Mortgage bailout..

[magellan01]

@elucidator

And a stern lesson it will be, too!

http://blogs.abcnews.com/politicalpunch/2008/09/last-years-big.html

Sorry, rude to interrupt. You were saying? Something about personal responsibility?

Yeah, and what about it? We need more of it, not less. And I be happy—thrilled to go after these people and their money. I think they broke the fiduciary responsibility they have to the company. I’m in favor of the proposal of one politician who is trying to pass a “claw-back” law that would allow us to recoup those payments. What do YOU propose, oh Snarky One?

But that doesn’t mean that some home owner who chose to get in over his head and got burned deserves to be rescued from his bad decision.

And I’m sorry that you object to laws getting in the way of justice. They’re not always adequate, which is why we craft new laws. Grow up.

[elucidator]

@magellan01

…And I’m sorry that you object to laws getting in the way of justice. They’re not always adequate, which is why we craft new laws. Grow up.

Well, of course, the Law is the handjob of Justice…

Shirley, you are not suggesting that none of these people were swindled? How, then, do you propose that we seperate out the irresponsible? What mechanism do you envision to accomplish this? Just previously, you tell me that so long as no actual laws were broken, its all kosher. Greed and rapacity are perfectly fine, so long as no statutes are violated?

How grown up am I? Grown up enough to tell you that the answer to Cain’s question is yes, you are your brother’s keeper. And if that makes me juvenile and dewey-eyed in comparison to you, Oh, Ancient of Daze, then so be it. I was so much older then, I’m younger than that now…

[Shayna]

@elucidator

Well, of course, the Law is the handjob of Justice…

Shirley, you are not suggesting that none of these people were swindled? How, then, do you propose that we seperate out the irresponsible? What mechanism do you envision to accomplish this? Just previously, you tell me that so long as no actual laws were broken, its all kosher. Greed and rapacity are perfectly fine, so long as no statutes are violated?

How grown up am I? Grown up enough to tell you that the answer to Cain’s question is yes, you are your brother’s keeper. And if that makes me juvenile and dewey-eyed in comparison to you, Oh, Ancient of Daze, then so be it. I was so much older then, I’m younger than that now…

Oh no, no, no! None of those people were swindled or hoodwinked into believing they were getting something they could afford. No, every last one of them gamed the system.

The system, by the way, that was orchestrated and engineered by Phil Gramm, with the Gramm-Leach-Bliley Act that repealed the part of Glass-Steagall that would’ve protected us from this disaster, and the Commodity Futures Modernization Act that further sheltered the industry from regulation, all of which led to something the industry called the “credit default swap.” What’s that, you ask?

. . . Credit default swaps did allow the banks to share risks. So much so, that banks raced each other in an effort to find more risks. They made it possible for the down payment on homes to become 3%, 1%, 0%. Skip the credit check, avoid the employment requirements, damn the torpedoes, full speed ahead! We’ve got a credit default swap, we can do anything!

The encouragement and “safety” that credit default swaps provided made the sub-prime mortgage market possible. Just as with the deregulation of S&Ls in the 1980s, the market was suddenly flooded with easy credit. The result was a real estate boom, soaring home prices, and a plague of “Flip that House!” shows on cable.

As the banks piled up crappy mortgages, they heaped on ever more of the credit default swaps – and they still had no idea how to value the things. Worse, they began to trade the swaps themselves as if they were an investment, treating them like something worth holding instead of a big bundle of cartoon bombs whose fuses were already lit. Since very few loans were falling into default at the time, owning a default swap seemed like a way to collect fees without ever paying out. Banks wanted more, and more, and more.

A secondary market for trading swaps exploded into existence, and swaps were traded with absolutely no consideration for the nature or quality of the underlying investment. Swaps changed hands a dozen or more times, growing in “value” as they went. Worse still, no one regulated who could buy a swap, so it was (and is) perfectly possible for a company to acquire swaps that theoretically cover billions of dollars in loans, even if that company doesn’t have a red cent on hand to cover those swaps should the loans default. . .

http://www.dailykos.com/storyonly/2008/9/21/9322/74248/245/602838

But every bit of that manipulation and game-playing by financial institutions is 100% the fault of bad decisions by homeowners? You’ve got to be kidding me!

[magellan01]

@elucidator

Shirley, you are not suggesting that none of these people were swindled? How, then, do you propose that we seperate out the irresponsible?

What mechanism do you envision to accomplish this? Just previously, you tell me that so long as no actual laws were broken, its all kosher. Greed and rapacity are perfectly fine, so long as no statutes are violated?

Unfortunately, not all bad or rapacious acts are covered by laws. If you have a way to do that, I’d love to hear it. But what you’re asking is that I, or you, pay for someone else’s gullibility/ignorance/greed/stupidity whatever. No thanks. Now if you feel differently, I have an idea, seriously. You start a LuciFund that will help those people out who were not the victims of crimes. I have no desire to do so. I want such actions to have negative consequences. Hopefully people will learn from them in the future. Even so, not everyone will. Tomorrow, there will be another person taking chances with his future. If he wins, good for him. If he loses, like many people will, consider it an education. An expensive one, possibly. But eveidently that’s what some people need before it sinks in.

As far as those who were, in fact, victimized by criminal behavior, let them take people to court. I think they’d find a very sympathetic judge and jury. I hope people do this.

[Shayna]

Jesus! What is it going to take to get you to understand that this disaster was caused by CONGRESS, acting in conjunction with BANKING LOBBYISTS, repealing any regulation and oversight that existed to protect us; banks and other lending institutions TRAWLING for victims to play the system once they were free to do so with impunity, then creating the ILLUSION of assets they didn’t have, all to make BILLIONS off the backs of homeowners and the taxpayers?

[magellan01]

@Shayna

Jesus! What is it going to take to get you to understand that this disaster was caused by CONGRESS, acting in conjunction with BANKING LOBBYISTS, repealing any regulation and oversight that existed to protect us; banks and other lending institutions TRAWLING for victims to play the system once they were free to do so with impunity, then creating the ILLUSION of assets they didn’t have, all to make BILLIONS off the backs of homeowners and the taxpayers?

Please. Yes, congress passed the laws. Some of those laws allowed people to get loans they previously didn’t qualify for. But prudent people did the smart thing. Imprudent people didn’t. They gambled. They lost. No one held a gun to anyone’s head. People in this very thread were approached and declined, tempting though it might have seemed. But they asked themselves, “what if…” questions. Risky behavior is sometimes rewarded. Sometimes payment comes due.

Next.

[Shayna]

So I guess that answer to my question is, nothing. You are determined to apply 100% of the blame to the victims of this massive ponzi scheme. I guess I shouldn’t be surprised.

[magellan01]

@Shayna

So I guess that answer to my question is, nothing. You are determined to apply 100% of the blame to the victims of this massive ponzi scheme. I guess I shouldn’t be surprised.

Nice try, but I’ve stated more than once that some people were, no doubt, victims of criminal behavior. And that we have courts that deal with criminal behavior. So, whoever thinks they were such victims, take the scumbags to court.

Any better ideas?

[Shayna]

@magellan01

Nice try, but I’ve stated more than once that some people were, no doubt, victims of criminal behavior. And that we have courts that deal with criminal behavior. So, whoever thinks they were such victims, take the scumbags to court.

Any better ideas?

Have you actually read anything I’ve posted or linked to? It seems not, since you’re still harping on this “criminal behavior” crap, when there was nothing “criminal” about what the Lobbyists coerced Phil Gramm and his butt-buddies in Congress to LEGISLATE in favor of (that’s kind of the definition of “not criminal” right there), and which the financial institutions played paper games with.

I honestly don’t understand how you can’t be FURIOUS with your Representatives who allowed this to happen, by giving the banks and other financial companies carte-blanche to rip YOU off with their manipulative games.

Got any better ideas yourself, or do you still want to play Blame the Victims?

[magellan01]

@Shayna

Have you actually read anything I’ve posted or linked to? It seems not, since you’re still harping on this “criminal behavior” crap, when there was nothing “criminal” about what the Lobbyists coerced Phil Gramm and his butt-buddies in Congress to LEGISLATE in favor of (that’s kind of the definition of “not criminal” right there), and which the financial institutions played paper games with.

I honestly don’t understand how you can’t be FURIOUS with your Representatives who allowed this to happen, by giving the banks and other financial companies carte-blanche to rip YOU off with their manipulative games.

Got any better ideas yourself, or do you still want to play Blame the Victims?

I wasn’t talking about the criminal behavior of the lobbyists, but the criminal behavior, as someone brought up, of the lenders themselves. The so called “mortgage experts”. If anyone, banks, mortgage brokers, lobbyists, broke the law, lock them up. That aside, you keep viewing the borrowers themselves as mindless sheep or little children, unable to look out of their own best interests. This is baffling to me. Why can’t you just admit that people who took big risks got burned? Burned by their own decisions.

This isn’t blaming the victim. It’s holding the decision makers responsible for the decisions they chose to make.

And I’m still unclear on what YOU would do.

Also, you might find Sam Stone’s contribution’s to this thread interesting: http://boards.straightdope.com/sdmb/showthread.php?t=484394&page=2

[gonzomax]

There is no way the people can be held responsible. A little regulation would have made it impossible. The system was gamed by the loan originators and allowed by those who knew better. Millions were made by these companies and they were inside enough to know the risks. They sold them off and were home free. It was a scam and they should not get away with it.

[elucidator]

Not making a lot of sense, here, Mags.

Lets think-experiment. Say we have a mortgage agent, a “salesman”, just as you say, give him the name S. Nidely Whiplash, MBA. Presumably, Mr Whiplash has some passing familiarity with mortgages, as mortgage institutions do not commonly recruit from Starbucks baristas and bicycle messengers. He has at least a passing familiarity with what your banker thinks of as “the miracle of compounded interest”. Even if we don’t saddle him with an epithet like “mortgage expert” in a transparent ploy to slander doctors, he clearly must have some expertise.

In walks Ms R. Riding-Hood (known as Lil to her friends). Her first anxiety is not that she will get a mortgage, but that she will not, she is “leaning forward” in the ensuing collaboration. She doesn’t know ARM from term from fixed from hole in the ground.

Are you seriously suggesting that they are on an even playing field, relative to each other? And that each of them has an equal responsibility for the outcome of their negotiation? Clearly, they do not, one of them knows, the other does not, there is nothing “equal” about that. Now, we might quibble over precise quantification, is Whiplash 95% responsible, 90%, more, less…? But by no stretch of the imagination are they equally responsible.

And, of course, there is the dull truth that one of them is going to cash a nice check from all of this, and the other will be saddled with a crushing burden. Hardly an equitible outcome, I hope you will agree.

And while you seek to magnify and exaggerate what meagre responsibility Ms. Riding-Hood may deserve, you repeatedly assure us that Mr Whiplash has done nothing illegal, you throw down the gauntlet to prove that he did, as though this had any real bearing on the matter at hand. It does not.

If Mr. Whiplash steered the unfortunate Ms Riding-Hood into a mortgage doomed to fail, then he is either a blithering incompetent or he is a thief. The legality of his actions reflects badly on our legal system, but doesn’t decrease his culpability in the slightest.

There are many, many things one ought not to do that are entirely legal. I trust this is not news to you.

[treis]

@elucidator

If the real value falls within the affordable range of the current owners, why not let them keep it? What value is created by exchanging one set of occupants for another?

(1) If Joe is paying his mortgage on time, and he sees that Jim down the street got his knocked down 40% by not paying, what do you think he’s going to do? The practical effect of this policy is that more people will default on their mortgage, and the problem will grow.

(2) Why should these people get the equivalent of tens of thousands of dollars for taking out a stupid loan?

[elucidator]

@treis

(1) If Joe is paying his mortgage on time, and he sees that Jim down the street got his knocked down 40% by not paying, what do you think he’s going to do? The practical effect of this policy is that more people will default on their mortgage, and the problem will grow.

(2) Why should these people get the equivalent of tens of thousands of dollars for taking out a stupid loan?

And the elephant in the room cuts the cheese, big time, the stench of digested peanuts fills the air…

Joe’s home is almost certainly over-valued, both in terms of his mortgage and his property taxes. (If you listen closely, you can probably hear school boards and other entities that depend on property taxes shitting themselves in panic.)

My old man assesses houses*, I’ve learned a bit about it. One of the more important criteria for assessing the value of property is comparability. He looks for houses in the same neighborhood that are approximately comparable, bedrooms, amenities, garages, that sort of thing. Obviously, if two houses are roughtly identical in sq. footage, bedrooms, bathrooms, etc. then they are rougly comparable in value.

In all probability, Joe’s house is overvalued, it is not worth what his mortgage (or his property tax assessment) claims that it is. My advice to him is that he scream bloody murder. If there is any justice in this world, or if the injustice visited upon people with money can be remedied, a mechanism will be in place to revalue his house, for the property tax valuation if nothing else. Justice being fungible, I suspect some remedy to be applied, if nothing else, his property tax bill will be lessened. If he has not completed his mortgage cycle, his terms will be re-evaluated.

If he has, and he owns his home outright, perhaps he can approach his friendly banker for some sort of rebate. And I wish him the best of luck with that. But the ugly fact is that property values are inflated, perhaps wildly, and somebody is going to take it in the shorts. The guy who cannot afford the mortgage on his overvalued property has no shorts with which to absorb.

So who does that leave to screw?

*(Its a pity he’s retired, he could work 24/7/365 for the next several years and leave a much more substantial inheritance. I’ll have to speak with him about this…)

[treis]

@elucidator

And the elephant in the room cuts the cheese, big time, the stench of digested peanuts fills the air…

Joe’s home is almost certainly over-valued, both in terms of his mortgage and his property taxes. (If you listen closely, you can probably hear school boards and other entities that depend on property taxes shitting themselves in panic.)

My old man assesses houses*, I’ve learned a bit about it. One of the more important criteria for assessing the value of property is comparability. He looks for houses in the same neighborhood that are approximately comparable, bedrooms, amenities, garages, that sort of thing. Obviously, if two houses are roughtly identical in sq. footage, bedrooms, bathrooms, etc. then they are rougly comparable in value.

In all probability, Joe’s house is overvalued, it is not worth what his mortgage (or his property tax assessment) claims that it is. My advice to him is that he scream bloody murder. If there is any justice in this world, or if the injustice visited upon people with money can be remedied, a mechanism will be in place to revalue his house, for the property tax valuation if nothing else. Justice being fungible, I suspect some remedy to be applied, if nothing else, his property tax bill will be lessened. If he has not completed his mortgage cycle, his terms will be re-evaluated.

If he has, and he owns his home outright, perhaps he can approach his friendly banker for some sort of rebate. And I wish him the best of luck with that. But the ugly fact is that property values are inflated, perhaps wildly, and somebody is going to take it in the shorts. The guy who cannot afford the mortgage on his overvalued property has no shorts with which to absorb.

So who does that leave to screw?

*(Its a pity he’s retired, he could work 24/7/365 for the next several years and leave a much more substantial inheritance. I’ll have to speak with him about this…)

What the hell is the point of this rambling shit?

[UltraVires]

@elucidator

If he has not completed his mortgage cycle, his terms will be re-evaluated.

What? I haven’t heard any of this. From what I’ve heard, you could have the most upside down crazy balloon mortage, taking 89% of your pay, but if you are current on your payments, then you get no relief under this plan.

[jkusters]

@elucidator

…he could work 24/7/365 for the next several years and leave a much more substantial inheritance. I’ll have to speak with him about this…

Undoubtedly intended as a bit of humor, I think this nevertheless speaks unintended volumes about differences in financial priorities…

[elucidator]

@treis

What the hell is the point of this rambling shit?

You should probably just avoid my posts, they aren’t for you. I’ll get over it.

[elucidator]

@jkusters

Undoubtedly intended as a bit of humor, I think this nevertheless speaks unintended volumes about differences in financial priorities…

Really? Wow, perhaps you can explain this dream I had, I was on a train, going by all these fire plugs, and then it went into a tunnel…

[Spoke]

One thing about this bailout, it’s going to make it really easy for Obama to sell the idea of taxing the shit out of the ultra wealthy. They profited from this system; let them pay the tab.