gameshowhost: NO BLOOD FOR SECOND HOMES

Second? Why, I can't even remember how many homes I have.

The author needs to learn what a subsidy is. This does not transfer government money to rich home owners. It guarantees federally backed loans, ie fannie and freddie, which at most lessens lending requirements causing the banks to either give less points on interest or less stringent down payment criteria. Nothing is being subsidized.

All spending is stimulus.

I hope the rich have fire insurance.

Cake, let them eat, etc.
The United States senate certainly has its fingers around the necks of on the pulse of ordinary Americans!
All hail the 99 percenters!

/99 percenter status starts at $200K. Link: http://www.ssa.gov/cgi-bin/netcomp.cgi?year=2010

My understanding (probably oversimplified and under-informed) it that the banks are sitting on about $700Bln in upside-down mortgages which are likely to go into default. The logical thing to do is a "cram down", reduce the principle to the house's current value. But no bank wants to act unilaterally. Congress needs to force all banks who received TARP money to simultaneously cram down their bad loans.

I love how we are tirying to fix the economy with more pf the same bad behavior. Is there an economc theory of "hair of the dog"?

Savings.
Reuse and refurbish what you have.

Oh wait ... Capitalism.

God Is My Co-Pirate: Second? Why, I can't even remember how many homes I have.

Senator McCain?

But seriously, this is not a serious enough issue to get worked up about. The left is in danger of responding as reflexibly against the right ("This helps rich people? I'm against it!") as the right does against the left ("This helps poor people? I'm against it!"). Again people, the key to winning the ideological debate in this country is to demonstrate that you are ethically superior to your opponents, not just as bad as they are.

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

Oh come on. Aside from Manhattan, Honolulu, Malibu, Boston and San Francisco/Silicon Valley, $625K would get you a whole lot of house. I guess we could toss out the word mansion, but it certainly isn't a shotgun shack either.

The Democrats did this? Douchbags!

Well, $600K doesn't buy a mansion in SF. Maybe a condo on 3rd Street.

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

I'm not sure where the article picked up that number (maybe the national housing numbers?), but the law is not a particular number, it is a percentage of the metro areas median price.

Paid $670k for our 1180 square foot 3/2, so I'm really getting a kick out of these...

It isn't meant to lend a helping hand to Americans on the cusp of home ownership.

That's exactly what it did for us.

So does this mean that rich people will start flipping houses again?

Is that good or bad?

12349876: timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

I'm not sure where the article picked up that number (maybe the national housing numbers?), but the law is not a particular number, it is a percentage of the metro areas median price.

This is all you need to know: Link (new window)

12349876: I'm not sure where the article picked up that number (maybe the national housing numbers?), but the law is not a particular number, it is a percentage of the metro areas median price.

There is also a cap in the 700k region

Delay: Well, $600K doesn't buy a mansion in SF. Maybe a condo on 3rd Street.

In San Francisco? No, but that's a ludicrous standard.

If this passes the house, the stimulus effect will allow the job creators in the upper one percent to turn the economy around.

Notabunny: My understanding (probably oversimplified and under-informed) it that the banks are sitting on about $700Bln in upside-down mortgages which are likely to go into default. The logical thing to do is a "cram down", reduce the principle to the house's current value. But no bank wants to act unilaterally. Congress needs to force all banks who received TARP money to simultaneously cram down their bad loans.

The housing bubble needs to deflate, with prices returning to something a person with a median-wage job can hope to pay off in hir lifetime. Unfortunately, this would reduce the asset side of many lenders' balance sheets, which in the case of banks may place them in jeopardy of falling below reserve requirements, triggering a need to raise more capital or just have more zero-interest central bank money thrown at them.

The upshot is that the bank probably never actually had the entire amount of principal the lendee is expected to pay back in the first place, thanks to the magic of fractional-reserve banking, but you can bet your arse the entire amount, interest and all, is booked as an asset by the bank, and it will be a cold day in hell before they give up a penny of that asset value. When you consider how house prices rocketed while wages fell, that wages and salaries are ultimately the method for most people to pay off those loans, and that a lot of people who should have known better figured they could eternally outrun the difference by simply encouraging people to take on ever-bigger loans and refinance evey few years while pocketing the resulting higher fees and commissions, it's a wonder the correction hasn't been worse. Since I think asset values have much further to decline, and since capital controllers have shown no interest in paying workers more, there's still more of an ugly correction to come... assuming the present system will survive, which I'm not sure it will.

Dear congress,

fark YOU

The American public

ZAZ: Congressional Democrats vote to extend: But today, the Senate passed an amendment to a minibus spending bill that would extend the old, higher mortgage limits. It passed 60 to 38. Just eight Republicans voted in favor, while no Democrats voted against it.

I suspect the headline would have been a tad different if the parties were reversed.

The housing bubble needs to deflate, with prices returning to something a person with a median-wage job can hope to pay off in his lifetime. Unfortunately, this would reduce the asset side of many lenders' balance sheets, which in the case of banks may place them in jeopardy of falling below reserve requirements, triggering a need to raise more capital or just have more zero-interest central bank money thrown at them.

The upshot is that the bank probably never actually had the entire amount of principal the lendee is expected to pay back in the first place, thanks to the magic of fractional-reserve banking, but you can bet your arse the entire amount, interest and all, is booked as an asset by the bank, and it will be a cold day in hell before they give up a penny of that asset value.

THIS. As long as banks insist that the money that never existed be paid back, and the government goes along with this charade, we're farked.
This is also why inflation isn't a danger -- the gubmint cannot print enough money to deflect the functional cash economy because all of it goes straight into the giant empty vacuums of space that are the bank balance sheets.

Isn't it awesome how so many of us have been tricked into these rent-to-own schemes for our shelter and transportation? You don't own it, but you get to pay taxes on so the bank doesn't have to! This system is breaking down ...

Im not even outraged anymore when our government shafts us to give some small benefit to the wealthy.

Wake me when we take up arms.

HotIgneous Intruder: This system is breaking down ...

Let it crash and burn. I am stocked up already with beans and ammo. And every month this goes on I put aside even more. Still poor but I will survive.

HotIgneous Intruder: The housing bubble needs to deflate, with prices returning to something a person with a median-wage job can hope to pay off in his lifetime. Unfortunately, this would reduce the asset side of many lenders' balance sheets, which in the case of banks may place them in jeopardy of falling below reserve requirements, triggering a need to raise more capital or just have more zero-interest central bank money thrown at them.

The upshot is that the bank probably never actually had the entire amount of principal the lendee is expected to pay back in the first place, thanks to the magic of fractional-reserve banking, but you can bet your arse the entire amount, interest and all, is booked as an asset by the bank, and it will be a cold day in hell before they give up a penny of that asset value.

THIS. As long as banks insist that the money that never existed be paid back, and the government goes along with this charade, we're farked.
This is also why inflation isn't a danger -- the gubmint cannot print enough money to deflect the functional cash economy because all of it goes straight into the giant empty vacuums of space that are the bank balance sheets.

Isn't it awesome how so many of us have been tricked into these rent-to-own schemes for our shelter and transportation? You don't own it, but you get to pay taxes on so the bank doesn't have to! This system is breaking down ...

And I didn't even touch upon the shiatshow of securitization that resulted in the-gods-know-how-many subnational governments and pension funds buying what were rated as top-shelf, rock-solid debt investments, while the jerks who cooked them up must have known they were eventually going to fail and become worthless. I wasn't even aware of things like mortgage-back securities and credit default swaps and such until 2005 or 2006, but I knew something wasn't adding up just from house prices and average wages.

The people paid incredible amounts of money to "efficiently allocate resources" really have no motivation to actually do so properly, only motivation to skim as much as they can from various resource distribution systems before their schemes eventually break down and fail. If there were actually consequences and a meritocracy in finance, everyone who had a hand in creating the housing bubble and resulting credit bomb would be working at McDonald's or hauling garbage instead of being allowed anywhere near management of a resource allocation process. They proved as greedy and reckless as a drunken Soviet central planner.

JesusJuice: Im not even outraged anymore when our government shafts us to give some small benefit to the wealthy.

Wake me when we take up arms.

How is this "Shafting" you? It's not a handout, it's a loan guarantee. The only way it affects you is if the mortgages go into default. You have the very same protections if you have a loan through Fannie and Freddie.

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

at 6% on a 30 year mortgage estimate owing 65$ per month per 10k borrowed. thus about 4k per month, in total 48k per year. since we've just seen that the median income is something like 26k or what, yes, that makes you a douche. if we bumpkins are so stupid to live in non-coastal regions, why do you need the feds to help redistribute our money over your way, not only in the form of excessive tax breaks on mortgages, but also in federally backed loan subsidies? isn't that stacking the deck against the poor bumpkins of alabama and what not?

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

635k will buy a mansion in most parts of the country. Sounds like you need to move.

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

*gets the vibe this isn't so much an example as it is bragging*

Delay: Well, $600K doesn't buy a mansion in SF. Maybe a condo on 3rd Street.

San Francisco: where you can get your "back alley" filled in a back alley!!!

MyRandomName: JesusJuice: Im not even outraged anymore when our government shafts us to give some small benefit to the wealthy.

Wake me when we take up arms.

How is this "Shafting" you? It's not a handout, it's a loan guarantee. The only way it affects you is if the mortgages go into default. You have the very same protections if you have a loan through Fannie and Freddie.

No, no, no. The GOVERNMENT is protecting the BANKS by guaranteeing the loans. "You" have no "protections." In fact, when the government guarantees the loans, YOU, as a taxpayer, assume the risk of these fat-spenders' fat-arsed mortgages.

/Mortagages, how the fark do they woooooooooooork?
//derp

proteus_b: at 6% on a 30 year mortgage estimate owing 65$ per month per 10k borrowed. thus about 4k per month, in total 48k per year. since we've just seen that the median income is something like 26k or what, yes, that makes you a douche.

In your scenario, someone put down 0%, and got a 6% rate on a 30 year fixed? That person should not be buying a home.

Put down 20% like you're supposed to and it's a $500k mortgage. At today's rates a 30 year fixed is around 4.5%. That's about $2600 per month.

And that median income is per person, not per household. Two working adults, it's doable.

if we bumpkins are so stupid to live in non-coastal regions, why do you need the feds to help redistribute our money over your way, not only in the form of excessive tax breaks on mortgages, but also in federally backed loan subsidies?

The bumpkins earning $26k aren't subsidizing squat.

They're too big rich to fail.

PlatinumDragon: Notabunny: My understanding (probably oversimplified and under-informed) it that the banks are sitting on about $700Bln in upside-down mortgages which are likely to go into default. The logical thing to do is a "cram down", reduce the principle to the house's current value. But no bank wants to act unilaterally. Congress needs to force all banks who received TARP money to simultaneously cram down their bad loans.

The housing bubble needs to deflate, with prices returning to something a person with a median-wage job can hope to pay off in hir lifetime. Unfortunately, this would reduce the asset side of many lenders' balance sheets, which in the case of banks may place them in jeopardy of falling below reserve requirements, triggering a need to raise more capital or just have more zero-interest central bank money thrown at them.

The upshot is that the bank probably never actually had the entire amount of principal the lendee is expected to pay back in the first place, thanks to the magic of fractional-reserve banking, but you can bet your arse the entire amount, interest and all, is booked as an asset by the bank, and it will be a cold day in hell before they give up a penny of that asset value. When you consider how house prices rocketed while wages fell, that wages and salaries are ultimately the method for most people to pay off those loans, and that a lot of people who should have known better figured they could eternally outrun the difference by simply encouraging people to take on ever-bigger loans and refinance evey few years while pocketing the resulting higher fees and commissions, it's a wonder the correction hasn't been worse. Since I think asset values have much further to decline, and since capital controllers have shown no interest in paying workers more, there's still more of an ugly correction to come... assuming the present system will survive, which I'm not sure it will.

I agree with you, but still think the lenders should be forced to take a haircut. Without forced cram downs, the housing sector will continue its decline and drag the rest of the economy down with it. That ugly cycle could continue for years. Perhaps a decade or more. The bankers were the professionals who wrote the contracts. It's time they took their medicine so we can get the economy moving forward again. One of my other crazy ideas is to force banks to hold the mortgages they write for 5 years. That would incentivize them to write sustainable mortgages. Another crazy idea I like is the separation of commercial banks from investment banks. But I guess I'm really going off the rails with that one.

ORLY TITS: timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

Oh come on. Aside from Manhattan, Honolulu, Malibu, Boston and San Francisco/Silicon Valley, $625K would get you a whole lot of house. I guess we could toss out the word mansion, but it certainly isn't a shotgun shack either.

You've obviously never been to Miami or the DC metropolitan area. Most houses in my area START at $625K.

Justin Bieber's Acne Medication: In your scenario, someone put down 0%, and got a 6% rate on a 30 year fixed? That person should not be buying a home.

Put down 20% like you're supposed to and it's a $500k mortgage. At today's rates a 30 year fixed is around 4.5%. That's about $2600 per month.

And that median income is per person, not per household. Two working adults, it's doable.

if you put money down, it's no longer included in the mortgage, is it not? so by your "old fashioned" wisdom of putting money down on the mortgage, a 730k mortage can represent nearly a 1 milllion dollar home.

Justin Bieber's Acne Medication: Two working adults, it's doable.

ok say i got two working adults at 25k a year. that's before taxes. say they bring in 3500 a month after taxes. you say it's "doable" to spend 2600 on a mortgage? hell, say they end up paying no taxes because of tax breaks.... 2600/4000 is a little high. say someone loses the job, etc. etc.

/ christ i'm going to be renting forever it seems...

Notabunny: PlatinumDragon: Notabunny: My understanding (probably oversimplified and under-informed) it that the banks are sitting on about $700Bln in upside-down mortgages which are likely to go into default. The logical thing to do is a "cram down", reduce the principle to the house's current value. But no bank wants to act unilaterally. Congress needs to force all banks who received TARP money to simultaneously cram down their bad loans.

The housing bubble needs to deflate, with prices returning to something a person with a median-wage job can hope to pay off in hir lifetime. Unfortunately, this would reduce the asset side of many lenders' balance sheets, which in the case of banks may place them in jeopardy of falling below reserve requirements, triggering a need to raise more capital or just have more zero-interest central bank money thrown at them.

The upshot is that the bank probably never actually had the entire amount of principal the lendee is expected to pay back in the first place, thanks to the magic of fractional-reserve banking, but you can bet your arse the entire amount, interest and all, is booked as an asset by the bank, and it will be a cold day in hell before they give up a penny of that asset value. When you consider how house prices rocketed while wages fell, that wages and salaries are ultimately the method for most people to pay off those loans, and that a lot of people who should have known better figured they could eternally outrun the difference by simply encouraging people to take on ever-bigger loans and refinance evey few years while pocketing the resulting higher fees and commissions, it's a wonder the correction hasn't been worse. Since I think asset values have much further to decline, and since capital controllers have shown no interest in paying workers more, there's still more of an ugly correction to come... assuming the present system will survive, which I'm not sure it will.

I agree with you, but still think the lenders should be forced to take a haircut. Without forced cram downs, the housing sector will continue its decline and drag the rest of the economy down with it. That ugly cycle could continue for years. Perhaps a decade or more. The bankers were the professionals who wrote the contracts. It's time they took their medicine so we can get the economy moving forward again. One of my other crazy ideas is to force banks to hold the mortgages they write for 5 years. That would incentivize them to write sustainable mortgages. Another crazy idea I like is the separation of commercial banks from investment banks. But I guess I'm really going off the rails with that one.

Oh, I'm not disagreeing with you - the banks were basically allowed to treat mortgages as casino chips, and we all see how well that worked out - I'm just saying they won't accept changes or restrictions without an ugly fight, and given the existing ideological capture of the federal and state governments in the US by the financial sector it's unlikely pressure to change will come from those individuals for a long time. I think the unrest will have to reach a degree of intensity similar to the 1960s or the period between WWI and WWII before the capitalists will decide to give up some of their resource-hoarding and wealth-skimming capabilities.

Notabunny: PlatinumDragon: Notabunny: Another crazy idea I like is the separation of commercial banks from investment banks. But I guess I'm really going off the rails with that one.

The Gramm-Leach-Bliley Act put the kabosh on that for good. And it was signed, I might add, by Global Bill Clinton, who had a gun to his head at the time or something.

HotIgneous Intruder: MyRandomName: JesusJuice: Im not even outraged anymore when our government shafts us to give some small benefit to the wealthy.

Wake me when we take up arms.

How is this "Shafting" you? It's not a handout, it's a loan guarantee. The only way it affects you is if the mortgages go into default. You have the very same protections if you have a loan through Fannie and Freddie.

No, no, no. The GOVERNMENT is protecting the BANKS by guaranteeing the loans. "You" have no "protections." In fact, when the government guarantees the loans, YOU, as a taxpayer, assume the risk of these fat-spenders' fat-arsed mortgages.

/Mortagages, how the fark do they woooooooooooork?
//derp

So in all your derptastic response you agree the rich home owners are not getting a subsidy. Good to know. You went a long way to agree with me.

But seeing as you want to demonstrate your amazing intellect, yes there is an effect on the buyer I already mentioned in both reduced interest rates and lowered borrowing requirements. So next time you want to agree with me, don't act like a complete retard.

SO your second slash is the most accurate display of your intellect.

HotIgneous Intruder: No, no, no. The GOVERNMENT is protecting the BANKS by guaranteeing the loans. "You" have no "protections." In fact, when the government guarantees the loans, YOU, as a taxpayer, assume the risk of these fat-spenders' fat-arsed mortgages.

Want a fun read? Is Bank of America preparing for a Chapter 11? (new window)

MyRandomName: HotIgneous Intruder: MyRandomName: JesusJuice: Im not even outraged anymore when our government shafts us to give some small benefit to the wealthy.

Wake me when we take up arms.

How is this "Shafting" you? It's not a handout, it's a loan guarantee. The only way it affects you is if the mortgages go into default. You have the very same protections if you have a loan through Fannie and Freddie.

No, no, no. The GOVERNMENT is protecting the BANKS by guaranteeing the loans. "You" have no "protections." In fact, when the government guarantees the loans, YOU, as a taxpayer, assume the risk of these fat-spenders' fat-arsed mortgages.

/Mortagages, how the fark do they woooooooooooork?
//derp

So in all your derptastic response you agree the rich home owners are not getting a subsidy. Good to know. You went a long way to agree with me.

But seeing as you want to demonstrate your amazing intellect, yes there is an effect on the buyer I already mentioned in both reduced interest rates and lowered borrowing requirements. So next time you want to agree with me, don't act like a complete retard.

SO your second slash is the most accurate display of your intellect.

The rich mortgage holders are not getting any benefit from this. The banks are getting the subsidies if the holders of the $4,000 to $8,000 per month mortgages default. The we pay. It's called a G-U-A-R-A-N-T-E-E.
If the rich mortgage holders default ... they DEFAULT and get ... NOTHING.
See how it works?

/derp.

Notabunny: HotIgneous Intruder: No, no, no. The GOVERNMENT is protecting the BANKS by guaranteeing the loans. "You" have no "protections." In fact, when the government guarantees the loans, YOU, as a taxpayer, assume the risk of these fat-spenders' fat-arsed mortgages.

Want a fun read? Is Bank of America preparing for a Chapter 11? (new window)

Guess who will pay for BoA's shenanigans?

timujin: $625,000 is a mansion? Sure, subby, maybe in Buttfark, Alabama or wherever you live. In my neighborhood $625k gets you a 1200 sq ft SFO with a yard. Nice, but not exactly what someone would call a mansion.

...and I'm guessing a $200K salary is abject poverty?

clambam: God Is My Co-Pirate: Second? Why, I can't even remember how many homes I have.

Senator McCain?

But seriously, this is not a serious enough issue to get worked up about. The left is in danger of responding as reflexibly against the right ("This helps rich people? I'm against it!") as the right does against the left ("This helps poor people? I'm against it!"). Again people, the key to winning the ideological debate in this country is to demonstrate that you are ethically superior to your opponents, not just as bad as they are.

Do you really think anyone but concern trolls are really "getting worked up" about this? Really?