If the government really wanted to help they would start at the bottom. Bailout the home buyers and keep them from defaulting on the loan, this reduces the foreclosures and saves the banks and everything else in the process.
Bad idea. First of all, the government doesn't have that much money without massive printing. We are talking trillions here I bet. Morally its wrong because that would be bailing out many people who bought way more house than they could afford, and uses tax payer money to keep them in those homes. Also, many people simply used refi's as ATM's for new cars, etc. Economically not a good idea because it keeps the overall market propped up where it is still over priced. Mortgages to incomes are still at a ridiculous level in much of the country. Prices NEED to come down more. They went parabolic on the upside so a big shakeout is normal.
You mean the greedy, gluttonous irresponsible scum who bought more house than they could afford, often by lying about their incomes? The ones who used their houses as ATMs while real estate prices were going up to live even further beyond their means? Many of whom were too stupid or lazy to understand the terms of their loans?
Other than giving the home buyer the house the bank will lose because these subprime buyers consistently show an inabilty to pay their bills. The banks must forclose or cut principal in half and if you do the latter you will see a revolt among the class of people who actually are making their payments on time which happens to be most of the country.
this is something i never understood, why do rates go up when you can't pay your bills in the first place? makes no sense! why do high risk pay more? high risk can only pay less by definition. dropping the rates enables more people to make payments, raising rates makes more people default. them guys is crazyyy
The next time some limp wristed leftie tells you banks are redlining and its everyones right to own a home, kick them in the balls for me.
in the early 80's when rates went over 16%, i put one on the market and moved out of state and in a few months the broker called and said kids were breaking in. now they will rip out copper, dishwashers, etc. the worst you can do is leave one vacant too long.
The sad story on this is that while this legislation is being trumped up as a home owner bailout, unfortunately congress actually decided to bailout their buddies, the home builders, rather than the home owners. The fed govt is has way more resources to float on, but what is an interesting trend is the cost that is starting to weigh on the state budgets.
seriously, you don't understand why high-risk deadbeats pay more in interest? well let me give you a real life example. i'll send you my bank info, you wire me a $100,000 loan at 10%. i'll pay you $500 per month, and after 3 months i'll start being delinquent. at that point, you can lower my rate to 8% ($400 month). after a few more months i'll be delinquent again and you can lower my rate to 5%. after a year my rate will probably be 0%. sound good to you? this idea sounds very good to me.