The mortgage industry is fighting against new laws and regulations that would allow courts to readjust mortgage terms. In normal circumstances they might have a leg to stand on. But it happens we’re standing in the middle of a global recession aided in part by a mortgage industry that essentially printed money in an unregulated environment.
So when they bawl about being regulated now, this is what we used to refer to on when I was a child on the playground as something called “tough titties”.
Sounds like a fair deal to me. Both sides knew what they were getting into when they signed the mortgage contract; when the buyer finds out that they can’t keep their promise, why not get the courts to rewrite the deal after the fact?
Likely consequences of this:
* Banks increase their legal budget to handle the added expenses of delinquent buyers seeking court assistance
* Banks cut back on higher-risk mortgages for people who are less likely to keep up the payments
* Banks decrease the number of mortgages overall
* People start demanding mortgages that the banks would rather not make, encouraged by the “credit is a right” and “housing is a right” crowd
* Banks get pressured to make more and more risky loans at favorable rates, a la the 1990’s.
Yeah, this’ll work out REAL well.
So much for Obama’s talk about “personal responsibility.” Obviously it doesn’t apply to people who got into bad mortgages — who were legally required to declare that they understood every single detail, over and over and over again, on page after page after page of signed and sworn documents.
J.
Gosh, won’t it be fun if some day Oliver goes for a mortgage, and the loan officer pulls out this article?
J.
Why should the courts get involved if a contract is valid and legally entered by two parties?? What crime or injustice has been committed???
At closing, a review of the HUD report is law, and there is nothing clearer that a HUD report.
If you can’t make your car, electric, gas, water, insurance, of cable TV payment, do you also want the court to step in?
It’s obvious that Oliver hasn’t thought this out.
Boo freakin hoo. You have a problem with additional bankruptcy protection for borrowers? At least it doesn’t cost the government a ton of money.
Listen to JayTea whining about personal responsibility while trying to protect the status quo for the banking industry that lobbied for deregulation so they could loot the country and make the mess we find ourselves in now. Look at his likely consequences: banks not lending to people who can’t afford it, damn? Banks not lending at all, kind of like what is happening now, damn. Maybe they will have to cut back on the executive bonuses to pay for increased legal fees, GASP!
…while trying to protect the status quo for the banking industry that lobbied for deregulation…
…by sinking tons of donations to Democrats like Chris Dodd, Barney Frank, John Kerry, Barack Obama, and so on, granting Dodd and other key government officials sweetheart “Friends Of Angelo” mortgages, and the like.
And they got a pretty good return on that investment. Dodd and Frank in particular did yeoman’s work at fighting increased oversight on the banks.
Nothing like honest politicians — the kind where “once they’re bought, they stay bought.”
J.
In this thread, JT advocates screw the homeowner, they shouldn’t be able to get out of a contract.
In another thread, JT brags about how he got medical care and after they provided it in good faith, hoping to be paid the full cost, he only offered a “settlement” of probably pennies on the dollar.
Not that we expect much logical consistency from JT, but I thought I should point that out.
EL, I lived up to my end of the agreement. If they had pursued the full amount, I would have had no defense. Instead, we reached a compromise.
Without the government stepping in.
Borrowers have the same right to seek to renegotiate the contract they signed willingly and freely and declared in numerous places that they understood fully.
Had I instead filed bankruptcy and repudiated the entire debt to my hospital, then you’d have an argument. In that case, I’d be asking the government to get me out of the predicament I was in.
Finally, I specifically said I wasn’t proud of that moment in my history. How that becomes “bragging” in your mind is more a testament to your ability to read and understand than it is a comment on me.
J.
So you negotiated after you made a contract to pay a certain amount by willfully entering their care. And that is different from this situation how?
Your screed only goes to prove why judges should have this right- you were rendered care only because the hospital was required to admit you. So your hated government allowed you to get medical care despite the fact that you were unable to pay the contracted amount.
All this legislation would do is allow judges to impose a settlement that will keep homeowners in their house when the lender won’t negotiate in good faith. This government mandate will make for MORE negotiations, not fewer, because the homeowner has the leverage of hoping for a better outcome through the judge.
Jay Tea and joaquin: the entire basis of a backruptcy reorganization is to allow a judge to start overruling previously-made contracts to ensure that creditors get back some portion of their money while creating a “soft landing” for the business in bankruptcy.
Without this, the best solution for homeowners is simply to walk away from their homes and their mortgages. Since banks aren’t in the homeowning and homeselling business, and since out-and-out mortgage defaults are part of the problem that has been causing our recent economic mess, I can’t help but think that this proposal is just a rational approach to the issue… in fact, it’s an approach that is considered normal during bankruptcy proceedings. Both of you: spare us your ignorant, faux self-righteous outrage.
I can’t help but think that this proposal is just a rational approach to the issue… in fact, it’s an approach that is considered normal during bankruptcy proceedings.
Then if they can’t pay the mortgage, let them declare bankruptcy. What you’re advocating is to give people the remedies provided by a bankruptcy but without any of the consequences. There is a reason that a bankruptcy stays on your credit for 7 years, it’s to let potential creditors know that you are a risk… you were unable to pay your bills at one time and it can happen again.
As JayTea noted above, how does this square with Obama’s call for “personal responsibility”?
I know it’s easy for you to say that the people should be able to unilaterally change the now inconvenient terms of their mortgage contracts, since the money is coming from those big rich banks who can afford it (and besides, they probably fooled those gullible people into buying homes they couldn’t afford anyways). It’s easy because the money isn’t coming out of your pocket. On the other hand, had I borrowed 100K from you and then decided that I really could only afford to pay you back 50K, I seriously doubt you would nod approvingly.
I can’t understand why a mortgage lender wouldn’t voluntarily adjust the terms of the mortgage.
I mean, what’s the alternative? Take possession of a house that has a) declined in value, and b) will languish on the market for months with zero payments being made?
Seems to me that the banks would want to maintain whatever cash flow they can get.
Yeah!!! Dave in SoCal supports the bill. Who else will get on board?
Since he agrees with the Dem proposal, I’m not sure what the rest of his screed means. Just random bitching I guess.
EL, it’s perfectly analogous. Except that the home buyers want the law changed so they get the benefit of bankruptcy (i.e., the agreement being redefined by a judge without requiring the consent of the lender) without the stigma.
If I had filed for bankruptcy, then I would have had to deal with all the complications that ensued. Same with home buyers.
Actually, it’d be kind of entertaining to let this go through. If it involved a provision requiring the lender to stand up in court, read aloud every single page that they signed or initialed stating that they had read and understood everything on that page, and then explain — under oath — just what happened between when they signed all those papers and the present, I could almost support it.
But that’d be too much like “personal responsibility,” which Obama stressed in his inaugural speech, and we all know he really didn’t mean that.
J.
Dave in SoCal, it’s also traditional (and this used to happen more often in the days before mortgage securitization), for lenders to readjust terms of a mortgage for a borrower who was having trouble making his payments. Why? Because lenders could get some of their money back without having to go into the real estate business.
The problem is that these problems of collapsing property values and mortgage defaults have become a pandemic throughout our country and that mortgage lenders, due to securitization, are no longer able to easily readjust terms for borrowers that the best outcome seems to be to give judges the power to change the terms of the mortgages, as one does in a bankruptcy proceeding.
You can make an argument that this isn’t a good idea because some other economic policy might be better (which one? the current policy? we see the aftereffects of the mass defaults, and they aren’t pretty and they’re bringing down the rest of the economy). However, there is nothing wrong with the principle of the law at all.
And, Jay Tea, you know what “personal responsibility” is? Making a commitment to work with the bank to try to keep the mortgage and the home together, even if it involves renegotiation. You know what’s NOT personal responisibility? Lenders ignoring or being logistically unable to handle such renegotiations and having borrowers realize their best bet is to send in the keys and abandon the homes.
Cripes, it’s like the right wingers here are demonstrating to us how they have NO IDEA about what lending and payments are about.
If it involved a provision requiring the lender to stand up in court, read aloud every single page that they signed…
Apparently all you have to do is blame TurboTax. Problem solved!
Seems to me that the banks would want to maintain whatever cash flow they can get.
Well exactly. If you think of the lendee as a customer of the bank – do you make some concessions that will keep your customer paying you money, or do you tell him ‘tough shit’ and lose his business?
Good post parthenon, and it underscores why Con ideology has been so soundly repudiated. Con ideology says that you pay the full cost no matter what and if you don’t you deserve whatever is coming to you. That hurts both sides.
On the other hand, pragmatic solutions require that both sides work together to reach a solution. That works only if both sides act in good faith. Which the government can enforce through regulation.
Ultimately, if the house goes into foreclosure and is bank owned, three parties hurt- the bank, the former homeowner- and the neighbors who see housing values decline because of a fire sale price on the foreclosed house. That’s how “the market” works.
Where con ideology fails is illustrated with JT’s simultaneously arguing two sides of the same issue. His ideology says that the homeowners signed a contract and tough shit if they can’t pay. On the other hand, JT had a personal situation where he stuck a creditor with part of the bill. That was ok with him, though. Most con ideology doesn’t apply to real world situations, and finally the electorate figured it out.
Am I missing something or did some of you not read the fucking linked article? The Dem proposal is (opening paragraph):
“Most congressional Democrats say the quickest way to save homeowners like Troy Butler of Saginaw, Mich., is to let them declare bankruptcy and allow judges to dictate new mortgage terms.”
further reading yields this gem:
“Butler, 40, is a laid-off General Motors worker who has filed for bankruptcy. But the bankruptcy court has no authority to change the terms of his $90,000-plus mortgage that is more than double the value of his home.”
I guess some of you need to get some new talking points
Why should the courts get involved if a contract is valid and legally entered by two parties?? What crime or injustice has been committed???
Usury. By the way, are extra question marks supposed to make your question more questiony or something??????????????????????????????????????
If you can’t make your car, electric, gas, water, insurance, of cable TV payment, do you also want the court to step in?
Except that, with the exception of the 1st one, all of those are fixed monthly rates, and don’t have interest.
Obviously it doesn’t apply to people who got into bad mortgages — who were legally required to declare that they understood every single detail, over and over and over again, on page after page after page of signed and sworn documents.
Jay coming out in favor of usury. How very Christian of you.
Banks get pressured to make more and more risky loans at favorable rates, a la the 1990’s.
Jay, here are some little factoids (though I expect to run with your tail between your legs like last time):
CRA loans constituted only 23% of all loans and 9.2% of high-cost loans.
CRA loans were twice as likely to be retained in the originating bank’s portfolio than loans made by other institutions.
CRA loans were less likely to be foreclosed upon than other loans.
OK, after thinking it over for a while, I think I get it.
A bank is holding a mortgage loan. The homeowners pay $1,500 a month. The one member of the household loses his or her job and they can’t affort the payments.
The bank can adjust the terms. Instead of $1,500 a month, the bank can refinance, lower the interest rate, lower the priniciple or whatever and accept (let’s make it radical) $1,000 a month.
On the other hand, the bank can foreclose. Instead of $1,500 a month, the bank now gets $0 per month. The house sits on the market for 6 months or a year and finally sells at 70 percent of its previous value. The bank takes a 30 percent markdown on its asset but gets its cash out as soon as the house sells–and lets somebody else write the new mortgage.
Which is better? In the current market, apparently the second option is more appealing to the banks.
EL, I lived up to my end of the agreement. If they had pursued the full amount, I would have had no defense. Instead, we reached a compromise. Without the government stepping in.
Couple things here, Jay Tea. EL has a good point.
You did not live up to your end of the agreement as you didn’t pay the full amount of your care. You entered into a contract for care but could not pay what you owed. Instead, you renegotiated the original terms to pay what you could afford.
Why did the hospital agree to this new settlement? Because they’re humanitarians? Because you’re such a great and honest fellow? No.
They agreed to the settlement because they could pass the remainder of the cost of your healthcare on to the government, that is, the taxpayers.
You’ve already acknowledged in the other thread:
But in this thread you’re insisting that you were able to renegotiate “Without the government stepping in.”
Of course, this isn’t the only reason you can thank the government for your treatment. The government also stepped in on your behalf when it passed the law mandating that emergency rooms could not deny care to people who had no coverage. Without that law, you would have been out of luck. And even more to the point, according to you, dead.
So not only did the government ensure your access to care, it ended up subsidizing the cost of your care, when you couldn’t pay the full amount.
My question for you now is, when you went the emergency room did you know going in that you couldn’t afford the care you were going to receive? But you took it anyway, right?
Most people who sign mortgages understand their financial responsibility and have every intention of living up to it. But circumstances change and contracts need to be renegotiated to meet those new circumstances. Would you agree this is what happened in your case regarding health care?
You directly benefited from government action when you couldn’t meet your obligations.
I’d think you’d have the decency not to judge and belittle others who suddenly find, through circumstances beyond their control — like the tanking of the global economy — that they can’t meet theirs.
And just for clarifications sake, do you actual mean “lender” or “lendee” in the following:
It makes a difference in determining just how much of a jackass you really are.
Wow, all this concern about my health. I’m so touched.
<i.My question for you now is, when you went the emergency room did you know going in that you couldn’t afford the care you were going to receive? But you took it anyway, right?
Most people who sign mortgages understand their financial responsibility and have every intention of living up to it. But circumstances change and contracts need to be renegotiated to meet those new circumstances. Would you agree this is what happened in your case regarding health care?
I’ve said, repeatedly, fafaroo, that I’m not proud of that part of my life, but the system then — as it is today — took into account that it was literally a matter of life or death for me. I knew, when I chose to go to the emergency room (I was in such distress that I could barely breathe), that there was a good chance I’d spend the rest of my life paying off the debt I was about to incur. I also was fairly certain that “rest of my life” would be a fairly short-term concern if I didn’t.
Pardon me if I don’t see the decision to buy a house in quite the same level of crisis and criticality as “go to the hospital or risk going to bed and not ever waking up again.”
It amazes me how what I say here gets so distorted. I introduce my story by saying that I’m not proud of it, yet it gets characterized as “bragging.” I say that the system, as it is today, is flawed, but the proposed alternative is far worse, and that’s described as saying “scrap the current system too.” And my intial suggestion for the soon-to-be-former DHL employees — job training, loans for startups, and tax credits for new employers — somehow gets changed into a call for absolute social Darwinism, where they get NOTHING and should be GRATEFUL for it.
That it happens isn’t amazing. How, that’s the amazing part.
I also have to give points to Jaim for honesty, when he openly admitted that he ignores what I say and instead castigates me for what he thinks I mean and what he wants people to believe I said.
It’s a profoundly educational experience, and I wouldn’t trade it for anything.
But back to the DHL workers… apart from training, new business loans for the entrepeneur-inclined, and tax credits for potential new employers (oh, yeah, and unemployment benefits — something I didn’t mention because it never occurred to me that I’d have to spell it out) — anyone else have any ideas for them?
J.
qft: “You directly benefited from government action when you couldn’t meet your obligations.
I’d think you’d have the decency not to judge and belittle others who suddenly find, through circumstances beyond their control — like the tanking of the global economy — that they can’t meet theirs.”
Jay is literally alive because of a government hand-out matched with Federal law put in place by dirty socialist Democrats that says a hospital can’t refuse treatment based on ability to pay.
And yet, in Jay’s little basement world, the help he got shouldn’t go to others, even in a relatively more stable situation that would allow a lender to renegotiate the terms of their mortgage, so that he gets to keep his house and the bank gets to keep some cash flow going.
A visual representation of my take on Jay’s outrageously bizarre world-view as of late: o_0
The most important thing for the DHL workers would be extending their unemployment benefits. Even then, however, the problem is one being faced by a lot of small towns in America. What little capital there is out there right now for starting a new business is probably not going to small towns. There’s a larger structural issue at work here that’s been going on for decades (just ask Detroit).
I’d like to see educational vouchers be a big part of any “New Deal ca. 2009.” With the Boomers retiring, health-care is one of the fastest growing fields in the country. Even in economically depressed areas like the last one I lived in in the States, the demand for nursing care was very high.
Seems to me you want to set up a strawman scenario here. “ZOMG LIBRUL HAND-OUTS WON’T ACTUALLY BRING A NEW DHL BACK TO WILMINGTON, OHIO!!!” But that’s a feature of government aid, not a bug. The point is to give people some breathing room as they re-adjust their lives, find new work, and possibly consider moving somewhere where they can start their lives over.
But thanks for asking Jay. I’m glad to know you value my opinion so highly. And yes, believe it or not, people across the political spectrum from you do care about your health. The government helped you out when you needed help and you couldn’t afford it. Just wish you’d realize that what Americans want from government, sometimes, is a helping hand, not a life-long hand-out. You got one, so why can’t others?
btw O-dub, your site is eating comments and acting hella strange.
Please give me specifics, because I’m not seeing anything out of the ordinary. Saying its not working doesn’t give me any direction.
Again, Jay, tail, legs.
I’ve said, repeatedly, fafaroo, that I’m not proud of that part of my life, but the system then — as it is today — took into account that it was literally a matter of life or death for me.
Jay Tea, what exactly does pride have to do with it? You needed help and you got it.
There are some people who would be grateful for this and move on with their lives and maybe try to pay it forward, when they can.
Still others might be grateful for this but realize that there is something wrong with a system in which the loss of a job could leave someone so vulnerable that getting urgent medical care comes with the real possibility of financial disaster and maybe try to effect some kind of change.
Still other people will be so resentful at finding themselves so helpless that they need to demonize the very thing that came to their aid and attack those who also need its assistance.
This is the category that you seem to fall into.
You seem to have this image that your helplessness was somehow special, so totally extraordinary that you aren’t like other people who need the same kind of assistance.
Those OTHER people should be pilloried in public for being irresponsible. They should be forced to PUBLICLY CONFESS, UNDER OATH, their crimes against self-reliance.
You demand it of them because deep down inside you hate yourself.
I say that the system, as it is today, is flawed, but the proposed alternative is far worse …”
And Jay Tea, I’m still wondering if you’ve ever spent any time in either of the countries that you claim have worse health care systems than ours: Canada and Great Britain.
Ever been to either of those places? And just out of curiosity, have you ever been out of the country?
I’ve heard there’s lots of foreigners who live outside of America.
J.G.Thayer: “I say that the system, as it is today, is flawed, but the proposed alternative is far worse…”
Given your track record on what you say, this is the greatest proof one could find for having universal health care.
Like fafaroo asked, do you have any firsthand experience with the Canadian health care system? Or the British?
Jay does know that commercial real estate this year is going to be worse than residential real estate last year, right? And that those loans have terms that look about as stupid as a lot of the residential terms that he’s telling only homeowners, “tough titties,” right?
He knows it but he chooses to ignore it, because no one can credibly blame commercial real estate problems on the colored folk.
Jay, the bankers are being idiots. That you want to protect them from their own responsibility so damn much tells me how worthless your conservative ideology is.
Conservatives, please go to your paradise in Saudi Arabia if you hate America so much.
I do wonder with all the CDS’s running around – are some bankers actually making money instead of merely cutting their losses in a foreclosure situation? And is that why they want no changes? “Mistakes” like bad loan terms that make money for the originator ensure that those “mistakes” are made again and again.