Mortgage Mess: Is Relief in Sight?

In your column you mentioned the moral and philisophical objections that have been raised against "rescuing" the sub prime mortgage holders, clearly based upon the assumption that they are at fault for their own problems. While I do agree that individuals should take responsibility for their actions, I have often observed that the person (or company) calling for others to take responsibility are trying very hard to dodge it themselves. In most other aspects of society, we expect enablers to bear at least some responsibility for the behavior that they encourage. The real questions that we should be asking are: What action benefits our society most; and what should be done (if anything) to prevent future occurances.

I have been considering buying a home for a few years, but unlike others in my age/income bracket who jumped at mortgages they thought they could afford, I was scared off by the high price tags of the condos and town homes I was looking at. My friends all purchased for outrageous prices, thinking that they could turnaround and sell at some obscene profit. (Some did - those who did a fast turn-around and now own an even bigger property with an even bigger mortgage.) Everyone told me I was crazy to spend my money on rent when I could easily get a mortgage, but I did my research. I knew the loans were crazy, that the homes I was looking at were priced too high, and that the housing bubble would eventually burst.

I'm torn on whether I agree with the government stepping in and helping out those who are now on the verge of losing their homes. On one hand, since there are so many people affected, I know that their fate will affect the entire economy. On the other, why should they get extra help when there are people, like myself, who used common sense and didn't spend beyond my means?

3 years ago who saw that this was going to happen. I purchased my house in 1998 for 78k, refinanced that and 2nd 30k mortgage in 2004 for $156k. I did also try contacting my lender HSBC as I am concerned about he rates going up and they said I couldn't do anything because I am currently doing construction on my home. This has been on ongoing hobby of mine that I do all on my own and it's been a 3 year project. Of course I did many other improvement since 1998 that I really like. Again thinking that my home in a growing city would never go down in value the way it has. Now banks tell me it's worth 140k. It took a lot of effort recently to try and find options and the last two weeks I have been struggling just to put a foot in front of the other again at times. Banks are not being flexible. Yes I made some financial mistakes and other poor decisions in the last 10 years. It just doesn't make any sense when you are the most educated person on your job site and everyone comes to you, but yet those same people make more then double my income. I made the biggest mistake not staying in college and only getting an associates degree and another year to earn a certificate. Maybe taking out more loans and not buying my house, staying in school would have been a better choice. But living in a 2 bedroom apartment with 3 children ages 8 on down didn't seem like an option. Then moving up into a bigger unit for the same price of owning a home really seemed like a waste. I have enjoyed being a home owner, having the ability to make improvements is a hobby I enjoy. I just don't understand corporate America and how they have let the small guy down. In Mexico the company I work for hires after you have been a contractor for 3 years, no matter how well a job you have done. This company used to hire more highly skilled contractors like myself within 5-8 years. I'm still hoping that this 10th year will be the one to help me out. I really don't care to move to a larger metro city.

Being one of the homeowners at risk, Id like to say a few things to the "We should not bail anyone out" crowd. I am a young husband, (28) with a young family. We were very excited that the 0 down options were now being extended to us (those without lengthy, established credit histories) OUr credit was not bad, just not well estabilished. When we spoke to our broker about a fixed rate, he stated, with a strait face that an Adjustable ARM aould be better for us. HE ASSURED US WE WOULD BE ABLE TO RE-FI WHEN THE RATE SWITCHED. The Problem we are facing now, is that with all the foreclosures, our property value has plummeted to the point our loan is worth more than our house. In addition, lending practices have been much more strict now than they were when we originally signed. So we have been unable to secure a re-fi.
I have NEVER MISSED A PAYMENT. I HAVE NEVER BEEN CHARGED OR PAID A LATE FEE. Yes I bought my wife a new-to-us (used) car, and have a payment on that. I have little, if any, credit card debt at any one time, and have meager amounts left at the end of the month to save, but I do save.

I take exception to those who would call me ignorant of the terms, or irresponsible. I especially take exception to those who say I am living outside my means. I save every penny. and do not indulge in many luxuries at all. Maybe dinner twice a month. No vacations in my adulthood, and I carefully budget.

I have many factors working against me in this fiasco I call a mortgage. How was I to know that after making payment, on time mind you, for three years that my loan would still be worth more than my home, due to falling home values. I beleived the broker when he told me I could easily refi. I pay my bills, my credit will be more estabilshed, and I will (have) an excellent payment history.

When my rate resets in May, My payment will go up by 300 dollars / Month. Goodbye savings; and, Equity where have you gone? I may have made a poor decision when accepting this mortgage, but feel confident it was right at the time, well researched and that I have done EVERYTHING that I am supposed to do as a responsible parent.

This so called bail-out is going to save my house, which I could lose for no other reason than falling property values.

Have some heart.......

I think one thing that is being overlooked is that even if you save people, they wont be able to afford what they have. In the DC area, we had condos at 150K in 2001 and now they are 400k. Most people still are not budging in price and overall most projects are being scrapped or converted. Even if you save that person with the 400k condo, it's true value is not 400k, probably somewhere in the range of 200k because its new and in a nice area. If you save that person, that person is going to be in the hole for 100k+, and at that point, it is better for them to walk away then stick it out even if you want to save them it makes no sense. It is better to let this correct and correct hard so people remember nad pass on wisdom to the next generations

Can anyone help me - I am trying to get a 3% loan so I can add on to my house,buy a new car, and spend a week at Seaside with my girlfriend. The typical rate of 6-7% is not to my liking. I would also like to take this money and re-invest it at the typical MM rate of 5%. Please help as this is really starting to crimp my lifestyle

I don't see how anyone can comment on the relief package unless they have experienced the reality of how
we are all being impacted by the loss of value of our homes. I have been trying to sell my home for the last
14 months and now $100,000.00 less than the original asking price, I've finally gotten my first written offer.

Of course this will be a short sale and I will welcome the tax relief proposal that President Bush introduced.
It has passed the House and today he yelled at Congress for not passing it. yet. So walk in my shoes for 14 months and then think about how you'd feel being punished to the economical conditions created by the subprime mess. We have all lost the value of our homes in most parts of this country and not too far down the line we'll be paying property taxes on inflated munipal property appraisals............

it seems unfair that the people who made bad decisions w/ their mortgages will now be receiving any financial assistance at all. I originally financed on a 5 yr arm. I refinanced just prior to the end of that term. However, I did not finance more than I could afford to pay. I'm a single parent receiving no child support. I work hard and I pay my bills. Why should the consumers who make bad choices receive any help and those of us who work hard, make the right decisions, and still don't have EXTRA continue to struggle??

Just two months ago, when we were looking for a mortgage, a rep from one of the mortgage companies that is now complaining that is hard hit, tried to convince us that we could "only" get an ARM mortgage because we'd been out of the US for two years. Both my husband and I have 790 on our credit scores, no debt, and a significant down payment. When I said that I didn't see why we'd want an ARM, he got very snippy with us and said we'd probably not be able to get a mortgage from any other lender. So I can see how someone who's not feeling good about their credit could have been duped. We DID get two mortgage offers from reputatable companies--not ARMs and at a good, lock-in interest rate. At least we know what we'll be paying for the next several years.

Hundreds of billions of dollars are going to be lost with this. I'm surprised the Democrats aren't mentioning that if all that money had gone into wage hikes that had kept pace with productivity gains (as in the great housing booms for the first 30 years after WWII), then more of the wage-earners would have qualified for flat-rate, traditional mortgages. Rather than needing "new" ideas (i.e. all the exotic products that everyone is supposed to understand), we needed to not abandon old ones that worked. Many candidates say that more Americans need to join unions or start them to get a fair share of the pie. Those who disagree should be made to offer an alternative idea, because whatever is being done now is clearly not working.

The Republican Congress voted out also should get a good share of the blame. They and Bush in 2004 repeatedly pointed to the homeownership stats to say the economy was doing well, and now we know the truth. More pointedly, what was the Republican Congress doing in 2005? Rather than addressing any abuses in banking or reining in their banking industry pals (who spend a LOT of money on lobbying and campaigns, mostly for the GOP), that Congress was passing the bankruptcy bill with all its provisions directed at individuals.

Apparently with Republicans the banks can do anything and try just about any form of deception, but individuals are held to higher standards and get the blame for anything. Laissez-faire and caveat emptor and all that. And we're seeing the result.