patrick.net

I think those sitting on their Dicks waiting for the Government to do anything are going to end up part of the Need/Have not/Will never own Class, for when the recovery does actually happen.
Are you paying attention? We are going through a lot more than an economic quagmire, the rules are been bent back and new lines of what is both acceptable and legal is being redefined every day.

Those thinking of "yesteryear's" class order in America's economic landscape, will magically resume with this mess is over, will be left sucking the hind tit.

I think for the last three years, the FED and Government has with out curtains have proven on a weekly basis, just how far they willing to go, to recoup money and take revenue from the wild by Gaming the Stock markets, then skimming the top by pulling out when it's high, letting the stocks fall 500 to 1000 points then rebuild it back up with Quantitative Chum.

Anyone still pretending that their 401K will be worth half as much as their Social Security monthly check(if SS doesn't get axed!) in 10 to 20 years from now, is in deep denile.

I suggest you start getting creative and look for neiche ways to save for the future, and if you have any inclination of owning a house, I'd advise you get your financing in before the next 12 to 24 months. It will be a strictly cash only game by then.

foreclose on those that can't or won't pay their mortgage.
it's the best for everyone - including mortgage holders.

the economy is sick and foreclosure is one of the bitter pills that need to be swallowed.

So, you both think there is no remedy or relief on the horizon? Won't that also hurt the monied interests though? And you think that foreclosure is the solution (I can see that), but that that is what the banksters will allow to happen?

And that 401ks will be worthless in 10-20 years? Wow! That's grim indeed. And yes, I follow the news religiously.

anon says

foreclosure on those that can’t or won’t pay their mortgage.
it’s the best for everyone - including mortgage holders.
the economy is sick and foreclosure is one of the bitter pills that need to be swallowed.

The U.S. system of law goes a few more layers deep i'm afraid anon. how about air tight chain of title contract law for one. I'm losing confidence that those laws mean much at the moment.
and that's a WTF moment IMO.

Cram downs are possible with the Fed backstopping FDIC and FRE/FNM.

Jobs aren't coming back regardless, however. Not until wage levels between Chindia and the US equalize.

The jobs we had in the previous decade were mostly housing bubble driven and/or directly funded via HELOCs and cash-out refi.

The music has stopped on that game.

CL says

And that 401ks will be worthless in 10-20 years?

401ks are invested in equites. Corporate america has been doing semi-OK, since US brands are the strongest in the world and as long as we sell stuff we don't care who's buying it.

anon says

foreclose on those that can’t or won’t pay their mortgage.
it’s the best for everyone - including mortgage holders.

the economy is sick and foreclosure is one of the bitter pills that need to be swallowed.

This. Principal reduction is a horrible idea, economically and morally. Don't reward people for their mistakes, and for god's sake don't subsidize it at the expense of the majority that didn't make the mistake.

That would be incredibly unlikely.

Troy says

Cram downs are possible with the Fed backstopping FDIC and FRE/FNM.

Great! So renters and those of us who live in paid-off homes, or have been paying mortgages diligently as agreed to per the mortgage note now need to subsidize the fools (bubble buyers & bankers that enabled them) who bit more mortgage than they could chew.

No, foreclose and kick the fools out! Let the market decide who rightfully belongs in those homes once prices adjust to what the market will bear.

Mark_LA says

So renters and those of us who live in paid-off homes, or have been paying mortgages diligently as agreed to per the mortgage note now need to subsidize the fools

Wasn't it Dick Gephardt that said “Those who have prospered and profited from life's lottery have a moral obligation to share their good fortune”

Really, if we are going to spend our "life's lotto" funds on healthcare, public school, free food, farm subsidies, foreign aid, and NPR it isn't that far of a stretch to extract a little more blood to fix the housing problem? Perhaps a 50% tax on Realtor commissions would be a good place to fund it?

EightBall says

Wasn’t it Dick Gephardt that said “Those who have prospered and profited from life’s lottery have a moral obligation to share their good fortune”

The lottery is a tax issued by the government to stupid people who have given up on their ability to become rich on their own account. The idea that the vast majority who prosper and profit in life do so without respect to their intellect, ambition & hard work is as dumb as the lottery itself.

Mark_LA says

EightBall says

Wasn’t it Dick Gephardt that said “Those who have prospered and profited from life’s lottery have a moral obligation to share their good fortune”

The lottery is a tax issued by the government to stupid people who have given up on their ability to become rich on their own account. The idea that the vast majority who prosper and profit in life do so without respect to their intellect, ambition & hard work is as dumb as the lottery itself.

Well, alot of people inherit their prosperity also.

EightBall says

Really, if we are going to spend our “life’s lotto” funds on healthcare, public school, free food, farm subsidies, foreign aid, and NPR it isn’t that far of a stretch to extract a little more blood to fix the housing problem?

I hope you are kidding.

Mark_LA says

The lottery is a tax issued by the government to stupid people who have given up on their ability to become rich on their own account. The idea that the vast majority who prosper and profit in life do so without respect to their intellect, ambition & hard work is as dumb as the lottery itself.

I was not being serious - I mostly agree with what you say here:

Mark_LA says

No, foreclose and kick the fools out! Let the market decide who rightfully belongs in those homes once prices adjust to what the market will bear.

The rule of law is clear (or should be) - if the fools quit paying, they should be thrown out under the terms of the contract. Ideally this is a great idea but with so many people underwater you have to think about this: The value of the house disappeared but the mortgage didn't. The banks want to collect even though the value was fleeting and not real. People in recourse states and ones with recourse loans should drag this stuff around like herpes or old luggage for the next 20 years? Is this good for the market and the economy? The way the rules are now it is easier for people to say "screw it" and stop paying. Depending on how things shake out, they could be back on their feet in half the time. I'm not advocating one way or the other - but we are all taking a bite out of the crap sandwich. Inflating the economy out of it is the method the fed is attempting, right? Is that any better for "savers" than people getting a cramdown on their loans?

The government "interference" has prevented the market from doing a dirty shutdown with the subsequent recovery to normalcy. Would it have been all that bad if everything tanked in one fell swoop? I guess we'll never know.

EightBall says

People in recourse states and ones with recourse loans should drag this stuff around like herpes or old luggage for the next 20 years?

Yes, fuck 'em, let them live with their own decisions. If people think there's a chance they'll have to pay back the losses on those loans, you'll see strategic defaults stop in a heartbeat.

CL,
pal, from your previous post, it looks like you are trapped in a overpriced home in a nice area. And you were thinking of strategically defaulting.

now you are hoping the Gubmint will some how do some thing to reduce your principal.

It won't happen:
- Republicans took over Congress. So no more of this 'do good spending' programs

- the news of well-off people strategically defaulting and bringing down neighboring property values have been in the press a lot. So there is no sympathy to help these.

- the Obama administration tried all sorts of modification programs and they all universally failed (thank GOD!). SO there is no more political appetite for any more 'relief program'

- Banks have no incentive to reduce principal. They know it is a slippery slope. Once they reduce principal for you, your neighbor who has been diligently paying his mortgage, will stop, hoping to get a modification too. And so on. So even loans in pretty good standing will also go bad.

And its funny to hear people talk how jobs won't come back and housing market recovers. In fact, at least it is the other way around.

CL says

So, you both think there is no remedy or relief on the horizon?

The relief comes when people stop blaming others for their own decisions and own up to them. Why should the vast majority of people that did not make the mistake of buying into the bubble and being underwater be on the hook for the small fraction of people that did?

I agree, Permanent Marker. I'm not hoping the Government will do something, but asking IF they will, in your opinion. They do a lot of things that individuals disagree with, but I think that most of with clarity of mind can see MAY happen. And, as you say, with austerity in vogue with the Teabaggers ascending, it does seem unlikely that there will be appetite for spending.

BUT, I'm wondering if the banks will see that it's in their own best interest to do so.

As it is, those of us who can default will still cause the investors to lose, and thus drag down the 401ks, pensions and the banks. Those of they who cannot afford their inflated mortgages will do so too.

So, as Eightball described, it may not be a "great" idea, nor one that any of you find personally appealing, but it may be the best of a bunch of bad options.

As it is, it falls on the home purchaser who CAN pay (i.e. me) to keep the banksters, and granny's pension afloat. It's not my problem to solve, is it?

I can see that it makes sense for some people to startegically foreclose. It's wrong, but may make most sense.

CL says

As it is, those of us who can default will still cause the investors to lose, and thus drag down the 401ks, pensions and the banks. Those of they who cannot afford their inflated mortgages will do so too.

If an pension fund like Calpers (California Public Employees Pension plan) invested on Mortgage Backed Securities, then they should loose their shirt. They can always sue their idiot investment advisors and get some thing in a claw-back clause.

CL says

So, as Eightball described, it may not be a “great” idea, nor one that any of you find personally appealing, but it may be the best of a bunch of bad options.

As it is, it falls on the home purchaser who CAN pay (i.e. me) to keep the banksters, and granny’s pension afloat. It’s not my problem to solve, is it?

Funny how much more thought some people give to home ownership AFTER they buy a house. The idea of principal write downs is an absolute failure, will never happen. You really think it would be cheaper to write down the balance of everybody that's underwater rather than letting a fraction of them walk away?

Troy says

Jobs aren’t coming back regardless, however. Not until wage levels between Chindia and the US equalize.

That translates into only one outcome; a lower standard of living for America. That, along with the debt financed high standard most Americans have enjoyed for decades. The lender is finally knocking on all the slave borrower's doors and they want their money. Out that door will go the money they owe, along with their smoke and mirrors artificial lifestyles that, as it is being proven now, they couldn't afford.

Have to agree with Nomograph here, CL.

Losing credit is not exactly the end of the world. If the US is headed in Japan's direction, we're moving into an era when credit won't exactly be handed out like candy. Bank of America Visa grants me an $11,000 credit line even though my total savings at BoA are only around $18k and I've posted zero domestic income in the US for a decade. In post-bubble Japan, on the other hand, at one point the credit line on my Sumitomo Visa card was a mere $1k despite having 135 times that amount in my savings account with them. (I spent all that money on my home, so I can't imagine them raising it any time soon.)

Start learning to live on cash now before the consumer-credit bubble pops and forces you to. Be thankful default is even an option -- someday it might not be.

Mr.Fantastic says

I can’t wait until the “rack” and “gallows” are brought back. Maybe the government can start removing fingers too!

warning F bombs a plenty.
http://www.youtube.com/watch?v=koY6kXhQDQo&feature=player_embedded