CA Uses Taxpayer $$ to Reduce Underwater Mortgages

[RoyGBiv]

No surprise that California is planning to be the first state in the country to use federal tax dollars to reduce the loan principals on underwater mortgages. The original CA plan was to share the write down 50-50 with banks. When the banks refused, CA decided to take on 100% of the write down, up to $100,000 per home.

The upside here, I predict, will be the unparalleled voter fury that will result from this undertaking.

http://www.foxnews.com/politics/2012/08 ... eir-share/" onclick="window.open(this.href);return false;

California took the unprecedented step this month to give banks and struggling homeowners up to $100,000 in taxpayer funds to reduce underwater mortgages.

Originally, banks and lenders were supposed to pay 50 percent of the cost of reducing the principal for those whose homes are worth less than their mortgage. But when the banks refused, California took the controversial step of paying the entire amount, up to $100,000.

"We thought, you know, 50-50 was much more attractive and we'd have much more traction with lenders, and it just didn't turn out to work as well as we would have liked," said Diane Richardson, legislative director of the California Housing Finance Agency.

The program, known as the Hardest Hit Housing Market fund, is part of a $7.6 billion federal effort to help underwater homeowners in 18 states. California received $2 billion. But when banks and lenders who service loans refused to write down even a small portion of the negative equity loans, California decided to use the taxpayer money to pay 100 percent of the mortgage reduction.

[Heartland Patriot]

I just look at that as the State of California buying votes...its what they've done all along, isn't it? However, they do continue to push more and more productive people to other states...

[RoyGBiv]

Actually, according to that story, the Federal program from where this fiasco is derived was pushed out to 18 states to be implemented on a 50-50 basis between taxpayer funds and bank write downs. No mention of what's happening in the other 17 states.... I suspect we'll find out soon enough.

[E.Marquez]

So I bought a house within my means, pay the mortgage each month. And Im rewarded for my buying knowledge and work ethic by...... a warm feeling.

If I had bought a house above my means, using poor market research, and now owe more than it's worth, cannot pay my mortgage, Im rewarded by a warm fuzzy feeling.... that I get when the US taxpayers (me and you) PAY for a large chunk of that home.

Heck, who does not like free money...... If Rick Perry handed me a check for $150,000 this afternoon (1/2 my mortgage when new) Id be a happy camper and likely vote for him


Yes this is vote buying...... anyone can see this.. Obama arranged it, local CA political thugs will claim they "forced it" on him for a share in the credit.. Those who like putting their hand out for free money will pat them on the back and reward them with votes.
Heck even my dogs know to lick the hand of the human with the dog cookie in it.

[SQLGeek]

The California government believes there isn't a problem that can't be solved by throwing money it doesn't have at the problem. The yearly budget deadlock there would've been entertaining were it not so sad. I absolutely hate to see what has happened to the once great and propsperous state. I

[chasfm11]

So I bought a house within my means, pay the mortgage each month. And Im rewarded for my buying knowledge and work ethic by...... a warm feeling.

If I had bought a house above my means, using poor market research, and now owe more than it's worth, cannot pay my mortgage, Im rewarded by a warm fuzzy feeling.... that I get when the US taxpayers (me and you) PAY for a large chunk of that home.

Heck, who does not like free money...... If Rick Perry handed me a check for $150,000 this afternoon (1/2 my mortgage when new) Id be a happy camper and likely vote for him


Yes this is vote buying...... anyone can see this.. Obama arranged it, local CA political thugs will claim they "forced it" on him for a share in the credit.. Those who like putting their hand out for free money will pat them on the back and reward them with votes.
Heck even my dogs know to lick the hand of the human with the dog cookie in it.

But the worst part of this is the nasty names that those involved want to dish out when you call them on the fraud that this is. I'm a terrible person because I don't like it when my tax dollars are going to pay for someone else's excess. I'm supposed to sit still and simply accept it. Fat chance!

[E.Marquez]

So I bought a house within my means, pay the mortgage each month. And Im rewarded for my buying knowledge and work ethic by...... a warm feeling.

If I had bought a house above my means, using poor market research, and now owe more than it's worth, cannot pay my mortgage, Im rewarded by a warm fuzzy feeling.... that I get when the US taxpayers (me and you) PAY for a large chunk of that home.

Heck, who does not like free money...... If Rick Perry handed me a check for $150,000 this afternoon (1/2 my mortgage when new) Id be a happy camper and likely vote for him


Yes this is vote buying...... anyone can see this.. Obama arranged it, local CA political thugs will claim they "forced it" on him for a share in the credit.. Those who like putting their hand out for free money will pat them on the back and reward them with votes.
Heck even my dogs know to lick the hand of the human with the dog cookie in it.

But the worst part of this is the nasty names that those involved want to dish out when you call them on the fraud that this is. I'm a terrible person because I don't like it when my tax dollars are going to pay for someone else's excess. I'm supposed to sit still and simply accept it. Fat chance!

Yup same as welfare or un employment assistant recipients using OUR tax money to buy items of want, vice need.

They NEED food, they WANT steak.
They NEED baby formula, they want Monsters and Cokes
They NEED to go to work, they WANT to have the government keep handing them a debit card filled with tax payer money.

That of course is a generalized statement. .. a small percentage of both welfare and un employment honestly need a helping hand to get back on their feet. .. to cover necessities while they new job is found, the leg healed, the spouse comes back from deployment.. … the rest,, well, no compassion in my heart for them.

[MOA]

I think the people who aren't thieves should cut them off. Literally if necessary.

[sjfcontrol]

So I bought a house within my means, pay the mortgage each month. And Im rewarded for my buying knowledge and work ethic by...... a warm feeling.

If I had bought a house above my means, using poor market research, and now owe more than it's worth, cannot pay my mortgage, Im rewarded by a warm fuzzy feeling.... that I get when the US taxpayers (me and you) PAY for a large chunk of that home.

Heck, who does not like free money...... If Rick Perry handed me a check for $150,000 this afternoon (1/2 my mortgage when new) Id be a happy camper and likely vote for him


Yes this is vote buying...... anyone can see this.. Obama arranged it, local CA political thugs will claim they "forced it" on him for a share in the credit.. Those who like putting their hand out for free money will pat them on the back and reward them with votes.
Heck even my dogs know to lick the hand of the human with the dog cookie in it.

Well, I'm not supporting this buy-down, but an underwater mortgage is not the same as toxic assets.

The original housing crash was caused by Democrats deciding that "everybody" needed to be in a house, whether they could afford it or not. Barney Frank and the other Democrats, 'encouraged' Fannie Mae and Freddy Mac to guarantee the mortgages of people that never should have been given mortgages, under the presumption that the properties would appreciate, and could be sold at a profit before the balloon payments came due. This created a 'bubble'.

When the bubble burst, these homeowners were left with houses they could not pay for, and the banks were left with mortgages that could not be paid. This encouraged the practice of bundling these loans together, and selling them as investments. These investments became financial "hot potatoes", with nobody wanting to be the last one holding them -- toxic assets -- which the government would have to buy back to keep the various financial institutions solvent. Enter TARP, The Toxic Asset Relief Program.

But those people that were (fraudulently, IMO) talked into the mortgages in the first place are long gone. This is now phase two.

The problem now is that the large quantity of repossessed housing (inventory) has brought EVERYBODIES values down. Neighbohoods are deteriorating due to empty (abandoned) houses, and even in good neighborhoods the 'underpriced' repossessed housing is depressing the values of neighboring houses with homeowners that have been paying their mortgages all along. So, Bronco, these homeowners are, for the most part, like you -- bought a house within their means, and paid the mortgage every month. But the value of their property has declined until they now owe more on the mortgage than the property is worth. The danger here is that those homeowners no longer have any equity, and with high unemployment, many may have to walk away from their "underwater" homes. It's hard, IMO, to blame those homeowners. Their decisions were sound based on the conventional thinking at the time of their purchases. They were submarined by their government making irresponsible decisions, creating irresponsible policies that ultimately created the mess we've been trying to wade our way out of for the last 4 years.

[Bob in Big D]

Fine......stuff happens! Let the folks in Kalifornia pay for the write downs. Or in any of the other 17 States. Why are the banks getting off scottfree? This is another bailout (spread the wealth) no matter how you look at it.

[Jumping Frog]

Hey, JALLEN!

Maybe Kalifornia will give you $100k that you can use to drop the price of your house, get it sold, and hustle your hind end back to the Lone Star State!

j/k. You sound like a responsible citizen and surely wouldn't qualify for the govt bribes.

[JALLEN]

Hey, JALLEN!

Maybe Kalifornia will give you $100k that you can use to drop the price of your house, get it sold, and hustle your hind end back to the Lone Star State!

j/k. You sound like a responsible citizen and surely wouldn't qualify for the govt bribes.

Well, you are right about that.

For many of us, $100k isn't even a decent down payment, and sometimes doesn't even cover the real estate broker's commission.

As a real estate lawyer, private lender, developer and builder, I have participated, albeit at some distance, and on a tiny scale as these things go, in the industry. The present debacle will some day be written up as a new chapter in Memoirs of Extraordinary Popular Delusions and the Madness of Crowds, along with the South Sea Company, the Mississippi Project and other such antics.

Once upon a Time, long ago and far away, the residential real estate finance market was serene and business like, relatively attractive as far as risk goes, until government meddling started chipping away at common sense lending practices. Only the government is dumb enough to lend money in the environment thus created. Nobody would lend their own money under such conditions, on such terms. But banks and lenders had to do it, were subject to regulatory sanctions if they did not, and were further enticed by the new paradigm where originating loans bore little risk and large fees. Now, forced to do dumb things by the government, the banks are getting whacked by the Justice Department for doing so, and have settled for their "sins" to the tune of $25 billion!

The ensuing catastrophe won't be resolved easily, or quickly, but will be prolonged, I am sure, by these incessant government meddlings in getting the market back on its feet. In a way it is hard to blame the politicians. No elected official who has to run for office can respond to voters by saying, "This mess is all your fault for living beyond your means, or trying to do so. There's is nothing we can do, or should do, to remedy the situation which will right itself faster if we do nothing." So we will all suffer for longer, some perhaps less for longer. Meanwhile California is spending money it doesn't have and won't have, but that is nothing new. The state has been fiddling with the budget for years, pretending it is balanced by any means necessary.

They've turned this place into a socialist hellhole, one of a number of reasons I'm out of here. Of course, the weather is nice and all.

[RoyGBiv]

They've turned this place into a socialist hellhole, one of a number of reasons I'm out of here. Of course, the weather is nice and all.

California would be a great place to live, if it weren't for all the Californians.

[emcee rib]

To paraphrase Gump, "Evil is as evil does."