'We're Not Trying to Bail Out Lenders and Speculators'
From the SF Chronicle:
In an effort to stem potential mass foreclosures of homes financed with controversial subprime loans, a state Assembly committee on Monday approved a bill intended to create a pool of money for homeowners to refinance their mortgages.
"We're not trying to bail out lenders and speculators," said Assemblyman Ted Lieu, D-Torrance (Los Angeles County). "The idea is to assist first-time homeowners who may face foreclosure due to bad loan products."
The bill, AB1538, would create a fund by tapping into the housing bond that voters approved in November, floating bonds in the future and asking banks that have large numbers of subprime customers who face foreclosures to pitch in, Lieu said.
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Critics of the proposal questioned whether the state should be in the business of refinancing mortgages or bailing out people who may have made bad financial decisions.
They also say it would be wrong to use funds from November's Proposition 1C -- $2.85 billion housing bond measure that in part would be used for down-payment assistance for low-income families -- when voters weren't told that the money might be used to help troubled subprime borrowers.
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But Lieu argued before the Assembly Banking and Finance Committee that the subprime crisis will cause ripple effects far beyond the individual borrower. "A rash of unmitigated foreclosures could drag down the California economy and create a shock wave of asset losses," he said, who also chairs the committee.
12 comments:
"A rash of unmitigated foreclosures could drag down the California economy and create a shock wave of asset losses,"
Since when has it become the job of state government to prop up the value of asset classes?
When you are the state of California and all you have going for you anymore is some mediocre weather and overpriced land-based assets.
Where do I stand in line to buy some of that paper? The rating on those bonds oughta resemble credit card interest rates, all backed by the full faith and confidence of the state of CA. A few $Billion's going to do the trick? If one uses 3 homes per $Million in mortgages, the state could help approx. 9000 homeowners with a $3Bil bailout. We're early in the game and there are already pushing 25,000 foreclosures and NODs in the state. These people couldn't afford the nut in the first place.
Stop the pandering, get out of the way, and let's get this thing over with as quickly as possible. The shakeout shouldn't take more than a few years. Once its over, things might just swing toward a normal market again and the taxpayer lives to pay another for another debacle down the road.
If you want to bail out the first time home buyer who has become the Greater Fool and the F'd Borrower....give them a moving allowance to ease the transistion. Everything else is futile. It makes no sense to keep him underwater in an overmortgaged asset. Do the GF/FB a real favor. Get him out of the mess. Give him two months rent and a security deposit and get him into a rental unit. For crying out loud, anything else is just tossing money into the head wind.
You're right on the money. Anything short of getting them out of the house they never should have bought in the first place is simply prolonging the inevitable. If the people could barely qualify for the interest only loan, how is getting them into a fixed that includes principle going to help? Or maybe we should just refi them at 50 years.
Well, to be fair, California has just a tad bit more going for it than just good weather (like a gross state product ranking it in the top ten in the WORLD compared against other countries, and one of the largest ag economies in the WORLD). Might just be me, but threatening that scale of economy should probably raise a few hackles. It shouldn't be the taxpayers who have to bail out unscrupulous lenders, though. Now Sacramento on the other hand, there's a place with "mediocre weather and overpriced land-based assets."
This bill is shite. Expect lawsuits.
I only hope that politicians realize that most current mortgage or house owners and all renters are not in trouble, so throwing money at the minority of gambling speculators will not win more votes than it will lose.
The bubble needs to pop fast, and the quicker prices return to normal, the faster that people can get on with their lives and start thinking about something other than housing.
They should let true first time home buyers out of their mortgages if their loan was predatory.
Dont hit their credit and dont hit them with a 1099. Let them walk if they are ture first time borrowers and truly have 1 house and were living in it. They dont need to owe more on the house than its worth and they bought at a higher price point obviously than now. Give them a free walk. Dont force them to sit in their overpriced house now.
Cool.
Cow_tipping.
Cow_tipping said...
They should let true first time home buyers out of their mortgages if their loan was predatory.
Dont hit their credit and dont hit them with a 1099. Let them walk if they are ture first time borrowers and truly have 1 house and were living in it.
You're kidding, right? Why should tax payers get hurt because some people took a huge gamble that the housing market would go up, and lost that gamble? It makes no difference WHO bought recently. EVERYONE was gambling. And most lost. I don't want to pay their bill.
Article on yahoo saying lenders wanting to work with borrowers to reduce foreclosures. I am highly against bailing out these people, but if they need help from foreclosing, maybe the banks should work with them to allow them to keep their home, but they must put it on the market to sell. If a 2 income fam making $60K/yr is living in a %500K home on a subprime loan, maybe they should be renting?
"If a 2 income fam making $60K/yr is living in a %500K home on a subprime loan, maybe they should be renting?"
And maybe they ought to check into some financial counselling while their at it.
LOL I was thinking it was time to get a math tutor.
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