Bailout effects

[klmno]

That was an outrageous "under-estimation". I've had it happen several times but it normally is a few hundred dollars- not thousands- so the difference in my mo. payment might be $50-75. I wonder if their under-estimation was really a way to get you in the house for the mo. pamnt you wanted, knowing it would go much higher after a year.

 

[Nancy]

bby what a shame. There are many stories like yours and so many people find themselves in financial crisis through no fault of their own but because they did what they thought was best at the time, believing the experts when they told us that values would continue to rise and so would incomes.

My sister sells real estate. She told me years ago that banks were giving mortgages to people who couldn't afford them. They convinced people that the interest rates were low and that the economy was strong and everyone could own a house. Where was the regulations, who was in charge of overseeing this?

Years from now experts will look back on this crisis and realize it could have been predicted. Day traders tried to make a killing in the stock market. These were everyday people, my nephew being one. I remember having arguments with him that he and his fellow traders were going to be responsible for our stocks having inflated prices and then tumbling down at some point. There was little or no regulation. The stocks I had when I left my employment 21 years ago are worthless today.

People were convinced to open up credit accounts, take out home equity loans, spend spend spend. Look what they told us all after 9/11....we need to spend to show confidence in the economy.

And now we are suppose to be convinced that free enterprise will fix this. That we don't have to bail out the banks and brokerage firms. The foreclosures have to stop. People need relief from loosing their homes. No one is saying that ceo's or big corporations should profit from this. That is not the goal of the bailout. To do nothing and let the economy fail is just not an option. The only people who will come out ahead in that scenario are the very wealthy. The "main street" people that everyone is talking about now will lose everything. Credit will dry up. We won't be able to get a loan to buy a car or pay college tuition or consolidate debts. Foreclosures will continue and housing values will continue to plummet.

I was thinking the other day, my house has lost about 25% of its' worth since I bought it ten years ago. I'm still paying taxes on the highest value amount. Why do I have to pay taxes on an amount that everyone agrees I can't get for my house? And what will happen to the school systems that stand to lose all that money if they do reevaluate all our homes to what they are worth in today's market?

Nancy

 

[muttmeister]

To me, the scary thing about all of this is that I don't think ANYBODY has a clue how to fix this. Even the experts are just guessing, although their guesses are more educated than mine. The bailout was one proposal. It failed. So now, they HAVE TO come up with something else. Allowing nature to take its course will fix it eventually but only after the rich become richer and all of the rest of us are living on the streets hoping somebody starts a bread line to feed us. I agree that giving a bail out to the people who are responsible for the problem stinks. But if nothing is done our economy will grind to a halt. It will effect not just those who invest in the market, but, eventually, every citizen of this country. When credit dries up, businesses fail. When businesses fail, people lose their jobs, their retirement accounts, their insurance, their houses, and everything else. With 50% or more of our citizens unemployed, which could happen, just how will any of us find a job? And with failed businesses and fewer people working, the government will not be able to collect as much in taxes so all of their fancy guarantees and programs to help people will not be worth the paper they're written on. I don't think this is an insurmountable problem but it is going to take some clear thinking and some cooperation between both parties and I'm not sure that is going to happen. I am very pessimistic at this point.

 

[Stella Johnson]

Nancy,
In Texas, not sure about where you are, if your home price drops you can dispute your taxes with the county. I got my recorded home value reduced through the county by about 8k.

Steph

 

[Nancy]

muttmeister, I agree completely. I don't think anyone did a good job of explaining this to the public. I also don't have a lot of confidence in who I've seen so far, the fighting and blaming that is going on is ridiculous. We have some very intelligent economists in our country. We should be calling on them to help formulate a plan.

I like what Woopie Goldberg said today on The View. She said we were all at a party for years and now the party's over and it's time to clean up and it will take all of us to clean up. The party was fun, we didn't do anything bad, we had a good time, but the party is now over.

Nancy

 

[Stella Johnson]

If you are having problems with your ARM or feel that you were taken by the mortgage broker you used you can contact NACA

http://www.naca.com/index_main.jsp

They fight the mortgage companies to get loans reworked or they refinance you themselves. My brother in law works for Countrywide in the rework dept. He said these guys have gotten some people's rates down to 2% in some cases.

Steph

 

[Nancy]

Steph,

Thanks for the info. Yes we can challenge it, but our treasurer has already said that he is taking a very hard line on that. It's worth a try anyway and we will, but our entire community is in the same position and I'm not sure they will give us much relief.

Nancy

 

[bby31288]

Here in New Jersey, when I bought my house it as brand new, as in it was a little ranch and taxed at a little ranch rate. So a builder bought it, knocked it all down except for one wall. He then built a new, bigger house. But the taxes were still rated at the old little ranch. But after the purchase and the paperwork went thru, the town said, oh...you have a new house now, so you are not paying enough taxes. Which is how it went from $6,000 to $9,000.


Stella. Thanks for the info and link, I will forward everything to husband.

 

[klmno]

We have some very intelligent economists in our country. We should be calling on them to help formulate a plan.

That's a very good point, Nancy. Although, isn't part of the problem that government really can't control what these businesses do, due to the nature of free enterprise? Of course, it would seem that if the government is willing to give them money to get them out of a crunch, certain conditions could be made to help them out. And, what if the government looked into which companies can easily turn things around and give them some money, but not give any money to the ones lining the pockets of the ceo's with millions of dollars?

 

[Fran]

I agree with Whoopi.
We enjoyed it while we could and now we have to pay a big price. I'm with Nancy in that we have always been conservative and cautious. Carry no balance on the credit card so we don't pay that horrendous interest.

Everyone wants a chance to buy a home. They made it possible and almost easy. No one expected the worst case scenario. Now we are living with it.

 

[busywend]

Fran, age certainly plays a role in the risk levels for retirement funds. At 25 - go for the rare 25% return! high risk. At 55 - play it safe and hope for 10%.

 

[witzend]

I imagine that you will get as many answers as you get replies to this post. It's a muddle. I have a real problem with the CEO's getting anything ever again if it's a company that the taxpayers rescue. No one - NO ONE needs $982 million for leaving a company that you tanked.

 

[DammitJanet]

Witz...you are right. I dont think any of us on this board are in the position to truly know enough to fix this problem...if we were, we wouldnt have time to be on this board! I know Im not that smart. I like to think I have a fairly passing knowledge of economics. (Hey...I have passed two college level Macroeconomics courses with A's!) Still I wouldnt even fathom trying to unravel this mess. I know enough to know its a holy mess.

I have never felt that Golden Parachutes were a good idea. Nice idea for the CEO's no doubt but I see so much room for fraud and deceit. Call me a pessimist.

 

[flutterbee]

The thing is, the bailout is going to stop the bleeding. It's only going to open up the credit so banks continue lending to each other and to businesses that need money for payroll. That to me is scary - needing loans to make payroll. I guess I'm naive. That's like one of my clients at the accounting firm who took out a loan to pay his taxes. Think he was spending more than he should?

But, the bleeding at the bottom - with falling home values and foreclosures - is still going to continue. We can complain all we want about people that got into bad loans that should have known better, yada, yada, yada, but the fallout effects all of us with falling home values. For many people, all it takes is losing a job or a major medical crisis and a home now worth less than you owe and you're in a really bad spot.

Even with the bailout, unemployment is expected to continue to rise and home values are expected to continue to fall. It's just a mess and I don't think there is an easy fix. It's going to be a bumpy road for all of us.