Wednesday, May 6, 2009

U.S. Senate: Fuck New Homebuyers

Senate moves toward easing mortgage terms

By ANNE FLAHERTY, Associated Press Writer Anne Flaherty, Associated Press Writer

WASHINGTON – Trying to curb home foreclosures, the Senate voted on Wednesday to make it easier for homeowners with risky credit [READ: PEOPLE WHO SHOULDN'T QUALIFY AS HOMEOWNERS] to switch to a lower-cost mortgage backed by the government [READ: YOU AND I]. The bill, passed 91-5, also would give banks a break by encouraging reduced fees they must pay for the government to insure deposits.

While both steps put taxpayer money on the line, lawmakers say the legislation is needed to prevent the economy from getting worse.

"Given the size and scope of the struggles too many Nevadans and Americans endure, it will take more time before housing normalizes again," said Senate Majority Leader Harry Reid, D-Nev. "But with this bill, we are working to hasten that day so that no family will ever accept losing its home as the way it is."


Also on Wednesday, the House agreed to a Senate-passed bill that would hire hundreds more FBI agents and prosecutors to investigate mortgage fraud. The legislation, expected to reach the president's desk soon, also would establish a $5 million, independent commission to investigate the cause of the financial crisis and chart a path forward. [A LITTLE LATE, DON'T YOU THINK? PLUS, I DON'T THINK OBAMA'S BANKING PUPPET MASTERS ARE GOING TO ALLOW THIS COMMISSION TO DIG TOO DEEP.]

The Senate housing bill would expand an existing $300 billion program called "Hope for Homeowners," which encourages lenders to write down an individual's mortgage if the homeowner agrees to pay an insurance premium. The program, which is set to expire in 2011, is intended to swap out a homeowner's high-interest rate for a 30-year fixed loan backed by the Federal Housing Administration.

So far, the program has been a dud. [LOL!]

When it was established last year, Congress envisioned helping some 400,000 troubled homeowners. But because eligibility requirements were so strict, one borrower has completed the refinancing process and only 51 more are in the works, according to statistics released last week.


The Senate bill would expand eligibility. For example, the program currently bans participants who intentionally defaulted on the mortgage or other substantial debt. The Senate bill would narrow that prohibition to defaults within the last five years. [YOU. MUST. BE. FUCKING. JOKING.]


Still, some Republicans warned that increasing the burden of the government to insure risky mortgages — even if it saves people from foreclosure — could backfire. [YA THINK?] Sen. David Vitter, R-La., who called the Federal Housing Administration a potential "ticking time bomb," proposed letting the administration suspend any programs that threaten its solvency.

His effort was defeated 36-56.

Another issue is whether Hope for Homeowners will be enough to keep people in their homes, considering other voluntary efforts haven't provided homeowners steep discounts. According to a report released last month by federal regulators, fewer than half of the loan modifications made by lenders at the end of last year reduced payments by more than 10 percent. [HAHAHA! "BROWNIE, YOU'RE DOIN' A HECKUVA JOB!"]


And here are a few choice quotes from a February LA Times article discussing the near-immediate failure of the Hope for Homeowners bill:

"The program restrictions have proven to be more and more difficult over time, as economic conditions worsen," HOPE for Homeowners Executive Director Meg Burns said at a House Financial Services Committee hearing in Washington on Tuesday. "At this stage in the mortgage crisis, program standards that effectively shut out large numbers of families in trouble may only perpetuate the foreclosure crisis." [THE ONLY PEOPLE BEING "SHUT OUT" ARE THOSE WHO HAVE ABSOLUTELY NO CHANCE AT AFFORDING THE HOME--NO MATTER WHAT CHANGES ARE MADE TO THEIR MORTGAGE. THIS IS A GOOD THING, DUMMY.]

Committee Chairman Barney Frank (D-Mass.) has scheduled votes today on a bill that would allow HUD to loosen pricing restrictions and reduce the amount of losses banks would have to take in some instances to participate. Legislation that created the program was "drafted badly" in a rush to insure taxpayers against losses, Frank said. [HEY BARNEY, I CAN'T THINK OF ANYTHING BETTER TO DRAFT "IN A RUSH" THAN LEGISLATION TO PROTECT TAXPAYERS FROM THE INEVITABLE DEFAULTS OF INSOLVENT HOMEDEBTORS.]

As you can see, the vast majority of politicians are focused on ensuring insolvent deadbeats get to keep houses they could never afford in the first place--all to keep house prices inflated and unaffordable to hardworking, prudent citizens.

The lesson? Go ahead and bite off more than you can chew and take absurd risks because Uncle Gov will always be there to rescue the "victims" from their own greed and irresponsibility.


  1. yep, it sure is a sad comment on the times. Whatever happened to "Personal Responsibility"? I guess our overlords have decided we don't need it anymore.

  2. One of the reasons that we threw in the towel on homebuying: when our agent called on a few of the more desirable short sales in our price range several of the listing agents told her that the seller wasn't actually trying to sell the place. Confused? Us too! Turns out the short sale was a measure to appease the bank and they were waiting to see if government loan remodification programs came into play (listing agents obviously didn't put it in those terms, but that's pretty much how it boiled down). I would never have thought that waiting for a handout was prudent financial strategy, but it looks like they might have been right!

  3. Drjim,

    Personal Responsibility is as dead as a doornail, it seems. Can I get a bailout for those shares of Sirius I bought five years ago?

  4. Jen,

    I think you made the right move by throwing in the towel for now. I suspected many short sales were just a ruse for buyers to get somewhere with the bank regarding loan modifications ("See? Nobody wants to buy it, so you'd better lower our rate to keep us in it!") and for banks to stall for more time ("We contributed mad dolla's to your campaign, so hook us up, yo!").

    As this article illustrates, no amount of government intervention--outside of cutting $30,000 checks to each citizen--can change the fact that people have been spread way too thin trying to squeeze into homes they couldn't realistically afford.

    Someone in the CalculatedRisk comments mentioned that July might see a spike in municipal worker layoffs. And those homeowners (and potential homeowners) are generally considered to have some of the most "secure" jobs. That can't possibly have a positive effect.

    It's weird to me that people think our economy is on the mend and that very soon home prices will shoot up like Scott Weiland in a New Orleans motel.

    Interest rates can only go up from here, meaning home prices can only go down. Or maybe I'm just blinded by my own bearishness.

  5. Okay, so I am sitting here in a hotel in Indianapolis I read this shit.

    My patience is wearing thin. VERY Thin.

    Let those who can not afford the home give it up, and let those who can afford it move in (as of now I may not).

    How about this for a bailout plan. Let those home owners go into foreclosure, and pass a law that says that it will only appear on their credit report for 4 years. :) See, I can compromise.

    But maybe I can get some money for the not announced, but I am sure soon to come, Credit Card bailout.


  6. I feel really good too. The fraud brigade keep their formerly 800K (today 500K+/-) homes with payments on a 350K low interest mortgage. I have the pre-approval letter for the purchase of a 400K home, that qualifies me to buy a house in the ghetto... And in the eyes of some spoiled, rotten, slimy used house salesmen I'm a filthy bum.


  7. I love, love, love your blog, and your writing style, that, well, I have blog crush on you. But my question is, do you ever write about something good happening in LB real estate? I'm a poor working class gal hoping to buy a little condo, but your blog scares the crap out of me.

  8. Anonymous working class gal,

    Ha, I know this blog mostly focuses on the negative but, to be frank, there's very little positive news to report on. I am the first to say when a property is cool (Tuesday's post will feature one) or approaching a good value, but the fact is that is very rare in this current housing environment. But I assure you, once good things start happening in Long Beach real estate, I will go tell it on the mountain. Remember: More than anything I want to buy a house in LB, so I have a vested interest in things getting better.

    And things will get better. The massive amounts of inventory that will hit the market in the coming months, in conjunction with rising unemployment, will put further downward pressure on home prices.

    I know it seems like normal "working class" guys and gals will be priced out forever given the painfully slow return to normalcy and the government's attempts to re-inflate the housing bubble, but keep in mind that as recently as EIGHT YEARS AGO, working class people could afford decent homes.

    I assure you the days when buying is cheaper than renting will return (and especially little condos like you're waiting for). As much as current Fucked Buyers don't want those days to come back, you can't fight basic economics.

    And as far as your blog crush goes, maybe I should turn RE in the LBC into a dating site. :)