I just read an article online about the federal goverment upping the amount they are proposing to spend on bailing out Freddie Mac and Fannie Mae from 2.5 billion to (possibly) 300 billion. Guess who gets to foot the bill, us tax payers. While I don't have a problem funding things like healthcare for children, foodstamps for families in need, and training for those whose jobs have been lost due to industry changes and such I do have a problem with footing a bill for some giant banks who were dumb enough to get themselves into trouble by lending to people who couldn't afford the mortgages in the first place. Let me be clear that I completely understand that not everybody bought houses in the boom did so knowing that they could not afford them (I blame predatory lenders for that one) I am almost ashamed to admit it but we were one of those families who was talked into a house that was simply too expensive for us to afford by a willy nilly lender who told us to find a house and he would get the loan. However I was lucky and or smart enough to sell it just 9 months after we bought it and before the housing crisis came crashing down here in the northwest. Yes, we lost a bunch of money but we came out with our credit in tact and now we rent. Happily at that. Owning a home is no longer a dream of ours, at least not until my husband retires from Active Duty military.

Now back to my point, why don't we as tax payers get a say in how the money is spent or do we lose that right when we elect our officials who then get swayed by big corporations and thier good 'ol boy ways. Mom and pop don't come to the rescue when DH and I overspend, and guess what we learn from our mistakes and try not to make them again.

Sorry for the rant this just drives me nuts.

The whole way the mortgage system works - people getting approved for loans by smaller banks, those loans get sold in investment portfolios, many of them to Fannie & Freddie.  Fannie & Freddie have and always will be government secured banks.  They were created and put in place by the government. Of course the government is going to "bail them out" (its not really a bail-out, since the government sponsors those banks, its just a shifting of funds).

Fannie Mae was created after the Great Depression as part of Roosevelt's "New Deal" because banks would not invest or offer mortgages after the Depression. Fannie was put in place to loan federal money to smaller banks in order to increase home ownership for citizens.

Freddie Mac was created as an off-set to Fannie Mae so that there wasn't a monopoly on the banking industry, since they are allowed to operate as a private bank even though they are federally funded. 

They own roughly 90% of the nations mortgages.  If they two largest federally funded banks go out of business, what is that going to do to the rest of our economy?  Its not really a bail out.  The media & government want you to think that something is being done to "help those poor people." They would have done it anyway, they have too.

Meh, I guess taking all those training courses on Fannie & Freddie when I worked in mortgages are finally paying off

I am confused as to how the "bail out" is going to help the mortgage payers.  If they couldn't afford the home before the bail out, how can they afford it now?

And why should someone who CAN'T make their payment get special consideration over me who CAN make my payment?  I made sure when I bought my home that I COULD afford it and have done without in other ways to make sure I kept it.  Now someone whose eyes were too big for their budget is going to get a commisserating pat on the back and a handout?

re-tired

Homeowners in trouble will probably have to go through a process of re-financing their homes under new loan agreements (gov't supported) with banks (hand picked by the gov't) to get the "bail out" and those new loans will of course come with new interest rates, longer term mortgages to make the monthly mortgage payments seem attainable so that this doesn't happen again *snark*.  At least thats what I'm guessing will happen...and I'm no expert...in fact, I barley pay attention to this "crisis" which would have been a non issue if there were laws about preditory lending (which I'm sure are soon to come). 

 

You have brought up some issues that have been leaving me raw. I agree with you 100%. Its starts with those CEO's who make huge incomes and bonuses to boot. And why wasn't anyone in government concerned over the the lending practices? Surely it wasn't that big a secret. Then there were those folks who wanted desperately to buy more home than they qualified for. You know how they got away with it? The banks had this gimmick called a NO DOC loan. NO DOC stands for No Documentation. Sort of the Bank Version of don't ask-don't tell. I know this because a good friend qualified for her home this exact way. Had the bank looked into her and DH history, they would have seen second mortgages, refinancing and credit card debt. Now she's in bankruptcy and foreclosure. And the reason I'm angry with her is because SHE KNEW BETTER. She used to work in a bank doing home mortgages. It was greed on every level. The bank wanted the business, the real estate and construction company wanted the business, and she and DH wanted to "live their best life now" according to a well known motivational speaker that they listen to. We've been friends for 40 years and I don't even know her anymore. I know this isn't the case for everyone caught in this racket but I have issues with bail outs and bad behavior.

arianasilver:

Meh, I guess taking all those training courses on Fannie & Freddie when I worked in mortgages are finally paying off

Ariana,

I was wondering how you knew all that, lol.

Alaskan,

I find the term "predatory lending" (which is exactly what this type of lending is) kind of amusing, but I totally agree with you.  Despite the information from Ariana and the fact that "Fanny and Freddie" are federally funded banks, I don't like the idea of the government (Taxpayers) bailing out a bunch of people who, even though they knew better, picked out the most expensive house they could find, bought it with a BAD mortgage plan and now are suffering because their eyes were bigger than their pocketbook.

 This is exactly like my brother and SIL - my brother recently filed bankruptcy (his wife filed when she was 18) then their son gets kicked out of daycare because he is undisciplined.  Now, my SIL's mom has come up with the brilliant idea that SIL should just quit work and stay home to take care of the kid.  If she quits her job, they will lose their house.  They have already lost one house to foreclosure.  From what I understand, they are now actually going to lose this house they are in - it's not just conjecture anymore.  You know what they said about what will happen after they lose it?  Oh, they'll just buy one in this other town and have her mother come live with them.  This is the same plan they had in mind when the last house was foreclosed.

I wish them all the best, but I hope they don't come running to me when they need something. Not to sound ungenerous, but they have been given a significant amount of money by my parents and each time they were helped, they just created more debt for themselves.

 

I am new to this group and this conversation is right up my alley!  True, NO DOC does pretty much mean..."don't ask, don't tell". BUT, the NO DOC loan was originially designed for the self employed who doesn't tell Uncle Sam everything.  Unfortunately, it didn't turn out working that way.

I am sorry but I have no sympathy for those that bought more house than they could afford. Most of them knew right off the bat they couldn't afford it but signed those docs anyway. I see many are wanting to blame the mortgage companies for this and in all reality that is so unfair.  People have to take personal responsibilty for themselves and their actions instead of trying to blame in on someone else and expect someone else to bail them out because they made a bad decision.

I am all about personal responsibilty. We could have had a bigger mortgage then what we had. 

Actually a couple of days ago in the newspaper, there was  a big article about the changes in the Canadian Mortgage laws due to the fallout in the US.

No more 40 yrs mortgages and more restrictions that were in place before. higher deposits etc.

It infuriates me as well. DW and I have lived within our means all our lives, accepting responsibility for ourselves. Neither one of us understands how someone can put themselves into that position absent health issues or unanticipated job loss.

But many people don't think that way. They believe that "fate" dictates what happens to them and they are incapable of planning ahead so when something happens "It's not my fault".

I suppose I will never understand.

I agree ...I can`t understand how folks can stand owing that kind of money  and  a 40 year mortgage !!! I have never bought anything on time ..except  when late hubby and I bought our home and we paid it off in 5 years . Back then I was much more frugal than I am now ..I  grew up  rough ..cold and hungry a lot of the time ...laughed at at school for my clothes . I had 4 kids and I was very frugal ...I was going to make certain my kids didn`t have to go hungry !! I didn`t work ...we lived on one income ..and paid off that house ..dang life was great back then

Walt I agree ..we have to be responsible for ourselves  and I think life is what you make ...yes sometimes it hands us challenges thats why we plan for the unexpected !