Unfair Mortgage plan

Quote from millionaire7:

Former Marine facing foreclosure, but do you really want to bail him out?

Jeff Gray is a nice guy. He’s a 45 year old father of three, a husband to a school teacher and a former Marine. He is also self-admittedly financially inept and very-near being kicked out of his suburban Maryland home. He is literally begging for help not to be foreclosed on. But when you hear his short financial history, you may come to the same conclusion that J.P. Morgan Chase has come to: Jeff Gray can not keep his home.

I sat in his living room a few weeks back and went through his mortgage papers and could not believe what I was reading. In 2005, Jeff Gray filed a tax return indicating he and his wife had a combined income of $7,900 a year. In December of that same year the couple refinanced their three bedroom home for $347,000. It would take four months of his salary to pay for just one month of his mortgage.


When I asked him how anyone ever approved this loan, he told me to look at the loan papers that he says were filled out by a fast talking mortgage broker. The loan form indicated Jeff and his wife were making more than $13,000 a month!

“Wait a minute”, I said “Your income was $7-thousand-900 a year and they inflated it on the paperwork to $13,000-a-month, and somehow they loaned you $347,000?”

“Yep.”

“Jeff, I have to ask you did that make sense to you at the time?”

“Well Drew, when I went back and looked at it, like I said we were signing deeds we were getting them real fast, and we didn’t know. We didn’t pay any attention to it.”

Jeff Gray has not made a mortgage payment, he says, in four years. He has been living rent free, unable to pay that $2,700-a-month for even one month. Now he wants help.

There are a lot of reasons we have gotten into this housing mess. Whoever it was who wrote this loan, approved this loan and sold this loan should, in my view, be held responsible for it. But that also includes the person who applied for the loan, signed for the loan and then couldn’t pay the loan.

Jeff Gray told me he feels he was swindled, caught up in a swirl of paper work flying at him at closing. And it is true he is being kicked out while the banks are being bailed out. But there is no fine print about the loan papers I saw. They clearly stated his first mortgage payment would be $2,700 dollars and he knew he couldn’t afford it.


http://ac360.blogs.cnn.com/2009/02/...osure-but-do-you-really-want-to-bail-him-out/
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Good example. Of course its an extreme case and clearly the guy should not have been extended that loan.

Instead of bailing Jeff Gray out what if the bank evicted Jeff immedietely and promptly sold the property at auction to the highest bidder? The bank could then report the loss to the banks shareholders who could promptly fire the BOD and elect competent board members. The new board could then institute stringent loan vetting and income documentation requirements. If the loss is too great to bear then the bank could GO OUT OF BUSINESS. Depositors could then file for FDIC or FCUA funds. If FDIC and FCUA funds are unavailable because insufficient reserve has been set aside then those depositors could lose their money. Then the depositors who lost their money could ask themselves if that vote they cast for Barney Frank or Maxine Waters or Chris Dodd were really in the best interest of the country.

Yknow, just a hypothetical question. Anyway who makes 8k per year? This aint El Salvador.
 
This is not "helping your neighbor out," it's rewarding bad/irresponsible behavior which begets more of it.

Enabling people to live beyond their means got us into this mess and more of the same won't solve it. Not everyone is entitled to live in a house, only those who can afford to.
Quote from Mike805:

At its heart, this is a community issue that is based on utility. Where is the greater harm? Even though its unfair, I think the greater harm results from not helping your neighbor out.
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Quote from Trader666:

Not everyone is entitled to live in a house, only those who can afford to.
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Right, and you've put your finger on the key word here, which is "entitled." This is the mentality we are dealing with. The essential point on which I think we disagree is whether that mentality can ever be altered.

Everyone on this board is a trader. To stay a trader, one must be able to quickly learn and benefit from mistakes and change one's behavior accordingly. So it's not surprising that anyone on this board would make the assumption that other people might learn lessons through experience.

But we are not talking about traders now; we are talking about people who never learn, no matter what happens to them. If you can't take personal responsibility for your actions, you will never change them.
 
The issue isn't whether or not we as a society change their thinking, it's whether or not we tolerate their behavior.

Taking your argument to the extreme we should also tolerate violent crime and murder.
Quote from drcha:

Right, and you've put your finger on the key word here, which is "entitled." This is the mentality we are dealing with. The essential point on which I think we disagree is whether that mentality can ever be altered.

Everyone on this board is a trader. To stay a trader, one must be able to quickly learn and benefit from mistakes and change one's behavior accordingly. So it's not surprising that anyone on this board would make the assumption that other people might learn lessons through experience.

But we are not talking about traders now; we are talking about people who never learn, no matter what happens to them. If you can't take personal responsibility for your actions, you will never change them.
More...
 
Quote from millionaire7:

Former Marine facing foreclosure, but do you really want to bail him out?

Jeff Gray is a nice guy. He’s a 45 year old father of three, a husband to a school teacher and a former Marine. He is also self-admittedly financially inept and very-near being kicked out of his suburban Maryland home. He is literally begging for help not to be foreclosed on. But when you hear his short financial history, you may come to the same conclusion that J.P. Morgan Chase has come to: Jeff Gray can not keep his home.

I sat in his living room a few weeks back and went through his mortgage papers and could not believe what I was reading. In 2005, Jeff Gray filed a tax return indicating he and his wife had a combined income of $7,900 a year. In December of that same year the couple refinanced their three bedroom home for $347,000. It would take four months of his salary to pay for just one month of his mortgage.


When I asked him how anyone ever approved this loan, he told me to look at the loan papers that he says were filled out by a fast talking mortgage broker. The loan form indicated Jeff and his wife were making more than $13,000 a month!

“Wait a minute”, I said “Your income was $7-thousand-900 a year and they inflated it on the paperwork to $13,000-a-month, and somehow they loaned you $347,000?”

“Yep.”

“Jeff, I have to ask you did that make sense to you at the time?”

“Well Drew, when I went back and looked at it, like I said we were signing deeds we were getting them real fast, and we didn’t know. We didn’t pay any attention to it.”

Jeff Gray has not made a mortgage payment, he says, in four years. He has been living rent free, unable to pay that $2,700-a-month for even one month. Now he wants help.

There are a lot of reasons we have gotten into this housing mess. Whoever it was who wrote this loan, approved this loan and sold this loan should, in my view, be held responsible for it. But that also includes the person who applied for the loan, signed for the loan and then couldn’t pay the loan.

Jeff Gray told me he feels he was swindled, caught up in a swirl of paper work flying at him at closing. And it is true he is being kicked out while the banks are being bailed out. But there is no fine print about the loan papers I saw. They clearly stated his first mortgage payment would be $2,700 dollars and he knew he couldn’t afford it.


http://ac360.blogs.cnn.com/2009/02/...osure-but-do-you-really-want-to-bail-him-out/
More...


Under Obama's plan just announced yesterday, this guy will likely qualify for a loan modification. Moreover, the mortgage payment will reduce to less than one third of the income, that is, $2000 a year (Yes, that is yearly payment). welcome to socialism.
 
+1

Well put. Such logic almost seems like a 'duh' statement, yet so few want to comprehend.

Quote from poyayan:

You talked about the negative feedback loop.

Look at the flip side, the positive feedback loop didn't last forever and certainly, the negative feedback loop won't last forever neither.
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Sucks to be the losers that already bailed - nothing for them. Maybe we should all stop paying our mortgage and let Uncle Sam bail us all out.
 
Quote from millionaire7:

"The Obama administration is looking at subsidizing the mortgage payments of struggling borrowers before they default, according to sources familiar with the discussions. "

I would say this is unfair to the people who are planned their home purchase in accordance to their affordability.

Not good paying taxpayers money to the people who are reckless and purchased at the abnormal prices without thinking.


:mad:
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boo hoo hoo cry me a river. Free money means more bailouts and stimulus. It's economics 101.
 
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