Monday, February 23, 2009

A little Something on Obama's $75 Billion Mortgage Loan Bailout

Insane America: Obama Wants You to Bailout the Asshats Who Live Next Door

The Standard-Examiner has another fascinating article today, wherein Ogden Journalistic Legend Charlie Trentelman dives into the issue of what local lenders will be able to do with their part of the $75 Billion that BIG Spender Obama plans to dump onto the US economy, to bail out the 8% or so of American homeowners who are having trouble with their mortgage loans. Real estate lenders, and holders "in due course" of promissory notes and real estate securities are also particularly interested in this new demonstration of federal Big Gummint Spendin' Largesse, as is evidenced by this comment from Bank of Utah's own Vice President Scott Parkinson, who eagerly mentions possible "incentives":
Parkinson said that, as he understands it, two types of homeowners can benefit from the program: people who are behind on their payments, and people whose homes have lost so much value that they are no longer worth what the mortgage has them paying.
The second kind may get an opportunity to refinance, he said, but with limits.
For people who are behind on payments, he said, the program depends on the cooperation of the mortgage holder.
“I think most of it is voluntary on the part of the mortgage holder to refinance, but they’re going to incent them to do it,” meaning mortgage holders will get incentives to take part in the program.
Like Mr. Parkinson, we're still waiting to see what kind of generous incentives will flow from the taxpayers to persuade lenders and holders in due course to modify existing real estate loans.

Just for yucks, BTW, we'll post here a most remarkable YouTube video, demonstrating how the traders on the Chicago Mercantile Exchange reacted to the announcement of Obama's plan a couple of days ago, to bail out individual homeowners who borrowed more than they could afford for neighborhood home loans during the recent real estate bubble phenomenon. Watch CNBC's Rick Santelli effortlessly rally the crowd on this issue on the trading floor of the Chicago Mercantile Exchange:


This reaction to Obama's mortgage borrower bailout scheme is interesting too, we believe:
Insane America: Obama Wants You to Bailout the Asshats Who Live Next Door
Comments, anyone?

12 comments:

Curmudgeon said...

The problem is, in many cases, if the people next door go under on their mortgages and into foreclosure, the houses near them instantly drop between 15 and 20% in market value. I understand the reluctance to allow mortgage modification, but feeling good and righteous about them going under may take a lot of the rest of us down with them.

And there is another element the question of equity [fairness]. Corporations have access to bankruptcy proceedings to restructure their debt. Why Joe Underwater Mortgage Holder shouldn't have similar access to bankruptcy proceedings including his mortgage debt... why that particular kind of debt and only that [and college loan money] should be exempt from bankruptcy restructuring is not an easy question to ask. If Delta can welsh on its debts with the cooperation of the bankruptcy statutes in order to remain a going concern, why should Joe Underwater Mortgage Holder be able to do the same?

None of these are easy questions. None are likely to have simple answers, and no answer will please everyone.

RudiZink said...

Gimme a friggin' break, Curmudgeon. The foreclosure of a trust deed takes 135 days in most states, tops.

If neighbors are concerned about the condition of their neighbor's abandoned property, they can waltz over with a garden hose or a lawn mower, ferchrissake, assuming the foreclosing lender doesn't do that already itself.

Yours is a completely bogus argument.

As Rick Santlelli says, this bill on Obama's part will merely reward bad behavior, at the expense of responsible Americans who are already struggling to meet their own obligations.

What bullshit!

What will it cost us said...

What will Provident do with all the homes in Ogden they bought and have sat empty waiting for buyers or even renters. Will they get a bailout for their bad decisions and buying up properties.

Or Gadi's property by the river, these rich guys will stick it to the taxpayers again, as long as we let it happen.

I hope enforcement is in place as soon as the weeds start to grow.

Dr. Opposite said...

A major research institution (MRI) has recently announced the discovery of the heaviest chemical element yet known to science, at Curmudgeon's house.

The new element has been tentatively named Governmentium. Governmentium has 1 neutron, 12 assistant neutrons, 75 deputy neutrons, and 224 assistant deputy neutrons, giving it an atomic mass of 312. These 312 particles are held together by forces called morons, which are surrounded by vast quantities of lepton-like particles called peons. Since governmentium has no electrons, it is inert. However, it can be detected as it impedes every reaction with which it comes into contact.

A minute amount of governmentium causes one reaction to take over four days to complete when it would normally take less than a second.

Governmentium has a normal half-life of three years; it does not decay, but instead undergoes a reorganization in which a portion of the assistant neutrons and deputy neutrons exchange places. In fact, governmentium's mass will actually increase over time, since each reorganization will cause some morons to become neutrons, forming isodopes.

This characteristic of moron-promotion leads some scientists to speculate that governmentium is formed whenever morons reach a certain quantity in concentration. This hypothetical quantity is referred to as Critical Morass.

Curmudgeon said...

Sorry, Rudi, but facts unfortunately are getting in the way. When a house goes into foreclosure, homes on the same block drop in estimated market value almost instantly. This is not a prediction of what might happen or even what will happen. It is what has happened already, and is continuing to happen. People have been put upsidedown on their mortgages, people who are making payments and are not behind, because a neighbor's house went to foreclosure and so their house's value dropped significantly. It is happening now. You may argue that the consequences are not significant enough to justify permitting bankruptcy declarations to affect mortgage terms, but you cannot, on the evidence, argue that foreclosures do not significantly reduce the value of nearby home on the same block. It is happening right now.

Curmudgeon said...

What Will It Do:

According to the president, the mortgage relief provisions he's put in place will NOT be available to speculative buyers like PP owners. They are going to be available only to owner-occupied homes. Not to second homes or rental properties, etc.

As always, the devil is in the details, but according to the President's statement of two days ago, no bought-to-hold-for-speculation homes like PP's properties in Ogden will be eligible for the program.

RudiZink said...

Sorry, rudi...blah,blah blah..."When a house goes into foreclosure, homes on the same block drop in estimated market value almost instantly."

Sorry, Curm...That's a load of crap.

Home values mainly depend upon comparable real market sales in neighborhoods, even in bad markets. Value per sq. ft. for construction is another lesser factor. There are several others.

Foreclosed homes are usually not ready for market, and therefor sell at depressed prices. Seldom will you find an appraiser or broker including foreclosed home in a comparative market analysis, because foreclosed home sales don't reflect real market prices.

Even in down markets, foreclosures are considered by appraisers and brokers to be aberrations from a property valuation viewpoint, inasmuch as they are essentially "forced sales."

While it's true that a generally down housing market will downwardly effect housing prices in general, foreclosed home sale prices aren't ipso facto considered by pricing experts to be much of a pricing benchmark at all.

Sale prices reached between ready and willing buyers and sellers after a normal listing period are still the standard for home pricing in America.

And why, I'll ask, adding anotherplank to the argument, should taxpayers across the country have to bear the burden for overbought properties which are for the most part concentrated in about five US states anyway?

Obama's mortgage borrower bailout makes no sense at all, in my never-humble opinion. If we as a nation ever expect to see the housing market reach equilibrium, we're simply going to have to let the chips fall. The sooner median housing prices in any given region begin to equilibrate with median incomes, the sooner we'll be released from the current housing pricing mess.

The Viking said...

Anytime the Federal Government gets involved in financial aid of any kind, you can be sure it will be mishandled. They are not equipped to monitor distribution or results and this leads to chaos.

If you want something screwed up, give it to our government to administer. Right now however, they are the only group that can help. The banks and lending institutions are failing and are of no help. We are stuck with the worse possible scenario with nowhere else to turn.

momba said...

If you want something really screwed up (or if you really want to get screwed) let business run the government, set their own limits and police themselves. An example of that is how we do it in Utah.

OgdenLover said...

Having been driven around with real estate agents who tried (unsuccessfully) to sell me on "creative financing", I can see how many people fell for these schemes. Years ago, our family income was under $20K and they were trying to show me $300K houses! (We bought a $40K house with a 5% down-payment.)

Why not try to help those who are losing their homes because they've lost their jobs or have had massive medical expenses? What if it were your friend or neighbor? If people can stay in their homes, they will get back on their feet one day. If they are out on the street now how many will become a permanent burden to society.

We can be a mean-spirited, punitive society or a caring society. I'd prefer the latter.

Pizza Man said...

Momba, they tried that in Russia and other places in the world, it is called Socialism and it fails every time.

Maybe you would like us to look like North Korea?

bullet sponge said...

So by your logic, Curm, we should never let any person ever be foreclosed on because it has a bad effect on the neighborhood. Sorry but bad behavior is bad behavior, whether its on a small scale or large and this bailout is a horrible precedent.

But I'm also not in favor of bailing out these banks either. "Too big to fail" my ass.

I say stop this bailout, take our medicine, however hard it is and balance the damn budget. If it requires higher taxes and less spending then so be it. If it causes interest rates to go double digits then tough crap. Start doing what Canada does with their banks (which are not nationalized) by regulating them tighter and not letting them be leveraged 40 to 1.

Stop hand-holding everyone and expect a little responsibility instead of trying to buy votes (this goes for both parties).

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