Now, I realize that some defaults are because of job losses and I'm sympathetic to those people, but these I think are a small minority of those mortgages in trouble.

I don't have much problem with helping those that are a bit short simply because it wouldn't take very much help to keep them in their homes - in many cases just the opportunity to refinance at the current interest rates would be enough to get them through.

But so many bought too much house, with little or no equity down and with an ARM too boot - these folks shouldn't be helped, partly because the help required would be cost-prohibitive and would only defer the inevitable foreclosure. It's a bad investment for government to bail them out.

Those people that got themselves into that bad of a situation should suffer the consequences of their decisions, their homes foreclosed on and placed back on the market so a responsible person with good credit can buy it either for a home or a rental property.

I'm one of those people who has worked hard all his life, lived well beneath my means, sacrificed expensive toys and new cars and saved/invested for the proverbial rainy day. We played by the rules. Now, we're expected to bail out others who lived beyond their means, have the big screen TVs and toys, and more or less screwed up. Darn right I'm mad that I have to pay to bailout stupid, selfish and undisciplined fools. A lot of people must have skipped kindergarten that day when they read the fable of the "Ant and the Grasshopper".

But what really makes me mad, is that my children and perhaps their children will be paying for the accumulated debt that this mortgage bailout will cause.

My last point is that losing a house to foreclosure, while a bad thing, is not fatal. People can and do recover from foreclosures. So do economies.

But we can't place the all the blame on the Banks/Lenders....

1) The Fed kept interest rates artificially low, increasing demand.
2) The Community Reinvestment Act [en.wikipedia.org] pushed lenders to lower their standards.
3) Wall Street was willing to buy those mortgages with little concern for their obvious risk.

These actions caused the banks/lenders to essential saying: "To hell with prudence, rates are low (demand is high), the government wants us the lower our standards and we're still selling the paper."

I applaud all the banks and credit unions that did NOT fall into this tempting tramp.

Bottom line, the government was the root cause, but they're going to place ALL the blame on the banks and Wall Street. AND they think they're smart enough to fix this. Unbelievable!

We were responsible, we lived within our means, bad luck can still happen.

75 billion divided by 138 million US taxpayers (2007 figure). $544 bucks apiece.

This is still only a proposal - it will require a change in the bankruptcy laws.

So your job is based on "assisting" deadbeats? Kiss my arse. Your "clients" aren't entitled to a damn penny of the money we earned.

That's just it--the deadbeats are not going to "hit rock bottom." They're going to be bailed out by the responsible people, who'll be paying higher and higher taxes to cover all this manamana.

And then the deadbeats will all go vote Democratic, which is what this whole exercise is really about.

Because what this is really all about is ass-covering for the politicians who set Fannie and Freddie loose, and then got huge campaign contributions. Obama (with only 4 years in the Senate) was #2 in lifetime "donations" from Fan and Fred.

Just another payoff, on the backs of everybody who was actually responsible.

There's nothing "Awesome" about forgiving the debts of deadbeats. All that's going to do is make mortgages more expensive in the future for those of us who are RESPONSIBLE.

Idiocy.

1) Homeowners w/ Fanni & Freddie can reneg a new rate. From what to what? Are they suddenly going to be able to make their payments if it goes from 6% to 5%? That's about $100 a month difference. Who is living that close to the edge that it will help?

2)Guidelines? Interesting choice of words there. Sounds to me like they can't enforce squat.

3) 31% of their income. Okay...supposed I just got laid off. 31% of nothing is...oh lemme get my calculator out...Ah..NOTHING! How does that work?

4) $2 BILLION in GRANTS to groups who come up with "innovative" ways to solve the crisis. A grant means you write a nice touchy-feely essay on why you think your idea needs money. They give you money. You never have to pay it back. Lemme see here, um...I have an innovative way of WISHING and HOPING that the crisis will go away. I need $25 million to buy a 30,000 acre ranch in Wyoming to test my theory. I'll let you know how it goes.

Damn, I should have stopped paying my mortgage months ago - I'd probably be eligible for assistance now.

I would take some measure of comfort if the bill were titled "The Handout For Irresponsible People Who Couldn't Be Bothered To Read An Important Contract And/Or Live Within Their Means" or some such. If we're going to have to shoulder the burden of these shirkers of basic responsibility, can't we at least properly name the solution? See also: "The Massive Expenditure For Liberal Programs Which Takes Advantage Of The Economic Crisis".

Buying a home allows you to save money you would otherwise spend as rent. Think of your house as a piggy bank. You pay into it monthly as you pay your mortgage. As you pay down the principle your savings increase. Since the interest you pay is deductible you get to pay less in taxes. When you sell it you realize these savings as cash. In recent years we've been conditioned to look at equity as a wasted resource unless we tapped it immediately and then consumed it right away. That's short sighted in my view.

Property values will increase nominally with inflation or with constraints on supply and demand. They shouldn't be manipulated higher as they were in the recent bubble. If anything we should currently have an oversupply of homes, and prices should be falling. If you intend to stay in your home and haven't tapped the equity this shouldn't be a problem. Correcting the price problem should allow more people to own their own homes going forward. Once the supply and demand for homes equalizes a bit we'll start to see market stability. And hopefully we'll have learned our lesson on homes as investments.

Jaffa, Cree!

Overall property taxes are set at the county level, not the statewide level. If it were as you say Washington wouldn't be facing a $6 billion deficit. And taxes in Pend Oreille county would be the same as they are in King county. They aren't.

I received my property tax assessment from my county a few months back and it showed a decrease in value of about 10%. For my county that's probably accurate. If you have a problem with your valuation or your taxes take it up with your county government.

I agree wholeheartedly! I think this also should apply to other areas of credit like auto loans as well. It never made sense to me why someone who has a black mark would have oppressive rates charged that essentially ensures they will never dig out of the hole.

But then the problem that arises is how does the one with great credit get rewarded for not being a dirtbag? I think that would be the hard sell to change this. Perhaps a rebate reward for those with good credit at the end?

@dangermike: I would agree that it is foolish on many levels. The issue I am saying is that although both people in these examples are wrong, the Banks absolutely knew better and granted the loans anyway. Banks are nothing more than risk management enterprises and they failed at managing risk but did so knowingly. Your average borrower is not very well educated in the financial system and tends to do things like looking at just the monthly payment and if they can afford that. Is this bad? Yes! The difference is that although the borrower should have known better, the lenders DID know better and did it anyway. All of this isn't even getting into the documented cases of predatory lending that was taking place.

We live in a society that takes intent very seriously and generally uses intent as a way to determine punishment. Accidents and honest mistakes, although still punished, are usually dealt much less harshly than calculated decisions. This is what leads me to my opinion that it is the banks and institutions that should be dealt with harshly on this. They are supposed to know better and without them as willing accomplices, the problem never occurs.

Yes, but one dancer is a Julliard trained dancer, and the other is a quadriplegic with a blindfold on.

Lots of trust and lots of empty promises over the years...

@dangermike: The problem is, homes aren't available at prices appropriate to incomes, and until they are, the market is frozen.

Excellent point, and I'm shocked (somewhat) that this hasn't been brought up more often. Homeownership is encouraged like there's no downside - until everything collapses and we discover that artificially boosting the purchasing power of most families to keep up with home prices is a terrible idea.

I'm with you in agreement that prices need to fall and/or wages need to rise - and I'd also like other social benefits of homeownership to lose a lot of their weight. I'd start with including rent payments on a credit report the same way that mortgage payments are.

Well SOME things gotta get cut in schools when you implement a program like 'No Child Left Behind' that essentially forces teachers to teach to a test, rather than teach children critical thinking. Oh, and the best part about No Child? Let's force schools to do it, then cut education funding further. F'n brilliant!

You think it's bad now - wait till the next generation comes out of school...

@portishead69: The whole thing is one gigantic insurance fraud.

When the only penalty is lowering your credit score, then there is no penalty at all when you are giving loans to people with low credit scores.
And when you have nothing and someone is offering you something huge for doing little more than signing some papers, why not sign the papers?
A lot of these "home buyers" had no intention of ever actually buying a house. And were basically accepting offers to live a little higher on the hog for as long as they could make it last/not get kicked out of the house.

Homes can be reused. Once someone is evicted, it can be sold again. Of course, when the government does things like buying toxic mortgages, it really doesn't motivate the bank to drop the price.

Every abandoned house out there can be sold easily. Simply drop the price to where normal people can afford them. 28% of your gross income MAX should be used on housing.

Right now, the median income can't afford that.

Get the deadbeats out of the houses and into apartments. Banks, lower your prices! Government, stop f'ing interfering!

People bought homes they could not afford because for twenty-odd years they were told it's all okay on credit. Don't worry! Everyone from people like you to the Feds to the banks all said it was okay.

It was NEVER okay to spend that far beyond their means and they knew it. You cannot but a $350,000 home when you make $50,000 a year. The numbers just don't add up. Anyone who has ever paid a bill knew it.

They wanted the dream without the sacrifice. In other words they wanted something for nothing and were happy to go along with the banks to get it.

I never once said banks and brokers who packaged bad mortgages shouldn't share blame. I believe they should. But these mortgages should never have existed to be traded like baseball cards in the first place, and SOME of that blame has to lie with morons who signed papers for a 250K or more loan knowing full well they could never, ever repay it.

Not so great on two levels.

1) Phoenix and Mesa happen to be flipper country. So you mean to tell me the government is going to help flippers taking a gamble because they got caught upside down on a deal. While of course folks who played by the rules are going to get shoved out on the street because they lost a job. Just great.

2) Banks will adjust by modifying their risk assessments. They will build in the cost of bankruptcy adjustments that will be reflected by higher rates and even higher PMI payments.

A great f'ing plan. President Teleprompter is an economic dunce.

For instance, here in OC, the median wage got up to around $60,000 while the housing market peaked well over $600,000 around the same time. Running the numbers, the $600,000 home would require around a $200,000 annual wage to support a 30 year mortgage at the then-going interest rates to fit within traditional affordability guidelines. Or in other terms, financing the median house at that time would have required a monthly payment approximately equal to after-tax income for a median wage earner. Or another way, 98.5% of the population was prices out from 50% of homes (including condos, etc.)

Now the point stands that somebody making 30 grand shouldn't be buying a $250,000 home. Similarly, someone making $60,000 shouldn't be paying much more than that, either. The problem is, homes aren't available at prices appropriate to incomes, and until they are, the market is frozen. Passing laws to "help out" the situation will can only prolong the problem. Prices need to fall or wages need to rise. Period.

Article 1, section 10, U.S. Constitution:

"No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility."

Seems to me the Fed is talking specifically about impairing the obligation of a contract. Although the weasel language that no "State" may do it could allow slimy corrupt politicians to argue that the Fed can but the states cannot.

For those who like to blame the so called freeloaders, you fail to account for how many people were pushed over the edge when gas went to $4+ per gallon, and groceries jumped anywhere from 12% to %20 percent. Sorry I don't have statistics on that, but the carnage near me testifies that it did happen.

@InfiniTrent: He only did that after cashing out $100,000 worth of "equity".

As the real estate market tanked, work slowed. Realizing the danger to come, my husband took another job and a pay cut. My job slowly ceased to bring in money, so I also found another job too; both of our new jobs equaled the pay of one of the original jobs. We were barely making it, using our savings as a supplement. We eliminated ALL excess spending and unnecessary services.

Now my job is laying me off. Our savings is gone. Countrywide has been unsympathetic to our attempts to save our credit and hold up our end of the contract. There are NO jobs ANYWHERE.

We're probably losing the very reasonable home we brought two babies home to and have worked so hard on. It is heart breaking and gut wrenching. Every day I drop the kids off at school and then cry until I throw up. On top of that, people still on their life raft sneer and call those of us drowning "irresponsible" and "ignorant" and any help we might be fortunate enough to get is a "punishment" to them.

It's all just so sad, and it is really hard.

What really should be happening is that the shareholders in these bailed out institutions should be losing their shares.

I agree. But that would be our Federal Government now wouldn't. Vicious cycle, taxpayers lose.

@Jeremy Wentworth:

[Very few people were trying to get something for nothing on the borrower side.]

So when the lender tells you that in 4 years your ARM loan will reset to 75% of your monthly income what do you consider that? It's greed. It's not necessarilly malicious greed on the part of the borrower but they took a chance on a deal they knew they couldn't afford.

Again, some borrowers were lied to; I am not denying that. There are, however, a large number who knew the terms, knew what their payments would adjust to down to road, and signed the papers anyway.

Admittedly, however, it hasn't been very effective in the last few decades, and invites a whole different and enormously messy discussion in its own right. =\

"For homeowners with loans worth more than 105 percent of the home's value - which some foreclosure specialists say is one of the biggest roadblocks to loan modification - lenders and servicers could still opt to write down principal, but the decision would be voluntary."

So how does this help? If I get a 105% loan and then find that the value is still falling, why won't I just not make payments again and then simply walk at the last possible moment?

"A new $10 billion insurance fund would help protect lenders against losses if home prices fell further after they refinanced 100 percent of current market value."

Oh, I get it. The Federal Government is now propping up artificial prices. While those of us who were PRUDENT get to help bailout the greedy and stupid.

@JimK: I said nothing about predatory lending.... I am saying the loans were a bad deal all along and the lenders knew it. The higher ups also knew they had more to gain personally than they had to risk, so they risked the business (and ultimately our economy) for their personal gain. They just planned to sell off the risk as part of their risk management.

Also, these people were going to a lender for a loan on a house. The lender offered them what they said was a better deal... where in there is the "something for nothing"?

This is the typical BS spewed by people that frankly don't know what they are talking about. Very few people were trying to get something for nothing on the borrower side. I don't know what it is about banks and lending institutions that lead people to defend them (maybe they think that they are defending capitalism by blindly siding with bad businesses?) but in this arrangement one side without doubt knew exactly what they were doing and what the outcome was going to be. In fact they were doing it because they knew that even in the worst case, the government would step in and bail them out. This was a calculated choice made in the persuit of profit.

There certainly are some individuals who were irresponsible, but 100% of these banks knew exactly what they were doing. They also did it thousands of times and kept doing it even when they saw it was getting bad. You can try to hold the irresponsible home owners at fault if you want, many did wrong, but that won't fix the problem in the least. Holding the banks responsible on the other hand, can.

We need rules that force banks to give the lowest possible rate to everyone, despite any bad credit history. It makes no sense to qualify people for loans with bad credit, but then turn around and force them to pay much higher interest rates. This just sets them up for failure.

With our current system, a person with bad credit might have to pay 1300 dollars a month while a person with good credit might only pay 900 dollars a month for the exact same house. A person making 30k a year can afford 900 a month, a person making 30k a year cannot afford 1300.

Mortgages are backed by the value of the home. Assuming house values do not plummet, the bank is taking almost no risk on a home loan. There is no justification for charging people more or less based on a credit score. Basically, banks set up those with poor credit for failure.

It's not right that people with money issues can be good enough to get a loan, but aren't good enough to pay a fair price for the loan.

People can cut, slice, and dice it however they want, but personal responsibility is the key. No one's going to look out for you except yourselves, folks - but that doesn't stop us from blaming everyone but ourselves.

Thank you for proving that it's possible to be responsible and self-reliant, while still being empathetic and able to see beyond your own nose.

It's short-sighted selfishness at all levels - the banks and investors doing ludicrous things for short-term profit, the people who signed up for things they couldn't afford, the government deregulating industries and driving the country deeper into debt - that got us into this economic mess, and the same attitude isn't going to make things better.

I'm going to go back to my job as an underpaid foreclosure-prevention counselor and see if I can help another single mom or nice old lady keep a roof over their heads.

We live in an entitlement society, and you blamed everyone in your post except the entitled individuals who signed those mortgage papers knowing full well they couldn't pay the bill, long term. Not everyone is in that boat, but pretending that isn't a major part of the problem is disingenuous at best.

Have you considered that they can't pay their electrical bill or medical bills because their mortgage is so unaffordable that they can't save for a rainy day? You're right in saying there are some people losing their homes because of events largely outside their control, but many of these same folks seek out every creature comfort, in the form of cell phones, cable TV, dining out, and then cry and spraypaint "I want 2 be heard" on their roofs when it comes time to pay the mortgage.

Yeah. Sure. Whatever.

@Corporate_guy:

Maybe we should give Chrysler another 5 billion in blessings.

Also, in many areas of the country (for example, Lexington, KY, a city of 300,000), $250k is a pretty darn nice house. Here, $120k will buy you a 1200-1400 square foot house. $250k will but you in the 2500-3500 range, depending on the neighborhood.

I'd argue that if you make $30k, you simply shouldn't be buying a $250k house. I agree that prices are absurd in a lot of places, but arguing that Mr. $30k should be able to buy a quarter-million dollar house is a little silly, IMO.

@zentex: Well, if poeople stopped saying that he's a terrorist, hates America, will "let the blacks take over," etc. he wouldn't need that kind of car. The car is in response to the threats against him.

Borrowers would also have any pre-payment penalties waived.

Borrowers would only be able to do these modifications if they were subject to a "notice of foreclosure" before filing for bankruptcy.

@Trai_Dep: I know. I was ready to jump in to take on the "cut taxes no matter what" crowd and johnva did a little TCB.

@JimK:

[I'm disgusted with anyone that would champion the ability of the government to forcibly intrude upon the terms of a contract years after the signing.]

It's called contract law and it dates back before even the creation of the United States. Terms of a contract are based upon the laws of the state they are agreed upon in. This means the Government can (and often will) intrude if it feels the contract is one-sided or dangerous.

They don't care about you. This is all bigger than you. Go off and be responsible, good for you (you are now like the vast majority of Americans to be honest but feel special if you like)...here's a cookie... The truth is that what you should be disgusted at is that these lending institutions have been manufacturing artifical success for years now and now that the gig is up they (and their stockholders/executives etc) are getting away with this while people are losing their homes.

A contract is a two way agreement, and many of these sub-prime, no-doc, loans were executed in bad faith by those offering them. They knew that many people would not be able to pay but banked on the ability to sell these as assets. The tried to scam the system and many actually did. The people who should be held the most accountable are those that responsible for billions of dollars, not the individuals responsible for thousands.

@JimK: As a person who did pay my bills and did live within my means when times were good, I feel (more in this recession that previous ones) that personal responsibilty has actually paid off. In a climate where no one is lending, my credit score is high enough to refinance; and with interest rates slashed, I'm getting the lowest rate I've ever seen.

@scientician: How does a class for one hour for five days a week for a year or so combat the pervasiveness of consumerism in our society though? The issue is that every part of our lives is full of high pressure advertising telling us to be unhappy with what we already have. I am aware of it and it gets to me. I just don't know if there is any solution for this society short of a big...very big reset (on the level of social revolt) which would likely just make things worse in other ways.

There is nothing wrong with going underwater at the beginning of a mortgage if you don't intend to move. It's a house not a stock.

Oh yeah, property values going up is not a good idea. The median income in this nation is already out of whack with mortgages. You want the problem to get worse? I don't get it. House prices need to come down and stay low.

If a $200K mortgage is rewritten down to $150K then the house is later sold for $175K, that $25K should go to the lender, not the seller.

@JimK:

Personal accountability flew out the window many years ago. Now, you get your hand held, a pat on the back for a good try, and when you fall down and skin your knee, someone will put a bandaid on it.

@johnva: Baby Boomers are running the Government for the most part right now. If we younger (and I would say more overall responsible) folk want things for us, we better start getting involved in Government.

Wage freezes, home price freezes...all of these things hurt those who just entered much more than those who are established, but there is little Government incentive to help us because we don't have much of a voice in Government.

@Ira Kroll: Not every one of those 5 million homebuyers were irresposible. Some were for sure but I would wager it is more a product of bad risk taking on the institutions than the borrowers. Moreso, as gatekeepers of the money it was the job of the lending institutions to manage their risk. What really should be happening is that the shareholders in these bailed out institutions should be losing their shares. Shares in banks/lenders is not the roof over your head, we should be going in to end the forclosures long before we step in to save shareholders.

WHY DO I PAY MY BILLS? Why do I bother living within my means? Why shouldn't I be UTTERLY irresponsible and then demand my government check?

I'm disgusted with anyone that would champion the ability of the government to forcibly intrude upon the terms of a contract years after the signing.

I'm just disgusted. Didn't we fight a revolution to NOT be European? Don't we believe that you rise or fall based on YOUR decisions and YOUR work, and that failure is in fact an option? Aren't we supposed to be leveling the playing field so that everyone has the same *chance* at success, not trying to make sure everyone has the RESULTS of success without the effort?

What the hell happened to us?

I can still apply for the $7,500 tax credit (read: loan), but if I had waited 20 days I would've been able to get $8,000. Oh well. This kind of stuff happens.

If the tax credit works as planned though, the real estate market will recover faster and property values will go up.

The regulations were changed because it was the only way families making the median household income could afford to buy a the median priced home.

@t-r0y: This is the point of bankruptcy you know.... adjusting outstanding contracts so that the most number of creditors will get paid while the person going bankrupt can still survive. The Government has always had the right to cancel a contract as all contracts entered into under their jurisdiction is under their purview. Welcome to civilization.

@dako81: GDP figures being used are based on annual averages which are per capita... in other words population changes are factored out. I suppose they could try to manipulate the numbers but since these numbers are used and produced by several sources it would have to be a pretty big conspiracy to make the numbers work.

The Government is us (or do you think that Government for the People and by the People has perished?) Their reporting agencies are generally trustworthy. If they aren't it's because we put untrustworthy people in the Government. Go wear a tinfoil hat if you wish, but in the real world just because it's from THE GOVERNMENT *ahem* doesn't mean it's a lie... it means it's from THE GOVERNMENT. Just like any statistics, it should be weighed against the other available data (which, in a shocker agrees in this case).

Not in my good old state of Washington. The legislature sets the dollar amount they want to collect, and the tax rate is set such that they collect it...

Great discussion on how flippers will get a free pass too

[www.calculatedriskblog.com]

In some states, lenders often waive the right to a deficiency balance (the difference between the sale of the home and the amount owed on the loan). This means that people can walk away from a house that they cannot afford without any financial repercussions other than the huge hit on the credit report. The property is sold at 50% (or less) of what is owed on the mortgage and everyone's property value goes down. Lender takes a huge loss, surrounding property takes a loss.

In others, lenders can sue for the balance of the loan and force people into bankruptcy anyway. This is lose-lose-lose because the lender and surrounding area take a hit, and the debtor has no house and still has to file bankruptcy.

One solution? Filing bankruptcy, rewriting the loan down to market value. Debtors still get punished for taking on more house than they can afford, but get to stay in the house. Lenders get more than they would have at a sheriff's sale (although it's over 30+ years). Surrounding properties save some value.

Unfortunately, the commenters on Consumerist are not a cross-section of America. Most if not all are well educated and consider themselves fiscally responsible. As a country we need a lesson in spending within our means. Prior to the crisis, lenders certainly weren't explaining to people why you shouldn't refinance for 120% of your house's value or how backwards an 80/20 loan is when purchasing a home.

It is in everyone's best interest to get this situation resolved. My hope is that some of that money is earmarked for education: mandatory financial education in high school (and not presented by BoA, Citi, Chase, etc.).

Please back up your claim with information. What % of foreclosures are due to lost jobs? I thought the main cause was sub prime no doc lending and ARM adjustments. Maybe I'm wrong, but I'd like to see something proving your claim.

At the very least, if you want to be selfish and still see the silver lineing, people in houses helps every home owner. Foreclosures mean more houses on the market. More houses on the market means new buyers have lots of choices, lots of choices means lots of competition for selling a house, lots of competition means lower sale price for your house.

Lower property value = lower taxes.

@Mary Marsala with Fries:

Hmmmm, where did I put my world's smallest violin.

@ckaught78: Why wait? You can refinance I like I going to do on March 4. I have never missed a payment and was just informed by my mortgage broker that my middle score is 706.

He even told me what my super-secret Experian FICO score is! Take THAT Experian!

Also, I'm really mainly proposing those high rates for *really* high marginal income. You would still be taxed at the "normal" lower rate for the first few million dollars in income. And I'm not sure that I buy the notion that most people who make millions of dollars a year actually work much harder than most people who don't. Actually, I think that's patently false. If you make $100K per year, do you think you work 1000x less hard than the CEO who makes $100 million? No, you don't. The purpose of a progressive tax system is to even some of that disparity out a bit. Don't worry - the CEO will still be making millions and millions more than you.

Did you even watch his inauguration? It was one big cheerfest.

@Jeremy Wentworth: Yea but what about GDP vs. population? Also, you can easily manipulate GDP's by comparing GDP's with different base years, and aren't GDP figures are provided BY THE GOVERNMENT?

Seriously? SERIOUSLY? Millions of people are losing their HOMES because of lost jobs, medical problems, corrupt lenders and a depression-level economic crisis and your answer to anything designed to help them is "BUT WHAT ABOUT MEEEEE I WANT MONEY TOOOOOOO WAAAAAAAH I'm being punished for being responsible BOO HOO FOR ME"?!

You're all disgusting, and not to sound like my (very responsible) grandmother, but you'd better count your blessings and watch your damn tongue, because bad luck has a way of finding bad attitudes, and if you look closely, it may not take very much bad luck to put you in just the same situation as these unfortunate people you so enjoy being jealous and vindictive about.

Much as I want to go shoot me some entitled brats right now, instead I'm going to go back to my job as an underpaid foreclosure-prevention counselor and see if I can help another single mom or nice old lady keep a roof over their heads. You all enjoy taking your jobs and paychecks for granted. May the gods hear every word you say.

@johnva: I'm actually not 100% sure how you were in the @ part of that.... it was really @TheRedMonkey. I agree with what you were saying as well.

@johnva: If I had to pay extraordinarily higher taxes the more money I make, I would have abosolutely NO incentive to try to make more money past a certain point. Why the hell would I try to make another 100k if I only get to keep 20k of it?

Disincentivising people with more taxes as they make more will only stifle incomes. I'd do everything I could to not make it into those brackets. Probably a lot of work "off the books" too.

+1. Excellent points that are often overlooked by government. If anything, I'd like to see an extra SS and medicare tax on the boomer generation to help pay for the exorbitant cost of their care (that will fall on us younger folk) in the next 10-30 years.

Go talk to your bank or lender, re your mortgage rate. In challenging times you may be surprised what they might be willing to do for you. You will never know unless you try. Good luck!

You bring up some good points. I just wanted to point out that the good economy of the late 40s and 50s is not the best example for pointing out good policy, being a unique time in history. Most of the (non-US) industrialized world was devastated by WWII. These countries were all rebuilding for the next decade or so, essentially leaving the US with no global competition for goods and services. We greatly benefited from this, and there is a good argument to be made that we would have had economic growth regardless of policy.

@ThickSkinned: Most conforming standard mortgages over the last ten years were sold to Freddie/Fannie, so it pretty much covers everyone. In fact, there is one credit reporting agency who will tell you who bought your mortgage - the others just list the servicer as the creditor. I have a prime conforming conventional 20 year mortgage that I make payments to Citibank on, and one of my credit reports pointed out that that loan is actually owned by one of the Macs.

@johnva: I see you have bought in to his fear tactics. If we don't act now this ship will sink! It wasn't right when GW used it and it still isn't. This must have been the hope and change we signed up for...

@johnva: @The_Red_Monkey: Actually we stopped the recession in March of 1933 when the economy hit bottom and began to climb (GDP, the measure of recession/depression bottomed at this point). We left the Great Depression in 1936 when we set a new record for the GDP (beating the previous record in 1929). It climbed steadily until falling sharply around 1937 when FDR balanced the budget by slashing New Deal programs. The growth resumed shortly after the correction and by the time the US entered the war in December of 1941 the GDP had more than doubled over the record set in 1936.

Those "many historians" are using figures like the dow industrial values or unemployment rates which, although can indicate trouble (and for those without jobs is a major issue) tend to be lagging indicators and are not used by economists to determine the success or failure of a policy. GDP is the measure of economic strength and its growth or lack thereof is how we measure "recession/depression". By these measures, it can be shown that it was in fact the increase in government spending of the new deal that lead to the recovery from the Great Depression by 1936 and the Recession of 1937 by 1938. WWII played no role in these recoveries (rather it helped the growth in the 1940's).

So, I'm punished for being careful and responsible. After all, that $75 billion will have to be taken from me and people like me!

It may be fitting from a liberal perspective.

Or even a libertarian perspective, if the perspective is bent over.

We actually are facing a really serious problem with the economy here, and stimulus is necessary or the damage will be much worse than they are already going to be. You can call that "fear tactics" if you want, but I don't see where Obama has outright lied about the problems. We're certainly facing a threat to our country that is much greater than the threat

@johnva: I say send all the Baby Boomers to Carousel and give them a shot at renewal.

But there is a lot less focus on doing something to help, for example, younger people who don't own homes and many of whom have a crushing load of student loan debt that earlier generations simply were not saddled with. Propping up home prices artificially actually hurts non-homeowners, many of whom didn't buy because they knew that prices were unsustainably high. Home mortgages are a problem, but student loans are an equal problem.

You can disagree that the New Deal programs had anything to do with ending the Depression, and there are good arguments either way. But you directly admit that government spending on debt (on the war) is what got us out of the Depression. So you're not disagreeing with my premise...why is military spending stimulative while other things cannot be, in your view?

Also, your line about higher taxes meaning lower revenue is just bogus. At some point, lower taxes mean lower revenue. And that Republican theory is essentially based on the idea that high taxes on the rich always retard the economy, which I think is just flat out wrong (the 50's and 60's disprove that idea). I would argue that higher taxes on the poor and middle class probably retard the economy much more, because they would directly cut into consumer spending. The rich have excess income, so taking some of that away isn't going to impact their spending so much.

@ckaught78: No kidding. Those of us who scrimped and scraped and cut back to pay our mortgages no matter what get punished, while those who just said "f... it" get rewarded.

Then again, those of us who actually pay taxes always get punished.

@johnva: I'm just glad that Obama didn't resort to the exact same fear tactics used by Bush to rush his agenda through Congress. Wait...

Same, except I have a higher rate than that. I'm sitting at 7% because I was pretty fresh out of college with some student loans and no money down and didn't want to get an ARM. I bought it about 2 years ago, so i just missed both tax credits. I also have never missed a payment so I'd imagine much like yourself, the people who made bad decisions as opposed to making well thought responsible decisions are the only ones who will get any assistance.

No good deed goes unpunished.

He was placing the blame on all the different parts, but just kind of passively, mentioned the government.

Sure, all the people who he listed are guilty, but Government is definitely in the top 2.

I hope this new idea works. As a responsible home owner, feel some anger towards this. But his points about having foreclosed homes in your neighborhood are correct as well.

I'm feeling indifferent about this new bill.

So, I don't have a problem with stimulus spending in principle. I just think that a) it should be spent responsibly in a way that actually helps normal people get through this rather than giving huge bailouts to irresponsible, greedy bankers, b) it should be spent on infrastructure projects that are important to our future and politically difficult to enact at other times (maybe something like high speed rail or other radical energy efficiency changes), and c) it should be paid back once we recover a bit by jacking up taxes tremendously on the richest people, just like we did to pay down our last huge government debt, after WWII. I want us to bring back 70-80% income tax brackets for marginal income over $2 million or so. If we do that, we can start to pay this debt down in a hurry, and it won't be a problem. Reluctance to do that is why I think the Republicans are so opposed to this stimulus spending...that, and they want the country to fail even more so that they can blame the Democrats.

Um... I'd sort of think about using the term "e-stim."

[en.wikipedia.org]

Though I guess refinancing is sexy after all.

You know what would be great (and could possibly create more jobs)?

Create a government funded program that requires new home buyers to take an entry-level basic personal finance course. Teach people what their budget [i]should[/i] be, how to save AND how to plan for the big expenses (College/Car/Home)

I hope there's some funding for a marsh rat in Pelosi's congressional district, too.

@zentex: No need for the Hyundai, he got 0% for 60 months. Not to mention he would likely get crucified for buying an import as well :-)

I wonder if they have a "presidential" 48 month plan...

@ckaught78:

I'm in much the same situation as you. Some people have to keep this country running, right?

@ckaught78:

Amen. I dont like this. Why reward people for making irresponsible decisions? If you're going to do something do it across the board, not just those who made bad decisions.

The other problem is there are a ton of mortgages out there that are not backed by Fannie or Freddie.

I think a one time, across the board, fixed refi or loan modification to a lower rate is the only thing that would fix the mess we have now.

I bought a home last March on a fixed 30yr at 5.6%. Had I waited I could have got $8k from Uncle Sam and a rate below 5%. Now the only waiy I'll get anything is if I start missing payments. So much for being responsible. Guess I should be thankful I'm employed.

does this mean he's trading in that fancy new Cadillac-One for a bomb-proof Hyundai? :-)

Except the government, of course. :-(

Don't bankruptcy judges do that already? I thought your first mortgages were things that couldn't get wiped out by bankruptcy.