President signs housing bill to bail out people like this...

Discussion in 'Current Events' started by brett636, Jul 30, 2008.

  1. brett636

    brett636 Well-Known Member

    I remember seeing this episode, and the house they got for FREE was infinitely better than the house they had. They were given the money to pay the taxes for the next 25 years, and they still squander it all away. Protecting people from the consequences of bad decisions only encourages them to make more bad decisions.

     
  2. moreluck

    moreluck golden ticket member

    People need to experience the pain of their bad decision making or they'll never learn life's lessons.

    Just another rescue plan for the "do-nothings" of the world !!
     
  3. scratch

    scratch Least Best Moderator Staff Member

    This house is delivered out of my Center. People make stupid decisions. The other houses in that neighborhood probably go for something like $100-140,000. This county is full of people being fore-closed on because of the laid off UAW workers and the closing of two nearby Army bases. Not to mention the Delta, Northwest, and AirTran employees.
     
  4. diesel96

    diesel96 New Member

    Ir-responsibility lay on the shoulders of both the buyer and Lender.
    True some people don't derserve to be bail out but that also applies to some lenders who's loan practises, greed and the reliance on corperate bail out encourages bad descions as well.
     
  5. brett636

    brett636 Well-Known Member

    Agreed, both lenders and borrowers are feeling the smack of the invisible hand of the free market. Its not the government's job to stand in the way of the discipline being delt out due to much too lax lending and borrowing. This cartoon depicts the situation quite well.
     
  6. Jones

    Jones fILE A GRIEVE! Staff Member

    Did someone say invisible hand?
     
  7. wkmac

    wkmac Well-Known Member

    There are many sides at fault in this whole thing but one major factor that I've not heard much of concerns the Nehemiah Program.

    http://www.nehemiahcorp.org

    Generally, this is how it works.

    Remember the term, faith based initiatives?

    OK, at this link read page 2 very carefully and especially under item #2 on page 2 under the heading "How Are Gift Funds Requested?" The last sentence in that section is the focus.
    https://web.archive.org/web/20070315134523/http://www.getdownpayment.com/pdfs/guidelines.pdf

    Now, this is the reality of how it works and my wife does law in real estate and she filled me in on this process. The gov't and certain private interests advocated home ownership but the problem was for some of these people, they could not qualify, mostly in the area of downpayment. What Nehemiah did was get the seller. builder, whoever to donate the money for the downpayment to be transacted at the closing table. May sound good but here is the reality of how it worked.

    Real Estate agent brings client to Loan originator and mostly these folks can only get FHA loans because of being first time buyers or whatever. If lack of down payment, home buyer would get plugged into Nehemiah and this is where the fun begins. Few sellers are willing to take money off the table to in effect give to the buyer for a down payment. What would happen at this point, the loan originator would send out a property appraiser who would overvalue the property equal to the amount need to qualify the property at the seller's asking price plus the down payment. The deal would be worked so that the seller at the closing table in effect give the buyer the money needed for the down payment. The seller would also get a nice tax deductible write off for his/her act of charity. Really an act of nothing or a fiction.

    The bottomline, the real estate value has become over inflated which local gov't likes since higher values mean more tax dollars. Surrounding neighbors love it because their own values go up allowing for higher equity lines of credit on their own home. Sellers don't care because they get the price they wanted in the first place and the higher value tends a bit to give the real estate agent a little more money. Even the lawyers make out as some of the fees are % driven by the sale transaction amount. Loan companies get the business but then many of these companies turn around and sell the loan and make their money off the yield spread.

    The new home owner get their home but they walk in with no money in the place, (comes in handy latter when you need to walk away) through creative financing they are paying every drop of the tab and in reality their holding a 120% loan of the true home value and it will take several years before even the first cent of equity is realized. In the meantime, everyone else in this deal has their money and moving on to the next victim and all of this using gov't created or gov't approved programs.

    Alot of these people were sold on home ownership with a monthly rate right about what they were paying for rent but many of these loans had balloon rates and this is where the problem exploded. When the balloon rates hit, it was impossible to re-qualify for a new fixed rate mortgage even though they may have made ever previous payment on time because the amount of the home was toploaded and the homeowner had an actual negative equity. In other words, they needed more money than the home was truly worth.

    Every bit of this was all done above board and in full sight of elected officials and regulators but no a soul raised a finger to stop it. Now that the system they created has busted, they want the taxpayer to step in a bail them out? OH HELL NO!

    I'm all for seeing hardworking folks get ahead but I'm telling ya, IMHO, they (the system) brought this stuff on themselves in what can only be called pretatory lending practices of the worse sort. 3 to 5 years ago my wife told me that down the road was a huge bubble that would burst and she was so right. And we may not have seen the worst yet people!

    Just an FYI!
     
  8. wkmac

    wkmac Well-Known Member

    BTW: This new mortgage bill killed the Nehemiah program with FHA loans.
     
  9. scratch

    scratch Least Best Moderator Staff Member

    I think if I can recall correctly, that the Lake City, Ga. family chosen for this "Extreme Makeover" had some disabled children or something like that. While it is great that Beazer Homes and ABC tried to help them, I think they went overboard in what they did. The amount of money put into this one house could have easily built a dozen new homes using Habitat For Humanity. I have helped build a couple of Habitat Homes. It is a faith based charity that screens the applicants better. The last one I helped on, the new homeowner worked next to me framing her new house.

    She was a school janitor who had a disabled husband and a disabled child. They had previously lived in a basement apartment and she worked two jobs. Habitat had a house lot and most of the building materials donated. When we got to the job site that Saturday, the slab and basement walls were already up. We had about eighty people show up to frame this three bedroom/two bath house in one day. We had a builder and about a dozen professional carpenters there to make sure it was done right. I nailed the first and last boards on that house that day.

    The new homeowner wound up in her new home with special financing. I think her mortgage payment is about two hundred bucks a month. She also had to promise to help Habitat help build the next home for somebody else. Its a great program, if you have one going up near you, I would encourage you to go help. It doesn't matter if you know about construction, they will train you.
     
  10. toonertoo

    toonertoo Most Awesome Dog Staff Member

    While what you do with habitat carries much more responsibility for ownership than EM does, you will never get the glory and media glitz they do, although you accomplish the same thing with less extravagance.
     
  11. Overpaid Union Thug

    Overpaid Union Thug Well-Known Member

    It's frustrating because people like this, and others that bought houses they couldn't afford, are the reason I can't get a home loan interest rate lower than 6.5% right now despite having excellent credit (my three credit scores were all above 730). It's real simple people......don't buy something you can't afford.
     
  12. over9five

    over9five Moderator Staff Member

    Well, apparently it was an excellent idea to buy a home you couldn't afford. Because now you'll be bailed out, and even tho you couldn't afford it, you'll get to keep that mansion you shouldn't have bought in the first place.

    You and I, the people who did everything right, who paid our bills no matter what....get to watch the losers get help to stay in mansions they should have lost.
     
  13. wkmac

    wkmac Well-Known Member

    Ashame the political leaders in Washington won't follow such wise advice.