Veteran Member
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Nothing pisses me more off right now (other than USC not playing Ohio State for the National Championship) than this:
http://www.bloomberg.com/apps/news?p...1U&refer=home/ I know I might be upsetting some people in here that might benefit from this plan, but I do not see why I, as a taxpayer, should bailing out homeowners that made stupid decisions about over-borrowing against the value of their home and then whine when they cannot pay their mortgage when it resets. (And I do not even want to get into those homeowners that committed fraud about lying about their income.) No one forced them to take out a variable rate mortgages. Every newspaper and every news outlet has been advising homeowners to refinance into fixed rate mortgages since 2003 due to the fact that we are at a 25-year low in the interest rate cycle. And. . .ignorance is no excuse. For those that do not think it will cost you anything for this plan to go through, think about the following: 1. The plan will give tax relief for those that default on their mortgage and walk away from their property. Background: currently forgiveness of debt is a taxable event (ordinary income). When you walk from you home and it is foreclosed on, you are responsible to claim as income the difference from the loan and the current value of the home. The proposal is to allow homeowners not to claim that income, thereby lowering possible tax receipts. 2. The plan calls for freezing certain interest rates on loans for up to five years. Many of these loans are packaged into CMOs (Collateralized Mortgage Obligations) or CDOs (Collateralized Debt Obligations) that are owned indirectly by you--either in your 401(k), pension plan or State fund. Most investors that bought these (on your behalf as your fiduciary) expect the rate of the mortgage to rise, and therefore, priced the value of the security when they bought them at that time. Since now the interest rate is going to be frozen for 5-years, the value of "your" security is less--you have suffered a loss, even if it's a paper loss right now. 3. It puts an "artificial floor" on the value of real estate. I guess if you own (like I do) that seems good, but I feel the marketplace should be free of manipulation and let the prices move to level they are supposed to. And then again, what if you were waiting to buy since you think the prices are too high, and now you find out that the home prices will not drop by their full amount since there is an artificial floor. That sucks! 4. Most importantly, it sets another bad precedent that Uncle Sam will bail out stupid people doing stupid things. What's next? Credit Cards? Auto Loans? People need to be responsible for their own actions. Well, at least hat's how I feel about the whole situation. Now that I got a job, I can buy more Apple products! |
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superkaratemonkeydeathcar
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What will it do to predatory lenders? Keep them in business? I don't know if blaming the consumers is appropriate, here in Chicago the big story is how all these lenders gave money to people who shouldn't be buying homes on an adjustable mortgage rate. Lower to moderate wage earners trying desperately to own their first home.
I'm not concerned about the people getting away with anything, chances are they aren't abandoning their homes for a mansion on the hill. From the commercials I've seen, predatory lenders seem to be targeting college students now. they are scum. "What's a Canadian farm boy to do?" |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Fundamentally, jcoley is right. Responsible people shouldn't have to bail out the irresponsible. Most people in this country are completely irresponsible when it comes to money. I can include myself in that category at different times in my life, though, I don't have any "Oprah Horror Stories" per se. We borrow too much, too frequently and pay it back too infrequently. Credit cards are the exact same thing. People should think of credit cards as a LOAN, not cash. It's a friggin high interest LOAN, but they spend with them out the ass anyway.
Americans have become very soft and very irresponsible in how they handle their affairs. You have an entire generation coming up whose parents make lousy examples when it comes to spending wisely, spending money on needs (not wants), and saving money long term. The boom / bust cycle is likely to repeat itself in the near future, and when it does, a whole lot of people are going to be put in a very uncomfortable situation. Not only Bush, but citizens themselves, have set this country up for a financial disaster. Everything over the last 20+ years has been built up on a foundation of sand it seems. Somehow we forgot the lessons our grandparents taught us about what it means to be prosperous. Not looking forward to the headlines. ...into the light of a dark black night. |
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@kk@pennytucker.social
Join Date: Jan 2005
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I kind of have the feeling that this is a necessary evil.
With all of these people losing there homes, there stood a very good chance of there being a recession. That would not be good for anyone. So, by bailing out these people, it preserves the economy for everyone else. But, I do agree with you that bailing these people out for their stupid decisions is stupid. Our government should not be doing this, but it's kind of necessary at this time. These people should have never been able to qualify for these mortgages in the first place. These people knew this, and that they'd never be able to afford the mortgage rates when they went up, but they banked on the housing market to continue to appreciate and they'd be able to make some money by selling the house before the rates went up. As we all know, the housing market collapsed and there are now millions of people with ARM's that are being foreclosed on. With all of this, the government is bailing out these people so the entire country doesn't fall into a recession. It sucks that our government is going to bail them out with taxpayers money, but it's kind of needed right now. No more Twitter. It's Mastodon now. |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Same thing happens on a different level with health insurance. Joe and Jane healthy constantly bail out Sam and Sue couch potato, who smoke, eat shitty foods 7 days a week, don't exercise, become badly overweight, and ultimately constantly sick / in need of medical attention. Yours and my constantly escalating premium (despite the fact that we never go to the friggin doctor more than once a year), are a result of millions of Sams and Sues, trying to medicate their way to health.
We are already bailing out the stupid on a monthly basis; but people just don't think of it that way. ...into the light of a dark black night. |
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Veteran Member
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I have been surprised that the medical insurance industry has not moved more to a varaible pricing scheme to mirror the risk. (The exception is of course life insurance where smokers and sky divers are charged more than normal folks.)
I do not understand why people that are medically higher risk are not priced appropriately--and I am only talking about things that you can control: alcohol and drugs, weight, exercise. Can imagine if auto insurers charged every one the same, so you would be paying for those idiots that crash their cars twice a year? How about your homeowners insurance? You want to pay for wind insurance in Florida even though you live, say, in Ohio? I know it is politically insensitive but it is really crazy when you analyze it logically. . . . Now that I got a job, I can buy more Apple products! |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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You know... an interesting idea would be to figure out a way to take a non-invasive tissue sample with some fatty cells... and test those cells for smoking, alcohol abuse and other factors that people surely lie about on their applications. Something where, it's not just abstaining from the bad habit for a week to clear your system out, because the bad stuff stays in the tissue for much longer. Then jack their friggin premiums and co-pays accordingly so the rest of our premiums can be lowered accordingly.
I'm happy to go in twice a year at somewhat random intervals, to take that test and keep my premiums down. As long as I don't have to pay more than $10 or $12 for the test, A-OK by me. Spend $12, save $120 a month! ...into the light of a dark black night. |
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I shot the sherrif.
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Ha, it's been sold as bailing out the consumers, but really they're bailing out the banks/money markets etc. that hold those loans as collateral.
The end result is to bail out the consumer, but I promise you the intent was to bail out the banks/investors. Google is your frenemy. Caveat Emptor - Latin for tough titty I tend to interpret things in the way that's most hilarious to me |
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Less than Stellar Member
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If Bush thinks it's a good idea, it must not be, so I'm against it.
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Banging the Bottom End
Join Date: Jun 2004
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I read an article (don't have the link now) that showed that 70% of people 3 months behind on their mortgage are current on their credit card bills. This is a direct result of the bankruptcy law changes that made it so people have to pay their credit card bills over a 5 year period. All the companies that are losing their shirts in the subprime market have seen good increases in their credit card business because of these changes. Unfortunately they've robbed Peter to pay Paul, and Peter isn't quite as financially secure as Paul. While credit card profits are up in the hundreds of millions, subprime losses are in the billions. |
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Senior Member
Join Date: Oct 2005
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I purchased my home in the summer of 2006, before even looking at homes I purchased "Home Buying for Dummies" for $13.99. That book explained to me the differences between fixed rate mortgages and adjustable rate ones. It also went over the rules of finances like your monthly mortgage payment should not be more than 28% of your monthly gross income and that when other bills are added in everything together not exceed 35% of your monthly gross. I read up on PMI and why you should put 20% down. I learned all that from a 13.99 book and maybe 4 hours of my time reading it during my commute. In the end I purchased a 530,000 home with a 115,000 down payment because the book told me that mortgages over a certain rate are considered jumbo and thus the rates are higher. Could I have asked the bank for a 617,000 loan over 415,000 and received it? Probably, but it wouldn’t have been fiscally responsible on my part to do so. I lease a Volvo XC90, is someone out there willing to give me a loan for a Porsche Cayenne? I’m sure, but it’s my responsibility to know what I can afford to payback without eating hurting my bank account. Blaming the banks is easy, but what about the people who signed for these loans? How about the fact that many of them admit that they didn’t read the papers they were signing? Why are we helping them? I’m paying 6% on a fixed rate mortgage of 415,000, what is my reward for doing the right thing? What is the incentive for me to do the right thing next time? |
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Senior Member
Join Date: Oct 2005
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EDIT: It's losing, not loosing. I have to change this every time because it's so annoying - Luca Last edited by Luca : 2007-12-06 at 13:27. Reason: Loose money |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Your incentive should be your own self-respect / making sure you're not part of the problem. It's hard to watch people of lesser character take the easy way out that, in the short run puts them on easy street, but that's life.
There are always losers who take short-cuts in everything they do. They're the same douche bags who half-ass it at work while sucking up to the right people, the same people who instead of waiting in the turn lane, tear onto the shoulder and drive down that at 50mph then cut in front of someone, the same one who gets indignant with store clerks or chashiers when they can't find something they want or aren't moving through the line fast enough, etc. The best we can hope for is that they all get hit by a bus, sparing their children from being raised by an idiot, thus turning the kids into idiots in the process. But most likely not going to happen. ...into the light of a dark black night. |
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Veteran Member
Join Date: May 2004
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I know you're tongue in cheek, tori, but a lot of people won't be. |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Personally, I care less that this is a Bush move, than it ignores the real problem (irresponsible citizens) as noted at various points above. That the Bush administration suggests it gives somewhat instant credibility to the cynicism factor of "OK why are they really doing this / who are they really aiming to benefit", but it's a moot point in some ways.
If millions of people didn't spend with their head up their ass [year after year], there would be no need to legislate such things. ...into the light of a dark black night. |
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Banging the Bottom End
Join Date: Jun 2004
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Isn't this what happened in the late 80s? Except it was an oversupply of commercial buildings that brought down the S&Ls. We The People are still paying for that.
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Senior Member
Join Date: Jun 2005
Location: eastmidlandshire
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But maybe it's because I'm Scottish* and careful with debt. I wouldn't dream of ever borrowing money to buy a car. Average cars are such lousy depreciating financial investments, that the idea of paying interest on a loan to buy something depreciating in value seems crazy! But each to their own I guess... * Scottish folk are stereotypically "financially cautious." |
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Less than Stellar Member
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I'm not sure where I stand on this issue. I'm one of those who got a 5 year ARM when we bought our home*. This won't affect me because I'm not one of those in trouble but it's an interesting dilemma... (*Not because we couldn't afford a slightly higher fixed rate but because we *knew* that we'd be moving out of the house within 5 years (and it would be incentive to do so). We could have bought much more house than we did - we pay something like 9% of our monthly gross income to our mortgage - but we're so financially sound right now, I wouldn't change it for the world. ) |
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Veteran Member
Join Date: May 2004
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Right now there is very little incentive to be fiscally responsible. |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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People are financially irresponsible because they don't plan, don't think it through, don't pay attention. Not because they're like faust, looking into everything and then say "well I don't have any incentive to do the right thing."
Most people just blindly spend thousands of dollars every year on shit they don't need, buy houses and cars beyond their means for vanity's sake, etc. There's no excuse to be made for them (if that's what you're saying). ...into the light of a dark black night. |
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Veteran Member
Join Date: May 2004
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No, my point is that, like most herd animals, if sheeples see another member of the herd get mauled and taken down after doing something stupid, they tend to shy away from that same behavior. "Heyyyyyyy, every time someone goes near that watering hole, this big scaly thing pops out and eats them... maybe I shouldn't go near that watering hole..."
Eliminating all possible bad outcomes just leads to ever more stupid sheeples. "Gee, everyone else buys all this crap, and nothing bad happens to them... sure!" |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Ah... well 100% with you on that then.
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Veteran Member
Join Date: May 2004
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Here's to the Heartless Bastard Brigade! *clink*
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Veteran Member
Join Date: Jul 2007
Location: St. Louis, MO
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I don't have a problem with stupid people taking an axe and smashing a hole in the bottom of the boat they're in, but we're all in the same boat with this, the economy being what it is. If it goes down it's taking more folks than those with axes in their hands.
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Senior Member
Join Date: Oct 2005
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Luca thanks for the fix. |
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Hates the Infotainment
Join Date: May 2004
Location: NSA Archives
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Stallion
Join Date: Feb 2006
Location: Milwaukee
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That's a really poor attitude to have. George Bush would be a great president if Americans had any idea how to manage their money and stop depending on credit cards. Everything gets blamed on the government, but the average American should take a look in a mirror and see how the American dream has changed, and how everyone wants to live outside their means and have cool toys instead of paying off their debts.
...and calling/e-mailing/texting ex-girlfriends on the off-chance they'll invite you over for some "old time's sake" no-strings couch gymnastics... |
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Stallion
Join Date: Feb 2006
Location: Milwaukee
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...and calling/e-mailing/texting ex-girlfriends on the off-chance they'll invite you over for some "old time's sake" no-strings couch gymnastics... |
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Veteran Member
Join Date: May 2004
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Stallion
Join Date: Feb 2006
Location: Milwaukee
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The problem isn't the government, its the lazy americans who would rather buy a 2000 dollar tractor to mow their 3/4 acre lawn instead of buying a modest house with a 1/4 acre lawn and buying a 100 dollar push mower to get the job done. Not a perfect analogy, but the point is American Joe doesn't know how to live within his means. It's kind of funny, despite my grandparents and father being millionaires several times over, they still drive old cars, have a modest home, small yards, don't have cable or the internet, don't have a cell phone, etc. Yet, I see people making 35k a year driving 30k cars, buying huge houses on 30 year mortgages paying the minimum monthly payment, etc. Funny how that works ...and calling/e-mailing/texting ex-girlfriends on the off-chance they'll invite you over for some "old time's sake" no-strings couch gymnastics... |
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