Earth to Senator Schumer....

[Little Raven]

This sort of thing is a bad idea. Seriously.

Amid new signs that the housing slump is worsening, key Senate Democrats said Wednesday that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure.

The call for federal involvement from New York Democrat Charles Schumer, chairman of the Joint Economic Committee, came on the same day the National Association of Realtors forecast that the median price for existing homes will decline for the first time since 1968 as a sales slump worsens.

"We will be proposing significant amounts of dollars," Schumer told reporters after being asked if a large federal bailout may be needed.

Oh, joy. Since Wall Street no longer feels the need to pump millions into the home market, the government should take over? Really?

"We've heard one heartbreaking story after another of borrowers with limited incomes being sold mortgages they could not afford," Sen. Sherrod Brown, D-Ohio, said at a briefing on Capitol Hill.

Yes, very sad. But that doesn't change the fact that a Congressional bailout is a bad idea.

Yes, lots of people are going to get screwed. Many deserve it. Some no doubt don't. But this is exactly the kind of thing the market needs to fix and the government needs to stay out of.

 

[Che Guava]

I don't know if I trust the market's wisdom when it comes to basic needs, like housing...

having said that, I don't know exactly whom this is going to affect (i.e. upper-middle calss with houses to large for them anyhow, or lower class with not much else place to go...), so I'll reserve judgement for now.

 

[JollyRoger]

Yep - this is really to protect the lenders (or whoever bought the loans) from losing out when the borrowers default. I say let both parties (the lender and borrower) get the hurt they deserve for entering into a risky proposition and leave tax dollars out of it.

 

[Little Raven]

I don't know if I trust the market's wisdom when it comes to basic needs, like housing...

But this isn't about making sure people aren't sleeping under bridges. This is about attempting to prop up a housing market that's completely out of step with reality.

A lot of people have made a lot of money on this particular roller coaster, and now that the good times appear to be ending, they want the taxpayers to bail them out. But nothing good lies down that path.

 

[nc-1701]

I'm not sure what I think here. If the whole lending industry really suffers it could screw the economy up pretty bad for quite awhile. On the other hand a little healthy bleeding might make it even better. Like what happened after dot.com boom.

 

[Che Guava]

But this isn't about making sure people aren't sleeping under bridges. This is about attempting to prop up a housing market that's completely out of step with reality.

A lot of people have made a lot of money on this particular roller coaster, and now that the good times appear to be ending, they want the taxpayers to bail them out. But nothing good lies down that path.

If that's the case, then I would have to agree with your assesment. I don't mind a little of gov't cushioning, but a full bail-out is just plain silly...

 

[bathsheba666]

This sort of thing is a bad idea. Seriously.Oh, joy. Since Wall Street no longer feels the need to pump millions into the home market, the government should take over? Really?Yes, very sad. But that doesn't change the fact that a Congressional bailout is a bad idea.

Yes, lots of people are going to get screwed. Many deserve it. Some no doubt don't. But this is exactly the kind of thing the market needs to fix and the government needs to stay out of.

Ermm, didn't the market create this situation in the first place?
Sounds like government intervention is required, just too late.

 

[Masquerouge]

I agree that artificially maintaining the house market is the worst thing the government could do.
It's high time for a reality check.

 

[Little Raven]

Ermm, didn't the market create this situation in the first place?

Yes, although the government certainly helped by keeping interest rates so low for so long.

Sounds like government intervention is required, just too late.

No. It's not the job of the government to make sure lenders don't screw themselves over with stupid loans, or that people don't buy houses they can't afford. It's not like the market won't fix this...it just won't be pretty for some people.

 

[Urederra]

Yeah... I would have liked to move out of my parents home and buy a new house with a kick ass TV and averything by the age of 18. But I know that it is better to save some money first just in case something happens and I don't have enough money to pay my mortgage.

Reality check, guys (and gals)

Good time to check for good foreclosure deals for the hard-working ants who saved money for the winter.

 

[mrtn]

I'd never thought I'd complain about American Socialism...

But then I'm not facing personal bankruptcy either...

 

[CIVPhilzilla]

Bailouts are a bad idea, it teaches people, "Don't worry buy stuff you can't afford, the government and everybody else will be here to bail you out." People need to learn some personal responsibility and not look to the government everytime they make a mistake.

 

[JollyRoger]

Bailouts are a bad idea, it teaches people, "Don't worry buy stuff you can't afford, the government and everybody else will be here to bail you out." People need to learn some personal responsibility and not look to the government everytime they make a mistake.

Or don't lend money to people that are a high risk to default. This is a bailout of the mortgage industry disguised as a bailout of homeowners.

 

[Keshik]

I agree, although I'm not sure if Schumer has ever had a good idea.

 

[CIVPhilzilla]

Or don't lend money to people that are a high risk to default. This is a bailout of the mortgage industry disguised as a bailout of homeowners.

I have no sympathy towards either borrowers or lenders in this case. You loan out to high risk customers who are likely to default, your going to get burned, just as your going to get burned if you get a mortgage you can't afford.

 

[Stile]

I don't have any numbers, but I suspect most of the foreclosures will be on upper-middle class people with exotic mortgages, such as interest only, or balloon mortgages. Lenders are to blame by advertising $500,000 for a home for $1200/month, and borrowers are to blame for thinking they can sell in 5 years for much more than they paid for it or that they will earn substantially more than they spend in 5 years or that they will make additional payments to the principal in the interim. Mathematically it might make sense for some people, but the emotional part of man almost always overrides the mathematical.

Either way there should be no bailout; "homeowners" can rent and lenders should be wiser. I'm looking to buy later this year and I refuse to pay for someone else's mistake. Forcing people to pay through taxes is just as bad.

 

[JollyRoger]

I have no sympathy towards either borrowers or lenders in this case. You loan out to high risk customers who are likely to default, your going to get burned, just as your going to get burned if you get a mortgage you can't afford.

That's why I was against the bankruptcy bill. It was basically bailing out the credit card companies for issuing credit cards to people they should not have.

 

[El_Machinae]

It's not the job of the government to make sure lenders don't screw themselves over with stupid loans, or that people don't buy houses they can't afford. It's not like the market won't fix this...it just won't be pretty for some people.

I'm under the impression that most of the bubble was due to the fact that people were buying (and holding!) investment properties; some outrageous percentage of homes were held as non-residences, IIRC. It's not like actual homeowners are really in trouble; except for those who borrowed on their homes.

This is why I got out last year, and did very well ...