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Headline: White House to Announce Foreclosure Aid

The White House is set to announce a plan this morning that will help struggling homeowners avoid foreclosure. Secretary Alphonso Jackson of the Department of Housing and Urban Development and Secretary of the Treasury Henry Paulson will announce the proposal this morning. The plan is known as Project Lifeline, and will help overdue homeowners delay foreclosures for 30 days while they try to negotiate more affordable terms with their lenders.

Do you think an extra 30 days will help those in a mortgage crisis? With the record number of foreclosures sweeping the country, what would you like to see the government do to help — or do you think the government should remain detached from the problem?

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trésjolie1 trésjolie1 8 years
I really enjoy your comments, you have a lot to bring to the table. I know this wasn't about the stimulus package, but I did feel that there were some similarities between the two, mainly they are two measures put out to deal with the looming economy. I don't really support the stimulus package either. We need focus on the long term, so I guess we sort of agree? I got to go back to the election on TV.
mymellowman mymellowman 8 years
Hi tres, This isn't about the stimulus package. I don't have a big issue with the stimulus package (though I would have preferred that it fiscally be accounted for before giving it out, but heck, we're so far in debt at this point that another 160 Billion is practically chump change.) Additionally, the rebate isn't so much to pay off debt as for Americans to spend purchasing American products, thus stimulating the economy. Though, much of this money will wind up leaving the country, paying for debt or going into savings and investments. This more about the federal government's involvement in freezing interest rates for those with bad credit and/or sub prime mortgages with fluctuating rates and raising limits on Freddie-Mac and Fannie-Mae's (two federally mortgage companies that rely on tax payer money) abilities to loan. This is a very different area than the stimulus package that just went through congress and has more potentially hazardous effects.
mymellowman mymellowman 8 years
Hi tres,This isn't about the stimulus package. I don't have a big issue with the stimulus package (though I would have preferred that it fiscally be accounted for before giving it out, but heck, we're so far in debt at this point that another 160 Billion is practically chump change.)Additionally, the rebate isn't so much to pay off debt as for Americans to spend purchasing American products, thus stimulating the economy. Though, much of this money will wind up leaving the country, paying for debt or going into savings and investments.This more about the federal government's involvement in freezing interest rates for those with bad credit and/or sub prime mortgages with fluctuating rates and raising limits on Freddie-Mac and Fannie-Mae's (two federally mortgage companies that rely on tax payer money) abilities to loan. This is a very different area than the stimulus package that just went through congress and has more potentially hazardous effects.
trésjolie1 trésjolie1 8 years
Just a quick comment; I think this move was in part made to jump start the economy, and the stock market did jump up quite a bit today. Not saying it is the best of reasons, just thought it should be brought up. Also, it is election time all around, and these guys need to look like they've done something going home to their states to campaign. I think it is safe to say that there should have been some preventative regulations making it harder for mortgage funds and credit companies to accept loans that were highly irresponsible. Not to take away the responsibility from the people who took out loans; but strictly from a business point of view the spending, in which counts for 70% of the American economy, will plummet if a big portion of the population is in debt over their ability. And you can call them stupid, but the Government and the stock market have stimulated the people to spend, spend, spend. So even if we all have to take responsibility for our actions, I think some financial education and a few simple regulations should have been in place a long time ago. Even this stimulus package is created to give(and increase our national debt)people money and tell them to spend it, when they should tell them to pay off debt. That should be the main goal. Why treat the symptoms when you can cure the disease?
trésjolie1 trésjolie1 8 years
Just a quick comment; I think this move was in part made to jump start the economy, and the stock market did jump up quite a bit today. Not saying it is the best of reasons, just thought it should be brought up. Also, it is election time all around, and these guys need to look like they've done something going home to their states to campaign. I think it is safe to say that there should have been some preventative regulations making it harder for mortgage funds and credit companies to accept loans that were highly irresponsible. Not to take away the responsibility from the people who took out loans; but strictly from a business point of view the spending, in which counts for 70% of the American economy, will plummet if a big portion of the population is in debt over their ability. And you can call them stupid, but the Government and the stock market have stimulated the people to spend, spend, spend. So even if we all have to take responsibility for our actions, I think some financial education and a few simple regulations should have been in place a long time ago. Even this stimulus package is created to give(and increase our national debt)people money and tell them to spend it, when they should tell them to pay off debt. That should be the main goal. Why treat the symptoms when you can cure the disease?
mymellowman mymellowman 8 years
or the guarantee to own, I should say....
mymellowman mymellowman 8 years
Do the rights of society supercede the rights of the individual (and vice versa)? Lol, we could debate that for eons! - Very true, it could be a long debate on the general thesis, but when it comes to the role of the United States Federal Government, it's position is to protect the right to pursue, not the right to own.....
luvthebosox luvthebosox 8 years
I just had a flashback to high school english class. I can't remember what book we were reading...maybe it was Billy Budd. One of the themes was Do the rights of society supercede the rights of the individual (and vice versa)? Lol, we could debate that for eons!
j2e1n9 j2e1n9 8 years
Its sad when people make decisions without educated help and without thinking them through and then have to foreclose. Its scary!
misogi misogi 8 years
Honestly, how do you guys know so much about this stuff? It's overwhelming how smart you are! :P
mymellowman mymellowman 8 years
"We don't have a free market, we never have, and I would be shocked if we ever did." - I agree you, our market has not, is not and will not be a "true" free market. As you said, I would be shocked myself if it ever came to be, but that does not justify the government making attempts to change and control things, especially in a Socialistic manner, that is not in the interest of the individual.
luvthebosox luvthebosox 8 years
We don't have a free market, we never have, and I would be shocked if we ever did. The government interferes as it chooses. Just to clarify, by free market I mean the invisible hand free market, not the capitalist market that we call a free market.
raciccarone raciccarone 8 years
I can't wait until they do "Allowance Aid" so that any kid who spends their allowance before the weekend can get a loan to tide them over.
mymellowman mymellowman 8 years
Well, I stole it myself, but I think that's a great place for it Cine!
cine_lover cine_lover 8 years
3m, I am stealing this and posting it on Conservative sugar.
cine_lover cine_lover 8 years
3m,I am stealing this and posting it on Conservative sugar.
mymellowman mymellowman 8 years
"I was commenting more on the general question of should the government get involved." - They shouldn't. Government interference in a free market won't solve any problems. To break it down into a simpler concept: If someone can't afford their mortgagee, the government coming in and freezing a rate for a few months or even a couple years isn't going to change the fact the person has a mortgage that they can't afford to pay. All it does is push off the inevitable for a longer period of time, making the problem larger. Additionally, here is an article from SmartMoney that I believe really carries many of my beliefs and sentiments on the subject: Government Shouldn't Bail Out Failing Homeowners By Jonathan Hoenig ITH ELECTION SEASON in full swing, politicians of every party and persuasion are falling over themselves to propose ways to remedy the millions of people adversely affected by the dramatic shift in housing and credit markets. Sen. Hillary Clinton, for example, has proposed the establishment of a $1 billion fund to help states help borrowers who are in danger of foreclosure. Most people with even a cursory knowledge of free market economics understand that governmental interference doesn't alleviate problems; it simply makes them more severe and longer lasting. If someone can't afford to pay their mortgage, certainly the government paying it for them for a few months isn't going to make any meaningful difference. In reality, it simply distorts the rational allocation of assets and ultimately drives up costs for both lenders and borrowers. The negative byproducts of governmental intervention in a free market are well documented, and were most recently seen in agriculture, where massive subsidies for ethanol production have led to skyrocketing corn prices. But the real reason to oppose a bailout isn't that it's impractical, but that it's immoral. To live freely means to act in accordance with your own rational beliefs and to accept the consequences of your decisions, no matter how unwise they might seem after the fact. Those individuals who made financial commitments they can no longer afford to honor have no right to demand taxpayers bail them out. In America, we have the right to "life, liberty and the pursuit of happiness," but not the guarantee we can live in the four-bedroom Colonial that's priced way beyond our means. It might sound cold, but homeowners who can't pay their mortgages should not expect to be able to keep their homes. As traders, we are unquestionably comfortable with this sort of personal responsibility. If we make poor investments and lose money, we certainly don't expect the government or anybody else to bail us out. But Americans, especially many populist politicians, believe that individuals deserve to have their mortgage paid simply because they can no longer afford to pay it themselves. Forgetting the fact that these individuals willingly took out loans well beyond their means or didn't plan for a rainy day in which the real estate market wasn't soaring, politicians on both sides of the aisle say they are entitled to keep their home. So they plan to take other people's hard-earned money and give it away...not because these individuals did anything to deserve it, but simply because they need it. It's the essence of the "entitlement mentality" I wrote about last winter. The purpose of government is to protect my rights — end of story. But because there is no such thing as a right to a home, using taxpayer dollars to bail out homeowners or home lender, is an immoral abuse of governmental authority. Those who advocate for such measures tend to think with their hearts instead of their heads. When challenged about the morality of such schemes, they usually present a tragic example about a down-on-their-luck Rust Belt family who are in danger of being evicted from their home. Dad lost his job at the plant, mom is on dialysis and takes care of the kids, all of whom desperately need braces and new books for school. The argument is always an emotional one: "Don't you want to help poor people in need?" But a government bailout is not charity — it's coercion. Americans are incredibly charitable people, last year donating a record $295 billion. But when you donate to Habitat for Humanity, for example, you do so voluntarily, deciding how much you'd like to give and to what particular cause. When Hillary pledges $1 billion in financial aid for homeowners, however, it's not her money; it's the taxpayers', many of whom would undoubtedly prefer to give to any number of other deserving recipients. The other tactic used by proponents of a bailout is to demonize the banks and mortgage companies for making "predatory" loans to financially unstable families, as if somehow loaning someone money is harming them. What's ironic is that for years, elected officials chastised businessmen for failing to offer loans to people with poor credit. After the private sector stepped up and many billions in loans to lower-income families, many of those loans are not being paid back, and those same businessmen are being criticized for making the loans in the first place. Indeed, businessmen are the scapegoat either way. The more the government gets involved in mortgages and banking, the tighter credit will become. But beyond the impractical reality of collectivist economics, a bailout of homeowners facing foreclosure would be an immoral violation of the property rights of the millions of citizens who live within their means and pay their bills on time. The responsibility of paying back subprime mortgage rests with those who took them, not the publicity-seeking politician eager to sacrifice the individual for the "public good." Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.
mymellowman mymellowman 8 years
"I was commenting more on the general question of should the government get involved." - They shouldn't. Government interference in a free market won't solve any problems. To break it down into a simpler concept: If someone can't afford their mortgagee, the government coming in and freezing a rate for a few months or even a couple years isn't going to change the fact the person has a mortgage that they can't afford to pay. All it does is push off the inevitable for a longer period of time, making the problem larger. Additionally, here is an article from SmartMoney that I believe really carries many of my beliefs and sentiments on the subject:Government Shouldn't Bail Out Failing HomeownersBy Jonathan HoenigITH ELECTION SEASON in full swing, politicians of every party and persuasion are falling over themselves to propose ways to remedy the millions of people adversely affected by the dramatic shift in housing and credit markets. Sen. Hillary Clinton, for example, has proposed the establishment of a $1 billion fund to help states help borrowers who are in danger of foreclosure.Most people with even a cursory knowledge of free market economics understand that governmental interference doesn't alleviate problems; it simply makes them more severe and longer lasting. If someone can't afford to pay their mortgage, certainly the government paying it for them for a few months isn't going to make any meaningful difference.In reality, it simply distorts the rational allocation of assets and ultimately drives up costs for both lenders and borrowers. The negative byproducts of governmental intervention in a free market are well documented, and were most recently seen in agriculture, where massive subsidies for ethanol production have led to skyrocketing corn prices.But the real reason to oppose a bailout isn't that it's impractical, but that it's immoral.To live freely means to act in accordance with your own rational beliefs and to accept the consequences of your decisions, no matter how unwise they might seem after the fact. Those individuals who made financial commitments they can no longer afford to honor have no right to demand taxpayers bail them out. In America, we have the right to "life, liberty and the pursuit of happiness," but not the guarantee we can live in the four-bedroom Colonial that's priced way beyond our means. It might sound cold, but homeowners who can't pay their mortgages should not expect to be able to keep their homes.As traders, we are unquestionably comfortable with this sort of personal responsibility. If we make poor investments and lose money, we certainly don't expect the government or anybody else to bail us out.But Americans, especially many populist politicians, believe that individuals deserve to have their mortgage paid simply because they can no longer afford to pay it themselves. Forgetting the fact that these individuals willingly took out loans well beyond their means or didn't plan for a rainy day in which the real estate market wasn't soaring, politicians on both sides of the aisle say they are entitled to keep their home. So they plan to take other people's hard-earned money and give it away...not because these individuals did anything to deserve it, but simply because they need it. It's the essence of the "entitlement mentality" I wrote about last winter.The purpose of government is to protect my rights — end of story. But because there is no such thing as a right to a home, using taxpayer dollars to bail out homeowners or home lender, is an immoral abuse of governmental authority.Those who advocate for such measures tend to think with their hearts instead of their heads. When challenged about the morality of such schemes, they usually present a tragic example about a down-on-their-luck Rust Belt family who are in danger of being evicted from their home. Dad lost his job at the plant, mom is on dialysis and takes care of the kids, all of whom desperately need braces and new books for school. The argument is always an emotional one: "Don't you want to help poor people in need?"But a government bailout is not charity — it's coercion. Americans are incredibly charitable people, last year donating a record $295 billion. But when you donate to Habitat for Humanity, for example, you do so voluntarily, deciding how much you'd like to give and to what particular cause. When Hillary pledges $1 billion in financial aid for homeowners, however, it's not her money; it's the taxpayers', many of whom would undoubtedly prefer to give to any number of other deserving recipients.The other tactic used by proponents of a bailout is to demonize the banks and mortgage companies for making "predatory" loans to financially unstable families, as if somehow loaning someone money is harming them. What's ironic is that for years, elected officials chastised businessmen for failing to offer loans to people with poor credit. After the private sector stepped up and many billions in loans to lower-income families, many of those loans are not being paid back, and those same businessmen are being criticized for making the loans in the first place. Indeed, businessmen are the scapegoat either way.The more the government gets involved in mortgages and banking, the tighter credit will become. But beyond the impractical reality of collectivist economics, a bailout of homeowners facing foreclosure would be an immoral violation of the property rights of the millions of citizens who live within their means and pay their bills on time. The responsibility of paying back subprime mortgage rests with those who took them, not the publicity-seeking politician eager to sacrifice the individual for the "public good."Jonathan Hoenig is managing member at Capitalistpig Hedge Fund LLC.
luvthebosox luvthebosox 8 years
I was commenting more on the general question of should the government get involved. I don't know enough about economics (or honestly, care enough) to comment intelligently on the proposed solution. Mymellowman, you are probably right about that though. Wouldn't surprise me given the pattern of things with this administration...
brookrene brookrene 8 years
mymellowman, you seem very intelligent and know what you're talking about. I totally agree with you. :)
brookrene brookrene 8 years
mymellowman, you seem very intelligent and know what you're talking about. I totally agree with you. :)
mymellowman mymellowman 8 years
Yes, but there are economists that are saying that the concept of freezing rates, and raising the limits on what Fannie-Mae and Freedie_Mac can do, will not even help in the long run. Even worse, some say the results could have a far worse impact that could crash Fannie-Mae and Freedie-Mac thus leaving the US Taxpayers with an even higher burden.
luvthebosox luvthebosox 8 years
My first impulse is to agree that the homeowners and lenders are responsible for this and should bear the burden. But I think there is a greater good to look at. The crisis has an impact on the rest of the economy. As the risk of sounding socialist, we're all in this together and unfortunately everyone bears the burden of the mistakes of the irresponisible among us.
CaterpillarGirl CaterpillarGirl 8 years
complete agree with mellowman.
mymellowman mymellowman 8 years
I completely agree piper. It is an issue on both sides of the fence, lender and lendee.
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