On Mar 6, 11:11*am, "rick++" <rick...[at]hotmail.com> wrote:
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Rick - Thanks, I missed that wrinkle :-) It also punishes sub-prime,
no?

On Mar 6, 5:13*am, camg...[at]att.net wrote:
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Joe should sell before missing payments, and let the bank know. The
mortgagor has a lot of incentive (170k note at original rate and a
sold house, is better than foreclosure at 450k). They wouldn't mind
allowing principal payments as Joe crawled out.

But after reading your scenario, I'm not sure I ever want a
mortgage :-)

On Mar 6, 9:11 am, "rick++"
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?

- quote -

a modified mortgage. In other words, people are eligible for help even
if the value of their house is far less than the outstanding amount of
the mortgage, as is the case for about 14 million people who bought
houses at the very peak of the market and often put no money down.
Administration officials have said, however, that people who owe more
than 150 percent of the current market value of their homes will
probably have a harder time persuading their lenders to modify the
mortgage."

On Mar 5, 9:40*am, dapperdobbs <George...[at]hotmail.com> wrote:
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There's a bumper sticker out that reads "Honk if you're paying my
mortgage"

On Mar 5, 9:40 am, dapperdobbs <George...[at]hotmail.com> wrote:
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Extreme cases as your example would not qualify for bailout.
Only slightly underwater mortgages (105% LTV) qualify.
The program is punishing those who didnt have down payments.

On Thu, 5 Mar 2009 22:23:41 -0600, "Gil Faver" <rowdy'sboss[at]xxyz.comwrote:

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One good start is the proposal to let judges modify mortgages for
those in Bankruptcy. This rule was changed in 2005 to make it
impossible for primary residences. Gee, do you think that the banks
saw this coming? Second homes, investment property, and commercial
property can be re-worked. Only the homeowner of a primary residence
is now excluded.
Thumper

A 5% loan would be for someone who hit the mortgage rate at
practically the perfect time. It would also be for someone with
excellent credit and collateral for security. Joe can't afford his
house, so he doesn't have excellent credit anymore. The house would
no longer be collateral so this would not be a secured loan. A more
reasonable interest rate for an unsecured loan for a person with poor
credit would be 9%. Remember there would be a $30,000 real estate
commission on the sale of the house. This brings the loss to
$170,000. It is interest only, so it would have to be paid for the
rest of Joe's life, say 35 years. So Joe would pay $15,300 a year for
35 years ($535,500) and die still owing $170,000. Joe wouldn't be
happy and his creditor wouldn't be happy with the loss of his
principal.

Sorry - make my previous post "Mar 5" (not "Feb 5"). I must be in
shock, or wishing for the good old times of Jan, when the market was
20% higher.

On Mar 5, 11:23*pm, "Gil Faver" <rowdy'sb...[at]xxyz.com> wrote:
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This link to a Feb 5 mainstream news article stating that the House of
Reps. will be taking up debates on the mark-to-market accounting rules
shortly. Isn't the timing of this remarkable? Is it just routine
business and coincidence, was it blocked until now, or is this timing
planned for some reason? "Duh" questions, I guess.

http://www.cnbc.com/id/29536588

IMO, the housing bailout bill was never about "keeping people in their
homes," but about price supports for the assets underlying the
leveraged house of cards.

"JoeTaxpayer" <JoeTaxpayer[at]comcast.net> wrote in message
news:gopv5i$bm7$1[at]reader.motzarella.org...
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with the current mark to market requirement, and the current situation where
nobody seems to want to buy any mortgage based asset for any price, I don't
see how this will help the bank a lot. Maybe if the mark to market rules
were changed, at least temporarily during this period without a realistic
market for such assets.

honda.lioness[at]gmail.com wrote:
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This is a good introduction to "moral hazard." Consequences should
result from one's behavior. I understand the larger risk of death,
crime, and all, but in the end, the guy who bought more house than he
could reasonably afford, and then continued to spend as it rose in
value, is going to me made whole, no consequence for his actions or that
of the bank who not only did not apply good lending practices, but wrote
mortgages that bordered on criminal acts. The same banks that did this
should apply some intelligence now, and instead of writing off mortgages
at pennies on the dollar, figure out how to fund the refinances from
their own wallets. A $300K mortgage actually making payments based on 4%
interest is worth far more than a $400K mortgage where the owner simply
gave up. The banks could recoup much of their papers losses by doing this.
Joe

On Mar 5, 9:40 am, dapperdobbs <George...[at]hotmail.com> wrote:
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ISTM it is hard to say. Layoffs are increasing. Whence people spend
less, demand is down, companies do not need so much supply and so cut
costs by laying off more. ISTM the only sure relief will be when the
economy's contraction reaches the most basic amount of goods and
services. What is a federal government to do to avoid Depression-era
scenarios like those from the Grapes of Wrath?

I am not happy bailing out these losers (from individuals to
completely undeservig auto companies and banks). But if I were in
government, I do not know that my choices would be different, assuming
I did not want massive death and crime.

"dapperdobbs" <GeorgeCFL[at]hotmail.com> wrote in message
news:16d42a9d-0596-42da-aefe-a83e19d46269[at]n33g2000vba.googlegroups.com...
- quote -

http://www.financialstability.gov/

Let's say Joe buys a house for 800k, then discovers he can't afford
it. He puts it on the market, and learns he cannot sell it for more
than 500k. Assuming he put 20% down, his mortgage is 640k, so he comes
up 140k short. What's wrong with the bank holding his note at the rate
he was paying on the mortgage?

If he was paying 5% on 640k = 32k a year (in interest). On 140k [at]5% =
7k a year. Surely he can pay that and have money left over for rent?
(He also gets out from under property taxes of probably > 12k and
insurance of probably > 4k. So his cash flow, which is the problem,
increases by 41k a year.)

Why do the rest of us have to bail him out by reducing the principal
and / or the interest he pays just so he can continue to live in a
house above his standard of living?