Comments on: Homeowner Mortgage Rescue Plan: Unanswered Questions http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/ The Hard Truth about Money and Personal Finance Fri, 19 Mar 2010 02:03:20 +0000 http://wordpress.org/?v=2.9 hourly 1 By: kitty http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/comment-page-1/#comment-2705 kitty Mon, 23 Feb 2009 04:08:33 +0000 http://toughmoneylove.com/?p=1813#comment-2705 I am on the fence here. I have my doubts as to this banks ability to prevent foreclosures; I am not really happy as anyone about bailing out those irresponsible. I also have a question about the "cram down" provision: if the principal balance is reduced, shouldn't there be some provision to say that if the property value goes back up at some point in future, and the owner sells for more than the new reduced principal, shouldn't it be the bank to receive the money and not the homeowner? Why should the owner pocket the profits from this arrangement? At the same time, foreclosures hurts the neighbors. This is especially true for condos. A lot of attention was paid to houses and how the foreclosed homes aren't good for neighborhoods. But the effect can be much worse on condos. In condos, several owners' not paying common charges may result in a significant hike in common charges for the perfectly responsible neighbors or in an assessment. Given big enough hike, and neighbors can end up having to struggle to come up with money. Also, banks owning significant percentage of units don't really care about improvement or maintenance, so they may vote against needed repairs. Then there is our whole economy. So I am not really sure: if I can get myself to believe that this bill would help the economy, I'd be for it. I'd love to be optimistic, but I have my doubts. I am on the fence here. I have my doubts as to this banks ability to prevent foreclosures; I am not really happy as anyone about bailing out those irresponsible. I also have a question about the “cram down” provision: if the principal balance is reduced, shouldn’t there be some provision to say that if the property value goes back up at some point in future, and the owner sells for more than the new reduced principal, shouldn’t it be the bank to receive the money and not the homeowner? Why should the owner pocket the profits from this arrangement?

At the same time, foreclosures hurts the neighbors. This is especially true for condos. A lot of attention was paid to houses and how the foreclosed homes aren’t good for neighborhoods. But the effect can be much worse on condos. In condos, several owners’ not paying common charges may result in a significant hike in common charges for the perfectly responsible neighbors or in an assessment. Given big enough hike, and neighbors can end up having to struggle to come up with money. Also, banks owning significant percentage of units don’t really care about improvement or maintenance, so they may vote against needed repairs. Then there is our whole economy. So I am not really sure: if I can get myself to believe that this bill would help the economy, I’d be for it. I’d love to be optimistic, but I have my doubts.

]]> By: Four Pillars http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/comment-page-1/#comment-2703 Four Pillars Sun, 22 Feb 2009 22:44:01 +0000 http://toughmoneylove.com/?p=1813#comment-2703 Great post TML - you will like my post on this same subject. It is scheduled for tomorrow morning. Good point about draining equity... Mike Great post TML – you will like my post on this same subject. It is scheduled for tomorrow morning.

Good point about draining equity…

Mike

]]> By: Rick Beagle http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/comment-page-1/#comment-2702 Rick Beagle Sun, 22 Feb 2009 22:06:38 +0000 http://toughmoneylove.com/?p=1813#comment-2702 There is a tendency as Americans to assume that people -who are struggling with their bills and their mortgages- are somehow completely responsible for that predicament. We look at their lives and say such things as: 1) you didn't spend within your means; 2) you didn't take advantage of educational opportunities to retool your skills; and 3) you are in a job that you should have realized would be phased out (due to technology or whatever). Many of these comments certainly sound good and do a lot in reaffirming our superiority for our good planning versus their obviously flawed thought processes. Unfortunately, in the traditional market sense there are a large enough number of people out there that seem to reaffirm these notions that we sometimes forget that it isn't always true. The collapse of the RV industry in the course of one year is not something that a reasonable person could have predicted. Of course we could browbeat the community for not diversifying their businesses, but other than making us feel good, there really isn't a point to that. Which brings me to my point, what percentage of the people being assisted with their mortgage are simply in need of a "bridge" to help them get out of a situation that they simply could not control? I mean, what about the people who did everything right, but still managed to get into a bind. Wouldn't it be prudent to invest in these folks and provide them with a helping hand? But what about those statistics concerning re-default? I am not sure that those numbers are applicable in the current economic turmoil. I do know that if we do not stop the economic bleeding, those numbers will not get any better. So what do we do? Do we keep letting people bear with the brunt of the economic turmoil unassisted while we pump billions into banks and other big businesses? Who, I might add have already shown resistance to change? Do we heed the markets, and reverse course? Who knows? But in my own little world, I must say watching wall street and the banks scream bloody murder about this bill puts a little smile on my face. I know it's wrong, but somehow it makes me think they have a "bit more skin in the game". Even if it is an illusion, it is worth every tax dollar to me. Absurd, but there is my opinion for what it's worth. Rick Beagle There is a tendency as Americans to assume that people -who are struggling with their bills and their mortgages- are somehow completely responsible for that predicament. We look at their lives and say such things as: 1) you didn’t spend within your means; 2) you didn’t take advantage of educational opportunities to retool your skills; and 3) you are in a job that you should have realized would be phased out (due to technology or whatever). Many of these comments certainly sound good and do a lot in reaffirming our superiority for our good planning versus their obviously flawed thought processes.

Unfortunately, in the traditional market sense there are a large enough number of people out there that seem to reaffirm these notions that we sometimes forget that it isn’t always true. The collapse of the RV industry in the course of one year is not something that a reasonable person could have predicted. Of course we could browbeat the community for not diversifying their businesses, but other than making us feel good, there really isn’t a point to that.

Which brings me to my point, what percentage of the people being assisted with their mortgage are simply in need of a “bridge” to help them get out of a situation that they simply could not control? I mean, what about the people who did everything right, but still managed to get into a bind. Wouldn’t it be prudent to invest in these folks and provide them with a helping hand?

But what about those statistics concerning re-default? I am not sure that those numbers are applicable in the current economic turmoil. I do know that if we do not stop the economic bleeding, those numbers will not get any better.

So what do we do? Do we keep letting people bear with the brunt of the economic turmoil unassisted while we pump billions into banks and other big businesses? Who, I might add have already shown resistance to change? Do we heed the markets, and reverse course?

Who knows? But in my own little world, I must say watching wall street and the banks scream bloody murder about this bill puts a little smile on my face. I know it’s wrong, but somehow it makes me think they have a “bit more skin in the game”. Even if it is an illusion, it is worth every tax dollar to me.

Absurd, but there is my opinion for what it’s worth.
Rick Beagle

]]> By: Brian http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/comment-page-1/#comment-2701 Brian Sun, 22 Feb 2009 20:56:26 +0000 http://toughmoneylove.com/?p=1813#comment-2701 Great Questions Mr TML. #3 is really scary, because what will stop people from jumping into more debt via CC's or Auto's just so they can join the rescue plan? Great Questions Mr TML. #3 is really scary, because what will stop people from jumping into more debt via CC’s or Auto’s just so they can join the rescue plan?

]]> By: K-money http://toughmoneylove.com/2009/02/22/homeowner-mortgage-rescue-plan-unanswered-questions/comment-page-1/#comment-2699 K-money Sun, 22 Feb 2009 20:07:08 +0000 http://toughmoneylove.com/?p=1813#comment-2699 One of my coworkers also works for a major bank and will be attending training next month on how the bank plans to implement their part in this plan. I am very curious what the bank's instruction to their employees is going to be. "barrier to recidivism" - as much as I want a loan modification for myself (I am WAY too underwater to qualify right now, and besides, I can afford my payments so I don't "deserve" help under the plan) I am leery of helping people out of this mess for fear that they will not have really learned any lessons and just get into trouble again. I don't have the answers, either. One of my coworkers also works for a major bank and will be attending training next month on how the bank plans to implement their part in this plan. I am very curious what the bank’s instruction to their employees is going to be.

“barrier to recidivism” – as much as I want a loan modification for myself (I am WAY too underwater to qualify right now, and besides, I can afford my payments so I don’t “deserve” help under the plan) I am leery of helping people out of this mess for fear that they will not have really learned any lessons and just get into trouble again. I don’t have the answers, either.

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