Who is really behind the sub-prime mortgage bailout,?
If you thought Hillary Clinton’s government takeover plan for health care was bad, wait ‘til you see what she has in store for the housing sector. As always with the Clintons, the market is the problem and Big Nanny is the solution. Unfortunately for taxpayers, Hillary has bipartisan company in the Bush administration on this issue. Their election season prescription? Rewarding bad behavior. Punishing responsible behavior. Doing more harm than good.
In case you’ve been living in a cave, there’s a painful credit crunch underway. The culprit is the subprime mortgage — a species of risky home loans to buyers with dubious credit and income. Cash-rich lenders doled out the subprimes hoping rising home prices would compensate for any failed bets. But when housing prices started plummeting and interest rates began rising, many borrowers started defaulting. Insolvency looms for countless lenders.
Instead of letting lenders and subprime mortgage-holders suffer the consequences of their actions, politicians and grievance-mongers are riding to the supposed rescue. In a supreme irony, the very same champions of the needy in the Democrat party who complain constantly about the lack of “affordable housing” are now fighting tooth and nail to keep housing prices high.
To “cure” the housing crisis, Hillary wants a 90-day moratorium on foreclosures for homeowners who default on subprimes. In addition, she wants a five-year freeze on the monthly rate for subprime adjustable mortgages. While she demonizes lenders as predatory out of one side of her mouth, the other side of her mouth is floating legislation to protect lenders from lawsuits and let them convert certain mortgages into “stable, affordable loans.” On top of all that federal meddling, she proposes a $5 billion — yes, that’s “billion” with a “b” — fund to “help communities suffering from high rates of foreclosures.”
Jesse Jackson is also stirring the pot. With subprime victim sob stories flooding the news and anecdotes of minority homeowners in trouble, there’s no way the shakedown king could stay away. But the subprime mess isn’t a result of ruthless racial discrimination. If anything, it’s the result of too little discrimination by lenders too willing and eager to sign on people who had no business taking on mortgages. (And you know Jesse Jackson would be screaming either way. The lenders are damned if they lend and damned if they don’t.)
Let’s boil this down to fundamentals: Why should the rest of us have to shoulder the burden because some buyers made poor choices, overextended themselves, and bought more house than they could afford? Why should other business owners bear the costs of lenders’ failed bets? And why are falling home prices such a catastrophe to be “fixed” in the first place? Sacramento Bee columnist Daniel Weintraub put it well: “It is great news when the price of energy, food, transportation, health care and consumer electronics drops. But for some reason it is bad news when the price of shelter drops. . . . Shouldn’t we be seeing stories filled with anecdotes about formerly priced-out middle-income families finally getting their chance at the American Dream?”
There’s another side of the housing crunch equation that’s not making it onto the newspaper front pages and presidential campaign websites. “For every house sold because the buyer couldn’t make the payments,” Weintraub notes, “there is a buyer on the other end of that transaction who got a good deal. And for every foreclosure, there are probably 10 buyers of nearby homes who benefited from the general easing of house-price pressure.” Bingo.
Fiscal conservatives ought to be balking at HillaryCare for housing. But President Bush’s treasury secretary, Hank Paulson, is singing a similar tune. He proposed a new safety net to stem the tide of home foreclosures through a bailout plan for homeowners with bad credit scores. They’d be eligible for relief from paying hundreds of dollars in additional monthly payments when their mortgage rates reset. Those who have been responsible enough to maintain good credit, however, will be out of luck. In addition, Federal Reserve Chairman Ben Bernanke has proposed that government-sponsored mortgage enterprises Fannie Mae and Freddie Mac be allowed to raise their loan limits and have their debt explicitly guaranteed by the public dole.
Lawmakers on both sides of the aisle are colluding to protect the reckless and keep home prices high on the backs of prudent taxpayers. Who’ll bail us out from this perversion of the American Dream?
Well defaulting on loans helps no one. All those people would be homeless and that will cost the taxpayers billions too. The only thing to do is to freeze the rates and allow the homeowners time to repair their financial woes. I hate the idea as much as the next republican, but in light of what has happened freezing the loans is like closing the gate after most of the cows got out. A little help but should have never opened the gate in the first place.
Should we all go delinquent on our mortgages.?
Just heard on the news that the mortgage bailout our government plans will work like this. It will bring the payments down for homeowners who are in trouble of losing their homes AND it will buy up the difference between what is owed and the homes actual value.
So, MOST Americans were smart enough to understand the terms of their mortgages and were able to afford the payments of those terms. My homes value has gone down so far that, regardless of the 30% I put down, there is little equity should I choose to sell. This is the scenario of MOST people who bought new home in the last 5 years.
So, what about OUR home values? Who is going to pay to make up the difference in value for the responsible people who do not have mortgages that are at risk?
The result will be HIGH mortgage rates for years to come, for YOU, for OUR children and grandchildren and for those who saved for homes and have good credit and didn’t need the “zero down, no credit, no problem” loans to begin with.
Once again, irresponsibility and ignorance get rewarded every time.
I was being sarcastic. I have never been irresponsible with my finances but because some people were, I pay. Nuts!
*Freedom Rocks* actually they said interest rates will be very high “even for those with good credit”…..and yes, I worry about taxes as well. Scary. More scared for my children than myself. I’ll be fine. I don’t know about the furture……..
*jean jean* I’ve no problem helping the elderly but I do not know even one responsible person who lost everything. Not one.
It is sad, isn’t it? Everyone that borrowed more money than they could afford to pay back will be bailed out by the ones that were responsible with their finances. And what is even funnier is that they EXPECT it. Spread the wealth, work harder to support the ones living on welfare and credit cards.
When going thru foreclosure and late payment on mortgage, would my credit card company raise the interest rate
We are in the 1st month of late payment that we plan to short sale or deed in leiu of foreclosure on our house. My husband heard at work that someone heard on the news, credit companies can raise interest rates for the folks who are going thru late payment on mortgage. Is this valid, true fact that is happening now or not? I’ve heard that credit card company wouldn’t do that as long as we make minimum payment on the credit account and are in good standing.
Ok, I see that “yes” is the answer to my question. Now how about auto loan? If I get a auto loan now, would the lender of the auto loan can raise interest rate too once they see our FICO drops?
Yes, a credit card company can raise your rates for late payments on mortgage, even if you’ve never been a day late with them in your life.
The drop in fico will probably cause a risk review of your credit by your credit card companies. If you have a lot of debt, minimum payments, late payments with other creditors, they are more likely to simply close your account.
But, they still can’t demand payment in full, so don’t get worked up over that possibility.
Isn’t this a great time to increase interest rates? We have high unemployment, nothing is made in America and?
we have a risk for hyperinflation. New Businesses need capital in the form of mortgages. That is how you start new businesses.
WASHINGTON – As the U.S. economy struggles to regain its footing, financial experts are predicting higher interest rates are on the way.
Such an occurrence would mean higher rates for mortgages, car payments and other loans. Still, for some people, that might be good news.
Although America’s economy is starting to grow again, the industry at the center of the economic bust continues to struggle.
Interest Rates and Housing
“We have yet to see evidence of a sustained recovery in the housing market,” Federal Reserve Chairmain Ben Bernanke said.
Now, there’s talk of raising interest rates.
Thomas Hoenig, president of the Kansas City Federal Reserve Bank, said the Fed should start raising rates soon. He warns leaving them near zero increases the risk of inflation.
But since other members of the Fed may not agree, it may be a while before the Fed starts to hike short-term rates.
In the meantime, longer-term rates have already been climbing and Americans will definitely feel the difference.
People taking out loans for cars and houses will get less bang for their borrowed buck. The reasoning is that for every percentage point interest rates rise, a buyer’s purchasing power is reduced by approximately 10 percent.
According to the Association of Realtors, $300,000 to $400,000 would-be buyers are priced out of the market in a given year.
Impact on Uncle Sam
However, the good news is that people who save money will earn a little more interest on their savings accounts and other investments like CDs.
Meanwhile, higher interest rates will also have an impact on the biggest borrower of all: the federal government.
Paying off the interest on those huge federal deficits could get more and more expensive in the years ahead.
By some estimates, the interest costs alone will reach $840 billion by the year 2020.
Only a little over a thousand signature left.
CG-11 growing fast for whom China. Are you from China or some other country sucking off our system and leaving us hungry.
Barry – high priced labor where did you get that? When you adjust for inflation we have one of the lowest priced labor. Why do you think everyone is flocking to welfare.
They’ll have to budd if they want to support the dollar and spur investments in the bullet train bro..
Sorry Gold dudes..
Backwards mortgage calculation?
There are several sites on the Internet that let you input your mortgage value, interest rate and number of years, then tell you what your monthly payment will be. Like these:
However I’m trying to do the calculation the opposite way round- I want to input my monthly payment, interest rate and number of years, and get told what house value I can afford to get.
Is there any site on the internet that does this calculation for you, or even better can somebody explain the formula to do that?
Just do it the standard way and reduce or increase the mortgage until you get the house payment you want. It shouldn’t take more than 5 or 6 tries.
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