Obama hopes to roll a rock the size of Gilbraltar up a hill as steep as Mt. Everest: the Housing Bubble Bail Bill is supposed to support the continued payments for excessively over-priced real estate. But details of this bill shows that it will defeat its purpose while demoralizing all savers who were careful to not dump a mountain of debt on their homes. The collapse has to be endured. We can’t escape this. Keeping prices inflated means, the only fix will be inflation.
The $75 billion effort, dubbed the Homeowner Affordability and Stability Plan, boils down to two basic solutions:
First, the government is aiming to help more homeowners refinance to take advantage of new low interest rates.
Everyone who owes money on mortgages should get low rates. Giving this out to only people who bit off more than they can chew is stupid. Everyone will be filled with anger if they pay, say, 6.5% while deadbeats get to pay 2%. This will be very explosive.
Second, it provides incentives to lenders and servicers to restructure your mortgage to more affordable levels.
The taxpayers who are not deadbeats will fund these bargain rates by paying the difference! Extremely damaging, socially. Rewarding fools and punishing the prudent is a ticket to social collapse.
Homeowners in default or at risk of default may qualify for loan modifications, which restructure the terms of loans.
The line of future defaulters just got much, much longer. Everyone will want to be a defaulter and I can’t blame them.
Anyone with high combined mortgage debt compared to income or who is underwater may be eligible for a loan modification.
This is now nearly 50% of the homeowners or more. Each day, more are in this category.
Borrowers with high levels of other debt, such as car loans and credit card debt exceeding 55% of their incomes, may still qualify for a modification but they’ll be required to accept debt counseling in a HUD-certified program.
How cute! People who are deep in debt will be talked to and then given a huge Xmas package of goodies. ‘Now, don’t do this again, we won’t bail you out!’—HAHAHA.
If you qualify, your servicer or lender will reduce your monthly mortgage payments to 31% of your gross income.
ALL Americans paying more than this should get this deal [many pay more than that amount]. Alas, many people dumped a mountain of debt on their homes in order to have cheap lending so they could buy stuff! Every time their house went up in value, they re-mortgaged it at the higher amount. Now, they get to reset it to a prudent level! Wow. Fun! I wish I was this stupid.
The payment would stay there for five years and then gradually revert back to the conforming loan rates in place at the time.
And the Tooth Fairy and Easter Bunny will pay the higher rates! Right! Deadbeats who are too deep in debt don’t plan paying more in the future, they look for ever-easier loans. Uncle Sam comes to mind, here.
The reduction would come mostly through interest-rate reductions, though in some cases, principal reduction also would be an option.
Taxpayers get to make up the differential. Thank you, can I rip out someone’s throat while screaming?
Borrowers would also receive incentive bonuses of up to $1,000 a year for five years for making payments on time….
THERE IS A SANTA CLAUS!!! Now, I owe nothing. Why can’t I get $5000 for being a prudent, careful, very hard-working person who didn’t take any vacations for 15 years and worked double time in summer? Eh? What? Oh! I get to pay taxes for this!
And, in order to protect taxpayers from excessive expenses, no loans will be modified unless it results in a net savings compared with the costs of foreclosing. Finally, rates would not be lowered below 2%.
WHOA! Wait! If the banks foreclose, THEY lose money, not me. In this alternate game, I lose $5000 per deadbeat AND have to pray these losers will honor commitments they didn’t honor in the first place.
That will disqualify many borrowers who simply can’t afford any reasonable mortgage payment because of illness, for example, or job loss.
The ONLY people I want to help are people who fell behind due to job losses and illness! Tossing these unfortunates to the wolves is cruel.
There is no way this will fix anything and instead, it will cause intense rage. I feel cheated here. I suffered very significantly, working hard to get out of all debts and to this end, I even built my present house while living in a tent, for several years, no less. I practiced prudence and did everything the hard way.
When housing prices overshot incomes, all we had to do was have the damn bankers stop lending to people who obviously could not pay. Then, housing prices would have stabilized. Instead, they helped prices shoot to the moon. The more expensive the house, the bigger the real estate agent and banking profits! Everyone is paid by percentage! Higher prices=greater wealth for them.
This bubble was painfully obvious by 2004. Instead of stopping it, the government allowed lenders to go crazy. Greenspan even encourage the exotic loans which are the ones collapsing the most. Now, we must bring down prices to reality. Shanties in the Central Valley of California are not worth more than a mansion in New Jersey in 1990. Once mansions drop back down to $500,000 and shanties to $12,000, will we see any fiscal sanity.
House legislators are expected to vote on a bill that would allow bankruptcy judges to reduce the principal and monthly payments on mortgages for borrowers in Chapter 13 bankruptcy protection.
Too many people are too deep in debt. The nation is deep in debt. Going deeper into debt to bail out people who are too deep in debt will destroy the Nation, itself. We can’t do this. We are at a limit here, one we can’t fix by turning Uncle Sam into the Easter Bunny.
Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering….
So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide’s former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
This is what happens when we don’t arrest these clowns. These men should be in prison. Selling unsustainable mortgages and then opening a new bank that processes the defaulting mortgages they made earlier is a criminal operation. This is much more important than trying to bail out excessively indebted houses.
We can pay for saving the fools who did business with these crooks by confiscating their properties and bankrolls. Or we can tax these guys to death. Suits me fine. Until the US is no longer the main holder of mortgages, we must tax all bankers and real estate agents very heavily. Once we are out of this mess, we can reduce the taxes. I have no idea how to punish these guys but we must punish them, not savers or prudent homeowners. Call this the ‘real estate emergency tax.’
In Mesa, Ariz., President Obama picked an appropriate place to talk about the mortgage-default crisis: More than half the homes for sale in this sprawling suburban town are distressed properties.
In choosing Arizona as the backdrop for Wednesday’s housing rescue announcement, Obama ventured to a state suffering from high foreclosure numbers. Arizona had the third-highest rate of foreclosure filings in the nation during 2008, according to RealtyTrac, which compiles foreclosure statistics.
Mesa itself, as Mayor Scott Smith often remarks, is the biggest city in the country that nobody knows. It’s a young, sprawling bedroom community of Phoenix that has grown explosively since the end of World War II. With 452,933 residents as of July 1, 2007, it’s now the 38th largest city in the nation: bigger than Cleveland, St. Louis or Oakland.
This immense and utterly stupid ‘suburb’ is an example of what is wrong with US real estate. Here is the satellite photo of the place. I grew up in Arizona and lived near Mesa when very young.
Much of Phoenix and Mesa were farmlands when I was a child. Today, it is wall to all houses. The blocks are former field lines, for example. When I was a child, these were orchards, alfalfa fields, cotton, date trees, etc. I used to take a long saguaro rib and knock down dates, which I loved. Farmers would shoot at us with salt and we had to keep a sharp eye out for them. Heh.
When they flooded the orchards, I would go swimming. It was fun. But even in 1955, I could see people replacing this Eden with houses. We lived in the middle of a grove, ourselves. Today, the entire place is paved over and has houses. The only major growing area of Arizona has been turned into housing in both Tucson and Phoenix. Water is King in Arizona.
When I was a child, Arizona was the Three C’s: cotton, copper and cattle. Today, it is golf, gambling, and military. All the water that went to farmers has been diverted to flushing toilets, swimming pools and manufacturing. And watering golf courses. When I was a child, we used to roam the golf courses at night, in summer, to romp in the sprinklers and find golf balls.
All of this is possible due to dams. Right off the bat, when the US took over Arizona via warfare, water diversion systems were set up and the earliest dams were built in my grandfather’s days. Thanks to the new train lines, the Rio Grande system, Tucson and Phoenix were connected to Texas and California.
The mineral wealth of Arizona was a big attraction just like California and Nevada. The natives were removed in the usual fashion: brutally.
The early travelers crossing southern Arizona on their way to California followed the Gila River, not usually proceeding up to the Salt River. But when the miners discovered bodies of ore along the Hassayampa River and then the military came to keep the hostile Indians away, Jack Swilling found the remains of prehistoric canals in what became the Salt River Valley. By the 1 870s other farmers and settlers found the land along the Salt River to be fertile and stayed to cultivate the soil, growing extensive fields of grain or alfalfa, or establishing commercial businesses, but within thirty years the flow of the river was over appropriated and growth could not be maintained….
Flooding would delay construction at the dam site, but would also lead to the present configuration of the Salt River Project. The Arizona Dam, just below the confluence of the Salt and Verde rivers, diverted water to the north side canals, but was prone to damage by floods and in 1905, a major flood swept down the Salt River. The Arizona Dam was washed away and the farmers north of the Salt River approached Louis C. Hill for assistance. To unify the lands in the Salt River Valley, the Reclamation Service constructed the 1,000 foot long Granite Reef Diversion Dam which diverts water to both the north and south side canals. The federal government purchased many of the existing canals within the Salt River Project boundaries and built additional ones to bring the waters of the Salt and Verde rivers to 170,000 acres.
After prolonged conferences on irrigable acreage and repayment costs of the project, Secretary of the Interior Franklin K. Lane signed over operational control of SRP to the Salt River Valley Water Users’ Association in 1917. Significantly, the September 6, 1917 agreement permitted the Association to retain the power revenues generated at SRP facilities, thus allowing for its future growth. Conceived by the Reclamation engineers as a source of electricity for construction of Roosevelt Dam, power generation developed by a power canal and as part of the dam were in the drawings almost from the initial plans. During the 1920s, Project management expanded its hydropower installations with the construction of three additional dams on the Salt River and more lands joined the Association, bringing its membership up to 242,000 acres.
The Salt River is what fed the irrigation systems of Mesa. Like the ones running in Death Valley to the Salton Sea area, the water was seasonal. Namely, in wet winters, it ran or in summer thunder storms, it would violently overrun the banks. Since little water is soaked into the ground in summer rains, they can create instant floods, very easily. Especially since these storms often form in the mountains.
In 1848 the United States government signed the Treaty of Guadalupe Hidalgo, ending the War on Mexico and initiating its claim on the territory of the Yavapai Indians. Exploration for and discovery of gold and other mineral ores in Yavapai territory resulted in the first significant invasion of non-Indians after 1860. In 1865 a military outpost was established on the Verde River, at the site of the present day Fort McDowell Reservation. As in the case of almost all Native American populations, the invasion of Anglo-Americans resulted in forcible resettlement of the Yavapai Indians. In 1871 the Rio Verde reservation was established in the Middle Verde Valley. General Crook ordered all Yavapai Indians to the reservation (Coffeen 1972). He also ordered that all Indians off the reservation would be treated as hostiles and shot on sight (Mariella 1983). On Dec. 23, 1873, the Skeleton Cave Massacre ended Yavapai resistance. By the following spring almost all surviving Yavapais, numbering around 1800, were forcibly resettled at Rio Verde.
The Indians were shoved here and there. If they resisted, they were killed. If they tried to avoid being locked into concentration camps, they were subject to instant death. The horror of this still hasn’t been paid for. This history always disturbs me since members of my own family were doing this, back then.
The Yavapai began intensive agricultural activity to ensure survival on their diminished land base. In 1874 five miles of irrigation ditches were dug and fifty acres cultivated. However, self-supporting Indians were not in the interests of competitors for the land and water rights nor of contractors supplying Indian rations to the U. S. government. Under pressure of non-Indian special interests (Mariella 1983), in 1875 the approximately 1,400 Yavapais were forcibly marched on foot by the United States military 180 miles to the San Carlos Apache reservation (Khera, et. al. 1983). There, after two weeks of marching, the 1285 survivors who reached the destination began a confinement that endured nearly twenty five years. The move to San Carlos resulted in greater dependence on the government (Mariella 1983). The Rio Verde reservation returned to public domain and most of the irritable bottomlands were claimed by non-Indians. Of these lands less than one square mile has been returned to the Yavapai.
After 1899, upon being allowed to leave San Carlos, some 400 surviving Yavapais returned to the Verde Valley. The returning Yavapais were relegated to unclaimed secondary lands. The Interior department set aside a portion of the Fort McDowell military reservation for the returnees. The Yavapais began to petition for the remainder of the Fort. In 1903 President Roosevelt established a 24,680 acre “Mohave-Apache” reservation near Fort McDowell. Early Anglo settlers referred to the Yavapais as `Apache-Mohaves’ (Coffeen 1972). One of the impacts of this confusion and the quarter century of living on an Apache reservation was a change in the ethnic composition of the tribe. The Anglo claim that the Yavapais were Apaches had resulted in marriages with the Apaches and between previously geographically disparate Yavapai groups. By the time the Yavapais left San Carlos the ethnic composition of the tribe had been altered.
Only 400 survived. When I was a child, the poorest people in Arizona were the Indians who once were the only people there. When water rights were apportioned, they came dead last in line. Clever white men thought nothing of cheating them. For example, after confining them to a reservation, when the white invaders needed to dam the Salt River, they found these unfortunate people in the way.
So, they had to move them out of the way so the dam could be built. Then, the floods wrecked the dam and more dams were proposed. Each time, the tribe was in the way and had to be moved. One of them was adopted as a child, raised in Chicago and came back to argue on the tribe’s behalf.
The real estate of Mesa, Arizona, is very dependent on the Salt River waters. It is rather agonizing, seeing this place change over the century. It had a real function, in the past. Now, it is an urban wasteland dependent on cheap fossil fuels to keep functioning. It is an example of what went wrong with our society and culture.
Theodore Roosevelt Dam and the Roosevelt Lake it forms are considered perhaps the crowning achievements of the Salt River Project. With the initial funds raised by the association in 1903, an ambitious project was begun several miles east of Phoenix in the Tonto Valley, at the confluence of the Tonto Creek and the Salt River. When it was completed in 1911, Roosevelt Dam was the tallest masonry dam in the world at 280 feet (85 m). It was dedicated by U.S. President Theodore Roosevelt, for whom the dam and the reservoir are named. 
In 1996, a massive expansion project aimed at increasing the capacity of the lake was finished. The dam was resurfaced with concrete and raised an additional 77 feet (23 m), which had the effect of increasing the lake’s capacity by over 20%, and providing much needed flood control space on the Salt River. Shortly after completion, however, the area entered into a prolonged period of drought, and it would be some time before the new capacity was used, with the lake finally reaching historic levels of 90% capacity in early 2005. 
With an at-capacity surface area of nearly 21,500 acres (87 km²), Roosevelt is the largest lake that is wholly inside the state of Arizona. It can store 2,910,200 acre feet (3.59 km³) of water at capacity. 
Arizona is a place that was grossly overpopulated. It is the very definition of ‘unsustainable’. So is California. And Florida. And many of the places that are seeing the worst of the real estate collapse. There is nothing real about these estates: they are all fantasy islands in an ecological or climate catastrophe, especially if there is global warming. Not to mention, earthquakes and hurricanes.
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