Jeffrey R. Scharf, Everybody's Business, Dec. 13, 2009: Federal...

To no one's surprise but the government's, the $75 billion Home Affordable Modification Program or HAMP is not achieving its goal. Full Story
PayRent

Watsonville, CA

#1 Dec 13, 2009
Suppose a homeowner owes $500,000 on a house that is now worth $400,000. It simply does not make economic sense for the homeowner to keep making payments even if they are affordable.Good, all you loser home gamblers move out. Go pay rent and try to live within your means. This tax payer bailout of idiots who could not afford homes in the first place is assinnighn.
Santa Cruz Citizen

United States

#2 Dec 13, 2009
Peoples life expectancies are getting longer.. so adjusting the term of mortgages longer benefits lender more than merely claiming a reduction on the principle.

However, typical financial calculations on a standard 30 year mortgage provides lenders three times the revenue than the purchace price.

Currently, a person is required to pays total principle within half that time, while lender gets free money for the duration of the mortgage.

Appraisals, finance terms, qualifying criteria all need to be modified from the get go - where an ounce of prevention is worth more than a pound of cure if America truly wants to be delivered from this dysfunctional business model.
Reality Check

United States

#3 Dec 13, 2009
Santa Cruz Citizen wrote:
...Currently, a person is required to pays total principle within half that time, while lender gets free money for the duration of the mortgage...
It's only 'free money' if capital has no value and there is no investment which would offer a return over 15 years. So 'free money' is a bit of a misnomer. Unless, of course, you want to loan me a bunch of money, and I promise to pay it all back (to the penny!) in fifteen years, with nothing but my thanks in return for the loan.

I do agree WRT creating a viable loan to begin with vs. the 'creative financing' model.
reality check 2

Felton, CA

#4 Dec 13, 2009
"The logical modification is to erase the second mortgage since it would be worthless in foreclosure. The homeowner would have his or her monthly payments reduced and would owe no more than the house is worth."

This seems like a very bad idea. I dont think tax payer $$ should be used to write off peoples flat screens, jet skis and granite counter tops.

Let home owners fail. let banks fail. Let the market adjust. Enough government manipulation. Finally, start investigating the crooks behind this mess and lets see some heads roll on wall street and main street.
Santa Cruz Citizen

Alameda, CA

#5 Dec 13, 2009
Reality Check wrote:
<quoted text>
It's only 'free money' if capital has no value and there is no investment which would offer a return over 15 years. So 'free money' is a bit of a misnomer. Unless, of course, you want to loan me a bunch of money, and I promise to pay it all back (to the penny!) in fifteen years, with nothing but my thanks in return for the loan.
I do agree WRT creating a viable loan to begin with vs. the 'creative financing' model.
I say free money because essentially that's what most of it is - free, under usury contextual meaning.

If the banks made a flat 20% of the principle within a 20 year finance schedule, they'd make more money and the domestic economy would flourish.

No, instead they wanna sit back like fat slobs and collect three times the principle, creating climate for failure, while holding property in question in collateral (or ransom - however you wanna put it) for doing essentially, nothing.

Given the above, everything this article reports just amounts to rabbit-brained tyranny-of-ditsy methodology that supportis some bank manager(s) phat income - behind the scenes - within those glass highrises downtown who don't want to be bothered to get off their arses and make competitant, responsible, rational or intellegent policies.

No, let the decent front end customer service people who were hired deal with the public and their irate animosity, instead !
Reality Check

United States

#6 Dec 13, 2009
Once again, if you want to give me a <1% loan, I'll be happy to take it. Let me know how much money you're willing to give me.

Me, I would not provide $100,000 today with the promise of getting $120,000 back over the course of twenty years. It would be foolish.

There are definitely some usurious folks out there, and a 8 or 9% loan is ridiculous when prime is 3%. Then again, one does have to account for defaults and the associated costs. Feel free to accumulate a large amount of capital and loan it out at 1%. Doesn't look like a good business model to me.
Aileen

London, UK

#7 Mar 26, 2014
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