There will NOT be any significant help for homebuyers..any time soon..or later

[SoCalDem]

All it takes, is to google New Orleans or Bay St. Louis.. We are TWO AND A HALF YEARS past the hurricane, and the place is almost worse than it was during week 2..At least at week 2, most people still thought their insurance would come through, or that the government would help, and they had hope.

The home-buyers who got snookered into dodgy loans are at the end of the proverbial line.

Even IF a democrat is elected in November, people who are in trouble NOW, will be long gone from "their house"..and the ones who manage to hang on by their fingernails and selling everything they can, well..they will be disappointed because we are TRILLIONS in debt, and there are just too many wolves at the door.

Just to get enough boots on the ground to supervise something of this magnitude, would be a daunting task..and who's going to pay THEM?..

The big money is already gone.. That's the way scams work.. By the time people realize they have been scammed, the perpetrators are long gone..with the money.

Many of us saw this train coming down the tracks for years now.and I would venture a guess that most of us have a lot less economic education than Alan Greenspan.. who told us for years how VIBRANT the housing market was and how GREAT things were..

So for people who are in trouble, they have a few choices:

1. bail on the house before they throw more good money after bad
2. continue struggling until they can no longer manage it
3. take in boarders to help until things settle down

No matter which is followed, their credit rating is bound to take a hit..BUT there are worse things than credit issues. It forces people to live within their means, with cash, and once enough people do that, things should settle down.

If the banks were smart, they would foreclose, but rent the house at a reduced rate to the former home-buyers. That way they would care take the place (which is unlikely to sell any time soon, anyway), and the bank would at least have the places occupied and cared for. The people foreclosed on will have to live somewhere, so why not where they have been living..but at a reduced rate of rent. That gives them time to find other lodging or find a better job (hah!)..and it keeps kids in their schools too.

[brokensymmetry]

1. K&R n/t

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[Demeter]

2. Ah, But That Would Be Both Smart and Compassionate! We Can't Have That!

"If the banks were smart, they would foreclose, but rent the house at a reduced rate to the former home-buyers. That way they would care take the place (which is unlikely to sell any time soon, anyway), and the bank would at least have the places occupied and cared for. The people foreclosed on will have to live somewhere, so why not where they have been living..but at a reduced rate of rent. That gives them time to find other lodging or find a better job (hah!)..and it keeps kids in their schools too."


These are Capitalists we're discussing--they got bills to pay. Their investors want their money back and their pound of flesh.

Those banks don't own those mortgages; they sold them off to "investors". The social contract as well as the legal contract has been broken.

[SoCalDem]

4. You should SEE the house next door to us..

There's about $50K in damage to it.. The police don't give a crap.. and the realtor whose sign is up on the house, is in another county.. I called & talked to them and finally got them to board it up, but kids keep breaking in through the back window and police will not do anything..

I almost expect it to catch fire.. the bank would probably prefer that.. at least then they would get the insurance money..

[El Pinko]

3. There won't be any help, and there shouldn't be.

Government is not supposed to be in the business of paying people's gambling debts for them.

I like your idea of the lenders renting out the properties until the market recovers. It would help prevent a lot of communities turning into bombed-out ghost towns.

Inland Empire and Stockton/Bakersfield/Sacto burbs are already at serious risk of this.

[SoCalDem]

5. I agree that it's not government's role, BUT government IS

"helping" the financial "geniuses" who started this whole mess, by pumping more and more money into their banks to try and keep up the appearance that everything's okiedokie..

It would be better to let the whole thing go ..all at once..instead of the weekly trickle.. There are people who are waiting until the bottom is reached, and the longer they wait, the more damage that's done..

[bluerum]

6. Getting snookered with a predatory loan is gambling?

I want to know why the FBI is looking into Countrywide two months after Bank America bought them out. How far up the chain of suit and ties does that stink go?

[El Pinko]

10. I don't condone what Countrywide and others did.

But the fact that these people did not have the fine print explained to them does not completely excuse them from responsibility for taking on far more debt than they could handle.

And it certainly doesn't merit the government paying them for their poor judgment.

I agree that the predatory lenders should be punished - I personally think that the CEOs and CFOs personal fortunes should be confiscated to help reimburse the people they defrauded (which would be thousands of investors who were told they were buying "rock-solid mortgage-backed securities).

At the most, the homebuyers should maybe have some transitional assistance into rental housing or priority access to Section 8.

[fasttense]

7. If we had a supposed "free market" then I would agree with you.

But what we have is crony capitalism.

All the cronies of the repukes get big contracts from the government and all sorts of sweet deals. The nation is then left with a huge debt to pay back because the government doesn't have the tax revenue to pay for these contracts without borrowing. The average Joe gets left with paying the bill.

A little help for the people who pay the majority of the tax burden and provide the consumer base that makes this country the biggest consumer market in the world wouldn't hurt anything.

It doesn't seem to hurt our country when oil companies get to ignore billions of dollars in pumping fees. It doesn't seem to hurt our economy when the Fed lowers interest rates, reducing the value of the dollar and savings, to help out the financial and stock market gamblers. It doesn't hurt the economy when pharmaceutical companies get to charge our elderly twice the going rate for their government funded researched drugs. Oh wait, maybe it does.

In a perfect world, I might agree with you but because of all the welfare that is going to corporations, a little help for the average Joe will only help the economy.

The government is suppose to be of, by and for, We the People but right now it is of, by and for, We the Corporations and bush's friends. It's about time the common man got a break.

[El Pinko]

11. The people who got subprime loans are by no means our most needy.

They could easily afford decent rental housing, but they overreached and tried to buy half-million-dollar homes.

I'm all for giving them assistance to transition to home that they can AFFORD.

There are millions of people without health care, who can't afford food, in much more dire need than the subprime gamblers.

I strongly disagree that bailing them out is a good use of federal funds, and it would also have the negative effect of propping up still-grossly-overvalued real estate prices. The market needs to correct in order to make housing affordable to REGULAR WORKING FOLKS again, and the government should not be interfering with the correction.

I agree that if the government had done its job as regulator and the lenders had done due diligence on borrowers, we would not have had such a crazy bubble in the first place, but bailouts for the borrowers is the wrong prescription.

[leftofthedial]

8. other than inflation and the devalued dollar, the money didn't just vanish

who has it?

[SoCalDem]

9. the rich guys who set the ponzi scheme into action

They always bail out "in time" :(

[El Pinko]

12. People who sold their homes at bubble-inflated prices...

...the electronics companies who sold their plasma screens to guys who took out HELOCs, builders also sold at bubble-inflated prices, then bough more land at bubble-inflated prices and started projects there that in many places have not been completed because the money ran out.

The lenders are the middle men. And they can loan out 1 million dollars as long as they have 100K to leverage it. In other words, lenders have been allowed to lend out money that they don't actually have to lend, which works okay as long as most people make their payments, but it's another story when 10% or more of your borrowers start to default en masse.

[KharmaTrain]

13. The Banks WIll Be The Only Ones To Get A Bailout

Remember, this is a "trickle down" regime...meaning the crap trickles down on the middle class and poor. This regime doesn't give a shit about your home...only about your debt. That's why they passed the draconian "bankruptcy" law that opened the doors to the greed of the banks and predatory lenders (is there a difference between the two??) and put millions with loans behind the eight ball with no recourse. Fail to make a payment and you lose your home...it's no longer protected...and also expect ALL your credit card rates to soar...no accountability and you have no recourse...ya signed the dotted line ya know.

While homeowners won't get relief...they don't throw the big coin at the politicians like the banks do, look for Helicopter Ben to keep discounting and slashing and trying to bail out the lenders with more funny money that will sink the dollar lower and spread this mess across the entire economy. Repugnicans...like, unfortunately, many on DU, feel its the onus of the borrower that they got into this mess and tough shit.