Gross: Bush needs to rescue homeowners

[imagine2frolic]

Ernie, after reading your question I stumbled across. this.http://www.msnbc.msn.com/id/20359910/

[CobraEd]

But if they go completely out of busness and fold up, then there is no one to pay the mortgage to anymore. The house is yours!!


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[VRM]

A friend of mine got ARMed. He signed up for one of those crazy mortgage deals that he saw on TV or someplace. He told me about it as he was about halfway through the process. I told him he should back out of it and lock in a good rate (this was about 4 years ago). He said that his credit was not that great. Well, fast forward - he took out a bunch of equity to buy a new truck, a new car, and also to remodel his house. He seems to buy (not lease) a new car every 2-3 years. Then the rate started to go up. He would have lost his house if his dad had not paid off his truck, car, and credit card bills for him.

The whole thing is his own fault for not living within his means, and for not understanding the mortgage plan that he was getting into. Unfortunately, there are lots of people just like him. They started to see dollar signs (and flat screen TVs) when lenders told them that they did not have to pay for the principal for a few years, or that they could use their home equity to buy all those things that they 'need'. Lenders also have a responsibility to write loans that stand a good chance of running to term.

There is plenty of blame to go around, but that is not going to fix the problem. I'm not a banker, and I know that the issue is more complex than my understanding of it, but where is that breaking point between rewriting the note for an rate that the lender can afford for the duration of the note and the costs involved in forclosure? In this market there are just not going to be that many people able to buy all the homes being forclosed on, so what are the lenders going to do with them? With the value of the homes being a lot less the lenders will take a (sometimes substantial) hit there as well when they try to resell.

I might be wrong, but it just seems to me that it would be better to make a smaller profit on someone paying a loan properly than to end up with extra costs associated with forclosure and resale.

Steve

[CobraEd]

VRM, This is another classic example of $hit for brains. And now the American public will have to bail out all the people like this, that is if their mommys and daddys dont fix it for them.

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[VRM]

Originally Posted by CobraEd

VRM, This is another classic example of $hit for brains. And now the American public will have to bail out all the people like this, that is if their mommys and daddys dont fix it for them.

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Yep, I agree...this same guy has been jealous of me having a Vette. I've told him numerous times that if he bought a car and drove it for a few years then he would not be throwing money at car dealers and could actually save for a fun sports car. Instead, he goes out every 2-3 years and buys the biggest pickup he can find. I've known him for 10-12 years now and he has had 4 new pickups (usually a dually covered in chrome doo-dads) in that time. His wife just got (2 years ago) a brand new Pontiac Grand Prix - 26K for that.

He makes better money than average, but not enough to afford what he is doing.

Unfortunately, when people stop their crazy spending for TVs, cars, and so on, the economy will take a turn for the worse.

I'm not in favour of bailing out the companies or the borrrowers - they made the decisions to finance this they should have to live with it.

Steve

[DAVID GAGNARD]

Yep, I agree...this same guy has been jealous of me having a Vette. I've told him numerous times that if he bought a car and drove it for a few years then he would not be throwing money at car dealers and could actually save for a fun sports car. Instead, he goes out every 2-3 years and buys the biggest pickup he can find. I've known him for 10-12 years now and he has had 4 new pickups (usually a dually covered in chrome doo-dads) in that time. His wife just got (2 years ago) a brand new Pontiac Grand Prix - 26K for that.

He makes better money than average, but not enough to afford what he is doing

An old buddy of mine had a saying for folks like that......they have a champainge taste and a root beer pocket book !!!!!!!!!!!

I have a brother-in-law like that, actualy 2 like that......One asked me why I continue to drive a truck 10 years when he knows I could afford one every five years??? He trades in his F-250 Lariat,4x4,crew cab,loaded to the gills every 3 years, so far he has never owned anything outright, he just continues to pay notes and probably will all his life....same goes for his ATV and bass boat......one day I told him I make twice as much as he does, but can't afford half the things he has!!!!!!!!!!!!!!!!!! but I OWN everything I have, to me that means a lot.......

people like him help keep the economy rolling along I guess...

David