Foreclosures are key element missing in plan (Homeowners get screwed by bailout!)

[IndianaGreen]

Foreclosures are key element missing in plan

$700 billion bailout likely to offer little help for struggling homeowners

ANALYSIS
By John W. Schoen
Senior producer
MSNBC
updated 31 minutes ago

Hard as it is to believe, even a $700 billion bailout may not be enough to dig the economy and financial markets out of the hole they're in.

By committing such a staggering sum to end the widening financial crisis, Congress and the White House are hoping to deliver a swift knockout punch to the fear gripping the global markets and economy. But to win bipartisan support, key provisions have been watered down or left vague — including any efforts to stop the wave of foreclosures at the heart of the meltdown.

Much of the debate — and opposition to the plan — centered on Treasury Secretary Henry Paulson’s original request for sweeping powers to spend hundreds of billions of taxpayer dollars on mortgage-backed securities that are unable to attract other buyers.

<snip>

For the past year, many House Democrats have been urging that the process of rewriting unsustainable loans be turned over to bankruptcy judges. That proposal was hotly debated again during the whirlwind negotiations of the past week.

Opponents — including The White House and some Republicans — argued that forcing lenders and investors to accept such bankruptcy “cramdowns” would only make matters worse. They argue that lenders would be leery of extending new credit if borrowers could go to court to have terms changed. That would make mortgages more costly and more difficult to get, worsening the housing crisis, say opponents.

Supporters of the bankruptcy law change argue that voluntary efforts to work out affordable loan terms — including the White House’s highly touted Hope Now Alliance — just haven’t worked. They also note that the bankruptcy process applies to other forms of debt that are still in relatively good supply.

http://www.msnbc.msn.com/id/26931454/

[sandnsea]

1. HOPE Mortgage Plan already exists

And it includes a mechanism to write down loans.

[madfloridian]

2. That is just what Pelosi said.

Pelosi: helping bankrupt homeowners avoid foreclosure won't be a part of the emergency legislation

[IndianaGreen]

4. Help the bankers, screw the homeowners

Not with my money!

[1corona4u]

6. You know, I almost want it to not pass, so that when everything

goes to hell, I can look you up, and shove it up your ass, like you are doing tonight, to the rest of us.

[IndianaGreen]

10. I am not with the investor class

If you are so worried, push Congress to fully cover all the FDIC insured accounts.

[madfloridian]

3. Dupe

[napi21]

5. Unfortunately, there were many homes sold to people who will NEVER be able to afford

them. The market has been pushing bigger is better for a long time! There were criminal brokers who lied on loan apps, or directly told their clients to lie and they covered it up. Uninformed people were talked into believing the y COULD afford a much higher loan than they ever could. NOTHING is going to help them keep that home now! Yes the biggest % of the responsibility lies with the brokers and lenders who just pushed the loans through, but some of that fault lies with the buyer too. I bet if you asked them today if they ever really thought they could pay for that home, they'd tell you no.

[IndianaGreen]

7. Meanwhile the bankers got larger minimum payments on consumer credit without

lowering the exorbitant rates they charge, not to mention the fees they charge just for normal banking transactions.

They sure got a lot of gall to come asking for help from the very people they exploit.

[napi21]

13. Anyone who pays for normal bank transactions is a fool. I've

lived in 5 different States and if the bank I was using announced they were charging for anything other than overdrafts, or bad checks that I deposited, I closed the account and went elsewhere! That's one of the reasons I've not dealt with one of the BIG BANKS for 20 years! They started that kind of crap which told me they didn't want me as a "little customer" and I sure didn't want them!

As for the higher minimum payments on CC's, I understand your problem with it, but it was actually doing the consumer a favor. So many people didn't think about or realze if they paid only minimum payments, they'd be dead before the damn thing was ever paid off!

IMO the biggest scam the CC companies have pulled in recent years is dramatically increasing interest rates if someone was ONE DAY LATE win a payment! THAT is total BS!!!!!

[mzmolly]

8. Which is why I presume Obama will vote nay

on this bill?

[IndianaGreen]

9. Congressional leaders don't want hearings or a debate on bailout

They just want to rush a vote. How many times have we the people been burned by that?

[nolabels]

15. I have heard that it has bi-partisan opposition

I also take that to indicate nobody will just be rolling over for this bail out

[mzmolly]

21. I support hearings including a debate among economists.

But, I suppose if it is urgent and truly needed, they may feel they don't have time?

[Kurt_and_Hunter]

14. Obama is the one who de-linked this bill from mortgage protections

He has been plain in his public statements that measures to address mortgages should not be included in the bail-out bill, but should be considered separately.

[mzmolly]

19. That's not my take. He said bankruptcy reform (while desirable) should not be included.

He also said that the principles he laid out initially should be:

Obama's proposed additions include:

# A ban on generous payouts for "irresponsible CEOs on Wall Street." Obama warned: "There has been talk that some CEOs may refuse to cooperate with this plan if they have to forgo multimillion-dollar salaries. I cannot imagine a position more selfish and greedy at a time of national crisis. And I would like to speak directly to those CEOs right now: Do not make that mistake."

# Replacing Treasury Secretary Hank Paulson's absolute authority over the bailout's execution with a bipartisan independent board. Obama noted that Paulson signaled during testimony this morning that he may be open to the broadening idea.

# An investor stake for taxpayers. "The American people should share in the upside as Wall Street recovers," Obama said, adding, "There are different ways to accomplish this."

# Assistance for people who are in danger of foreclosure. He outlined several possible ways to provide aid, including giving the government the authority to purchase mortgages directly, instead of the mortgage-backed securities that have cause the banking woes.

He also called for a stimulus package, although he added that it shouldn't be attached to the bailout bill.

On FACE THE NATION today Obama said he'd support a plan that had his principles included. Sounds like the deal is missing one of his key additions to me?

http://voices.washingtonpost.com/the-trail/2008/09/23/obama_outline_principles_for_b.html">WAPO

[alcibiades_mystery]

11. I don't want homeowners bailed out

They should have some kind of arrangement with the credit bureaus for those who were given obviously silly loans, but that's it. I didn't ever buy a home I couldn't afford. Why should I have to pay for the home of somebody who did?

[bluesbassman]

20. If the underlying mortgage was secure, then there would be no "toxic debt".

Then the institutions and investors who are claiming to have a liquidity problem would not have a "problem" that needed to be "bailed" out. The current homeowners would stay in their homes, thereby continuing to pay property taxes, utility bills, etc., and not be out on the street driving up rental prices. The overall property values would stabilize, as there would not be a continuous increase in foreclosed properties. The loans could be restructured to meet the borrower's real ability to pay, and the goverment would be the equity partner, not the banks.

You're right though, we shouldn't help the homeowners. Let's just let the market crash, because that worked out so well in the Thirties.

[mzmolly]

22. Well thankfully Obama disagrees with you.

And, with good reason. Also, credit bureaus don't issue loans. If loans are re-written you will not have to pay, the homeowners will. I think taxpayers would pay more in the end if we let the crisis amount to more vacant homes.

[Major Hogwash]

12. Well, we've only been saying this for the last 6 days.

At least.

This is much worse than the S&L crisis of 1987.

[IndianaGreen]

16. But unlike the S&L crisis, there is no equivalent RTC in bailout bill

This deal stinks!

[iiibbb]

17. I have a good loan, I can pay for it, but if the credit market dries up, I'm screwed.

I'm just screwed by timing. We bought our house a year ago. 30 yr loan. Under budget.

[IndianaGreen]

18. As long as you are making payments, you got nothing to worry about

If this bailout is such a good deal, how come McCain and Obama won't be voting at all for it, or against it?

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3517090

[iiibbb]

23. As long as I'm getting payments from my job...

... and as long as my banks stay open...

[mzmolly]

24. I believe both have said they'd return for a vote if needed?

But, I expect Obama will distance himself from the legislation as will McCain? McCain will have some difficulty however, given he claimed to return to WA to "solve the crisis."

[IndianaGreen]

25. Obama and McCain should cast a vote, yay or nay, on the bailout

Let's see where they stand on this disastrous proposal.

[mzmolly]

26. Hell no.

I think Obama should win so we can fix this disaster we find ourselves in. ;)

I personally hope he's not forced into a vote. If he is however, of course I want him to vote nay as the legislation did not include the homeowner protections he laid out in his principles for the plan.

[IndianaGreen]

27. I want Obama to vote NO!

Restore the provision for homeowners the GOP and the bankers wanted out.

[mzmolly]

29. I want him to have it both ways.

LOL. :hi:

[dawgmom]

28. Relief for homeowners was a hard sell

The whole thing stinks, but I think for most Americans, they will buy the "big picture" story of how we need to keep the banks from failing. I think it would be a hard sell for a lot of middle America to bail out homeowners who they see as buying more house than they could afford, without saving for a downpayment, etc. I understand that lenders were predatory; I just think a lot of middle America will not be able to relate to those homeowners.