The trifecta of Bailouts: Banks, Homeowners and Home Builders

[poindexter]

http://www.latimes.com/news/nationworld/washingtondc/la-fi-mortgage2apr02,1,6296482.story

There's going to be billions and billions in bailout goodies for everybody who made mistakes in this mess.

People who were prudent and rational: **** you!

 

[Inky_Wretch]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

 

[alleyallen]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

I'm genuinely curious...in what opinion do you hold those homeowners caught up in this mess?

 

[poindexter]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

I'm genuinely curious...in what opinion do you hold those homeowners caught up in this mess?

Ignorance is not an excuse.

 

[Inky_Wretch]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

I'm genuinely curious...in what opinion do you hold those homeowners caught up in this mess?

Depends on the individual circumstance.

People who are in lower incomes who took a subprime just so they could buy a cheap house instead of renting are one thing. I have sympathy for them. They're doing the best they can.

But the people who got one to buy a 4,000 sq. foot McMansion in the newest subdivision can **** right off.

 

[alleyallen]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

I'm genuinely curious...in what opinion do you hold those homeowners caught up in this mess?

Ignorance is not an excuse.

That's not what I asked. And I'm not trying to stir stuff up. Lots of people here have blasted homeowners from not understanding ARMs. I'm just trying to find out what Inky thinks of it.

 

[alleyallen]

Mistakes!?!

They weren't making mistakes. They were chasing every loose dime they could. They were greedy bastards who don't deserve an ounce of sympathy nor a penny of my tax dollars to bail their asses out of trouble.

I'm genuinely curious...in what opinion do you hold those homeowners caught up in this mess?

Depends on the individual circumstance.

People who are in lower incomes who took a subprime just so they could buy a cheap house instead of renting are one thing. I have sympathy for them. They're doing the best they can.

But the people who got one to buy a 4,000 sq. foot McMansion in the newest subdivision can **** right off.

That's what I was looking for. Thank you!

 

[Pancamo]

Why should low income buyers be given a free pass on any of this ****?

 

[buckweaver]

Not a free pass, Pancamo. Sympathy for an impossibly unaffordable situation. ... The fact is, people in my parents' generation could afford to buy a house on one (low) income. I can't, even though I make a lot more than my dad did at my age. There's something wrong with that picture when people do everything right and owning a home is still out of reach.

 

[hockeybeat]

I recently saw an ad for a family house in middle class Levittown, Long Island. The asking price is $515,000.00.

Who can afford that?

 

[BTExpress]

Not a free pass, Pancamo. Sympathy for an impossibly unaffordable situation. ... The fact is, people in my parents' generation could afford to buy a house on one (low) income. I can't, even though I make a lot more than my dad did at my age. There's something wrong with that picture when people do everything right and owning a home is still out of reach.

It's a tough call, since there are so many different circumstances.

However . . . I would bet that you spend much more on vacations, gadgets, sporting events, eating out, etc., than the average person from your parents' generation did. Outside of visiting relatives, my family took exactly one vacation when I was growing up (a 200-mile drive to Atlanta, woo-hoo!!!). Spend big bucks to take me to a Beatles concert (as opposed to Hannah Montana)? Never. Something like that was never an option. Today's generation of parents feel like failures if they don't do those things . . . and wonder why they are having trouble staying out of debt.

Unless a lender was criminally in the wrong, I have a hard time not placing much of the blame with the homeowner. Whether you make $20,000 or $200,000, it doesn't take much research to understand that interest rates have been at historical lows. Thus, DO NOT take an adjustable-rate loan just because you can afford a house based on the teaser first-year payment. When making the most important purchase of your life, you must think "worst-case", not think you are going to get 30 years of "best case." If you cannot afford a fixed-rate loan, you cannot afford a loan period. Sorry. It's called the American Dream, not the American Right.

There's something wrong with that picture when people do everything right and owning a home is still out of reach.

True, but how much of that has to do with where you live (as opposed to home prices in general)?

"Doing everything right" could also mean choosing to live in a more affordable part of the country . . . or choosing a profession that would enable you to buy a home anywhere you choose. Saying "this is the job I want and this is the part of the country I must live in . . . so where's my house?" is not reasonable. Supply and demand does suck sometimes.

 

[pallister]

If there were circumstances out of your control (getting laid off, having to sink most of your money into unexpected medical bills, etc.) that caused you to lose your home, then I feel sorry for you. But far too many of these homeowners signed for mortgages they knew they couldn't afford. For those people, I don't have a bit of sympathy. But, as usual, they'll likely get bailed out for their stupidity so they'll be free to do the same damn thing in the future, at which time they again will be rescued from themselves by a free-spending government and so on and so on.

 

[poindexter]

Let me get this right: People think that it's the government's responsibility to bailout borrowers who are in over their heads, regardless of circumstance?

 

[pallister]

Not sure who you're addressing that to. I never said that.

 

[poindexter]

Not a free pass, Pancamo. Sympathy for an impossibly unaffordable situation. ... The fact is, people in my parents' generation could afford to buy a house on one (low) income. I can't, even though I make a lot more than my dad did at my age. There's something wrong with that picture when people do everything right and owning a home is still out of reach.

Then you should root for anything but a bailout - you need a housing prices to go down to where it's affordable for the average worker.

Housing prices are high because they have been propped up on crazy-ass **** like no-money down, neg am, all the **** that's been discussed here for months.

By supporting bailouts, whether banks, builders or borrowers, all you are doing is supporting an artificially high housing price. You want just the opposite.

 

[Pancamo]

Poin, you are 100% accurate.

As for the programs the government is going to implement, I guarantee you each plan is bull****. What the government has tried to implement so far will not help anyone who currently has a loan. So far the increase in FHA and Conforming limits has done nothing to slow down defaults. The way Fannie and Freddie are structuring the higher loan amounts creates rates that are above Jumbo rates. Also, the new Agency Jumbo programs will not allow a borrower to combine a first and a second mortgage in an environment where second mortgage lenders will not subordinate.

So far the only entity that has received help is Bear Stearns.

The government should not bail out anyone. Let the market adjust and people who handle their finances in the proper manner will be able to buy homes at normal prices.

 

[deskslave]

I'm not sure why no one is telling some of these folks that they just shouldn't own a home right now. Yes, renting is less efficient. Yes, there are tax benefits to owning a home. But for God's sake, owning a home is not a constitutionally guaranteed right, and there are too many people out there who seem to think it is. But the philosophy up until now wasn't, "Maybe you should wait a couple years." It was, "Let's see what we can do to get you in your own home." Sometimes the answer needs to be "nothing."

 

[Inky_Wretch]

I'm not sure why no one is telling some of these folks that they just shouldn't own a home right now. Yes, renting is less efficient. Yes, there are tax benefits to owning a home. But for God's sake, owning a home is not a constitutionally guaranteed right, and there are too many people out there who seem to think it is. But the philosophy up until now wasn't, "Maybe you should wait a couple years." It was, "Let's see what we can do to get you in your own home." Sometimes the answer needs to be "nothing."

And that's part of the reason I have sympathy for the low-income buyers.

The lenders said "Yes" to anybody who'd approach them. Hell, they were even throwing themselves at people begging them to take bigger loans than the applicants could afford.

The lenders deserve zero sympathy (and bailout cash) for their poor business practices.

 

[joe]

I think what buckdub was getting at -- and he can correct me if I'm wrong -- is that there's something fundamentally wrong when a person making decent money, say $40,000 to $50,000 a year, simply cannot afford to buy a house.

My parents could, and did, afford a house in the '70s and mid-'80s when my dad was the only one working, and he was making a ****load less than $40,000 a year. It's almost impossible for a person making those wages to buy a house these days, never mind inflation.

The inequities in income from the highest to even what was the traditional middle class is a travesty. And save me the capitalism, invisible hand bull**** argument. Capitalism has always been tilted to those who already have.

I don't expect a handout. I make my own way. But when there's no ****ing way I can ever afford a house on what I'm making now, there's something seriously wrong with the whole system.

 

[alleyallen]

I think what buckdub was getting at -- and he can correct me if I'm wrong -- is that there's something fundamentally wrong when a person making decent money, say $40,000 to $50,000 a year, simply cannot afford to buy a house.

My parents could, and did, afford a house in the '70s and mid-'80s when my dad was the only one working, and he was making a ****load less than $40,000 a year. It's almost impossible for a person making those wages to buy a house these days, never mind inflation.

The inequities in income from the highest to even what was the traditional middle class is a travesty. And save me the capitalism, invisible hand bull**** argument. Capitalism has always been tilted to those who already have.

I don't expect a handout. I make my own way. But when there's no ****ing way I can ever afford a house on what I'm making now, there's something seriously wrong with the whole system.

The only way I ever could have afforded my house was to leave the journalism field and find a new career. That should tell you how much owning my own home, after so many years of not having a real home of my own for the decdae I spent in the Navy and beyond.

So I ditched my journalism career, probably for good, and opted to start a new career, which has worked out rather handsomely. And when my ex- and I divorced, I kept the home, working hard to make sure I can afford my monthly payments, on one income, as a single dad.

Think about that for a moment. Think about a reality like that magnified by thousands or more. Surely more. It's easy to dismiss people as being irresponsible, since so many people are. But there are quite a few people out there really trying to be smart, save for retirement or their kids' college education and doing everything they can to compete in an economy that stretches them thinner.

I don't ever recommend getting into a loan you can't handle, and I have no intention whatsoever of being unable to handle mine, but there are real people out there being affected by this. People who just wanted a home of their own and thought they could get it. People largely ignorant of financing.

We talk on here constantly about finding the real people among the dead Americans in Iraq. I should think we could do the same for some here.