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Originally Posted by audreyh1
I think the secondary mortgage market will never be the same again anyway simply because there won't be the same extent of subprime mortgages again, and CDOs, etc. will never be rated the same way again.
This is not necessarily a bad thing.
Audrey
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This would have happened anyway, even without government intervention. Everyone will suffer because of subprime loan modification. We'll all be paying higher interest rates and will have fewer loan choices with higher down payments. The consumers who signed up for these loans will never learn a lesson in personal responsibility. Today, our government told them that it was OK for adults to behave like children, because Uncle Sam will always be there to get them out of a fix.
Many of these borrowers being bailed out purchased homes or McMansions that they could never afford, with little or no down payment. If they're somehow fortunate enough to be able to make the payments for five years, there's a good chance that they still won't have any home equity at the end of five years and will lose their homes anyway.
In the future, lenders on all types of loans will be reluctant to loan to people with lower credit scores, because they now know what can happen when they do--big government might step in and rescue them from their contract.
We will all suffer from what happened today. There is no such thing as a free lunch.
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