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Close Topic OptionsUs Judges To Decide Failed Mortgages
Us Judges Decide Failed Mortgages - Politics, Business, Civil, History - Posted: 2nd Mar, 2009 - 3:19am
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If you cannot pay your mortgage you will be allowed to go to a judge for help after declaring bankruptcy, but there is a catch.Us Judges To Decide Failed Mortgages
US Judges To Decide Failed Mortgages
I'm hearing on the news that people who enter into contracts (mortgage) with banks and then cannot pay will now have the choice to (maybe will become law) declare bankruptcy and then go to a judge and basically complain that the worth of their house does not justify the mortgage. The judge can then lower the mortgage rate and payment regardless of the contract made between that person and the lender. To me this does not make sense. I understand the intention of government to help home owners, but at the same time what happens to the bank who lends the money? The US government seems to want its hand in everything. US citizens will have to consider that all contracts are subject to change by judicial review - if so whats the point of a contract in the first place. One commentator also mentioned that mortgage rates will now go up!
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Mortgages Failed Decide Judges Us
Obama is like Robin Hood, take from the rich to give to the poor. The problem is when you keep taking from the rich then there are no more rich people only poor ones. This is what separated Obama from Clinton. Clinton opened up tax cuts and helped the rich do what the rich do like hire people, buy big houses and keep the economy afloat! The problem with the housing issue will not be solved by telling judges to fix it, the issue here is making certain guidelines mandatory before awarding a mortgage.
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Us Judges To Decide Failed Mortgages History & Civil Business Politics
The idea here is that people are just not intelligent to do things for themselves and guess what they generally aren't. The government decides to help them rather than let them fall to their own goofs.
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Mortgages Failed Decide Judges Us
The idea here is not based on any intelligence quotient of the people that are in trouble financially. Generally, people try to do the right thing. There are periodic downturns in property prices in the nation. The mid 70's, early 80's, early 90's and now are examples of when the average housing prices dropped. The overall trend from the 70's to now still shows a very substantial increase (basically 3x). Historically, property is a safe investment. It is common to buy the most house you can afford at the time, because the assumption is it will increase in value. At this time, that is a incorrect assumption.
Many new mortgage vehicles (loan types) have very little or no interest for the first few years (about 4 years - arm loan). After that, the interest rates rise fairly rapidly. The intent was that you werent actually going to maintain this loan. You would refinance the loan (assumption being the house value increase). Problem is that the housing prices have dropped. People now cannot refinance the loan and they are starting to see the interest rates increase and cannot actually pay for the monthly payment. This was the majority of the loan problem. People that took out straight rate loans arent feeling this pinch.
As for the people not being smart enough, that is just not true. People who are trying to preemptively work with their mortgage companies are just being told to just do nothing and default on the loan. At that point, there appears to be plans in place to help them (Freddie Mac, Fannie Mae and the judicial system).
As for where the buck stops, this is where a portion of the bailout money is going. It is dealing with the "toxic assets" of which these type of things are. Bottom line is that the American people will end up paying the difference through taxes or phrased differently...the US people are funding the mortgage companies write offs of overvaluation of property. I do not doubt that the mortgage rate will increase because it is almost 0 now, so it has to go up or their is little reason to be in the mortgage business. The government will be looking for payback and the investments need to start generating money, but first off, the government is trying to keep people in houses. I am not excited about having to pay for people that cannot afford their homes, but apparently, I am in the minority for now. However, I realize the situation that allowed them to get into this condition was a direct result of government rules and laws, so perhaps the government needs to take some responsibility. Plain and simple: If the regulations of the mortgage companies that were in place in 1979 were never changed, we would not have had this problem.
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Mortgages Failed Decide Judges Us
I think mortgage companies / banks do overlook the person's ability to pay for a loan though. I believe that Clinton was one that essentially 'opened' up the system to allow for a greater number of (ineligible) people to take out mortgages and the banks were in some ways forced to loan the money. Thus, the problem is mostly the system of things. Of course there is a level of responsibility here. Buying a home you are barely able to afford may not be the way to go unless you have a lot of backup plans.
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Us Judges To Decide Failed Mortgages
I cant remember how many times I heard to buy the biggest house I could barely afford because it is such a good investment and in general it is. However, there are short term corrections that have occurred over time. The biggest prior to this one was at the end of the 80's and very beginning of the 90's. The use of ARM Loans to get people that do not have enough money into homes is a very strong root to this whole problem. You couple that type of loan with the government forcing banks to lend money to those that are high risk and you have a big fat bubble...
| QUOTE |
Adjustable rate mortgages are sometimes sold to consumers who are unlikely to be able to repay the loan should interest rates rise.[7] In the United States, extreme cases are characterized by the Consumer Federation of America as predatory loans. Protections against interest rate rises include (a) a possible initial period with a fixed rate (which gives the borrower a chance to increase his/her annual earnings before payments rise); ( a maximum (cap) that interest rates can rise in any year (if there is a cap, it must be specified in the loan document); and © a maximum (cap) that interest rates can rise over the life of the mortgage (this also must be specified in the loan document). |
Source 6
Honestly, you are never intended to fulfill the 30 year arm loan. The idea is the value of you property rises and you refinance. You either get a fixed loan at that point or another arm, but to do this the price has to rise on the house. Couple that with the fact that mortgage companies could now buy insurance companies and now they get to insure their own bad loan...just cross fingers everyone pays or the ponzi scheme falls.
As far as people not being able to pay, yes, they are at fault as well. They should be more responsible and think of contingency plans, but many dont. Our own government should have thought far enough ahead at what potential problem laid waiting for them with these deregulations, but they didnt either.
I certainly cant find a the one smart enough to have avoided all of it ahead of time. Even the republicans that raised concern about it, didnt yell all that loud. Greenspan only mentions it as a potential "glitch" in the economic model...some glitch! We printed a bunch of money to wash all these toxic assets away from certain banks, so it seems that the Judges are going to help decide how it is doled out.
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TOPIC: Us Judges To Decide Failed Mortgages