Stupid Solution to the Mortgage Crisis
I just read the following:
One of the suggestions Bernanke made was for mortgage and other financial companies to reduce the amount of the loan to provide relief to a struggling owner. "Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure," Bernanke said.
Among other things, I just have to vent. I am sooooo sick of hearing all the discussion of how we can bail out these morons. You want to lower rates? Fine. Play with taxes? Whatever. But if I hear one more a$$hole suggest we reward these idiots for the stupid decisions they've made, I'm absolutely going to puke.
I've been b*tching about "the American way" for 5 years now. Take my town, an Anytown, USA type of place (15K people, 25K when the local college is in...not depressed, not affluent, just average)...go back 10 or 15 years, and if you saw a Mercedes, or a 3,000 sq. ft. house, you knew it was a doctor/lawyer/businessman/etc. Seeing luxury goods was rare, because the only people that had them were the people that..well, could afford them.
Fast forward to today; same Anywhere, USA town...if you are in one of the dozen local developments, and your home isn't 2,500 sq. ft., you are the "poor guy." Drive down Main Street, and see a Navigator, Escalade, 3/5-Series, SLK's, GALORE. Where do these sh*tstains work? Did we have an influx of Docs & lawyers over the past decade? He|| no! These are your average Joe Blows...would have driven a Corolla and a Ranger in the 90's...the husband works at the local carpet factory, and the wife is a receptionist at the university, etc. Everyone has to be a "baller" -- well this is what you get. I swear to god, I'm going to be so pi$$ed if they try and bail these a-holes out. I hope every one of these idiots with negative home equity after 5-10 years of "ownership," 10K, 20K, 30K+ in 20% interest debt to AMEX, and a pair of 84 month car loans on Bimmers they never really could afford, end up on the street. Heartless? Maybe. I'm just sick of being surrounded by idiots. F*ck'm. I'm going back to work.
Everyone has to be a "baller"
This is the mentality these days. All these wanna be ballers have no net worth.
Amen. I could not agree more. It's going to be painful to watch, and will likely hurt the entire economy, but people will get the hint ("pssssst....hey buddy, you CAN'T AFFORD THAT!"). I say let them bail themselves out. If anything, make them apply for "mortgage welfare" and pay their $3,000/mo. mortgage with welfare checks. And repo their cars. Don't make it easy or painless.
The problem is that they were told that they could afford it by people they trusted & at the time, they in fact could.
We deal with folks money. How sophisticated are the majority of our clients? It disgusts me to see how many people bought and buy investments because a glossy piece of cardstock with pictures on it.
Bail (some of) the people out. Hang the lenders.
thumbs up Iceco1d and fastcar. The fact is if the banks repo and foreclose..it just goes to destroy an already terminal bank balance sheet, we are no where close to a bottom to all this mess!
=Last year, you were ditsy, arrogant, and stupid, driving a Benz and living in a nice house...this year you are walking to the welfare line and living with your parents. STFU.
Feeling pretty frisky after that interview, eh?
The folks you are referring to aren't the folks I think ought to get bailed out. We're in agreement - the trash you're speaking about ought to be allowed to ... fail.
if I offended any of you scrubs that are getting foreclosed upon, having rent-a-center take back your 100 inch plasma TV, or having your Volvo REPO'd...tough!
Banks voluntarily reducing the principal amount of a delinquent loan? Never happen. If it does, I'm not making another house payment until MY mortgage is reduced!
However, one proposal that is getting some traction is the one with the delinquent mortgage holder refinancing with the government and the previous mortgage company holding a certificate for the difference between the remaining principal of the old first mortgage and the balance of the new first mortgage (based on a current appraisal). For example:
Delinquent 1st mortgage balance with GMAC: $200,000
Refinanced 1st mortgage balance: $120,000
GMAC holds certificate worth: $ 80,000
This certificate entitles GMAC to $80,000 of the proceeds, if the house is ever sold.
Yeah, yeah, there are a lot of unanswered questions surrounding this proposal. However, all I know about it is what I typed. So now, you know what I know...if your IQ is 185!