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SweetestOfPeas
J'taime Paris!
Member since 3/06 32345 total posts
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Hi-Fi55
The potential money that is lost belongs to investors. Many of whom are overseas. Now we have the US gov't coming in and telling them they will not see the return they intended to see. Why would they want to reinvest here?
Maybe we bail out a few people but in another 5 years will they be ready to start making higher payments? How does this solve the problem, it just prolongs it.
THANK YOU!
like someone said earlier, it's a stop gap. its not a real solution.
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Posted 12/6/07 4:31 PM  |
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pmpkn087
Life is good...
Member since 9/05 18504 total posts
Name:
Stephanie
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Ophelia
unless you feel bad for these wall street ceo's and there million dollar bonuses.
Well, actually this can effect many more people than that. Lending companies are going out of business, which means thousands of people are loosing jobs. Just last month (I believe) one of the big mortgage companies closed their doors with little notice to their employees. People like you and me, with families, who depend on their income to live. What happens to those people? We become homeless so that these people who made poor decisions.
And, if they freeze the rate, they will reajust it in 5 more years. Which to me is just prolonging the inevitable. When it is reajusted in 5 years, what makes people think they will afford it then if they can't afford it now?
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| Posted 12/6/07 4:31 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by SweetestOfPeas
I find it very hard to believe that only one's who will be paying for this are investors and lenders.
they will appeal this or find some legal loophole. this IMO is very bad for Wall street in general. what's the incentive for anyone to invest if the Gov't steps in and decides "sorry, you're gong to have to give up your profit for the good of the country. people made bad mistakes, you have to pay for it".
Appeal what? What legal loophole? It's a voluntary agreement among lenders, not something the government is forcing on them and not a regulation.
Honestly, they stand to gain quite a bit, actually -- more secure income rather than a foreclosure. Banks hate foreclosures. They also stand to gain a somewhat more stable lending environment, as foreclosures harm their business tremendously.
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| Posted 12/6/07 4:31 PM |
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Karen
Just chillin'!!
Member since 1/06 9690 total posts
Name:
Karen
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Hi-Fi55
The potential money that is lost belongs to investors. Many of whom are overseas. Now we have the US gov't coming in and telling them they will not see the return they intended to see. Why would they want to reinvest here?
Maybe we bail out a few people but in another 5 years will they be ready to start making higher payments? How does this solve the problem, it just prolongs it.
I totally agree! When the mortgages were sold, they were sold based on a certain level of cash flow in the future. Now the purchaser of those mortgages is going to be out a lot of $$ - and I doubt they will just sit idly by and let that occur.
I think this is much more complicated than giving people a 5 year pass on their ARM's.
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| Posted 12/6/07 4:31 PM |
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SweetestOfPeas
J'taime Paris!
Member since 3/06 32345 total posts
Name:
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Kara
Posted by SweetestOfPeas
I find it very hard to believe that only one's who will be paying for this are investors and lenders.
they will appeal this or find some legal loophole. this IMO is very bad for Wall street in general. what's the incentive for anyone to invest if the Gov't steps in and decides "sorry, you're gong to have to give up your profit for the good of the country. people made bad mistakes, you have to pay for it".
Appeal what? What legal loophole? It's a voluntary agreement among lenders, not something the government is forcing on them and not a regulation.
Honestly, they stand to gain quite a bit, actually -- more secure income rather than a foreclosure. Banks hate foreclosures. They also stand to gain a somewhat more stable lending environment, as foreclosures harm their business tremendously.
it's not about the lenders though. it's the investors.
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| Posted 12/6/07 4:32 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by pmpkn087
Posted by Ophelia
unless you feel bad for these wall street ceo's and there million dollar bonuses.
Well, actually this can effect many more people than that. Lending companies are going out of business, which means thousands of people are loosing jobs. Just last month (I believe) one of the big mortgage companies closed their doors with little notice to their employees. People like you and me, with families, who depend on their income to live. What happens to those people? We become homeless so that these people who made poor decisions.
And, if they freeze the rate, they will reajust it in 5 more years. Which to me is just prolonging the inevitable. When it is reajusted in 5 years, what makes people think they will afford it then if they can't afford it now?
The market doesn't work like that. The lending institutions and mortgage lenders are harmed by foreclosures and a poor market. Reading this carefully, this applies to a VERY small number of mortgages. VERY few people will even qualify for this. The lenders would be hurt far worse if the majority of these loans went into default and/or foreclosure than they will by freezing the interest rate on these loans for 5 years.
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| Posted 12/6/07 4:33 PM |
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SweetestOfPeas
J'taime Paris!
Member since 3/06 32345 total posts
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
from cnn.com
"I think the plan is good in theory," said Mark Zandi, chief economist for Moody's Economy.com, "but, in practice, it's going to come up short. There are too many impediments to its widespread adoption by investors and servicers."
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| Posted 12/6/07 4:36 PM |
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Kara
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Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by SweetestOfPeas
from cnn.com
"I think the plan is good in theory," said Mark Zandi, chief economist for Moody's Economy.com, "but, in practice, it's going to come up short. There are too many impediments to its widespread adoption by investors and servicers."
I DO agree with this.
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| Posted 12/6/07 4:37 PM |
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Ophelia
she's baaccckkkk ;)
Member since 5/06 23378 total posts
Name:
remember, when Gulliver traveled....
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by pmpkn087
Posted by Ophelia
unless you feel bad for these wall street ceo's and there million dollar bonuses.
Well, actually this can effect many more people than that. Lending companies are going out of business, which means thousands of people are loosing jobs. Just last month (I believe) one of the big mortgage companies closed their doors with little notice to their employees. People like you and me, with families, who depend on their income to live. What happens to those people? We become homeless so that these people who made poor decisions.
And, if they freeze the rate, they will reajust it in 5 more years. Which to me is just prolonging the inevitable. When it is reajusted in 5 years, what makes people think they will afford it then if they can't afford it now?
they are going out of business b/c of LACK of income.
foreclosure means they haven't paid. NO income.
they'd be safer hedging their bets and maintaining status quo with those that are still able to make the payments now.
it's also poor planning on the lenders part...there has been talk FOREVER about how iffy these ARM mgts were....they shouldn't have counted their eggs before they hatched.
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| Posted 12/6/07 4:39 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Ophelia
Posted by pmpkn087
Posted by Ophelia
unless you feel bad for these wall street ceo's and there million dollar bonuses.
Well, actually this can effect many more people than that. Lending companies are going out of business, which means thousands of people are loosing jobs. Just last month (I believe) one of the big mortgage companies closed their doors with little notice to their employees. People like you and me, with families, who depend on their income to live. What happens to those people? We become homeless so that these people who made poor decisions.
And, if they freeze the rate, they will reajust it in 5 more years. Which to me is just prolonging the inevitable. When it is reajusted in 5 years, what makes people think they will afford it then if they can't afford it now?
they are going out of business b/c of LACK of income.
foreclosure means they haven't paid. NO income.
they'd be safer hedging their bets and maintaining status quo with those that are still able to make the payments now.
it's also poor planning on the lenders part...there has been talk FOREVER about how iffy these ARM mgts were....they shouldn't have counted their eggs before they hatched.
A lot of times (especially in this market) foreclosures will mean the lenders will LOSE money on the loan. These properties have likely DECREASED in value to below what was paid for them, potentially even below the amount financed. At a foreclosure sale, the property is going to go for less than it's otherwise worth, so likely below the amount financed.
Then, you first have to pay any tax liens on the properties. (If these people defaulted on their taxes, government gets paid first) THen any fees associated with the sale / foreclosure -- including hefty legal fees... And then the lenders get what' left. Likely, foreclosure means not just NO income, but LOSS of money.
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| Posted 12/6/07 4:42 PM |
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stickydust
Now a mommy of 2!!!
Member since 4/06 3164 total posts
Name:
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
As someone deeply familiar with Mortgage Backed Securities and the Secondary Mortgage Market I think it is a good solution and a balancing of all the evils. While I do not agree with tampering with the market I do think there has to be accountability on the part of the gov't and the lenders for this fiasco. And while, yes, the Mortgagor bears some blame, for the most part they were sold loans with very compliucated terms.
The investors were all sophisticated institutional investors. EVERYONE knew this was going to happen. EVERYONE talked about it. ANd now they pretend they are surprised. The Borrowers were convinced to take these products because that was the pool investors wanted to buy. Higher risk = potential higher yield.
So while those consumers should have know better and been more "prudent" we must remember that the average American doesn't have the education and savvy to navigate these complicated documents and were relying on what their broker told them about the loan.
Ok, thats it 
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| Posted 12/6/07 4:44 PM |
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codybear
Our Family is Complete!
Member since 11/06 2064 total posts
Name:
Christine
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by SweetestOfPeas
from cnn.com
"I think the plan is good in theory," said Mark Zandi, chief economist for Moody's Economy.com, "but, in practice, it's going to come up short. There are too many impediments to its widespread adoption by investors and servicers."
exactly, if there is a shortcoming of this plan, its the fact that it doesn't go farther.
This won't hurt the investors, it will help them. Their investments are worth less after foreclosures, all this does is freeze the rate of return.
And while I agree that people shouldn't be bailed out for making poor decisions, I think the bigger picture here is that if the economy goes into a depression, we will all suffer. The amount of people affected won't be limited to those in the real estate industry, each one of us will feel it in some way. So shouldn't we do what we can to prevent that? Especially if it isn't compulsory.
Your tax dollars will be spent far quicker trying to pull the economy out of a depression.
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| Posted 12/6/07 4:46 PM |
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codybear
Our Family is Complete!
Member since 11/06 2064 total posts
Name:
Christine
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by stickydust
As someone deeply familiar with Mortgage Backed Securities and the Secondary Mortgage Market I think it is a good solution and a balancing of all the evils. While I do not agree with tampering with the market I do think there has to be accountability on the part of the gov't and the lenders for this fiasco. And while, yes, the Mortgagor bears some blame, for the most part they were sold loans with very compliucated terms.
The investors were all sophisticated institutional investors. EVERYONE knew this was going to happen. EVERYONE talked about it. ANd now they pretend they are surprised. The Borrowers were convinced to take these products because that was the pool investors wanted to buy. Higher risk = potential higher yield.
So while those consumers should have know better and been more "prudent" we must remember that the average American doesn't have the education and savvy to navigate these complicated documents and were relying on what their broker told them about the loan.
Ok, thats it
agreed. I represent those lenders, they know all the ins and outs of buying into high risk markets, this isn't something they didn't account for as a possibility.
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| Posted 12/6/07 4:48 PM |
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stickydust
Now a mommy of 2!!!
Member since 4/06 3164 total posts
Name:
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by codybear
[This won't hurt the investors, it will help them. Their investments are worth less after foreclosures, all this does is freeze the rate of return.
Completely agree, this isn't exactly altruistic...
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| Posted 12/6/07 4:48 PM |
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Reese1106
Family of 4! :o)
Member since 8/06 6655 total posts
Name:
Theresa
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Hi-Fi55
The potential money that is lost belongs to investors. Many of whom are overseas. Now we have the US gov't coming in and telling them they will not see the return they intended to see. Why would they want to reinvest here?
Maybe we bail out a few people but in another 5 years will they be ready to start making higher payments? How does this solve the problem, it just prolongs it.
I was thinking the same thing. What happens in 5 yrs if the economy is still the same as it is now, or worse? I can kind of see what the government is trying to do but I think, in the long run, this solution is just plugging a hole in the dam. I think the blame falls equally on the lenders and the people who bought the homes they clearly could not afford. They got caught up in the "American Dream" of owning a home and didn't really take the time to educate themselves on what they were really signing. Soley blaming the mortgage brokers who were doing their job by selling the subprime ARM's is taking responsibility off of the people who bought into the idea.
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| Posted 12/6/07 5:37 PM |
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Kara
Now Zagat Rated!
Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by SweetestOfPeas
Posted by Kara
Posted by SweetestOfPeas
I find it very hard to believe that only one's who will be paying for this are investors and lenders.
they will appeal this or find some legal loophole. this IMO is very bad for Wall street in general. what's the incentive for anyone to invest if the Gov't steps in and decides "sorry, you're gong to have to give up your profit for the good of the country. people made bad mistakes, you have to pay for it".
Appeal what? What legal loophole? It's a voluntary agreement among lenders, not something the government is forcing on them and not a regulation.
Honestly, they stand to gain quite a bit, actually -- more secure income rather than a foreclosure. Banks hate foreclosures. They also stand to gain a somewhat more stable lending environment, as foreclosures harm their business tremendously.
it's not about the lenders though. it's the investors.
Those investors in mortgage-backed securities will suffer bigger loses due to forecloseures.
Message edited 12/6/2007 5:48:30 PM.
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| Posted 12/6/07 5:43 PM |
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Kara
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Member since 3/07 13217 total posts
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They call me "Tater Salad"
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Reese1106
Posted by Hi-Fi55
The potential money that is lost belongs to investors. Many of whom are overseas. Now we have the US gov't coming in and telling them they will not see the return they intended to see. Why would they want to reinvest here?
Maybe we bail out a few people but in another 5 years will they be ready to start making higher payments? How does this solve the problem, it just prolongs it.
I was thinking the same thing. What happens in 5 yrs if the economy is still the same as it is now, or worse? I can kind of see what the government is trying to do but I think, in the long run, this solution is just plugging a hole in the dam. I think the blame falls equally on the lenders and the people who bought the homes they clearly could not afford. They got caught up in the "American Dream" of owning a home and didn't really take the time to educate themselves on what they were really signing. Soley blaming the mortgage brokers who were doing their job by selling the subprime ARM's is taking responsibility off of the people who bought into the idea.
Investors who buy mortgage-backed securities should know the risks full well. It's not like something like this or worse didn't occur to them.
Message edited 12/6/2007 5:47:59 PM.
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| Posted 12/6/07 5:46 PM |
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MegZee
My bunny
Member since 5/06 8777 total posts
Name:
Meaghan
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by stickydust
So while those consumers should have know better and been more "prudent" we must remember that the average American doesn't have the education and savvy to navigate these complicated documents and were relying on what their broker told them about the loan.
Ok, thats it
no - they should have hired an ATTORNEY who tells them about their loan.
and if you cant afford an attorney, dont buy the house.
the LIHP offers FREE (as in FREE) counselling. when you buy a car, do you rely on exactly what the salesman tells you or do you do your own research? you learn yourself, you dont listen to people who are making a living based on your loan. you dont need high education to figure that out
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| Posted 12/6/07 5:54 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: How do you feel about this? "Subprime help: Some loan rates to be frozen"
the key word is the title of the post "SOME" - some loans- actually is very few- only 12% of subprime borrowers qualify for this "help"
(and I bet the number of actual loans forzen is even less)
and then in 5 years when the rate adjust- what happens then? unless they sell the house or get an increase in salary they will be back in the same boat
(my info came from CNN this morning)
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| Posted 12/6/07 5:56 PM |
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Superkat
More a stranger than a friend
Member since 5/06 9730 total posts
Name:
K
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Beth1210
and then in 5 years when the rate adjust- what happens then? unless they sell the house or get an increase in salary they will be back in the same boat
(my info came from CNN this morning)
They also have the option of refinancing at a better, fixed rate. You aren't stuck with an ARM loan for life.
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| Posted 12/6/07 6:53 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: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Superkat
Posted by Beth1210
and then in 5 years when the rate adjust- what happens then? unless they sell the house or get an increase in salary they will be back in the same boat
(my info came from CNN this morning)
They also have the option of refinancing at a better, fixed rate. You aren't stuck with an ARM loan for life.
ahh- but here is where the issue is- it's VERY hard to get a suborime loan now-
my DH's company wont even call you if you don't have a 680 credit score-
so if you are a subprime customer- the odds of you re-fiing aren't all that great
so they would have to fix there credit- and that isn't always easy
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| Posted 12/6/07 8:10 PM |
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SweetestOfPeas
J'taime Paris!
Member since 3/06 32345 total posts
Name:
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
I just want to add that it's been mentioned that none of us will be paying for this, but that is wrong.
anyone who is in the market whether a buyer or seller, is affected by what is occurring in the market today due to this issue.
there is nothing wrong with ARM loans for a responsible buyer. people who took out ARM loans for homes they could not afford has resulted in a MAJOR impact on the value of homes. so all of us who want to buy a home are suffering because of this.
had these sub-prime mortgages never been granted, housing prices would not be anywhere near where they're at today. this affects us all.
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| Posted 12/6/07 9:27 PM |
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
the gov't is basically proposing to force banks to modify legally binding contracts. the teaser rates are below bank to bank lending rates, so the banks will take a huge financial hit.... bigger than the one they would get from a percentage of forclosures...
they'll become much more fussy about who they loan money to... including car loans, credit cards.... all becuase of the new legal precedent of the gov't strong-arming the banking industry.... after all, this means the gov't could do this again with other lending sectors....
end result:
people with very good credit, who made conservative fiscal decisions may find it more difficult to get a loan or credit card... especially at a decent rate. Meanwhile the people who were wreckless, get a big fat free-bee for no good reason.
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| Posted 12/6/07 9:47 PM |
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DRMom
Two in Blue
Member since 5/05 20223 total posts
Name:
Melissa
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
Posted by Karen
what about all the steps BEFORE the paperwork? why are people making $100k a year looking at $800k houses?!?!? at what point just common sense just prevail?
I don't think those are the majority of people in trouble
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| Posted 12/6/07 10:37 PM |
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Kierasmom
I love my kids
Member since 5/05 2885 total posts
Name:
Jenn
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Re: How do you feel about this? "Subprime help: Some loan rates to be frozen"
People who made the choices to go with these mortgages should have to suffer the consequences. It's not society's responsibility to make sure people are educated about getting a mortgage. There's a reason owning a home is an American dream. It's not for everyone. And to bail some people out because they thought they were being smart about things and thought they were able to leave the american dream when they couldn't afford to do it is just plain stupid. Who's going to come help me out when I'm having trouble paying my bills?
I am a credit analyst for a major bank so all of my friends are always asking me questions and I tell all of them that just because you are qualified for $400,000 does not mean that you should take all of that money. The banks do not count on how much money you spend each month for food or entertainment. You need to know your own finances. And just because these people did not understand their own finances does not mean that the government should bail them out. Learn a lesson and learn how to budget your money.
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| Posted 12/6/07 10:55 PM |
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