Propping up the Real Estate Market, Again

[cme1201]

As if the Help for Homeowners program or Home Affordable Modification Program wasn't a big enough disaster, here comes round 2

More Money for Struggling Homeowners
by AnnaMaria Andriotis
Wednesday, June 29, 2011
finance.yahoo.com/loans/article/113040/more-money-for-struggling-homeowners-smartmoney?mod=loans-home

The effort, called the Emergency Homeowners Loan Program, is the latest in the federal government's efforts to slow down the flood of foreclosures a necessary step to a meaningful recovery in the housing market, says a Department of Housing and Urban Development official. For people who have lost their jobs, the $1 billion program offers loans of up to $50,000 that don't actually need to be repaid, if applicants meet certain requirements.

The government's Home Affordable Modification Program, which started in 2009 and was projected to help up to 4 million homeowners lower their mortgage payments has so far only permanently helped around 700,000 homeowners.

With this program, we placed $75b into a program that was touted to be the greatest help to homeowners, and less than 25% of the low-end estimate have been helped, now we are going to throw another billion at the problem, (under a different name) and expect a different result. I don't think that's going to work.

[BeenThere...DoneThat...]

[floridayankee]

Up to $50k that doesn't have to be repaid, eh? I've always considered that a handout, not a loan.

[cme1201]

Jun 30, 2011 10:28:58 GMT -5 floridayankee said:

Up to $50k that doesn't have to be repaid, eh? I've always considered that a handout, not a loan.

It only doesn't need to be paid back if the "homeowner" stays in the house for 7 years (loan is for 2 the payback period depreciates 20% per year till zero), If they are late on a payment (really likely since they are looking for people out of work or under employed), or they sell early the remaining portion has to be paid back.

And when the home gets foreclosed on or the buyer needs to do a short sale, who gets left holding the bag, that's right We do, the Taxpayers and not the irresponsible ones.

[djAdvocate]

this was a forgone conclusion. the second wave of crap mortgages peaks this year.

[floridayankee]

Jun 30, 2011 10:33:21 GMT -5 cme1201 said:

It only doesn't need to be paid back if the "homeowner" stays in the house for 7 years (loan is for 2 the payback period depreciates 20% per year till zero), If they are late on a payment (really likely since they are looking for people out of work or under employed), or they sell early the remaining portion has to be paid back.

IOW, this will simply drag out the pain and bilk even more money out of the foolish folks that bought an unaffordable McMansion to begin with in a vain attempt to hang on to that imagined "American Dream".

I forget the number, but something like half the folks receiving loan modifications a few years ago still ended up in foreclosure. You'd think people would just learn to walk away if the house is truly unaffordable. Why throw more good money after bad?

[bubblyandblue]

There is many more things less tangible than "investment" and, of greater value to homeownership.

[cme1201]

Jun 30, 2011 11:28:58 GMT -5 @bubblyandblue said:

There is many more things less tangible than "investment" and, of greater value to homeownership.

Exactly what is this supposed to mean bubblyandblue, because I don't follow your line of thinking.

FloridaYankee

As I stated in the OP,

I don't expect this to work

[henryclay]

cme said:

I don't expect this to work

But it WILL work, , ,for the people handling the paperwork. It goes back to how Obama got rich. What he did was use government programs as a source for "handling fee" income while stumping that he was doing it for the residents of south side Chicago. He had Tony Rezco and his friends picking and chosing the properties with the most promise. (Maybe it was the other way around, , , Maybe Tony Rezco was the one who se thim up onto the scheme in the first place.)

All he is doing now is providing a broader base of "handling fee" leeches a guaranteed income at the expense of taxpayers.

[bubblyandblue]

Homeownership should never have been run through the securitization model. Someone should by a home and, not look to it as an investment. I derive much happiness in my home because of the folks that are my neighbors and good friends, a decent school district, recreational activities, activley at our council board meetings with my neighbors, a sence of community, police who you know and care about because they care about you. Location near work and transportation etc. etc.- It's a blast where I live and, I know I am lucky for it.
During the boom - we did not have a turn over in housing and when it crashed - we did not have the sale signs go up. _ we are lucky because we have a close knit community.

[maui1]

the gov't can't fix what they broke........

what caused the gov't to break the housing market, still alludes them, so they don't see the other side of the problem.

[cme1201]

So is this your entire town or just your neighborhood?

My house is neither a piggybank nor a place for happiness, my house is a roof and 4 walls, keeps me and mine dry and allows us a place to store our crap.

[djAdvocate]

Jun 30, 2011 12:30:47 GMT -5 @maui1 said:

the gov't can't fix what they broke........

what caused the gov't to break the housing market, still alludes them, so they don't see the other side of the problem.

the government cause the problem because they failed to regulate the easy money.

the solution is not to get rid of both the easy money and the regulations.

[bubblyandblue]

cme1201 - "My house is neither a piggybank nor a place for happiness, my house is a roof and 4 walls, keeps me and mine dry and allows us a place to store our crap."
Sorry to hear that - the whole town is that way "a few grumps but, they always join the festivities, and if they need anything, they know they can depend on a ton of us to help. The town had some zoning issues that brought everyone out years ago and that bond never went away. As crazy as it sounds, everyones house is a refuge to any of the kids running about - no one has ever been short a babysitter. I really am thankfull that I ended up here. It really is a blast.

[thyme4change]

I wonder how many people this will actually help. I would think that many people who are getting foreclosed upon are happy to be out of an underwater house. I guess the $50k kinda helps that, but I'm guessing that 7 year time-frame may deter a few people.

[floridayankee]

Jun 30, 2011 13:04:15 GMT -5 thyme4change said:

I wonder how many people this will actually help. I would think that many people who are getting foreclosed upon are happy to be out of an underwater house.

Been there, done that....when my soon to be ex walked out on me after getting laid off and rehired by an old company for less than half my previous salary.

Sure it sucks. The world didn't end. The government didn't save me from myself. I took plenty of lumps but life went on. IMHO, I'm a better person because of that experience.

My house is neither a piggybank nor a place for happiness

Really? My house is a place for all sorts of "happiness". The happiness isn't because of the house though.

[jkapp]

So if I plan to stay in my house for the next 30 years at least (that's the plan anyway), I make the payments on time, and don't sell...can I get a $50k loan that doesn't need to be paid back too?

Oh, of course not...because responsibility isn't rewarded by government - only irresponsibility and stupidity gets rewarded, the responsible people are the ones they steal from to reward the irresponsible.

[cme1201]

In the sense that I do not derive my happiness from my home. As I said it's nothing more than 4 walls an a roof to keep me and mine dry and a place to store our crap.

Is there happiness there sure, will I have happiness if I choose to move yes.

[cme1201]

Jun 30, 2011 13:19:35 GMT -5 jkapp said:

So if I plan to stay in my house for the next 30 years at least (that's the plan anyway), I make the payments on time, and don't sell...can I get a $50k loan that doesn't need to be paid back too?

Oh, of course not...because responsibility isn't rewarded by government - only irresponsibility and stupidity gets rewarded, the responsible people are the ones they steal from to reward the irresponsible.

Exactly, you must be behind on your mortgage, not be working or have taken a serious pay cut. Look at the list of documents that you must have before you can even begin applying for the "loan".

The Government should simply go into the front yard set a billion 1 dollar bills on fire and walk away, it will have about the same effect.

[❤ mollymouser ❤]

I just don't think it's possible to borrow one's way out of a money crisis.....

[thyme4change]

I just don't think it's possible to borrow one's way out of a money crisis

Can you call the democrats and tell them that?

[swamp]

Jun 30, 2011 13:26:02 GMT -5 thyme4change said:

I just don't think it's possible to borrow one's way out of a money crisis

Can you call the democrats and tell them that?

I think some republicans need a reminder too. Maybe all of Congress should get the memo?

[thyme4change]

How about everyone in America? Can we just force a tatoo of that on everyone's forhead? I think it would change our country for the better if we were reminded of that 50 or 80 or 100 times every day.

[swamp]

Jun 30, 2011 13:34:11 GMT -5 thyme4change said:

How about everyone in America? Can we just force a tatoo of that on everyone's forhead? I think it would change our country for the better if we were reminded of that 50 or 80 or 100 times every day.

No problems with that............

I'm sure it will look better than 70% of the tats you saw at the waterpark.

[thyme4change]

I concur.

[floridayankee]

Jun 30, 2011 13:25:15 GMT -5 ❤ mollymouser ❤ said:

I just don't think it's possible to borrow one's way out of a money crisis.....

I believe you are correct Molly. Think the clowns in DC will ever realize this?

Sometimes I'm really left wondering if it is a requirement to check any fiscal sanity and common sense at the door before entering the congressional chambers.

[pepper112765]

Looks to me as if the banks win again. They lender directly gets the money as it pays past due balances, etc. So, even if a homeowner still goes into foreclosure the lender that holds the loan got $50,000 they would not have otherwise received.

[swamp]

Jun 30, 2011 14:15:20 GMT -5 pepper112765 said:

Looks to me as if the banks win again. They lender directly gets the money as it pays past due balances, etc. So, even if a homeowner still goes into foreclosure the lender that holds the loan got $50,000 they would not have otherwise received.

But should it go directly to the homeowners, though, if it's mean for a mortgage bailout? If it did, I could see lots of $50k's being spent on hookers, blow, and big screen TV's..................

[pepper112765]

What if they aren't $50,000 in arrears??? Are they holding it as a deposit against future missed payments, or, does it reduce the principal after the arrears are caught up? Either way, the bank ultimately wins because if the homeowner is allowed to go into foreclosure as it ultimately would based on the circumstances to get the loan, the bank is still up $50,000 and the homeowner out of a home.

[swamp]

Jun 30, 2011 14:31:00 GMT -5 pepper112765 said:

What if they aren't $50,000 in arrears??? Are they holding it as a deposit against future missed payments, or, does it reduce the principal after the arrears are caught up? Either way, the bank ultimately wins because if the homeowner is allowed to go into foreclosure as it ultimately would based on the circumstances to get the loan, the bank is still up $50,000 and the homeowner out of a home.

Do they still get $50k if teh homeowner is not $50k in arrears?

But I'm not sure I agree with you that the bank is still up $50k. They usually lose money on a foreclosure. Not that I think the government should be giving any help the banks, but they're gonna be out a ton of money when the homeowner walks.