Thread: My reaction: You've got to be kidding. What do you think?

Bernanke urges banks to forgive part of mortgage debt. My reaction: You've got to be kidding. What do you think?

110 messages - 88 authors - last updated 03/05/08 02:22 AM

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Jim JubakMessage #1
03/04/08 03:35 PM What about the folks who have been prudent, borrowed only what they could afford, paid their mortgages on time, and now see their home prices falling. Is somebody going to reduce what they owe?

Here's a summary of what Ben Bernanke, head of the Federal Reserve, told a banking conference in Miami today:

March 4 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.
``Lenders tell us that they are reluctant to write down principal,'' Bernanke said. ``They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again.''
The Fed chairman countered that by reducing the amount of the loan, this ``may increase the expected payoff by reducing the risk of default and foreclosure.''
Bernanke also urged investors in mortgage bonds to accept ``short payoffs'' of loans by allowing borrowers to refinance at a lower principal.

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unknown warriorMessage #2
03/04/08 03:48 PM Sorry, but I think Bernanke has it all wrong with respect to forgiving portions of mortgage debt (principal). Most of the people in trouble with their mortgages knew when they signed on the dotted line that they were getting in over their heads. Those that have been living beyond their reasonable means should not be expected to be bailed out by the feds or banks or the government. Once it starts, where does it stop? There has to be financial accountability for the borrowers as well as the lenders.
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underfireMessage #3
03/04/08 03:55 PM I see this as a sick idea. I witnessed the loan write downs in agriculture over the years.

It was the same old story, poor economics, people couldn't make payments. The result was what can be predicted, those who succeeded and prospered in ag, to a large degree, are those who learned to manipulate the system for financial assistance and write downs. Those who acted in a responsible manner have struggled and often gone bankrupt only to be taken over by those less scrupulous.

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anysiaMessage #4
03/04/08 03:58 PM why should the people who didn't know their own budget be rewarded while those of us who spent within our means essentially get screwed? what if my job changes and i have to move? what if i can't sell my house for what i bought it for in mid-2006? who is going to bail me out? we purchased a home based on our budget that WE came up with and ignored what mortgage brokers told us we could borrow. we knew it was way more than we could afford. we were comfortable under 250k, but mortgage brokers were fine with giving us over 300k and if my old home had been refi'd under my ex-spouse's name before we bought this home, my current spouse and myself would have qualified for 400k or more. anyone looking at how much money we make per month would tell you that is absolutely insane. i'm tired of having to bail out the people who refuse to think for themselves and want to blame the lenders out there for their idiocracy. i'm tired of having to foot other peoples' bills. unfortunately it doesn't look like there is any good way around this one. whether we pay the price for those peoples' stupidity via our decreasing home value or by increased taxes for a gov't bailout, or whatever, we'll be the ones saddled with covering the costs of those idiots.

i'm sorry, but to those going through foreclosures, where was your brain at when you signed on the dotted line of a document that you apparently did not understand????????? i don't feel one ounce of sorrow for those people unless they have some completely unforeseen situation arise and they were more than able to afford the property when they bought it. otherwise, quit raining on my parade and grow up!

and bernanke, what about those of us who used our brains when purchasing property??? what will the govt do for us? should i quit paying on my home, lose my job, get close to a foreclosure so i can benefit? this is as bad as food stamps and other govt aid that is so often misused and abused by people who could minimally be flipping burgers at mcdonalds, but they're "too good" for that sort fo job.........

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livin2retireMessage #5
03/04/08 04:27 PM What do I think? My first thought was great let them off the hook, so they can keep making the same mistakes. Then I thought, maybe I can lose my job, get my mortgage principle reduced, get a stop on foreclosure proceedings then get another job! I could save an awful lot of money... then I could save for retirement, because ya know "you Gen Xers shouldnt count on Social Security, duh!"

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PeterNYMessage #6
03/04/08 04:34 PM I believe those who made poor decisions when taking out these loans are paying a high price for their mistakes, and perhaps deservedly so. But I am sure many relied on bad advice from individuals and institutions they trusted. Then there are those who have now been victimized by the economic downturn and have lost their jobs. They may have been responsible and lived within their means, but having lost their source of income, and being unable to get out from under their mortgages because they now owe more than their property is worth, find themselves in a financial crisis. Many people will suffer serious consequences and many are not to blame, perhaps including you and me. I think it is not unfair to expect the banking industry (who knowingly made bad loans) and the federal government (who failed to regulate the banks) to accept a major share of the burden. Whether forgiving the pricipal is the sole answer (or even part of the answer) I'm not certain, but the institutions that we trusted to protect all of us from this fiasco failed miserably and, to be fair, we cannot place all the blame on those who are facing foreclosure.
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c4s_manMessage #7
03/04/08 04:41 PM The major problem now is what does Big B do now? He can't lower interest rates anymore, for fear inflation will continue it's huge rise. He can't raise them for fear the markets and the econmy slides into a recession...so his only move...is to move the other variables in this market (housing, energy, and the like)....so he begs the banks to forget loans, and asks the rest of us to spend the govt checks as fast as we can...(forget his statements about the lack of savings and credit/debt problems).....we are in a true 1980's mess...and what goes up will come down...which is what's happening now...we just need to fall some more and things will balance out....

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mlatkowskiMessage #8
03/04/08 04:51 PM Well, Mr. Bernanke, I can only react by saying this idea strikes me as outrageous and foolish. I was taught to be responsible for my debts and to live within my means. For those that can't manage those basic economic principles, too bad. Maybe the rest of us should all plead poverty or stupidity when it comes to paying our taxes. It would be interesting to see how that would go over!

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LHfoolMessage #9
03/04/08 05:17 PM It may get to the point where banks have little choice but to restructure some of its loans. Look at Citi, they are seriously on the ropes. Do they have the ability to maintain property taxes on these foreclosed homes? They will do what saves the most money. It just may very well be some principal write-offs.

Is it fair or not?? Hard to say, I would imagine it would be a knock on your credit if you worked wrote down some principal.

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scsusanMessage #10
03/04/08 05:18 PM Although some people who are having trouble paying their mortgages got into trouble because of loans they could NEVER afford, alot of people didn't. My husband is in real estate and due to his business failing because of the housing market, is basically unemployed. My salary is good but not good enough to pay ALL of the expenses. When we purchased our house we had enough income to afford our living expenses. We were NOT, contrary to what some people think, trying to "live above our means". Thanks to the willingness of banks such as Wells Fargo (the bank that holds our mortgage) to work with us, we will probably be able to keep our homes. There are MANY more people in the same position we are in. Believe it or not, people do get laid off and businesses do fail. And people get sick and can't afford their mortgages. It is not fair to pass judgment on people with mortgage problems based on a stereotype (that being the people who took out subprime mortgages). Luckily, we have enough equity in our home to avoid having the value depreciate to the point that we owe more than it's worth. However, some other people are not so lucky.

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C1o1wbo1y1215111Message #11
03/04/08 05:32 PM Ben Bernanke should personally loan me 10 billion dollars and then forgive the whole amount.

I think Ben Bernanke is just setting up himself and his rich friends to all get free money from no interest loans he gave them.

Everyone knows that normal people like you and I are going to get our houses foreclosed on and the super rich are going to get their houses paid for by us the tax payer.

This is just one more PONZI scheme to steal our money.

I figure Ben Bernanke and his friends have already stolen 3 trillion dollars from the mortgage lenders and now they want us to pay for it.

I keep writing my congressmen and the leadership for a 2 million dollar loan to be forgiven by them but they ignore me all the time. I guess I am not part of their super rich let's ripe off the tax payer crowd.

I say we give them a real shock and everybody dump their current bank and put all our money in First Convenience Bank. HA HA if we all had the balls to do that it would be game over for the U.S. Banking system. I have already moved my CD's there.

If we did that all the other banks in the US would collapse and then Ben would really have trouble on his hands.

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greenladyMessage #12
03/04/08 05:34 PM A slap in the face for all those who make sound judgments in the first place and pay their bills. M.O.

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http://moneycentral.msn.com/community/m ... did=586318

More comments on the site... What do you think?

I do not think the principal should/needs to be reduced. I can see some sort of rate cap to stop runaway interest.

I respect Jim Jubak and he said it best.. Does the homeowner that have paid their bill on time also get a reduction?


The big banks also do not need to be bailed out. If there are some failures as a result of this mess, so be it.