Sources: Bush to outline 5-year rate freeze plan

[Little-Acorn]

I hope this was merely a trial balloon floated by the Bush admin, to gauge public reaction. And I hope the overwhelming reaction is: "DON'T EVEN THINK ABOUT IT, CHARLIE!!!"

Bush has done liberal things before (Perscription drug entitlement, exploding spending, signing Campaign Finance "Reform"). But this one would take the cake, almost as badly as FDR's and Nixon's wage&price freezes. Bush has been good on some things (tax cuts, appointing law-abiding justices, war against terrorists), but he keeps swinging erratically liberal.

A lot of people screwed up, buying homes with adjustable mortgages they couldn't afford. Surprise, surprise, they're getting foreclosed on nowadays. I did that too, back in the early 90s. What did I do when rates went up? Sold it, of course, and started renting. I didn't wait for the people who had trusted me to pay back the money, to get screwed by my own inaction. We had a deal that I'd agreed to - did they deserve that?

Now GWB seems to think they DO deserve that. He hasn't explained why. If he wants to do this, he (and Congress) should do it honestly (if it can be called that). They should mandate that mortgage rates rise as they had been contracted to do, pinned to whatever index they are, and that the homeowners pay the higher payments. And then GWB and Congress should decree that the mortgage companies write a check back to these poor, benighted homeowners, for the difference between the real rate and the lower rate they want to "freeze" at. The money would come out the same either way.

Then let Bush & Congress explain why the mortgage companies should write those checks to the homeowners - what did the companies do to deserve those penalties? They might consider asking Hillary and Edwards for their explanations, since the article mentions that they're considering similar plans.

Such legislation would be, in fact, properly called a "Bill of Attainder" - a law that directly requires somebody to pay money or endure some other penalty without any crime or guilty verdict being rendered. And guess what: Bills of Attainder are unconstitutional, and for very good reason. And that would be no different in substance from what this Reuters report describes.

BTW, there were also a lot of people for the last few years, who looked at houses, gauged the market, saw they couldn't afford a house if the rates went up on their adjustable mortgatge... and decided NOT TO BUY THE HOUSE. And still more who bought, later found the rates rising, and sold to avoid a foreclosure. In other words, they made wise, or at least honest, decisions.

And now the joke's on them! If they had been stupid instead of smart, or hadn't made the effort to uphold their end of the deal, they would now be able to keep their house! Here comes another government policy to help the stupid, weak, and/or conniving, while the people who played it honest and straight lost out. Yep, that's what I want MY government to do, all right!

-----------------------------------------------

http://www.reuters.com/article/polit...rpc=22&sp=true

Bush to outline 5-year rate freeze plan: sources
Wed Dec 5, 2007 2:12pm EST

Related News
Edwards proposes lower rates to halt foreclosures Related News
Sen. Clinton proposes moratorium on foreclosures

by Patrick Rucker and John Poirier

WASHINGTON (Reuters) - President George W. Bush is expected to outline on Thursday a plan to freeze mortgage rates for five years for many U.S. homeowners facing sharp increases in their monthly payments, industry sources said on Wednesday.

Final details of the plan are still being worked out after a trade group that represents large mortgage investors presented its framework for implementing a broad rate freeze to the Treasury Department late on Tuesday, the sources said.

"The president will make a statement on housing issues tomorrow afternoon," a senior administration official said, declining to elaborate on details.

The sources, who are familiar with details of the trade group's pitch, said the plan envisions covering subprime loans taken out between January 1, 2005, through the end of this past July, with rates that are due to reset over the coming 2-1/2 years.

An estimated 1.8 million U.S. homeowners who took out loans with low teaser rates face pricey loan resets next year alone, the Federal Reserve has said. Officials fear half a million borrowers risk losing their homes.

Treasury Secretary Henry Paulson has worked closely with the investor trade group -- the American Securitization Forum -- as well as mortgage servicers and lenders to hammer out a comprehensive plan to modify troubled loans.

Rising defaults on U.S. subprime loans, aimed at borrowers with a spotty credit history, have spooked financial markets around the globe in recent months, tightening credit conditions and threatening to derail the U.S. economy.

Many sinking loans had been repackaged as securities and sold to investors, who are having a tough time getting a handle on the value of their assets.

The plan to temporarily freeze mortgage rates is primarily aimed at borrowers who can afford their existing rates and who are current on their payments, but who would face default when the rate resets at a higher level.

Under the plan, homeowners who have shown they are a reasonable credit risk but who could not afford their homes with higher rates would qualify for "fast-tracked" loan modification and a five-year interest rate freeze.

[glockmail]

I hope this was merely a trial balloon floated by the Bush admin, to gauge public reaction. And I hope the overwhelming reaction is: "DON'T EVEN THINK ABOUT IT, CHARLIE!!!".....

I agree. Most of these foreclosures are in housing markets that appreciated well above the national average, and the borrowers took a gamble- and lost. Don't expect me, who chose to move out of such a market so I could afford a house like I grew up in, and chose to pay a higher, but fixed, interest rate, to pay for their mistakes.

SCREW THEM.

[Little-Acorn]

SCREW THEM.

They don't have to be "screwed". They have a house they can't afford payments on. They can sell it like I did, to get out from under and NOT renege on their contract.

If they choose not to, they're screwing themselves, and there's nothing you or I can do about it.

And nothing the govt SHOULD do about it. If the govt tries, the ones who will be SCREWED are the mortgage lenders. Again, what did they do to deserve that?

BTW, I had owned the house for two years, and had built up a little equity, not much, so the remaining loan balance was like 95% of the original price. I sold in a depressed market, and got back the loan value, no more... and so had nothing left. Life sucks when you gamble on mortgage rates like I did (and now these other homeowners did) and rates go up. Learn it, live, it, love it. Or at least learn from the consequences.

[diuretic]

Horse racing across the paddock at a rate of knots....stable door now securely bolted sir!

Too late, recession is on the way. Time to batten down.

[bullypulpit]

I hope this was merely a trial balloon floated by the Bush admin, to gauge public reaction. And I hope the overwhelming reaction is: "DON'T EVEN THINK ABOUT IT, CHARLIE!!!"

Bush has done liberal things before (Perscription drug entitlement, exploding spending, signing Campaign Finance "Reform"). But this one would take the cake, almost as badly as FDR's and Nixon's wage&price freezes. Bush has been good on some things (tax cuts, appointing law-abiding justices, war against terrorists), but he keeps swinging erratically liberal.

A lot of people screwed up, buying homes with adjustable mortgages they couldn't afford. Surprise, surprise, they're getting foreclosed on nowadays. I did that too, back in the early 90s. What did I do when rates went up? Sold it, of course, and started renting. I didn't wait for the people who had trusted me to pay back the money, to get screwed by my own inaction. We had a deal that I'd agreed to - did they deserve that?

Now GWB seems to think they DO deserve that. He hasn't explained why. If he wants to do this, he (and Congress) should do it honestly (if it can be called that). They should mandate that mortgage rates rise as they had been contracted to do, pinned to whatever index they are, and that the homeowners pay the higher payments. And then GWB and Congress should decree that the mortgage companies write a check back to these poor, benighted homeowners, for the difference between the real rate and the lower rate they want to "freeze" at. The money would come out the same either way.

Then let Bush & Congress explain why the mortgage companies should write those checks to the homeowners - what did the companies do to deserve those penalties? They might consider asking Hillary and Edwards for their explanations, since the article mentions that they're considering similar plans.

Such legislation would be, in fact, properly called a "Bill of Attainder" - a law that directly requires somebody to pay money or endure some other penalty without any crime or guilty verdict being rendered. And guess what: Bills of Attainder are unconstitutional, and for very good reason. And that would be no different in substance from what this Reuters report describes.

BTW, there were also a lot of people for the last few years, who looked at houses, gauged the market, saw they couldn't afford a house if the rates went up on their adjustable mortgatge... and decided NOT TO BUY THE HOUSE. And still more who bought, later found the rates rising, and sold to avoid a foreclosure. In other words, they made wise, or at least honest, decisions.

And now the joke's on them! If they had been stupid instead of smart, or hadn't made the effort to uphold their end of the deal, they would now be able to keep their house! Here comes another government policy to help the stupid, weak, and/or conniving, while the people who played it honest and straight lost out. Yep, that's what I want MY government to do, all right!

-----------------------------------------------

http://www.reuters.com/article/polit...rpc=22&sp=true

Bush to outline 5-year rate freeze plan: sources
Wed Dec 5, 2007 2:12pm EST

Related News
Edwards proposes lower rates to halt foreclosures Related News
Sen. Clinton proposes moratorium on foreclosures

by Patrick Rucker and John Poirier

WASHINGTON (Reuters) - President George W. Bush is expected to outline on Thursday a plan to freeze mortgage rates for five years for many U.S. homeowners facing sharp increases in their monthly payments, industry sources said on Wednesday.

Final details of the plan are still being worked out after a trade group that represents large mortgage investors presented its framework for implementing a broad rate freeze to the Treasury Department late on Tuesday, the sources said.

"The president will make a statement on housing issues tomorrow afternoon," a senior administration official said, declining to elaborate on details.

The sources, who are familiar with details of the trade group's pitch, said the plan envisions covering subprime loans taken out between January 1, 2005, through the end of this past July, with rates that are due to reset over the coming 2-1/2 years.

An estimated 1.8 million U.S. homeowners who took out loans with low teaser rates face pricey loan resets next year alone, the Federal Reserve has said. Officials fear half a million borrowers risk losing their homes.

Treasury Secretary Henry Paulson has worked closely with the investor trade group -- the American Securitization Forum -- as well as mortgage servicers and lenders to hammer out a comprehensive plan to modify troubled loans.

Rising defaults on U.S. subprime loans, aimed at borrowers with a spotty credit history, have spooked financial markets around the globe in recent months, tightening credit conditions and threatening to derail the U.S. economy.

Many sinking loans had been repackaged as securities and sold to investors, who are having a tough time getting a handle on the value of their assets.

The plan to temporarily freeze mortgage rates is primarily aimed at borrowers who can afford their existing rates and who are current on their payments, but who would face default when the rate resets at a higher level.

Under the plan, homeowners who have shown they are a reasonable credit risk but who could not afford their homes with higher rates would qualify for "fast-tracked" loan modification and a five-year interest rate freeze.

What you don't seem to understand is that allowing these home-owners to default on loans they can no longer afford will throw even more housing stock onto a market where there is already a glut...will force these families into a tightening rental market where rents rise as demand rises...Forcing lenders to tighten credit even further, thus slowing the economy even further and accelerating the slide into recession.

As for where to place blame, there's plenty to go around...from a Congress which cheerfully accedes to the demands of its banking industry johns to permit ever riskier and more usurious mortgage instruments to be foisted on an unsuspecting public. And then there's the borrower too ignorant or desperate or stupid to know they're going to get screwed by their mortgage broker and their lender.

The sub-prime market is even worse, as the ripples from that collapse are being felt around the world. It is a sensible plan from an otherwise irrational administration.

[Little-Acorn]

What you don't seem to understand is that

Any particular reason for feeling this? Or just wishful thinking?

allowing these home-owners to default on loans they can no longer afford will throw even more housing stock onto a market where there is already a glut...will force these families into a tightening rental market where rents rise as demand rises...Forcing lenders to tighten credit even further, thus slowing the economy even further and accelerating the slide into recession.

Yup, that's what happens when govt monkeys with the economy, artificially lowering interest rates, giving tax breaks for mortgages, etc. Lots of people buy things they can't afford and often wouldn't have bought otherwise. Then when interest rates go up (they always do, they are cyclic like pretty much everything else) you wind up with a HUGE problem.

But the overbuying has already happened. You can't turn back the clock. The only thing you can do is let them take the pain they set up for themselves, let the consequences of having overbought, work themselves out as people sell and the unethical ones get foreclosed, and then try not to make the same mistake again (diddling with interest rates). Except the latter step never seems to happen - govt ALWAYS comes back and diddles more, anyway, and so the cycle repeats.

Something similar happened before the Great Depression, worldwide as govts messed with their economies to a scale unprecedented in history. It's part of what made the Roaring 20s roar in many countries, with lots of apparent prosperity... until the crash came in 1928-1929. And during the Depression, those same govts tried to "soften the blow" as GWB is proposing to do now... and their efforts wound up deepening and lengthening the Depression interminably, until a World War finally got spending going again (at the price of massive deficit spending).

Economic downturns, even severe ones, usually work themselves out in about a year, causing pain for all but then going away. The Panic of 1837 started far worse then the Great Depression, with unemployment rates as high as 75%. The GD topped out at 25%, but did it twice, in 1933 and 1937, with no end in sight as govt kept interfering with the recovery. Yet most of the Panic of 1837 was over in eighteen months, and business pretty much back to normal, excpet for banks which people wisely stopped using for a while. In case you were wondering, government stayed out of the way, after initially causing the Panic by printing tons of paper money until people got used to it and then changing course and demanding that payments for land be made only in gold or silver.

Now in 2007, the overinflation of housing has already happened, again thanks to govt manipulation and people trying to take advantage of it. There is nothing we can do to prevent the pain that will now follow. Attempts to do so, will be like trying to hold back a flood that keeps building without limit - it will just make it worse when the fragile dam does break, as it inevitably must. Better to let it happen now so the damage won't be so great.

But government thinks it can get more votes by pretending to "help", and soime people are dumb enough to go along. It's those people who need a dose of reality. People ALWAYS need to learn from their own mistakes so they don't keep making worse ones. Govt trying to prevent that, is doing them no service at all.

[JohnDoe]

even those that have not been delinquent on their adjustable mortgages have not been able to refinance their homes, because their homes are now worth ALOT LESS than their original mortgages....this is a different situation than what you described little acorn. and home prices, with additional foreclosures dumped on to the market, the estimate for 2008 home prices is suppose to be another 13% drop in retail prices, making it even MORE difficult to refinance ones home mortgage....as i have said, even if you are in good standing financially.

And those of us that paid cash for their homes, as we did on this one, are witnessing it go down and down and down in value year after year because of this situation.

I don't know what the right thing to do is, but i do know that it will not adjust itself on its own in just a year....more like 5 years perhaps, and 10 years before my home is even worth what we paid for it because of these nincumpoops!!!!

jd

[Hobbit]

even those that have not been delinquent on their adjustable mortgages have not been able to refinance their homes, because their homes are now worth ALOT LESS than their original mortgages....this is a different situation than what you described little acorn. and home prices, with additional foreclosures dumped on to the market, the estimate for 2008 home prices is suppose to be another 13% drop in retail prices, making it even MORE difficult to refinance ones home mortgage....as i have said, even if you are in good standing financially.

And those of us that paid cash for their homes, as we did on this one, are witnessing it go down and down and down in value year after year because of this situation.

I don't know what the right thing to do is, but i do know that it will not adjust itself on its own in just a year....more like 5 years perhaps, and 10 years before my home is even worth what we paid for it because of these nincumpoops!!!!

jd

If you're in a good financial situation, you should be able to make your loan payments. The problem is that people took out loans they couldn't afford.

[Immanuel]

If you're in a good financial situation, you should be able to make your loan payments. The problem is that people took out loans they couldn't afford.

True, but they did this with the encouragement of the lenders.

Immie

[JohnDoe]

If you're in a good financial situation, you should be able to make your loan payments. The problem is that people took out loans they couldn't afford.

Hobbit, we paid cash for our home, so we do not have to worry about anything other than the fact that our home is dropping and dropping and dropping in value due to this situation going on with the market being flooded with foreclosure homes at rock bottem prices.

And you are wrong to a degree on those in good financial standing being able to tolerate the higher interest rates on their adjustable mortgages.

For example, about 4 years before we sold our home in Massachusetts, we refinanced our home in to an adjustable rate mortgage that had a rate of around 5% from a fixed mortgage rate of around 8%, this saved us around $450 dollars a month on our mortgage payment. We did such, knowing that we were going to move, before the 7 years were up on the ARM, or we were going to refinance in to another 30 year fix if we stayed there....

Many people did take out an ARM knowing that they were going to take advantage of the lower % rate for 5 -7- or 10 years fixed period. They were sold on this by the banks or by the realtor or through their own research, knowing that because they were in good standing financially, they WOULD be able to refinance when the adjustable rates kicked in and started to rise.

All of these people will NOT be able to refinance their homes now, even though they are in good standing, because their existing home mortgage is HIGHER than what their homes are worth, because of the drastic drops in retail values due to the other people that are being foreclosed on and the flood of these homes in to the market place, putting more and more homes on the market each day, month and year....and this is suppose to be going on for another few years to come.

Yes, perhaps you are right that some of these financially sound homeowners can live with the higher adjustable rates to come, but most of them were planning to be able to refinance prior to that being the case and are not able to do such.

jd

[manu1959]

i bought a car with the encouragment of the auto sales force....i was not adeqauatly informed of the risks of driving the cost of gas and maitenance....

i want a corporate bail out.....

fuck that....

survival of the fittest ......

[Mr. P]

True, but they did this with the encouragement of the lenders.

Immie

SO....ever stepped foot on a car lot? Should the Gov set car prices or financing because the salesman sold you more car than you needed and financed it for so long you'll soon be upsidedown? A deal you agreed to btw.

[Trigg]

SO....ever stepped foot on a car lot? Should the Gov set car prices or financing because the salesman sold you more car than you needed and financed it for so long you'll soon be upsidedown? A deal you agreed to btw.

Exactly, good example.

People make mistakes with their finances, they learn their lesson and hopefully don't do it again.

Fresh out of college my husband bought himself a beautiful brand new car, his mistake was getting a loan where the interrest was paid first-then the principal (I'm sure there's a name for this type of loan, but it escapes me). We quickly owned a car that we owed more on than it was worth. Luckily we planned to keep it and this wasn't a problem. We still learned a valuable lesson though and have never made the same mistake again.

[Immanuel]

SO....ever stepped foot on a car lot? Should the Gov set car prices or financing because the salesman sold you more car than you needed and financed it for so long you'll soon be upsidedown? A deal you agreed to btw.

No, but then, I don't believe that the President should be stepping in and fixing these rates either. It is a very bad idea, but then, I don't remember the last time the President had a good idea.

Immie

[Yurt]

i bought a car with the encouragment of the auto sales force....i was not adeqauatly informed of the risks of driving the cost of gas and maitenance....

i want a corporate bail out.....

fuck that....

survival of the fittest ......

can i get my student loans take care of GWB? they are about the size of a small mortgage. and i was young and stupid and thought some edumacation would actually grow me smarter.