I agree with everything here, except I’m not socially “very” liberal. I have trouble seeing people who knew how much their loan payment would be as victims unless they also lost their jobs when the economy crashed since no one could forsee how long many people have been out of work.
The problem, like most when dealing with economics, is complex. Certainly the unemployment rate contributed to the problem as does/did the stagnation we have seen for the last 4-7 years (depending on your opinion).
It is all very systemic; predatory lending, credit default swaps, 150% LTV and certainly - in some maybe many but not all cases - bad judgement.
But I think many are missing the point or at least only looking at a single facet of the issue. Some of you want to keep harping (no pun intended) on "rewarding for bad judgement) yet fail to acknowledge that some people did not in fact over extended themselves and NO ONE could have predicted the level of devaluation we have seen in some areas.
I live in the Midwest in an area that was only lightly touched and lost almost $50k equity on a 500k home (10%)… and I am considered lucky. Most would expect some appreciation in the last 5 years, yet in some markets people have lost LITERALLY 50%, 60%, 70% or more! That is completely unprecedented and no individual could be blamed or be accused of not being responsible.
Couple this with the other factors, lost jobs and income and you have to feel for everyone impacted. I was outright angry at my mere 10% loss and I do not have money problems.
I can only imagine having a 900k home in California that is now worth 300k while I owe 800 to the bank! And in that scenario there are people, right now, you are living it and do not qualify for HARP because they bought days, weeks or months after the May 2009 cut off. :mad:
Ahhh, the punishment factor. Usually this vanishes when we start talking about banks making bad economic decisions, and eating the cost of strategic defaults.
Hi there, you can now barely afford a home, because the housing market is in a shambles and prices have dropped 30% in the last year. Feel like buying this house? The block only has 3 other abandoned homes, it’s a great deal.
Hmmm… I can’t really think about a recent problem with the housing market to illustrate how much prices can change and fuck up the economy as a whole.
I’m curious about your assumptions. What bad economic decisions are you assuming most people made that are taking advantage of this program?
Do you assume they bought too much house? Or didn’t consider the chances of losing their job/not enough saved up in case of loss of job?
When leaving a building I exit through the door, like a normal person.
The reality is that these homes are not worth what they paid for them. The faster equilibrium happens the faster everything gets back to normal. Supply can start adjusting to demand and banks can start making loans again. Having a significant amount of homes in limbo, just prolongs the process without making anyone better.
Deserves got nothing to do with it.
At one point during the housing bust I lost over 100,000 in home value. That does not make me worthy of a government hand out. That is just the way the market works. Since you have a job and can afford the payments, why should the government give you money, when the government is going in debt one trillion dollars each year? People who have lost their jobs and can’t pay their mortgage, how is a slightly lower interest rate going to do anything for them? If they can’t get jobs they will have to leave the house eventually. This might get them a couple of months in their house, but given the government’s financial status is that really something they need to be doing?
What most of this seems to be about, is that since they bailed out the banks people think the borrowers should be bailed out to. However, the government can not afford to keep writing checks to everyone who made a bad investment, either through poor judgement or bad luck.
I’m in my late 20’s and maybe looking to buy a home in the next couple of years. I live within my means, save money, and have good credit. Any program that artificially supports housing prices is bad for me. I would rather pay less for a house than more.
Would you be opposed to the government offering people like me some type of financial benefit to even the playing field?
I understand there are varying levels of guilt amongst many different parties involved with the mortgage meltdown. However, I’m 100% sure I have none, and programs that attempt to keep housing prices inflated I find extremely frustrating.
How do you feel about the mortgage interest deduction?
Good, I guess?
That doesn’t really have anything to do with the price of homes. It’s just a way to make buying more appealing than renting, IMO.
It provides a financial incentive to having a mortgage (versus renting). Therefore, more people will want to buy houses. More buyers = more demand, higher prices.
It’s a free handout to homeowners. How is it NOT going to increase the price of homes?
Oh, yeah, I agree with you. I think it’s good for me personally, but overall I think it distorts the market. I’d love to be able to deduct a portion of my rent.
Can someone explain that HARP actually does? Some of the objections here imply that HARP pays down the principal so that houses aren’t underwater anymore, which, if true, I’d agree and be against HARP.
Other posts imply that HARP merely gives homeowners in a bad situation the option to refinance at a lower rate so they get out of a predatory lending situation. If this is the case, then I’d support it. Access to a lower interest rate isn’t giving away money like lowering principal would be. They are entirely different things to me. The homeowner would still owe the same loan amount.
As I read it, it’s the latter. HARP originally allowed homeowners to refinance if their loans were already owned by Fannie Mae/Freddie Mac, which apparently applied to 90% of mortgages (whether the homeowners knew it or not). The principle amount remained the same, but obviously by refinancing they could take advantage of the currently low interest rates and possibly eliminate PMI. The government, under HARP, simply backs the loans like they do with FHA loans. It’s also worth noting that to qualify for HARP, you had to be current on your payments for the last 12 months, so this wasn’t for people who “bought more than they could afford,” really, it was for people who were making payments but couldn’t qualify for a refi mortgage based on their reduced appraisal.
HARP 3.0, as it’s being discussed in this thread, simply expands the HARP program (quietly in place since 2009) to the 10% of mortgage NOT owned by Fannie Mae/Freddie Mac, as long as the same conditions are met.
I’m still not clear on what this costs the government, exactly.
Personal anecdote: I’ve had my house refinanced under HARP. Nothing was paid off; I’m still underwater by nearly 50%. I was 7 years into my original 30-year loan. A new 30-year loan got started at a lower interest rate which cut my monthly payment by $100.
I still owe just as much principal as I did before the refinance (a little bit more due to the closing costs, actually), but it’s more manageable now.
Many posters have talked about re-inflating the bubble, but I’m not seeing it. I don’t really have a strong position either way on HARP, but what it isn’t doing is re-inflating the bubble.
If I bought a house 5 years ago for $250k, but today it is worth $100k. It is only worth $100k, and that is all I or the bank will get out of it. The bank can foreclose on me and sell it for $100k, or refinance through a government program and let me stay in it for $100k. I’m not seeing bubble re-inflation.
Widespread use of these programs will help prop up prices by keeping a certain number of properties off the market. Part of the reason your house value drops to $100k is an increasing number of houses on the market compared to the number of buyers. Cut a percentage of that supply by keeping more homeowners solvent, and prices will go up.
What you label this price effect depends on whether you think it’s a good thing or a bad thing.
Someone needs a better understanding of the term handout.
Giving a home owner a lower interest rate and some relaxed qualifying requirements (like no appraisal required due to devaluation) to a homeowner who has never been late on a payment, while mandating that said owner STILL PAY THE EXACT AMOUNT agreed upon… all while the lenders, many of which were predatory, corrupt and misleading only make a few hundred thousand in interest is NOT a handout.
Listening to some of you talk about HARP like it is the Food Stamp System is either uneducated or bias to the extreme.
For those that have reviewed this bill, it requires ZERO tax dollars to fund because there is no funding, bailout or handout as part of it. Its SOLE purpose is to keep people paying their mortgage and not saying “screw it” causing more massive foreclosures.
The government is backing these loans, though. What happens if someone does default?
HARP in no way reduces the principal amount owed. It requires no funding from the Government. What it does do is allow a homeowner who is underwater on their home to still refinance and revision 3.0 that is in the house will extend the eligibility dates to a total of 11 million homeowners (as opposed to the one million plus currently) while also expanding to FHA and other loan types such as Jumbo.
There is some decent info at the White House site
Maybe I am off here but at the end of the day is it any different than the Freddie/Fannie crap we went through a few years back? It is all paperwork shuffling and semantics IMO… because the government still gets involved.
The more important point to me is that if you can do something to stem off foreclosures in a way that has no tax implications to the economy then you should do it and regardless of which side of the aisle you call your home team its good for most if not all Americans.