Wednesday, August 22, 2007

Senator Dodd and Los Angeles Councilman Alarcon - BAILOUT BUDDIES?!?!?

I told you it was only a matter of time until the politicians started talking BAILOUT for people that bit off more than they could chew. They can't have it both ways (or can they). They can't have 70% 'home ownership' (more like home mortgageship) on one hand, and then use taxpayer money to say that nobody loses a house on the other. The thing is, 70% of the population probably shouldn't be owning a house, and certainly not at the prices that many of them paid. The coming 'foreclosure boom' is going to realign the home ownership percentages to more realistic levels and realign housing prices to levels that reflect incomes.

Creative financing, no risk assessment, and loose credit created this monster...risk assessment, tighter credit, and traditional financing (fixed rate loans paying principal) will rein it back in. If the mortgage industry and the secondary market didn't discard risk assessment the past 5-6 years to get these 'high risk' people loans, they would NOT be defaulting today.

If the homeowner isn't responsible for being able to make the payments they agreed to make, then who is? Seems that many politicians see it as the taxpayers problem. Senator Dodd feels that:

"Americans should not lose their homes, through no fault of their own." - Senator Christopher Dodd

Apparently, biting off more than one can chew is no longer an individual problem, it is society's problem. Who knew that the 'leaders' of our country were so against personal responsibility. Aside from the capital gains tax, 'society' didn't really benefit from the massive property appreciation, so why should society have to foot the bill for the 'bad investments' that were made.

Sadly, it isn't just politicians on the national level that are screaming BAILOUT! Seems that Los Angeles City Councilman Richard Ararcon wants CITY, STATE, and FEDERAL funds to bailout CITY homeowners that cannot afford their mortgages!! Read it here if you don't believe me. Let me rephrase that for you: some local politician wants local, state, and national tax dollars to help the people in HIS area that cannot meet the mortgage obligations they undertook as individuals. But wait...it gets better!

Warning that the region is embroiled in a foreclosure upheaval, Alarcon said he's also considering asking lawmakers to declare a state of emergency to direct state and federal money to counseling and loans for people about to lose their homes.

WOW...a "state of emergency". I thought hurricanes, earthquakes, or other natural disasters that were outside human control constituted national disasters. Not a bunch of people that were looking to 'hit it big' buying overpriced LA County real estate with mortgages they couldn't afford.

"We're in a crisis. We don't need bureaucrats who are going to sit on their thumbs and not get things done. Who do we go to in federal government to ask for emergency assistance to help solve this crisis?" Alarcon asked city housing officials Tuesday during an emergency hearing on foreclosures.

Just to make sure I didn't miss anything, I looked up the US Constitution again, and I saw NOTHING about the federal government stepping in and providing 'emergency assistance' to people that made poor mortgage decisions. If I missed something, would somebody please point it out to me.

"It seems to me we'd better kick the federal government in the butt to get into action to help us solve the problem, and I don't think we're doing any kicking now."

I think we better kick a several thousand home owners in the butt...not the taxpayers! They either need to learn from this experience by filing BK and going through that process, or pick up a 2nd, 3rd, or 4th job to fulfill their financial mortgage obligations. I know there are some people that had things happen out of their control (accidents, deaths, etc.) but for the people that were looking for "No Money Down Real Estate Riches", welcome to 'investing'. You take risks...and you reap the rewards, or suffer the consequences (until politicians step in...or at least that is the way it appears).

Now, that said, since Councilman Alarcon wants EVERYBODY in the country to pay for just the people in 'his city' that cannot afford their mortgages, I think that even people outside of 'his' district should let him know how you feel. Here is his e-mail address: Councilmember.alarcon@lacity.org. After all, he wants YOU to pay for his constituents mistakes!

Finally, I don't know how much good it will do, but I have been informed of on online petition that is against any mortgage bailout. Here is the link if you do NOT want a government bailout of homeowners that are going into foreclosure: NO BAILOUT PETITION.

Remember, if the bailout starts, it is going to get ugly. Instead of working a little bit harder when things get tough, more people will fold and take the bailout. Let's not forget that we still have 'two more shoes to drop' so to speak, so this is just the beginning of things getting ugly. You better think real hard if 'bailout' is the way you want to go.

Stay tuned...

SoCalMtgGuy

11 Comments:

Blogger Casey Serin said...

This comment has been removed by the author.

8/24/2007 2:37 AM  
Anonymous denny poi said...

Chris Dodd sucks.

On another note, it looks like Casey Serin has returned:

http://iamfacingforeclosurethereturn.blogspot.com

8/24/2007 2:39 AM  
Blogger Phil said...

Hey here is an important point:

Not only would they be bailing out the home-owners, they will be bailing out the sub-prime mortgage pimps. What a rediculous idea. Let the sub-prime pimps take a beating, lose big money on foreclosed houses, and then go ou of business. This market needs this kind of reality check.

8/24/2007 8:07 AM  
Anonymous Anonymous said...

Can someone explain to me why the F'd borrowers mortgage insurance doesn't kick in if they can't pay?

Why aren't the mortgage insurers the ones really taking the hit?

8/24/2007 12:01 PM  
Anonymous Nate said...

Take Japan -- Real estate prices skyrocketed there for years, until one day many consumers woke up and realized "you know, a 750 sq/ft apartment really isn't worth $1 million", and many others just realized what they had in the bank.

Sometime in the early to mid '90s the bottom fell out. Prices crashed, sometimes by 40%. 15 years of 0% interest and billions of billions in government bailouts had no effect.

This in a country where people earn on average 30% more income and have much more personal wealth (as in assets minus debt, not the American version of make-believe wealth).

Japan paid the price, but is now a little bit wiser and still a lot wealthier.

Let prices crash! Let the foreclosures role in! Let the hedge funds collapse! Millions of empty homes! Oh Glory, Long Live Common Sense!!!

8/24/2007 12:43 PM  
Anonymous Anonymous said...

Is there a reason you don't cite/blame the borrowers themselves for being stupid enough to buy into a ARM or other loan that was out of their league?

I have little sympathy for those who didn't do their own homework before borrowing. It is not my job (as a taxpayer) to bail out those too stupid to do their own research.

8/24/2007 3:19 PM  
Anonymous Anonymous said...

I agree with the no bailout policy. Nobody bailed me out financially when I made a big screwup. I managed to recover on my own. I didn't buy into this bubble crap. Why should I be bailing out Juan the Strawberry Picker and others like him that bought $700K houses on $20K income. Common sense (I forgot, that was tossed out the window) says those numbers don't work.

8/24/2007 3:39 PM  
Anonymous Anonymous said...

What a surprise. A Mexican politician is calling for a bailout of all the Mexicans who bought homes they couldn't afford. More wealth redistribution (taking money from whitey and giving it to the Mexicans) is being called for, because ultimately, that's who foots the bill. 60% of Mexican homeowners use those sub-prime loans.

8/25/2007 7:36 AM  
Anonymous Anonymous said...

How many of these homeowners or residents in So Cal are legal residents anyway? After all, all of those protestors must be living someplace...

8/26/2007 8:12 AM  
Blogger SoCalMtgGuy said...

Anonymous said...

Can someone explain to me why the F'd borrowers mortgage insurance doesn't kick in if they can't pay?

Why aren't the mortgage insurers the ones really taking the hit?
---------------------------------------
There is no PMI on subprime loans. That is why so many use them. You don't have to pay PMI on subprime or many alt-a loans.

So no PMI, no insurance company to take the hit.

SoCalMtgGUy

8/31/2007 11:31 AM  
Anonymous Anonymous said...

If subprime and alt a loans don't required mortgage insurance, they do carry a much higher interest rates which is to compensate the lender for the higher risk. A smart/reputable lender should therefore insure themselves similar to PMI insurance with this additional income. If they don't, they should eat the loss and suffer the consequences and not have the government (ie us taxpayers) bail them out for their stupidity.

My two cents.

7/24/2008 10:36 AM  

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