Throw Out The Bums
Proposals advancing in the Senate and House of Representatives would call for the federal government to insure
as much as $300 billion in refinanced mortgages, potentially saving up to 2 million borrowers from foreclosure, according to one of the sponsors, Representative Barney Frank.
Declining home prices will mean that one-third of those borrowers will default again, prolonging the deepest housing crisis since the 1930s...
said Michael Carliner, former economist at the National Association of Home Builders in Washington.
"Clearly, if you recast the mortgage lower and it still goes bad, you're just prolonging the agony and making the loss severity worse than it is now."
In addition to counting on investors to cut the principal they are owed, the bills, backed by Senator Christopher Dodd, a Connecticut Democrat, and Frank, a Massachusetts Democrat,
would require borrowers to keep making their monthly payments even as they are given an incentive to stop.
Holders of second-lien mortgages also would have to consent to taking losses of more than 99%.
Bonds made up of second mortgages have fallen so steeply in value that Standard & Poor's, said May 1
it would stop rating new bonds of second mortgages because they have become too difficult to assess.
Tom Deutsch, deputy executive director of the American Securitization Forum, which represents the securities industry:
"If you change contracts, you call into question whether future agreements will be fulfilled.
If investors don't believe contracts will be fairly upheld, the credit crisis in America will extend much, much longer than it would."
Stuart Saft, a real estate lawyer and partner in Dewey & Leboeuf LLP:
"This legislation will prop up the housing market and continue to make homeownership unaffordable to people who haven't gotten loaded down with debt.
It's not the end of the world if people lose their homes. Many didn't have equity in the homes.
You have borrowers sitting there saying if we don't do anything at all the government will come and bail us out.
By keeping them in place, all we're doing is continuing the housing crisis."
Senator Jim Bunning, a Republican from Kentucky said the proposals send the wrong message to borrowers.
"It tells people who acted responsibly they were fools for living within their means, and those who acted irresponsibly to make even bigger bets next time.
It is not fair and I can't blame someone for being upset when their neighbor who drained all the equity in their home to buy a new car and go on vacation has that debt forgiven,
gets a lower payment and equity back in the home, and is not even asked to make any sacrifices such as selling the car or getting a second job."
The Nattering One muses... can't say we didn't tell you so. The housing fiasco has even trickled down to the Nattering One.
Losing a municipal contract due to a budget crisis and layoffs is not the end of the world, but it still stings.
The next real estate jackass, greedy housing speculator, slimey mortgage agent or bleeding heart that suggests any kind of relief or
bail out for these "poor people" will get a well deserved size 11 inserted in their rear, foot that is.
Hattip To Bloomberg.
as much as $300 billion in refinanced mortgages, potentially saving up to 2 million borrowers from foreclosure, according to one of the sponsors, Representative Barney Frank.
Declining home prices will mean that one-third of those borrowers will default again, prolonging the deepest housing crisis since the 1930s...
said Michael Carliner, former economist at the National Association of Home Builders in Washington.
"Clearly, if you recast the mortgage lower and it still goes bad, you're just prolonging the agony and making the loss severity worse than it is now."
In addition to counting on investors to cut the principal they are owed, the bills, backed by Senator Christopher Dodd, a Connecticut Democrat, and Frank, a Massachusetts Democrat,
would require borrowers to keep making their monthly payments even as they are given an incentive to stop.
Holders of second-lien mortgages also would have to consent to taking losses of more than 99%.
Bonds made up of second mortgages have fallen so steeply in value that Standard & Poor's, said May 1
it would stop rating new bonds of second mortgages because they have become too difficult to assess.
Tom Deutsch, deputy executive director of the American Securitization Forum, which represents the securities industry:
"If you change contracts, you call into question whether future agreements will be fulfilled.
If investors don't believe contracts will be fairly upheld, the credit crisis in America will extend much, much longer than it would."
Stuart Saft, a real estate lawyer and partner in Dewey & Leboeuf LLP:
"This legislation will prop up the housing market and continue to make homeownership unaffordable to people who haven't gotten loaded down with debt.
It's not the end of the world if people lose their homes. Many didn't have equity in the homes.
You have borrowers sitting there saying if we don't do anything at all the government will come and bail us out.
By keeping them in place, all we're doing is continuing the housing crisis."
Senator Jim Bunning, a Republican from Kentucky said the proposals send the wrong message to borrowers.
"It tells people who acted responsibly they were fools for living within their means, and those who acted irresponsibly to make even bigger bets next time.
It is not fair and I can't blame someone for being upset when their neighbor who drained all the equity in their home to buy a new car and go on vacation has that debt forgiven,
gets a lower payment and equity back in the home, and is not even asked to make any sacrifices such as selling the car or getting a second job."
The Nattering One muses... can't say we didn't tell you so. The housing fiasco has even trickled down to the Nattering One.
Losing a municipal contract due to a budget crisis and layoffs is not the end of the world, but it still stings.
The next real estate jackass, greedy housing speculator, slimey mortgage agent or bleeding heart that suggests any kind of relief or
bail out for these "poor people" will get a well deserved size 11 inserted in their rear, foot that is.
Hattip To Bloomberg.
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