Upcoming Foreclosures

"Honk if I'm paying your mortgage" bumper sticker... I'm sorry am I missing something here?

I didn't believe the Homeowners Affordability and Stability Plan is to make my taxes pay my neighbor's mortgage payments. I thought my taxes were going to stabilize the housing industry by preventing foreclosures by readjusting mortgage amounts back to a socially acceptable 38% of a families income, or if that wasn't enough the government would pitch in 7% to bring it down to 31%, with the difference being made by extending the lease of the mortgage. For example, my neighbor had to foreclose his condo because he had applied for an ARM (which he now knows is unwise, he hadn't learned or god forbid been told by the lender what that meant) and got a $330,000 loan. He made his payments on time, $1600 a month for the first two years (they were interest only). Two years later, his interest rates readjusted to make his monthly mortgage payment $3200, while his property value had lost $100,000. He tried paying the $3200 a month, but considering it was just interest on the loan, and rents in the area are $1300, the whole thing was just a huge disillusionment. He tried to get the mortgage company to restructure, but they wouldn't. He stopped paying, and the company got $95,000 for the property through auction, losing $230,000 in the deal - $25,000 or so that had been repaid. This, extrapolated across the country, of course made everything extremely unstable, and is only now trying to be contained. For the above example, what I thought would have been extremely wise for Wilshire (the lender) was to take the homeowners documented income, (~5500 a month) make the mortgage 31-38% of that income, fix the interest rate, and extend the terms of the lease to be a 50-year mortgage. Homeowner stays in house, lender doesn't lose $230,000 and the financial system is better stabilized. I thought that was very close to Obama's plan, and so I see this bumper sticker by the Tennessee Republican Party and think it's irrational, inflammatory, and their head is in the ground. My question is, am I misinformed, are they misinformed, or are we both wrong? Thanks to everyone who read the entire post and considered the example. Wouldn't you like to know* Is there any proof that we are paying for people's mortgages other than the costs to refinance them? xiphos* I don't have any problem with what I explained. I think it should have been done over a year ago to stabilize financial flows. Mortgage fraud was horrendous in my area. I still have yet to see any proof that my tax dollars will pay my neighbors mortgage instead of their income. If they are not using tax dollars to refinance the loans, and paying a 3rd outright, then I have a problem with that. Yet, I read the Foreclosure prevention act and I didn't see the government offering any more than 7%. Plowboy* Congratulations, I also bought a condo 30 year-fixed, 20% down, at a 3rd of my income. But where do you get off with that murderer crap? pendejo... Plowboy, you've proven incapable of irrational thought, and if you want to influence others to consider your views as valid, you need to work on that. To link freeing murderers from assisting homeowners who were defrauded, is nothing more than verbal vomit.

Public Comments

1. Two words: moral hazard.
2. No we are paying for other people mortgages who made bad decisions.
3. You explained it perfectly. Taxpayers are going to subsidize people who behaved foolishly. Do you see a problem with that?
4. I am a small business owner that has to pay about 40 percent in taxes each year. I own a home and have never been late on a payment. Is it right for my taxes to go up because many people's greed got the better of them. Of all the people in foreclosure situations, how many have large credit card debt, have taken expensive vacations, or own storage units full of stuff they don't use. The bottom line is that responsible people are being penalized because Americans believe that they have the right to wealth, instead of the privilege to earn it. People like your neighbor did not do the proper research when they were making a $330,000 investment. That is nobody's fault but his own. He should have taken the time and used many resources to see that this was a terrible idea to have a ARM. Lastly, I know many people that now are considering taking second jobs to help make up for their taxs. Is this helping the economy when we have a large unemployeed sector and a large population with two or more jobs? The problem with the 50 year mortgage is that it will drive down housing prices and the housing market will forever be changed. This will further hurt homeowners when the look at housing as less of an investment and more of a bill, like a car payment.
5. your friend made a stupid decision. we ARE paying as now that lender (like so many others) is getting back only a small portion of what was given out. look at the companies on TV saying - i can get your debt down to 65%..... who's going to pay the other 35%!? the lender will be taking a loss -- someone has to pay. I like your idea of the 50 year loan - sadly they are not doing that. realtors and brokers are TELLING people who CAN pay their mortgages - don' t pay so you can get a short sale and just get out.
6. Yes you are missing something. It is called intelligence. Why should I bail out anyone? Are they going to do anything for me? I bought a sensible house with a sensible mortgage, and I am to be punished for it? I guess you want to free all of the murderers next. Followed by imprisoning law abiding citizens for being law abiding. Addendum: Where else will it end? If you are going to look the other way for one group, why not another? I Guess I'lll have to irrationally disagree with a guy who got his panties in a bunch over a "humorous" bumper sticker.
7. you have a very rational good point, unfortunately republicans are really interested in the bottom line, they believe that corporations that make a profit (no matter how) is a good thing. and to make matters worst, they use this to further the cause by selling bumper stickers. we are not paying other mortgages, we are giving the mortgage companies the money they lost in these scams. the CEO's of countrywide have opened another mortgage company, and are now buying up the failed mortgages they financed with countrywide. (see link below) overall, something has to be done, and we are all in this together. the few greedy people are making us all pay
8. Wow Plowboy you're on a role calling everyone stupid on YA tonight. People in glass houses... OP is completely rational. I think the bumper sticker is a reaction to the Republican party not knowing all the facts of the proposal. This program is about supporting Loan modifications. We are not paying people's mortgages. Can you imagine how pissed people would be if their neighbor was chosen for free mortgages? One thing for sure happened when Obama got elected. The Republicans and conservatives turned incredibly daft and hateful.