An Idiot in Miami

Why Paulson and Bernanke's Plans Don't Work

Why is everyone so gun ho about stabilizing housing? Let the air out of the bubble. Or better yet just prick the darn thing. The median income to median house price in the US is still absurdly above historical norms. Once that comes down, housing has, in essence, stabilized itself.

I am in the real estate business (broker) and I find that this advice/suggestion is beneficial to the market as whole even though it might actually starve me.

Thoughts?

Dissing and Praising the Recent Housing Bill

Ironic that you mention HOPE Now since I called them yesterday to prove a point. I asked them if it was wise to sue the lenders and force them to produce the note ( popular defense nowadays) and I got a resounding NO. HOPE now is the CCS for mortgages-I dont believe they have the purest best intentions for the consumer since they are bank/lender financed.

Dissing and Praising the Recent Housing Bill

Thanks, I guess does sugar coat the worst losses, making them easier to swallow by the banks.

However, the way it is being perceived by the commoners (myself included in the group-not the perception)) is that the banks/new law will help me save my house.

I am sure the panacea glow will wear off once they see that the new loan is "same as the old loan" in that as prices continue to decline their home will be underwater once again and God know what the government will do then.


On Aug 07 03:05 PM rm wrote:

> This bill gives investors a floor... so their losses may be lower
> if they participate in this bill, as opposed to selling their assets...
>
>
> which allows them to offer principal forgiveness without the "moral
> hazard" of actually doing writedowns on existing loans.
>
> The old argument was that if they did a writedown for you, then they'd
> have to do it for your neighbor.
>
> Now they can tell the neighbor, "Hey, we CAN'T do one for you...
> because you don't qualify for this "special" program.
>
> Also, many of the servicing agreeements don't have provision to write
> down principal, because it's such a foreign concept.

Dissing and Praising the Recent Housing Bill

Can't they (banks) do that now? Why would they get a higher price? Is it because the current occupant/borrower is willing to pay a premium to stay in the house as opposed to an outside buyer who will only pay true market price?

I would understand the "bailout" (therefore the incentive) if the banks would get subsidized on the writedown amount by the govt (read Fannie or Fred). Perhaps I have cloudy vision but if I were a bank the only motivating factor for me would be if someone (anyone?) would cover my losses.

Dissing and Praising the Recent Housing Bill

Can anyone explain what the incentive is to banks if the loan reduction is voluntary on their behalf?

Why the 2008 Housing Relief Bill is No Relief

600 plus pages is the size of the bill yet one word makes it worthless: Voluntary. The lenders have a CHOICE, BUT NOT AN OBLIGATION, under the bill to modify the loan. Guess what? They have always had the choice so all this hoopla is pointless because the lenders do not have a motivation to take a loss. Who does?