Just when I think the idiots that are coming up with all of these piss poor ideas can’t be outdone, they suprise me. The Bankruptcy Bill approved by the House is just that. According t0 the story in the Houston Chronicle, the bill was passed by the House Judiciary Committee 17 to 15, with one Republican supporting it.
I love the comments from the fuckstick known as Steve Chabot, R-Ohio, the lone Republican to support the bill. “”We are in the midst of a crisis _ and one that is deepening,” adding that he was “worried about keeping the residents of my district and in the state of Ohio in their own homes”. How about having these people move into rental housing/apartments? I’m sure there is plenty of that available, and the supply will only grow. Who the fuck has the right to stay in fucking house if they can’t adhere to the terms of the contract they signed? Why should I, the prudent renter that chose to wait for this mess to sort itself out, be penalized while all of these “consumer advocates” and vote-seeking-politician-weasals artificially prop up the prices of homes.
HERE IS A BIG FUCK YOU TO YOU BAIL OUT BITCHES.
Bravo to Seth Jayson over at Motley Fool for writing a great editorial on the bullshit that is rising higher each and every day.
Paulson & Company - you ignorant assholes.
Foreclosure! What a strong word. First thing that comes to mind for many of us is that poor family that’s been living in their house for years, have done everything they can to get by, but just can’t keep up with the bills. Here comes the big bad bank and takes the house back. Poor little guy - he just wanted a place to live for him & his family.
I have a very different take on the foreclosure situation. My contention is that in cycles past, back when there was such a thing as underwriting standards, that person losing their house to a foreclosure really did have something to lose. They had typically put 20% down on the house, and up until the time they were foreclosed on had paid Principal AND Interest on a monthly basis. Real equity in the form of cash that had been put toward the house (as opposed to equity from appreciation) was lost.
Today’s situation is MUCH different. Many of the people in foreclosure today are nothing more than glorified renters. I say this for two underlying, primary reasons:
1.) Amount of Down Payment - $0. Many of these people who are losing “their” homes to foreclosure didn’t put a penny of their own money down on the property. Why do that when you can do an 80% first mortgage with a 20% second behind it. Fog a mirror - get a loan. No credit -get a loan. No income - get a loan. It just didn’t matter - money was cheap and easy for everybody…so they took as much as they could get.
2.) Amount of Principal Paid - $0. Again, many of these people who “bought” these homes (I use “bought” lightly because I really think they rented) went interest only, or even Negative Amortization where they didn’t even cover all the interest.
When some deadbeat has put nothing down, and paid little to no principal, what are they really losing? The house they rented for the cost of the interest payment from the bank? So these people might actually need to give up the house and go back to, *GASP*, RENTING? Perish the thought!!!
My point with this post is simple, and supported by absolutely no statistical evidence because I’m too lazy to dig it up. That said, anecdotatlly, I know that a LOT of the people at risk of losing their homes do fall into the bucket of having put exactly $0 down and have made exactly $0 principal payments. So…losing their homes….was it really ever their home?
I have to say I really wish I wasn’t so busy at work. If not, I might have some time to put some effort into writing some worthwhile posts. Not to worry, there are plenty of other people out there who are providing plenty of good content for people to chew on.
I do have some questions about this Paulson / Administration / Republican / Democrat / Everybody-that-can-get-political-points / Wallstreet / etc bailout. Here are a few of them.
1.) Who is eligible? I’m pretty certain that the single parent who is down on his or her luck, making their existing payments, but not able to handle the rest will be eligible based on what I’ve heard. What I haven’t heard is how the specuvestors will be treated? People that bought multiple homes? How about people that lied on their applications? What about the folks that have sheltered assets elsewhere?
2.) What is it going to cost ME? I’m a non-home owning renter that doesn’t benefit from the glorious mortgage interest deduction. It’s starting to sound like one way or another this is becoming a tax payer subsidized bailout.
3.) How does this help the affordability issue? If we manipulate the market to prop up prices by keeping people in overpriced, under-market loans, what of the people trying to get into the market? Will they be the next wave that Paulson Jr. will be bailing out.
4.) Moral hazard anyone?
5.) What is the definition of a homeowner? Wow…that’s going to be a topic in itself. Coming right up….
Here you go - thank you Motley Fool. Paulson’s Plan to Punish the Public
Thanks for keeping prices high and perpetuating the problem. Why not let prices fall for future buyers you idiot. Sorry to my handful of readers, I’m getting really pissed now.
Well it appears that the WSJ is reporting (via Yahoo for me) that the Banks and the Bush Administration is close to a pact on a temporary freeze for rates on certain subprime loans. I can’t help but wonder how many people that gambled by stating outright lies on loan applications will have the mighty US taxpayer ride in to save them since they bet and lost?
Do the people in power really believe that artificially propping up prices will do us any long term good? Should we get the next batch of people ready to mortage themselves to death because prices stay artificially high. Pathetic.
Roben Farzad has a great commentary in BusinessWeek. It’s an open letter to Bernanke, Paulson & Dodd asking for, well, you’ll see. I encourage everybody to give it a read.
What a great read! Have a look at this great piece by Seth Jayson.
Mathew Padilla’s Blog over at the OC Register, Mortgage Insider, had a good interview with Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University. As some of the comments indicated, Mr Adibi presented a very reasonable, calm and well thought out overview of why he is against a bailout.
James Pethokoukis had an editorial piece in US News entitled “Would a Bush Bailout Save the GOP?”. The commentary opines on the comments of Bill Gross from the other day, where he was supporting the notion of a government bailout of homeowners facing foreclosure. James’ points were good, including:
1) This would totally alienate conservatives, many of whom were pretty disgusted heading into the 2006 election with what they perceived as the free-spending ways of the White House and the GOP-led Congress.
2) Talk about playing on someone else’s home turf. Any Bush bailout idea, if he should propose one, would inevitably start a bidding war with Democrats.
3) We’re not talking about a very big constituency here. Research firm First American CoreLogic projects 1.1 million subprime-related foreclosures, spread out over a total period of six to seven years. And it’s blue state California—which Democrat John Kerry won by 11 points in 2004—where most of the trouble is, with a reported 39,013 foreclosure filings in July, the most of any state for the seventh month in a row and up 289 percent from July 2006, according to RealtyTrac.
4) Not that politicians necessarily care, but the economics of a bailout are pretty iffy.
Above and beyond everything written here, I keep going back to the fact that any bailout is going to reward the speculative & risky behavior many borrowers engaged in while concurrently punishing the savers who refused to take part in the house of cards. Transferring the taxes of the savers to line the pockets of the specuvestors that bet and lost is not what I consider a good solution.
