Bank Of America to forgive large % of mortgages debt

[pembquist]

Love to reply but I figure it will be considered political.  All for personal responsibility and all but....  A well run financial system would never be on the brink of collapse because of home mortgage defaulters.  Metaphorically speaking the mortgages were the horses at the track and the collapse was in the OTB parlor.  Lot more money tied up in OTB then horseflesh.  No way to run a railroad thats for sure.

[Bodhi]

The ramifications of these debt forgiveness measures is going to trickle down (as previously mentioned) into higher costs for those that do not default and the expectation of future forgiveness measures in the future.  In fact, my bet is that this forgiveness has exactly the opposite effect and actually encourages more people to over extend in the hopes of potential debt forgiveness.

It is no wonder that personal responsibility is at an all time low.

[Rob52240]

That money is not just lost. It will filter into what paying customers have to pay. So in reality we are paying for the deadbeats.

So you blame the 'deadbeats' but not the 'money dummies' that loaned them the money?  Or the 'suit dummies' who "forced" them to loan the money to people with no income, or fixed address? 

[zack1234]

Can i borrow $10 of someone?

[morfiend]

I hope the canadian banks start doing this also;
http://finance.yahoo.com/news/bank-america-starts-mortgage-reduction-100202589.html

  Wont happen as there is no need,Canadian banks didnt get into the trouble that the US banks did.
   However if you hear they are thinking about it let me know,I'll go get a mortgage so I can be forgiven too.....  




    



  

[Shuffler]

I took it you are saying all those in forecloser are deadbeats....maybe I took it wrong....if that's what you are saying...well I stand by what I said.

Not all but most.  My point was that the banks were forced to ok loans to individuals that would generally have been turned down. These are the ones that usually might make one or two payments then find out they also have to pay taxes, upkeep... etc. They then quit paying and get mad when the bank wants it's money.

Some folks lost jobs and then there are the general lot for one issue or another (like medical). Those are not the ones I am refering to.

[SmokinLoon]

Real shame that banks were forced to loan to folks who did not qualify then have to forgive the loans because the person could not pay them.

THIS is the root cause of the mortgage/housing crisis.  The standards were LOWERED and hence the problems we have today.  Fact.

[zack1234]

Its shocking forcing people to borrow money

[Shamus]

Love to reply but I figure it will be considered political.  All for personal responsibility and all but....  A well run financial system would never be on the brink of collapse because of home mortgage defaulters.  Metaphorically speaking the mortgages were the horses at the track and the collapse was in the OTB parlor.  Lot more money tied up in OTB then horseflesh.  No way to run a railroad thats for sure.

This is pretty much it. When the investment bankers found that they could collateralize subprimes into derivatives with investment grade ratings, take a cut and sell them on the open market it was off to the races, they were clamoring to the brokers to produce more paper. Then we allowed commercial banks to merge with investment banks which put the commercial banks at risk and strapped the FDIC in the end.

shamus  

[zack1234]

I believe Chrysler remorgaged all thier real estate 

[Rob52240]

Ever gone to the bank for a small loan only to have them try and talk you into a much larger loan?

It was typically how everyone's loan process worked before the crash.

[klingan]

Ever gone to the bank for a small loan only to have them try and talk you into a much larger loan?

It was typically how everyone's loan process worked before the crash.

Not really the same as forcing, is it?

[katanaso]

It was a little different than being talked into a larger loan.

People were financing 105% or more through fancy mechanisms, getting interest-only loans, and then couldn't pay them when they adjusted after the 5 year period was up.

In order to even afford these interest-only payments, putting nothing down, they were avoiding PMI through other mechanisms as well.  So a lot of these people couldn't have afforded more than what they had.

The lenders were also slicing and dicing the mortgages so many ways, packaging bad loans with good loans, that it was bound to crash and burn, which it did.  This is where the bank bailouts came into play a few years ago.

It's so widespread that it's become everybody's problem now.  Normally, the bank would take the home and the family would have to vacate the premise, but when it's hundreds of thousands of families, it can't happen that way.

So the responsible ones, who didn't borrow more than they could afford, are really the ones who get screwed. 

I'm not talking about the percentage of folks who lost value on their houses after buying during the height of the market.  I know several people that did that -- bought condos for $180K and they're worth under $30K right now (South Florida).  However, they could afford the $180K.  That was a bad decision on their part.

I'm talking about the percentage that bought more than they should've bought in the first place.

[pembquist]

The thread that plots a perilous course around the shoals of politics, piloted by a dead horse.  I gotta say this mortgage thing is a red herring.  The thing that killed us was a financial crisis.  You can blame deadbeat borrowers but thats like blaming the horse for losing the race and causing you to lose your kids college fund.  Mind you I'm totally p.o.ed at my idiot neighbors and their borrowing.  The worst are people in no recourse states that bought a slew of 'investment' property and played the game until it ran out and then walked away.  But frankly these are just the little scummy leaches and they are always with us.  I think its just a distraction.  The amount of debt directly at risk of default was not the problem, the big numbers were the derivatives that were based on the debt, and the big problem was that you couldn't really know who was in trouble.  Credit Default Swaps are the most famous and easiest to understand of these trades.  The structural problems are still substantially there and I predict we will have another disaster within the next 20 years.  You can take that to the bank, its up to you if you want to deposit it.

[HL117]

The ramifications of these debt forgiveness measures is going to trickle down (as previously mentioned) into higher costs for those that do not default and the expectation of future forgiveness measures in the future.  In fact, my bet is that this forgiveness has exactly the opposite effect and actually encourages more people to over extend in the hopes of potential debt forgiveness.

It is no wonder that personal responsibility is at an all time low.

I feel robbed ..............come and get me John Galt!