I have not even bothered to try to understand the details of Obama’s changes to the Student Loan program that he claims will help those impacted by his “recovery.”
A few of his other populist programs have been all PR with no actual effect:
- No income tax on phantom income when you sell your house with a short sale.
- Home Affordable Modification Program which was trumpeted as a solution to help people stay in their homes by paying lenders to reduce principle or interest.
- Home Affordable Foreclosure Alternatives that was supposed to make the torture of a short sale more bearable and give you a few bucks to help you move.
What all of these programs have in common is that virtually no one qualifies or is actually helped by them.
Big press conference, claim credit and the press almost never follows up with any results. As long as the intentions are good, that is all that matters. Was the “Road to Hell” a shovel ready project?
An Update
Mike Flynn posted an article from The Atlantic which says that “The monthly impact of the president’s new effort for most Americans paying off college debt will be between $4 and $8″. As phony as all his other programs.
A failed attempt at smoke and mirrors.
Steve, if there were easy bulletproof answers it would be easy. That best thing to do is offer some ideas.
The problem everybody is trying to help out with is obvious – the collapse of home prices coupled with it being hard to even sell a house, has a lot of people in desperate shape. Good people. By no fault of their own caught in a historic housing market collapse.
That means ordinary working families with kids forced out of their homesteads by the hundreds of thousands. I’ve been around a long time, never saw anything like.
So these mortgage relief efforts, good, bad, effective or not effective, all have the same goal: trying to relieve some of the burden on the families caught up in this. Do it in a way so we help those who should get help, without rewarding profiteers. I don’t see an easy solution. But I think we should be trying different things until we get something going.
When you think about it, ideas that are intended to help those in need, are very much in keeping with our Christian heritage.
How is it no fault of their own? Did they over extend themselves? Did they buy a house they really couldn’t afford? Were they house rich/cash poor? Based on your theory everyone who buys a new car should get a bailout?
Arthur, is nothing ever the fault of anything but the guy with the troubles?
Here’s part of what went on. During the frenzy to “securitize” mortgages, package them up to sell in billion dollar bundles, they ran out of normal mortgages. So the Wall Street brokers beat the bushes telling mortgage brokers to to sign up anything that walks in the door. That what BOA Countrywide, Morgan Stanley, Goldman Sachs and other have been found guilty of – knowingly buying up bad risk mortages, lining pockets to get them certified AAA, then selling them to pension funds here and abroad. Many states as well as the world’s biggest pension funds are suing claiming fraud and are winning. So that’s what was happening at the top. Banks and brokers creating demand and marketing subprime no prime deadbeat prime mortgages. If you don’t believe me google around. Read the court transcripts. See why Morgan Stanley had to pay restitution to Nevada homeowners.
So that’s the big side of it. Your idea that it’s the little guy that greedy has a kernel of truth in it, but a lot of little guys got suckered. I am not talking about person making 90K who decides he wants a million dollar house. Sure that’s reckless – but regardless – I hope you agree – the “system” is supposed to be set up so our banks Wilmington Trust et al have a fiduciary responsibility to protect investor against risky lending practices. Just because a hot shot comes in and says lend me $500K for a new house does not mean he gets it. The bank is there to make that calculation. Can this person pay.
Trouble is banks got disconnected by Wall Street buying up the mortgages. The banks didn’t care if the guy paid or not. They were not going to be holding the paper. Compounding that problem Arthur, is something new call “shadow banks”. Lenders with no real connection to banking, banking laws, or regulation. Countrywide, Capital One. Remember all those millions of TV ads?
Get a mortgage in two minutes? Do leave equity sitting in your house. Get a second mortgage? That’s why Countrywide is costing BOA billions and billions. They were not even really a bank. Their specialty was fishing for people willing to sign for a mortgage even if they had no job. Then Countrywide took all the bad paper sold it to Wall Street in bundles. Wall Street stamps it AAA and sells it to clueless investors all over the world. And AIG? AIG is the insurance company that said they would pay everybody if anything went wrong with those bundles.
But the little guy you think is to blame. You forget not everybody is astute like you and me. You’re probably not a sucker for the con. You may even have an above average IQ. So I can see why you would tend to thing everybody in America should be just as capable as you. Next time you go into a WaWa or a supermarket in a working class neighborhood – not upscale – working class – take a look around. Most people are not nearly as sharp astute as you Arthur. The average IQ is around 100. I suspect tens of million come in way less than that.
So an ordinary person sees a new housing development. He deals with a builder, a real estate broker, a bank, a lawyer, mixed in is an appraiser. The average person (before all this happened) entrusts this biggest purchase of a lifetime to these certified professionals. They tell him even if you can’t afford it, you can start with a teaser rate mortgage and by the time it expires this house will worth twice as much you simply refinance end up golden. Trust us.
And that is what millions upon millions of simple everyday working Americans did. Trust. Trust the bill of goods they were being sold was on the level. They didn’t know the appraiser and the builder and the bank and the broker were all looking out for themselves, not the ordinary Joe.
So when you say no sympathy no help for anybody you are talking about a different set of people maybe. I am talking about the ordinary gullible working folks that snared in the greatest real estate mortgage con in history.
So Bill the theory behind this assistance is to reward stupidity? I understand CMOs and CMBS but the biggest issue was the fraud committed on the sales of ARMs. The stupidity is when everyone thought they could buy a house and assumed their rate would never go up, only their income. They also assumed the tooth fairy would visit them. Probably about 20% of defaults were from no fault of their own. The rest had a large hand in their personal financial demise. this is also why 55% of those who got assistance in he first mortgage bailout re-defaulted.
Arthur, that’s one way to put it, rewarding stupidity. Maybe we should have started with the ethicality of signing up a mentally disabled person for a 30 years mortgage, then work our way up from there. Find a cut off point at maybe an 82 IQ. Truth is even very smart buyers sign on the dotted line based on trust. Very few know what’s in the papers they sign. It’s all based on faith and trust that the system is honest. In the last ten years the system got dishonest.
When the average ordinary unsophisticated buyer goes to buy a house or even refinance a house, that transaction is very much like going to a doctor. The average guy is suddenly way out of his zone of knowledge. Buying, financing a house puts most consumers in the hands of a system they assume they can trust. That trust was broken. It the reason the top 19 banks and brokers are being sued for $196 billion for tricking people into bad investments. You can’t just say people should be smart enough not to get tricked. That would be great. In the mean time, we put a boot on the neck of the cheaters, and cut the people cheated some slack.
The assumption is you can trust the bank, trust the builder, trust the appraiser, thrust the broker, thrust the lawyer. They, the trusted experts, they guide us through a system that ends with us sitting in front of two hundred pages of finely printed legal documents. You sign those documents one after another with very little understanding of what you’re signing. The only assurance you have is all the people you taught to trust are passing you the papers and saying “sign here” – and we all joke, ha ha you’re signing your life away ha ha.
A deal as complicated as buying a house is not like buying a TV.
Part of the reform laws created the Consumer Financial Protection Agency. The first thing on the CFPA agenda is to create a universal one page summary document clearly stating all the costs, all the terms of a mortgage. Sort of like what we did with credit card statements. Real clear english. I like the new credit card statements. I charged something big at Lowe’s years ago because they said no interest for 12 months. I paid it all at the end of twelve months but they did not apply it to my “extended terms” balance. They said I needed to call in when I wanted to pay that off so they know where to apply the payment. They said I owed the entire 12 months interest since I missed the deadline. I remember feeling sorry for dumb people. I thought I was a savvy guy and I got screwed. A guy got charged a $35 penalty for going over his credit limit on a $5 slice of pizza. That slice cost him $40. He didn’t know the bank would not decline the purchase, they would raise his limit, just charge a $35 dollar penalty.
I don’t charge that much, but I did notice the Lowe’s statement and the Visa statement are totally different now. Very clear. Less change of getting tricked.
We need to do that for the mortgage business. And see how we can help out the people who got sweet talked into signing all those papers nobody understand. It’s not as simple, hey it’s on you pal. That’s the way mobsters look at things. If your dumb enough to get conned, that’s on you.
All Our Little Red Star does is talk. It’s really the only area in which he’s competent, and then, only with a teleprompter and with a bunch of stooges nodding in the background.
BO has been tuned-out. Vacuous blabbing can only take you so far.
“Twinkle, twinkle,
Little Red Star,
Who’d have thought,
You’d fall so far?”