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Freezing interest rates for 5 years

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wayne forbes

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A friend asked me "How will freezing interest rates on subprime loans benefit the appraisal industry as far as work?"
 

David Wimpelberg

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A friend asked me "How will freezing interest rates on subprime loans benefit the appraisal industry as far as work?"

I don't see how it would. Simply freezing rates for five years pretty much guarantees that those homes will not be appraised. If the market was left alone, appraisals would likely be needed for refi's to lock in rates (especially given the strong likelihood of high LTVs), or appraisal work due to to foreclosures and bankruptcies.
 

Rudy Canoza

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I made a bad decision buying my car and got locked in to a high interest rate. I'm about to have it repossessed. I sure hope the nanny state bails me out. Oh, and I could use help with my credit cards while your at it...

heh...

Anyway, I'm all for helping the truly needy. But I have a problem with individuals who didn't read their contract or seek help if they read it but didn't understand it.

Here's an idea, rather than making tax payers help the poor uneducated borrower, make the lender bail them out. Bet they rethink their lending and appraisal policy if they must hold the bag for the loan for a fixed period of time if the poor uneducated borrower they mortgaged goes south...
 

fritzvogel

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Go for it Rudy, I'm tired of paying for the.....people who....think they can....get away with being stupid. If we keep this bailing s**t up the ship will SINK!
 

wayne forbes

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If it is frozen, would that that give the borrower some time to get out of it? Maybe not in the short term, but in the long run? Or are they going to wait until 4 years and 11 months again.
 

KenRossman

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I very seriously doubt it would impact appraisers one way or the other... The vast majority of those affected are likely already upside down on equity or would not qualify to refinance anyway under the far more stringent requirements - post meltdown.

How are taxpayers being made to help anyone??? Under the plans being discussed, the lenders will be voluntarily :) freezing rates for a relatively narrow group of borrowers.

Am I missing something?
 

Dennis J. Black ASA IFAS

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They can't freeze rates

Not going to happen. Maybe some lenders will modify their mortgage notes but the government will not IMPOSE anything. This is politicans trying to look good.
 

Rudy Canoza

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Congress is making noises about doing something to help homeowners who can't meet their mortgage payments hold on to their slice of the American Dream.

Democratic presidential frontrunner Hillary Clinton, senator from New York, wants even lower mortgage rates for homeowners facing foreclosure. Senate Banking Committee Chairman Chris Dodd, Democrat of Connecticut, and House Financial Services Chairman Barney Frank, Democrat of Massachusetts, are holding hearings to determine Congress's legislative options.

Bailing out borrowers also means bailing out lenders. If lenders have to foreclose then they usually have to sell the house for less than the loan amount which means an actual loss to the lenders. That threat of loss gives lenders a motive to help borrowers by restructuring the loans, maybe extending the time to repay.

On the other hand, using our tax dollars to keep people in houses they cannot afford would be "socializing" lenders' losses, meaning taxpayers like you and me would be footing the bill and guaranteeing the profits of the lenders.

Edited to add: Clickity-click...
 
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Mztk1

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Right now, interest rates are pretty darn low. But that is having an effect on the value of the dollar. The economy is caught on a fence. Either lower interest rates and devalue the dollar, or raise rates and destroy the housing market even deeper than what some economists already call a "housing depression". If you hold interest rates on mortgages (on the adjustables, at the lower rates they are now) you can then allow the overall rate to go back up without hurting the people, thereby resurrecting the dollar.

This isn't a matter of a nanny-state, it is the matter of poor federal fiscal policies and deregulation on the lending industry that allowed what was nearly an open ended lending policy. Not long ago the current administration was bragging about the "ownership society", and how home ownership was at the highest levels in our history (nearly 70%). That's a feather in their cap, and it should be. But the fact is we deregged to get the people in those houses, gave out money like it was worth the price of dirt, and now we have to figure a way to keep money valuable AND keep the people in their houses. Freezing interest rates is not a panacea, but it can help a bit.

How does it help appraisers? It gives consuumers confidence to own a house, and to take a mortgage. It wasn't long ago that people preferred to rent. They are beginning again to rather rent than own. If that happens, there will be fewer owners and fewer people to refi and to buy and sell. We will be caught in a longer cycle of limited work.
 

Terrel L. Shields

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Oh, and I could use help with my credit cards while your at it...
funny about all those brilliant bankers who got the bankruptcy laws changed so you cannot write off CC debts as easy....make the CC payments, skip the house payment..they have to work that out. :) smooth move exlax...
Right now, interest rates are pretty darn low
the problem is not the interest..its the principal and the only way to change that is inflation...rob the value via inflation then a few years down the road you can refi.... Negative interest rates won't help a lot of these investors who bought 4 new houses and was going to flip for a profit in 6 months.
 
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