Profile picture for SoCal Engr

Principal forgiveness for underwater homeowners?

Any truth, or nugget of truth, to this LA Times article?

I experienced a significant feeling of "are you really going to reward people for making bad decisions?" as I read this article. Can anyone in the mortgage/bank biz verify, or refute, any of this article's content?

What about people who looked at houses and said "that's way over-priced" and didn't buy? Or people who didn't treat their houses as ATM's? Or people who recognized exotic loans for what they were and didn't abuse them to get in over their heads?

I don't know about anyone else, but it bugs me that two people may have bought the same house, side-by-side. both for the same price. One stayed within their means and worked within conventional wisdom, putting 20% or more down. The other went in and obtained 100% financing. Under the plans identified in this article, the one who took the bigger risk may end up getting bailed out, while the more responsible owner is left with a limp handshake.
  • June 16 2010 - US
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Answers (2)

Profile picture for wetdawgs
In the three months since this article was written, are we hearing of an increase in principal forgiveness?   It seems like it is a rare bird (fortunately).

As a responsible home buyer, who had to relocate at peak prices (and did buy), yes it bothers me deeply that those who bought with nothing down may be rewarded.   

I was pleased to see that prinicipal forgiveness is not an automatic and is spread out over several years.   I guess I'm becoming conservative in my old age.

  • June 16 2010
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 Don't believe everything you read that's all misinformation to take the light off the complete rip off Wall Street, Banks & Government is doing to us Average Taxpayers.  The Bailout plan was All a big head fake when they said that the money that Bush remember him...would go to buy Bad Mortgage loans in a effort to stop  the slide in the overall economy after the plan was passed Hank Paulson changed plans and said that they would now buy the banks stock in order for the banks to have money to invest back into the overall economy....Did that happen? no last time I checked CEO's and the brightest talent the banks need to make money are still getting big bonuses...Don't get me wrong I'm all for making money heck it's the American Way and the American Dream but the slide in the Real Estate is all a big sham since it could be stopped tomorrow if the Banks and Government really wanted to do it. 

The argument that people are getting bailed out while others who were responsible are getting like you stated a "limp handshake" is too late in the game since now the Real Estate Crash is affecting everyone here Federal, State, County, City Governments & the overall economy since what happens in 1 sector of the market IF big enough OF a bubble will effect the whole pie.  I think the Real Estate Crash is just 1 small piece of what is wrong with our economy remember you still have derivatives & the slow economy due to massive spending by not just the average person but by Governments Worldwide.  Take a step back and see THE WHOLE picture and that's why we are in the mess we are in.

On the note who wants to Refinance at 4.50% for 30 Years?
  • June 16 2010
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