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Old 02-20-2009, 11:49 AM #43
Adema3412
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Originally Posted by kjjm4 View Post
I believe that part of living in a free society is taking risks, and sometimes you get burned in the process. Yes, it sucks for the people who get burned, but the alternative (a centralized, state-run economy) is not so rosy either.
Ohh the beauty of black and white.
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Old 02-20-2009, 12:06 PM #44
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Originally Posted by Adema3412 View Post
Ohh the beauty of black and white.
Oh, since there's a lot of gray area with central planning?
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Old 02-20-2009, 12:11 PM #45
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Oh, since there's a lot of gray area with central planning?
There's a huge difference between a mixed-economy and central planning. Just like there is a difference between our current form of capitalism and libertarianism.

These attempts to pigeon hole debates into black and white areas prevent any meaningful discussion and compromise.

This mortgage plan is an ill-gotten use of taxpayer funds, but it's not central planning.
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Old 02-20-2009, 12:16 PM #46
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Originally Posted by Adema3412 View Post
There's a huge difference between a mixed-economy and central planning. Just like there is a difference between our current form of capitalism and libertarianism.

These attempts to pigeon hole debates into black and white areas prevent any meaningful discussion and compromise.

This mortgage plan is an ill-gotten use of taxpayer funds, but it's not central planning.
Well, I could just as easily argue that any form of centrally-planned economy will go the course of 'unintended consequences' as collectivist theories always do... Which was my point.
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Old 02-20-2009, 04:35 PM #47
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You know if people actually thought about things for a bit ... nobody is getting ANY "reward" from this program.

Homeowners are not getting an reward ... buying at inflated prices and getting a writedown to realistic prices gains the person nothing (and will reduce equity tremendously). Loan renegotiations will drag down credit scores as well. There is no gain here, only loss.

Banks aren't getting a reward as they have to write down the loan. Even though they get some money back from the government, they lose money, just less than in a default.

The government is obviously not getting any reward.

The only person who got any reward was the person who sold to the homeowner at the inflated price, and that is just good old free market economics. And at this point that person is long gone from the equation.

Calling anything to do with this program a reward is like saying a skydiver who packed his chute poorly and was saved by his backup chute was rewarded for packing his chute poorly. That's just silly.
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Old 02-20-2009, 04:44 PM #48
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Difference is, if you were responsible and bought a house you could afford, you actually have something to your name, whereas you could pay rent every month for the rest of your life and still own squat. I'm not talking about you, just addressing the point you made.
Actually, renting is a VERY responsible move in your earlier year. I'd bet that guy is under 25, and if not, he's most likely under 30. Someone at that age is just getting settled into a good job after college and might not be ready to make a long term commitment to an area.

Want irresponsible? Look at the person who buys a house because they think renting is a crock of **** and then they get transferred or fired from their job and need to move.
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Old 02-20-2009, 06:56 PM #49
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You know if people actually thought about things for a bit ... nobody is getting ANY "reward" from this program.

Homeowners are not getting an reward ... buying at inflated prices and getting a writedown to realistic prices gains the person nothing (and will reduce equity tremendously). Loan renegotiations will drag down credit scores as well. There is no gain here, only loss.

Banks aren't getting a reward as they have to write down the loan. Even though they get some money back from the government, they lose money, just less than in a default.

The government is obviously not getting any reward.

The only person who got any reward was the person who sold to the homeowner at the inflated price, and that is just good old free market economics. And at this point that person is long gone from the equation.

Calling anything to do with this program a reward is like saying a skydiver who packed his chute poorly and was saved by his backup chute was rewarded for packing his chute poorly. That's just silly.
Umm, excuse me? Homeowners WILL be rewarded. When you bought a property for X amount of dollars, and it falls to W amount it is not the governments responsibility to fix the prices to current standards. That is a piss poor arguement and an extremely slippery slope. The home buyer, at the time of the purchase, felt that the home was worth X amount of dollars and purchased at that price. Now that it is at a lower value it shouldn't matter, because the worth of the property was X to the buyer.

On a smaller scale, a person buys somehting on Ebay worth $10, but finds it at a later time for $5, should the government pay him back $5? Should PayPal? Should the seller? No.
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Old 02-20-2009, 07:20 PM #50
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Old 02-20-2009, 10:02 PM #51
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Umm, excuse me? Homeowners WILL be rewarded. When you bought a property for X amount of dollars, and it falls to W amount it is not the governments responsibility to fix the prices to current standards. That is a piss poor arguement and an extremely slippery slope. The home buyer, at the time of the purchase, felt that the home was worth X amount of dollars and purchased at that price. Now that it is at a lower value it shouldn't matter, because the worth of the property was X to the buyer.

On a smaller scale, a person buys somehting on Ebay worth $10, but finds it at a later time for $5, should the government pay him back $5? Should PayPal? Should the seller? No.
No, there is no reward. Use your brain to think. You are taking something extremely negative and turning it into just something negative. Again being saved from something very bad is no reward, it is a relief. You don't learn that you can do the same thing again, you learn that you should NOT do the same thing again. This is very basic stuff we learn as kids.

I won't argue, however, with the general idea that this is not something to be looked at as a routine action. This is only to be considered when the problem is so widespread, so systemic, that it starts to harm innocents. That is what we have now, and this is why the action is necessary.

People who acted responsibly can and will suffer if the economy suffers more than a certain amount of damage. That is the point at which action is required, and we DEFINITELY are beyond that point.
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Old 02-20-2009, 10:13 PM #52
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No, there is no reward. Use your brain to think. You are taking something extremely negative and turning it into just something negative. Again being saved from something very bad is no reward, it is a relief. You don't learn that you can do the same thing again, you learn that you should NOT do the same thing again. This is very basic stuff we learn as kids.

I won't argue, however, with the general idea that this is not something to be looked at as a routine action. This is only to be considered when the problem is so widespread, so systemic, that it starts to harm innocents. That is what we have now, and this is why the action is necessary.

People who acted responsibly can and will suffer if the economy suffers more than a certain amount of damage. That is the point at which action is required, and we DEFINITELY are beyond that point.
No, its a reward. Your rewarding negative behaviour in this way instead of letting the person actually learn from their mistakes. If you defaulting, forclose and try again now that you have a better understanding. Not forclosing? Good, don't ***** about your home value which you bought at the top of the market going down and expect the taxpayers to help you out.

People that have nothign to do with these problems may indeed have some sort of problems. But suffering through those problems today will prevent them from having to go through it again in another 10 years when the next set of these fools starts looking for a handout.
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Old 02-20-2009, 10:15 PM #53
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No, its a reward. Your rewarding negative behaviour in this way instead of letting the person actually learn from their mistakes. If you defaulting, forclose and try again now that you have a better understanding. Not forclosing? Good, don't ***** about your home value which you bought at the top of the market going down and expect the taxpayers to help you out.

People that have nothign to do with these problems may indeed have some sort of problems. But suffering through those problems today will prevent them from having to go through it again in another 10 years when the next set of these fools starts looking for a handout.
While I agree with you. This personal moral hazard argument is really quite weak.
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Old 02-20-2009, 10:17 PM #54
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While I agree with you. This personal moral hazard argument is really quite weak.
Your speaking about the second paragraph?
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Old 02-20-2009, 10:18 PM #55
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No, its a reward. Your rewarding negative behaviour in this way instead of letting the person actually learn from their mistakes. If you defaulting, forclose and try again now that you have a better understanding. Not forclosing? Good, don't ***** about your home value which you bought at the top of the market going down and expect the taxpayers to help you out.

People that have nothign to do with these problems may indeed have some sort of problems. But suffering through those problems today will prevent them from having to go through it again in another 10 years when the next set of these fools starts looking for a handout.
No, the person learns the lesson whether they foreclose or renegotiate the loan and lose credit and equity prior to foreclosure. However in only one instance does the bank continue to get paid, so the economy does better in that instance.

You do not need to lose your home to learn a lesson, just like you do not need to die to learn that doing something is dangerous. Again, basic stuff we learned as kids.
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Old 02-20-2009, 10:20 PM #56
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No, the person learns the lesson whether they foreclose or renegotiate the loan and lose credit and equity prior to foreclosure. However in only one instance does the bank continue to get paid, so the economy does better in that instance.

You do not need to lose your home to learn a lesson, just like you do not need to die to learn that doing something is dangerous. Again, basic stuff we learned as kids.
That instance requires the taxpayers to take on the burdon of the individual instead of the individual relying on ones self.

No, you don't need to lose your home at all, just make the payments.
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Old 02-20-2009, 10:21 PM #57
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No, the person learns the lesson whether they foreclose or renegotiate the loan and lose credit and equity prior to foreclosure. However in only one instance does the bank continue to get paid, so the economy does better in that instance.

You do not need to lose your home to learn a lesson, just like you do not need to die to learn that doing something is dangerous. Again, basic stuff we learned as kids.
Okay then they should lose their home and give it to someone who made the right choice and bought within their means. Then they can live in the right choice home, with a new mortgage. I can live in their large home with my old payment...sounds fair to me seeing that they CHOSE to buy more than they could afford.
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Old 02-20-2009, 10:38 PM #58
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Okay then they should lose their home and give it to someone who made the right choice and bought within their means. Then they can live in the right choice home, with a new mortgage. I can live in their large home with my old payment...sounds fair to me seeing that they CHOSE to buy more than they could afford.
A nice story, but a pipe dream. People who are foreclosed on will not be getting a new mortgage anytime soon. This will not help the economy.

This stuff isn't being done for the heck of it, it's about practicality. In the future, regulations will need to be tightened to prevent being placed in this position again.
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Old 02-20-2009, 10:39 PM #59
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Your speaking about the second paragraph?
People are not going to take this government involvement into account when purchasing a home.
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Old 02-21-2009, 08:06 AM #60
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dont pay mortgage... get to stay in house...


that equates to a reward...
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Old 02-22-2009, 02:54 AM #61
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dont pay mortgage... get to stay in house...


that equates to a reward...
Except people pay the mortgage. So yeah, that's not true at all.

If they don't pay the mortgage they lose the house and the bank takes the loss on the property anyway.
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Old 02-22-2009, 03:22 AM #62
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Except people pay the mortgage. So yeah, that's not true at all.

If they don't pay the mortgage they lose the house and the bank takes the loss on the property anyway.
What? If you can't sustain your current rate, the government, your neighbor specifically, is going to subsidize you. The whole plan is to drastically reduce foreclosures.

Some of these people are living above their means and the government is giving them a handout. How is that not a reward for bad behavior?

You buy a house you can't afford and the government steps in before you default so you can keep it. Am I missing something?
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Old 02-22-2009, 05:27 AM #63
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What?
He said if people don't pay their mortgages, they get to stay in the house. That's false. They are going to have to pay their mortgages to stay in their homes under this plan or any plan (or no plan). If they don't pay their mortgages, they will lose their homes.

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If you can't sustain your current rate, the government, your neighbor specifically, is going to subsidize you. The whole plan is to drastically reduce foreclosures.

Some of these people are living above their means and the government is giving them a handout. How is that not a reward for bad behavior?

You buy a house you can't afford and the government steps in before you default so you can keep it. Am I missing something?
Actually, priced at non-bubble prices, many of those homes ARE within peoples' means. Pricing of homes was part of the problem, and being that the bubble has burst and with it the equity has evaporated, there's overall gain to be had by writing down loan principals rather than allowing default.

It's misleading to say that people are subsidizing their neighbors. Foreclosures drag down area home values, so it's not like doing nothing actually saves people money.

Foreclosures at 2006 rates brought home value declines of ~8.7% to neighborhood homes; it is almost surely a greater percentage now. The ENTIRE stimulus package costs roughly $10k per family. The median home value in the U.S. is somewhere around $190k.

This means NOT preventing foreclosures will cost the median homeowner in the US ~$16k this year, in addition to the general decline in housing values from the bad economy. That's more than 50% greater than the cost of the ENTIRE stimulus package.

So homeowners are really subsidizing themselves. And do note that people threatened with foreclosure also pay taxes and bear the same burden as everyone else.

Almost losing your home is not a reward for anything, any more than almost dying is a reward for doing what you were doing that almost got you killed. This isn't fun and games, this is real life.
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