Housing Bailout: These Criteria Are Ridiculous

I was troubled enough when reading that only people with little or no equity would be allowed to refinance under Obama's plan. Also, in cases where people have been paying on time but are now facing an increased interest rate, they can't re-finance either. They just get to help pay off someone else's house, too. But then it got worse.

President Barack Obama's new foreclosure-prevention plan is already sparking outrage from some Americans who won't qualify for federal aid -- and from those who resent having to foot the bill for those who do.

Why are they allowing people with little or no equity to refinance up to 105% of the house's current market value? That just puts them right back underwater, again? And we have to subsidize that? It's insane. And studies show most of these re-fi's go belly up, anyway. This will never end.

Some borrowers in hard-hit markets say they also are excluded. That is because the foreclosure-mitigation plan allows borrowers with little or no equity to refinance a first mortgage for up to 105% of the property's current market value.

Comments

[Lala]

I don't pretend to understand all of this but it sounds like a euphemism for section 8 housing where the renter pays 30 percent of the rent. How can anyone who has no equity in a home be considered to be an owner? Owning a house is expensive, repairs have to be made, things have to be updated, real estate taxes have to be paid. If the "owner" doesn't have enough money for these things then they have no business "buying" a house.

They are claiming victimhood, that they were deceived into buying at unfavorable terms. I don't believe it. I think they thought that prices would continue to go up forever and they would flip the house as soon as the price was right. That's why they took "teaser" loans that would adjust in three years. They never expected that they'd have to ante up on them.

[Al]

"criteria" is a plural word - do you mean these criteria. or this criterion? It's not clear from reading the article

[Dan]

all better now I believe

[Lala]

usage

The plural criteria has been used as a singular for over half a century . Many of our examples, like the two foregoing, are taken from speech. But singular criteria is not uncommon in edited prose, and its use both in speech and writing seems to be increasing. Only time will tell whether it will reach the unquestioned acceptability of agenda.

[WBestPresidentEver]

Now, there's a fascinating story at TwinCities.com, and it is by Nicole Garrison-Sprenger, posted yesterday. It's about the president, the CEO of US Bancorp. His name is Richard Davis. It's about the TARP plan. He says: "There is no 'A, R or P' in the government's Troubled Asset Relief Program. 'It's just troubled,' the 50-year-old CEO said at the Thrivent Financial for Lutherans' Business Leaders Forum. The forum invites executives to discuss how business and their principles intersect."

The CEO of US Bancorp, said that "while government officials marketed the program as a way to entice banks to lend again, TARP actually was designed to give solid banks like US Bancorp some extra cash to buy weaker banks in the system. US Bancorp did just that late last year when it acquired the assets of two failed banks in California, Downey Savings and Loan and PFF Bank & Trust. 'We were told to take it so that we could help Darwin synthesize the weaker banks and acquire those and put them under different leadership,' he said. 'We are not even allowed to mention that. ... We were supposed to say the TARP money was used for lending.'" This CEO told a group of people that TARP was never about credit, it was about Darwinism, it was about giving big banks some money to go buy little banks that were in trouble.

The CEO Richard Davis says he's "talking about it now because he and others oppose current and future strings attached to the program. Davis didn't detail those strings, but he said he and some peers intend to voice their opinions to Washington, DC, soon."

Now, don't forget, the CEO of Wells Fargo also said he didn't want the money; they weren't in trouble; they didn't have any bad mortgages out there. He said they were dragged in there and the Treasury secretary gave them 'til five o'clock that day to sign on the TARP, and they weren't getting out of the room until they signed it. Okay, so they give us the money, they tell us to use the money to go buy smaller banks and now they're punishing us for having the capital. He said he "refuses to stand by and let his company become 'collateral damage' in an attempt to nationalize the banks. ... Davis also disclosed that a number of other states and cities have been working hard to lure US Bancorp away from the Twin Cities," but he's not going to leave. He refuses to stand by and let his company become collateral damage. So one of the bank CEOs is out there now and saying this was never about lending, it was never about restocking the credit pile. It was about giving us capital to go buy other banks, and that's exactly what happened. And then remember how mad Congress got at these guys? They got ripped for it! That's what they were told to do by the Treasury secretary. They were called up to explain themselves to Barney Frank, and they couldn't go public with this. They're frustrated as hell. I guess that's why Davis has gone public with it.

[Dan]

Thanks, Lala. Actually I checked it on line before I used it in the header - but in looking at it, there are multiple criteria, so I decided to change it.

I could argue either way - that I meantthe one criteria I found worse. But, heck - it's balanced now!!

[mary]

Speaking of the housing "plan", there is a poll up at CNBC, simple really "CNBC Poll: Tell Us What You Think Would you want to join Rick Santelli's "Chicago Tea Party?" http://www.cnbc.com/id/29283701

[Lala]

You're welcome. It's like lame-o with media.

[Lala]

Santelli was interviewed - the poll is 92 percent in his favor.

http://corner.nationalreview.com/post/?q=YWU1OTYwYThkZmM2OGZkYzIxNDMyNTUxY2UwZmNmOWI=

[mark l.]

the housing market needs to resettle and this 'housing giveaway' is keeping the the markey in limbo.

Everything has to collapse to clean itself out.

people who can't afford 400k houses need to go to 300k houses, 300k to 200k, 200k to 150k etc....
all the houses go except at the top end.

it would be the best thing for the market. Supporting individuals, or even keeping them in the belief that they might get a huge deal if they keep squating, is going to make it that much harder for the defaulters to downsize.
Half the defaulters need to downsize. The other half just need their bubble burst.

After they make a concerted effort to get those pursuing the exercise in futility-those who got liar loans, interest only, or ARMs and still think they can meet their mortgage the old fashioned way, out of the houses, the rational people can be bailed out and allowed to downsize.

The longer the govt sustains the belief that individuals don't need to seek alternate housing, the longer we sit in a housing slump. We are looking at a queazy home market for a long time, as opposed to flushing it out of the system in six months or less.

[jvc]

This plan is just the first step in "reparations by stealth". The criteria are purposefully vague - and eligibility will no doubt be decided on a case-by-case basis by hand-picked "mortgage specialists" in some new federal mortgage bailout dept. These specialists will certainly be chosen from among the ranks of the "disadvantaged" and "underprivileged" and will decide who qualifies. It's not much of a leap to see who will get most of this money - the modern-day version of 40 acres. The mule will be next.

[Doug nusbaum]

I like to think that this is a practical, free market, fair (everyone shares the pain) solution

http://www.dnusbaum.com/fix.html