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Housing stimulus
Old 02-18-2009, 03:46 PM   #1
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Housing stimulus

I read this article


Obama unveils plan to tackle housing crisis


which contained this paragraph.

Quote:
The plan would provide a $1,000 fee to mortgage servicers for each successful loan modification, while borrowers would receive up to $1,000 to reduce their loan principal each year if they stay current on their payments.
I do not understand the details of those 2 sentences- how does someone get the $1000 principal reduction per year?
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Old 02-18-2009, 03:49 PM   #2
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I think I heard the $1,000 per year loan principal reduction is a payment made directly to the lender by the US govt.

Edit: I found this...

"The program would not only give [loan] servicers $1,000 for each modification, but would give them another $1,000 a year for three years if the borrower stays current."

Obama seeks to aid up to 9 million borrowers - Feb. 18, 2009
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Old 02-18-2009, 04:17 PM   #3
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$75 Billion for 9 million homeowners??!!

That's a lot of money. But it only works out to $8,333 per homeowner. Is that really going to put a dent into situations where the mortgage payment is many hundreds more than what the homeowner can afford? And where they may be thousands behind on their payments after interest and fees? Or situations where the homeowner started out with zero or negative equity when they bought the house a couple years ago, and have been increasing the principal each month on their negative amortization loan while the value of their house has plummeted, and then stopped making payments, resulting in being hundreds of thousands of dollars upside down on their house?

This just seems like too little too late. A bandaid on a severed carotid.

Looks like us vultures with cash waiting to scoop up cheap foreclosed houses might have another few months to wait...
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Old 02-18-2009, 04:19 PM   #4
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Originally Posted by jIMOh View Post
I do not understand the details of those 2 sentences- how does someone get the $1000 principal reduction per year?
One way it could potentially be structured is that the loan is modified so the borrower pays the interest on the loan and the govt sends $1000/12 to the bank each month to pay down the principal.
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Old 02-18-2009, 04:49 PM   #5
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"$75 Billion for 9 million homeowners??!!"

That's a lot of money. But it only works out to $8,333 per homeowner.

If they write down the rate to a fixed 30 year of about 4 to 5% it should be a help to a lot of those who just bought wrong at the market highs or have lost a job. Doubtful if it will make a difference to those with the 0 $ down or pick a payments with the negative amortization. Sometimes those who were greedy or foolish need to take the medicine and move on and grow up. If they can make the new payments but walk because it is underwater then they can enjoy the stigma of extra scrutiny for a long time on any borrowing.

I do not mean to sound vindictive or mean spirited in any way. And I am grateful they did not totally destroy housing by forgiving all underwater mtgs with a BIG UGLY BLANKET designed to play screw your neighbor.

Have you all watched "House of Cards" (next showing is on 3/1) on CNBC? It explains this debacle very well. I recorded it and my young adult kids will be watching it this weekend.
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Old 02-18-2009, 05:54 PM   #6
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If they write down the rate to a fixed 30 year of about 4 to 5% it should be a help to a lot of those who just bought wrong at the market highs or have lost a job. Doubtful if it will make a difference to those with the 0 $ down or pick a payments with the negative amortization. Sometimes those who were greedy or foolish need to take the medicine and move on and grow up. If they can make the new payments but walk because it is underwater then they can enjoy the stigma of extra scrutiny for a long time on any borrowing.
I just wonder why a noteholder would voluntarily reduce the interest rate significantly for a paltry $1000 or whatever is on offer from the govt. Given that the deadbeat not paying their mortgage may just default again.

And for those that started with sub 4% teaser rates that they could barely afford, fixing the rate at even 4% will do nothing to help with affordability, especially for folks whose incomes are reduced or non-existent.

I guess I'm just a skeptic.

This might help those very few borrowers who are basically able to pay their loan, but might come up short a hundred or two each month and got a bad rate on a loan initially.
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Old 02-18-2009, 05:58 PM   #7
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Shoot, I bought HIGH at the market peak, but I bought for CASH. No help there, that is for sure! Let the dumb s**ts suffer. We all make mistakes and you know, we should learn to live with them (I will) - that is part of life (well it used to be).
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Old 02-18-2009, 07:38 PM   #8
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Shoot, I bought HIGH at the market peak, but I bought for CASH. No help there, that is for sure! Let the dumb s**ts suffer. We all make mistakes and you know, we should learn to live with them (I will) - that is part of life (well it used to be).

You got me thinking! What about selling and taking a whipping and get a capital loss for taxes and rebuy comparable. Would that work for some folks? I bet one of our accountant types will blow through and enlighten us soon!
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Old 02-18-2009, 07:46 PM   #9
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No losses deductible on a personal residence that I know of. I used to be a GAAP accountant in another life.
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Old 02-18-2009, 08:26 PM   #10
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Oh well, at least I tried to help ya!
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Old 02-18-2009, 09:48 PM   #11
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Originally Posted by crazy connie View Post
Have you all watched "House of Cards" (next showing is on 3/1) on CNBC? It explains this debacle very well. I recorded it and my young adult kids will be watching it this weekend.
I thought it was pretty good as well. It will repeat a few times over the next few weeks:

US
Wednesday, February 25th 8p ET
Sunday, March 1st Midnight ET
Sunday, March 15th 9p ET
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Old 02-19-2009, 11:35 AM   #12
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No one in the gonvernment cared much when the Defined Benefit Pensions were being changed oto Hybird plans in the 90's and early 00's. My CEO back then got $50 million in compensation from the excess funding, $200 million, in the pension plan removed to the profit line. My pension value ended $100K lower because of this. He later left the corp when caught in questionable stock sale before the share price collapsed. Congress left all that to the courts and the PPA of 2006 only addressed the future and didn't do that vary well.

DW always says we're targeted because we saved, passed up vacations, paid off the mortgage. There coming after our SS next. They already tax it and next they will means test it.

I wouldn't have lost anything in the market if I just would have bought all those toys, traveled, rented, ate, drank and been merry. But then whos money would Washington be spending?
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Old 02-19-2009, 12:55 PM   #13
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Originally Posted by cashbalancetrouble View Post
..........we're targeted because we saved, passed up vacations, paid off the mortgage. There coming after our SS next. They already tax it and next they will means test it.

If the gov't targeted folks who didn't save, took expensive vacations, didn't pay off the mortgage, etc., what could they get from them? It does no good to reach into empty pockets.

I agree on SS and have said so on this forum for years. SS means testing (beyond today's taxation) is in our future, probably before the end of the second term of the current administration. Not saying whether that's good or bad, fair or not, just or not...... just that it's coming.
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Old 02-19-2009, 02:55 PM   #14
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For those who are against this stimulus package you'll love this!

Finally someone nailed it! Rick Santelli is my hero!

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Old 02-19-2009, 03:38 PM   #15
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For those who are against this stimulus package you'll love this!

Finally someone nailed it! Rick Santelli is my hero!
Very, very nicely done.
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Old 02-20-2009, 05:03 PM   #16
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For those who are against this stimulus package you'll love this!

Finally someone nailed it! Rick Santelli is my hero!
Tilting at windmills.
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Old 02-20-2009, 11:25 PM   #17
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It looks like there might be an angle for some of us here. The details will come out March 4th, but an article in the WSJ (link might require a subscription) says one element of the government handout is for people whose mortgage payments are at least 38% of their income. If you meet this criteria, taxpayers and the mortgage lender will share the costs of reducing your payments to 31% of your income (and that might mean interest rates as low as 2% or a reduction in principal). Plus, if you pay your mortgage on time, your fellow taxpayers will pay up to $1000 per year every year to reduce your principal. The article mentions that if you earn $50K per year, all this moola from the honeypot could add up to $4500 per year, tax free. Some folks will find it worth their while to quit their second jobs so they can get more from fellow taxpayers--which is exactly the kind of behavior our economy and society so desperately needs.

The details to be released will let us know just how we'll have to hold our mouths to drink from the gummint teat. For example--what qualifies as "income?" Is it legit to get a 15 year loan (rather than 30 years) to boost the mortgage payments over the required 38% of income threshold? Any impact on the borrower's credit rating for taking this money? Is this only for loans written before a certain date in the past, or is there still time for an enterprising citizen to get a loan in the next few months and secure a part of the New New Deal for himself?
Those without mortgages might want to think about getting one soon. It is one means to recoup some of the higher taxes you'll be paying for the rest of your life due to this spending orgy in DC.
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Old 02-21-2009, 01:52 AM   #18
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There is an entire class of people in Europe whose only purpose is to game the system and to lift as much money out of tax payers' pockets as they can. They feel no remorse and no shame and will openly gloat about their loot. They believe that the government/wealthy individuals/corporations/society somehow wronged them and owe them that money. They don't see anything wrong with taking money where they can and sometimes where they shouldn't.

Lately, I have started to notice more and more people openly demanding their share of government cheese around here as well. It's shocking. Beware, Pandora's box has just been opened.
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Old 02-21-2009, 07:23 AM   #19
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Lately, I have started to notice more and more people openly demanding their share of government cheese around here as well. It's shocking. Beware, Pandora's box has just been opened.
It's going to lead to disaster. I don't have an issue with taxation in general, but more and more the prevailing attitude is that there is a faucet that money comes out of and there is no consequence to turning the tap to get more and more.

A state employee once was going to let me go across a toll bridge for free because I was driving a police car. I protested and said I was off duty and on personal business, but he insisted: "It's the state's gift to you!"

He looked really puzzled when I asked, "Yeah, but where does the state get all of its money?"
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Old 02-21-2009, 07:35 AM   #20
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I am not a student of history. How were the Depression era jobs and other programs paid for? Borrowing like now?
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