Mortgage bailout

[Parkbandit]

Ok.. so the Senate is going ahead with a 300 BILLION dollar bailout for 400,000 mortgages for Bank of America (ala Countrywide).

I'm not good at math.. but doesn't that equate to $750K for each one of those mortgages? WHY THE FUCK are we bailing out people who are not able to pay for a mortgage of 750K home? Who the fuck pays 750K for a house that they can't afford and why does our Congress think it's in our best interest to repay them for their lost speculation?

What a surprise.. Dodd is spearheading this. Maybe he's hoping for another sweatheart deal of his own?

[crb]

I used to get so annoyed when I'd watch a show on HGTV and it'd be like "Bob and June make $75,000 together, Bob is a teacher just out of school, June works part time as a personal assistant. Their budget for a new home is $800,000." wtf!

Now it isn't annoyance, it is anger, cause my tax dollars will be used to help douches like that.

Gee, I wish I had been irresponsible and bought a house I couldn't afford so I could get my neighbors to pay for it for me.

[AnticorRifling]

I thought the rule of thumb was don't buy a house that's more than 2x your annual, combined if applicable, income?

[Parkbandit]

I thought the rule of thumb was don't buy a house that's more than 2x your annual, combined if applicable, income?


That's a good general rule of thumb and one I've always lived by... unless you have a sizable savings account or other liquid assets you can access in times of need.

Another good rule of thumb is to make ONE extra mortgage payment a year.. it'll take a 30 year loan and pay it off in less than 18 years.. saving you a shitload on interest.

[crb]

... sure... if you're responsible and not gambling. But irresponsible people with spotty credit who bank on rapid appreciation are not, by definition, responsible.

[Trouble]

I thought the rule of thumb was don't buy a house that's more than 2x your annual, combined if applicable, income?

That simply doesn't work in places like DC/NY/etc. I think here they were saying 3x income a few years back when I got my first place before the housing market run-up. The first place I got here in NoVA was within the 3x limit but my current place is around 4.5x my salary.

The trick is what your payments are. My PITI+Condo fee is a little less than half of my take-home pay (after pre-tax deductions too) which is my personal limit for housing expenses.

[Deathravin]

I've known two people who have foreclosed on their mortgage. Both of them bought houses that were too expensive for their income (one was about 4x income, the other was almost 3x), both would just go on spending sprees or gambling sprees occasionally. One bought a new car etc.

I don't understand why if somebody was struggling so badly, why they would throw it all away like that. One is just completely ripped up about it, it was her dream home. I just feel like pushing the bitch down the stairs every time she complains about it, "YOU Lost it... YOU fucked it up... YOU pissed it away... therefore YOU can't fucking complain".

Neither of these people would deserve a buyout, nor does any of the other retards out there that can't see a deal that's too good to be true.


I have a system where I live far below where most other people would live if they had my means. I could probably afford to buy a house, but I'm in an apartment (mainly because I'm going to be moving away from this hellhole soon)... I could afford a new car, but I'm driving around my paid off shitmobile (hey, it hasn't needed anything but gas and oil for about 3 years now... 200,000 miles coming up! Party!)... I could afford to take trips and gamble, but I stay at home. I still go out to eat at nice places occasionally. I still buy things on a whim (PS3 anybody?). But I'm not irresponsible.

To everybody who's been foreclosed on; good riddance, maybe you'll teach your children to not be so retarded with money matters.

[crb]

and one day Deathravin your fiscal responsibilities will pay off.

Keep saving and investing.

[Clove]

Keep saving and investing.Like perhaps a house.

3x gross annual income is what's appropriate in my area.

[Clove]

The trick is what your payments are. My PITI+Condo fee is a little less than half of my take-home pay (after pre-tax deductions too) which is my personal limit for housing expenses.Your month-to-month payment (including insurance and taxes) shouldn't exceed 60 percent of your net monthly pay. And it won't, if you don't buy a house for more than 3x your gross annual income.

[Parkbandit]

Like perhaps a house.

3x gross annual income is what's appropriate in my area.


Housing is an excellent investment... if you can afford it. Especially now, with the prices being rock bottom.

[Skeeter]

I have a system where I live far below where most other people would live if they had my means. I could probably afford to buy a house, but I'm in an apartment (mainly because I'm going to be moving away from this hellhole soon)... I could afford a new car, but I'm driving around my paid off shitmobile (hey, it hasn't needed anything but gas and oil for about 3 years now... 200,000 miles coming up! Party!)... I could afford to take trips and gamble, but I stay at home. I still go out to eat at nice places occasionally. I still buy things on a whim (PS3 anybody?). But I'm not irresponsible

I work so I CAN travel and gamble. Saving money is one thing but not at the cost of enjoying life.

[AnticorRifling]

I'm not a fan of bailing out there has to be a way to make people accountable for their actions. It just seems like there is little reprocussion to filing for bankruptcy. Of couse I don't know much about it and I've done little research so this is just my perception.

Someone fill me in what's the worst case scenario for living way outside your means, racking up a shit ton of debt, going bankrupt. You do what 7 years of no credit then start over?

[Warriorbird]

Mortgage bailouts are about as stupid as economic stimuli.

[Parkbandit]

I'm not a fan of bailing out there has to be a way to make people accountable for their actions. It just seems like there is little reprocussion to filing for bankruptcy. Of couse I don't know much about it and I've done little research so this is just my perception.

Someone fill me in what's the worst case scenario for living way outside your means, racking up a shit ton of debt, going bankrupt. You do what 7 years of no credit then start over?

You can now get credit as early as 18 months..

Remember.. bankruptcy is a disease and those that have it are nothing more than victims of the evil capitalistic society we are forced to live in.

This is TheE :)

[Kembal]

Ok.. so the Senate is going ahead with a 300 BILLION dollar bailout for 400,000 mortgages for Bank of America (ala Countrywide).

I'm not good at math.. but doesn't that equate to $750K for each one of those mortgages? WHY THE FUCK are we bailing out people who are not able to pay for a mortgage of 750K home? Who the fuck pays 750K for a house that they can't afford and why does our Congress think it's in our best interest to repay them for their lost speculation?

What a surprise.. Dodd is spearheading this. Maybe he's hoping for another sweatheart deal of his own?

PB, do you have a link to a story? I can't find this anywhere, and the number of mortgages appears small for such a bailout.

[Parkbandit]

PB, do you have a link to a story? I can't find this anywhere, and the number of mortgages appears small for such a bailout.

The isp I am stealing currently sucks.. but I read it this morning. Once I get home tonight, I'll look it up.

Just google "Congress+mortgage+bailout" and then click on the newspaper icon.

[AnticorRifling]

Mortgage bailouts are about as stupid as economic stimuli. But but it's for the economy!

[Gan]

This legislation will only enable taxpayers to continue to be fiscally irresponsible.

Bad deal for those of us who bought homes we could afford and who live a standard of living comisurate with our income and debt.

:(

[Gan]

PB, do you have a link to a story? I can't find this anywhere, and the number of mortgages appears small for such a bailout.

http://www.theledger.com/article/20080625/NEWS/806250454/1410&title=Mortgage_Bailout_Measure_Passes_Senate_Vote

Here's another link.

[BigWorm]

I heard on the radio today that the limit is a 625k loan, which seems like a huge amount to me in St. Louis, but I know housing values are much higher in places like California and NOVA.

Either way, I think this mortgage bailout is bullshit.

[Parkbandit]

:rofl:

I didn't even read that it was to bailout people who were too financially risky for a fucking GOVERNMENT loan. That's fucking awesome. Who are these people that get 750K loans when their credit is so bad the US Government handout program won't even give them a loan?

[Kembal]

The isp I am stealing currently sucks.. but I read it this morning. Once I get home tonight, I'll look it up.

Just google "Congress+mortgage+bailout" and then click on the newspaper icon.

Ok, looked it up. The limit on the loans in the Senate version is $625k. The 400,000 number is a minimum estimate of how many homeowners it could help. Can go up to 1 million homeowners, depending on how many homeowners qualify for the loans.

[Warriorbird]

Now... on the wasteful category... 3 trillion as a conservative Iraq estimate?

[Parkbandit]

I heard on the radio today that the limit is a 625k loan, which seems like a huge amount to me in St. Louis, but I know housing values are much higher in places like California and NOVA.

Either way, I think this mortgage bailout is bullshit.


625K loan is huge everywhere. If you are making 60K a year, you don't belong in a 625K house. Hell, if you are making 150K a year you STILL don't belong in a 625K house.

[Parkbandit]

Now... on the wasteful category... 3 trillion as a conservative Iraq estimate?

I know WB.. as this is your every other post in any topic. How about you start a new thread and post everyday in it?

[Gan]

Now... on the wasteful category... 3 trillion as a conservative Iraq estimate?

You're just diverging from one type of greed to another.

Doesnt make the bailout any less idiotic or irresponsible. Unless two wrongs now make a right. ;)

[crb]

maybe if you make 150k a year for 40 years, save and invest well, you can have 625k house.

[crb]

Now... on the wasteful category... 3 trillion as a conservative Iraq estimate?
IRaq was an expensive mistake, and yes a mistake.

But unless you have a time machine it is sort of moot, isn't it?

The question now must be:

1. What is the cost of staying? Short term and long term?
2. What is the cost of leaving? Short term and long term?

[Gan]

maybe if you make 150k a year for 40 years, save and invest well, you can have 625k house.

As was stated earlier. Its more dependant upon your income to debt ratio than just income alone.

[Trouble]

625K loan is huge everywhere. If you are making 60K a year, you don't belong in a 625K house. Hell, if you are making 150K a year you STILL don't belong in a 625K house.

That's the problem with today's market. Even with the crash, houses are stupidly over-priced. 2 bedroom condos in my neighborhood can run $650k and easy houses easily top $850k.

Here's a quick link to all 2 BR places for sale in my zip code: http://realestate.yahoo.com/Virginia/Arlington/Homes_for_sale/result.html;_ylt=AsvPzkSitvwtpKUAeAiroe3nMrQs?sort By=price+2&p=22201&type=classified&radius=&priceLow=&priceHigh=&bedrooms=2&bathrooms=3.0&bathrooms=2.5&bathrooms=2.0&bathrooms=1.5&bathrooms=1.0&submit=Search&redir=1 They range from 280k to 1.25 million. That's crazy talk.

The problem is made worse because like others have mentioned, people choose not to live within their means. Ok, so a family might be able to swing a mortgage on a 650k house, but WTF is with adding the pair of $500 a month car payments and stupid shit like that on top of the monster mortgage? OMG, I must drive an Audi or I'm worthless!!@

[Warriorbird]

As stated earlier, Gan, I find the bailout and the stimulus packages ridiculous.

[TheWitch]

As a kid, I was taught (read: forced) to save half my allowance.

I'm doing the same thing to my kids.

Someone didn't do this for these people, and they now suck at life.

Unfortunately, there's an entire segment of the population out there who are living under this false sense of entitlement.

Now the rest of us who live a fiscally responsible existance get to take cover for them. Great. Disgusting.

[AnticorRifling]

That's the problem with today's market. Even with the crash, houses are stupidly over-priced. 2 bedroom condos in my neighborhood can run $650k and easy houses easily top $850k.

Here's a quick link to all 2 BR places for sale in my zip code: http://realestate.yahoo.com/Virginia/Arlington/Homes_for_sale/result.html;_ylt=AsvPzkSitvwtpKUAeAiroe3nMrQs?sort By=price+2&p=22201&type=classified&radius=&priceLow=&priceHigh=&bedrooms=2&bathrooms=3.0&bathrooms=2.5&bathrooms=2.0&bathrooms=1.5&bathrooms=1.0&submit=Search&redir=1 They range from 280k to 1.25 million. That's crazy talk.

The problem is made worse because like others have mentioned, people choose not to live within their means. Ok, so a family might be able to swing a mortgage on a 650k house, but WTF is with adding the pair of $500 a month car payments and stupid shit like that on top of the monster mortgage? OMG, I must drive an Audi or I'm worthless!!@

Sucks to be in that area. My house (3br, 2.5ba) is a touch over 2k sq ft and it's only 140k.

[crb]

the problem is speculation has driven up the prices of homes in those areas. There needs to be a correction (and we're getting one).

[Parkbandit]

That's the problem with today's market. Even with the crash, houses are stupidly over-priced. 2 bedroom condos in my neighborhood can run $650k and easy houses easily top $850k.

Here's a quick link to all 2 BR places for sale in my zip code: http://realestate.yahoo.com/Virginia/Arlington/Homes_for_sale/result.html;_ylt=AsvPzkSitvwtpKUAeAiroe3nMrQs?sort By=price+2&p=22201&type=classified&radius=&priceLow=&priceHigh=&bedrooms=2&bathrooms=3.0&bathrooms=2.5&bathrooms=2.0&bathrooms=1.5&bathrooms=1.0&submit=Search&redir=1 They range from 280k to 1.25 million. That's crazy talk.

The problem is made worse because like others have mentioned, people choose not to live within their means. Ok, so a family might be able to swing a mortgage on a 650k house, but WTF is with adding the pair of $500 a month car payments and stupid shit like that on top of the monster mortgage? OMG, I must drive an Audi or I'm worthless!!@

But why are you stuck at that zipcode? I live in Tampa, but that doesn't mean I have to live in the most expensive area.. there are PLENTY of other cheaper neighborhoods than the ones in that specific zipcode.

[Gan]

As stated earlier, Gan, I find the bailout and the stimulus packages ridiculous.

So then there really was no point to your previous post about the 3 trillion?

[Warriorbird]

No. I'm just pointing it out to suggest scale. This is small compared to the war yet folks who oppose it are going to claim fiscal responsibility.

[Trouble]

But why are you stuck at that zipcode? I live in Tampa, but that doesn't mean I have to live in the most expensive area.. there are PLENTY of other cheaper neighborhoods than the ones in that specific zipcode.

Personally, I have decided I must live within walking distance to a Metro station. I chose to accept the higher prices as a trade-off for that convenience. There are definitely more expensive zip codes in my area too. Places like Potomac and Great Falls are just silly. If I lived out in the suburbs I could probably find a 2 BR condo similar to mine in the neighborhood of 250-300k (same relative age and sq ft).

I'll be ok if I'm not out of work longer than like 6 -12 months. I have no debt other than my condo.

[Clove]

No. I'm just pointing it out to suggest scale. This is small compared to the war yet folks who oppose it are going to claim fiscal responsibility.WB, how do you feel about the Iraq war again? Really we haven't discussed this yet IN THE MORTGAGE BAILOUT THREAD.

[Parkbandit]

Personally, I have decided I must live within walking distance to a Metro station. I chose to accept the higher prices as a trade-off for that convenience. There are definitely more expensive zip codes in my area too. Places like Potomac and Great Falls are just silly. If I lived out in the suburbs I could probably find a 2 BR condo similar to mine in the neighborhood of 250-300k (same relative age and sq ft).

I'll be ok if I'm not out of work longer than like 6 -12 months. I have no debt other than my condo.

6-12 months is far longer than most people plan or budget on. I'm hoping to pay off my last house next month (although it probably won't be until Oct...) leaving me 100% debtless.

[Gan]

No. I'm just pointing it out to suggest scale. This is small compared to the war yet folks who oppose it are going to claim fiscal responsibility.

Because we all know that expectations of fiscal responsibility by John Q Public is the exact thing as expectations of fiscal responsibility from our elected officials.

Its a given that John Q Public is going to act in its own self interest. Its a resonable expectation (definatly not reality though) to expect our politicians whom we have elected to act responsible and not driven by self interest.

Quit being stupid.

[Parkbandit]

Quit being stupid.

Why don't you just ask him to part the Red Sea, ffs.

[Kembal]

So this is just a line of thought, and I've not worked this out to see whether I'd be correct or not, but...

If this bailout goes through and all these homeowners are able to refinance their mortgages, enabling them to pay it, won't this inject a bunch of liquidity into the banks? The holders of mortgage-backed securities won't have to write down all those securities to zero (which they're close to doing), thus reducing those banks' need to charge massive liquidity premiums on their loans, and thus reducing the credit crunch currently limiting financing at the moment.

I might be missing a step here or two, but it might alleviate some of the pressures on the economy. Or maybe not. It's a complex problem, and it certainly doesn't address inflation in the least.

[crb]

Nah... if refinancing itself was enough it'd be enough to just lower rates to entice enough homeowners to refinance. (fucking inflation prevents that though).

The problem is bank losses are all on paper. Accountants and lawyers are pushing them to value their mortgages as 0, which is stupid, because worst case scenario the house, land, building, is worth something. They've already been doing it.

If they would just only write them down when they have an actual loss, they wouldn't take these losses on paper.

In the end, banks don't lack for liquidity right now, not since March they haven't really, and Bear Sterns was just a good old fashioned bank run. They had enough liquidity until there were rumors that they didn't, the rumors scared enough people into withdrawing that they became self fulfilling.

Financials at this point are relatively old news anyways, the economy is being fucked by oil now. Oil, food, and other commodities. Inflation is the new bitch.

[Daniel]

That's the problem with today's market. Even with the crash, houses are stupidly over-priced. 2 bedroom condos in my neighborhood can run $650k and easy houses easily top $850k.

Here's a quick link to all 2 BR places for sale in my zip code: http://realestate.yahoo.com/Virginia/Arlington/Homes_for_sale/result.html;_ylt=AsvPzkSitvwtpKUAeAiroe3nMrQs?sort By=price+2&p=22201&type=classified&radius=&priceLow=&priceHigh=&bedrooms=2&bathrooms=3.0&bathrooms=2.5&bathrooms=2.0&bathrooms=1.5&bathrooms=1.0&submit=Search&redir=1 They range from 280k to 1.25 million. That's crazy talk.

The problem is made worse because like others have mentioned, people choose not to live within their means. Ok, so a family might be able to swing a mortgage on a 650k house, but WTF is with adding the pair of $500 a month car payments and stupid shit like that on top of the monster mortgage? OMG, I must drive an Audi or I'm worthless!!@


Yea. Some of these areas in DC are also some of the hardest hit. It's ridiculous what the housing market was 3-4 years ago. I just bought a brand new 2 br condo in a gated community for $185K. The thing is it's in southeast. Sure that means an extra 20 minutes in the morning but that's better than paying the same amount per month for a 600sq studio.

[Warriorbird]

Gan misunderstood my post. Many of the politicians who voted against the mortgage bailout will claim they're fiscally responsible yet work to continue the war.

[Parkbandit]

Gan misunderstood my post. Many of the politicians who voted against the mortgage bailout will claim they're fiscally responsible yet work to continue the war.

And you misunderstood his post. 2 wrongs don't make a right.

[TheEschaton]

But one right doesn't make you the party of fiscal responsibility when you're simultaneously backing a (far more) fiscally irresponsible war.

Which is exactly how the GOP will try and spin their position here.

[Kembal]

In the end, banks don't lack for liquidity right now, not since March they haven't really, and Bear Sterns was just a good old fashioned bank run. They had enough liquidity until there were rumors that they didn't, the rumors scared enough people into withdrawing that they became self fulfilling.

Financials at this point are relatively old news anyways, the economy is being fucked by oil now. Oil, food, and other commodities. Inflation is the new bitch.

Not so sure banks aren't hurting for liquidity right now. I've been looking at getting our line of credit expanded, and most banks are quoting us double the spread we have on our current line of credit, even though our financials are just as strong as they were. (i.e. nothing on our end justifies the increase in spead)

But yes, inflation is the new bitch. And the fact that the Fed uses core inflation (and excludes food and fuel) as its metric is ridiculous.

[BigWorm]

But yes, inflation is the new bitch. And the fact that the Fed uses core inflation (and excludes food and fuel) as its metric is ridiculous.

I don't understand that either. I mean, I under stand elasticity, but those two items are where a significant portion of inflation has taken place. Just because those two sectors can be volatile doesn't mean we can completely exclude them when measuring inflation.

[Parkbandit]

But one right doesn't make you the party of fiscal responsibility when you're simultaneously backing a (far more) fiscally irresponsible war.

Which is exactly how the GOP will try and spin their position here.

You DO realize that it wasn't only the Republicans that voted to give Bush the power to pursue armed conflict with Iraq.. right?

And by your logic, all of Congress should just rubber stamp any spending bill that comes before them.. since they voted for the this 'fiscally irresponsible war'.

[Clove]

Gan misunderstood my post. Many of the politicians who voted against the mortgage bailout will claim they're fiscally responsible yet work to continue the war.First of all we're not at war with Iraq at the moment. We're occupying. Second of all, the war happened. Get over it. We're talking about mortgages.

[crb]

no one doubts the war (aka peacekeeping operation in iraq, the war was over in 3 weeks after the iraqi army capitulated) is expensive.

What you have to ask yourself, is what would be the long term costs to the US economy of an unstable iraq in civil war, which could happen if we pull out early?

I can understand people not agreeing with me, but at this point, staying there seems cheaper to me. The Middle East is a powder keg and with oil being so important to the world economy we cannot afford gross instability there.

So, the cheapest thing to do, since we've already gone in, is to stay in until it is stable and secure.

[Clove]

Nevermind the fact that we're already commited and a power-vacuum in the area could have disasterous effects and result in even more cost. At the end of the day NONE OF THIS HAS ANYTHING TO DO WITH MORTGAGE BAILOUTS.

Is it a good idea, or not a good idea? It really isn't germane if you thought a previous decision about an unrelated topic was a bad call or not. For fucks sake.