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Re: Mortgage bailouts - Congress to the rescue!
Old 04-16-2007, 07:38 PM   #21
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Re: Mortgage bailouts - Congress to the rescue!

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Originally Posted by lets-retire
Martha wouldn't delaying the foreclosure process raise costs for the banks? I would think, if it did, that would hurt the situation more than help. The banks would have to receive even more money for the properties during a soft market.
I agree that moratoriums tend to increase lender losses and generally don't seem to help the borrower much.
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Re: Mortgage bailouts - Congress to the rescue!
Old 04-16-2007, 08:39 PM   #22
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Re: Mortgage bailouts - Congress to the rescue!

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Originally Posted by brewer12345
Have you looked at how little principal gets paid off in t he first 5 or so years of a 30 year mortgage? Very little. So I can't get too excited about IO mortgages given to people who aren't stretching to make the payment, have very good credit, 20+% equity in the property, and document their income.
I agree........but the kicker is the broker that qualifies a buyer at an intro rate of 1.75%, on a home with a generous appraisal, charges all kinds of up-front fees, and winks at the undrwriter as they close and bundle the loans to 2ndy market.

IO is not the enemy if used appropriately.
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Re: Mortgage bailouts - Congress to the rescue!
Old 04-16-2007, 08:49 PM   #23
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Re: Mortgage bailouts - Congress to the rescue!

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Originally Posted by Martha
Bailout proposals don't involve paying people's loans. Usually they involve restructures where the payments are stretched out over a longer period of time so the payment amounts are reduced. Even interest rate reductions are not common. Periodically, when foreclosures are prevalent there is a mortgage moratorium passed which allows some additional time for borrowers to catch up on their loan before it is foreclosed. This can mean that if the borrower doesn't try to catch up the borrower lives in the place for free for a while.
Unfortunately, when I read:
""We will be proposing significant amounts of dollars," Schumer told reporters after being asked if a large federal bailout may be needed."

......it sounds to me like tax dollars will be spent to buy votes. Foreclosure is the most expensive solution, so the market should be able to resolve this via restructuring as many loans as possible with NO BAILOUT by the Gov't.

Now, I could maybe see some sort of limited moratorium on foreclosures only because they push values down throughout the market and would devastate some neighborhoods, especially in areas undergoing restoration.
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