Wednesday, November 05, 2008


From the Open Forum - Hat tip Raul

Feds May Be Considering Subsidy on Troubled Mortgages
November 4, 2008

Feds considering subsidy on troubled mortgages - housing wire

One plan that may be garnering some consideration is the idea of a federal subsidy for troubled borrowers, perhaps tied to an effort to modify loans. The memo outlines a proposed bailout that would use three-year subsidies for some troubled borrowers.

The proposal outlines the mechanics of a mortgage bailout that would cost as much as $441 billion, relying primarily on a three-year borrower subsidy that would be repaid in five years, with interest. “Upon receipt of a notice of default on an owner-occupied primary residence, a homeowner could apply to participate in a program under which the government would fully subsidize three years’ mortgage payments in exchange for a note, to be paid in a lump sum five years from receipt of the first payment subsidy, equal to the payment subsidies plus interest accrued at the federal funds rate,” reads the proposal, in part.

No More Mortgage Payments Soon - Get ready to Default! - Mr Mortgage

Oh my. Friends, get ready to default on your mortgage…on purpose. The first chatter about the government sponsored loan modification initiative has surfaced from Paul Jackson at Housing Wire and what a disaster it is.

I have been telling you guys for months that a homeowner bailout is coming. But this is unlike anything I expected - it actually encourages mortgage holders of all paper grades to default. This is better than a Pay Option ARM because the monthly payments are zero! Why not default when you get to skip three years of mortgage payments and pay the government back five years from now at FED FUNDS RATE!

Stop Paying Your Mortgage Today - Market Ticker


Assuming your home is worth equal or less on the market today than your outstanding mortgage balance, of course.

You deserve to live free for a year, and you deserve to have your home price come way down so you can buy it back in a few years for much less.

You've already been taxed to the tune of $700 billion for a bailout for the bankers, even though you told Congress "no".

Now the FDIC and Treasury are "working on a plan to curb foreclosures."

In return I recommend that every American with a mortgage immediately stop paying.


Whether you can afford it or not.

Consult with an attorney and CPA, in the same room before you act to make sure your specific mortgage (and the state in which you live) is a "non-recourse" loan and to understand exactly what impact this will have on you (it will come with a significant impact, most specifically to your credit rating! Hear me out - you may find that this course of action makes perfectly good sense.)

See, in many states purchase-money first mortgages are "non-recourse", meaning that all they can do is ruin your credit and foreclose on your house.

That's it.

They cannot force you into bankruptcy, they cannot garnish your wages.

And from the time you stop paying until the time you get evicted, you get to live there for free.

Finally, after you have been foreclosed upon, your house (and lots like it if your friends and neighbors do likewise) will drop dramatically in price. Presto! In a year or two you will be able to buy it back at half what you paid for it in 2004 or 2005. Now that's a bargain.


Dave said...

Boy, with all this bending over backwards to help out irresponsible homeowners, I feel like a silly fool for not being irresponsible too!

Christ, I could be living in a million dollar house, rent free, with the government bending over backwards to sweeten the terms of my loan and doing everything it can to keep me in the house!

Man, what a fool I was!


Randy said...

Me too - Now I kind of wish that; rather than being responsible (out of growing concern for my family's long-term welfare) and taking actions completely beyond the slightest grasp of mainstream society - selling my house at the peak to rent (for over three years now!!!) - I could have prevented the growth of quite a few grey hairs by not taking any action or worrying about any of this... Just could have sat back on my fat, lazy ass, oblivious to my surroundings and waited for the gvt to come rescue me. What a crock of Shit!

Now, if I lose my job and/or run into financial difficulty, will the Gvt come subsidize my rent payment?



Anonymous said...

I have a friend who is a bartender. He bought a condo in 2005 and never should of been approved but he lied on his application and he got the loan anyways. Well, he quit making his mortgage payments October 2006 and has had foreclosure notices but as of today he has lived there for free and no one yet has tried to kick him out! He just lives there and does not pay the rent and could care less about his credit.

Randy said...

Holy Crap - TWO YEARS and he's still there? Like I said - Our world has gone insane...

Thanks for sharing this Anon 7:12

Anonymous said...

I read an article a while back where UBS was in court to get some homeowners evicted and the judge said prove your the owner and UBS couldn't. The mortgages were repackaged and resold all over the world and the paperwork was sloppy so in some cases banks can't prove they are the holders of the mortgage note! Also, the banks are so backlogged with foreclosure proceedings that it can take a year before they even get around to trying to evict you!

Dave said...

We may still have a chance to suck at the government's tit. I read recently that now banks are considering debt forgiveness for credit cards!

I'm runnin' out right now to max out all my credit cards!

Oh, wait, I don't have any credit cards. Damn!