Unfortunate Details of the Bailout

[AK]

Chrysler paid the government a loan guarantee fee, and repaid the guaranteed loans early. In the end there was no direct cost to taxpayers.

IIRC the government also made hundreds of millions by exercising stock warrants given as part of the bailout package. The cost was passed on to Chrysler stockholders in the form of dilution.

Chrysler had to renegotiate its existing debt. Creditors wrote off substantial sums in order to avoid even greater losses in bankruptcy.

Sure, Chrysler screwed up, and by the cold logic of capitalism shareholders and management deserved to feel some pain. They did. But the bailout kept thousands of workers and dozens of plants in productive use.

A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000.

[jpinpb]

AK says: “A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000”

I disagree. This housing market, whether artificially or not, produced good paying jobs overnight and – artificially, albeit, created equity which people took out of their homes and put back into the economy.

[jpinpb]

AK says: “A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000”

I disagree. This housing market, whether artificially or not, produced good paying jobs overnight and – artificially, albeit, created equity which people took out of their homes and put back into the economy.

[jpinpb]

AK says: “A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000”

I disagree. This housing market, whether artificially or not, produced good paying jobs overnight and – artificially, albeit, created equity which people took out of their homes and put back into the economy.

[jpinpb]

AK says: “A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000”

I disagree. This housing market, whether artificially or not, produced good paying jobs overnight and – artificially, albeit, created equity which people took out of their homes and put back into the economy.

[jpinpb]

AK says: “A house produces nothing. It is valuable for its use as shelter, but a 3000sf house serves the same purpose whether it costs $1 million or $400,000”

I disagree. This housing market, whether artificially or not, produced good paying jobs overnight and – artificially, albeit, created equity which people took out of their homes and put back into the economy.

[unbiasedobserver]

Every since the subject of these increased limits came up, I’ve been trying to figure out what the DTI limits are. Evidently that is not a clear cut answer. If you go to Fannie’s site and use their calculator “what can I afford”, it spits back a DTI of 45%!! That’s friggin’ nuts, works out to about 75% of take home pay. These govt loans are not nearly as conservative as some think they are. The 45% used to be 32% last time I bought a house.

[unbiasedobserver]

Every since the subject of these increased limits came up, I’ve been trying to figure out what the DTI limits are. Evidently that is not a clear cut answer. If you go to Fannie’s site and use their calculator “what can I afford”, it spits back a DTI of 45%!! That’s friggin’ nuts, works out to about 75% of take home pay. These govt loans are not nearly as conservative as some think they are. The 45% used to be 32% last time I bought a house.

[unbiasedobserver]

Every since the subject of these increased limits came up, I’ve been trying to figure out what the DTI limits are. Evidently that is not a clear cut answer. If you go to Fannie’s site and use their calculator “what can I afford”, it spits back a DTI of 45%!! That’s friggin’ nuts, works out to about 75% of take home pay. These govt loans are not nearly as conservative as some think they are. The 45% used to be 32% last time I bought a house.

[unbiasedobserver]

Every since the subject of these increased limits came up, I’ve been trying to figure out what the DTI limits are. Evidently that is not a clear cut answer. If you go to Fannie’s site and use their calculator “what can I afford”, it spits back a DTI of 45%!! That’s friggin’ nuts, works out to about 75% of take home pay. These govt loans are not nearly as conservative as some think they are. The 45% used to be 32% last time I bought a house.

[unbiasedobserver]

Every since the subject of these increased limits came up, I’ve been trying to figure out what the DTI limits are. Evidently that is not a clear cut answer. If you go to Fannie’s site and use their calculator “what can I afford”, it spits back a DTI of 45%!! That’s friggin’ nuts, works out to about 75% of take home pay. These govt loans are not nearly as conservative as some think they are. The 45% used to be 32% last time I bought a house.

[JWM in SD]

JWM in SD

Here is my opinion on the conforming loan limits. I would actually support it IF THE FOLLOWING WERE TRUE:
-The lenders / investors were forced to eat the difference from the workout (Loan value versus new appraisal value) and take the “CramDown” as Tanta likes to call it.

-The new Gov backed principal balance would need to be less than the Upper Conforming Limit.

Yes, a lot of FBs would get to stay in their stucco box if that is truly what they want to do (otherwise, just walk away right?). However, this would cause a very fast decline in home prices to a market value while keeping FBs happy.

Thoughts?

[JWM in SD]

JWM in SD

Here is my opinion on the conforming loan limits. I would actually support it IF THE FOLLOWING WERE TRUE:
-The lenders / investors were forced to eat the difference from the workout (Loan value versus new appraisal value) and take the “CramDown” as Tanta likes to call it.

-The new Gov backed principal balance would need to be less than the Upper Conforming Limit.

Yes, a lot of FBs would get to stay in their stucco box if that is truly what they want to do (otherwise, just walk away right?). However, this would cause a very fast decline in home prices to a market value while keeping FBs happy.

Thoughts?

[JWM in SD]

JWM in SD

Here is my opinion on the conforming loan limits. I would actually support it IF THE FOLLOWING WERE TRUE:
-The lenders / investors were forced to eat the difference from the workout (Loan value versus new appraisal value) and take the “CramDown” as Tanta likes to call it.

-The new Gov backed principal balance would need to be less than the Upper Conforming Limit.

Yes, a lot of FBs would get to stay in their stucco box if that is truly what they want to do (otherwise, just walk away right?). However, this would cause a very fast decline in home prices to a market value while keeping FBs happy.

Thoughts?

[JWM in SD]

JWM in SD

Here is my opinion on the conforming loan limits. I would actually support it IF THE FOLLOWING WERE TRUE:
-The lenders / investors were forced to eat the difference from the workout (Loan value versus new appraisal value) and take the “CramDown” as Tanta likes to call it.

-The new Gov backed principal balance would need to be less than the Upper Conforming Limit.

Yes, a lot of FBs would get to stay in their stucco box if that is truly what they want to do (otherwise, just walk away right?). However, this would cause a very fast decline in home prices to a market value while keeping FBs happy.

Thoughts?

[Author]

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