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Another nail in the housing coffin

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JCONNOR3

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Florida
Well guys we now have a new issue. The prez and his loonies are stopping all foreclosures on ARM's to find out how many people can't afford the resets. (5yrs)Imagine that. My guess is that they will ALL say they can't. Now how do you figure that out? Stated income again?

We are really in for it now because they just froze a ton of inventory in place. Next they have given every incentive to people to not pay their mortgages. Finally, how are we to estimate the value of an asset wherein we know there is a floodgate which could open relative to added inventory?

How about all those Wall St packages CDO's and SIV's expecting a return on their investments that just got frozen?

I have so many questions about how it could be done that I really don't think it will get done. Do you?

Oh, and by the way, who says let's all reduce our interest rates to teaser 1.5% across the board? We can all play their silly games.
 

Greg Bell

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Jul 7, 2006
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Gvmt Agency, FNMA, HUD, VA etc.
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Louisiana
Inventory will soar and home prices will plummet.Since no more new teaser and probably very limited ARM loans will be originated the buying public is left with generic FHA and Conventional loans.Sounds like what is should be , wrong , this takes about 30% of those that cannot qualify conventionally right out of the market.Don't forget all of the MBS (Mortgage back securities) that will take a dump due to no returns or a negative worth after they are revalued due to intervention in the market place.Should push us into a deep recession , maybe even a depression .This is very good 1930's government action...Quick , Buy some beans and Ammo..
 

PropertyEconomics

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Jun 19, 2007
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Certified General Appraiser
State
New Mexico
Actually there is more incentive to PAY your mortgage. If you look at the rules if you are NOT behind on your mortgage, if CANT refinance, and you CANT afford the increase you will qualify. If you are behind in your mortgage you wont. There is not an incentive here for owners not to pay.
I think this is not a very good plan at all ... but its not as described above as best as I can tell. In fact .. it seems to me this plan will effect very few borrowers. It doesnt address the problem at all.
 

Doug Wegener

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Apr 14, 2005
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Certified Residential Appraiser
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Oregon
How will they do it?

Well guys we now have a new issue. The prez and his loonies are stopping all foreclosures on ARM's to find out how many people can't afford the resets. (5yrs)Imagine that. My guess is that they will ALL say they can't. Now how do you figure that out? Stated income again?

We are really in for it now because they just froze a ton of inventory in place. Next they have given every incentive to people to not pay their mortgages. Finally, how are we to estimate the value of an asset wherein we know there is a floodgate which could open relative to added inventory?

How about all those Wall St packages CDO's and SIV's expecting a return on their investments that just got frozen?

I have so many questions about how it could be done that I really don't think it will get done. Do you?




Oh, and by the way, who says let's all reduce our interest rates to teaser 1.5% across the board? We can all play their silly games.



I dont see how they will be able to do it. If you invested in CDO's expecting a certain rate of return, isnt there a contract for the borrower to perform? How is the government going to negate the contract?

This sounds like price controls, reminescent of the wage and price controls of the early 1970's. However, it appears to be confined to a single industry.

What is the legal basis for their authority to do this?

I suspect the courts will not allow them to do this.
 

bart nathan

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Jun 9, 2005
Professional Status
Certified Residential Appraiser
State
California
So if people cant afford the reset now in five years it wont be a problem??? I really dont get it. Maybe they dont either.
 

Jerry Lieb

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Joined
Aug 14, 2004
Professional Status
Certified General Appraiser
State
California
JCONNER3:

I didn't read that the president was stopping foreclosures. Where did you see that??

What I did see was the following, which may reduce the number of foreclosures, but I think only slightly.

"WASHINGTON - The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures, congressional aides said Wednesday."
 

john snyder

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Jul 27, 2002
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Certified General Appraiser
State
Michigan
Nice to see that our present administration still cannot identify WMD's - in this case Worst Mortgage Decisions - properly.



jbs
 

MARK JOLLIFF

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Oct 23, 2003
Professional Status
Licensed Appraiser
State
California
I can only see this working on loans that are NOT sold to investors.
 

Joyce Potts

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Feb 6, 2005
Professional Status
Certified Residential Appraiser
State
Florida

mwbode

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Jul 5, 2007
Professional Status
Certified Residential Appraiser
State
Florida
This is the begining stages of the government bail out. The next step will be the government picking up the bill because the investors that hold the debt won't negotiate. If I ponied up $100 million for a fixed income vehicle with an expected return I am not freezing or negotiating. The packages that were sold were sold as bond graded vehicles. It only works with a small amount of originators that still hold the debt on their books.
 
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