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DaCounselor
Participant“well my point is why should the idiots who can’t make the payments stay in their home? Can’t the reduced principle be given to a new buyer with better credit instead?”
_______________________________The philosophy behind keeping people in their homes is driven by the obvious politics involved and also typically makes more financial sense. All things being equal it just makes more sense to keep current occupants in the home, assuming ability to pay based upon the new principal balance.
Participant“well my point is why should the idiots who can’t make the payments stay in their home? Can’t the reduced principle be given to a new buyer with better credit instead?”
_______________________________The philosophy behind keeping people in their homes is driven by the obvious politics involved and also typically makes more financial sense. All things being equal it just makes more sense to keep current occupants in the home, assuming ability to pay based upon the new principal balance.
Participant“well my point is why should the idiots who can’t make the payments stay in their home? Can’t the reduced principle be given to a new buyer with better credit instead?”
_______________________________The philosophy behind keeping people in their homes is driven by the obvious politics involved and also typically makes more financial sense. All things being equal it just makes more sense to keep current occupants in the home, assuming ability to pay based upon the new principal balance.
ParticipantRegarding 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.
ParticipantRegarding 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.
ParticipantRegarding 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.
ParticipantRegarding 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.
ParticipantRegarding 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.
Participant“I also don’t see govt wiping the slate clean on principal owed by just writing down the loan amount and giving the mortgagee a “freebee”.”
___________________________But this is exactly what is going to happen. Whether the govt. buys the loans and writes down the balance or subsidizes privately held loan write-downs, the result is the same. And this is where we are going to end up.
Without principal write-downs there are going to be a landslide of foreclosures/walk-aways – ability to pay or not – on top of the foreclosures we already have. There are plenty of influential players who know this to be true. They are just not going to sit back and let this happen.
In fact, I don’t know that I have seen a single piece of legitimate evidence that suggests that we are not moving, and quickly, toward this type of individual homeowner bailout.
Participant“I also don’t see govt wiping the slate clean on principal owed by just writing down the loan amount and giving the mortgagee a “freebee”.”
___________________________But this is exactly what is going to happen. Whether the govt. buys the loans and writes down the balance or subsidizes privately held loan write-downs, the result is the same. And this is where we are going to end up.
Without principal write-downs there are going to be a landslide of foreclosures/walk-aways – ability to pay or not – on top of the foreclosures we already have. There are plenty of influential players who know this to be true. They are just not going to sit back and let this happen.
In fact, I don’t know that I have seen a single piece of legitimate evidence that suggests that we are not moving, and quickly, toward this type of individual homeowner bailout.
Participant“I also don’t see govt wiping the slate clean on principal owed by just writing down the loan amount and giving the mortgagee a “freebee”.”
___________________________But this is exactly what is going to happen. Whether the govt. buys the loans and writes down the balance or subsidizes privately held loan write-downs, the result is the same. And this is where we are going to end up.
Without principal write-downs there are going to be a landslide of foreclosures/walk-aways – ability to pay or not – on top of the foreclosures we already have. There are plenty of influential players who know this to be true. They are just not going to sit back and let this happen.
In fact, I don’t know that I have seen a single piece of legitimate evidence that suggests that we are not moving, and quickly, toward this type of individual homeowner bailout.
Participant“I also don’t see govt wiping the slate clean on principal owed by just writing down the loan amount and giving the mortgagee a “freebee”.”
___________________________But this is exactly what is going to happen. Whether the govt. buys the loans and writes down the balance or subsidizes privately held loan write-downs, the result is the same. And this is where we are going to end up.
Without principal write-downs there are going to be a landslide of foreclosures/walk-aways – ability to pay or not – on top of the foreclosures we already have. There are plenty of influential players who know this to be true. They are just not going to sit back and let this happen.
In fact, I don’t know that I have seen a single piece of legitimate evidence that suggests that we are not moving, and quickly, toward this type of individual homeowner bailout.
Participant“I also don’t see govt wiping the slate clean on principal owed by just writing down the loan amount and giving the mortgagee a “freebee”.”
___________________________But this is exactly what is going to happen. Whether the govt. buys the loans and writes down the balance or subsidizes privately held loan write-downs, the result is the same. And this is where we are going to end up.
Without principal write-downs there are going to be a landslide of foreclosures/walk-aways – ability to pay or not – on top of the foreclosures we already have. There are plenty of influential players who know this to be true. They are just not going to sit back and let this happen.
In fact, I don’t know that I have seen a single piece of legitimate evidence that suggests that we are not moving, and quickly, toward this type of individual homeowner bailout.
Participant“What’s truly changed is people’s attitude to debt. It’s no longer shameful
I wouldn’t say that.
I would say its the attitude of *defaulting* on debt that’s no longer shameful.”
__________________________I would say it’s both.
I would also say that we are very likely to see a shift back toward an anti-debt sentiment.
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