My Problem with McCain's Mortgage Plan
Gonzo1977
Posts: 1,696
I'm just going to take this on the most basic selfish level possible.
And any of you wiz kid economists are welcome to jump in here and correct me and enlighten me if possible.
With McCain buying up these troubled mortgages and valuing these homes on a lower market value, won't this essentially bring the actual housing market down?
I mean, if a house on your block all of a sudden loses value, it obviously effects the value of your house as well and brings your property value down too.
How is this solution? If the property values drop, the market as a whole drops and in order to counter-balance this....inflation rises...which at this point in view of the current job market, I don't think American's can handle a rise in inflation. Especially when people like my wife and I who pay our mortgage and rely on this asset as an investment towards our financal future an eventual retirment.
I'm sorry but thinking about McCain's plan on at on that principle alone is very troubling.
I just feel that this is another ploy by McCain to gain votes. He's shooting off his mouth again and coming up with something that just sounds good without any real evidence of how this will actually help.
It sounds good on principle...But in the long run I believe this is just a hollow easter egg.
I understand that this idea in the best sense will loosen up the mortgage payments to help folks buy some time to get their feet back on the ground but at the same time it's neither solving this problem or helping these folks in the long run.
One of the major reasons for these people not being able to afford their homes is that the job market has also plunged. Jobs in places like Michigan, Ohio, New York are being cut or moved overseas.
The troubled economy also puts a strain on the job market which also in turn puts the crunch on homeowners struggling to make payments on their homes.
I think the key to this crisis is to somehow find a way to stimulate the job market.
I'm afraid that alot of the attention is being mis-focused on bailing out Wall Street or implementing plans such as McCain's which is merely just a bandage over a much deeper cut.
Any one else feel this way?
And any of you wiz kid economists are welcome to jump in here and correct me and enlighten me if possible.
With McCain buying up these troubled mortgages and valuing these homes on a lower market value, won't this essentially bring the actual housing market down?
I mean, if a house on your block all of a sudden loses value, it obviously effects the value of your house as well and brings your property value down too.
How is this solution? If the property values drop, the market as a whole drops and in order to counter-balance this....inflation rises...which at this point in view of the current job market, I don't think American's can handle a rise in inflation. Especially when people like my wife and I who pay our mortgage and rely on this asset as an investment towards our financal future an eventual retirment.
I'm sorry but thinking about McCain's plan on at on that principle alone is very troubling.
I just feel that this is another ploy by McCain to gain votes. He's shooting off his mouth again and coming up with something that just sounds good without any real evidence of how this will actually help.
It sounds good on principle...But in the long run I believe this is just a hollow easter egg.
I understand that this idea in the best sense will loosen up the mortgage payments to help folks buy some time to get their feet back on the ground but at the same time it's neither solving this problem or helping these folks in the long run.
One of the major reasons for these people not being able to afford their homes is that the job market has also plunged. Jobs in places like Michigan, Ohio, New York are being cut or moved overseas.
The troubled economy also puts a strain on the job market which also in turn puts the crunch on homeowners struggling to make payments on their homes.
I think the key to this crisis is to somehow find a way to stimulate the job market.
I'm afraid that alot of the attention is being mis-focused on bailing out Wall Street or implementing plans such as McCain's which is merely just a bandage over a much deeper cut.
Any one else feel this way?
Post edited by Unknown User on
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Comments
A lot of the jobs that are being lost are in construction because no one is buying houses. There really is no quick fix to this problem and I think any program to get us out of this will end up losing money or costing the taxpayer.
I do agree that if you stimulate the job market people might be able to save their homes. So then it comes down to who do you think will be able to create more jobs.
Good point.
It's going to a very big hangover for homeowners when they wake up to see the market value on their homes drop. It's an ivestment that alot of folks rely on as an asset that will continue to climb rather than de-value.
The housing market was bloated granted, but this is scary in the fact that is very reminiscent of what happend in Canada mainly Ontario and Quebec during the late 70's. The Canadian economy was in turmoil at the time because of instability in Quebec who were threatning to seperate from Canada. Housing values dropped significanlty in the wake of this crisis and it ushered in a housing market crash basically overnight where people who purchased homes for $165,000 were waking up to find their houses valued at $45,000-60,000 dollars!!!! A loss of $100,000 dollars or more on their principle value!!!!
Obviously a very severe example but one that we should keep in mind as we seem to be toeing that line. Our markets are very unstable and especially considering that we don't quite know if we've hit the bottom of this economic crisis yet.
McCain's plan could be a very dangerous trigger effect if not thought out properly. Hey likely won't be president in January anyway so we may not have to worry about his plan. But that doesn't mean that Obama gets a free card for his plan.
Obama is going to have to be very aware of the Job Market and find a way to stimulate that if we are going to get out of this mess.
Jobs are obviously vital to the economy and we've got to find a way to stimulate the US job market. I don't care what anyone says...It's the backbone of the American Economy.
Finding a solution to this is a sure fire way to breathe some air back into the markets.
That may be the case. But you're toeing a very dangerous line when you are talking about de-valuing homes. Investments that were purchased during the inflated bloated market are very vulnerable in this regard because it will cause folks to lose an aweful lot of money on their principal investment.
Not all of us play the stock market aside from our retirment investments. Many of us have homes and it's the single biggest purchase investment we ever make. When you start fucking with the value of peoples homes, you are fucking them large when it comes to their financial stability.
I'm obviously dealing with worst case scenarios here. But we're not really positive that things have hit rock bottom yet with the economy. When you start making brash ill-thought plans like this...you may be causing more harm than good.
If the shit hit's the fan with the world markets...People will turn to their homes as investment collateral. If that value is not there or plunges...We could be in for a disasterous outcome.
It's happend in Places like Russia, Germany, France. Where once strong markets have plunged and financially strong nations get crushed overnight by economic turmoil.
Housing markets are usually the hardest hit and home owners are the ones that end up suffering the most.
It'a a very real and scary scenario that quite possible could play itself out if we fall into an economic panic
pretty good article.
I definitely agree that is why I believe that we have to let the housing market self correct itself. Prices where ridiculous during the housing bubble. You had homes increasing in price by 20-30% per year. That is unheard of. While I do agree that we should be helping out Main St instead of just dumping all this money on Wall St I don't think that McCain's plan is the best way to go about it.
Great article!!!
I really believe that this is a horrible plan. Regarless of the effect on the actual homeowners we will still get fucked in the end as taxpayers will eventually fit the bill for these bad investments.
If McCain's plan buys up homes vauled at 200,000 dollars where the morgate is 25,000 dollars taxpayers will end up paying for the $50,000 dollar loss.
God forbid the housing market continues to drop as it will cost tax payers even more money.
What this bailout is going to do, is make you pay for the mortgages of the irresponsible people.
Just like you are paying for the irresponsible banks.
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What don't you understand here?
These investments were purchased in an inflated market. People have mortgages that are worth more than their actual current value of their homes.
Home owners owing $250,000 dollars to a homes now priced at $200,000 dollars or lower.
McCain is proposing buying up these bad mortgages. How is he going to pay for it? The Bail out money? His plan only sets aside 300 billion dollars; not even close to the number needed to buy up all these bad investments.
You know who's going to fit the bill for the rest?
THE TAXPAYER!!!!!
Furthermore by purchasing these bad mortgages you are still playing on the assumption that the market is going to get better before it gets worse.
With the Job market still slumping and looking weaker by the day there's currently no sign that things are going to get better.
In fact housing prices are still on steady decline.
Those homes vauled at $200,000 dollars may contiune to drop in value and by buying up the morgages you may be setting taxpayers up for a huge loss in this investment especially if the housing markets crash.
I don't know about you...but this is very scary.
The problem here is not the investments themselves. It's the issues that led to these Americans not being able to pay for their homes.
Cuts to their Wages
Job Losses
Rising Health Care Costs
We are not attacking this issue at it's core.
Isn't that the whole premise for the $700 billion bail out and McCain's plan. All along the government has been pushing to socialize the losses. McCain's plan is basically the same thing as the bail out. Instead of buying bad investments from corporations we are buying bad mortgages from banks. Either way we will over pay for these bad debts and the tax payers will be responsible for the difference while the banks and financial institutions get a clean slate.
This is my idea and I believe it would be appropriately balanced for individual homeowners since most people own homes that reflect a direct correlation to their income.
That pisses me right the fuck off. I would love to own a house but I was smart enough to realize that the market was over inflated and I knew it was going to coming crashing down. I was going to wait till it crashed to buy. Now with everything going on it's going to be damn near impossible.
Wait, I'll be owning a home with my tax dollars, I just won't be living in it.
What a joke.
Shit I owned a home. Had to sell it because of my divorce. Luckily I had some equity in the home and sold before the shit really hit the fan. Now I'm just waiting for the market to completely bottom out so I can get the best price possible.
It's disgusting.
The Quality of Life in this country is being polluted by a small percentage of greedy pricks who are robbing us of our basic needs.
We don't ask for obscene wealth. We just ask in most cases just to be able to enjoy our short time on this earth with our loved ones.
Instead we're being booted from our homes, losing our jobs, and our kids are getting their legs blown off and dying in Iraq.
What the fuck is wrong here?
...are those who've helped us.
Right 'round the corner could be bigger than ourselves.
He's also not going to be President in January so his hack plan will never see the light of day either way.
A lot.
The problem is that nowadays people are spending 40% of their net income on a house. My parent spent 20% of their net income. That is awful.
And that stat is rising.
It's going to get tougher and tougher for each generation to become home owners.
It was tough for My Wife and I. We had to work our ass off.
Home ownership should not be a privilege that is exclusive to the rich.
Wouldn't have been that tough to find an overpriced house living in San Francisco, the housing prices here are insane.
Then ol' Johnny could have come and bailed me out.
I can't beleive I'm pissed at a republican for such a liberal proposal.
And what the hell was all the suspending the campaign, running back to Washington shit all about if you are NOW going to say the bill is flawwed?
In my opinion, McCain had a fantastic chance to get back in this race if, when the Senate bill came up with the $140B in pork and extras, he stood up and said, "No way am I voting for this bill, I care to much about the American people to vote for this, here's MY plan, with no pork ... " He would have gained a TON of respect and it would probably be a tight race ... but, what he's doing now, which is yet another a stunt, is just so desperate.
"I don't believe in damn curses. Wake up the damn Bambino and have me face him. Maybe I'll drill him in the ass." --- Pedro Martinez
Let's hope that more Americans feel this way and can see through McCain's bullshit.