Bailout question . . .

[chrisg]

Re: Bailout question . . .

Ok, being 'joe home owner' with WaMu, who holds my mortgage going under, does that mean someone will come along and say, 'pay up now!" causing me to be out?

Or this is only those who gambled and lost?

 

[CBC]

Re: Bailout question . . .

Chris, as long as you are current on your Mortgage you have nothing to worry about.

 

[slia67]

Re: Bailout question . . .

Agree ^^^, again who is the loser? The original banks who should be right? Could you apply your understadnign to my question above? Would that not also make some sense, save Joe in the process?

Going forward, your idea would help Joe. The problem lies in the fact that the market for all of these structured mortgage debt products is dried up, and accounting practices require that the securities are priced to market (which is non-existent, like my apple metaphor). And without the intervention of "someone" to back the paper and say that it won't be worthless, these companies are locked up without the assets on their books to be able to loan money. And, as JB said, without credit this country will shut down.

Hopefully this answered your question a little better.

 

[slia67]

Re: Bailout question . . .

Ok, being 'joe home owner' with WaMu, who holds my mortgage going under, does that mean someone will come along and say, 'pay up now!" causing me to be out?

Or this is only those who gambled and lost?

No, JP Morgan will be taking over Wash Mut banking operations and their loan portfolios. Just keep paying your mortgage and you will be fine.

 

[Limited-Time]

Re: Bailout question . . .

Ok, being 'joe home owner' with WaMu, who holds my mortgage going under, does that mean someone will come along and say, 'pay up now!" causing me to be out?

Or this is only those who gambled and lost?

The terms of your mortgage do not (or cannot) change just because the note is sold. Which in essence is what is happening when someone bails out WaMu.

 

[fdmsiv]

Re: Bailout question . . .

. Who is the loser here? What am I missing?

In this senario Joe would be getting a 75k house for 50k. If the house price dipped, Joe wouldn't feel it for quite some time because he is still 25k in the black. Good for Joe, terrible for taxpayers that get left paying Joe the 25k.

My issue with the bail out is there are no losers. The only game I know of where everyone wins is a rigged game.

Correct me if I am wrong, but the bail out seems to be based on the notion that house prices are always going to go up. Isn't that what go us into this mess? We are going to pay big bucks to keep the status quo!

 

[waterinthefuel]

Re: Bailout question . . .

God bless GWB, he tried to explain what happened in his speech the other night, but as in most cases, I'm too stupid to know what the eff happened. I know that bailing out these companies is necessary, but to me it just rewards poor financial planning, like parents who bail out their son or daughter financially after they run up credit card bills they can't afford to pay.

 

[QC]

Re: Bailout question . . .

I think you're wrong, fdmsiv, the bank that "sold" the loan to the feds for 50 cents on the dollar lost the $25K . . . How has the tax payer been hurt if they pay 50K and then get 50K for Joe's new (lower) loan? The tax payer is being paid by Joe and/or the bank that buys the $50K loan. So the loser is the one who took the risk, as it should be (loses $25K). Joe comes out smelling better than he probably should, but so what?

And for witf, If we agree that a bailout is necessary to maintain credit in our economy, then we need a bailout . . .

 

[JB]

Re: Bailout question . . .

Joe and the lender both behaved irresponsibly, so both should take the loss. Neither should be "bailed out" if that bailout frees them of the consequences of bad decisions.

The President's plan, however improved, simply cuts the losses. Everybody loses who took irresponsible gambles but the credit market and our economy are rescued from total collapse.

Responsible citizens and responsible lenders will not be hurt as long as they pay what they agreed to pay.

If the market value of your home has dropped it is irrelevant unless you have depended on a plan to reap profits by selling or refinancing. Then you are hurt by losing a gamble. People who lose at gambling are victims only of their own decisions.

"Equity" is meaningless unless and until sold. Keep your home, pay your mortgage and you will be okay.

 

[QC]

Re: Bailout question . . .

I agree JB. Poor choice of words when I said "So the loser is the one who took the risk, as it should be" . . . However, the law allows the homeowner to walk away by filing Bankruptcy, so there is only a moral responsibility to pay. Of course this was understood by the people who give loans out as a profession . . . So, the "risk taker" does end up with the loss.

The President's plan should not ultimately affect taxpayers, but I do not think the public understands this properly, and I blame the media.

 

[seven up]

Re: Bailout question . . .

QC

The problems with offering Joe a reduced mortgage is that all those who have bought the securities investments that contain Joe's mortgage have just lost money.

What happens ? One thing, for instance, is the value of your 401k drops. The money we put in every week doesn't just sit there in the office safe. It's pooled and invested. Invested in everything. Stocks, bonds, securities. Ah Ha. Securities. There's Joe's mortgage.

Another possibility. The company that bought securities investments that contain Joe's mortgage was just devalued. Company devalued so less equity available to borrow money for day-to-day operations such as our paychecks.

Maybe you can tell that it is very complicated. Cut too much and it comes right back at ya.

 

[SgtMaj]

Re: Bailout question . . .

I like this guys idea.

http://viviangrant.wordpress.com/2008/09/25/the-birk-economic-recovery-plan/

LOL, I've seen first graders with better math skills...

85 billion divided by 200 million = 425, not 425,000.

 

[Vlad D Impeller]

Re: Bailout question . . .

By hook or by crook, make no mistake about it, the credit system will have to be rescued, we have to seize the opportunity now and buy in cheap where the chances are good that a profit can later be made.

When we rescued the Mexican economy in the 90's, there was a lot of balking and bellicose statements made by quite a few shortsighted politicians, just as they're doing today, well the loud mouthed blowhards were proven to be flat out wrong, the taxpayers made a profit on that rescue plan, which in turn did it's part in helping to reduce the deficit.

They screamed and yelled about the Savings & Loan debacle back in the 80's, again the taxpayer did indeed made a profit.

This is not some socialist nationalization plan as many are led to believe, this is business, a good solid free market capitalist society at its finest hour.

These folks in Washington need to get their fingers out of their arses and move on the President's/Paulson's plan, American businesses need credit to maintain their everyday fiscal demands, it won't take long for them to default, lets hope that your paycheck is on time.

If that happens and the markets around the world loses confidence, we will be in for one hell of a rollercoaster ride.

 

[Ship Boy]

Re: Bailout question . . .

gone to non polictical forum

 

[QC]

Re: Bailout question . . .

The problems with offering Joe a reduced mortgage is that all those who have bought the securities investments that contain Joe's mortgage have just lost money.

Got it!!! And that is exactly what I was missing. If the bailout gets to Joe, then the ultimate losses are real, not paper, and there is no opportunity to recover the original principal. Thank you!!

OK, time for me to break my own edict and possibly some iboats forum guidelines . . . . Vladster, this (or that ^^^^) was and is an excellent post!!!!! (BTW, if I am in any kinda trouble, just remember Vlad started it)

By hook or by crook, make no mistake about it, the credit system will have to be rescued . . . When we rescued the Mexican economy in the 90's . . . the taxpayers made a profit on that rescue plan . . . They screamed and yelled about the Savings & Loan debacle back in the 80's, again the taxpayer did indeed made a profit.

This is not some socialist nationalization plan as many are led to believe, this is business, a good solid free market capitalist society at its finest hour.

Why is this so hard for most to understand? Why are so many of our citizens so invested in negative thoughts about our system of government that they think that no matter what happens they are being screwed by some big bad Bogey man that meets with the other Bogey men in a room and plots their destruction? Steals from them, and sends our young men to war to make money for the Bogey Club? Why? What do they get from it? The only answer I can ever come up with is that it makes them feel better about their own failures if they can blame somebody else.

there was a lot of balking and bellicose statements made by quite a few shortsighted politicians, just as they're doing today, well the loud mouthed blowhards were proven to be flat out wrong.

These folks in Washington need to get their fingers out of their arses and move on the President's/Paulson's plan, American businesses need credit to maintain their everyday fiscal demands, it won't take long for them to default, lets hope that your paycheck is on time.

If that happens and the markets around the world loses confidence, we will be in for one hell of a rollercoaster ride.

And if that happens I will blame the media and some of our politicians for not reporting the realities of this need and the phony way in which they feed the fear of the Great Bogey Man in the sky . . .

 

[Drowned Rat]

Re: Bailout question . . .

So what happens if this bailout takes place, then the market does turn around eventually and the government is left with some valuable property (loans)? Who gets the money? The taxpayers are on the hook to make the bailout happen, but the last I heard there was no language in the legislation as to what will happen with any profits that may be gleaned from this action. Presumably it would be returned to the taxpayers, but in what manner or at all.

 

[JB]

Re: Bailout question . . .

Profits or losses will go into the treasury.

 

[Drowned Rat]

Re: Bailout question . . .

Profits or losses will go into the treasury.

Right, but then what? Rebates? Tax cuts? None of the above?

 

[QC]

Re: Bailout question . . .

National debt goes up or down . . . No tax increase to fund, so no tax rebate when we get it back . . . None of the above

 

[Tail_Gunner]

Re: Bailout question . . .

Generally i would step in a thread such as this and flame away at the core issue

In this instance i will try to gently wade in here and make a small and very simple comment....Our government is working....maybe.... the USA is working...but pay attention here the global Econ is not.... and our people in the house seem to be of the same voice...this time the USA will not bail out the world..

And that is the problem the world econ... the one world dream is in deep trouble...

Dont like this comment ....watch the next few weeks of google how the asian's are nationalizing European banks...That's right Asia is buying Europe..