Banks are overwhelmed by foreclosures

[Maverickz]

If the government really wanted to help they would start at the bottom. Bailout the home buyers and keep them from defaulting on the loan, this reduces the foreclosures and saves the banks and everything else in the process.

 

[Jayford]

Bad idea. First of all, the government doesn't have that much money without massive printing. We are talking trillions here I bet.

Morally its wrong because that would be bailing out many people who bought way more house than they could afford, and uses tax payer money to keep them in those homes. Also, many people simply used refi's as ATM's for new cars, etc.

Economically not a good idea because it keeps the overall market propped up where it is still over priced. Mortgages to incomes are still at a ridiculous level in much of the country. Prices NEED to come down more. They went parabolic on the upside so a big shakeout is normal.

 

[Trader666]

You mean the greedy, gluttonous irresponsible scum who bought more house than they could afford, often by lying about their incomes? The ones who used their houses as ATMs while real estate prices were going up to live even further beyond their means? Many of whom were too stupid or lazy to understand the terms of their loans?

Quote from The Kin:

... Even the socialist liberals are pissed as it does little for the honest hardworking people who are losing their homes...

 

[jd7419]

Quote from Maverickz:

If the government really wanted to help they would start at the bottom. Bailout the home buyers and keep them from defaulting on the loan, this reduces the foreclosures and saves the banks and everything else in the process.

Other than giving the home buyer the house the bank will lose because these subprime buyers consistently show an inabilty to pay their bills. The banks must forclose or cut principal in half and if you do the latter you will see a revolt among the class of people who actually are making their payments on time which happens to be most of the country.

 

[Jayford]

I agree.

The home buyer bailout idea is 100% politically motivated.

 

[brokerbroker]

Quote from blackjack007:

this is a very bad idea. if the borrower is in poor financial health and has shown repeatedly they aren't worthy of credit, why continue to grant them credit and give them low interest rates and i/o-only payments? that's something you only give to the best, low-risk borrowers, not the worst, hi-risk ones. you are basically saying that if a borrower has terrible credit, let's give them the best rates and terms. makes no sense at all.

and even if they refi at a lower rate, within a few months they'll probably become delinquent again. that's why their credit sucked in the first place: they have over and over shown an inability to manage their finances. you don't get a bad credit score simply from being 1 month late on a visa payment in the last 5 years. to get a shi**y fico score like these subprime people have, you must show a history of credit ineptitude.

the best thing the bank can do is foreclose and get it over with. these homeowners should never have been borrowers in the first place.

this is something i never understood, why do rates go up when you can't pay your bills in the first place? makes no sense!
why do high risk pay more? high risk can only pay less by definition.
dropping the rates enables more people to make payments, raising rates makes more people default.

them guys is crazyyy

 

[stock777]

The next time some limp wristed leftie tells you banks are redlining and its everyones right to own a home, kick them in the balls for me.

 

[new$]

Quote from blackjack007:

this is a very bad idea. if the borrower is in poor financial health and has shown repeatedly they aren't worthy of credit, why continue to grant them credit and give them low interest rates and i/o-only payments? that's something you only give to the best, low-risk borrowers, not the worst, hi-risk ones. you are basically saying that if a borrower has terrible credit, let's give them the best rates and terms. makes no sense at all.

and even if they refi at a lower rate, within a few months they'll probably become delinquent again. that's why their credit sucked in the first place: they have over and over shown an inability to manage their finances. you don't get a bad credit score simply from being 1 month late on a visa payment in the last 5 years. to get a shi**y fico score like these subprime people have, you must show a history of credit ineptitude.

the best thing the bank can do is foreclose and get it over with. these homeowners should never have been borrowers in the first place.

in the early 80's when rates went over 16%, i put one on the market and moved out of state and in a few months the broker called and said kids were breaking in. now they will rip out copper, dishwashers, etc. the worst you can do is leave one vacant too long.

 

[offbyone]

Quote from Jayford:

I agree.

The home buyer bailout idea is 100% politically motivated.

The sad story on this is that while this legislation is being trumped up as a home owner bailout, unfortunately congress actually decided to bailout their buddies, the home builders, rather than the home owners.

The fed govt is has way more resources to float on, but what is an interesting trend is the cost that is starting to weigh on the state budgets.

 

[blackjack007]

Quote from brokerbroker:

this is something i never understood, why do rates go up when you can't pay your bills in the first place? makes no sense!
why do high risk pay more? high risk can only pay less by definition.
dropping the rates enables more people to make payments, raising rates makes more people default.

seriously, you don't understand why high-risk deadbeats pay more in interest?

well let me give you a real life example. i'll send you my bank info, you wire me a $100,000 loan at 10%. i'll pay you $500 per month, and after 3 months i'll start being delinquent. at that point, you can lower my rate to 8% ($400 month). after a few more months i'll be delinquent again and you can lower my rate to 5%. after a year my rate will probably be 0%. sound good to you? this idea sounds very good to me.