Dem Sen want to give new loans

H

Horn6721

Hook'em
WASHINGTON (Reuters) - The chairman of the Senate Banking Committee is working on a plan to set up a company to buy distressed home loans at currently discounted values and use the money to help fund new mortgages.

In a letter to Senate Majority Leader Harry Reid released on Wednesday, Sen. Christopher Dodd said he envisioned a company with an initial capitalization of $10 billion to $20 billion that would buy distressed mortgages and pass on the "discounts ... to homeowners in the form of new, lower-balance mortgages insured by FHA or backed by the housing government-sponsored enterprises."


is this a good idea?
 
Definately an interesting idea- I would like to see the specifics.

I always worry when the government gets involved in influencing/distorting the market, but we'll see what happens. Devil is in the details in this scenario.
 
horrible idea. Doesn't this amount to government ownership of private property if and when defaults occur?
 
It assumes that these distressed home loans are currently undervalued. What if they are not undervalued? What if the market is right? Then there would be no "money" to help anybody.

When you book earnings that aren't really there, you then have to book a loss to balance things out. There's no other way. I don't care what schemes anybody can come up with. It's a bubble, and the air has to be let out. It's beyond me how some people just can't seem to grasp this exceedingly simple matter.
 
this is such a bad idea i don't even know where to begin. yes, let's give new loans to bad credit risks with tax dollars on homes they cannot afford.
 
What IF Dems used Hillary's plan and took from some for the common good.
let's see, Bill is getting a 20 million buy out from the Arabs, Buffet has some billions lying around he has wanted to give to the gov't not to mention Soros.I imagine there are some hollywood types who get give a few million here or a few million there
before you know it, BAM 20 billion
buy the predatory loans that are defaulted from the bad lenders
make new lower interest loans to thosee poor people who got bilked into buying with sub par loans,
and everyone lives happilty ever after.
I think Dodds is onto something here.
 
Might be an idea, as it's entirely possible that the inurers of the mortgages may go belly up along with the lenders. It's quite frankly the very first proposal of any consequence (IMO) that addresses the root problem. You can help out the people who are losing their houses... or wait and let them go down the rat hole and then work to help the financial institutions.

I still would want to know how the mechanics of it would work. Especially as far as do the lenders only dump the properties they don't want?

I still remember the S&L bailout where the RE was the key component in the bankruptcy portifolios. Wondering what the commercial building on Jollyville that was one of the last one's in NW austin related tot he bailout will go for when sold. He paid $210,000 for it and I think it's got to be 8,000- 10,000 sq feet.

The base concept might not be bad at all, not too terribly unlike the concept behind the Texas Workers Compensation Insurance Fund when it was set up.
 
People are defaulting on mortgages because they are unable and/or unwilling to make their payments. In many cases this is because of "unanticipated" increases in adjustable rates. See, the thing about adjustable rates is that they adjust-- half of all adjustments tend to be upward. If you borrow money on an adjustable rate and can barely afford payments now, how stupid are you? Answer-- very! If you make interest-only payments based (essentially) solely on the assumption that your equity will appear by the magic of 100% predictable future increases in demand, again you are stupid. If you lend stupid people money based on their stupid assumptions and lose your shirt, this makes you stupid, too.

I do not want to pay any more tax than absolutely necessary to bail stupid people out of the inevitable consequences of their stupid behavior.

Of course the fallout from this mess is going to sting. Let's not volunteer people not directly involved to share more of the pain than absolutely necessary.
 
naive question
If all those with subprime ARMs could get their loans reset to a fair fixed interest rate would that solve much of the problem? The biggest portion of this problem seems to be loans taken in 2005 so perhaps most of those homes haven't decreased all that much.
I would also set ceiling on the value of a home that gets reset at our expense. I do not want to subsidize someone getting an expensive home, the celing would have to adjust for market but for instance we shouldn't subsidize someone in Dallas who bought a 250k home on an ARM and now says they can't pay.


I agree please don't volunteer us to give up anymore of our money than is absolutely necessary.

the less the gov't getsw involved in this the better we all will be
of course the presupposes all those who get reset mortgages actyally make payments.
 
Judgroy?
what is it you always say, " Follow the money"

bow.gif
 
Roger
Why didn't I think to ask that?
perfectly reasonable question for whichwe all know the answer.
If there were a way to separate out the ones who really were too ignorant and who have made the efffort to make payments I could support a LIMITED plan to help them .
but as usual we will never restrict it
 
even better when do I have to have bought this home by? I think I might sell mine and trade up then miss some payments and then let the government buy and devalue my loan.
 
carrera, your biggest problem in communicatiing your point is that SOX has nothing to do with making accounting more transparent. It has everything to do with Internal Controls over Financial Reporting which has very little to do with Mark to Market Accounting.

Mark to Market accounting is an issue however I think your professor had an opinion on this, however I'm not sure that he is correct. Back in 2005 Fannie Mae hired Deloitte to come and audit restatements due to Mark to Market accounting and had 100s of auditors and M2M accounting experts working all over the DC area restating several periods of Fannie Mae's financials. If you want you can go look at them and you very well might say that they were or should be insolvent however I think you'll find that there latest financials follow the rules as stated by all of the authoritative bodies (SEC, FASB, etc...)

If you are getting your information from an ACC 310 or 311 instructor please stop listening to him as if he's gospel, if its a prof then I'm sure there is something that isn't being communicated. If it happens to be Hirst or Koonce then listen better to what they have to say cause they are the best in the department.
 
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