[AVGWarhawk]

Enigma:

First of all, let me say that me paying for Bob who got himself into a home he couldn't afford doesn't seem the least bit fair.

Now, the focus of Obama's plan is to stabilize home prices, and to slow the destruction of home ownership here at home, a root that which is destroying our economy. It will give millions of people in this country the opportunity to rebuild financially, not all of whom are "losers" and "irresponsible". Many, many hard working responsible people are losing their homes as values depriciate and they find themselves unable to refinance. A 5/1 arm was agreat deal on an affordable home 5 years ago. Today, that same mortgage is worth more than the home is worth due to slumping prices and immediate area forclosure, therefore, that person's loan is now adjusting, and the payment is going up 3, 4, $500 a month. The option to refinance does not exist. Therefore that person ends up defaulting, another foreclosure on the block brings surrounding properties an even lower value, and the dominos continue to tumble. Bringing down the rate of foreclosures is good for the entire country. It's essential at this point if we want to slow or stop the nose dive of our economy.

It is estimated that "6 million families could lose their homes over the next three years in the absence of government action."

Now, Part A) of this plan helps folks who are still current on mortgage payments, but cannot refi because they are upside down in their home,a nd are paying on large interest rates. This is our guy from my example above, before he goes default ont he loan. (an adjusted borrower on a 3/1 or a 5/ ARM) These folks should be the priority, and they are. These are responsible borrowers who should be able to refinance and should not suffer at higher rates because of the tumble of the value of their home. It's win - win.

Part B) provides incentives to lenders to allow people who are in danger of foreclosure to refinance and alter terms to make the payment affordable, because they can't keep up with the current payments. Your question comes into play here. I don't want to pay for people who got a home they shouldn't have/cant afford. I do however, want to help the guy above, who got into a 5/1 with the best of intentions, and is now stuck in an adjusted loan because he is upside down. How we distinguish between the two is unclear as of yet, but I'd certainly be on the side of having a way to do so.

Your question is completly valid. Does the plan compensate for home owners who purcahsed out of their means? Do people who lied about income or assets benefit? It's unclear at this point. Republicans are asking these questions, and I'm grateful that they are. My feeling is that it has to. It absolutly has to. If you entered a loan fraudulantly, you are on your own.

Ramble ramble...to the point: Do I think It's fair that I pay for someones irresponsible mortgage bail out. No. I do think that saving as many homes as we can int his country is absolutyl critical to the economy. Before I was out of a job, I'd see people on a daily basis who had gone into an affordable loan and are now upside down with an adjusting rate, and who will eventually foreclose if they cannot get help. Simply put, the idea that all of this money goes to losers who are in a home they shouldn't be in, it's simply not true. Yes, they exist, in large numbers I'm sure. But the majority of folks losing homes in this country are not getting what they deserve, and you, me, and all of us as a country will be very negativly impacted if we continue to let the foreclosures continue at the rate they are, and do nothing. I hate the idea of paying for dead beats. But I'm on board with the idea of soem of my tax money going towards a program that I beleive will help slow or stop the current nose dive we are experiencing.

Yes, it does suck having to bail out Bob. But, speaking from my experience with an ARM loan I received for my first house, I read all that this loan entailed. My real estate agent said not to worry. I would be making more money next year, raises, bonus, etc. Sorry, I do not count on money I do not have. So, I disregarded this notion because she just wanted a sale. Next, reading the contract for sale it stated the interest can go up only once a year and for only a certain percentage. In other words, my interest rate could go up to a maximum of 2%. It is not a free for all at the banks when they can raise this interest rate on my loan. In short, they can turn on the faucet but the home owner does not have to swim in the pool of water. After my first year in the home my monthy mortgage went up $175.00. I did not sit on my duff. I promptly refinanced to a 30 year fixed mortgage. But you say, these people are not allowed to because of the housing slump. That is true today, however 6 months ago this was not the case. Sure, a few might have gotten caught up in the recent slump preventing a refinance but a large majority just went along with the increase in interest probably saying they will look into later. Later came sooner than expected. Sure, some are in a pickle because of job loss. Let me ask you, 6 months ago did we hear of thousands losing their jobs? Not really. Not until banks started fessing up the problems that have been happening over the past two years. The markets went into a nose dive. In short, this did not happen over night. People have been living on their houses never expecting the housing bubble to pop. Just keep on refinancing and refinancing over and above what the house is worth gambling that the home value would grow. As we see, the bubble burst. Most people refinance to get rid of debt on credit cards, vehicles, school loans, etc. This is how it was sold to the general public. Just like the guy in the commerical if you have seen it were he is riding his John Deere mower talking about all his cars, pool, vacations, expensive home, etc and asks,"how do I do it?" "I'm credited up to my neck." Then the commerical talks about refinancing to get rid of all that debt that put him in the hole. It is not always about ARM loans. Even folks with fixed loans are way in over their heads with credit debt. I know quite a few. Not just recently either. Over the past 20 years folks have been crediting themselve into the hole. The only option at that time was bankruptcy or refinancing. That option is now gone as of today.

We really are in a catch 22 Enigma for several reasons. Yes, the housing markets and new construction do run the economy as we see. If people are spending and have the liquidity to spend, they do, however it has been credit spending as of late. Not cash. So, again, it is not ARM loans as the culprit. I first blame the people who got into these loans with blinders on. Did not wake up the very first mortgage statement that increased by hundreds of dollars after completion of the first year of the loan. Remember, ARM loans have rules on what can be done concerning interest increases and when the bank can do it. So, sitting for 12 months after the house mortgage increased doing absolutely nothing (even selling if need be) is pure laziness. I got an inlaw right now who did just that. You know what else. She has not paid a house payment in over 2 years. Every room has a computer and large screen TV. They are taking vacations. Any tax return coming or last years stimulus check they got did not go into catching up on the house. They blew it on junk and vacations. They are living large and it will be all paid for at yours and my expense. So, you can understand why people are bit pissed off. Alas, our nuts are in a vise because if we do not help them the economy continues on it's current path. Here is the next problem. The money is going to banks who asked for bail out. Not all banks got this money and did not need help. So, mortgages in trouble at these banks can offer no help. Home foreclosed. I have read time and time again from people who comment on new articles calling their loan holders and getting turned away. This is not over by a long shot. Furthermore, this will take years to accomplish. Everyone who is in under their head has to go through the process again. Credit worthiness has to be check if such a loan is offered. In other words, can this person carry this loan after it is reduced. That process will take a long time. I think many will disqualified because of other outstanding debt over and above just a mortgage. Again, the credit card living. See, this is a month to month reduction, not a lump sum refinance were one could wipe out credit card debt, car loans, etc. like I did when I refinanced. The more I think about it, even with help in reducing these month to month payments, many will still be screwed. I find it hard to believe the government is going to tackle paying off credit cards. Then again, looking at what is happening, anything is possible. So, it is more than just ARM loans causing this issue. It is the people who ignored the contract, did nothing when the mortgage went up and continued to live on credit over the past 5 years. This seed was planted years ago. The seed has now bloomed and we found out it is stink weed.

Lastly, yes, some good folk who did the right thing have lost their jobs and are faced with foreclosure. Here is the problem and I do feel for them. I had lost 2 jobs in under three months at one time. But, being a bank right now or even the same bank two years ago, when you filled out the credit application they asked your place of employment. If you write, none. Said bank will not approve the loan. So, these folks who approach the banks today after a bail out will ask the same question. Employment? Answer, no. Said bank will not approve the loan. Still screwed. Ok, so we say a moritorium to stop foreclosures on these folks until a job is obtained. Cool. I'm for that. However, I do not support people who have been in the rears for two months or more for the past two years. No sir. They did nothing. Did not work out an additional payment with the lender. Did not sell even at a loss. If these people did not figure it out in two years, they will never figure it out. Case closed. This is were the distinction needs to be made on who gets what.