By Catherine Brock
If only Angus MacGyver were here! Certainly he could solve this mortgage crisis, and with nothing but a Swiss Army knife and a stick of chewing gum. Unfortunately, since MacGyver was cancelled in 1992, we have to rely on politicians and legislation to do the trick.
Fueling demand for new homes
When President Obama's economic stimulus plan was put before the Senate, Republican senators criticized it for being stuffed with spending proposals that ultimately won't help the economy. Since the House version of the plan passed without a single Republican vote, they took a stand to put their own spin on solving the mortgage crisis. The Republican vision included three key strategies:
* Government subsidies to push mortgage rates down to 4 percent
* $15,000 tax credits to homebuyers
* Assistance to homeowners whose mortgage loan balance was greater than the market value of the mortgaged property
The core of this vision is the belief that the housing market can be healed by driving demand for home purchases. Mortgage rates of 4 percent, along with $15,000 tax credits, could fuel that demand by significantly reducing the cost of home ownership. A $300,000 mortgage financed at 5 percent carries a principal and interest payment of about $1,610. But lower that rate to 4 percent, and the payment drops to about $1,432. For those households with high annual tax bills, the tax credit would cover the closing costs of the purchase.
Playing party lines
Not surprisingly, Democratic senators weren't wholly supportive of the Republicans' housing push. Some, in fact, questioned the Republicans' motives for becoming suddenly concerned with the mortgage crisis. The Democrats also argued that the economic stimulus plan passed by the House already addressed housing, by way of a $7,500 tax credit for homebuyers.
The version of the economic stimulus plan that the Senate approved on February 10, 2009, did include the $15,000 tax credit. But Republicans were unable to win support for the subsidized mortgage rates.
Mortgage rates could fall anyway
In December, James Lockhart, Chairman of the Oversight Board of the Federal Housing Finance Agency, stated publicly that the government's efforts to fix the mortgage crisis could send mortgage rates to "well below 4 percent." This commentary came after the Fed's announcement that it would buy up mortgage-backed assets, but before the Republicans began pushing for the mortgage rates subsidy.
MacGyver's not around anymore to weigh in on whether 4 percent mortgage rates actually would fix the housing problem. It may be that the right solution is the action plan nobody wants to consider: waiting for housing prices to fall back down to where they'd otherwise be, had the bubble never happened.
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why should not the mortgage rate be fixed at 4%, the banks and loan companies have been getting their money from the treasury at .5% for a long time.....
ReplyDeletewhy are they waiting 4% would be the answer,this would stimulate house purchases and building new ones...jobs would come back and economy would start coming back to some normal status....
ReplyDeleteI am a widow with a $300,000. mortgage The payment is $2,240.70 a month. I only get $3,033 a month. after paying my mortgage I don't have much left over for all of my other bills let alone extras. The banks should lower the interest rate and give us all a tax rebate. To add insult to injury I have to pay over $800 in taxes this year. How come I'm not even making it and I have to pay taxes and politicians who make a whole lot more than me don't have to pay taxes until they get elected to a high office? Why don't we start at the top and start dribbling the money down to us?
ReplyDeleteThe notion that republicans care about anybody but their rich corporate supporters is absurd and has no basis in history or fact. They could have been involved in the stimulus plan but they chose to play politics. When they are being obstructionist's they are taking their cues from Limbaugh because they are all cowards. Party before the country, their wallets before the people.
ReplyDeleteThis whole issue is on the fringe of being absurd. As a person, whole and autonomous from all those around me, the choices I make, the life I lead have nothing to do with my neighbors. I am a single mother of two children. I laid down, I had sex, I married, I divorced, and now because times have gone bad my fellow countrymen must pay for me and my kids????? ABSURD!!!!! My choices are mine, my consequences are mine. There is no one is these United States that should pay for what I have chosen to do with MY life.
ReplyDeleteI pay my mortgage under the terms that I signed while I still had a husband. I am a steelworker. I make $47,000 a year. I pay taxes. I was given a good education through 12th grade. I am blessed to have wonderful parents who believe in hard work. Mom and Dad taught me that I alone am responsible for my life. Bad marriage, great kids, wonderful home, right now, my dime. YAY!
I am happy to be free. I will instill my values and morals upon my children. We all live. Our choices give us rewards and consequences, and yet there is one undeniable truth, we ALL long to be free.
Human souls do not wish to have anyone compel the way that their lives should go. This is a fundamental principle hardwired into all of us. We choose. We choose the path that our lives will take. Under the reign of freedom, we can go anywhere.
There are certain undeniable facts of life. Money, a.k.a. trade, makes the world go round. Someone has something, someone NEEDS it. Someone has something, someone wants it. PEOPLE, a.k.a., the market decides the value of that need or want. People, a.k.a. the market, decide the value, or what they will trade to get what it is that they want or need.
We all have desires. We all have dreams. Everyone wants to have the FREEDOM to pursue those dreams. When government compels that we all must take care of the wants, needs, and dreams of the other, production, money comes to a stifling halt. Hell, I look at my own union, incentive, extra money is given to us when we produce. Not all of us produce the same. Some of us are driven, some of don't care. Some of us will make 100 moves a day while the other does fifty, but we are compensated the same. Where is the incentive?
When production halts, we all must adjust. Money, the reason why we work and not just sit our asses waiting for manna, well, money get scarce. We have to find ways to get what it is that we need from those who have it. The barter system looks good then. What is it that you have to trade? Look deep inside yourself, humans are motivated to take care of themselves. That is undeniable.
I make $47,000 a year before I do my taxes. In order to do that, I work as much overtime as I can muster. All of that time, is time away from my kids. We don't live extravagantly to US standards. My kids have a house to live in. Changes of clothes through the week. (Cause gosh, who wants to be the kid that wears the same clothes all the time, even if those clothes might be clean.) They buy their lunches at school, without discount, endure comments about their clothes because they aren't name brand, and yet, those are the worst of their worries right now. If the economy gets worse, well, I'll teach them that this nation was founded upon certain principles, freedom and the like. My kids will rebuild what we let slip away because we were AFRAID to hurt for a little while.
See, there is a reason why so young of a country, USA, is as strong as it is. The US has given the world what it never saw before; the ingenuity of free men an women. The US is under assault from within. Let us stop it now!
I make payments to a bank to call my little piece of this rock my own. I pay for a 4 bedroom cape cod, that used to be my grandparents home. My Dad grew up in the room that my daughter calls hers, but he shared it with a brother because once baby #5 five was on the way, Granddad decided it to add on to the house. See, my grandpa decided, not the government. Grandpa decided on this his own. He took care of his own.
The bank gave me a loan because I worked hard to have the reputation that says I can repay what it was that was given to me. I paid my bills and I worked where women aren't traditionally, supposed to work. I work in a steel mill. (Hell, I'm going to college so I can get out of there to. I have loans, but that means I have to repay them too. Gosh I'm getting old too. I'm 33 and, oh my goodness, I decided I could change my life!)
I am a union worker. My job in the steel industry looks pretty bleak right now. The government and their ties to radical environmentalists are now threatening my job. See, environmentalists have spent enough money to convince those that don't represent me that our Earth is under attack. Regulation, regulation, tax, tax, and soon to come, cap and trade. No one seems to recognize that this world is no bigger than its' Creator. Humans won't destroy this world until they destroy each other.
Big steel is no more in America. Big auto, well that is going by the wayside too. Has anyone looked to government regulation and strangulation as its' probable cause?
To bring this all to a conclusion, this is what I have asked myself: If my life must change because I can no longer afford what it is that I have, than it must change. Will I ask my neighbor to subsidize the existence of MY progeny or me???? HELL NO!!! My neighbors have the unalienable RIGHT to live their own lives. Their money, their fortune, their TIME should be spent on what they see fit. If they see any left over and WANT to give, that is their right. That is charity and THAT should be what is upheld as righteous and good.
If my children and I live in shack until I build us more, than let it be, but please let me have every opportunity to go where it is that I think I should go. Don't put limits on dreams. Aspiration is what has gotten the human race to where we are. Freedom has given me this space to send this message so far and so fast.
My liberty, your freedom, and the liberty of the generations that will spring forth from each and us is worth all of the adaptation that it takes. We have not not one real crisis except what is offered to us in propaganda and agenda. Let us look to the proof of our own lives what comes before us. Let us remember that we have our inherit survival at tips of everything we do.
Please remember, what government gives, it can take away. Also remember that what the government gives away, you, us, me, the lowly, the downtrodden, we worked for it. All they did was give some pretty speeches. They didn't give their time for the dollars they give away. I prefer to count on me and, Lord help us, Divine Providence.
Never forget that fog that Washington escaped in New York. If not for that, we would still be a colony and not the United States of America. Never forget and to parapharse Reagan, Government is not the solution to our problems, government IS the problem!"
My gosh, stand on our own feet. Walk our own miles. When you finish with your journey, at least you can say it was yours. Then when you bequeath what it is you amassed, the generations you left behind, they can say, they did it their way. We must teach, we must uphold, and must give strength to human spirit, not the spirit of the devil made me do it.A
I have worked in the mortgage industry for 30 years and this is beyond words for me and many of the people I have helped over the years. This mess was created by greed on Wallstreet and if we are bailing out big business then the very least we can do is bail out the people who are now paying the price dearly in the form of their home... We were given these programs to sell and we did what we where paid for and paid good! We sold the programs and big business made BILLIONS!!!! Merrill Lynch now owned by Bank of America list 15 billion in losses - go back two years and they made 165 billion!!!! It kills me when they get bailed out and some of my clients who worked hard every day are faced with this disaster... It is ruining lives and our country. So my suggestion is cut the crap lower the interst rates to .5 above what the banks are paying - which would be 1% right now and while we all recover the banks still make money and families get to stay in their homes. It is going to take approximately 10 years for recovery I think a 50% profit for the banks is reasonable. The borrowers did nto do this on their own - the industry opened pandora's box made their money and now wants the borrowers to pay AGAIN!!!! This is all a bunch a crap and I hope our President grows a pair and saves our homes from GREED!!! of big business..
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