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Bush Plans Loan Relief on Housing
He will call for the Federal Housing Administration to raise the ceilings on what it can charge for federal mortgage insurance, a move that would let an additional 80k homeowners with spotty credit records sign up, beyond the 160k likely to use it this year and next.
Will endorse proposals backed by Democrats that would raise the ceiling on the amount of a mortgage that can be refinanced with federal insurance. Will support legislation that would provide tax breaks to homeowners whose mortgage debt is forgiven, in whor or in part, by lenders. The federal govt. currently collects taxes on the amount of a loan that is forgiven. There are 2 million mortgages, all held by homeowners with credit problems and homes that are declining in value, are valued at 500-600 billion. The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 1%. Now, is the government concerned about the .5% of the mortages held by homeowners that made a big mistake, or the huge mortgage industries that hold the mortgages and the resulting economic strife in afflicted areas? Isn't the subprime market owned by a small number of corporations? Won't they be hurt more than anyone else? The homeowner can simply fail to make the payment for 3 months, before being evicted, save the payment for the down payment on renting an apt/house. Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? |
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Re: Bush Plans Loan Relief on Housing
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Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? [/ QUOTE ] l o l |
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Re: Bush Plans Loan Relief on Housing
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.... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? [/ QUOTE ] They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot. |
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Re: Bush Plans Loan Relief on Housing
[ QUOTE ]
[ QUOTE ] .... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? [/ QUOTE ] They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot. [/ QUOTE ] Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks? Would things be better, if capitalism was void of government involvement? |
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Re: Bush Plans Loan Relief on Housing
[ QUOTE ]
[ QUOTE ] [ QUOTE ] .... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? [/ QUOTE ] They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot. [/ QUOTE ] Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks? Would things be better, if capitalism was void of government involvement? [/ QUOTE ] "High taxes on the rich are a failed strategy because the really rich people figure out how to dodge taxes anyway." - G.W. Bush, August 10, 2004 "The best way to relieve families from time, is to let them keep some of their own money." - G.W. Bush - 9-13-2000 regarding Taxation |
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Re: Bush Plans Loan Relief on Housing
yea. My math sucked there. The reason Bush/Congress is addressing the issue is because the crisis is being felt around the world.
Funds and banks around the world have taken hits because they purchased bonds, or risk related to bond, back by bad home loan, often bundled into financial instruments called collateralized debt obligations, or C.D.O.'s. There are even combinations, that were further removed from the original asset, called CDO's-Squared and CDOs-cubed. A lot of the top 1% richest, are losing a lot of money, having bet the wrong way. Take Merrill Lynch who bought First Franklin, a leading subrpime mortgage originator, for 1.3 billion in the fall of 2006, when the subprime business was at its peak. Oops! The rich kids are gonna take a big hit, and the media (owned by 5 corporations) is spinning it off as helping those less fortunate people who were duped into these home loans. You see, corporations are like doctors, they protect each other. |
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Re: Bush Plans Loan Relief on Housing
Don't worry about falling home prices. As long as the fundamentals (rent/price) are out of line, prices will come down. The government would have to do some more substantial bailing out to change the fundamentals.
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Re: Bush Plans Loan Relief on Housing
[ QUOTE ]
[ QUOTE ] [ QUOTE ] .... Are the Bush and Democrats main concern really about helping a small percentage of struggling home borrowers? [/ QUOTE ] They're worried about a contagin i.e. a downward spiral in home prices. I think it's also a recognition that the market for lending was not regulated sufficiently (that probably will get some responses). As to the morality of a bail out, the government bails out people all the time. As to the politics, if the Republicans are opposed they look bad IMO. The MBS markets have seen securities take a huge hit and it's not just junk that's taking it. I find it interesting that the government made Fannie Mae and Freddie Mac cut back on the leverage they use and we see this devastation in the MBS markets after that happens (not immediately though). Agency paper has held up fairly well for an obvious reason, the implied backing of the government. This, if enacted and depending on what's enacted, will probably help non agency paper alot. [/ QUOTE ] Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks? Would things be better, if capitalism was void of government involvement? [/ QUOTE ] I'll take these one at a time: Does the govt., by bailing them out through the use of federal funds (which is borrowed money since we run a deficit) allowing us to maintain to healthy economy at the expense of our children, while allowing the greedy to take heavier risks? Haha how does inflation hurt a borrower anyway? For those that the borrower owes money to the borrower says .... S U C K E R (and the borrower gets to print the money that the lender gets paid with too). Would things be better, if capitalism was void of government involvement? We've been debating this for years on this forum, go back and read the archives for various, well thought out views across the spectrum. |
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Re: Bush Plans Loan Relief on Housing
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The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 10%. [/ QUOTE ] |
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Re: Bush Plans Loan Relief on Housing
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The total value of American mortgages is about 10 trillion. So 500 billion is 1/2 of 1%. Now, is the government concerned about the .5% of the mortages held by homeowners ... [/ QUOTE ] Like Boro said, you're an order of magnitude off in your math. And beyond that, the dollar percentage is not equivalent to the percentage of mortgages held. These mortgages are probably less expensive than the mean mortgage, so their 5% dollar value of the total is shared by more mortgages. So maybe 6-8% of the total? That's a lot more than 0.5%. So is the govt really concerned about 6-8% of the people and their financial problems? I don't know, and don't know if it should be. But it's certainly concerned about the financial health of the top 6-8% of this country. |
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