Unlikely, as I live in an aprtment complex.
If you’re dumb enough to rent a house from a private party with only a month to month lease … yes, this can happen. And did, to me. My mistake, and I learned from it.
Obama made it clear they would not rescue speculators.
For 30 years people have bought more house than they could afford. They lived house poor figuring the price of the house would go up and they would be sitting on a life changing nest egg of equity. It worked for many years. We called them wise investors. When people did it the last few years the market dropped. They took a financial beating. They are idiots and thieves who were gaming the system. They should all die in hell.
I don’t like the idea of helping speculators, and I’m not sure that we can help them, even if we wanted to. However, I was arguing that they were, and are a big part of the problem. They helped to, in a big way, drive prices up and they are, in turn, driving prices down. This downward pressure on prices will make it difficult for Obama’s plan to have any real chance of helping the regular Joe out there refi. If he’s upside down, Obama’s plan can’t help him.
The discussion was 2 parts. One is that they would force mortgages into the 38 percent of income. Then hope to get a benefit to drive them to 31 %. That is the level that was a guideline before we allowed it to get distorted.
Two was to refinance based on a more accurate assessment of the changed price of homes. To owe 500 k on a house worth 300 k is a big problem. They can walk and buy a house next door for 300 k.Why should they stay?
I’m pretty sure I’ve read this happening in multi-unit apartments. I’d want to look at a lease pretty closely to see what it says about the property going to the bank. The articles didn’t give full details, but I got the impression that some of these tenants had been in these places for a long time, and that some of them were more or less professionally managed - not just house rentals from speculators. Though people in that situation have gotten booted also, no question. I don’t think that is newsworthy anymore.
Except that no one is going to give a mortgage to a person who just walked - especially in this environment. They will rent instead.
The question is whether the plan will allow refi for people with underwater homes in or close to foreclosure? I’d assume so, since I bet a lot of foreclosures were underwater first. If they aren’t very far underwater, someone who can afford the new terms will likely stay put until prices recover.
The person who got a subprime with little down at the peak of the market in an area especially hard hit is screwed no matter what the government does.
Sorry, but the plan doesn’t allow refi for those underwater. LTVs for refis, under Obama’s plan, can only go to 105%. When you roll in closing costs, you’re already there… So, in essence, the plan doesn’t help those underwater at all.
Meh. I checked with a lawyer, and he said in FL a new landlord (including a bank) must honor the lease.
But even if so – it’s just all the more reason I’d want a house. And all the more reason I want house values to fall. And all the more reason the gov’t shouldn’t be propping up people who made poor choices and didn’t pay their bills at the expense of people like me who made sound choices and did pay their bills.
Because of your above board board financial activities, we should let the banking system crumble. Is there some reason you thing bringing down the financial system will not affect you? If unemployment and and foreclosures continue to rise, do you think the effects will never penetrate your world ? Like it or not, we are in this mess together.
The problem is that you seem to think that helping homeowners refinance is somehow going to help the value of the underlying mortgage backed securities that have created a giant money suckhole in the financial system.
It doesn’t work that way. The issue isn’t the amount of mortgages that are going bad, it’s the leverage that was used to buy the underlying securities. Yes, foreclosures and refi’s have both caused the value of these securities to drop. But the general public seems to be under the impression that the banks were forced to write down these instruments to a value of 0 because “no one wants to buy them”. The truth is that the value of these securities has not dropped nearly that far but when you are leveraged at 20 to 1, it only takes a 5% reduction in the underlying value of the securities for you to get wiped out. If it drops 10% percent, you are wiped out and owe a lot of money, if it drops 20 to 25% then not only are you wiped out but you owe soooo much money that the government needs to give you billions to cover your losses.
The WSJ had an article on AIG’s projected quarterly loss of 60 billion. The triple A rated commercial mortgage backed securities that trashed this company are currently trading at an average of 75% of their original values. These securities where incredibly overleveraged and improperly insured and so twisted into all sorts of funky “bets” in the wrong direction that this 25% drop wiped out everything and left the company with something like 120 billion dollars of debts.
Now the problem with the securities backed with subprime mortgages is the only way they will hold their value is if almost everyone pays back their mortgage AS SCHEDULED IN THE ORIGINAL LOAN. Say that the unqualified homowner took out a $200,000.00 loan. With a subprime variable loan rate the total payments over the life of the loan will probably be over $600,000.00 over thirty years, maybe well over depending on how crappy the loan is.
Then the homeowner refinances. The holder of the original loan does not get $600,000.00 over thirty years…instead they get part of their original 200K back. THIS DEGRADES THE VALUE OF THE UNDERLYING SECURITY. Becuase the original purchase of the underlying security was so overleveraged, it will probably take a mere 5% to 10% drop in the value of the underlying security to wipe out the initial investment, then further drops in value drive the bank deep into debt. This is why the securities are so toxic and why no one can figure out what to do with them.
The bottom line is bailing out homewoners isn’t going to do much to help the banking system and the only reason to do it is from some misguided sense of “fairness”, figuring that since you helped out one irresponsible entity then you are somehow obligated to help every other irresponsible party.
Furt would and should capitialize on this mess, at least within the next 12-18 months. This massive correction in the housing market is what more fiscally responsible people wait for when jumping in. You see it half empty; he sees it half full. I guess it depends on where you stand financially, which is generally dependent on how well one is responsible with money/job/life in general. I hope Furt sees it this way…and that is why he responded to you the way he did.
I think this makes sense if you agree with my idea that the people who cannot afford houses really should return to being renters. At some point, the prices of the houses fall to a point where they become reasonable for landlords (read: people who understand what they are doing with respect to real estate investments) to buy them up and rent them to renters (read: people who do not have their financial shit together enough to reasonably buy a house) at a price they can afford. I think prices need to fall a bit more for this to happen. And of course, the people need to lose the house so that have to go back to renting.
No offense to people who could buy a house but choose to rent. They are a different set from those who can’t buy a house but do so anyway.