Comments on: My Thoughts On Foreclosure Bailouts http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/ A rich life without a lot of money Fri, 10 Feb 2012 16:44:00 +0000 hourly 1 By: thomas http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27161 thomas Tue, 03 Mar 2009 06:54:19 +0000 http://frugalbabe.com/?p=820#comment-27161 Excellent post. Well laid out and many great points. It's nice to see those who classify themselves as Liberal to actually THINK about things instead of toeing party lines. Excellent post. Well laid out and many great points. It’s nice to see those who classify themselves as Liberal to actually THINK about things instead of toeing party lines.

]]> By: Anna http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27124 Anna Thu, 26 Feb 2009 20:06:56 +0000 http://frugalbabe.com/?p=820#comment-27124 I think there are responsible people who got nailed in this and irresponsible people who don't deserve help. However, how do you decide between the two? I'm not touching that Solomon question for nothing. But I can sympathize with folks who tried to be responsible. After we bought our house, we got calls every year from our lender "Housing prices have gone up by average of X% - we can refinance and give you more cash" While a younger version of me would have gotten taken in on this, between the calls and what you saw on TV (take money and put it in stock market????), luckily my husband was more financially savvy and illustrated to me the fees we'd have to pay to get that money. It was those fees the banks wanted. On the flip side, though, I don't understand the foreclosure problem for one reason. What ever happened to bankruptcy? The bank takes over your budget basically and says "give us this much every month". A family member had to do this and it's not an easy way out. The bank is paid first and takes a LARGE chunk of your monthly income. Which is as it should be - you pay off as much as you can and bank helps reduce interest rates etc. Why is this option not being utilized with this crisis? Or did the revamping of the bankruptcy laws just a few years ago make this difficult? (Ok the paranoid person in me wants to know - did they see this coming and change the laws accordingly?) I think there are responsible people who got nailed in this and irresponsible people who don’t deserve help. However, how do you decide between the two? I’m not touching that Solomon question for nothing.

But I can sympathize with folks who tried to be responsible. After we bought our house, we got calls every year from our lender “Housing prices have gone up by average of X% – we can refinance and give you more cash” While a younger version of me would have gotten taken in on this, between the calls and what you saw on TV (take money and put it in stock market????), luckily my husband was more financially savvy and illustrated to me the fees we’d have to pay to get that money. It was those fees the banks wanted.

On the flip side, though, I don’t understand the foreclosure problem for one reason. What ever happened to bankruptcy? The bank takes over your budget basically and says “give us this much every month”. A family member had to do this and it’s not an easy way out. The bank is paid first and takes a LARGE chunk of your monthly income. Which is as it should be – you pay off as much as you can and bank helps reduce interest rates etc.

Why is this option not being utilized with this crisis? Or did the revamping of the bankruptcy laws just a few years ago make this difficult? (Ok the paranoid person in me wants to know – did they see this coming and change the laws accordingly?)

]]> By: AnnJo http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27114 AnnJo Thu, 26 Feb 2009 06:53:06 +0000 http://frugalbabe.com/?p=820#comment-27114 Reality is harsh, but it needs to be recognized: You WILL get more of what you reward and less of what you punish. The mortgage bailout rewards people for making irresponsible decisions and punishes people for making responsible ones. Therefore, we will get more of the former and less of the latter. The only question is whether this is what we want. For every homeowner whose house is foreclosed, there is a potential buyer, who could have bought that house if it only were priced reasonably, using his own money, not the taxpayers'. This is harsh for the foreclosed homeowner, but a boon for the potential buyer. I know quite a few people who got into houses they couldn't afford (all of them very nice people, by the way.) A few of them I even tried to persuade it was a risky idea, but it was not what they wanted to hear. Forgive me, but I think you are naive if you think that anyone will learn a lesson of frugality by a policy that rewards them for being foolish. I have to wonder why you didn't learn the lesson that you should have gone ahead and bought that $300,000 house even if it was irresponsible. Your lifestyle would be better and your more responsible neighbors would be picking up the tab. Reality is harsh, but it needs to be recognized:

You WILL get more of what you reward and less of what you punish.

The mortgage bailout rewards people for making irresponsible decisions and punishes people for making responsible ones. Therefore, we will get more of the former and less of the latter. The only question is whether this is what we want.

For every homeowner whose house is foreclosed, there is a potential buyer, who could have bought that house if it only were priced reasonably, using his own money, not the taxpayers’. This is harsh for the foreclosed homeowner, but a boon for the potential buyer.

I know quite a few people who got into houses they couldn’t afford (all of them very nice people, by the way.) A few of them I even tried to persuade it was a risky idea, but it was not what they wanted to hear. Forgive me, but I think you are naive if you think that anyone will learn a lesson of frugality by a policy that rewards them for being foolish. I have to wonder why you didn’t learn the lesson that you should have gone ahead and bought that $300,000 house even if it was irresponsible. Your lifestyle would be better and your more responsible neighbors would be picking up the tab.

]]> By: Angela http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27102 Angela Wed, 25 Feb 2009 20:48:01 +0000 http://frugalbabe.com/?p=820#comment-27102 Preach it sista! You have stated my thoughts about the problem exactly, except more clearly and well-crafted than I could have. Anway, I heard an interview on NPR recently where they discussed a program in which banks did repossess the homes, but then in turn kept the previous owners in the homes as renters. They could set the rent at a more reasonable rate, so the bank would still receive money, have someone living in the home, but the buyer would not retain ownership of the home. It seems like in this way, everyone loses a bit, but they still keep something. Preach it sista! You have stated my thoughts about the problem exactly, except more clearly and well-crafted than I could have. Anway, I heard an interview on NPR recently where they discussed a program in which banks did repossess the homes, but then in turn kept the previous owners in the homes as renters. They could set the rent at a more reasonable rate, so the bank would still receive money, have someone living in the home, but the buyer would not retain ownership of the home. It seems like in this way, everyone loses a bit, but they still keep something.

]]> By: Emma http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27100 Emma Wed, 25 Feb 2009 18:41:27 +0000 http://frugalbabe.com/?p=820#comment-27100 This is hard. I do not think the govt should bail out a majority of these homeowners. They acted foolishly and should pay for their actions and not be rewarded. On the other hand, I know people who will benefit from a homeowner bailout. One friend bought her home when making 160K a year and could readily afford her mortgage. She lost her job when the company folded its US office--in her current job she only makes 100K a year--so refinancing from 6.5% to 4.5% would be of tremendous help to her. Someone like her who has made all her payments should be helped, but the problem will be identifying those who deserve help and those whose actions were fraudulent and foolish. This is hard. I do not think the govt should bail out a majority of these homeowners. They acted foolishly and should pay for their actions and not be rewarded. On the other hand, I know people who will benefit from a homeowner bailout. One friend bought her home when making 160K a year and could readily afford her mortgage. She lost her job when the company folded its US office–in her current job she only makes 100K a year–so refinancing from 6.5% to 4.5% would be of tremendous help to her. Someone like her who has made all her payments should be helped, but the problem will be identifying those who deserve help and those whose actions were fraudulent and foolish.

]]> By: April http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27094 April Tue, 24 Feb 2009 23:35:07 +0000 http://frugalbabe.com/?p=820#comment-27094 Yes, but the example I gave of pork was not a social program. There was a lot of wasteful spending that did not help the poor. Movie studios got money, for crying out loud. I don't mind paying taxes to help those in need, either. But there is a great deal of abuse of social programs by able-bodied people, and I would like to see that stopped. I also take issue with those who paint conservatives as people who "don't care about poor people," as one coworker put it. I'm a libertarian, but I come from a family of conservatives, and that just strikes me as drinking the liberal media Kool-Aid. Research has shown that religious conservatives are far more charitable than secular liberals. SCHIP was created by republicans. You really have to read both liberal and conservative viewpoints to get the whole story. Yes, but the example I gave of pork was not a social program. There was a lot of wasteful spending that did not help the poor. Movie studios got money, for crying out loud.

I don’t mind paying taxes to help those in need, either. But there is a great deal of abuse of social programs by able-bodied people, and I would like to see that stopped.

I also take issue with those who paint conservatives as people who “don’t care about poor people,” as one coworker put it. I’m a libertarian, but I come from a family of conservatives, and that just strikes me as drinking the liberal media Kool-Aid. Research has shown that religious conservatives are far more charitable than secular liberals. SCHIP was created by republicans. You really have to read both liberal and conservative viewpoints to get the whole story.

]]> By: neimanmarxist http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27093 neimanmarxist Tue, 24 Feb 2009 20:31:14 +0000 http://frugalbabe.com/?p=820#comment-27093 I have been buried in my dissertation but am emerging to say 1) love the new look! it's proably been up for ages but i am keeping up in my feed reader, you see- and 2) great thoughts, and i agree that policy shouldn't be about punishment- but about forward movement. responsible people like yourself are the ones that end up paying, it's true, and i'm not trying to discount that - but you're right that the decisions that are getting made are ones that look to the future not the past. I have been buried in my dissertation but am emerging to say 1) love the new look! it’s proably been up for ages but i am keeping up in my feed reader, you see- and 2) great thoughts, and i agree that policy shouldn’t be about punishment- but about forward movement. responsible people like yourself are the ones that end up paying, it’s true, and i’m not trying to discount that – but you’re right that the decisions that are getting made are ones that look to the future not the past.

]]> By: sarah http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27092 sarah Tue, 24 Feb 2009 18:48:43 +0000 http://frugalbabe.com/?p=820#comment-27092 "Will a homeowner bailout benefit people who were financially responsible?" Oops, that should have been: "Will a homeowner bailout benefit people who were financially irresponsible?" “Will a homeowner bailout benefit people who were financially responsible?”

Oops, that should have been:

“Will a homeowner bailout benefit people who were financially irresponsible?”

]]> By: sarah http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27091 sarah Tue, 24 Feb 2009 18:46:46 +0000 http://frugalbabe.com/?p=820#comment-27091 It certainly it a mess. Something about the homeowner bailout enrages people in a way the (much larger) bank bailout never did. It is so much harder to get angry at a monolithic institution like a bank than Joe Schmoe down the street who drew out his mortgage equity to buy a car and a flat screen tv. Will a homeowner bailout benefit people who were financially responsible? Yes, it will. It will also help people who were responsible but who have seen their equity drop to the point the can't refinance. It will help people who are financially responsible but who've lost their jobs. And it will, hopefully, benefit the population at large by slowing the amazing losses we've seen recently. For those reasons, I support the homeowner bailout, even though I'll see no personal benefit. That's the way it is with ANY public program though; we provide support to grateful and deserving masses with the understanding that an undeserving few will receive the benefit as well. (As a side note to people who are so upset by the homeowner bailout: Even if irresponsible Joe Schmoe gets bailed out you are still much, much, much better off than he is both financially and emotionally. The peace and stability that comes with good personal finance completely surpasses the benefit of one-time government assistance.) It certainly it a mess. Something about the homeowner bailout enrages people in a way the (much larger) bank bailout never did. It is so much harder to get angry at a monolithic institution like a bank than Joe Schmoe down the street who drew out his mortgage equity to buy a car and a flat screen tv.

Will a homeowner bailout benefit people who were financially responsible? Yes, it will. It will also help people who were responsible but who have seen their equity drop to the point the can’t refinance. It will help people who are financially responsible but who’ve lost their jobs. And it will, hopefully, benefit the population at large by slowing the amazing losses we’ve seen recently. For those reasons, I support the homeowner bailout, even though I’ll see no personal benefit. That’s the way it is with ANY public program though; we provide support to grateful and deserving masses with the understanding that an undeserving few will receive the benefit as well.

(As a side note to people who are so upset by the homeowner bailout: Even if irresponsible Joe Schmoe gets bailed out you are still much, much, much better off than he is both financially and emotionally. The peace and stability that comes with good personal finance completely surpasses the benefit of one-time government assistance.)

]]> By: Kaytee http://frugalbabe.com/2009/02/23/my-thoughts-on-foreclosure-bailouts/#comment-27090 Kaytee Tue, 24 Feb 2009 17:51:03 +0000 http://frugalbabe.com/?p=820#comment-27090 I think some of it stems from some idea that the American Dream means that Americans are entitled to whatever they want, whether they can afford it or not. I think some of it stems from some idea that the American Dream means that Americans are entitled to whatever they want, whether they can afford it or not.

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