govt intervention

[CA renter]

[quote=eavesdropper]
But I am curious about one thing that’s been discussed in this thread: Denial. Is it as strong in your neck of the woods as it is here (documented for posterity on “Real Estate Intervention”)? Time and time again, I meet people who readily acknowledge the severity of the real estate crisis, but, somehow, feel that their home is different, and that they’ll have no problem charging, and getting, significantly more money for it. Is denial still as prevalent in SoCal as it is here, or are most sellers finally getting the message (before the “message” comes from their mortgage lender)?[/quote]

Like UCGal pointed out, the denial is thick around here.

That “Real Estate Intervention” show is great, BTW. It’s funny to get a glimpse into the minds of delusional sellers. There was the one couple who thought a fireplace in a comp should lower the value, because people with kids wouldn’t want a fireplace. Seriously, what is wrong with these people?

[SK in CV]

Another way to look at this.

[quote=pri_dk]
There’s another way to look at this:

Assume the homeowner put zero down. (Not uncommon, and explains why they are so underwater.)

The homeowner has a neighbor (in an identical house) that put $100K down when they purchased, so they are at zero equity also.

Ten years from now, RE eventually recovers and the homes appreciate by $50K. Both homeowners sell.

The person who put money down loses 50% of his initial investment — the one who got a principal reduction goes on a $50K spending spree with the “nothing” that they received.[/quote]

No argument, but there still is no immediate give away to the homeowner. He simply reverts to exactly the same place he was when he originally bought the house with no money down. And the lender has less a valuable, but performing loan.

I know many wouldn’t be happy with this kind of false reward to buyers who made bad decisions, but it’s what lenders should have been doing for the last year in cases with qualifieed borrowers, modifying loans to current market value of the collateral, rather than foreclosing and flooding the market with properties, driving values down further.

I know why they don’t do it. But they should.

[SK in CV]

Another way to look at this.

[quote=pri_dk]
There’s another way to look at this:

Assume the homeowner put zero down. (Not uncommon, and explains why they are so underwater.)

The homeowner has a neighbor (in an identical house) that put $100K down when they purchased, so they are at zero equity also.

Ten years from now, RE eventually recovers and the homes appreciate by $50K. Both homeowners sell.

The person who put money down loses 50% of his initial investment — the one who got a principal reduction goes on a $50K spending spree with the “nothing” that they received.[/quote]

No argument, but there still is no immediate give away to the homeowner. He simply reverts to exactly the same place he was when he originally bought the house with no money down. And the lender has less a valuable, but performing loan.

I know many wouldn’t be happy with this kind of false reward to buyers who made bad decisions, but it’s what lenders should have been doing for the last year in cases with qualifieed borrowers, modifying loans to current market value of the collateral, rather than foreclosing and flooding the market with properties, driving values down further.

I know why they don’t do it. But they should.

[SK in CV]

Another way to look at this.

[quote=pri_dk]
There’s another way to look at this:

Assume the homeowner put zero down. (Not uncommon, and explains why they are so underwater.)

The homeowner has a neighbor (in an identical house) that put $100K down when they purchased, so they are at zero equity also.

Ten years from now, RE eventually recovers and the homes appreciate by $50K. Both homeowners sell.

The person who put money down loses 50% of his initial investment — the one who got a principal reduction goes on a $50K spending spree with the “nothing” that they received.[/quote]

No argument, but there still is no immediate give away to the homeowner. He simply reverts to exactly the same place he was when he originally bought the house with no money down. And the lender has less a valuable, but performing loan.

I know many wouldn’t be happy with this kind of false reward to buyers who made bad decisions, but it’s what lenders should have been doing for the last year in cases with qualifieed borrowers, modifying loans to current market value of the collateral, rather than foreclosing and flooding the market with properties, driving values down further.

I know why they don’t do it. But they should.

[SK in CV]

Another way to look at this.

[quote=pri_dk]
There’s another way to look at this:

Assume the homeowner put zero down. (Not uncommon, and explains why they are so underwater.)

The homeowner has a neighbor (in an identical house) that put $100K down when they purchased, so they are at zero equity also.

Ten years from now, RE eventually recovers and the homes appreciate by $50K. Both homeowners sell.

The person who put money down loses 50% of his initial investment — the one who got a principal reduction goes on a $50K spending spree with the “nothing” that they received.[/quote]

No argument, but there still is no immediate give away to the homeowner. He simply reverts to exactly the same place he was when he originally bought the house with no money down. And the lender has less a valuable, but performing loan.

I know many wouldn’t be happy with this kind of false reward to buyers who made bad decisions, but it’s what lenders should have been doing for the last year in cases with qualifieed borrowers, modifying loans to current market value of the collateral, rather than foreclosing and flooding the market with properties, driving values down further.

I know why they don’t do it. But they should.

[SK in CV]

Another way to look at this.

[quote=pri_dk]
There’s another way to look at this:

Assume the homeowner put zero down. (Not uncommon, and explains why they are so underwater.)

The homeowner has a neighbor (in an identical house) that put $100K down when they purchased, so they are at zero equity also.

Ten years from now, RE eventually recovers and the homes appreciate by $50K. Both homeowners sell.

The person who put money down loses 50% of his initial investment — the one who got a principal reduction goes on a $50K spending spree with the “nothing” that they received.[/quote]

No argument, but there still is no immediate give away to the homeowner. He simply reverts to exactly the same place he was when he originally bought the house with no money down. And the lender has less a valuable, but performing loan.

I know many wouldn’t be happy with this kind of false reward to buyers who made bad decisions, but it’s what lenders should have been doing for the last year in cases with qualifieed borrowers, modifying loans to current market value of the collateral, rather than foreclosing and flooding the market with properties, driving values down further.

I know why they don’t do it. But they should.

[Anonymous]

I think I will need to hear a better argument why banks should be modifying loans. It depends upon the goal.

I see wholesale loan modification as effectively a redistribution of wealth from the responsible to the irresponsible. It doesn’t matter if the reward is deferred, there still is a reward for poor decisions.

And so what if there is foreclosure? Those that didn’t mortgage themselves into a hole will be in a position to buy a foreclosed house and rent it right back to the original homeowner. No one is left homeless and the assets are now being managed by those with better business judgment.

That’s how capitalism is supposed to work: it rewards those who best know how to allocate the capital.

[Anonymous]

I think I will need to hear a better argument why banks should be modifying loans. It depends upon the goal.

I see wholesale loan modification as effectively a redistribution of wealth from the responsible to the irresponsible. It doesn’t matter if the reward is deferred, there still is a reward for poor decisions.

And so what if there is foreclosure? Those that didn’t mortgage themselves into a hole will be in a position to buy a foreclosed house and rent it right back to the original homeowner. No one is left homeless and the assets are now being managed by those with better business judgment.

That’s how capitalism is supposed to work: it rewards those who best know how to allocate the capital.

[Anonymous]

I think I will need to hear a better argument why banks should be modifying loans. It depends upon the goal.

I see wholesale loan modification as effectively a redistribution of wealth from the responsible to the irresponsible. It doesn’t matter if the reward is deferred, there still is a reward for poor decisions.

And so what if there is foreclosure? Those that didn’t mortgage themselves into a hole will be in a position to buy a foreclosed house and rent it right back to the original homeowner. No one is left homeless and the assets are now being managed by those with better business judgment.

That’s how capitalism is supposed to work: it rewards those who best know how to allocate the capital.

[Anonymous]

I think I will need to hear a better argument why banks should be modifying loans. It depends upon the goal.

I see wholesale loan modification as effectively a redistribution of wealth from the responsible to the irresponsible. It doesn’t matter if the reward is deferred, there still is a reward for poor decisions.

And so what if there is foreclosure? Those that didn’t mortgage themselves into a hole will be in a position to buy a foreclosed house and rent it right back to the original homeowner. No one is left homeless and the assets are now being managed by those with better business judgment.

That’s how capitalism is supposed to work: it rewards those who best know how to allocate the capital.

[Anonymous]

I think I will need to hear a better argument why banks should be modifying loans. It depends upon the goal.

I see wholesale loan modification as effectively a redistribution of wealth from the responsible to the irresponsible. It doesn’t matter if the reward is deferred, there still is a reward for poor decisions.

And so what if there is foreclosure? Those that didn’t mortgage themselves into a hole will be in a position to buy a foreclosed house and rent it right back to the original homeowner. No one is left homeless and the assets are now being managed by those with better business judgment.

That’s how capitalism is supposed to work: it rewards those who best know how to allocate the capital.

[scaredyclassic]

values dont get driven down further. prices may get driven down further. it still has never been explained to me why low prices are bad for housing. we don’t bum out i a car is cheaper. why s hould a house be different/

[scaredyclassic]

values dont get driven down further. prices may get driven down further. it still has never been explained to me why low prices are bad for housing. we don’t bum out i a car is cheaper. why s hould a house be different/

[scaredyclassic]

values dont get driven down further. prices may get driven down further. it still has never been explained to me why low prices are bad for housing. we don’t bum out i a car is cheaper. why s hould a house be different/

[scaredyclassic]

values dont get driven down further. prices may get driven down further. it still has never been explained to me why low prices are bad for housing. we don’t bum out i a car is cheaper. why s hould a house be different/

[Author]

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