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Please see my 2 cents here:
I’m kinda ok with the lenders bailing them out, cause I know it can’t really work and the losses will still be felt, but I have a huge problem with a taxpayer based bail out, or any sort of gov. bailout. This is a lender/lendee issue an that is it. It is mainly the lendee’s responsibility to know the terms of their loan before they sign.
We need to stop the f’n pitty party for these people. As said before, no one who used one of these loans for profit is complaining.
say NO to a gov. sponsored FDIC type insurance policy for homeowners or lenders though!
My intitial thoughts on a bail out are quite colorful, but if you think about it…
– How many people can lenders really afford to bail out? It’s certainly limited.
– Then, how many people in foreclosure can actually qualify for a refi under the new restrictions? AKA traditional standards.
– Since mortgages are so heavily traded, how much bailing out are the investors going to allow? The article mentioned forgiving the principal. That won’t last long.
As the article says:
“It’s really up to servicers in this climate, he said. “If the servicers aren’t flexible, then we’re going to see credit losses like we’ve never seen before.”
The other thing, is this is by no means limited to sub-prime lenders. People won’t want to touch the housing market with a ten foot pole once the reality of the situation sets in.
“The other thing, is this is by no means limited to sub-prime lenders. People won’t want to touch the housing market with a ten foot pole once the reality of the situation sets in.”
That’s my opinion as well. Real estate will be about as fashionable an investment as a dotcom in 2001.
You cannot change the direction a market wants to go…it can only be manipulated briefly against that direction. Fundamentals always win out.
“Briefly” is relative. And while fundamentals always win out eventually, as Keynes once noted, “Markets often remain irrational for longer than one can remain liquid.”