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  • October 23, 2008 at 1:34 PM #292131
    cr
    Participant

    So, what kind of backlash do you think there is going to be when the average citizen looks down the street and sees that his neighbors, whom make 100K less than him own a house just as nice as his, and he is helping pay for it through a write down?

    That’s exactly the question every politician or economist for preventing foreclsoures needs to be asked.

    It’s a moral hazard. If it comes to this you may as well go out and buy the multi-million dollar dream mansion. And while you’re at it quit your current job, go to work at Starbucks making minimum wage plus tips, get your payment reduced to 38% of that income, then go back to your other job.

    The most I hear these ridiculous ideas the more I truly believe it’s lip service for homeowners who don’t know better want prices to stay elevated, those facing foreclsoure who need help, and banks who are trying to sell these worthless assets.

    The reality is lower housing costs are good for everyone. They either refuse to accept this, or are scared to admit it.

    October 23, 2008 at 2:28 PM #291795
    Scarlett
    Participant

    Does anybody know what would possibly be the ‘catch’ or ‘fine print’ with those loan modification? I can think of a few… e.g. they can’t sell, or if they sell, all the profits go to the bank(s), plus they have to pay back some of the money that were ‘forgiven’… I can’t imagine it’s really and truly a freebie with no strings attached…

    October 23, 2008 at 2:28 PM #292115
    Scarlett
    Participant

    Does anybody know what would possibly be the ‘catch’ or ‘fine print’ with those loan modification? I can think of a few… e.g. they can’t sell, or if they sell, all the profits go to the bank(s), plus they have to pay back some of the money that were ‘forgiven’… I can’t imagine it’s really and truly a freebie with no strings attached…

    October 23, 2008 at 2:28 PM #292147
    Scarlett
    Participant

    Does anybody know what would possibly be the ‘catch’ or ‘fine print’ with those loan modification? I can think of a few… e.g. they can’t sell, or if they sell, all the profits go to the bank(s), plus they have to pay back some of the money that were ‘forgiven’… I can’t imagine it’s really and truly a freebie with no strings attached…

    October 23, 2008 at 2:28 PM #292153
    Scarlett
    Participant

    Does anybody know what would possibly be the ‘catch’ or ‘fine print’ with those loan modification? I can think of a few… e.g. they can’t sell, or if they sell, all the profits go to the bank(s), plus they have to pay back some of the money that were ‘forgiven’… I can’t imagine it’s really and truly a freebie with no strings attached…

    October 23, 2008 at 2:28 PM #292191
    Scarlett
    Participant

    Does anybody know what would possibly be the ‘catch’ or ‘fine print’ with those loan modification? I can think of a few… e.g. they can’t sell, or if they sell, all the profits go to the bank(s), plus they have to pay back some of the money that were ‘forgiven’… I can’t imagine it’s really and truly a freebie with no strings attached…

    October 23, 2008 at 2:50 PM #291805
    DaCounselor
    Participant

    Regarding the maid – she will stay in the house only if she qualifies (w/docs) after the loan is written down to a BPO or appraisal value minus some additional arbitrary % down. Otherwise she is a goner.

    If moral hazard isn’t already out the window, it’s sitting on the ledge. Certainly the powers that be can refuse write-downs to those who have ability based upon the existing loan balance. Maybe they will. But I’m expecting a more sweeping and generalized program that ignores moral hazard in favor of the ease of a template approach. In any event if the goal is to avoid foreclosures you have to throw moral hazard out to head-off ruthless defaults. I suspect you will find that much like everything else we have seen so far, it is moral hazard that is being paid lip service and lip service only. Moral hazard will not derail the bailout du jour, that much is almost certain.

    I have posted many times about the inevitable mark to market of homes and a govt. subsidation is of course a mark to market or what may amount to a mark to slightly below market. We are not going to see home prices propped up. Values are going down with or without subsidation and are likely going to settle within the same historical parameters of debt/value/income regardless of subsidation. All we are talking about is a more orderly and controlled mark down that has a much less chance of driving the credit/investment industry and yes the entire economy further into the dirt.

    October 23, 2008 at 2:50 PM #292125
    DaCounselor
    Participant

    Regarding the maid – she will stay in the house only if she qualifies (w/docs) after the loan is written down to a BPO or appraisal value minus some additional arbitrary % down. Otherwise she is a goner.

    If moral hazard isn’t already out the window, it’s sitting on the ledge. Certainly the powers that be can refuse write-downs to those who have ability based upon the existing loan balance. Maybe they will. But I’m expecting a more sweeping and generalized program that ignores moral hazard in favor of the ease of a template approach. In any event if the goal is to avoid foreclosures you have to throw moral hazard out to head-off ruthless defaults. I suspect you will find that much like everything else we have seen so far, it is moral hazard that is being paid lip service and lip service only. Moral hazard will not derail the bailout du jour, that much is almost certain.

    I have posted many times about the inevitable mark to market of homes and a govt. subsidation is of course a mark to market or what may amount to a mark to slightly below market. We are not going to see home prices propped up. Values are going down with or without subsidation and are likely going to settle within the same historical parameters of debt/value/income regardless of subsidation. All we are talking about is a more orderly and controlled mark down that has a much less chance of driving the credit/investment industry and yes the entire economy further into the dirt.

    October 23, 2008 at 2:50 PM #292157
    DaCounselor
    Participant

    Regarding the maid – she will stay in the house only if she qualifies (w/docs) after the loan is written down to a BPO or appraisal value minus some additional arbitrary % down. Otherwise she is a goner.

    If moral hazard isn’t already out the window, it’s sitting on the ledge. Certainly the powers that be can refuse write-downs to those who have ability based upon the existing loan balance. Maybe they will. But I’m expecting a more sweeping and generalized program that ignores moral hazard in favor of the ease of a template approach. In any event if the goal is to avoid foreclosures you have to throw moral hazard out to head-off ruthless defaults. I suspect you will find that much like everything else we have seen so far, it is moral hazard that is being paid lip service and lip service only. Moral hazard will not derail the bailout du jour, that much is almost certain.

    I have posted many times about the inevitable mark to market of homes and a govt. subsidation is of course a mark to market or what may amount to a mark to slightly below market. We are not going to see home prices propped up. Values are going down with or without subsidation and are likely going to settle within the same historical parameters of debt/value/income regardless of subsidation. All we are talking about is a more orderly and controlled mark down that has a much less chance of driving the credit/investment industry and yes the entire economy further into the dirt.

    October 23, 2008 at 2:50 PM #292164
    DaCounselor
    Participant

    Regarding the maid – she will stay in the house only if she qualifies (w/docs) after the loan is written down to a BPO or appraisal value minus some additional arbitrary % down. Otherwise she is a goner.

    If moral hazard isn’t already out the window, it’s sitting on the ledge. Certainly the powers that be can refuse write-downs to those who have ability based upon the existing loan balance. Maybe they will. But I’m expecting a more sweeping and generalized program that ignores moral hazard in favor of the ease of a template approach. In any event if the goal is to avoid foreclosures you have to throw moral hazard out to head-off ruthless defaults. I suspect you will find that much like everything else we have seen so far, it is moral hazard that is being paid lip service and lip service only. Moral hazard will not derail the bailout du jour, that much is almost certain.

    I have posted many times about the inevitable mark to market of homes and a govt. subsidation is of course a mark to market or what may amount to a mark to slightly below market. We are not going to see home prices propped up. Values are going down with or without subsidation and are likely going to settle within the same historical parameters of debt/value/income regardless of subsidation. All we are talking about is a more orderly and controlled mark down that has a much less chance of driving the credit/investment industry and yes the entire economy further into the dirt.

    October 23, 2008 at 2:50 PM #292201
    DaCounselor
    Participant

    Regarding the maid – she will stay in the house only if she qualifies (w/docs) after the loan is written down to a BPO or appraisal value minus some additional arbitrary % down. Otherwise she is a goner.

    If moral hazard isn’t already out the window, it’s sitting on the ledge. Certainly the powers that be can refuse write-downs to those who have ability based upon the existing loan balance. Maybe they will. But I’m expecting a more sweeping and generalized program that ignores moral hazard in favor of the ease of a template approach. In any event if the goal is to avoid foreclosures you have to throw moral hazard out to head-off ruthless defaults. I suspect you will find that much like everything else we have seen so far, it is moral hazard that is being paid lip service and lip service only. Moral hazard will not derail the bailout du jour, that much is almost certain.

    I have posted many times about the inevitable mark to market of homes and a govt. subsidation is of course a mark to market or what may amount to a mark to slightly below market. We are not going to see home prices propped up. Values are going down with or without subsidation and are likely going to settle within the same historical parameters of debt/value/income regardless of subsidation. All we are talking about is a more orderly and controlled mark down that has a much less chance of driving the credit/investment industry and yes the entire economy further into the dirt.

    October 23, 2008 at 3:06 PM #291820
    j
    Participant

    Yes, foreclosures will go down, but at what cost?

    When foreclosures go down, home prices will remain artificially high, so young people will leave San Diego. This was happening before costs started to go down. Look at the school enrollment over the last 7 years. If San Diego loses its families, because home prices are too high there will be a very negative impact down the road.

    Home prices in San Diego are too high and must come down to a realistic home price to wage ratio.

    October 23, 2008 at 3:06 PM #292140
    j
    Participant

    Yes, foreclosures will go down, but at what cost?

    When foreclosures go down, home prices will remain artificially high, so young people will leave San Diego. This was happening before costs started to go down. Look at the school enrollment over the last 7 years. If San Diego loses its families, because home prices are too high there will be a very negative impact down the road.

    Home prices in San Diego are too high and must come down to a realistic home price to wage ratio.

    October 23, 2008 at 3:06 PM #292172
    j
    Participant

    Yes, foreclosures will go down, but at what cost?

    When foreclosures go down, home prices will remain artificially high, so young people will leave San Diego. This was happening before costs started to go down. Look at the school enrollment over the last 7 years. If San Diego loses its families, because home prices are too high there will be a very negative impact down the road.

    Home prices in San Diego are too high and must come down to a realistic home price to wage ratio.

    October 23, 2008 at 3:06 PM #292179
    j
    Participant

    Yes, foreclosures will go down, but at what cost?

    When foreclosures go down, home prices will remain artificially high, so young people will leave San Diego. This was happening before costs started to go down. Look at the school enrollment over the last 7 years. If San Diego loses its families, because home prices are too high there will be a very negative impact down the road.

    Home prices in San Diego are too high and must come down to a realistic home price to wage ratio.

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