Senate Dems Squabble Over Which Homeowners To Help

[Purveyor]

Source: Associated Press

(03-13) 12:12 PDT WASHINGTON (AP) --

Disagreement among Senate Democrats over how many struggling homeowners should qualify for court-ordered mortgage relief has stalled a key part of President Barack Obama's foreclosure prevention plan on Capitol Hill.

Behind the scenes, top Democrats are offering banks and credit unions sweeteners to drop their opposition to the plan, hoping that even tepid support from lenders might win a few vital votes from skeptical Democrats and Republicans. The bill would give judges new power to lower the interest rate and principal on a primary home loan as part of a bankruptcy settlement.

The measure passed the House last week — but only after a mini-revolt by moderates forced Democrats to narrow who might qualify.

They made sure the help was restricted to people who couldn't afford their mortgages without a court-ordered rewrite to lower their monthly payments, and those who had already tried to work out more affordable terms with their mortgage company.

The House bill also lets bankruptcy judges consider whether a homeowner has already been offered a deal by the lender that matched the guidelines Obama recently laid out in his housing rescue plan — one with monthly payments amounting to no more than 31 percent of the owner's income.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/03/13/national/w121235D39.DTL

[MrPerson]

1. What a bunch of cocksuckers

[Dr. Strange]

4. IBTD

[MrPerson]

12. They are playing with a law that I use every day

And changing it based on how much money a lobbyist can pay them, not on how they can help the poor schmuck losing their house.

Actually they're motherfucking cocksuckers.

[corpseratemedia]

2. the more they give in the reactionary "dems" the less it'll work

[PSPS]

3. I'm happy to see these details getting attention

The compromise proposal, routinely derided here on DU, seems completely reasonable to me.

If someone bought a house within their means but, because of job loss or unexpected but necessary medical expense, they can't make the payments, a "cram down" seems reasonable so long as the borrower can meet the traditional DTI ratios with proof of income and liabilities.

On the other hand, if they bought beyond their means with a no-doc option-ARM NINJA "liar's" loan, they deserve not one penny of taxpayer money. The house should be foreclosed and they can rent like they should have all along. Anything else will just prop up the housing bubble longer and keep housing too expensive.

[mbperrin]

5. So your solution to making owning a home more affordable is to

turn more homeowners into renters?

Hmmmm.

[hugo_from_TN]

6. More people foreclosing and renting equals lower home prices,

thus making home ownership more affordable. Makes sense to me.

I agree with the sentiment that some folks bought way too much house for their income and the best thing is for them to lose the house and either get something cheaper or rent. Trying to save everyone's house is short sighted as it is a desperate attempt to keep the bubble somewhat inflated.

Very few seemed to be concerned with the folks that have been diligently saving their money for a house while prices shot through the roof. A lot of these folks were responsible and didn't take a risky loan they couldn't afford and are still renting. When housing prices return to sane levels these responsible people will be able to buy houses.

[mbperrin]

7. The purpose of making houses more affordable is what?

Is it to promote more home ownership, which foreclosures destroy?

Or is it to make homes more affordable for the "right" people and damn the rest?

If the second, why not just return to redlining?

If the first, seems a bit counterproductive.

[hugo_from_TN]

9. I don't accept that foreclosures reduce home ownership in the long term.

Housing prices have been inflated the last several years.
In addition to that, the lending environment allowed (or encouraged) many people to buy houses they could not afford.

Foreclosures move people out of houses they can't afford and bring the overall housing prices down to a more historical price level. The overall long term result of this (IMO) will be to increase home ownership at sustainable levels.

[mbperrin]

10. So we support foreclosing them on what they bought before so that

they can buy after more affordably?

Actually doing them some sort of favor, apparently.

So lower the prices now which are too high due to excess or undeserved demand so that when the prices are lower, demand will increase, pushing prices up.

Think I've got it now. For sure. people who churn real estate will love it.

[hugo_from_TN]

13. No, I support forclosing on them so that others that can afford it can buy more affordably.

House prices got so high due to speculation, not demand.

[mbperrin]

15. So why not just bring back redlining. We won't let "those"

people buy, thereby decreasing demand and prices.

Won't that accomplish your goal of letting the "deserving" buy without worrying about the "wrong" people?

[hugo_from_TN]

17. You obviously have an agenda that has nothing to do with the discussion,

so I'll just step out and let you continue your rant. Have fun.

[PSPS]

18. That's all you can do, really

When you lay out how real estate works, many people here go off on tangents that, apparently, reveal how this touches them somehow. Personally, I think we have quite a few "liars" on here that will grasp at anything in an attempt to get taxpayers to buy their house for them despite it being overpriced and beyond their means.

[No Elephants]

20. Maybe. I know we have "liars" on here who masquerade as Democrats.

[mbperrin]

19. You claim you want to make houses cheaper. You demand to exclude

some from ownership who you say are undeserving.

Those are your statements. Own them.

I am pointing out ways to accomplish the things you want without going through the excess expense of making loans and then foreclosing.

I'm making an economic efficiency argument.

You may not like the implications of your statements. If you don't, change.

But plain old denial is easier.

I myself found it much easier to own real estate by skipping banks altogether. We own our own home outright and several dozen pieces of rental property as well.

Never took a bank loan for any of them. Owe nothing on any of them.

There's nothing sacred about banks and nothing wholesome about foreclosures.

You feel differently. Fine. Some analysis, please.

[Mojorabbit]

22. A lot of people

with ARMS that reset to a higher interest rate could keep that home with a lower interest rate. I don['t have one bit of a problem with that.

[mbperrin]

23. Right! These ARMS are creating a big part of the problem!

And WHY do they go up when all other interest rates in the world are down?

[Lance_Boyle]

25. If you bought an ARM, you bought an ARM, including the "A"

Why should people who can no longer afford payments on their ARM benefit from me continuing to make payments as promised on my fixed-rate loan? Don't expect me to believe that nobody anywhere know what the "A" stood for when they opted for an ARM to get more for less at the time. For them, it's too-bad-so-sad time. And rightfully so.

[Mojorabbit]

27. I have a fixed at 4.5 percent

but ARMs were pushed on us strongly. I know nothing about finance but I lived through the 80's and remember the high interest rates. We refused an ARM but I had that memory and the lessons from it. Many younger people did not and many trusted the professionals to give them good advice.

The market needs to stabilize. I am all for keeping people in their homes if possible. I would not wish foreclosure on anyone. The drain on states social services is quickly increasing and funds running dry. In the long run it ends up cheaper on everyone to try and work it out so people can keep their home.

[mbperrin]

28. Citi offered my daughter an ARM or nothing. I told her to tell them to

shove it and loaned her the money myself.

Now answer the real question: why are those A's always UP when they're supposed to be tied to some market rate or another, and all rates are near zero?

Don't get me wrong - ARMs should be illegal, period. They are used to confuse and sell something to people that they may not be able to afford, but the secondary mortgage market created by Fannie and Freddie lets banks escape the consequences of poor lending and pass them to you and me.

And so, banks should be required to hold every mortgage they write to final payment by their customer. I believe you'd quickly see more transparency and a bit more concern by banks as to whether these loans could actually be paid back or not.

[Rage for Order]

8. Guidelines should be easy

If you did a cash out refinance in the past 7-10 years or purchased any house other than a primary residence you do not qualify for assistance.

[EFerrari]

11. Cash out should disqualify no one because wages have been lagging

since the seventies. A lot of families had to do that just to survive.

[depakid]

14. Several of the "sqaubblers" probably ought to be in prison

[Robbien]

16. "Moderates" again. Ellen Tauscher and the New Dems insist on gutting the housing bill

http://www.congressmatters.com/storyonly/2009/3/12/12242/5199/248/779

But I think the main criticism in the end wasn't so much that Dem leaders had caved as it was that Ellen Tauscher and her staff were pretty much lying to everyone about what she was doing and why. The changes that made it through in the House are largely symbolic, perhaps. But the changes were only limited to the symbolic because of pressure over and scrutiny of what Tauscher was up to.

. . .

Now we find ourselves in the familiar situation of watching legislation watered down in the Senate, and be handed back to the House as "the only thing that can pass."

And here are the dynamics of that: the onus would normally be on the people behind the House deal to stand up and fight for the House version. Only in this case -- surprise! -- the people who drove the House deal really don't care to see any legislation pass at all. So how hard do we expect them to fight for it?

And that's how a House Member like Ellen Tauscher gets the Senate to do the dirty work she couldn't get done in the House, without the sort of fingerprints that would disqualify her from arguing to the press and the public that she "supports the bill" the way it was written in the House, but unfortunately the Senate left her no choice but to accept this amendment.

The New Dems (with Blue Dogs signed on) are insistent that banks do not give up even one cent they received on the predatory loans they issued to homeowners. Foreclosures be damned. Banks need their profits and New Dems/Blue Dogs need lobbyist money.

[Lance_Boyle]

26. "gutting" = making sure we don't buy mcmansions for deadbeats

I'm all for Ms. Tauscher's brand of "New Dem" in this case.

The reaction here to these common-sense changes is appalling - it's as if half of DU stands to get a free house by lining up to pants the responsible borrowers.

[pipoman]

21. What a novel idea

Obama recently laid out in his housing rescue plan — one with monthly payments amounting to no more than 31 percent of the owner's income.

Déjà vu this is one of the restrictions lifted which led to this mess we find ourselves in now. Part of what brought us to this point was the pugs demands for bank deregulation, the other part was Dems demands for lowering of lending restrictions including debt to income ratios which traditionally safeguarded against over extension...

[w4rma]

24. Housing prices are still too high, but I despise the DLC for these antics. (nt)