Why bail out loans and mortgages? I thought this was the land of the free?

Question

"Do people really believe that bailing people out of the loan crisis will help American families? Increasing the Fannie Mae limit loan limits will only hurt families like mine who have worked hard and saved. This will only help the speculators, banks and real estate agents." Yes, and I do not want pay for other people's mistakes. I don't have to when they pick the wrong stock or bond, or bought too many lotto tickets or the wrong no return pair of $500 dollar shoes, or their lack of foresight when investing in a gas consuming SUV before prices went through the roof, so why do I now?

Answer 1

Because there is millions of homes across the country going into foreclousure and about half mill going through short sales. It isn't mistakes of the people, it is the guliblity of Americans and it hurts everyone. Housing market went to the crapper and people are being pushed on the street and unable to buy another home because mortgage companies aren't willing to pay the high price of homes. It isn't just stock markets that went bust and it defiantely isn't because people wouldn't return those shoes. Also most people are buying imports and not gas guzzling SUVs in this country.

Answer 2

Depends on what you mean by "bailing out". There is no way to sweep all that has happened under the rug now. It isn't only an issue with mortgages, but also loans in general. Cars, boats, homes, businesses...you name it. There is a statistic I read the other day that stated the average American spends 104% of their income...104%! What does that tell you? The fact of the matter is, most of our society and none of our children have been trained, taught or understand how to live on a budget.



If you think you don't have to pay when someone picks the wrong stock or bond or bought to many lotto tickets...you are greatly mistaken also. All those things added to the spendable, or lack there of, family incomes are what is causing the overall devaluation of the dollar and the ever-growing indebtedness of the average American family.



Our national debt grows at a rate of $1.6+ Billion a DAY. This country is completely insolvent and it has to start with government spending. We are no longer a free country...we actually are slaves to our government's inability to manage its money. Is it any wonder why the average American can not live within its income limits...just look at our example...our government. Deficit spending is the norm...but in the end...should we all be enslaved to the debt of a government that we did not create ourselves? Am I responsible for the National Debt? I think not. I didn't cause that train wreck...but we are all being held responsible...out of our own free will. We all give money to the IRS every year that goes NOT to our government...but to pay towards the interest on the National Debt.



My question is this...what has to finally happen before people realize what our government continues to do to us...every...single...day?



To comment on EDWARDOG's post...



If you think for a minute that banks are losing money on mortgages going into foreclosure...you are wrong. There is a little known fact called "fractional lending". Nearly every single loan given is monitized and used as an asset to lend against in the Federal Reserve System. If I give you a "loan" for $10,000 to buy a car. I take that note, deposit it to a operations account and then can in turn lend against that note up to 9Xs its amount. That is according to the Federal Reserve System. It works the same way in the mortgage industry. Mortgage Companies don't lose money...they use the note to manufacture more money to lend.



If you really want to twist your brain...think about this. Why does a mortgage company have to foreclose? If you own a property and you rent it out and the tenant stops paying you...what do you do? You evict them. So why don't mortgage companies evict the homeowner? Its because they can't. Mortgage companies don't own the properties to begin with. The only way they can evict you is to have the home go to Sheriff Sale...where 9 times out of 10...they are buying the property back. But if they owned the property in the first place...why would they have to buy it back at Sherrif Sale? There is an answer...I know it...but if you want to know...do some research. All the answers are out there for everyone...all you have to do is search for them.



I've worked in the mortgage & title industry for nearly 20 yrs now. I also was an excutive for one of the largest mortgage servicers in the country and I can tell you there is a whole lot of fraud going on...but people just don't see it.

Answer 3

I agree that we should not probably be bailing out the mortgage companies.



However, we will probably end up bailing them out, one way or another. When the savings and loan companies went belly up and government got back a lot of those properties because they had guaranteed the loans to the savings and loans. The Resolution Trust Corp was a specially created government agency to unload the thousands of homes that were defaulted one. Which tanked the real estate market even worse.



At this point I believe they are trying to not commit the same mistake a second time. This is why I believe they are working to provide some kind of bail out type program to the RE industry. They did it for the airlines, why not the RE industry.



The problem is if you have hundreds of thousands of houses defaulted on because of the bad loans, it will ultimately affect the millions of loans where the people are making their payments. Then those individuals start defaulting because their home values go down to the point they cannot sell for what they owe.



Not sure what they real solution is, but my bet is that it will involve some type of government bailout.

Answer 4

This began out in approximately 1998 or 1999. additionally they began the mark to industry and bundling mortgages to sell to investors. those loans have been call swaps, have been assured via tax payer money, and weren't regulated. The loan agencies had to coach a definite volume of asset value or they won't proceed making loans. They have been additionally held to a quota. It replaced right into a self-perpetuating difficulty. while the value of properties have been given too extreme, the loans became fewer and much less and the asset volume could no longer be reached in spite of the mark to industry rule putting their own value because of the fact they could no longer make extra loans. the full loan component replaced right into a sham. The mastercard agencies basically advance activity to an outragious volume while persons are late on their value, pay minimum money for too long, prepare for yet another mastercard, examine their credit background, or any form of subjects. i do no longer think human beings can record financial ruin on mastercard debt anymore. Its a racket. i might call the practices of the two the loan and mastercard industry criminal.

Answer 5

It wasnt the Brokers it wasnt the borrowers it was the goverment plain and simple. These loan companies knew they were giving out more and more money sometimes on homes that just got out of a refi months before they did it again. Did you you know that the federal reserve is a private corporation? It is not owned by the goverment at all. However they are greatly influenced by the politicians that are the drunk drivers at the wheel of this once great nation. This recession is months away from a depression. Look it up. Recession is 3 consecutlive negetive months of capital. A depression is 4 quaters of negative growth. It is goping to happen in 2008. This will be worse than the 1930's and when its all said and done the goverment will be looking to Unify North America. The NORTH AMERICAN UNIOUN. They will tell us it is the only way to create job stabilty and to turn this nation around. Look what has recently happened in Europe. The Euro and the unioun of the all of Europe where it used to be divided. You can call me crazy if you want but this was the goverments doing and on purpose too.

Answer 6

Some brokers clearly steered customers into horrible loan conditions. Rather than the government bailing out borrowers, the government should mandate that the original lender make good.

Answer 7

Some of the blame needs to be put on the borrowers. They wanted a bigger & better house than they could afford. They wanted to start out in a house just like Mom & Dad's. No one told them Mom & Dad bought & sold several houses to get the equity to be in the house they are in. I want it & I want it now. Don't tell me no. And if one lender wouldn't loan them the money they wanted, they kept looking until they found someone who would. The Instant Gratification Generation.

Answer 8

that's why i always say when you are doing business, make sure you know the person you are dealing with. and when taking out a loan or mortgage, make sure you are dealing with a reputable agent, someone you have worked with before or someone who has been recommended by someone you trust. never deal with anyone who has contacted you by phone or mail or internet. i would venture to guess that 99% of those who got screwed out of their home was because they didn't do their homework and didn't read the fineprint and got greedy by something they saw on paper without checking it out.