Home Affordable Refinance Program (HARP) Changes <abandoned>

[Red]

I'm not really sure I know where I stand on this. Somebody please educate me.

The new rules will allow homeowners who owe more than 125% of the market value of their homes -- $125,000 in mortgage balance on a home worth less than $100,000, for example -- to get new loans.

http://money.cnn.com/2011/10/24/real_estate/housing_refinance/
http://www.nytimes.com/2011/10/25/us/politics/administration-proposes-changes-to-mortgage-refinancing-program.html?_r=1

Yes, I understand why we all want to help people. Helping people who need help is good!

However, if this plan was offered only to upper middle class white folks, clearly others would protests that it was crony FAVORITISM. Why should those people be allowed to borrow more than there house is worth? Shouldn't they have some skin in the game? What if they just take their cheap payments then default? Won't we all be stuck on the hook for their irresponsibility? But this time, stuck for 25% more than they were irresponsible for?

However, if this plan was offered only to lower middle class minority folks, we should surely hear protests of DISCRIMINATION. Why are you charging these folks a 25% premium on the value of their house? Shouldn't even poor folks be allowed to purchase their house for fair market value? Isn't it extreme social abuse to require these folks to pay 25% more up-front to own the same house that others can finance for much less?


A am truly not sure for which reason to dislike this proposed "solution" to our shared problem.

I mean if we are going to help people (and hence ourselves), shouldn't we start by not screwing people (and hence ourselves)?

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[SgtSpike]

Yay, more incentive for people to throw personal responsibility out the window!   

Let's just rely on the government for EVERYTHING, ok?  That way, we don't have to be responsible for any terrible financial positions we put ourselves into!

[Hawker]

I'm not really sure I know where I stand on this. Somebody please educate me.

The new rules will allow homeowners who owe more than 125% of the market value of their homes -- $125,000 in mortgage balance on a home worth less than $100,000, for example -- to get new loans.

A am truly not sure for what reason to dislike this proposed "solution" to our shared problem. I mean if we are going to help people (and hence ourselves), shouldn't we start by not screwing people (and hence ourselves)?

It's correct from an economic point of view in that the overhang of negative equity is killing the economy and they banks are going to have to write those loans down sooner or later.  So why not do it in one big bang and firestart the economy?

Its wrong from a moral point of view.  People who rented because they felt they should wait until they could afford a house are still renting while irresponsible folks who went right ahead and bought that house they could not afford are keeping it with the loan reduced.

At a fundamental level, people gripe about bailouts for the rich but don't really get upset.  However bailing out the trash who live next street over causes fury.  I doubt any government will really be able to push that through.

[Red]

It's correct from an economic point of view in that the overhang of negative equity is killing the economy and they banks are going to have to write those loans down sooner or later.  So why not do it in one big bang and firestart the economy?

People are eventually going to have to buy these houses at fair market value. It is just that nobody wants to acknowledge what that fair market value is.

Yes, we would have all been much happier if the market hadn't yet crashed. But pretending it didn't doesn't fool anyone. Except maybe those UNDER DURESS from the worry of homelessness. We normally don't hold people responsible when they are forced to sign contracts under duress. We shouldn't be surprised in the future when folks who signed over market contracts, for these reasons, walk away from them.

---

As for the banks, they should be welcome to TRY TO SELL the properties for 25% over market. But we (the people) shouldn't be required to buy them. That just relieves the bank of their responsibility for having sucked at banking.

[Hawker]

It's correct from an economic point of view in that the overhang of negative equity is killing the economy and they banks are going to have to write those loans down sooner or later.  So why not do it in one big bang and firestart the economy?

People are eventually going to have to buy these houses at fair market value. It is just that nobody wants to acknowledge what that fair market value is.

Yes, we would have all been much happier if the market hadn't yet crashed. But pretending it didn't doesn't fool anyone. Except maybe those UNDER DURESS from the worry of homelessness. We normally don't hold people responsible when they are forced to sign contracts under duress. We shouldn't be surprised in the future when folks who signed over market contracts, for these reasons, walk away from them.

I agree.  But I also see that its totally wrong that people who saw they could not afford the loan and rented while they saved up are being left renting while the irresponsible people are getting to keep the houses they should really never have bought.  The responsible people are now waiting for the houses to come on the market and it won't happen so they are stuffed.  Naturally they feel wronged.

I don't know if there is a right answer to this one.  No matter what you decide, you hurt a lot of people.

[I.Goldstein]

People wouldn't be left between choosing from two extreme ends of the housing spectrum if our building codes didn't limit our housing choices so much. The standard home size used to be no more than 800 sq. feet and now it has been grossly inflated due to codes. It's no surprise than an affordable home can no longer be bought. This is why people can hardly sustain themselves on a minimum wage. This is one reason why people are stuck with buying expensive homes on loans they can't afford.

[Hawker]

People wouldn't be left between choosing from two extreme ends of the housing spectrum if our building codes didn't limit our housing choices so much. The standard home size used to be no more than 800 sq. feet and now it has been grossly inflated due to codes. It's no surprise than an affordable home can no longer be bought. This is why people can hardly sustain themselves on a minimum wage. This is one reason why people are stuck with buying expensive homes on loans they can't afford.

The Fed and ratings agencies cooked up a sub prime housing bubble. When it popped prices fell and people were left with negative equity.  Nothing to do with building codes.

Really, why not pause for even a nanosecond of thought before posting nonsense.

[I.Goldstein]

People wouldn't be left between choosing from two extreme ends of the housing spectrum if our building codes didn't limit our housing choices so much. The standard home size used to be no more than 800 sq. feet and now it has been grossly inflated due to codes. It's no surprise than an affordable home can no longer be bought. This is why people can hardly sustain themselves on a minimum wage. This is one reason why people are stuck with buying expensive homes on loans they can't afford.

The Fed and ratings agencies cooked up a sub prime housing bubble. When it popped prices fell and people were left with negative equity.  Nothing to do with building codes.

Really, why not pause for even a nanosecond of thought before posting nonsense.

What I said was very relevant. It didn't answer the topic at hand nor address the bubble but listed one reason as to why people took on the loans they did. It has a lot to do with building codes.

[Hawker]

...snip...

What I said was very relevant. It didn't answer the topic at hand nor address the bubble but listed one reason as to why people took on the loans they did. It has a lot to do with building codes.

At least we agree on that

[Red]

The responsible people are now waiting for the houses to come on the market and it won't happen so they are stuffed.  Naturally they feel wronged.

How about in situations where the banks are offering worse deals, that the government offered loans of 80% of the fair market value to people willing to put 20% down. AND the government charged low interest, but added a 20%-10% penalty to those who sold in less than 5 years or 10 years respectively.

Vary the penalties and timeframes if you wish, but the point is to discourage free speculation from running the prices up again at our expense.

If someone wantd to commit 20% plus interest for 10 years in order to speculate, they are already commiting much more than the bankers and mortgage brokers ever did.

Am I sorry the current mortgagees would have to anti-up another 20%? Not really. Most of them didn't the first time around. The second time is a huge discount to the skin they should already have had in the game.

[I.Goldstein]

...snip...

What I said was very relevant. It didn't answer the topic at hand nor address the bubble but listed one reason as to why people took on the loans they did. It has a lot to do with building codes.

At least we agree on that

It's never been about agreeing. It's never been about swaying people. It's been about actually listening to the argument that is being said and trying to learn the truth. I am sick of people treating this like a competition. It's so childish and so pointless. Let it be clear that I am here to learn and that I treat every argument as potential truth.

[Hawker]

...snip...

What I said was very relevant. It didn't answer the topic at hand nor address the bubble but listed one reason as to why people took on the loans they did. It has a lot to do with building codes.

At least we agree on that

It's never been about agreeing. It's never been about swaying people. It's been about actually listening to the argument that is being said and trying to learn the truth. I am sick of people treating this like a competition. It's so childish and so pointless. Let it be clear that I am here to learn and that I treat every argument as potential truth.

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

[I.Goldstein]

...snip...

What I said was very relevant. It didn't answer the topic at hand nor address the bubble but listed one reason as to why people took on the loans they did. It has a lot to do with building codes.

At least we agree on that

It's never been about agreeing. It's never been about swaying people. It's been about actually listening to the argument that is being said and trying to learn the truth. I am sick of people treating this like a competition. It's so childish and so pointless. Let it be clear that I am here to learn and that I treat every argument as potential truth.

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

Anything to do with massive bailouts and subsidies stolen from people through taxation is wrong from the very core. The correct answer is to achieve a better world through peace.

[Hawker]

...snip...

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

Anything to do with massive bailouts and subsidies stolen from people through taxation is wrong from the very core. The correct answer is to achieve a better world through peace.

There is no option for bailing out ordinary Americans.  That's only for the rich.  And saying the correct answer is a better world though peace is a cop out.  The problem is real and needs a decision.  What would you do?  Reduce the underwater loans and let the people stay in the houses or not?

[I.Goldstein]

...snip...

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

Anything to do with massive bailouts and subsidies stolen from people through taxation is wrong from the very core. The correct answer is to achieve a better world through peace.

There is no option for bailing out ordinary Americans.  That's only for the rich.  And saying the correct answer is a better world though peace is a cop out.  The problem is real and needs a decision.  What would you do?  Reduce the underwater loans and let the people stay in the houses or not?

Do nothing. It was the government that caused the mess in the first place. I rather not stir up further trouble.

[Red]

There is no option for bailing out ordinary Americans.  That's only for the rich.  And saying the correct answer is a better world though peace is a cop out.  The problem is real and needs a decision.  What would you do?  Reduce the underwater loans and let the people stay in the houses or not?

Hey, I'm pretty sure I made a suggestion!

https://bitcointalk.org/index.php?topic=49715.msg591494#msg591494

Don't feed the trolls!

[Hawker]

...snip...

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

Anything to do with massive bailouts and subsidies stolen from people through taxation is wrong from the very core. The correct answer is to achieve a better world through peace.

There is no option for bailing out ordinary Americans.  That's only for the rich.  And saying the correct answer is a better world though peace is a cop out.  The problem is real and needs a decision.  What would you do?  Reduce the underwater loans and let the people stay in the houses or not?

Do nothing. It was the government that caused the mess in the first place. I rather not stir up further trouble.

So you would say that the banks should foreclose on those loans and kick the people out.

That's a perfectly valid decision.  It's probably the morally correct one from the point of view of the people who opted to rent instead of buy.

[I.Goldstein]

...snip...

The issue here is that what looks to be the right thing to do from an economic point of view may be the wrong thing to do from a moral point of view.  That's why OP said he didn't know the correct answer.  I agree with him - there probably is no correct answer and whatever action is taken is going to hurt a lot of innocent people.

Anything to do with massive bailouts and subsidies stolen from people through taxation is wrong from the very core. The correct answer is to achieve a better world through peace.

There is no option for bailing out ordinary Americans.  That's only for the rich.  And saying the correct answer is a better world though peace is a cop out.  The problem is real and needs a decision.  What would you do?  Reduce the underwater loans and let the people stay in the houses or not?

Do nothing. It was the government that caused the mess in the first place. I rather not stir up further trouble.

So you would say that the banks should foreclose on those loans and kick the people out.

That's a perfectly valid decision.  It's probably the morally correct one from the point of view of the people who opted to rent instead of buy.

If you go for the former, you destroy more savings in the economy and in the long-term end up with more homeless in the streets. There's no good solution.

[Hawker]

...snip...

If you go for the former, you destroy more savings in the economy and in the long-term end up with more homeless in the streets. There's no good solution.

I'm genuinely not an expert here but what would you say to people that say that the money is lost anyway, that the long slow process of foreclosures is making the rest of the economy worse and that there are advantages to taking all the losses at once?

[I.Goldstein]

...snip...

If you go for the former, you destroy more savings in the economy and in the long-term end up with more homeless in the streets. There's no good solution.

I'm genuinely not an expert here but what would you say to people that say that the money is lost anyway, that the long slow process of foreclosures is making the rest of the economy worse and that there are advantages to taking all the losses at once?

I think only individual banks can know what's most cost-effective in terms of foreclosers and loans. The banks obviously would not rationally give these people new loans because they'll never be paid back. It won't be sustainable and the only solution will be to inevitably bail out the banks and out comes the printing press. This destroys the economy even further because money is inflated and thus savings are destroyed. Savings are what fuels innovation and so forth...

That's my view on it albeit not that comprehensive. My knowledge is very limited as well hence why I am here to have a conversation. : )