News:

And we're back!

Main Menu

Obama to refinance underwater mortgages

Started by Admiral Yi, October 24, 2011, 05:30:28 PM

Previous topic - Next topic

MadImmortalMan

Quote from: Admiral Yi on October 25, 2011, 11:53:27 AM
Quote from: MadImmortalMan on October 25, 2011, 11:52:44 AM
Would have been cheaper than what we did.

What did we do?

Home buyer tax credit, cash for clunkers, TARP, ARRA, POMO, QE1, QE2, etc, etc, etc, ABCDEFG...
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Admiral Yi

Quote from: MadImmortalMan on October 25, 2011, 11:56:22 AM
Home buyer tax credit, cash for clunkers, TARP, ARRA, POMO, QE1, QE2, etc, etc, etc, ABCDEFG...

You're just being silly.

Sheilbh

This seems sensible, based on what Yi said.  I could do with more details though :mellow:
Let's bomb Russia!

Berkut

Yes, making sure that people who cannot afford to buy a house can still have a mortgage can only end well, as history can show us.
"If you think this has a happy ending, then you haven't been paying attention."

select * from users where clue > 0
0 rows returned

MadImmortalMan

Quote from: Berkut on October 25, 2011, 12:21:19 PM
Yes, making sure that people who cannot afford to buy a house can still have a mortgage can only end well, as history can show us.

You can leverage a one hundred dollar bill 2000%! That's super-duper better than anything out there. Not daytrade brokerage accounts, not EFSF, not Basel II, nothing.
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

Admiral Yi

Quote from: Berkut on October 25, 2011, 12:21:19 PM
Yes, making sure that people who cannot afford to buy a house can still have a mortgage can only end well, as history can show us.

I'm generally pretty leary of this idea, but one thing that mitigates is that the program is open only to borrowers who have not missed a payment.

Kinda wacky that we have 9 million underwater borrowers who haven't missed a payment.

MadImmortalMan

#22
Quote from: Admiral Yi on October 25, 2011, 12:26:16 PM
Kinda wacky that we have 9 million underwater borrowers who haven't missed a payment.


I'm one of those.   :lol:

It doesn't surprise me, actually. 70% of my city is underwater on their mortgages.


Edit: A million bucks for everyone would certainly solve the deleveraging problem...
"Stability is destabilizing." --Hyman Minsky

"Complacency can be a self-denying prophecy."
"We have nothing to fear but lack of fear itself." --Larry Summers

DGuller

Refinancing a mortgage that even way underwater can make sense. since you can't just dump your house and move somewhere else.  Your credit rating is going to be too shot to take another mortgage. 

That said, I'm afraid that this measure will just let the insolvency fester for that much longer, in a Japanese kind of scenario.  Ultimately, if your mortgage is underwater, you're a prisoner in your own home, even if you can handle the payments, and that can't be good when that's multiplied by millions.  There is no quick fix for the problems of liabilities exceeding your assets, without high inflation or wholesale debt write-down.

Valmy

Quote from: Admiral Yi on October 25, 2011, 12:26:16 PM
Kinda wacky that we have 9 million underwater borrowers who haven't missed a payment.

Well that is an awful lot but it is possible with the popping of the bubble.  Tons of recent buyers would have been stuck in that position.
Quote"This is a Russian warship. I propose you lay down arms and surrender to avoid bloodshed & unnecessary victims. Otherwise, you'll be bombed."

Zmiinyi defenders: "Russian warship, go fuck yourself."

Sheilbh

Quote from: Admiral Yi on October 25, 2011, 12:26:16 PMI'm generally pretty leary of this idea, but one thing that mitigates is that the program is open only to borrowers who have not missed a payment.

Kinda wacky that we have 9 million underwater borrowers who haven't missed a payment.
It sounds a great deal like some of what Glenn Hubbard's been saying in the FT. 

Basically his argument is that problems in the mortgage market are cancelling out low interest rates, household wealth and income and that taxpayers have borne the credit risk of mortgages since 2008 anyway.  For Fannie and Freddie mortgage holders, who are up to date on payments, to refinance at current low interest rates would, in his phrase, be the same as a long-term tax cut of around $70 billion a year (over the life of the mortgage).  As defaults diminish the Treasury's exposure to risk would diminish substantially.
Let's bomb Russia!

The Brain

Women want me. Men want to be with me.

Valmy

Quote from: Berkut on October 25, 2011, 12:21:19 PM
Yes, making sure that people who cannot afford to buy a house can still have a mortgage can only end well, as history can show us.

Well supposedly this is trying to close that door now that that particular horse has already gallopped off.

Of course it probably will be used as part of the bag of financial tricks used to get more people into homes they cannot afford somehow.  Unintended consequences and all that.
Quote"This is a Russian warship. I propose you lay down arms and surrender to avoid bloodshed & unnecessary victims. Otherwise, you'll be bombed."

Zmiinyi defenders: "Russian warship, go fuck yourself."

Ed Anger

Stay Alive...Let the Man Drive

Darth Wagtaros

PDH!