Dapoes,
I think I am missing your "bigger picture". It is evident that you are not fond of President Obama, and your posts seem to indicate your general disdain for his actions. But what is your overall agenda? Is it to lend credence to the viewpoint of some that that President Bush was wrongfully maligned? Is it to show that President Obama is not living up to the "superstar" status that others gave him -- and Obama encouraged? Or is it something else entirely?
Your dead on. Plus sometimes I just like to run off at the mouth as so i been told here before.
What do you think of Obama's ideas for the housing market?
I dont see how it will have much affect.
Lets see the specifics:
http://www.treas.gov/initiatives/eesa/home...tiveSummary.pdf
•No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
Good idea, but thats not going to help home prices decline in value as those properties are still going to fall into foreclosure or short sell.
•Protecting Neighborhoods: This plan will also help to stabilize home prices for all homeowners in a neighborhood. When a home goes into foreclosure, the entire neighborhood is hurt. The average homeowner could see his or her home value stabilized against declines in price by as much as $6,000 relative to what it would otherwise be absent the Homeowner Stability Initiative.
Stabilize by $6k??? So if the values dropped in the neighborhood by 30k he says I should be protect by losing only $24K? How does this make any sense?
•Providing Support for Responsible Homeowners: Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.
Good idea if only done like FHA Streamline, but if its a MBS, thats going to be difficult to ask the holder of the MBS to voluntary reduce the value. Thats why loan mods havent been very successful.
•Providing Loan Modifications to Bring Monthly Payments to Sustainable Levels: The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:
A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of his monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of his or her income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. That lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
“Pay for Success†Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success†fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.
Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration -- together with the FDIC -- has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.
Again if its a MBS, thats going to be difficult to ask the holder of the MBS to voluntary reduce the value. Thats why loan mods havent been very successful. They problem is it will undermine the MBS market as who would buy these products knowing that the value that they purchesed may be subject tobe written down in the future?
•Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.
To vague to make a determination.
These truths still remain:
• Home prices remain elevated and need to come back down relative to income;
• Artificially propping up prices is counter-productive;
• Home owners (No equity, 100%+ debt) who are in houses they cannot afford are going to have to move to homes or apartments they can afford;
• Foreclosures/REOs are often costly to banks; The lenders that made these bad loans to unqualified borrowers will suffer write-downs;
• It is not the responsibility of Taxpayers to bailout borrowers who are in over their heads, or lenders that made bad loans.
• Bankruptcy laws should be repealed to what the were prior to 2005 BK Law change. It is much harder to discharge personal debt then a mortgage. The credit companies wanted that change and but now it undermined the mortgage market. Case in point WAMU. See Bloomberg article: Bankruptcy Law Backfires as Foreclosures Offset Gains
The 3 main reasons that lead to foreclosures are DEATH, DIVORCE, LOSS OF WAGES. Theres a system already intact for this. Its called BANKRUPTCY. For the people that are in trouble then the bankruptcy judge can write down balances etc (cram down).
Home prices need to come down. Despite what people think a home is not an investment. A home is for shelter as you will always need a place to live. An investment carries with it inherent risk and subject to market fluctuations. If you own it as an investment then you have incur the losses along with the gains.
