I read that article and I belong to the NOT happy camp. This is NOT fair to the rest of the people. The banks and owners should work out the payments, without lowering the debt.

Responsible people will be paying through a bailout for this.
I understand that some people are over their heads because the RE market tanked. However, one should NEVER buy a house that costs more then 1 NET paycheck a month (mortgage). This way, even if things go wrong, you'll be able to always pay you mortgage. I've always lived by that rule. I live within my means. Then again, I worked and paid my way through college.

"I read that article and I belong to the NOT happy camp. This is NOT fair to the rest of the people. The banks and owners should work out the payments, without lowering the debt."

Why not? There are many reasons people are in bad financial situations and not because they caused it.
Taxpayers helped these institutions that were too big to fail, why can't it be the other way around and now they help the people who need it?

"I read that article and I belong to the NOT happy camp. This is NOT fair to the rest of the people. The banks and owners should work out the payments, without lowering the debt."
Why not? There are many reasons people are in bad financial situations and not because they caused it.
Taxpayers helped these institutions that were too big to fail, why can't it be the other way around and now they help the people who need it?
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Ummm, because either EVERYBODY gets 150k off their mortgages or nobody. As you can see taking off approx 150k means that these people probably live in homes that are not cheap.
Is it fair for some person who lives in a 130k house to pay for a bailout for someone who lives in a million dollar house?
I don't think so.
Besides, personal responsibility is the key. I'm not saying that banks should not work with the people to extend their loans etc, but to decrease their loans and make OTHER people pay through taxes (stimulus) is criminal.

We in this household are NOT in the same place we were a few years ago, so should we jump on the "irresponsible" bandwagon?

Oh yeah, next are BAILOUTS for the student loans....and I paid for my own college. This blows for me. I could have a nice retirement account.... if I only stuck it to the taxpayer! Gee sometimes, I wonder who is the fool. America is wonderful, just make your moves so the you can use OPM (other peoples' money).

"Ummm, because either EVERYBODY gets 150k off their mortgages or nobody."

Not everybody is in your position/situation, you seem to be doing ok.

"Besides, personal responsibility is the key."

Personal responsibility for what? Take responsibility for this recession/depression? Hardly.

Posted by berniek (My Page) on Sun, May 13, 12 at 18:08

"Ummm, because either EVERYBODY gets 150k off their mortgages or nobody."
Not everybody is in your position/situation, you seem to be doing ok.

"Besides, personal responsibility is the key."

Personal responsibility for what? Take responsibility for this recession/depression? Hardly.

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So you think that a person sitting in a restaurant, eating chopped steak should pay for the next guy's filet mignon?

Yes, this recession/depression has done most people in, but the ones who lived within their means (by eating chopped steak) are bailing the filet mignon-ers out.
Sorry, I disagree.

When I read this story I felt just like Notto, and then 5 seconds later I felt just like Berniek.
Both scenarios are crappy, and whichever way it is that we eventually get out of this mess, let's not divide this Country's people more than it currently is. Let's just remember that in the future, it does no good to make money too cheap. There should be some sensible requirements to get a loan. Not everyone will get there in their lifetime. that is just the way life is.

I hope no help is going to those that refinanced, pulled cash out and spent it on "toys". I see plenty of short sales were the current sales price is double the original price, but due to refinancing and pulling money out it is a short sale. Those sellers should be making a nice profit, but instead the taxpayers are covering the bank's losses. I believe that the redefault rate is pretty high among those that have received modifications. Let's hope BofA is picking their custoners carefully.

Not sure how people are reading "bailout" into this. The settlement with the Feds called for banks to spend $25 billion in loan modifications, not taxpayers. BoA repaid TARP funds almost immediately so they could start giving out big bonuses to managers again.

In the end, this is just a business proposition to the lender. A certain percentage of people always default not matter what the terms of a loan. That costs huge $$$ for the lender. The lenders are betting that by modifying loans, they will reduce that percentage.

"To be eligible for the principal reductions, however, homeowners will have to meet certain criteria, including: having a loan owned or serviced by Bank of America; owing more on the mortgage than their property is worth; and being at least 60 days behind on payments as of the end of January."

If I understand this correctly, homeowners who are up to date with their mortgage payments will not qualify. Is this correct?

>If I understand this correctly, homeowners who are up to date with their mortgage payments will not qualify. Is this correct?

Yes.

Socialize the losses, privatize the gains.

It is a perfect example of a moral hazard.

A third party covers the losses, the first party picks up the gains.

"So you think that a person sitting in a restaurant, eating chopped steak should pay for the next guy's filet mignon?

Yes, this recession/depression has done most people in, but the ones who lived within their means (by eating chopped steak) are bailing the filet mignon-ers out.
Sorry, I disagree."

I am not talking about people who caused their own demise. I'm saying the ones who ended up in a bad financial position THROUGH NO FAULT OF THEIR OWN.

Wouldn't it be more productive to allow people whose houses are worth less than the mortgage amount to refinance their mortgage at today's rate with no closing costs? It would seem to me it would be fair to those who continue to make payments as well as those have fallen behind in their obligation to the bank.

This does not really change my opinion of the banks. It is a prudent measure on their part, done as part of a settlement in the hopes of avoiding worse penalties/judgment. I do hope that it truly helps those who truly need it though.

BofA isn't just being nice. This is a reaction to some consumers choosing "strategic default." Lots of people are choosing to walk away from homes that are deeply underwater. They've done the calculation and are willing to take a credit hit instead of continuing paying for a $500k house that is only worth $250k. The bank is using some criteria to try to spot those people and offer to reduce the principle. Out of the ten of millions of underwater homeowners, BofA has identified 200k who are likely to choose "strategic default" and are offering to make a deal.

"BofA isn't just being nice. This is a reaction to some consumers choosing "strategic default.""

This.

BofA is figuring they can keep paying borrowers in the house.

The write down comes off the banks asset value the reserves are based on, but only the right down instead of the whole mortgage balance.

The new mortgage is a performing asset and BofA believes it is less likely to enter default.

It is less expensive to forgive some debt that foreclose.