Welcome to communism. I can't see how this could possibly pass--certainly there are enough self-respecting democrats that would never support something as ill-conceived as this. I don't see how it's possible there could even be a shred of bi-partisan support for this.

quote:

Follow Up: US eyes home loan subsidies in rescue plan, according to sources - Reuters Reuters reports that the Obama administration is hammering out a program to subsidize mortgage payments for troubled homeowners who have gone through a standardized re-appraisal and affordability test, sources familiar with the plan said on Thursday. The program would be a major break from existing aid programs, which are triggered once homeowners fall into arrears. Under the plan being contemplated, mortgage companies would use a uniform eligibility test even before a borrower becomes delinquent, sources said. The administration hopes the mortgage industry will soon agree to a set of standards that will allow it to move quickly to modify many home loans. Sources said government-controlled housing finance companies Fannie Mae and Freddie Mac would play a supporting role in the government's new plan, but said they are not expected to expand their securitization of loans. In an interview, James Lockhart, the regulator that oversees Fannie Mae and Freddie Mac , said the mortgage finance industry was eager to have a standardized mortgage modification standard. "I've talked to all the major servicers -- both the big bank ones and the big independent ones -- and they are all ready to go, they're chomping at the bit," Lockhart, the director of the Federal Housing Finance Agency, said. "The other thing they're asking for standardization."

Essentially the government is talking about subsidizing mortgage payments for people who bit off more than they can chew. Save the weak, screw the sensible.

Edit: With hindsight, who knew this idiot was so fucking smart??




Edit edit: Judd Gregg just withdrew as Secretary of Commerce nominee...sas "issues such as stimulus are 'irresolvable conflicts.'"

Good for him.

Last edited by Shakka on Feb-12-2009 at 21:16

quote:

Originally posted by Shakka Welcome to communism. I can't see how this could possibly pass--certainly there are enough self-respecting democrats that would never support something as ill-conceived as this. I don't see how it's possible there could even be a shred of bi-partisan support for this. Essentially the government is talking about subsidizing mortgage payments for people who bit off more than they can chew. Save the weak, screw the sensible. Edit: With hindsight, who knew this idiot was so fucking smart?? Edit edit: Judd Gregg just withdrew as Secretary of Commerce nominee...sas "issues such as stimulus are 'irresolvable conflicts.'" Good for him.

I'm all for a stimulus plan that upgrades infrastructure, i'm not for a stimulus plan that rewards poor risk/reward decisions.

Who knew the government's tits were so big?!?!?

quote:

Originally posted by jerZ07002 I'm all for a stimulus plan that upgrades infrastructure, i'm not for a stimulus plan that rewards poor risk/reward decisions.

here here.

more trains, better sewers, environmental clean up, fiber optic infrastructure.

quote:

Originally posted by atbell here here. more trains, better sewers, environmental clean up, fiber optic infrastructure.

i would also like more funding for math and sciences at all levels, and more funding to make education more affordable,

quote:

Originally posted by jerZ07002 I'm all for a stimulus plan that upgrades infrastructure, i'm not for a stimulus plan that rewards poor risk/reward decisions.

+1 - I'm really annoyed with this mortgage subsidy idea that came out today at 3 and rallied the market.

I'd like to know where my handout is for being smart enough to not buy a house in the midst of the bubble when I couldn't afford it. Hell, I just found out that there's a pay cap for the homebuyer deduction that might have enticed me to want to buy this year. $75K in NYC is nothing. It's been bad enough that I can't deduct student loan interest anymore. I should just stop working in August/September so I can deduct everything. It'd end up being the same in the end.

___________________
"Go back to bed america your government is in control
Here's American Gladiators, here is 56 channels of it,
Watch these picturary retards bang their fuckin' skulls together and congratulate you on living in the land of freedom,
Here you go America you are free to do as we tell you
We want your soul
Your cash, your house, your phone, your cash, your house, your life" -Adam Freeland - We Want Your Soul

quote:

Originally posted by Groundhog Boy +1 - I'm really annoyed with this mortgage subsidy idea that came out today at 3 and rallied the market. I'd like to know where my handout is for being smart enough to not buy a house in the midst of the bubble when I couldn't afford it. Hell, I just found out that there's a pay cap for the homebuyer deduction that might have enticed me to want to buy this year. $75K in NYC is nothing. It's been bad enough that I can't deduct student loan interest anymore. I should just stop working in August/September so I can deduct everything. It'd end up being the same in the end.

the incentives are all wrong. My first job paid more than double the phase out for the student loan interest, even though I have more than $200,000 in student loans, and I have a debt to income ratio of almost about 2:1. The phase out should be based on a debt to income ratio, and not a strict income amount. I'm currently trying to devise a plan to purchase a fractional share of my grandmother's house and roll my student loans into a home equity loan so that I can get the mortgage interest deduction (I still have to convince her of that, and a bank to lend me the money).

Also, if the final stimulus bill has the $15,000 first time homebuyers credit I may just purchase the entire house from my grandmother and sell it back to her in a year (or so). That is if: 1) there is no minimum holding period, and 2) the 'credit' isn't a loan like it is in the current $7,500 first time home buyers credit.

Last edited by jerZ07002 on Feb-13-2009 at 15:34

quote:

Originally posted by jerZ07002 Also, if the final stimulus bill has the $15,000 first time homebuyers credit I may just purchase the entire house from my grandmother and sell it back to her in a year (or so). That is if: 1) there is no minimum holding period, and 2) the 'credit' isn't a loan like it is in the current $7,500 first time home buyers credit.

Seems like the $15K amount is becoming less likely (sorry!). My latest (most respected) research notes:

quote:

The Senate's version of the stimulus plan had included the lesser of a $15,000 or 10% non-refundable tax credit to all homebuyers for a period of approximately one year, with no income limits. The cost of this tax credit was estimated at roughly $35B. This was a major focal point of the "Fix Housing First" lobbying efforts. According to our contacts, the tax credit in the compromise version of the bill will be scaled back to resemble the House's original proposal of a $7,500 tax credit with income caps of $75,000/$150,000 for single and joint filers, respectively. This credit would only be available to first-time homebuyers. While we had previously been skeptical of the effectiveness of this tax credit since it would not be available for down payments, the reduction in the amount is a major blow to builders...

But $7500 is better than nothing I guess! I view it as a 1x waste of taxpayer money. i.e. the trick doesn't work on a large scale--why wouldn't someone just jack up the asking price by $7500? What happens to the "value" of the house when someone then tries to turn around and re-sell it--it vanishes!

Anyway, not that the latter concerns would necessarily be relevant to your specific scenario, but nonetheless.

quote:

Originally posted by Shakka Seems like the $15K amount is becoming less likely (sorry!). My latest (most respected) research notes: But $7500 is better than nothing I guess! I view it as a 1x waste of taxpayer money. i.e. the trick doesn't work on a large scale--why wouldn't someone just jack up the asking price by $7500? What happens to the "value" of the house when someone then tries to turn around and re-sell it--it vanishes! Anyway, not that the latter concerns would necessarily be relevant to your specific scenario, but nonetheless.

if there's a 75K income limit i'm shit-outta-luck. Our government is full of idiots! Why would they limit the benefit to the people who probably can't afford to purchase houses? It seems to me that giving peeps on the upper fringe of the middle class the benefit would do more because we actually can afford to purchase houses and we still have access to credit. You have to love how they are aligning the incentives in the same way that caused the issue in the first place (trying to lure people who should be renting apartments into buying homes).

as to your comment about the seller jacking up the selling price by 7500 to take into account the credit, I'm not sure sellers have the ability to incorporate that into the price considering the over-supply of housing in the market. If demand was still outpacing supply, I would agree that the credit would be incorporated into the price, and that extra $7500 of "equity" or "value" would disappear on a resale.

Shakka, what do you think about this:

quote:

Punctual Payers Face Higher Rates From Card Companies (Update1) Email | Print | A A A By Alexis Leondis Feb. 13 (Bloomberg) -- Mel Brandt said he got a Citibank Home Depot MasterCard for its rewards program. His reward for paying on time was an interest rate increase to 19 percent from 12 percent. �If I didn�t opt out and close the account, I�m afraid the interest payments would snowball and I would default,� said Brandt, 52, a self-employed house painter in St. Louis, who relies on credit cards to fund his painting business. Lenders came under fire yesterday in a U.S. Senate Banking Committee hearing for raising interest rates, adding fees and cutting credit lines, even for consumers perceived to be low- risk with high credit scores. Connecticut Democrat Christopher Dodd, the chairman, called the practices �gouging.� The federal funds rate, or the interest rate banks charge each other for overnight loans, is as low as zero and U.S. lawmakers have agreed to a $789 billion economic stimulus plan funded by taxpayers. Rates for consumers should be falling faster than they are, said Ben Woolsey, director of marketing and consumer research at CreditCards.com, an online resource for credit-card users. Banks, facing an increase in defaults and a decline in consumer spending, are �still very reluctant to pass lower rates or increased credit access to consumers,� said Woolsey. Rate Changes The average interest rate charged on credit-card balances decreased to 13.4 percent in November from 14.4 percent a year earlier, according to the Federal Reserve�s December G19 report, which tracks rates for credit-card accounts. The prime rate has decreased to 3.25 percent from 6 percent last February. Most variable credit-card rates are linked to the prime rate, which follows the federal funds rate. Rate changes announced by New York-based Citigroup Inc., the biggest U.S. credit-card issuer, American Express Co. and Charlotte, North Carolina-based Bank of America Corp. are intended to raise revenue, said Woolsey, who is based in Austin, Texas. Citigroup�s charge-off rates of loans increased by 88 percent, climbing to 7.81 percent in December from 4.16 percent a year earlier, according to data compiled by Bloomberg. Charge- offs are loans the banks don�t expect to be repaid. American Express�s charge-off rates more than doubled to 7.23 percent from 3.32 percent while Bank of America�s rates increased to 8.45 percent from 5.24 percent, a 61 percent jump. Costs Fluctuate The cost of funding for banks fluctuates with economic cycles, said Peter Garuccio, a spokesman for the Washington- based American Bankers Association. Credit-card companies have seen one of their sources of capital, selling bonds backed by card payments, dry up, Garuccio said. �In order to keep credit flowing in a responsible way, we had to change rates on these cards,� said Citigroup�s chief executive officer, Vikram S. Pandit, at a House Financial Services Committee hearing in Washington on Feb. 11. Citigroup has received $50 billion and Bank of America has gotten $45 billion from the Troubled Asset Relief Program, according to Bloomberg data. Citigroup is changing rates for consumers who haven�t had their rates adjusted in at least two years. The bank is offering the option to cancel the cards and pay off existing balances at the original rate, according to Samuel Wang, a spokesman for Citigroup. Kenneth Lewis, Bank of America�s CEO, said during the hearing that 9 percent of the bank�s customers had their interest rates increased in 2008. The figure includes customers who had a default or change in credit profile, which may include external credit risk, said Betty Riess, a spokeswoman for the bank. Rate Hikes The majority of American Express cardholders saw interest rates increase by 2 to 3 percentage points in December, said Desiree Fish, a spokeswoman for the bank, who declined to be more specific. American Express has received $3.39 billion from the government. �I felt like my credibility was in doubt, despite my 20- plus years of on-time payments,� said Donald Neville, a 54- year-old regional sales manager for industrial machineries. Neville, who lives in Swedesboro, New Jersey, said he no longer uses the card for purchases and is just paying down the balance. There is the risk that increasing rates on borrowers who are already struggling with payments may result in more defaults, said Linda Sherry, director of national priorities at Consumer Action, a Washington-based advocacy group. �Sudden rate hikes across a broad swath of cardholders can bust family budgets,� Sherry said. Risk-Modeling The banks use risk-modeling systems to predict the likelihood of default, said Garuccio of the ABA. Michael Megeath, a Treasury analyst in Tulsa, Oklahoma, has five credit cards and has accumulated more than $40,000 in debt. He said he has tried to negotiate with American Express to decrease the 13 percent interest rate on his Amex Blue Card. �If a bank raises the interest rate on a person with a lower credit score, even though he�s current on all of his payments, it will cause the financial collapse of the cardholder,� said Megeath, 61. �Who�s going to bail me out?� The Federal Reserve approved provisions in December that include 45-days� notice for rate increases, instead of 15 days, and 21 days to pay a bill. The rules are effective July 1, 2010. The Fed�s measures dovetail with legislation introduced by Dodd. The bill would prevent �any time, any reason� rate increases, according to a summary of the bill. �At a time when our economy is in a crisis and consumers are struggling financially, credit-card companies in too many cases are gouging them, hiking interest rates on customers who pay on time and consistently meet the terms of their credit-card agreements,� Dodd said at the hearing yesterday. �Winter sets in and jobs evaporate,� said Brandt, the painter. �This month may be the last that I can or am willing to make these card payments.� To contact the reporter on this story: Alexis Leondis in New York [email protected]. Last Updated: February 13, 2009 10:44 EST

http://www.bloomberg.com/apps/news?...illk&refer=home

personally, I'm not bothered by credit card companies increasing their interest rates. Usurious practices by CC companies will result in harm to that company anyway, and a low cost provider will always emerge to service qualified customers. Unsecured credit lines are dangerous for most people, and americans make use of them far too frequently (I only use my CC to get continental airline points - i pay it off in full every month). I think this is a necessary adjustment that will flush out of the system certain risky credit lines that these companies were taking in the hay-day of easy money. People have no business having $40K in CC debt anyway. If your CC debt is that high, and you don't have the income to pay the balance in a short period, you are a risk (whether actual credit risk or timing risk).

On another note, I'm sick of people bitching because they don't have access to something that doesn't belong to them, or because a company followed a legally binding agreement that harmed them. These people signed contracts that allowed variable interest rates on their credit cards.

/rant

quote:

Originally posted by jerZ07002 Shakka, what do you think about this: http://www.bloomberg.com/apps/news?...illk&refer=home personally, I'm not bothered by credit card companies increasing their interest rates. Usurious practices by CC companies will result in harm to that company anyway, and a low cost provider will always emerge to service qualified customers. Unsecured credit lines are dangerous for most people, and americans make use of them far too frequently (I only use my CC to get continental airline points - i pay it off in full every month). I think this is a necessary adjustment that will flush out of the system certain risky credit lines that these companies were taking in the hay-day of easy money. People have no business having $40K in CC debt anyway. If your CC debt is that high, and you don't have the income to pay the balance in a short period, you are a risk (whether actual credit risk or timing risk). On another note, I'm sick of people bitching because they don't have access to something that doesn't belong to them, or because a company followed a legally binding agreement that harmed them. These people signed contracts that allowed variable interest rates on their credit cards. /rant

There are a lot in Congress who have had their sights set on the credit card industry for years and are licking their chops. I think there is probably a legitimate case to be made that in some instances the card companies have been a bit aggressive with fees and penalties and that may be coming home to roost, but I don't think it's the rule vs. the exception. This kind of reminds me of a housing/banking note I read not to long ago that talked about how banks that have lost so much money on bad loans are going after the performing loans/good borrowers and demanding more collateral for no other reason than that they can actually get money back there (even if it violates the loan contracts they have in place, and makes it more likely that the good borrower will become a delinquent borrower in the future--possibly because of the bank's "proactive" actions. Kind of like the old "cutting off your nose to spite your face")

There's a reason I make sure to pay my credit card balance off in full every month (even when my wife goes a little crazy from time to time!). I may be overly conservative in this regard, but I simply abhor the concept of debt in any sense. I still have about $25K in student loan debt and a mortgage and I hate that I have either, though certainly they are much more desirable debt than the guy with 10 maxed out credit cards, paying the minimum, who is so representative of our overly credit-bloated culture.

My dad told me when I was in college that having good credit was one of the most important things I could do to help myself out in life. I never thought that much of it, but I have always paid my debts on time and dealt with problems if they arose. I have a near flawless credit score and as a result I get more favorable lending terms and less hassle from credit card companies. I don't know about the guy in the article, but I just got a new Amex card with a few new perks. Most importantly though, I never use a card that has an annual fee--I just think that's stupid. Credit cards are commodities--there is simply no reason to pay $100 a year for the privilege of using plastic.

Lastly, whatever the government's intentions--my rule of thumb is that generally, when government gets involved it leads to undesirable results. If the government forces changes in one part of the card issuers' business model, they will find ways to make it up in other areas. There's regulation and refereeing, and then there's interference. It seems like lately the government thinks it's job is to find profits and destroy them. It's sickening to the worst degree.

quote:

Originally posted by Shakka There are a lot in Congress who have had their sights set on the credit card industry for years and are licking their chops. I think there is probably a legitimate case to be made that in some instances the card companies have been a bit aggressive with fees and penalties and that may be coming home to roost, but I don't think it's the rule vs. the exception. This kind of reminds me of a housing/banking note I read not to long ago that talked about how banks that have lost so much money on bad loans are going after the performing loans/good borrowers and demanding more collateral for no other reason than that they can actually get money back there (even if it violates the loan contracts they have in place, and makes it more likely that the good borrower will become a delinquent borrower in the future--possibly because of the bank's "proactive" actions. Kind of like the old "cutting off your nose to spite your face") There's a reason I make sure to pay my credit card balance off in full every month (even when my wife goes a little crazy from time to time!). I may be overly conservative in this regard, but I simply abhor the concept of debt in any sense. I still have about $25K in student loan debt and a mortgage and I hate that I have either, though certainly they are much more desirable debt than the guy with 10 maxed out credit cards, paying the minimum, who is so representative of our overly credit-bloated culture. My dad told me when I was in college that having good credit was one of the most important things I could do to help myself out in life. I never thought that much of it, but I have always paid my debts on time and dealt with problems if they arose. I have a near flawless credit score and as a result I get more favorable lending terms and less hassle from credit card companies. I don't know about the guy in the article, but I just got a new Amex card with a few new perks. Most importantly though, I never use a card that has an annual fee--I just think that's stupid. Credit cards are commodities--there is simply no reason to pay $100 a year for the privilege of using plastic. Lastly, whatever the government's intentions--my rule of thumb is that generally, when government gets involved it leads to undesirable results. If the government forces changes in one part of the card issuers' business model, they will find ways to make it up in other areas. There's regulation and refereeing, and then there's interference. It seems like lately the government thinks it's job is to find profits and destroy them. It's sickening to the worst degree.

I have almost zero credit card debt (i keep one card with a small balance because it has a zero rate atm), and I pay off monthly the entire balance on another card that I use for EVERY purchase (to get airline points). I actually pay a fee for this card, but it's for airline perks (access to lounges, priority lines, etc..., which was necessary before I attained status on the airline), and airline miles. To my knowledge, no credit card gives you airline miles without an annual fee.

The enormous gorilla on my back is student debt. Because of US education policy, however, I can't do anything about this considering the career path I chose to follow. If I'm lucky, I can have this paid off in 10-15 years. Like you, I hate that I have this debt even though it was absolutely necessary. It makes me extremely nervous in this economy.

I tend to agree with everything you said with respect to this issue (and generally other areas of business, e.g., windfall profits tax on oil companies). Our opinions are slightly different, however, with respect to government involvment in other areas (i.e., healthcare).

Last edited by jerZ07002 on Feb-13-2009 at 19:58