WASHINGTON (AP) -- Amid new signs that the housing slump is worsening, key Senate Democrats said Wednesday that hundreds of millions of dollars of new federal aid may be needed to assist homeowners at risk of foreclosure.
The call for federal involvement from New York Democrat Charles Schumer, chairman of the Joint Economic Committee, came on the same day the National Association of Realtors forecast that the median price for existing homes will decline for the first time since 1968 as a sales slump worsens.
"We will be proposing significant amounts of dollars," Schumer told reporters after being asked if a large federal bailout may be needed.
Questions:
1. Didn't these FB's ("Failed" Borrowers) already get their tax break for owning over renting?
2. Will these "significant amounts of dollars" be paid for by those who have been saving and waiting patiently to be able to afford a home without exotic lending?
3. Can I get bailed out for my pets.com fiasco?
5 comments:
I am very sorry that mortgage holders (one isn't a homeowner until one OWNS the house)are in such a mess. The problem is not just the sub-prime, or alt-A, but also the prime mortgage holders who overbought. All are subject to financial hardships, declining equity values, and increasing mortgage payments. I have friends who face all of those issues, but I can't see bailing them out. Again, a "false" economy will be propped up artificially by the Feds. The long term effects could well be another financial disaster. Two wrongs do not make a right.
I do not want to sound heartless, but I am a realist. The suffering mortgage holders probably should consult a lawyer, and cut their loses. Get out of bad situation, rent temporarily until the market settles to something reasonable, and wait to purchase a home with a TRUE value based on cost of materials, schools, area with a reasonable profit for all involved in the sale.
Not every RE market suffered what the DC metro is going through. Maybe finding a decent job in an area where housing is reasonably priced (and there are many large metro areas with beautiful well-made houses, great schools and strong jobs markets) is a good solution to living the "American dream." It may be a while before "dust settles" and middle-class citizens in this area can really afford a well-made home in a safe area with good schools. No one should pay 50% of their take home pay on housing. That is a accident waiting to happen.
At least Bush can use that veto for something that i'll actually support...first in 7 years!
@kcwood,
Well put. I do believe that renting is likely an option for those facing foreclosure. In some cases, as in areas around Northern VA, it may even be the "less financially painful" option, and it probably should have been considered in lieu of buying in the first place.
Of course, the problem doesn't just lie with recent overpriced purchases (as the price declines on this blog show), but with those who re-financed and "cashed out". We are continually barraged with advertisements to do just this. To "tap into home equity" and "lower credit card bills".
Somehow the lenders (if indeed they made foolish loans) should face the music for this, and not the taxpayers.
@John
:-)
Absolutely OUTRAGEOUS. These loans were APPROVED by those in the industry and were enabled by regulators that turned a blind eye to what was going on. People were treating the housing market as though it were an arbitrage arena. As with any investment, there's no guarantee of future performance - and if you gave it some thought, you saw this coming. I did not place myself in jeopardy, will I get a lump sum to help me with my down payment when I do finally buy a home?
If this gains momentum, we all need to rise up and let our collective voices be heard. I'll not shoulder the financial burden of bailing out people who were irresponsible with their finances to begin with.
All I know is that i'm happy to pay for a mortgage in something I deem as affordable... until then, i'm just happy to think I timed at least one thing right in my life by negotiating my RENT down in 2003, so i'll sit in my nice rental house until then.
With this bailout thing, i'm honestly not that worried about it happening... first, having GROWN up here, by the time anything actually happens, a boatload of resets will have happened... unless i hear something about getting a new mortgage at "market value" vs. what the current mortgage is and some sort of debt forgiveness... then i'd worry.
If you step back and consider the facts (or at least the facts as my aged mind remembers them)... between 2005-2006 30-40% of home purchases were for 2nd home (investments) or "vacation homes"... and in that timeframe I think 20-30% of them were with suicide type loans...
Prices didn't run up because of the "victims" that are being portrayed in all the articles... prices ran up mostly because of investors... even with a govt. sanctioned refi, whats the effect? not much in my opinion.
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