Deal near on mortgage defaults

[CHUBROCK]

Here is another example of why we as a country are falling faster than we've ever fell before...

Deal Near on Mortgage Defaults

Here is what got me...and I quote:

"We are working aggressively and quickly, utilizing available tools and creating new ones, to help financially responsible but struggling homeowners," Paulson said in a speech to a national housing conference sponsored by the Office of Thrift Supervision.

If you ask me, anyone who needs help because they got themeselves into a sub-prime mortgage is not FINANCIALLY RESPONSIBLE! I would consider them FINANCIAL IRRESPONSIBLE!

When is somebody going to help me with my mortgage payments? I say just let them lose their homes. It is a tough lesson but one that needs to be learned the hard way!

[cptacek]

I completely agree with you, CHUBROCK. Sometimes people have to fall hard in order for them to get the lesson.

[TheTexan]

If you read the statement again, there are those who are financially responsible and those who are not, with adjustable rate mortgages that will be resetting soon. Let me break it down for you...

The majority of people who are financially unresponsible were the ones who lied about their income while due to sloppy underwriting, were approved. Many mortgage companies didn't even verify income for these people who had less than perfect credit to begin with. You are right that these people should be held accountable for their deceit. There are also those who were told that they were making a great move with a ARM, Suze Orman even promoted them as of a few months ago. I have her telling everyone in one of her books, they are a great option for those who will be moving in less that 10-15 years. Besides, they could refinance.

The big problem is...in 2008, over $380 Billion of these mortgages will be resetting. If nothing is done, these homes, some in your neighborhood, will foreclose. When this happens, a home with a market value of $200,000 will sell for around $130,000-150,000. What will that do to your neighborhood. Also, when you go to sell your home, guess what the comps in the area will say.

Maybe this does effect you. Guess this problem is a little bigger than you thought, huh?

[cptacek]

When I said "people have to fall hard" I meant all of us. The housing market needs to contract and house prices need to fall because they are artificially high right now.

House prices are sky high BECAUSE of the low interest / no income verification / interest only / ARM fiasco. If my house is worth $200,000 now, part of it is because houses surrounding me were high for the same reason. It is artificially high, and so if the market does its job (without government intervention) it will fall to realistic levels. Might be bad for me personally, (I might sell my house in the next 6 months, year or two) and if it goes for less than what I think it should, I'll have to either keep it a little longer or take a hit on it. I might complain a bit, but prices need to fall.

I just think if the government steps in now, it will just push out the problem to a later date instead of solving it.

[TheTexan]

You are right. Housing prices do need to come down or salaries need to increase. Unfortunately, I don't think the later will happen. Do I want housing prices to come down, no. I do think that house prices are inflated in some parts of the country, but not in others. It all depends are where you live.

[PRICEPLUS]

If I am running a company that made these damn loans I would not want to foreclose. A glut of available housing on the market drives house prices and values down. Where do most home owners have the bulk of their wealth? In the house!

The lenders should work with the home owners and lower rates to keep people in the homes. Make the loan a generational loan if you have to do so. Work with people to keep them in the home and money coming in.

If you write off the loan and throw the people out you make no money and you are stuck with an asset that is worth less. What can you afford to pay? How about some folks move in with you...relatives?

It is better to take a haircut on the loans than write off everything!

In future maybe we can get the Regulators to do their damn jobs!!!