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Thursday, November 13, 2008

The Coming Mortgage Class War

My dad gets angry every time he hears about a potential mortgage bailout. Frankly, he should. He's maintained perfect credit his entire life. He's always lived within his means. The idea that someone more irresponsible than him would be provided with some sort of a lifetime specifically because they were irresponsible bothers him to the core. What my dad doesn't even realize is just how good a deal some of these folks will get.

Yesterday, the Federal Government announced that the Fannie Mae/Freddie Mac would soon begin to modify loans en mass of borrowers struggling to make their payments, but some folks think this plan doesn't go far enough.

“It’s definitely a step forward,” says Howard Glaser, a mortgage industry consultant and a U.S. Department of Housing and Urban Development official during the Clinton administration. “They do have several hundred thousand eligible loans, and Fannie and Freddie are likely to be better than the private industry has been in applying modifications across the board because they don’t have the shareholder issue to deal with.”

But there are limiting factors, Glaser says. “Fannie and Freddie’s share of high risk mortgages is very small compared to the market as a whole. And as you get into 2005 and 2006, sixty five percent the mortgages were done in securitizations outside Fannie and Freddie--and that’s where most of the trouble is.”

Indeed, James Lockhart--Fannie and Freddie’s regulator--said in a speech announcing the program that “private label securities represent less than 20% of the mortgages but 60% of the serious delinquencies.”

And that’s where the plan falls short, says Susan Wachter, a professor of real estate at the University of Pennsylvania's Wharton School of Business. The program does no apply to loans in most private label mortgage-backed securities. Instead, Lockhart is asking investors and servicers of such securities to do so voluntarily. “I ask the private label MBS [mortgage-backed securities] servicers and investors to rapidly adopt this program as the industry standard,” Lockhart said.

But simply asking them to do so is not enough, Wachter says. The private sector has
that it is “unwilling or unable” to voluntary modify loans in significant numbers since the onset of the crisis, she says. “There’s hope here, but its moral suasion,” Wachter says. “And we don’t have a lot of time to see if moral suasion works.”

I believe this idea of mass loan modifications will soon produce one of the most corrosive class wars in the history of this country. Loan modification is the process by which a distressed borrower gets new loan terms not based on their merit but based on their ability to pay. Either or both, the loan amount and the interest rate are adjusted so that the new payment is now something the borrower can handle. Because loan modifications are available to those based on ability to pay not credit worthiness, this is a process that someone with perfect credit like my dad would not qualify for. That's because those with perfect credit are perfectly capable of paying the loan terms they AGREED TO WHEN THEY GOT THEIR LOAN.

Yesterday, I mentioned a loan modification I recently saw. This particular borrower got a interest rate of 4% for the next five years. That rate would go to 6% for the next two years after that, and then it would go to 6.75% for the rest of the loan. That's not a bad deal considering this borrower only got said deal by not being able to pay their current loan.

What do you think will happen when word gets out just how good a deal some of these modifications are? What will happen when borrowers with good credit find out those with bad credit are having not only their interest rates reduced but their loan amounts as well? What do you think will happen when the borrowers with perfect credit realize that it is their own credit worthiness that holds them back from getting the exact same deal?

We will have a class war the likes of which we've never seen. Those that acted responsibly won't merely be jealous and envious, but rather they will be outraged. This will pit neighbor against neighbor, friend against friend, and colleague against colleague. Those with good credit will demand action. They will demand justice and they will demand accountability. I have always believed that there is a silent majority in this mortgage mess. That majority are the folks that have paid their bills on time. For the most part, they want no one bailed out. They were responsible. Others weren't and they won't stand for those that were irresponsibly being rewarded.

The process of loan modifications is just entering the public consciousnesses. Once the public at large understands just what all of this means, there will be a revolt from those that don't "qualify" for loan modifications. Those that have been responsible have been overlooked by this entire process. Those that have acted irresponsibly have been catered to and turned into victims. In my opinion, turning them into victims has always been a source outrage as exhibited by my dad. This sentiment is out there however the MSM has buried it. Just look for a sob story about some family that lost their home. See if there are comments and read the comments. Almost always the bulk of the comments come from people that feel the situation was their own fault.

The dirty little secret of loan modifications is about to come out. Once it does, that secret will start a class war the likes of which we have not seen in a long time.


Anonymous said...

Agreed. I'm so pissed I can't see straight. We NEVER fail to make our payments (and then some to pay the balance down faster), and we even bought a $112,000 house while we make six figures so that we could also pay our considerable school loan debt.

having good credit and being responsible is so ingrained in me I can't fathom stopping, but what reason do I have to keep paying?

Anonymous said...

I don't qualify for loan modification either ... because I'm not and have never been behind in my payments. But I'm not sitting at stewing over the fact that a family down the way will not be thrown out into the street because the bank cut them a break. Bottom line: the family for whom the bank cut a deal will lose their home eventually. The principal owed just continues to increase over time. Bank are not in the game of charity. And the guy who lost his job and cannot even pay a reduced mortgage is going to be thrown out into the street. The banks are better from an asset recovery standpoint letting a family stay in their house for a few years if they can continue to pay a reasonable amount of what is essentially rent. Then when the housing market recovers several years later, the bank forecloses. It's a business decision, not a gift.

Anonymous said...

I'm outraged by this also!

I live in an area with a high density of foreclosures. Lots of people are going to get "help" to the tune of hundreds of thousands of dollars. Why? Because they lied on their original loan applications and now they are "victims."

So what should the class of responsible borrowers do? Is there any kind of organization forming that can put pressure on the government? We need to organize...

mike volpe said...

Let me take the last comment first and then address the second one.

First, you can reach out to everyone that represents you and tell them how you feel. you have many representatives and thus on your own, you can tell at least ten pols that this is wrong.

Second, it's likely you have friends in a similar position to you. Tell them to do the same. Tell friends and colleagues at work.

As to the second comment, once a loan gets modified those are the new terms. If said borrower can't pay that mortgage either, then they could get foreclosed on, however banks don't do mods with an eye on foreclosing later. They do them in order to avoid foreclosure.

Anonymous said...

I wish I thought you were right, that the "responsible" people will revolt. It won't happen. If you will recall, the loaning institutions were encouraged to make loans to those with poor credit and without the ability to repay them... it was sold as "making housing more affordable." It wasn’t “fair” for some to be able to buy a house and others couldn’t. If you let those making stupid decisions live with those decisions, you are "mean spirited." The news media perpetuates this. I truly fear we are headed into socialism. Socialism has never worked, but it is “fair,” in that no one has anything except the elite “leader.” One of our past leaders said that democracy will survive only as long as those voters paying taxes out number those voters who are living on the government dole.

mike volpe said...

First of all, you are distorting the roots of the crisis. It didn't happen because banks were forced to do anything. That is a conservative meme created by those seeking an agenda. Here is how I viewed the roots of the crisis.

Second of all, I don't think that folks quite understand yet just exactly how this loan modification thing works. Once they do, they will have huge fury.

Brett Legree said...

Good for your dad. I hope nothing bad ever happens to him, because if it does, someone else might look down on him the same way he is doing it to other people.

The danger in thinking you're superior to other people and then judging them is that someday it might happen to you.

Perhaps self-centered attitudes like this are the reason why things like the mortgage crisis happened in the first place.

Anonymous said...

Those who say we need a bailout now always paint this picture of families with little children being tossed out onto the street to beg for change. In reality, the vast majority of these people will do what the rest of us that were not irresponsible have been doing all our lives - move to a cheaper house, a rental, or an apartment or family member's home. For someone like myself, who has been renting modestly all my life, while saving up and taking on no debt, I'm getting more ticked every day - houses are still not down to median prices yet in most areas, and they never will be if the government continues taking my own tax dollars to keep the prices propped up...

mike volpe said...

I don't think it is a sense of superiority. It is a sense of anger. Why should he wind up with a worse deal than someone that was irresponsible?

It isn't that he feels superior. This is about fairness and justice. He pays his bills on time. Yet, his interest rate and terms will wind up being worse than those that don't. How would you feel?

Anonymous said...

Life isn't fair. There's no point in deluding yourself into thinking it is and being jealous that you neighbor got cake and you didn't.

That said, the idea from a bank's perspective is that they aren't getting the money they should, but they need to do their best to maximize what they do get. Forclosure is expensive and, for a bank, a guaranteed loss, and often a substantial one. Rewriting / refinancing a loan is merely a way to maximize the bank's return.

The ideal case for a bank would be to extend the term of the loan and keep everything the same. This would increase the profit over the life of the loan while reducing the monthly payment of the loan holder. This is the simplest approach, but some are going to balk because the amount you end up paying is so much more. However, those same people can sell later or refinance, so I don't see how they could complain.

The next best option is to lower the interest rate. This only has a marginal effect on the monthly payment, and directly decreases profits, but it does mean that the loan will mature on schedule and will reduce the paperwork involved in reforecasting for the bank. This is still cutting people a break, but not so much a handout as...

Reducing the principle on the loan. That's simply handing out cash to people. Not only that, but the forgiven principle is both an immediate write-down for the bank, and it is income to the borrower (who'd then have to pay tax on that income). This is the worst possible solution for everyone. A loss for the bank, a huge tax wallop for the borrower (who's presumably already fallen on hard times), and a slap in the face for those that don't get anything.

The simplest solution: offer a 1-time deal to *everyone* to refinance their current mortgage at 5.5%-6% with a term equal to the lesser of 40 years or whatever term would be satisfied with a monthly payment equal to 1/3rd the resident's after-tax income (based on the last 12 months of income). Banks should fair alright in that deal, lots of people would see their monthly payments drop substantially, etc.

mike volpe said...

I agree with the last comment except for one point. Loan modifications were always something banks did however normally on the D.L. Once the public at large finds out, then everyone will want one. How does a bank justify en mass giving borrowers that don't qualify good rates if those with good credit don't get the same deal.

Brett Legree said...

I would feel the same way I do now. It isn't about fair or just.

It just is.

Life is like that. Sometimes people get breaks that you and I do not.

Is it fair? I don't know. Life is like that.

I could get angry with my parents generation, which is probably your dad's generation too.

You know, didn't need more than a high school education to get a good job. More jobs here at home. Pensions that actually were there when they were needed.

And so on.

But what good would it do me to get angry and complain that I didn't get a "fair deal"?

None. Better to go do something useful.

Getting angry in this situation just seems to me a vengeful attitude.

Anonymous said...

class warfare..... HAHAHA no one will do didly turd. Its fun hearing americans blow steam. what are you ever gonna do about it? the only thing you can get people to rally around is "hope"

Anonymous said...

So your dad is mad he has to keep paying his loan on the same terms he originally agreed to? If he didn't like the terms, he shouldn't have signed up in the first place.

Do you get mad when someone smarter than you makes more money, or when someone slicker than you negotiates a better deal?

mike volpe said...

Brett, I think that some borrowers will get more than angry. They will demand the same deal. They will go to their Congress Person, their lawyer, their Senator and their local news person until someone explains to them why irresponsibility is rewarded with a better mortgage than the one they can get.

mike volpe said...

I know these are now getting out of order, but to the last anonymous poster,

my dad isn't mad about his own terms. He's mad that someone that doesn't deserve it will get a loan better than him.

How would you feel if you spent your entire life paying everything on time and then you found out that en mass banks were giving those that weren't better deals than you and they were doing it because they couldn't afford the terms they agreed to.

Anonymous said...

America is having a garage sale, and everything must go. Feels like we've lost some kind of financial war that has been going on for the last five years - all under the radar. This Just In... Uncle Sam to be replaced by Nanny Nancy. Somebody, tell me where the silver lining is - please???

Brett Legree said...


I understand, and you're right. Some people will do that, they'll spend a lot of energy going and complaining about how they feel slighted.

Or... you could just go and do something positive with your energy. As one of the other posters mentioned, if you were happy with the terms you originally signed up for, then maybe you should be happy with it.

I'm sorry, but if I see anyone doing this, I'm just going to think they are being a bit childish and exhibiting a victim mentality.

It's the same concept to me as our automotive companies going and crying to the government because the rules changed and someone else is getting a break they did not get.

Like I said, that's life.

Look at it another way - if your dad didn't read the papers and no one told him about this, would he be happy?

I can put a personal spin on it by changing the topic a bit. I work in a typical corporation. I notice that often times (and more often than not) the people who are reliable and work very hard are *not* the ones who get promoted.

It is the ones who are doing things that are not really above board.

Do I lose any sleep over that? No. I'm hard at work trying to create my own company, my own work. It will involve helping other people, whatever it is - creating real value.

Look, I understand some folks like your dad will be upset by this, and I my first comment was perhaps a bit strongly worded.

I just think at a time like this, the people of a nation should be pulling together and trying to rebuild properly, rather than having a big pissing contest about who got an advantage and who got slighted.

Because really, if a large portion of our population loses their housing, it will not be a good thing for us.

It will be good for the bankers and the rich - but not you and I, or your dad.

mike volpe said...

Whether or not this would be a productive use of someone's time is a totally different matter. I do know lots of borrowers and I know plenty that would do everything they could to try and get the same deal as those that they felt were of less qualified. I don't think my dad is one of them, though I think he would at them minimum bring it up in conversation with most of his friends. Some of them might be more aggressive.

That's the point. It wouldn't take that many screaming bloody murder and for those that have perfect credit, there is plenty to scream about.

Brett Legree said...

I understand that, and it is everyone's "right" to scream away and complain.

Hey, I pay my bills on time too and I pay my mortgage.

It's just my personal choice not to get all bent out of shape and say "it's not fair that this guy is a screw up and he got a break".

That's life. It isn't fair.

If life were fair, babies wouldn't be starving to death in other countries.

mike volpe said...

Well Brett, I certainly never said you would be part of the class war. I just said there would be one.

Brett Legree said...

Oh no, I know - no worries.

As I said, my first comment was a bit strong, so let's go forward from that.

Perhaps it isn't right that some folks will be bailed out - we all get to choose how to spend our time, and if one wants to go complain, that is okay. If someone else wants to do an entirely different thing, that is okay too.


Anonymous said...

what about the HOPE plan that enables people like your father to refi at 90%LTV ... assuming that he refinanced during the last 5 few years (which he obviously should have). The program is only for those who are not late on their payments.,7601299&_dad=portal&_schema=PORTAL

mike volpe said...

My dad doesn't need to refinance to take out cash. He is fine with his own financial situation. What he is angered by is the thought that others weren't responsible and are now rewarded with terms better than his. Frankly, if you were frugal your whole life and you heard about these mass loan modifications and heard about these terms, you would be mad as well.

Anonymous said...

Loan modification? Isn't that just a buzz word? LOL....If the banks do a loan mod, you continue to pay and assume ownership of the negative equity. If they foreclose, they own the negative equity. Now, on a sidenote, who could have predicted that the feds manipulating of the rates would have such an effect? Duh

mike volpe said...

I don't believe that's accurate. The documents for the loan modification I saw were the standard loan documents. The loan modification becomes the new mortgage.

Anonymous said...

Here's a solution to this problem if anyone is interested.

Any present home owner not being able to meet monthly mortgage payment and facing foreclosure can apply to the following program.

1. A government created agency will hold the Title to the property.
Hence, the previous home owner will now become a tenant.
Their monthly rent will be the prevailing rental amount in the area.

If the home owner does not want to lose the Title, they're welcome to not participate.

2. If the Home owner did put down any Down Payment, provided there were no re-financing done on the property since the original purchase, will get that amount as a Lien on the property.
Thereby safeguarding any initial investment. Of course, if nothing-down purchase, no Lien.

3. The agency holding the Title of the property, in 3 years or so, when the housing market stabilizes, will put the property up for sale.

4. The renter may purchase the home by getting approved for a conventional mortgage, if the renter's finances merit such an approval. No sub-prime. A conventional prime-mortgage only.

Otherwise, an investor may purchase the property as an investment property. With the clause that the renter may purchase the property, at market value, when the renter is able to qualify for a mortgage.

Otherwise, the renter is welcome to rent the property as long as they can make timely monthly rental payment.

Of course, since it is now a rental property, the renter will be subject to rental laws and dynamics.

If the occupier wants to retain property ownership and related benefits to such, then, the occupant should bring current any past dues and make monthly mortgage payments on time.

5. This particular event will NOT be recorded on a person's credit history, thereby not affecting negatively in future credit applications or assessments

What this program will do is let everyone know that home ownership is not a right. It is a goal that you have to work for and strive to achieve.

If you have followed the rules and kept up with the mortgage payments, then, you're fine.

Whereas, if you got over your head and gotten into this mess, the government will help you get out of it, however, you will not profit or get special treatment.

Anyone have an opinion regarding my proposal?

mike volpe said...

That is awful lot of bureaucracy in order to save borrowers. I don't know why a borrower should receive their down payment back. If they can't stay on time, why should they get their down payment back? What about all those folks that have previously been foreclosued on? How do you think they will feel knowing that they just simply mistimed their foreclosure. Had they been able to hold off for a couple months or years, they wouldn't have lost their homes at all, maybe not even their down payment.

Anonymous said...

Well, the main reason is that if a current home owner that is being foreclosed are to be helped, then, victimizing them is of nobody's interest.

By safeguarding the original Down Payment, provided that there was an initial Down Payment, if will not victimize them a 2nd time for partaking in this program.

The main point here is that it will only apply to those who made such a Down Payment.

Every NINJA borrowers won't get anything.

Furthermore, as it has been argues on this page, those homeowners who played by the rule would like this program because they did play by the rules and as such, they benefit by the advantages of home ownership.

By participating in this program, you lose the benefits of home ownership.

That's the whole point. If you can't handle the requirements of home ownership, you shouldn't get the benefits either.

mike volpe said...

No, what would happen is you would rent your home, which is the same as paying a mortgage since you have no equity.

What you have done is nationalized yet another industry. I want to go toward the free markets, not further toward Socialism. There is a mechanism already in place for all of those that can't pay their mortgage. It's called a foreclosure. I don't see any reason why the government should do anything. These folks need to be removed from the market, not kept in it.

Incidentally, how exactly would ownership transfer work to another party. Are you planning on having the government own this property forever?

Anonymous said...

That would fall on this agency to be created.

For the sake of holding these properties that will be sold on open market in 3-5 years.

I understand your point, however, foreclosing on such a massive number of homes would be detrimental to the economy as a whole.

This way, withing 5 years, either the current occupant qualifies for a conventional mortgage, or an investor buys the property as an investment property. Either way, the government is out of the picture.

What is being proposed right now, only will reward those who took the unreasonable risk, and victimize someone like you father who played by the rules.

My proposal will address the issue of not kicking out the people from their abodes and make it an orderly process.

Having massive foreclosure is not the answer. Changing the terms of the mortgage contract is also not the answer, because it penalizes those who did play by the rules. And with the changes, may prompt more financially sound owners to default in their mortgages in order to benefit from re-structuring of the mortgages.

mike volpe said...

Again, creating a massive new bureaucracy is a dicey proposition. To say that this is something up to the Federal government is to me, at least, to give the feds way too much power. The Federal government is already far too close to Socialism and now you want a bulk of housing natioanlized. No way.

The problem is not so much that we are going to have massive foreclosure. It is that there is a massive amount of unqualified people holding onto mortgages. Propping those folks up with schemes is not the answer. Foreclosures is a cleansing of the market of its excess. Will it have a devastating effect on real estate value, of course, but that effect will be short, and then the market can recover.

Doing a bunch of schemes like yours only continues to long painful process of keeping these folks in properties they shouldn't be in.

Anonymous said...

For those that are making the "such is life" argument, or saying that "banks are free to do whatever they want because it is their money." - You are missing an important point:

Many of these loan modifications are possible because the government is guaranteeing the loans under one of bailout programs.

The bank is effectively using your (taxpayer) money to pay for someone else's house.

If you think this is a good idea, you can even take it one step further: on your way home today, stop at your neighbor's house and write him a check to help him catch up on his payments. It will help stabilize the economy!

(How will you know which neighbor? Look for the one with the RV and Escalade in the driveway.)

Anonymous said...

If you haven't noticed, the government is already doing enough to damage the housing industry.

And, like your dad, a lot of people will be very pissed at being victimized for doing things the right way.

At least, my proposal wouldn't enlarge the problem.

Yes. I agree that you don't another government agency, however, the current solution that is being talked about will alienate people like your dad. And still create a government agency overseeing the housing market anyway.

If we don't get this right, it will make the solution, that is being currently proposed, into an engine that destroys the housing market.

mike volpe said...

Let me take both the last comments at once.

First, TOBCAR,

the fact that government has screwed up real estate is not actually a point in favor of giving them more of a role in real estate. Second, that your proposal won't make things worse is a point to debate. It could make things a lot worse. What if these folks fall behind on their rent payment? How will these homes be sold? What will happen to the renters when they are sold? All your proposal does is turn delinquent borrowers into renters with the federal government as the new landlord. If you think that is not necessarily making things worse, that is an awful large stretch.

As to the other comment, that is an excellent point. A lot of these loan modifications are now being mandated by the government. In Cali, it is required that a bank attempt a loan mod prior to foreclosing. Fannie is now required to do it.

Frankly though, whether or not they are mandated, they are a bad idea. A loan mod is the definition of a moral hazard. They reward irresponsible behavior. All we are doing by making them popular is inviting more irresponsible behavior.

Anonymous said...

I agree with your point that loan mod is dangerous.

And that is the point of my proposal.

Eliminate the mortgage that they're defaulting under.

As for not being able to pay the rent, that would be the case whether they got foreclosed and have to arrange a new residence anyway.

At least with my proposal, some will be able to stay and eventually purchase the property the correct way.

Some will be a renter for a longer period of time and proceed forward better prepared for future endeavors.

And some will have to move and get a more cost effective means of residency.

And there would be no incentive, for those able to meet their mortgage responsibilities, to start defaulting on purpose to be able to take advantage of mortgage modifications.

I would think faced with what the feds are proposing, my proposal would be the least intrusive and less damaging.

mike volpe said...

Right, well, your proposal is a moral hazard light. Rather than merely being rewarded with a brand new loan, you just get rid of it altogether but still live in the home regardless.

Furthermore, again, the biggest problem is the hunge new government bureaucracy and new government power. Everywhere we turn around another industry is being nationalized, and you want to do more of it.

Anonymous said...

Compared to what is happening now?

How long before those who are not in trouble defaulting on purpose if order to re-negotiate their mortgage?

You've heard what's right on these pages. People are pissed that they're going to suffer because they played by the rules.

While those who did not, get a benefit.

And this is happening right now.

I also believe, like you, that those who are not able to meet the mortgage obligations should be foreclosed on. The faster the market hits bottom, the better it is.

However, that is not the way the prevailing wind is blowing to.

So, yeah, although I agree with you, I believe my proposal will not make a situation worse, which I believe the current solutions are going to make it worse.

mike volpe said...

Your idea is better than a loan mod, however you are comparing to a really bad idea.

My idea is to let things play out and allow the distressed borrowers fail and not help anyone.

Anonymous said...

You are absolutely correct. Your idea is not doing anything at all.

I would prefer that option as well.

However, that is not happening.

The government is intruding.

You can just stand in the sidelines and yell 'Hell no!' at the top of your lungs, AND ignored, or, you can look for ideas that would solve the goals of those who want to help and still safeguard as much of free market principles as possible.

The Democrats created this mess, and the Republican administration is compounding the situation.

It's not a perfect world, what can I say.

At least, with my proposal, there is nary a chance that anyone that is not in default will have any inclination to default on purpose.

AND THAT is the point.

Not make a bad situation worse by modifying mortgages en mass.

Anonymous said...

I don't know anyone who is losing their home because they were allowed to purchase something they obviously couldn't afford, but I do know people who are losing/lost their home because they got themselves in over their heads. I'm concurring with the person who commented about looking for the houses [that are for sale] with the RV and Escalade in the driveway. I had one of those people bold face tell me -as they were scrambling for some place to store their multiple ATVs, tow-vehicle, boat, and trailers, while moving four rooms of brand-spanking-new furniture into the house they were now having to rent- that it was more important for them to "live life to the fullest" then to be a "slave" to a home. And while I don't think that is a belief held by most of the people who are facing forclosure, I do think that many of them got caught up in a credit trap by not choosing to live within their means and/or doing many of us homeowners, who have remained responsible, knew we had to do in order to afford and maintain owning our own home. So yes...I agree that to help those people by modifying their loans is only serving to reward irresponsible behavior. Just another example of the dumbing down of America.

mike volpe said...

All right, great debate so far.


I can appreciate pragmatism and that is an admirable position. That said, neither of us will have much influence in policy. I would rather be on the right side of policy than tailor my policy to be a good alternative of bad policy.

Anonymous said...

It's very easy to point out the faults and to remain ideologically pure.

For example, if your child won't listen to you, then, you can say, they will learn when it blows up in their face.

So, if a child were to climb up on a stool and reach for something and falls, the child will learn never to do that again. Mission accomplished.

However, at some point, this form of learning can be fatal.

If the child is going to cross the road without checking both ways, and is about to be run over by a car, then, we would yank the child back. Just saying the child will learn through failure would be idiotic because the child would be dead.

So, I agree with let the market place learn through failure, in most instances.

However, that does not mean it will always work out.

The government have to take action in order to preserve the market place when the existence of the market place hangs in balance. And do it in the least intrusive way as possible. And get out as soon as possible.

The longer and more penetrating it's actions are, the more likely that the assistance will turn out to be the death grip.

And standing firm to ideological purity may lead to the emergency becoming a calamity that will end up being the total destruction just as well.

The solution lies in making any intrusion as brief and least intrusive as possible, and keeping the overall rules as intact as possible.

mike volpe said...

That sort of attitude is how the bailout got turned into law. A conservative idea wasn't "feasible" so a bunch of conservatives got on board this monstrocity as the best of a bad situation. Screw that. I will back that which I believe is the best policy, not the best policy that I think could be passed in this climate. I am not going to back some monstrocity because it has a better chance of passing.

Anonymous said...

I believed it's not impossible to happen,everybody who has the same case are in the hot seat and are much affected.

anumia1205 said...

OK folks, now GE has been downgraded. Why? The lending unit, which has been questionable for months. Let's be real here, their existing portfolio doesn't look too good, and they need some quality loans to improve the book. GE is not alone in this plight, all the banks are looking for quality, and they'll pay for it. If you a good borrower, make the banks compete!
They got TARP money, and they've got the operations staff. What they don't have is fresh business

Mortgage Modification said...

Although a loan does not start out as income to the borrower, it becomes income to the borrower if the borrower is discharged of indebtedness.

Mortgage loans modification said...

We just have to accept that the way money was created in our "modern" bank system can not be sustainable. We have to rebuild a new scheem which does not exploit all of our resources.

loan modification said...

Regardless of class struggles, people need help, especially those facing foreclosure. The ramifications of widespread foreclosures we can clearly see; it doesn't stop just with the loss of a home for a family; it affects home values for the surrounding neighbors, brings down a boom market, wrecks the economy, which in turn causes job loss, recession, less demand and spending, fostering more job loss... and as more people lose their jobs, more people foreclose.... the very best thing that could possibly happen right now is for every homeowner in america to be in an affordable mortgage. so what if some overbought? so what if some people get 2% interest rates through HASP and completely don't deserve it? its time to put an end to the foreclosure epidemic. it's OUR problem, and its time for action.

Loan modifications ca said...

Loan modifications ca are taking place in great numbers due to the rise of foreclosed real estates over the past year. It is advised to seek help from an attorney who has great experise to deal with a variety of issues during the modification process. They have a higher success rate than individual applicants.