Better plans?

Discussion in 'Politics' started by B_spiker067, Feb 19, 2009.

  1. B_spiker067

    B_spiker067 New Member

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    We are interested in only two things; stemming the tide of homelessness and not having foreclosures devalue the property values of neighborhoods.


    To that end the govt. should find ways to compel those who can't reasonably refinance mortgages into 5 years leases paying between 22-28% of their monthly income. And banks who made poor loans forced into landlord status. At the end of five years further review or bankruptcy could deal with the issues.


    Those people who can refinance should not be allowed to do so without penalty. If you bought a home for $200,000 that is only worth $140,000, then you should be allowed to refinance at the $140,000 level. Except, the ownership is a partnership in which the bank has a $60,000 stake in that home. When you sell that home in the future the first $60,000 goes to the bank. No federal help to banks who do not abide by these guidelines and harsher treatment by bankruptcy courts to people who decline this type of option.


    These are un-fleshed but better plans than what this administration has put forth. It speaks to equity and fairness to all including those that played by the rules
     
    #1 B_spiker067, Feb 19, 2009
    Last edited: Feb 19, 2009
  2. HazelGod

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    Let's see...I was stupid enough to buy more house than I could afford, so I was likely stupid enough to leverage myself close to 100% to do it, as well, so...my choices are to walk away from a deflated asset in which I have zero equity due to its depreciation...or stay indefinitely with a $60k IOU hanging around my neck?

    What could possibly go wrong?
    :rolleyes:
     
  3. Wyldgusechaz

    Wyldgusechaz New Member

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    Mortgages are legally binding contracts that were signed in good faith. The minute we start changing legally binding financial contracts, we will ruin the future of all financial transactions and could destroy our way of life.

    Why would any institution lend money if the terms can be changed later? With money being printed like leaves in autumn, how do we know what a dollar is worth? If you don't know what a dollar is worth, how do you make a prudent investment?
     
  4. B_spiker067

    B_spiker067 New Member

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    I spoke to this already. Those that can reasonably be refinanced and those that can't (i.e. lease versus refinance).

    The $60,000 doesn't represent so much an IOU as it does preferred stock. People function in this fashion all the time.
     
  5. B_spiker067

    B_spiker067 New Member

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    Contracts are renegotiated all the time when both parties are willing. Perfectly legal AND sound practice when warranted.

    The best part of this is that it is all stick by the govt. and minimal public carrot (i.e. less printing of money).
     
  6. HazelGod

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    I agree with you wholeheartedly on this principle.

    However, there are vagaries that come into play when examining that "good faith" clause, and that's where most of the brouhaha appears to be focused.
     
  7. Wyldgusechaz

    Wyldgusechaz New Member

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    One of the mistakes Obama is making, as was made by Barney Frank, Chris Dodd, Maxine Waters, and Franklin Raines, is that home ownership is a good thing. I read a terrific article that said nationwide, home ownership should be less than 50% of the population, as it stifles movement of labor from areas of excess labor to areas of labor deficiency.

    Anybody who has owned a home and I have owned a bunch of them KNOWS it is NOT a great tnvestment. Also having money tied up in home equity is a loser too. In flat or declining real estate markets, renting is far better. And I defy anyone to show much more than a 1-3% growth in the value of homes long term.

    Homes are not good investments.
     
  8. B_spiker067

    B_spiker067 New Member

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    Homes are good investments depending on your level of investing sophistication, income, and lifestyle.
     
  9. Wyldgusechaz

    Wyldgusechaz New Member

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    Actually what you did not say is profound and aims right to my argument: Homes are good investments for select people. Since home ownership is practically a zero sum game, that means its a win/lose barter. If it is good for some by rote it is bad for others.

    Real estate has winner and losers. Thats why its best that 50% or less buy homes. Forcing people into homes like has been done (albeit gently by subsidizing home ownership) has lead to where we are now.
     
  10. lucky8

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    Offer 40 year fixed rate mortgages at a 4.5% and refinance at market value...if only they had listened to me in October. And actually, homes are not an investment if you're just buying it to live in...no cash flows=not an investment
     
  11. HazelGod

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    That's not even close to being true.
     
  12. lucky8

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    Yes, it is
     
  13. SilverTrain

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    Tell that to Henry Kravis.
     
  14. lucky8

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    Didn't Kravis make most of his money from acquiring businesses?
     
  15. HazelGod

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    OK, you keep right on thinking that. :rolleyes:
     
  16. transformer_99

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    I see it as a choice, get incomes up to the level of the $ 200K mortgage or let everything bottom out so that the current incomes can afford the house at it's true lower FMV. Not a grossly inflated shell game that was the real estate market over the past 7 years. The cat's out of the bag and they aren't going to do anything about the frauds that perpetrated the act, so the party line is eat the loss as bailouts and move forward. That doesn't sit well with me. I read about the salvation for those that are in trouble already with the 5 year restructured mortgage. Those that are still making their ridiculous mortgage payment, they get is lip service "protection", which is bullsh*t. And then there are those of us that didn't contribute to the mortgage mess (renters) that are still going to be priced out because the economy is such that getting a paycheck to get that house is never going to happen. In these times, these types, for which I am one of, will be fortunate to keep their job and continue living as they have (within their means) and continue to forego, only at a new level. What are we all going to learn to live without next ? What new and creative way are we going to have to lie to ourselves about getting better service when we've cut that service out of our lives already ?

    Just me but another temporary solution to fixing the mortgage & economic mess ? I really think the tax laws for raiding your own 401-K/403-B should be abolished, My proposal there is that the penalty for the early withdrawal should be relaxed if not eliminated completely because the 401-K has nearly lost 40% of it value over the last year alone and they continue to plummet as we speak. There's your penalty right there, having it stuck in a retirement account and not touching it because the penalty would've beaten you for the loss to this point anyway. The money you saved is a windfall in this time for a relatively modest retirement account ? Granted I don't encourage raiding your own 401-K/403-B, you'll need that when your old and retired or unable to work. But let's face it, liquidity with no job might get many thru this time by providing basic necessities of shelter, food and clothing. Or it might just be the thing that delays the inevitable of becoming homeless and/or displaced worker as the state's unemployment systems in many states are on the verge of being bankrupt just the same ? Just ideas here, but sooner or later a decision will have to be acted upon. We've seen $ 1.5+ trillion in bailouts and economic stimulus packages. At least abolishing a major early withdrawal penalty on a non-Social Security retirement account is a self funded personal bailout. Hey the rules are constantly moving for mortgage contracts and everything else, why not 401-K's/403-B's ? Funny, in the 80's company's raided their employee pension plans and the alternative was the IRA's, 401-K/403-B's. With a penalty like the early withdrawal of retirement funds, it acts as a Government raid on your retirement. Any liquidated 401-K/403-B should be spent at it's owner's discretion, not at some ridiculous thought process to bailout the economy as an economic stimulus, even though that is more than likely what will occur as the wolves will raise the prices and inflation will rob even a penalized early withdrawn account. It's the way it works, but what it also tells me, go buy a house, instead of being a tenant at suffrance for a rented apartment become a homeowner at suffrance, don't even pay the first mortgage payment and when you default, you get 5 years protection from the mortgage bailout plan ? Right now the Obama plan has salvation for those in trouble, and the rest, whether they are in on the mess or just stayed out of it get nothing but lip service.
     
  17. B_spiker067

    B_spiker067 New Member

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    Damn, you're long winded.:biggrin1:

    Keep your money in the market. Move laterally at best for a better position. Take it out and lose forever.
     
  18. transformer_99

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    To me the penalty lifted makes better sense, then I could get what I invested back out and have the flexibility to do what you indicate. Then again I'd have probably turned it all into a safe and guaranteed T-Bill return a year ago before it lost that nearly 40 % ? :smile:
     
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