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Wednesday, July 23, 2008

The Crumbling State

posted by on July 23 at 9:55 AM

So utterly shameless:

The House is expected to vote on the bill as early as Wednesday, and it could be sent to Mr. Bush’s desk by the end of the week.

Mr. Bush had voiced objections to a $3.9 billion provision that would give grants for local governments to purchase and refurbish foreclosed properties — a provision that the White House regards as a bailout.

But Mr. Bush set aside those objections on the advice of the Treasury secretary, Henry M. Paulson Jr., who told him that the overall package was necessary to help stabilize the housing and credit markets, according to the White House press secretary, Dana Perino, who announced the switch Wednesday morning. Ms. Perino said the gravity of the crisis, coupled with Congress’ plans to recess later this summer, was the reason for the reversal.

“The president would not have signed this bill if we had a lot of extra time on our hands,” Ms. Perino said. “We don’t.” Mr. Bush believed he could have won a veto fight with the Congress, but that he had concluded a prolonged veto fight would not be good for the housing industry, she said.

The $3.9 billion provision had been a subject of dispute between Mr. Bush and Congressional Democrats for months, and for a time, at least, Democrats seemed ready to concede. Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, said that if removing the grants from the bill was needed to get Mr. Bush’s signature, he was prepared to do so.

I have no words for this. None.

RSS icon Comments

1

Don't buy a house if you can't afford the mortgage. Simple math. Now we have to bail these shmucks out. Wouldn't it be better to just let the housing market reset itself anyway?

Posted by rottent666 | July 23, 2008 10:24 AM
2

$3.9 billion. To put this in perspective, or perhaps to blow this out of perspective, that's the cost of 2 weeks in Iraq.

Posted by Mahtli69 | July 23, 2008 10:31 AM
3

This better not help out the flippers who were looking to make their shady bucks. Since it sounds like it's gonna happen anyway, it better be for single homeowners ONLY. But I agree with rotten. There are a lot of people that did it right, saved up and had a fixed rate.

Posted by P to the J | July 23, 2008 10:33 AM
4

Local governments shouldn't put themselves on the hook to prop up property values.

Posted by Bellevue Ave | July 23, 2008 10:34 AM
5

also how exactly are cities going to value the homes? according to the assessed value for property taxes? yeah, putting a price floor on housing prices is really going to help the housing bubble completely deflate.

Posted by Bellevue Ave | July 23, 2008 10:38 AM
6

@1. i've seen more and more cases where an unscrupulous loan officer arranged for a mortgage that the schmuck had no idea was too expensive. meanwhile, the loan has already been sold.

Posted by infrequent | July 23, 2008 10:58 AM
7

@6 - You really have to be either an idiot or willfully ignorant to get into an ARM without first figuring out what the payments are going to be when the rates go up. I have a tough time feeling sorry for these people. However, I'm glad that this industry will be more regulated now.

Posted by Mahtli69 | July 23, 2008 11:43 AM
8

@7. when a loan officer misrepresents the income or assets of an individual, the crime is by former, not the latter. perhaps there should be some victim-blaming here. at first i felt these people were idiots or willfully ignorant... but at some point the person with more knowledge can scam the person with less -- even if they don't resort to falsifying records.

i don't think people should get a free ride. of course it's not fair for someone to keep a house they cannot and could not ever afford. but the negative effect this has had on our economy -- people who knew better taking advantage of those who did not -- effects me directly. and i don't think unscrupulous loan officers should be let off the hook for that.

i think each and every case of a falsified claim should result in a prosecution. i'd even go as far to say that any questionable loan should be examined to determine whether or not there misleading information given.

Posted by infrequent | July 23, 2008 11:57 AM
9

@7 ditto. People just assumed interest rates would be low forever. Whoops! This is one of the rare cases where the responsibility falls squarely on the shoulders of the consumer. Wishful thinking and no money down=bad investment. Screw em.

Posted by Rotten666 | July 23, 2008 12:10 PM
10

This comment thread has suddenly made me unhappy.

Although I have no direct interaction with these situations (I'm still in college and won't be buying a home for a while), I've grown up with a mother whose job is to educate prospective home owners on predatory lending. She works at a large midwest bank in "community reinvestment" (whatever that means).

What I have learned from her about this issue:

1) Intentionally lending to people who won't be able to pay off a mortgage is a fairly common practice, especially in urban areas (read St. Louis).

2) Rarely is it the fault of the client. Most come for family and educational situations where they know little about keeping a budget or balancing a checkbook, nevertheless how to deal with mortgages, loans, and contracts. The bad investments they made were based in lack of understanding, desire for homeownership (prerequisite for the "American dream"), and shady dealings by lenders.

3) The benefits of foreclosing on these homes now are few. Often, the new homeowners have become model custodians of their homes and model neighbors. Vacant housing doesn't help anyone.

4) If anyone, the lenders should be punished. They've placed these most often innocent borrowers into a horrible situation. They have made their money by risking the livelihoods of others.

I don't know how to improve the situation. I do know that mortgage lenders need more oversight and regulation. Maybe the government's "bailout" plan will help stabilize the victims of these situations and plans can be implemented so that malfeasances such as this cannot occur again.

Posted by Will in STL | July 23, 2008 12:55 PM
11

@8 - When a loan officer misrepresents the income or assets of an individual in order to secure a loan, then that should be considered fraud. The problem is that it was a completely unregulated industry, and apparently legal.

I do agree with @10 that the benefits of foreclosure are few. It seems to me that it would be in the interest of the lenders to renegotiate ridiculously bad loans with home owners. It makes far more sense for the lenders to provide a sensible mortgage than it does for them to sit on a foreclosed vacant property that loses value and brings in no income.

Posted by Mahtli69 | July 23, 2008 1:06 PM
12

it was a game of hot potato. those who knew the loans were risky had to get rid of them as quickly as possible. many got away with it, while some, more recently, were stuck holding bad loans. i agree with 10 way more than 9.

there are stories about the person who buys the mcmansion and the SUV and cannot afford either, but hopes rates would stay low. i have a hard time finding sympathy for them.

but i do have sympathy for someone who was trying to be responsible, but was duped into a loan they could not afford, while the loan officer planned to sell it off before it foreclosed.

it's a case of buyer beware where the buyer didn't know they had to beware.

Posted by infrequent | July 23, 2008 1:37 PM
13

Don't worry Charles -- it's possible we'll have to nationalize the entire mortgage industry, which will give you the biggest, drippiest Marxist hard-on achieved by you to-date.

Stay tuned.

Posted by Jubilation T. Cornball | July 23, 2008 2:22 PM
14

It's just too bad that the Dems always appear so eager to buckle to GWB's threats.
Pass the GD bills to help Americans and let the fucker veto them. Such amatuers.

Posted by Vince | July 23, 2008 3:05 PM

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