Mortgage Renegotiation

[Beestie]

Originally Posted by TheMercenary

It still begs to ask, why are we helping so many people who made bad decisions when all those who pay on time are still screwed with the deals they made?

The money isn't going to come out of thin air - either way, we all will bear a portion of the economic contraction.

Think of it as shoplifting or insurance fraud. The loss gets capitalized into the rates that everyone pays.

There's two ways to get to your neighbor's house: you can walk out your front door and take a left and you're there or you can walk out your front door, take a right and walk all the way around the block. Either way you end up at your neighbor's house but one way is a little shorter.

If you think you can "teach these irresponsible, deadbeats a lesson they won't soon forget", you are just kidding yourself. The money is going to come from somewhere. When times are good, we all benefit more than we deserve (stocks appreciate, homes appreciate, wages increase, prices drop - whatever). When times are bad, you don't get to carve out an exception for yourself. Times are bad for everyone.

[TheMercenary]

So why can't we just let them go bankrupt in the cases of bad decisions and live in a box for punishment?

[sugarpop]

Originally Posted by Tiki

Part of me wishes I could renegotiate, but I've been far too responsible and taken far too few risks so even though each month I barely scrape by (just sent my mortgage payment this morning with only five days to spare!) I doubt I could qualify for a restructure, and frankly with only 14 years left at 5.5% I'm not sure it wouldn't put me in a worse position if I did.

So I just have to hope I can keep scraping up that mortgage payment every month for 14 more years.

I think you would be surprised. If you're paying more than 1/3 of your income, you might qualify for one of the programs. You may not be able to get that 2% deal, but most lenders are willing to work with people right now who are struggling, even if they HAVE been making payments on time. Check out these links: http://www.financialstability.gov/ma...nance_yes.html
http://www.treas.gov/news/index1.html
http://www.treas.gov/press/releases/...es_summary.pdf
http://www.treas.gov/press/releases/...guidelines.pdf

I know someone who is in the process of getting refinanced. She didn't have an ARM and when she got the loan she could afford it. Since then, her husand passed away so she no longer has his income, and she had a heart attack, so she can no longer work. She tried to get refinancing last summer and they said no, and she had her house on the market for over a year trying to get into something smaller. She doesn't really owe that much anymore, but the payments are high and since her situation has changed so drastically, she really does need the help, or she could end up losing her home.

I would say call anyway and see what they say. It can't hurt. Lenders are more open to helping people right now, because they almost have to be.

[sugarpop]

Originally Posted by TheMercenary

So why can't we just let them go bankrupt in the cases of bad decisions and live in a box for punishment?

Because some of the people getting hurt now really didn't do anything wrong. Refinancing people's loans shouldn't bother you if it keeps them in their homes. It will help calm the housing market and eventually stop prices from falling, something people are very concerned about. Less forclosures DOES help YOU, whether you realize it or not.

Your anger is aimed at the wrong people. You should be angry at all the bankers and investors and lenders who caused the problem by creating unethical structures that would increase their wealth even though they knew wouldn't work. It never ceases to amaze me how you pick on the little people and never point the blame where most of it should go, corporate greed and excess and corruption.

[TheMercenary]

yea, those evil Corps. People have no personal responsibility in this. Just blame some esoteric entity.

[sugarpop]

PEOPLE ran those corporations. PEOPLE made decisions that put the world economy at risk. MOST OF THE PEOPLE WHO DID THAT were the people who worked at banks, mortgage companies and other lending institutions. They did things that straddled the line of illegality, and were certainly unethical. And they KNEW IT. I have a feeling a lot of people will be going to prison when this is over. And rightly so.

Bernie Madoff is finally in prison. Next I hope they start looking at the people running the institutions that caused the financial meltdown, like Richard Fuld, the people running AIG and Citigroup, the people at Countrywide, etc etc etc.

[classicman]

And the elected officials in charge of oversight like Barney Frank & the
Committee Members

[sugarpop]

Them too.

[TheMercenary]

Originally Posted by classicman

And the elected officials in charge of oversight like Barney Frank & the
Committee Members

[classicman]

The R's too Merc - Every fuckin one of them. Their oversight was apparently as useless as a rainstorm over the ocean. We have justifiably been very critical of mgmt at these companies, well lets look at this group too. Seems to me they have been getting a free pass.

[Beestie]

Gotta go with sugarpop on this one. The mortgage structures that paved the way for the mess we are in should never have been allowed to exist.

Once they hit the market, Fannie and Freddie had no choice but to buy the damn things since they were targeted at folks who could not otherwise have purchased a home otherwise they would have been criticised for not fulfilling their charter of expanding home ownership.

Trouble is, those instruments were abused. They were used to buy more house by people who didn't need the extra help. That's why housing prices skyrocketed and the collapse of these time-bomb mortgages is a big part of why the housing market and nearly the entire international financial market almost collapsed.

These risky instruments were not only created in the mortgage market but in every kind of credit market. Across the globe. A lot of people saw how bad an idea this was but nobody could stop it. One could even make the case that this economic collapse was inevitable. Kind of like a fault line that never eeks out periodic mini-quakes of tolerable magnitude but continues to build pressure until the inevitable 9.5 continent-crusher.

[monster]

Originally Posted by Sundae Girl

There was a letter in my parents' horrible right wing paper the other day. I rarely agree with anything written in it, but this one made me smile.

It suggested that the Government gives everyone over the age of 18 £500 to be spent in this country in the next three months. It claimed that this would be a far better deal that bailing out hundreds of different companies (and more specifically the banks) would cost less and would give the economy the boost it needed without printing more money.

It couldn't work of course - for a start you could never police the conditions, and the infrastructure needed would cost a fortune. But I liked the idea. Of course I did! £500? Yes please. I would spend it all on me & Diz. After all, everyone I know would have the same amount.

the govt has done that twice in the time we've been here. Each time we've said thanks very much and squirrelled it away

[monster]

oh wait, and it would be easy to add a time limit. use debit/gift cards instead of checks.

[Beestie]

Originally Posted by monster

the govt has done that twice in the time we've been here. Each time we've said thanks very much and squirrelled it away

Saving it is actually the same thing as spending it. In the long-run, its better. When savings go up, the cost of credit goes down which leads to more investment which leads to... you get the pic.

And paying down debt is economically similar to saving.

[monster]

oh good, I'll stop feeling guilty about it then!