Phony mortgage plan

[Red05]

BTW, the traditional rule of thumb when purchacing a house is that a mortgage should not be more than 40% of your income.

Traditional? 40% of your income goes to the home mortgage? Surely not. If that's true, I need to move on up to the eastside . As far as irregardless goes (since you went all dictionary on me), I guess I'm a throwback, to the days when 25% of your income was considered the absolute maximum one should spend on a mortgage or rent. I'm an Obama supporter yes, but ultimately stick to my beliefs, and that includes not spending over your head. I would have pared the stimulus package way down, but I'm a lowly blue collar guy and he's president, so the point is moot (is that word OK? ). You and I have had a good ride and meal together but we're probably both glad politics or economics didn't enter the conversation

 

[Charlesbusa]

I thought the original idea of the bailout was to make the money available to the banks so they could refinance the sub-prime mortgages into something more stable for the people caught up in this mess. SO what are they really doing with OUR MONEY if they aren't using it to help out the folks who need help?

Yup, what they are doing is giving billions to the rich. If you don't have 20% equity, you can't refi.

Since the gov gave the banks money, the banks no longer have a reason to work out a deal with people who can't refi(due to market values). They got their money. If the gov had never bailed out the banks, the banks would be more inclined to work with people who can make their payments(who just don't have equity but can afford to make payments).

 

[BusaWhipped]

Traditional? 40% of your income goes to the home mortgage? Surely not. If that's true, I need to move on up to the eastside . As far as irregardless goes (since you went all dictionary on me), I guess I'm a throwback, to the days when 25% of your income was considered the absolute maximum one should spend on a mortgage or rent. I'm an Obama supporter yes, but ultimately stick to my beliefs, and that includes not spending over your head. I would have pared the stimulus package way down, but I'm a lowly blue collar guy and he's president, so the point is moot (is that word OK? ). You and I have had a good ride and meal together but we're probably both glad politics or economics didn't enter the conversation

I am also on the conservative side and don't come close to the rules of thumb on things. Less than 25% of my income goes into the morgage. But I like to have some toys in the garage in addition to a house. I'll ride and break bread with you any day. I even think we could disscuss our differences of opinion.

 

[BusaWhipped]

Yup, what they are doing is giving billions to the rich. If you don't have 20% equity, you can't refi.

Since the gov gave the banks money, the banks no longer have a reason to work out a deal with people who can't refi(due to market values). They got their money. If the gov had never bailed out the banks, the banks would be more inclined to work with people who can make their payments(who just don't have equity but can afford to make payments).

Good point. The Government needed to do something to stabalize the situation, but in doing so gave them too much so they were no longer motivated to fix the problem they created.

 

[Charlesbusa]

Just thinking off the top of my head, a better bailout would have been one where the banks get money as they refi home owners who don't have equity but can make their payments. Kind of like a commission. Don't refi to an interest rate below market, don't give loans to those who can't afford. Don't just give them money, make the banks DO something for the bailout money. And at the same time, anyone who has equity could refi. So its not like those who didn't get the 30yr fixed are getting a better deal, this will just keep them making payments instead of foreclosing.

All these foreclosures are hurting all of us and hurting the economy. And some of these foreclosures could have been avoided if the banks didn't insist on their ridiculous equity formula.

 

[99'busa]

Just thinking off the top of my head, a better bailout would have been one where the banks get money as they refi home owners who don't have equity but can make their payments. Kind of like a commission. Don't refi to an interest rate below market, don't give loans to those who can't afford. Don't just give them money, make the banks DO something for the bailout money. And at the same time, anyone who has equity could refi. So its not like those who didn't get the 30yr fixed are getting a better deal, this will just keep them making payments instead of foreclosing.

All these foreclosures are hurting all of us and hurting the economy. And some of these foreclosures could have been avoided if the banks didn't insist on their ridiculous equity formula.

 

[Red05]

I am also on the conservative side and don't come close to the rules of thumb on things. Less than 25% of my income goes into the morgage. But I like to have some toys in the garage in addition to a house. I'll ride and break bread with you any day. I even think we could disscuss our differences of opinion.

I feel the same way

 

[BusaWhipped]

All these foreclosures are hurting all of us and hurting the economy. And some of these foreclosures could have been avoided if the banks didn't insist on their ridiculous equity formula.

If you really think about it, they are showing how reactionary and unthinking the people in the mortgage industry are. They don't understand the reason behind the rules they are making. The equity formula, which they abandoned when they were overfunded, is there for 2 reasons:
1) To give the homeowner a stake in the loan (make it more painful not to pay)
2) Protect the lender incase they do have to forclose (property worth more than what they have out on credit)

Now they are trying to use this formula to protect themselves from people who want to pay but need a better rate. The result is they forclosing on property with negative equity wwhich is what the formula was supposed to prevent. No wonder the banking and mortgage industries are failing.