Why are we giving money to help homeowners in foreclosure?

Question

It seems to me that a majority of the foreclosures are from people who wanted to make a quick buck during the bubble and wound up losing. Sure there are some foreclosures from people who lost jobs but they're not what's causing the current mess. Why are we helping the people who were investing in real estate? Wouldn't it just encourage everyone to jump into the next bubble knowing the government would bail them out? Also, what about when people take extreme risks by investing in high-risk stocks and junk bonds? Isn't it the same thing? I don't think the government should give away our tax dollars to cover people's risky and uneducated investment strategies. I can understand people falling on hard times but people who lied about their income to get big loans should just go down.

Answer 1

The lenders not only have "some" responsibility but many have already been arrested and indicted for fraud. They offered renter's the ability to buy homes with teaser rates for a few years where the mortgage payments were less than rent.

That is very hard to turn down. It worked as long as home prices were going up and people could sell or refinance at better rates once they rising prices created equity. Then home prices stopped soaring and it fell apart.

It was a system set up by the lenders. They not only cheated the homebuyers but also the INVESTORS that bought the bonds of packaged mortgages that were far riskier, even fraudulent.

Be aware this bailout also helps US, investors.

Also they developed a whole banking system based on these CDOs (packages of mortgages). These CDOs currently are trading because nobody can value them and they are FAR underpriced because the risk is unknown.

Our whole banking system and economy is still at risk as long as home prices keep falling.

Home prices will keep falling as long as foreclosures keep increasing putting more homes on the market. The more they fall the more that fail. It is a self perpetuating cycle.

They have to do everything they can to make sure they break that cycle preventing homes from falling in price below what they should.

A lot of the cause is the deregulation of the banking industry and failure to enforce the regulation that still remained. They failed to "execute" on the laws and that falls on the "executive" branch of government.

Answer 2

I'm with you, and the only ones that are going to disagree with you are the unemployed or the bleeding heart Liberals

Not only should there be no Government support for individuals in foreclosure there should be no Government support for those on Wall Street that went off the deep end with their greed and I'm from Wall Street

The Liberals in Government feel that everybody needs them and can not take care of themselves.

The government should let the open market place take care of everything, the people know what they want and what they are doing, but the politicans don't.

I think it was Thomas Jefferson said Governments destroy economies more easily than promote them

The greatest enemy facing our country today is not terrorism nor is it coming from foreign soil it’s living among us in the form of Liberalism

Answer 3

Isn't it the loaners causing the people to go into foreclosure not the homeowners. I doubt all these people who "wanted to make a quick buck" all failed within the same time period.

Answer 4

We gave the loan companies who used fraudulent practices money.  We should have given the home owners the help in the first place.

The reason being, the home owner gets the money, they give it to the lender for the mortgage, they get to stay in their house and the lender gets to stay in business.

The reason most of these people are losing their homes is due to the fact that greedy lenders convinced people to take out loans based on FUTURE earnings.  Not loans they qualified for today.  Fraudulent lending practices.

More and more evidence of that is coming to light.

So given a choice between bailing out the homeowner with low/no interest loans so they can stay in their homes, or bailing out the lender by paying them off...  I say you help both by helping the home owner

Besides, I don't want to watch the value of MY home drop like a rock because there ends up being 3 or 4 emtpy houses on my street.  I don't want to see the construction industry fall apart.  Even the furniture industry has been impacted by this.

The majority of these people are NOT people trying to make a quick buck.  The majority of these people are families who live in their home and want to continue to have a place to live.

I have spoken with many of these people.  The finance companies called THEM and offered these "sweetheart deals".  They didn't lie about their incomes.  The lender verifies everything they put on the loan application.  

The lenders tell people, "Well, in 5 years you will be making more money and can afford a larger payment.  So, let's get you this loan to add on a room for that new baby, and your big payments won't kick in for 5 years.  Then in 5 years, that promotion didn't take place and the people are screwed.

I am neither unemployed, nor am I a "bleeding heart liberal".  I am an educated, retired, homeowner.  My house is paid off and clear of any debt or encumbrance.

Answer 5

because democrats are in control of congress.

Answer 6

That's the Dems for ya.  They're always trying to give away the farm!