Homeowner Rescue Plan

[bubbly]

How do you think the homeowner rescue plan (if it passes) will affect the Seattle real estate bubble?
Here's a link to an article at Seattle Times that describes it:

http://seattletimes.nwsource.com/html/n ... ing25.html

[rose-colored-coolaid]

Ever heard of Humpty Dumpty?

[bubbly]

Any more input?
I'm worried because we are planning to buy in 2010 or later. Do you think that if this passes, Seattle home prices will remain the same/ continue to go down/ or is it even possible that prices will increase?

[Robroy]

[rose-colored-coolaid]

[Robroy]

[cheapseats]

If I read it right, this would cap the banks risk of RE-FI ing at 85% of original price?

This is interesting and would probably help out a decent percentage of owners outside of Fl, Nv, Oh, MI and Cali...

In all I don't care what they do as long as taxes don't pay for it.

[Ubersalad]

Someone said a great quote recently.

"I am not concern of the $5.00 gas price or the RE bubble, but rather I am concern of our government's reaction to $5.00 gas price and the RE bubble."

[Robroy]

[jillayne]

Hi bubbly,

In regards to the latest rescue plan, I like the provisions for national loan originator licensing and increased educational requirements along with a tougher competency exam.

I don't like the rest of the bill.

I do not believe this bill will have the intended effect. There's not enough money. Further, what will happen when these homeowners who have already proven themselves to be a bad credit risk, go into default a second time? Do we bail them out again?

I don't like the idea of equity sharing with the government. This chains a homeowner to a mortgage. It seems disrespectful.

Why not let these homeowners go into foreclosure and re-enter the real estate market as renters. They can begin rebuilding their credit NOW instead of postponing the inevitable.

[EconE]

Well stated Jillayne.

I think that people were given enough rope to hang themselves quite easily by the nature of many of the loans. It seems as if they are just trying to "loosen" the noose just enough so that the homeowner can barely breathe and will continue to be a debt slave to an asset that may absolutely NEVER recover even half it's bubble price value in the next two decades. Just imagine how much would be required to bail out just Los Angeles alone? The "bad" areas (gangland) that bubbled like crazy and are now being fire-saled at less than 30% of the last purchase price won't ever help an upside down homeowner in those areas. I know that using these areas is an extreme example but there were TONS of loans in these areas add them up and that's a significant chunk of change.

WRT to equity sharing program, I think that's a suckers bet. When they sell their house they won't even have enough to buy a comparable house let alone "move-up" the ladder unless they have saved a considerable amount of money during the interim and then want to "blow it all" on a comparable house. I think that people that sign up for one of these programs don't realize the math behind it much like they didn't understand the "math" behind their loan and this will do little more than keep them "priced in forever"...maybe literally. They will also get to pay the overinflated taxes rather than getting the inevitable over with...get out of the over-priced and over-leveraged home, rent for however long they need to and then buy back in when the prices are more realistic. Especially in the communities that have been and will continue to be hit hard.

Only problem is...how much of the debt is forgivable using whatever means available and what are the chances of their paychecks being garnished for many years to come?

[Notabull]