Quit whinning about bail outs

[ucodegen]

@Multipleproperty

Boy are you out to lunch on your info. Ok.. starting from some where in the middle…

I know most of you are bitter because you don’t own homes. Thus, the tenor of this forum, which is generally caustic. Watching others suffer makes you feel a bit better about your situation as a renter

Dude, wake up. Most of the people on this site are up to their neck in debt. I heard about this site from a handful of people, and all of them are bitter cash poor renters.

Silly boy. There are several long term posters that have been here since the wild real-estate days, who have the ability to buy but did not.. because the rent-buy weighting did not work out and we do not want to risk financial suicide and expect Uncle Sam to bail use out of our stupidity. The cash poor renters were continually thinking of how to get in on the RE Ponzi Scheme, the Piggs were yelling at the top of our voice “Stop the madness”. Some of the newer posters/viewers may be in the category of ‘bitter renter’, but most of us old timers either own or are quite happy renting right now. Myself, I am saving(and investing) at a rate greater than 30% of gross income, or greater than 50% of net income (net of taxes, 401K contribs(maxed)).

Here is why I am upset on the bailouts:
1) It rewards bad behavior in Mortgage lenders(honesty in lending), CDO structures(misrepresenting risks in securitized loans), RE agents(acting as investment advisors, inserting themselves into the middle of the transaction instead of being a broker.. stuff that would get you jailed by the SEC and your series 7 yanked for life), home owners(the home ATM) and new home buyers(Not making sure they can afford what they purchase) while at the same time punishing those that act with prudence and live under their means. If the players in the RE Ponzi Scheme don’t have a penalty, the next time will be worse (more RE Ponzi Scheme players).
2) It really does not bail out the homebuyers, but it does bail out the lenders. Purchase money loans are non-recourse in California. This means that the buyers can walk away from the 1st mortgage on the overpriced asset if they have to, and the bank has to eat the deficiency. Once homeowners avail themselves of the “bail out”, they are no longer dealing with a purchase money loan. The loan has now become recourse, which means the lender can pursue the homeowner should the loan eventually result in foreclosure. This last part is what makes it bad for homeowners. I would recommend that any homeowner having financial problems on a purchase money loan, not use the bail-out. They will be able to walk away from the property if they have to.
3) The bailout supports the present overpriced housing (for the time being), which causes problems for any new buyers trying to enter the market. Eventually things will correct.. the question becomes who is the last fool buying.

The underlying issue is that all things have to return to a norm. The overpriced assets can get devalued, or the all other assets can get inflated up to the price of the overpriced asset.
1) In the example of the overpriced assets getting devalued, the RE speculators and unwise purchases are the ones getting hit, but it will largely be isolated to them. 100% of the current housing did not change hands this time. Less than 20% of total housing did.
2) In the case of everything else getting inflated, this is the ‘bailout’ case. Your wages buy less, gas prices are higher, price of money for business development is higher, Fed can’t get their deficit spending funded through treasuries so they print money.. spurring even greater inflation.. etc

All that changes in these outcomes is: who gets stuck with the bill. The cost of the correction can not be avoided, all that can be done is adjust who takes the cost. I don’t think a 1930’s depression can occur. The 30’s depression was caused by speculating on businesses with no income(not like a house whose ‘income’ is the amount of rent it shields you from) with margin overhang above 100%(similar to 100%morgages). The key difference is the speculation on a tangible asset verses a paper asset. The former provides the floor.

[LA_Renter]

I just saw this post on the LA times blog, Is this true??

“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?

Hope Now Alliance = banks hoping for more money NOW?

Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.

The FB’s with these loans have the right to walk away and mail the keys to the bank.

———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————

HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.

I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.

After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).

I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.

FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”

[LA_Renter]

I just saw this post on the LA times blog, Is this true??

“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?

Hope Now Alliance = banks hoping for more money NOW?

Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.

The FB’s with these loans have the right to walk away and mail the keys to the bank.

———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————

HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.

I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.

After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).

I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.

FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”

[LA_Renter]

I just saw this post on the LA times blog, Is this true??

“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?

Hope Now Alliance = banks hoping for more money NOW?

Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.

The FB’s with these loans have the right to walk away and mail the keys to the bank.

———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————

HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.

I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.

After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).

I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.

FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”

[LA_Renter]

I just saw this post on the LA times blog, Is this true??

“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?

Hope Now Alliance = banks hoping for more money NOW?

Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.

The FB’s with these loans have the right to walk away and mail the keys to the bank.

———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————

HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.

I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.

After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).

I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.

FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”

[LA_Renter]

I just saw this post on the LA times blog, Is this true??

“In regards to the bailout that Cramer is crying for, what do you think about this aspect of the mortgage bailout?

Hope Now Alliance = banks hoping for more money NOW?

Please let me know if I’m on the right track here. As I understand it, currently in California many borrowers who have not refinanced have NON-RECOURSE LOANS.

The FB’s with these loans have the right to walk away and mail the keys to the bank.

———————
Definition of non-recourse loan: A secured loan (debt) that is secured by a pledge of collateral, typically real property, but for which the borrower is not personally liable. If the borrower defaults, the lender/issuer can seize the collateral, but the lender’s recovery is limited to the collateral. If the property is insufficient to cover the outstanding loan balance (for example, if real estate prices have dropped), the lender is simply out the difference.
———————

HOWEVER, IF the FB refinances, they LOSE their NON-RECOURSE status.

I would assume that if a FB takes the bail-out bait and calls the lender to get their interest rate increase frozen, then this revision in the contract would switch their mortgage from NON-RECOURSE to RECOURSE.

After their interest rate is frozen the FB cannot walk away from their home without losing everything: money in savings, 401k, cars… and having their wages garnished. Seems similar to the new BK laws. It’s the new indentured servitude (but didn’t the servant get their freedom after they paid for 7 years, rather than 30 years or more paying on an inflated mortgage?).

I am wondering if one reason that these bail-out plans have been announced with such vague language is to test the waters to see if the public catches on about the downside for the FB’s.

FB’S: Don’t take the bait! Preserve your right to walk away from an upside-down mortage. This right is the most valuable thing you have in this uncertain time. Be sceptical! When was the last time a bank just did you a favor without something in it for them??!!”

[Anonymous]

All i can say to this is , the potential owners or any one who wants to make money thru. there home/RE, just hope that the “poor renters” ( like me :)) better have some down payment money and some interest to buy a place so, we dont go back to 1930 economic conditions.

Couple of scenarios can occur from now:

1) Housing goes to more drain ( -50%).
2) Bailout with time line of extending the loans to 2 yrs.
3) Housing is going up ( + .2% up).

In the all the above scenarious, i feel that we should all hope that potential renters/home buyers better have some good money to pay down & have some interest left to buy a place. If not, prices are going to go further drain. In case #3 also, we need buyers to clear up the inventory available till now.

So why is the govt. and financial institutions coming with this bailout saying “keeping the houses for people”.

Two simple reasons:

1) Govt. There is elections coming. No one wants to face with lots of people messed up.At the same time, angrying rest 70% folks with their bailout plan. so they are trying to walk a fine line.
2) Financial inst. They have the cash reserve crunch going on currently. They need cash desperately. Lowering interest rates by fed is one help at the expense of inflation. Other option is let the home buyers give some money every month with a potential of default in future. So this way finacial inst. is ready for the crash.Its more of an orderly decline in prices with financial inst. being not bank rupt.

Anyways, since this was my first post. Below is my background. Waiting from 2002(thats when i had some decent down payment in hand) to buy a place when it is a little affordable as well as makes financial sense.
Got around 250K downpayment. If govt. bailout fails, then i am planning around 2009. If govt. bailout helps couple of people then I am planning around 2011-2012. My back up plan is if so. cal is immune to all this, then go to some other beautiful parts of the country and have a debt free home for life.

Thanks.
Patient Money.

[Anonymous]

All i can say to this is , the potential owners or any one who wants to make money thru. there home/RE, just hope that the “poor renters” ( like me :)) better have some down payment money and some interest to buy a place so, we dont go back to 1930 economic conditions.

Couple of scenarios can occur from now:

1) Housing goes to more drain ( -50%).
2) Bailout with time line of extending the loans to 2 yrs.
3) Housing is going up ( + .2% up).

In the all the above scenarious, i feel that we should all hope that potential renters/home buyers better have some good money to pay down & have some interest left to buy a place. If not, prices are going to go further drain. In case #3 also, we need buyers to clear up the inventory available till now.

So why is the govt. and financial institutions coming with this bailout saying “keeping the houses for people”.

Two simple reasons:

1) Govt. There is elections coming. No one wants to face with lots of people messed up.At the same time, angrying rest 70% folks with their bailout plan. so they are trying to walk a fine line.
2) Financial inst. They have the cash reserve crunch going on currently. They need cash desperately. Lowering interest rates by fed is one help at the expense of inflation. Other option is let the home buyers give some money every month with a potential of default in future. So this way finacial inst. is ready for the crash.Its more of an orderly decline in prices with financial inst. being not bank rupt.

Anyways, since this was my first post. Below is my background. Waiting from 2002(thats when i had some decent down payment in hand) to buy a place when it is a little affordable as well as makes financial sense.
Got around 250K downpayment. If govt. bailout fails, then i am planning around 2009. If govt. bailout helps couple of people then I am planning around 2011-2012. My back up plan is if so. cal is immune to all this, then go to some other beautiful parts of the country and have a debt free home for life.

Thanks.
Patient Money.

[Anonymous]

All i can say to this is , the potential owners or any one who wants to make money thru. there home/RE, just hope that the “poor renters” ( like me :)) better have some down payment money and some interest to buy a place so, we dont go back to 1930 economic conditions.

Couple of scenarios can occur from now:

1) Housing goes to more drain ( -50%).
2) Bailout with time line of extending the loans to 2 yrs.
3) Housing is going up ( + .2% up).

In the all the above scenarious, i feel that we should all hope that potential renters/home buyers better have some good money to pay down & have some interest left to buy a place. If not, prices are going to go further drain. In case #3 also, we need buyers to clear up the inventory available till now.

So why is the govt. and financial institutions coming with this bailout saying “keeping the houses for people”.

Two simple reasons:

1) Govt. There is elections coming. No one wants to face with lots of people messed up.At the same time, angrying rest 70% folks with their bailout plan. so they are trying to walk a fine line.
2) Financial inst. They have the cash reserve crunch going on currently. They need cash desperately. Lowering interest rates by fed is one help at the expense of inflation. Other option is let the home buyers give some money every month with a potential of default in future. So this way finacial inst. is ready for the crash.Its more of an orderly decline in prices with financial inst. being not bank rupt.

Anyways, since this was my first post. Below is my background. Waiting from 2002(thats when i had some decent down payment in hand) to buy a place when it is a little affordable as well as makes financial sense.
Got around 250K downpayment. If govt. bailout fails, then i am planning around 2009. If govt. bailout helps couple of people then I am planning around 2011-2012. My back up plan is if so. cal is immune to all this, then go to some other beautiful parts of the country and have a debt free home for life.

Thanks.
Patient Money.

[Anonymous]

All i can say to this is , the potential owners or any one who wants to make money thru. there home/RE, just hope that the “poor renters” ( like me :)) better have some down payment money and some interest to buy a place so, we dont go back to 1930 economic conditions.

Couple of scenarios can occur from now:

1) Housing goes to more drain ( -50%).
2) Bailout with time line of extending the loans to 2 yrs.
3) Housing is going up ( + .2% up).

In the all the above scenarious, i feel that we should all hope that potential renters/home buyers better have some good money to pay down & have some interest left to buy a place. If not, prices are going to go further drain. In case #3 also, we need buyers to clear up the inventory available till now.

So why is the govt. and financial institutions coming with this bailout saying “keeping the houses for people”.

Two simple reasons:

1) Govt. There is elections coming. No one wants to face with lots of people messed up.At the same time, angrying rest 70% folks with their bailout plan. so they are trying to walk a fine line.
2) Financial inst. They have the cash reserve crunch going on currently. They need cash desperately. Lowering interest rates by fed is one help at the expense of inflation. Other option is let the home buyers give some money every month with a potential of default in future. So this way finacial inst. is ready for the crash.Its more of an orderly decline in prices with financial inst. being not bank rupt.

Anyways, since this was my first post. Below is my background. Waiting from 2002(thats when i had some decent down payment in hand) to buy a place when it is a little affordable as well as makes financial sense.
Got around 250K downpayment. If govt. bailout fails, then i am planning around 2009. If govt. bailout helps couple of people then I am planning around 2011-2012. My back up plan is if so. cal is immune to all this, then go to some other beautiful parts of the country and have a debt free home for life.

Thanks.
Patient Money.

[Anonymous]

All i can say to this is , the potential owners or any one who wants to make money thru. there home/RE, just hope that the “poor renters” ( like me :)) better have some down payment money and some interest to buy a place so, we dont go back to 1930 economic conditions.

Couple of scenarios can occur from now:

1) Housing goes to more drain ( -50%).
2) Bailout with time line of extending the loans to 2 yrs.
3) Housing is going up ( + .2% up).

In the all the above scenarious, i feel that we should all hope that potential renters/home buyers better have some good money to pay down & have some interest left to buy a place. If not, prices are going to go further drain. In case #3 also, we need buyers to clear up the inventory available till now.

So why is the govt. and financial institutions coming with this bailout saying “keeping the houses for people”.

Two simple reasons:

1) Govt. There is elections coming. No one wants to face with lots of people messed up.At the same time, angrying rest 70% folks with their bailout plan. so they are trying to walk a fine line.
2) Financial inst. They have the cash reserve crunch going on currently. They need cash desperately. Lowering interest rates by fed is one help at the expense of inflation. Other option is let the home buyers give some money every month with a potential of default in future. So this way finacial inst. is ready for the crash.Its more of an orderly decline in prices with financial inst. being not bank rupt.

Anyways, since this was my first post. Below is my background. Waiting from 2002(thats when i had some decent down payment in hand) to buy a place when it is a little affordable as well as makes financial sense.
Got around 250K downpayment. If govt. bailout fails, then i am planning around 2009. If govt. bailout helps couple of people then I am planning around 2011-2012. My back up plan is if so. cal is immune to all this, then go to some other beautiful parts of the country and have a debt free home for life.

Thanks.
Patient Money.

[DaCounselor]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse. I don’think this issue has been tested in the courts yet, and it very well may be down the road by some lenders who have modified purchase money loans. Nevertheless, my feeling is that a court would determine that modifications to a purchase money loan does not equate to a “re-finance” per se, and therefore the loan would remain non-recourse. Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

[DaCounselor]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse. I don’think this issue has been tested in the courts yet, and it very well may be down the road by some lenders who have modified purchase money loans. Nevertheless, my feeling is that a court would determine that modifications to a purchase money loan does not equate to a “re-finance” per se, and therefore the loan would remain non-recourse. Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

[DaCounselor]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse. I don’think this issue has been tested in the courts yet, and it very well may be down the road by some lenders who have modified purchase money loans. Nevertheless, my feeling is that a court would determine that modifications to a purchase money loan does not equate to a “re-finance” per se, and therefore the loan would remain non-recourse. Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

[DaCounselor]

LA_R – I don’t think that freezing the interest rate or in some other way modifying an existing purchase money loan would automatically change the characterization of the loan from non-recourse to recourse. I don’think this issue has been tested in the courts yet, and it very well may be down the road by some lenders who have modified purchase money loans. Nevertheless, my feeling is that a court would determine that modifications to a purchase money loan does not equate to a “re-finance” per se, and therefore the loan would remain non-recourse. Certainly anyone who agrees to a modification would want to pay close attention to any mod agreement they may be required to sign to determine if there is any language regarding recourse.

[Author]

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