Comments on: Fed Chairman’s principal reduction idea is crazy-talk.

By: Kris Berg

Kris Berg — Sun, 15 Feb 2009 22:57:22 +0000

Ron – That was the point! It was tongue in cheek! (Oy – Perhaps I was being too subtle.)

By: Ron Coulter

Ron Coulter — Sun, 15 Feb 2009 09:13:25 +0000

Unless I am living in a different world than you …
We ALREADY HAVE … uninsured motorist causing insured motorist rates to be higher, people stealing from retail and prices being posted higher to make up the difference AND since I am very close to the medical industry … there is a gigantic amount of medical care “given” to either uninsured or illegal persons (there is no such thing as an “undocumented American Nancy) and the hospitals do charge more in order to stay in business … I am not saying you are wrong, but you ARE WRONG to use this as an argument.
RC

By: Kris Berg

Kris Berg — Sat, 17 Jan 2009 16:24:06 +0000

Barry – I wasn’t disagreeing with you. It was tongue in cheek.

By: Brett Barry

Brett Barry — Sat, 17 Jan 2009 16:12:59 +0000

Whether you like the concept or not, I guarantee that principal reduction and modification is the ONLY answer to our current crisis. It’s so easy fro a Realtor like you to nix ideas, yet what exactly do you propose instead? Here in Phoenix prices are falling at a breathtaking 3% monthly rate, and (just as in San Diego) foreclosures are more the rule than the exception. Famous & respected investor Warren Buffet’s concept of “marking to market” is exactly what principal reductions will achieve. I know, I know…sigh…it isn’t fair to bail out consumers who got in over their heads, and overextended themselves. Yet everyone is now getting punished, with our economy careening off a cliff towards possible depression. I have spoken with professor Alan Blinder of Princeton and others who believe that PRINCIPAL REDUCTION is only way out if this mess. The government (finally) needs to kick the lenders and prod them into marking these homes down to today’s prices, taking the loss up front, and allowing homeowners to remain in their homes and refinance at today’s prices and interest rates. Like it or not, it will happen…some very bright people are studying these ideas now. How fair is it that 350 Billion was tossed at CitiBank, AIG, and B of A? Sigh, life just isn’t fair Kris…maybe take your “24 hour rule” and think about ladling soup in a soup kitchen in San Diego?

By: Kris Berg

Kris Berg — Sun, 11 Jan 2009 14:00:03 +0000

Jon,

That seems to be a very real question for a lot of people, a question I assume you are posing rhetorically (but I could be wrong). We have personally seen many do just that — take advantage of a generous return policy when the only hardship is that the books are a little upside down while the ability to pay is still there. Strange, nearly unprecedented times we are living in.

By: Jon

Jon — Sat, 10 Jan 2009 04:43:14 +0000

I make my payments on time for my home. I bought it at the height of the housing boom unfortunately for myself. I bought it for $211,000 and now other townhouses in my neighborhood are going for $155,000. I lost the 20% down, that got me the great interest rate and now I feel it could take 10-12 years to get back to the homes original purchase price. Should I let the house foreclose and then buy again in 7 years or less and earn more equity on that home than I have in the one I’m living in.

By: Adrienne

Adrienne — Wed, 28 May 2008 17:44:59 +0000

Apparently you haven’t read your history books. Thumbing your nose at people to “teach them a lesson” at the expense of the country’s economy is exactly what Herbert Hoover did during the Great Depression and led to economic disaster. But hey, he sure showed them, huh! Yippee! To place the “shaking of the finger” ABOVE the well-being of the country (which, “crazy-talk”as it may seem), affects the decent, hardworking, responsible people of the country as well. That’s not exactly rocket science. In fact, it is competely idiotic to dig your heels in to punish people, when the economy of the entire nation is at stake. I surely hope you are kidding. This isn’t Nordstrom, genius. It’s the most powerful nation in the world.

By: The Beef

The Beef — Sat, 15 Mar 2008 22:45:33 +0000

Did you fail simple math? Do you have the ability to discern which of two numbers is greater?

In many markets that have seen drastic declines homeowners have seen the value of their property drop by 50-60%. Many of them are not going to keep paying $4K a month in housing expenses for a home that is worth $160K and that they could rent for $800 per month. If you are in that situation, its a pretty easy calculation to make.

Now, the reality for the loan servicers and their investors is that in a foreclosure the best can expect to net is about 50 to 60% of the current market value. (not the original value). What is a better deal for the investors in that situation? What would you want on your balance sheet – $80K after a 1 to 2 year legal battle or a performing asset valued at $160K that is generating about $1K per month income?

This is an economic issue, not a moral issue. That a realtor or mortgage broker would try to infuse ethics into this argument is laughable and their conflict of interest is palpable.

By: Sven

Sven — Sat, 08 Mar 2008 20:51:23 +0000

Btw, don’t worry about having another great depression. We’ll definitely have a recession here, but the thing that triggered the depression was a complete collapse in the banking system. The government will do whatever it has to in order to keep the FDIC solvent, and as long as that is maintained, banks will still have money to lend. It’ll just be tight for a few years.

By: Bob

Bob — Sat, 08 Mar 2008 20:48:00 +0000

“Bernake is trying to solve a problem that was created by lack of personal responsibility, with more irresponsibilty.”

IMO, Bernanke is cutting losses quickly. I also take issue with agent and lenders who want to throw around the responsibility blame card. Let a neutral 3rd party vet all your transactions, and if yo can show that you walked from all transactions that shouldn’t have gone down, then feel free to cast the first stone.

I have literally several dozen people who are simply victims of a falling market and a few bumps, or pot holes or real tragedies derail their responsible lives.

In situations where the borrorer would like to hold on to the property but only if debt reduction occurs, the banks have choices –
1. foreclose and lose, while dragging down the market comps and adding to the distressed inventory,
2. approve a short sale that has roughly the same effect,
3. see a savvy BK attorney get what is now an under-secured, therefor unsecured 2nd discharged and the borrower stays in the home paying the 1st

4. Forgive that same debt that they’ll write off anyway. Agents don’t like this option because it takes them out of the picture.

There is no perfect blanket answer to the situation, but there are options that don’t have to be worst case.