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lbelle821
Arghhhhh
Member since 2/06 5285 total posts
Name:
Lisa
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Bailout related question re: housing market and middle class people
does the bailout plan help people who actually can pay their mortgage but yet are stuck in a home where they would have to take a loss on if they sold it because of the decline in the housing market?
Just to preface, i get kind of mad lately because we're trying to plan an upgrade to a bigger house but can't do it without taking a loss. And yet this bailout speaks of reducing mortgages based on current values of homes for those people who are in jeapardy of losing them because they are overextended.
On one hand I do understand that I don't need gov't assistance because we are blessed to be able to pay our bills and didn't spend more than our means back when we bought our home. However, I also feel that because I was responsible I just have to stomach the loss where other less responsible people get bailed out.
What is their consequence? How am I benefitting from this? Is it just that my credit will remain intact and I will be able to get further lending whereas these people won't? I just feel like eventually once the economy takes off again (and I hope it does) loans are going to be given out a lot more freely again anyway.
Please help me understand this. I'd love to be able to justify it a little better in my head so that I'm not so mad about it all the time.
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Posted 10/7/08 9:47 PM  |
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Sassyz75
Turning a new page
Member since 5/05 9731 total posts
Name:
Dina
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Re: Bailout related question re: housing market and middle class people
Understand that 99% of people that bought at the height of the market will have to take a loss if they want to sell.. not just you.
It sucks- and I feel your pain... but I guess you just have to hope that it will get better and be thankful that you are in a good situation (even if it isn't one that you want).
But I think if the credit frees up as a result of this bail out- people will be able to stay in their homes, thereby reducing foreclosures.. if foreclosures go up, then your home will be worth even less than it is today.
then, we can get to the bottom of this housing market and get the value of homes going up... and with increased credit availability, people will be able to get mortgages and buy up the inventory, which is also depressing the value of your house.
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| Posted 10/7/08 10:10 PM |
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PreshusSmurf
So in love with my little guys
Member since 1/07 2963 total posts
Name:
Jess
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Re: Bailout related question re: housing market and middle class people
As said during SNL Weekend Update:
"Good news, everybody. That house you couldn't pay for? You're paying for it! "
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| Posted 10/7/08 10:25 PM |
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dgtlsunshine
LIF Infant
Member since 12/05 217 total posts
Name:
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Re: Bailout related question re: housing market and middle class people
I just asked my husband this same question and he said our reward is that we will have good credit. It kind of sucks. I told him I think some people will stop paying their mortgage even though they can so that they can get the government assistance.
Message edited 10/7/2008 10:26:17 PM.
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| Posted 10/7/08 10:25 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Bailout related question re: housing market and middle class people
Posted by dgtlsunshine
I just asked my husband this same question and he said our reward is that we will have good credit. It kind of sucks. I told him I think some people will stop paying their mortgage even though they can so that they can get the government assistance.
I kind of feel the same way- I waited to buy a house-
but I would certainly never scarafice my credit rating in the HOPES the government will step in before the auction date is set
and then I would have no house and a 480 credit score- good luck getting a rental
to big of a chance for me to take
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| Posted 10/7/08 10:33 PM |
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lbelle821
Arghhhhh
Member since 2/06 5285 total posts
Name:
Lisa
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Re: Bailout related question re: housing market and middle class people
I totally get what you're saying -- And I didn't mean to make it sound like this only effects me because that wasn't my intention at all.
I completely get the supply and demand theory and wanting to reduce the inventory of homes for sale. Let me give a hypothetical. Let's say in 5 years we recover. Me and my neighbor's house are worth the exact same amount in 2005 when we purchased it. He got a bailout. I didn't. Let's assume for purposes of my example neither of us put anything down. We started out with the same $350k mortgage. Except his got reduced to $300k with the bailout. Mine stayed the same. Five year from now our houses sell for $500k. I get a $150k gain. He gets a $200k gain. So he gets $50k more in equity in that home than I. I know this is a basic example. Is there are any point where these people have to give back that bailout if a situation like this would occur? Again, it leads back to my question of consequence. Do they just get the $50k and that's that. Or is there some plan to take that back when the market bounces back?
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| Posted 10/7/08 10:36 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Bailout related question re: housing market and middle class people
that's why I don't agree with it
I think it's crazy that they would reduce the amount people owe
can they reduce what I owe to Amex and Ford Motor Credit- I think I over paid for the mustang in my driveway
oh wait- I have never been 1 minute late to pay- so I am out of luck
we keep rewarding BAD behavior- when is it going to stop!
PS- they are already talking about doing this in South FL- where home values have fallen 50% - thanks to massive speculation - my Dad mentioned this today to me
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| Posted 10/7/08 10:47 PM |
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itkocak
Member since 7/07 7639 total posts
Name:
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Re: Bailout related question re: housing market and middle class people
Message edited 11/21/2011 10:00:53 PM.
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| Posted 10/7/08 10:53 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Bailout related question re: housing market and middle class people
Posted by imthekevinofcindyandkevin
so basically people like me who pay their mortgage would be better off defaulting so that the government can reduce my payment so I can keep my house???
I wouldn't risk the government actually helping 1 person this way
they have been saying for months they were going to help people in foreclosure- so far- they haven't done anything
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| Posted 10/7/08 10:55 PM |
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ExpectingJoy
LIF Adolescent
Member since 5/05 751 total posts
Name:
Cari
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Re: Bailout related question re: housing market and middle class people
Posted by imthekevinofcindyandkevin
so basically people like me who pay their mortgage would be better off defaulting so that the government can reduce my payment so I can keep my house???
No. The government is not going to reduce the amount people owe. This would be ridiculous and completely not fair. However, they will change terms of payment back- eg; floating ideas of 40 year mortgages and 50 year mortgages, or some mortgage where they pay more later. The government is currently exploring these type of options. Still not fair, but the people who bought these homes will still have some sort of accountability.
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| Posted 10/7/08 11:05 PM |
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DRMom
Two in Blue
Member since 5/05 20223 total posts
Name:
Melissa
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Re: Bailout related question re: housing market and middle class people
Posted by ExpectingJoy
Posted by imthekevinofcindyandkevin
so basically people like me who pay their mortgage would be better off defaulting so that the government can reduce my payment so I can keep my house???
No. The government is not going to reduce the amount people owe. This would be ridiculous and completely not fair. However, they will change terms of payment back- eg; floating ideas of 40 year mortgages and 50 year mortgages, or some mortgage where they pay more later. The government is currently exploring these type of options. Still not fair, but the people who bought these homes will still have some sort of accountability.
This is John McCains new plan aka Hail Mary. He said it in the debate tonight
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| Posted 10/8/08 12:56 AM |
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Goobster
:)
Member since 5/07 27557 total posts
Name:
:)
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Re: Bailout related question re: housing market and middle class people
Posted by melijane
Posted by ExpectingJoy
Posted by imthekevinofcindyandkevin
so basically people like me who pay their mortgage would be better off defaulting so that the government can reduce my payment so I can keep my house???
No. The government is not going to reduce the amount people owe. This would be ridiculous and completely not fair. However, they will change terms of payment back- eg; floating ideas of 40 year mortgages and 50 year mortgages, or some mortgage where they pay more later. The government is currently exploring these type of options. Still not fair, but the people who bought these homes will still have some sort of accountability.
This is John McCains new plan aka Hail Mary. He said it in the debate tonight
Yes, he did say that, it's true.
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| Posted 10/8/08 5:58 AM |
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dgtlsunshine
LIF Infant
Member since 12/05 217 total posts
Name:
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Re: Bailout related question re: housing market and middle class people
Yes John McCain said they would work to reduce the amount owed on the house. That is why I asked my husband the question if we start to reduce the originl value of the loan on the people that are behind in payments what is the reward for people that are making payments on time.
It just seems like they would need to do that across the board for it to be fair.
Message edited 10/8/2008 7:04:20 AM.
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| Posted 10/8/08 7:00 AM |
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Karen
Just chillin'!!
Member since 1/06 9690 total posts
Name:
Karen
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Re: Bailout related question re: housing market and middle class people
Posted by lbelle821
I totally get what you're saying -- And I didn't mean to make it sound like this only effects me because that wasn't my intention at all.
I completely get the supply and demand theory and wanting to reduce the inventory of homes for sale. Let me give a hypothetical. Let's say in 5 years we recover. Me and my neighbor's house are worth the exact same amount in 2005 when we purchased it. He got a bailout. I didn't. Let's assume for purposes of my example neither of us put anything down. We started out with the same $350k mortgage. Except his got reduced to $300k with the bailout. Mine stayed the same. Five year from now our houses sell for $500k. I get a $150k gain. He gets a $200k gain. So he gets $50k more in equity in that home than I. I know this is a basic example. Is there are any point where these people have to give back that bailout if a situation like this would occur? Again, it leads back to my question of consequence. Do they just get the $50k and that's that. Or is there some plan to take that back when the market bounces back?
I thought I read somewhere that if the house was sold, they had to "repay" some of the assistance. But I am not 100% sure.
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| Posted 10/8/08 7:17 AM |
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siffleuse319
LIF Infant
Member since 8/08 189 total posts
Name:
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Re: Bailout related question re: housing market and middle class people
There is also talk of the increased value going back to the government where there was a bailout. For example, the govt. reduces your principle from 350 to 300 so that you can afford your home. You sell in 5 years at a price of 450. The govt will be entitled to a portion of the equity for that 50,000 that it spotted you in the bailout. This is all just talk though. I don't think either candidate has a clue about this financial crisis. Alll either of them did was hypothesize, repeat themselves and make idle promises about it improving under their administration. We'll have to be patient and see the real fruit of their labor in a few months. Nothing they say now matters, except in getting them the votes.
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| Posted 10/8/08 7:32 AM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: Bailout related question re: housing market and middle class people
they will just extend the terms-
longer term = lower payment, but more interest collected for the govt over the life of the loan - so they can make money on it.
THey have been doing 40 year mortgages in Asia for a long time, its nothing new.
I would not be happy if they are lowering principal - and if they did lower the principal, when the house is sold that profit should go back to the govt. No free lunch, especially for bad choices!
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| Posted 10/8/08 8:13 AM |
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lbelle821
Arghhhhh
Member since 2/06 5285 total posts
Name:
Lisa
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Re: Bailout related question re: housing market and middle class people
in the VP debate I believe it was Biden who made a remark about lowering the principles of mortgages...i'll have to go back to the DVR and listen for it again.
If there is some type of give-back clause where the gov't is entitled to a portion of the equity under the bailout plan than I don't necessarily feel as bad about it. But it's all so grey and muddy right now and I do feel like there is "free" lunch being given out for bad choices.
BTW, I'd also never intentionally default on my loan to get gov't assistance.
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| Posted 10/8/08 8:35 AM |
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sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
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Re: Bailout related question re: housing market and middle class people
here's an article about BOA making deals with homeowners that have Countrywide loans
Mortgage mess
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| Posted 10/8/08 8:44 AM |
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