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Frozen Mortgage Rates? Agree or Disagree - G.Irish - 12-06-2007
It seems that the government is considering freezing mortgage rates for those with variable interest loans that are in danger of not being able to pay when their rates reset.
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Personally I think it would be wrong to bail out people who made irresponsible purchases that led to the wild speculation in the first place. If the government steps in to save people when they make poor decisions like that then there is no incentive to make responsible decisions in the future.
This would certainly soften the real estate market correction, and who knows, it might be better for the economy. I guess I just don't like it because I want houses to be cheaper.
Re: Frozen Mortgage Rates? Agree or Disagree - Apoc - 12-06-2007
G.Irish Wrote:If the government steps in to save people when they make poor decisions like that then there is no incentive to make responsible decisions in the future.
There's a name for this program... it's called Welfare.
- HAULN-SS - 12-06-2007
I have a conflicting view on this. As someone who just bought a house, the responsible way, mind you (prime mortgage, 30 year fixed rate), I am all for a freeze, because it just means my house won't be affected by the correction as much, if at all. On the other hand, I really hate to see government meddling in a free economy. it's going to eventually cost tax payers for this to happen, and in a big way. I wish there was a way for them to help the average guy, but nail the flippers who pretended to be real suave investors, and got effed.
Re: Frozen Mortgage Rates? Agree or Disagree - .RJ - 12-06-2007
Apoc Wrote:There's a name for this program... it's called Welfare.
This doesnt cost the gov't (taxpayers) any money though. Just the banks in the form of lost revenue, although if people dont pay their mortgage they lose even more so ultimately this decision should be up to the lenders and not the gov't.
I dont agree with bailing people out that bought more than they could afford though. Let them roast.
- mrbaggio - 12-06-2007
Is it much different that what the gov has done since the 1930s? Poor people make dumb choices have extra kids they can't afford. Then they get a welfare check. Both systems help the stupid, irresponsible people of this country. All at the expense of everyone else.
Wear a rubber and learn how a mortgage works.
Re: Frozen Mortgage Rates? Agree or Disagree - CaptainHenreh - 12-06-2007
.RJ Wrote:This doesnt cost the gov't (taxpayers) any money though. Just the banks in the form of lost revenue, although if people dont pay their mortgage they lose even more so ultimately this decision should be up to the lenders and not the gov't.
I dont agree with bailing people out that bought more than they could afford though. Let them roast.
THIS.
- .RJ - 12-06-2007
mrbaggio Wrote:Is it much different that what the gov has done since the 1930s?
That one crashed and burned too.
Re: Frozen Mortgage Rates? Agree or Disagree - Apoc - 12-06-2007
.RJ Wrote:Apoc Wrote:There's a name for this program... it's called Welfare.
This doesnt cost the gov't (taxpayers) any money though.
Indirectly it does. Less income for the mortgage companies means less taxes are paid. You also lose the decrease/elimination in income tax credit given for mortgage interest that people wouldn't have gotten had they been forced to sell their house.
Money is always connected.
Re: Frozen Mortgage Rates? Agree or Disagree - Maengelito - 12-06-2007
.RJ Wrote:Apoc Wrote:There's a name for this program... it's called Welfare.
This doesnt cost the gov't (taxpayers) any money though. Just the banks in the form of lost revenue, although if people dont pay their mortgage they lose even more so ultimately this decision should be up to the lenders and not the gov't.
I dont agree with bailing people out that bought more than they could afford though. Let them roast.
i think its a bit more complicated than that. i dont know all the details but from what i understand, lenders advertise these awesome low rates to entice people to buy houses and take out mortgages. the lender then essentially sells the mortgage to another financial institution and it eventually makes its way to one of the govt backed mortgage lenders sallie mae or freddie mac. if all these foreclosures stop the flow of money, it could have some serious consequences on our economy where we all get screwed.
but yeah, i do think its shitty that people made stupid decisions and now they might get help because of it.
Re: Frozen Mortgage Rates? Agree or Disagree - .RJ - 12-06-2007
Maengelito Wrote:if all these foreclosures stop the flow of money, it could have some serious consequences on our economy where we all get screwed.
Then the bank sells off the house, and comes out ahead even if they sold it for less than it sold for 2 years ago. Everyone wins. Let 'em roast.
Re: Frozen Mortgage Rates? Agree or Disagree - Maengelito - 12-06-2007
.RJ Wrote:Maengelito Wrote:if all these foreclosures stop the flow of money, it could have some serious consequences on our economy where we all get screwed.
Then the bank sells off the house, and comes out ahead even if they sold it for less than it sold for 2 years ago. Everyone wins. Let 'em roast.
while i agree to let'em roast, the govt will lose tons of money for picking up lets say a hypothetical $400k mortgage, then all the securities backed by mortgage start taking dumps due to investor concerns, then the house sells again for like $150k a couple years later. multiply this by like the 10 million homeowners or so that are in question and thats a large chunk of change.
*note, all of these numbers were pulled out of my ass as an example, i dont know exact numbers
Re: Frozen Mortgage Rates? Agree or Disagree - G.Irish - 12-06-2007
Maengelito Wrote:Yeah my concern is that with a lot of foreclosures consumer spending will tank and that will stall the rest of the economy severely. As much as I'd like my McMansion I don't want to see a major recession..RJ Wrote:Apoc Wrote:There's a name for this program... it's called Welfare.
This doesnt cost the gov't (taxpayers) any money though. Just the banks in the form of lost revenue, although if people dont pay their mortgage they lose even more so ultimately this decision should be up to the lenders and not the gov't.
I dont agree with bailing people out that bought more than they could afford though. Let them roast.
i think its a bit more complicated than that. i dont know all the details but from what i understand, lenders advertise these awesome low rates to entice people to buy houses and take out mortgages. the lender then essentially sells the mortgage to another financial institution and it eventually makes its way to one of the govt backed mortgage lenders sallie mae or freddie mac. if all these foreclosures stop the flow of money, it could have some serious consequences on our economy where we all get screwed.
- .RJ - 12-06-2007
a $400k -> $150k drop is pretty unreasonable.
Also, the number of house foreclosures compared to the number of US citizens is very low. I believe the figure I read was 1 in 555 houses was the going rate, and how many people own houses?
The economic impact on the rest of us should be small. Let 'em roast.
- Maengelito - 12-06-2007
.RJ Wrote:a $400k -> $150k drop is pretty unreasonable.
Also, the number of house foreclosures compared to the number of US citizens is very low. I believe the figure I read was 1 in 555 houses was the going rate, and how many people own houses?
The economic impact on the rest of us should be small. Let 'em roast.
like i said, i dont know exact numbers, but its certainly not gonna be a negligible impact though. i'm certainly not for the govt stepping in and helping out idiots, but i dont wanna get screwed in the process either. its certainly a little more complex than what any of us get though.
- Evan - 12-06-2007
Holding people to accountability for their actions is one of my most core beliefs, but Im not terribly bothered by this particular solution to the "crisis" (now whether or not it actually is a "crisis" is another matter-- statistics for foreclosures are not dramatically up)
its more of a political crisis, in regards that any politician will be criticized for not doing anything about it, regardless of if it actually needs anything done.
I wouldnt call it a bail out since it doesnt envolve government funds. Its FAR FAR better than the Hillary proposed government bailout that would have directly paid for your neighbor's McMansion that he couldnt afford with your and my tax money.
it seems like this solution is a win-win for everyone. Less people foreclose, the banks have less defaults (although take a hit in payments), and you and I dont have to pay for Hillary's tax funded bailout.
Since the banks will take a small hit, they should teach them not to give out a loan to anyone with a pulse.
although of course, they deserve to burn. and eliminating risk from a free economy is a very very dangerous thing that can have bad longterm effects.
- .RJ - 12-06-2007
Maengelito Wrote:like i said, i dont know exact numbers, but its certainly not gonna be a negligible impact though.
Continue to let the meda frenzy to fuel your opinions then :thumbup:
1/555 homes = .18% of the homes. And whats the % of homeowners in the country, vs. tennants?
Spin it however you want, the long term impact of this is negligable to the health of the economy. The far more damaging part is the fear being propogated by the media outlets.
- Ginger - 12-06-2007
.RJ Wrote:The economic impact on the rest of us should be small. Let 'em roast.
I don't wanna pick on you, but you can't look at the number of effected houses, multiply by loss amount, and come up with a figure that will tell you total economic loss. The economy doesn't work the way finance accounting does. A collapsing sector of the mortage market would cause serious problems for the economy as a whole.
The dollar is already losing ground as an international reserve currency in large part thanks to this crisis... play our cards wrong and we can still lose a lot more ground. The Great Depression taught us how interconnected different markets were, and it taught us how a collape in one area causes greater downstream collapses and rattles investors and people's confidence in the economy. 1, to 2, to 3, to 4, and in not so long a period, we've got a bona-fide problem. If not losing that ground means propping up peoples' that made poor borrowing choices that may be something we have to do.
Deersty said something about fucking around in a free economy... which I'd usually agree with. But the problem is that we don't live in a free economy, and the Fed was a very large player in creating the sub-prime lending crisis. They're going to cut rates again by another quarter point for temporary relief and to hopefully regain confidence in the economy.... and it'll cause more problems. The problem with the Greenspan Put, cutting rates in low conditions and raising them at a much slower pace when times are good, is that eventually somebody's got to bite down on the artificially low lending that's occurred. Now looks like the time.
Economic history has taught us that hands off almost always produces the best results. But how do we let 'em fry and make people think that Everything will be O.K.?
- stevegula - 12-06-2007
I'm against it. Those people were idiots, let them suffer some consequences. I can't afford to buy a house because those nimrods drove up the housing market.
- Ginger - 12-06-2007
Evan Wrote:Since the banks will take a small hit, they should teach them not to give out a loan to anyone with a pulse.
We shouldn't just cut rates and never raise them, then. We're giving them an incentive to lend low. Yay Fed!
- .RJ - 12-06-2007
asteele2 Wrote:The dollar is already losing ground as an international reserve currency in large part thanks to this crisis... play our cards wrong and we can still lose a lot more ground.
Is devaluation of the dollar a bad thing? No, I'm not joking. If our stuff is "worth" less to other countries, there's more trade involved - its not worth any less to us while we're selling more goods.
I know its not as simple as a $$ calculation based on the foreclosed houses - because people's emotions get into this, there are market corrections, people buy/sell, dont spend much during xmas because they thing the sky is falling and so on. I look at this as all short term effects. I dont see any long reaching fallout for the economy (longer than a few years) and the housing market 'reset' should be finished in 5-8 years. All IMO.
stevegula Wrote:I can't afford to buy a house because those nimrods drove up the housing market.
Yup. So I spent it all on racing instead :beer: