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alstry (35.43)

WOW...Are Fools Sheep???

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April 05, 2010 – Comments (3)

The government launched a new effort on Monday to speed up the time-consuming, often-frustrating process of selling your home if you owe more than it's worth.

The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale -- known as a short sale -- or agree to turn over the deed of the property to the lender.

WE GIVE INSOLVENT WALL STREET BANKERS BILLIONS IN BONUSES....AND ALLOW THEM TO BORROW PRACTICALLY UNLIMITED AMOUNTS OF MONEY FROM OUR SAVINGS AND RETIREMENT ACCOUNTS FOR ESSENTIALLY FREE.....YET WE ONLY GIVE CITIZENS $3000 TO MOVE OUT OF THEIR HOMES TO GIVE THE HOMES TO BANKERS?

COULD YOU IMAGINE HOW MANY AMERICANS COULD KEEP THEIR HOMES IF WE LOANED THEM SOME MONEY FREE, TEMPORARILY OF COURSE, SO THEY COULD LEND IT BACK TO THE GOVERNMENT FOR A SUBSTANTIAL PROFIT JUST LIKE THE BANKERS???

BAAAAAAHHHHHHHHHH!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

3 Comments – Post Your Own

#1) On April 05, 2010 at 10:09 PM, alstry (35.43) wrote:

AMERICA BEING OUTSOURCED BY WALL STREET AND FOOLS STILL FOCUSED ON THE TICKER???? 

NO WONDER SO MANY AMERICANS ARE LOSING THEIR HOMES AND HOME VALUES ARE CRASHING!!!!!

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=366770&t=01002130057764754273

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#2) On April 05, 2010 at 10:19 PM, alstry (35.43) wrote:

Whoops...bad link:(

http://www.reuters.com/article/idUSN0514704420100405

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#3) On April 06, 2010 at 9:55 AM, arisktaker (62.62) wrote:

Alstry, would you keep a home with a current value of $150,000 and a loan of $300,000?  Maybe but I don’t think so, especially if you don't have a job or have taken one at half what you use to make. Then add in that the ARM loan has just recalculated from 3% interest only ($750 a month on $300,000) to 6% interest & principal ($1,798.65 a month on $300,000).  Lending "free money" isn't going to help.

From January 2001 to January 2007 the Republican Party controller the House, Senate and Presidency.   A major plank of the Republican Party (see the 2000 and 2004 Republican Party platforms available on the internet) was to make home ownership available to those that had previously been unable to afford it.  The 2004 platform brags about the success the Bush administration had in achieving this goal in their first term and how they supported the President’s goals.   The government lending institutions (Fedddie Mac; Fannie Mae, etc.) were under heavy pressure to loosen the lending rules to accomplish this.

Copied from the 2004 Republican Platform:

“Homeownership
Homeownership is central to the American dream, and Republicans want to make it a reality for everyone. That starts with access to capital for entrepreneurs and access to credit for consumers. Both have improved immensely in the past four years, resulting in record levels of homeownership. For the first time, more than half of all minorities own their home.

We support the President’s goal of increasing the number of minority homeowners by at least 5.5 million families by the end of the decade. Since President Bush announced his initiative in 2002, an additional 1.6 million minorities have become homeowners. The Self-Help Homeownership Opportunities Program helps low-income families purchase a home. The most significant barrier to homeownership is the down payment. We support efforts to reduce that barrier, like the American Dream Downpayment Act and Zero Downpayment Mortgages. The President and Congress have taken action to provide counseling and education to help first-time homebuyers navigate the process of buying a home. The Administration has also taken steps to alert people to the dangers of predatory lending, in an effort to help Americans maintain a positive credit history.”

 The government and the lenders did this.  They offered home ownership to poor families at payments equal to "project" rent payments.  Who wouldn't jump at a chance to move out of the "projects" and into a $300,000 home?  That said, they brought all their baggage with them but little thought was given to this..  

So what does the $3,000 do?  It allows the family to save their possessions rather then have the sheriff put everything on the corner when they are evicted.  It allows the family to put a deposit down on a new place to live and make the first month's rent.  They can rent a truck and move.  It may also allow them to avoid bankruptcy

What do we the taxpayers get?  Long ago big mortgage companies learned: 1. If you give people a way out when you foreclose (a few thousand dollars) then they don't destroy the property and you save tens of thousands of dollars.  2. Properties that are occupied have a much higher value that those that are not and there is less chance of people stealing stuff - like all the appliances and/or copper pipes.

"Short sale" vs foreclosure - there is a difference.

When a foreclosure occurs the property is sold at auction.  This takes many months and in most cases the lender buys the property for what is owed.  The majority of properties are then held by the lender for many more months before they find a buyer.  The evicted homeowner has nothing to loose if they take or destroy stuff and they can be angry.  Lenders often loose $100,000 or more on each foreclosure.  By the time a buyer if found the houses have often become a blight to the neighborhood.  When foreclosure rates were low communities were able to deal with the problem.  With the high rate foreclosures we are in danger of being overwhelmed.

Short Sales are the sale of the property direct to a buyer at an amount less then what is owed to the lender, hence the term.  This requires the homeowner and the lender to agree to the sale.  It normally means that the lender will forgive the difference is what is owed vs. what they get.  The homeowner can get out but by then they generally have no money left to get a new place or to move. The $3,000 allows them to move and the sale to take place preventing the chance for another blighted property.  It also help to slow the drop in property values and to reduce the losses to the lenders.  This can lead to reduced bank takeover by the FDIC and much small losses by the government lending institutions.

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