Biden -- Wants to give away houses????

[jond]

Did anyone else have their heart skip a beat last night when Biden/Obama said he want to allow people who don't pay their bills to have the principle on their mortgage reduced!?!!??!?!?!??! WTF is that. That is a MAJOR deal breaker. I mean seriously, how much more communist can you get?

"BIDEN SAID "We should be allowing bankruptcy courts to be able to readjust, not just the interest rate you are paying on your mortgage to be able to stay in your home, but in -- be able to adjust the principal that you owe, the principal that that you owe. That would keep people in their homes"
http://abcnews.go.com/Politics...age=1

I was on the fence, but as someone who works hard to pay down my average house every month, the thought of these guys bumping off $100,000 or so from some slacker using MY tax money infuriates me.

What do youguys think?

 

[Cairo94507]

Re: Biden -- Wants to give away houses???????

I could not agree more.

 

[NSX-Files]

Re: Biden -- Wants to give away houses???????

I was on the fence, but as someone who works hard to pay down my average house every month, the thought of these guys bumping off $100,000 or so from some slacker using MY tax money infuriates me.

What do youguys think?

You've hit the nail right on the head! Biden's statement represents the whole philosophy of Obama. They're pandering to the people who bought more house than they could afford and now find themselves struggling. Who wouldn't want to get $100,000 in principle knocked off their mortgage? I would, but I've got enough decency to acknowledge that I alone am responsible for my own financial decisions and obligations. I've got no right to count on all the other taxpayers to bail me out. Anyone who has just an ounce of pride should feel that way.

Unfortunately, as a country, we seem to be moving in the direction of eschewing personal responsibility and expecting the government to give handouts to help. Maybe we've gotten too materialistic, leading to the overuse of debt to keep up with the Jones'. I'm not immune to this criticism. I've got plenty of debt myself but I'm starting to see that's a dangerous way to live if you don't have a guaranteed source of income in the future. I think starting at home, parents need to teach their kids personal responsibility, beginning with leading by example. Teach them to earn and have pride doing so.

It might not be such a bad thing for the bailout bill to fail even if it means it hurts for a while. Our county might be at the point where we need to be knocked back down, so that we can begin again, living within our means.

[Down from soapbox now.]

 

[jond]

Re: Biden -- Wants to give away houses???????

If this really happened I would have to think normal people would start burning down entire neighborhoods in protest. I could see it being the start of a civil war.

 

[CL65 Captain]

Re: Biden -- Wants to give away houses???????

Wait... this could be a good thing if they start applying it to other industries that are in trouble. Let's say that Ford is in trouble and Obama announces that they are going to knock $50k off that new Ford GT I want to buy. Or I want to take a trip to Cancun and they can knock $200 off my ticket on United Airlines. Bag of weed... $30 too much, knock $10 off. Budweiser - well hell now that Inbev owns them, how about Obama can make all Happy Hour Budweiser a $1. Why doesn't Obama just mail out Federal Debit Cards to everyone that makes under $250k since it worked so well with the Katrina victims. :wink:

 

[White92]

Re: Biden -- Wants to give away houses???????

Wait... this could be a good thing if they start applying it to other industries that are in trouble. Let's say that Ford is in trouble and Obama announces that they are going to knock $50k off that new Ford GT I want to buy. Or I want to take a trip to Cancun and they can knock $200 off my ticket on United Airlines. Bag of weed... $30 too much, knock $10 off. Budweiser - well hell now that Inbev owns them, how about Obama can make all Happy Hour Budweiser a $1. Why doesn't Obama just mail out Federal Debit Cards to everyone that makes under $250k since it worked so well with the Katrina victims. :wink:

I personally think the McDonalds dollar menu is too much. The government should subsidize until it's 60 cents.

 

[makav3li]

Re: Biden -- Wants to give away houses???????

I personally think the McDonalds dollar menu is too much. The government should subsidize until it's 60 cents.

bring back the 29 cent hamburgers and 39 cent cheeseburgers. better yet give me government cheese and just put me down for the 29 cent hamburgers.

 

[Ski_Banker]

Re: Biden -- Wants to give away houses???????

Did anyone else have their heart skip a beat last night when Biden/Obama said he want to allow people who don't pay their bills to have the principle on their mortgage reduced!?!!??!?!?!??! WTF is that. That is a MAJOR deal breaker. I mean seriously, how much more communist can you get?

"BIDEN SAID "We should be allowing bankruptcy courts to be able to readjust, not just the interest rate you are paying on your mortgage to be able to stay in your home, but in -- be able to adjust the principal that you owe, the principal that that you owe. That would keep people in their homes"
http://abcnews.go.com/Politics...age=1

I was on the fence, but as someone who works hard to pay down my average house every month, the thought of these guys bumping off $100,000 or so from some slacker using MY tax money infuriates me.

What do youguys think?

I didn't really catch that, but lets just hope that isn't exactly what he intended to say. :redface:

 

[heySkippy]

Re: Biden -- Wants to give away houses???????

I didn't really catch that, but lets just hope that isn't exactly what he intended to say. :redface:

It sure sounded like he knew what he was saying and meant it.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

This has nothing to do with the government paying for bad mortgages.

Bankruptcy is not a government bailout. It is a restructuring of individual debt between the debtor and the creditor.

Allowing adjustment of the principal rather than just the interest would impact the mortgage holder, not the taxpayer.

If you want to debate the merits of that idea, go right ahead, but this entire discussion is based on a flawed premise.

 

[Cairo94507]

Re: Biden -- Wants to give away houses???????

After the lengthy political career Biden has had, if he can't say what it is he intended to say, in a forum where all are listening, Obama does not deserve to win since he selected him as his running mate.

 

[CL65 Captain]

Re: Biden -- Wants to give away houses???????

This has nothing to do with the government paying for bad mortgages.

Bankruptcy is not a government bailout. It is a restructuring of individual debt between the debtor and the creditor.

Allowing adjustment of the principal rather than just the interest would impact the mortgage holder, not the taxpayer.

If you want to debate the merits of that idea, go right ahead, but this entire discussion is based on a flawed premise.

That use to be correct. But now due to the $700b+ bailout, when that Mortgage holder dumps it off to the Treasury Dept it's the taxpayer that is stuck with it. So in essence, the govt will be subsidizing these mark downs of principal. REWARDING BAD BEHAVIOR.

Regardless, what everyone is getting pissy about is the Govt ability to mark down to market. I can understand a BK judge marking down a interest rate if it was due to predatory lending practices and is obscene. However, if someone over payed for their house or the market value has dropped - that's BS to reduce the principal.

My brother bought a house on the beach in St. Pete Beach, FL for $500k four years ago. Then the house appraised at $900k and the dumbshit Re-Finances for $900k and takes $300k out to buy a big boat, Mercedes and Harley, etc. So now that the value is back down to $600k, he owes $900k for a $600k house. When, not if, he files for BK should the BK judge be allowed to drop the principal back down to $600k? No! That's what my Mom is for - a check to bail my dumb ass brother out every time he comes up short.

So let's say that the judge does knock it down to $600k. You're right the mortgage company gets screwed. So they take this mortgage and package it with all their other toxic loans and dump it off to the Treasury Dept. So if you're down in St Pete, feel free to stop by my brothers and make yourself at home because you are going to be paying for his house.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

That use to be correct. But now due to the $700b+ bailout, when that Mortgage holder dumps it off to the Treasury Dept it's the taxpayer that is stuck with it. So in essence, the govt will be subsidizing these mark downs of principal. REWARDING BAD BEHAVIOR.

Regardless, what everyone is getting pissy about is the Govt ability to mark down to market. I can understand a BK judge marking down a interest rate if it was due to predatory lending practices and is obscene. However, if someone over payed for their house or the market value has dropped - that's BS to reduce the principal.

I think it is a stretch to take Biden's comments regarding a potential change in bankruptcy law as requiring taxpayer funds for paying down the principal on bad mortgages. He did not say that, and there is no evidence that I have seen that indicates that the bailout package would involve taxpayer's paying for the principal on bad mortgages were a change to be made in bankruptcy law as he proposed.

If you can point to something substantive that says otherwise, I am happy to consider it.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

My brother bought a house on the beach in St. Pete Beach, FL for $500k four years ago. Then the house appraised at $900k and the dumbshit Re-Finances for $900k and takes $300k out to buy a big boat, Mercedes and Harley, etc. So now that the value is back down to $600k, he owes $900k for a $600k house. When, not if, he files for BK should the BK judge be allowed to drop the principal back down to $600k? No! That's what my Mom is for - a check to bail my dumb ass brother out every time he comes up short.

I don't think it is reasonable to interpret his comment as allowing for a principal reduction in every situation, certainly not the situation you describe. If and when someone proposes actual legislation on the issue, we can debate the merits of that bill.

I don't think there is anything wrong with allowing for a bankruptcy judge to exercise discretion with regard to the amount of principal. That discretion would have to be exercised within certain defined parameters, but there will be some situations where it is in the best interest of the person filing bankruptcy and the creditor to allow for a principal reduction. If you can keep someone in their home and paying their mortgage, rather than foreclosing on their home, in many instances I think everyone will benefit, including the taxpayer.

BTW, it would be helpful to the discussion if you would post a new reply rather than continuing to add to your prior reply. I just finished responding to your first edit and see you have made a second.

 

[queenlives]

Re: Biden -- Wants to give away houses???????

my interpretation of his comments was that the issue would be addressed during bankruptcy proceedings. though i'm not personally familiar with bk proceedings, (on the surface) it seems to me that would be a pretty normal part of the negotiation process.

seems to me this is something that's actually occurring in today's market of "i can't make my payment, let's (bank & owner) negotiate a new value that reflects today's market so we can both try to remain whole."

i don't recall hearing any mention of the government / bailout picking up the tab.

 

[CL65 Captain]

Re: Biden -- Wants to give away houses???????

Biden spent alot of time last night talking about FAIRNESS.

Please give me a hypothetical where you think that allowing one person to have their principal reduced is FAIR when people who were responsible and not filing BK are paying full price for what they bought.

.

seems to me this is something that's actually occurring in today's market of "i can't make my payment, let's (bank & owner) negotiate a new value that reflects today's market so we can both try to remain whole."

No... let's negotiate new terms (length & interest) so I can make payments. I can't afford to pay you $300k so I am only going to pay you $200k now???

I want a new Comptech SC. So I call Comptech and order one. A week later, I loose my job so I call the CC company and stop the charge and then call Comptech and tell them I lost my job so I can only pay $5k for the SC. So I pay $5k and you pay full price?

 

[queenlives]

Re: Biden -- Wants to give away houses???????

After the lengthy political career Biden has had, if he can't say what it is he intended to say, in a forum where all are listening, Obama does not deserve to win since he selected him as his running mate.

great idea, except under these terms, none of the present candidates should be running.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

Biden spent alot of time last night talking about FAIRNESS.

Please give me a hypothetical where you think that allowing one person to have their principal reduced is FAIR when people who were responsible and not filing BK are paying full price for what they bought.

I hate to sound insensitive (although I am) but if you end up loosing your house because you can't afford it, that's life. Learn from it and don't live beyond your means next time. Have 6 months savings in the bank liquid. Bailing out people because they didn't see anything wrong with kicking it in a $600k home and driving a new BMW while making $80k a year is not FAIRNESS.

It sounds like you have an objection to the notion of bankruptcy in and of itself.

If you are going to allow bankruptcy, you need to allow for the flexibility to make the best decisions going forward.

Reducing principal makes sense if it prevents a foreclosure that would result in a greater loss of value. It is not about rewarding foolish financial decisions.

 

[queenlives]

Re: Biden -- Wants to give away houses???????

Biden spent alot of time last night talking about FAIRNESS.

Please give me a hypothetical where you think that allowing one person to have their principal reduced is FAIR when people who were responsible and not filing BK are paying full price for what they bought.

so what you're saying is that everyone who files for bk has been irresponsible?

what about people who have had catastrophic illnesses and have been financially wiped out? what about people who have - through no intent of their own - have been financially wiped out when their investments / retirement accounts / pensions (airline pilots take note) evaporated with the stroke of a pen of some exec.

i think there are lots of situations - based on your comments about your brother, apparently he's not one of them - where bk is an unfortunate, but necessary step, that some people have to to regain some stability in their lives.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

Reducing principal makes sense if it prevents a foreclosure that would result in a greater loss of value.

And just so you don't think I am avoiding given a hypothetical example, here you go:

Assume you have a mortgage based on $200k of principal.

The individual files bankruptcy.

The individual could continue to make the payments on the home, avoiding foreclosure, if the principal was reduced to $160k.

If the property is foreclosed upon, it will be sold for $120k.

By allowing the principal reduction, you retain $40k of value that would be lost.

 

[CL65 Captain]

Re: Biden -- Wants to give away houses???????

Reducing principal makes sense if it prevents a foreclosure that would result in a greater loss of value.

And just so you don't think I am avoiding given a hypothetical example, here you go:

Assume you have a mortgage based on $200k of principal.

The individual files bankruptcy.

The individual could continue to make the payments on the home, avoiding foreclosure, if the principal was reduced to $160k.

If the property is foreclosed upon, it will be sold for $120k.

By allowing the principal reduction, you retain $40k of value that would be lost.

Ok... how about just lowering the interest and extending out that loan to 40 years instead of 30? Change the terms not the principal.

 

[SilverStone05]

Re: Biden -- Wants to give away houses???????

Unfortunately, as a country, we seem to be moving in the direction of eschewing personal responsibility and expecting the government to give handouts to help. Maybe we've gotten too materialistic, leading to the overuse of debt to keep up with the Jones'. I'm not immune to this criticism. I've got plenty of debt myself but I'm starting to see that's a dangerous way to live if you don't have a guaranteed source of income in the future. I think starting at home, parents need to teach their kids personal responsibility, beginning with leading by example. Teach them to earn and have pride doing so.

Agreed.

This country continues to get fatter, more irresponsible, and more entitled every day.

If I was for this idea I would be embarrassed to admit it.

 

[nsx2tall]

Re: Biden -- Wants to give away houses???????

It's called debt forgiveness and it has been offered by some as a much better alternative to government purchase of distressed securities. Banks already do this today-- If they sell your foreclosed house for $100k and you have a $200k loan, where exactly do you think the other $100k difference comes from? You either owe it, declare bankruptcy or they forgive it. It also happens to be that the amount may be taxble income for the forgiven debt too*.

If I were you, I'd be more worried about this bailout including credit card and auto debt. At least with real estate you've got an appreciating asset as security. Autos are worth-less as time goes by and vacation costs can't be recovered. The treasury wants to purchase those types of debt obligations too-- now that seems stupid to me.

*http://www.taxhelponline.com/home_forclosure_and_debt_forgive.html

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

Even if you have no sympathy for the individual who is in over their head, you can see the merit of the idea. It is simply more efficient. That should appeal to you.

Consider the health care issue.

Right now, the uninsured show up in the emergency room with serious health problems that could have been avoided with basic, preventative care.

I believe it would cost far less to provide a minimal level of preventative care than having these people show up in the emergency room with a serious illness. Instead, we deny them basic preventative care and wellness management, and we pay for their catastrophic illnesses and injuries.

We need to start addressing social problems on the front end, not on the back end. Do you want to build prisons or do you want to build better lives?

Take abortion. Instead of trying to restrict the rights of women to have abortions, we should be reducing unwanted pregnancy, which is the real problem. Sex education and contraception to help prevent unwanted pregnancy and prenatal and early childhood care, daycare, etc., to prevent people from terminating a pregnancy because they can't afford to raise a child. Do those things and abortion will drop dramatically without restricting anyone's choice in the matter.

There are some things that are better left to the government.

Social services are the prime example. The goal of a child welfare agency should be to maximize child welfare, not maximize profit.

Profit is amoral. It is neither good nor bad, in and of itself.

We have seen what happens when social services are privatized. Profit becomes the primary goal, not the services themselves. We should measure the success of a prison by the rehabilitiation of its prisoners, not in the efficiency of its finances.

This does not mean that social services should simply run amuck, but the primary goal must remain the service, not profit.

 

[brahtw8]

Re: Biden -- Wants to give away houses???????

Ok... how about just lowering the interest and extending out that loan to 40 years instead of 30? Change the terms not the principal.

That seems to elevate form over substance to me.

If you can accomplish the same goal by lowering the interest and extending the term, fine, but at the end of the day I think it will be a horse a piece.

The issue is whether they can make the payments. How they get to that point is less important than that they do. I think allowing for principal reduction in certain limited circumstances would help accomplish that goal.