Friday, November 30, 2007

There will be a housing bailout when Hell freezes over........Opps!... Nevermind.

Hell clearly has indeed frozen over

Get ready for the Housing gambler bailout!

House Flippers, Wanna-be real estate kings, Illegal immigrants, and sub prime borrowers who can't pay a credit card bill on time but were given a 1/2 million dollar mortgage nonetheless REJOICE!

Your bad credit, irresponsible behavior, and reckless financial decisions are about to be rewarded!

During the real estate boom billions of dollars in toxic mortgages were made to people with undocumented incomes, and abysmal credit scores with complete disregard to any lending standards.

Recently, the consequences of these idiotic lending practices have been felt by all as foreclosure rates have soared. Banks and hedge funds are losing massive amounts of money, and property values are going down faster than a cheerleader on prom night.

Instead of letting the market play itself out, and letting the bad boys and girls get spanked, the fed is trying to bail out these fools at the expense of the rest of us who actually did things the right way.

... You know... Got a mortgage based on our income, paid our bills on time, had money for a down payment, and actually bought the house to live in, not flip for a quick profit.

The Moral Hazard ramifications of this situation are astounding. People who are not punished for their bad choices will continue to make them in the future, people who did things the right way and see the ignorant and greedy get rewarded for their actions will grow angry, and may be less likely to do things the right way in the future knowing that they will get a far greater reward by being irresponsible.

Read the full story here:

Paulson's mortgage bailout
Lenders discuss freeze on intro rates


WASHINGTON (AP) -- Treasury Secretary Henry Paulson and federal banking regulators are working out the details of a plan to extend lower, introductory interest rates on home loans before they reset at higher levels...

There are an estimated 2.3 million borrowers with poor credit records whose home loans are projected to reset at higher rates through the end of next year. There are fears many of those loans risk default, worsening the nation's soaring foreclosure rate....

Last week, John M. Reich, director of the Office of Thrift Supervision, the federal regulator of the nation's savings and loans, came up with a more modest proposal in which borrowers would get a three-year extension of low initial "teaser" mortgage rates. That plan,would be funded from surpluses in mortgage-backed securities.


So basically to sum up the plan, the borrowers with horrible credit who did not deserve the home in the first place, get to have the low teaser rate locked in for years.

The responsible who got fixed conventional mortgages on good credit, receive no such advantage. The responsible get punished, while the irresponsible get rewarded.

I guess Hell truly has frozen over.

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