Is Obama preparing a trillion-dollar, mass refinancing of mortgages?

if banks are not forced to deal with foreclosures, then what is their motivation to be responsible lenders? this is why this problem exists! we dont let the market sort things out.

 

I've been busy (actually working...I can explain that if any Democrats don't understand ) so I just read your reply.

Here's my answer...I would do whatever YOU and Obama want me to do. I've seen the light. Money does grow on trees. We should continue to print more money and throw it at everything possible. Taxing and spending is the only answer. While we're at it we should take all the money from people who don't vote Democrat and give it to those who do.

The plan has worked so well for the past three years we should continue. I'm now seeing the genius behind it all. This guy isn't the worst president of all time. He's the greatest! It's really easy to see. I just close my eyes and keep saying Obama is the answer and eventually I believe it.





When I look at the Republican candidates lined up next to each other...I don't see a great choice.

When I look at the Republican candidates lined up next to Obama...I see no other choice!

 

Well, I will grant you this Purple Tiger: it is not a good time to be a Republican. I am not being facetious here, I really do feel bad for my Republican friends because there isn't a single candidate who will inspire your electorate.

That being said, you still didn't answer my question: what is your solution? Obama aside, I honestly want to know what you think we should do to help speed the housing recovery. Or maybe you think we should do nothing at all but nevertheless, what is your solution?

P.S. You're joke about work and democrats actually made me laugh....so....good one.

 

Look, I don't like the bank bailouts any more than the next guy. They are despicable. However, it was the only way to preserve our financial system and to stop us from going into an economic period that would make the last three years look like la la land. A lot of the money has been paid back by big banks or is in a position to be paid back through equity and warrants in the companies. Also, your statement implies that while banks were going crazy, we as citizen's were not benefiting in any way. The housing bubble lead to a tremendous bull market that increased wages and standard of living for everyone while things were good. The point I'm making is that we all were thriving when the banks were doing these dangerous things.

In short, I would say two wrongs don't make a right. You have to stop somewhere. I didn't agree with GM bailout or other stuff that was not related to the initial critical stages of TARP. I truly believe it had to be done to save our country. The real failure has been the inability of our lawmakers to solve "too big to fail" since the bailouts.

 

Banks didn't have any losses in the housing downturn? That's news to me. As far as homeowner and government losing money and house, that doesn't even make any sense. Your example specifically stated that it was for borrowers who were on time and were not having trouble paying their notes. Why should they get a handout and not everybody? In your article, none of these homes that would qualify are in risk of foreclosure. In the example they gave, the monthly payment for the individual actually goes up.

So basically a coupon worth 6.5% is now worth 3.5% with no change in the risk to the lender because the payment is the same. Exactly how is this advantageous to the guarantor?

The bank is getting paid already. They don't own those mortgages in almost all instances. They don't care about getting "their" money back because most times it's not "their" money. Fannie/Freddie has either bought them or guaranteed them.....

Reason Foundation - Out of Control Policy Blog > How Fannie Mae and Freddie Mac Guarantees Work In Brief

So all we've done at this point is taken a payback of 6.5% and turned it into 3.5%. How is that good for taxpayers? And why do people who can afford to pay for their investment mistakes get to benefit when those who are truly going broke or who aren't in a bad situation because of smart financial decisions don't get any benefit?

 

None of these houses in the example are in risk of foreclosure. In fact, that particular plan specifically excludes houses in risk of foreclosure.

[/quote]B) Fannie and Freddie will buy the loans on the secondary market (as long as the guidelines are followed)[/QUOTE]

Exactly! Fannie and Freddie are loosening the guidelines and making poorer investments with taxpayer money to help these borrowers. But that wasn't really my question. My questions is what lender, true lender not middleman, would do this deal? If you were a bank that held mortgages and didn't sell them to anyone and they were not guaranteed by Fannie/Freddie, would you really lower the interest rate for someone because their house lost value. No way. Everything is driven by the government's involvement in this market and the banks will jump at a chance to refinance a loan because they're not really putting any money at risk. Banks make money on fees, not collecting 5% interest.