Laura Rowley Money & Happiness

Lex - Friday, December 12, 2008, 9:54AM ET  Report Abuse

• Overall: 5/5

Wow a stark voice of reason in irrational times. Thank you Laura for pointing out that it was the "good intentions" of the FHA to "make the american dream available to more americans through homeownership" that created the unintended of consequence of an american nightmare by putting the dream in the hands of those unprepared to handle the responsibilities. Tinkering with the free market failed yet again. Belief that tinkering with it further will correct it is just irrational.

Steven - Friday, December 12, 2008, 9:21AM ET  Report Abuse

• Overall: 5/5

I have debt! I have never missed a payment in my life and I have never even bounced a check. I struggle to make my payments sometimes. I have a brother-in-law who makes twice the money I do and has less to show for it and is late on his mortgage and just had a car repoed. He laughs about it and is waiting until the government bails him out on his mortgage troubles. All the bleeding hearts in this country are bleeding for the wrong people. I think the school of hard knocks is what my brother-in-law needs to wipe that stupid grin off of his face and make him grow up. The banking sector is where it is at because it followed the lead of Fanny and Freddy into the subprime market. Fanny and Freddy did it for social engineering reasons, but the banks followed them for greed. I oppose bailouts that reward bad behavior. We need a correction in our economy. I just wish that government would let it happen.

shuffleboardGuy - Friday, December 12, 2008, 1:32AM ET  Report Abuse

• Overall: 2/5

PLEEEEZ let's at least get something done to stop these foreclosures,because they just keep dragging home prices lower and lower and it just hurts ALL homeowners,when that happens. Trying to push blame is just a serious waste of precious time !

Yahoo! Finance User - Thursday, December 11, 2008, 11:58PM ET  Report Abuse

• Overall: 5/5

If 1 in 10 are going into foreclosure, I'd think the biggest impact would be to help keep the other 9 of 10 from being forced into foreclosure in the future, if housing prices continue to drop. Rather than reducing the interest rate, reducing the amount of the loan outstanding by an amount equal to the rate reduction would provide a bigger buffer in terms of people seeing equity in their house go to zero or negative. I'm not as concerned about renters, since as housing prices drop, and empty house supply increases, rental rates should also decline sharply.

JasonK - Thursday, December 11, 2008, 4:11PM ET  Report Abuse

• Overall: 1/5

Makes you feel good, but the reality is that 10% of mortgages in America are at least 1 month behind. If we do nothing, for them then foreclosure causes all other homes in these areas to become depressed and reduced in value and creates numerous upside-down mortgages even for those who put 20% down. Then those people are often better often going into foreclosure then making payments on a negative equity liability. Then the cycle repeats again into a continually decreasing spiral. We keep patting ourselves on the back and blaming these foolish "refinancers". Come on people have to refinance for unexpected deaths, medical bills, etc. People are always beginning to buy their first home. Articles like this just cater to a small minority of the top 20% wealthy in this country (often those reading yahoo! finance as they actually money to invest instead of having their whole paycheck go to housing, daycare, and food.). Get off your high horses you arrogant buffoons who were handed a silver spoon with education and opportunity.

Yahoo! Finance User - Thursday, December 11, 2008, 3:41PM ET  Report Abuse

• Overall: 1/5

Yes, now there is a good use of the fire departments across the land: eliminating housing oversupply by burning excess inventory.

Yahoo! Finance User - Thursday, December 11, 2008, 3:33PM ET  Report Abuse

• Overall: 1/5

Reward mortgage borrowers and lenders? They are responsible for this mess. You will punish savers and responsible people who RENT. Homeownership got us into this mess to begin with. Punish the homeowners and reward responsible renters. Dole out free rent money to renters who rent only one residence and reward the responsible for once. Eliminate the home mortgage interest tax credit. Get the US away from the home ownership fiasco and energy wasting, scattered, single family suburban housing. Too many houses? Burn them down!

Douglas - Thursday, December 11, 2008, 3:23PM ET  Report Abuse

• Overall: 5/5

this makes so much sense it is scary. Obviously, no one on capital hill will understand it or even remotely consider it, as the responsible people always get the shaft and only the uninformed, overlooked and abused get any relief. Maybe Sentors McConnell or Sessions can read this and get a 5th grader to explain it to them so it could actually be considered.

Sergey - Thursday, December 11, 2008, 12:22AM ET  Report Abuse

• Overall: 5/5

reward the responsible - I like it. Not sure why discriminate wealthy. If you keep punishing responsible and save gamblers and chatters whole USA will be bankrupt... wait USA already bankrupt, I just hope it's not to late

Yahoo! Finance User - Wednesday, December 10, 2008, 7:24PM ET  Report Abuse

• Overall: 5/5

This makes far too much sense to actually be implemented.

peter - Wednesday, December 10, 2008, 6:57PM ET  Report Abuse

• Overall: 5/5

Common sense proposal. Too bad we have a Congress that would not know what common sense entails.

Yahoo! Finance User - Wednesday, December 10, 2008, 3:18PM ET  Report Abuse

• Overall: 5/5

about time someone talked about this rationally

Yahoo! Finance User - Wednesday, December 10, 2008, 2:13PM ET  Report Abuse

• Overall: 5/5

To the folks who say, "Why would banks modify a loan that's already in good standing"? First off, my home has depreciated more than 50% since i bought it. My wife and i crunched the numbers and knew what we could afford and never juiced our equity. Now for me, i'm thinking why should i stay? What do i have to lose...My credit? At this point i feel i could rebound in 7 years and buy a home for what it's actually worth rather than being stuck in a home that my grandchildren may never even see the value of which i paid for thus my consideration to walk away. The only reason i am staying is exactly what this article addresses. The banks need to understand and make sure those of us in good standing stay that way. Do banks think the few responsible borrowers are not noticing all of the handouts to folks who have proven to be irresponsible? I don’t feel help is owed to me, but at the same time I’m not married to the ideas of the “American Dream” anymore. I’m hoping for “Change” in early 09 but if it doesn’t happen then the bank can have my house. Why reward people who have proven to be irresponsible?

Yahoo! Finance User - Tuesday, December 9, 2008, 8:57PM ET  Report Abuse

• Overall: 4/5

1) I thought DEMOCRACY WAS FOR THE PEOPLE. Looks like the people part can be replaced by “DOOFUS” now. Where is the help for responsible borrowers ? YOU CAN USE A CERTAIN AMOUNT OF MONEY TO KEEP 5 VERY SERIOUSLY ILL PATIENTS ALIVE, OR YOU COULD USE THE SAME AMOUNT OF MONEY TO VACCINATE 1,000,000 CHILDREN. Given finite resources, which one would you do ? ------------------- 2) The govt/FDIC is throwing reckless amount of good money to keep homeowners in house. JUST PAYING A FEW MORTGAGE PAYMENTS DOES NOT MAKE ONE A HOMEOWNER. IF YOU LOSE YOUR HOME AFTER LIVING IN IT FOR A COUPLE OF YEARS, IT IS SAME AS BEING THROWN OUT OF A RENTAL HOME. These people probably paid less in mortgage than a renter paid in rent. FDIC – PLEASE STOP THIS CONSTANT WAILING AND CRYING FOR THESE IRRESPONSIBLE BORROWERS. ----------------- 3) As we all know, the govt's loan modification program is GIVING IRRESPONSIBLE BORROWERS an EXTRA 17000 in TODAY's dollars( 17 K PER 100,000 OF LOAN ) over responsible borrowers.( All the monthly mortgage payment SAVINGS when invested at 7% amounts to 17K in today's dollars for EVERY 100K of loan). -------- --------- 4) According to FDIC, the total help that these borrowers are getting is $380 per month, which amounts to $ 60000 ( 60K ) in TODAY's DOLLARS. ---------- 5) I have not even taken into account the 1% INTEREST THEY GOT FOR THE 1ST 2 YEARS – which amounts to a gift of another $ 7000 per 100,000 of loan. --------------- 6) THEY HAVE NO REFINANCE COSTS ( a responsible borrower has to pay refi costs to refinance ). ------------- 7) THE LOAN BALANCE, IF FORGIVEN, WILL BE PAID BACK WHEN THE HOMEOWNER SELLS BUT NOT WITH INTEREST. ---------- 8) What have responsible borrowers got - nothing, ZERO, ZIP, NADA – oh sorry – they got a SLAP IN THE FACE. ------ AND THE PRIVILEGE OF LIVING IN THEIR MODEST HOME AND WATCHING THEIR DOOFUS NEIGHBORS IN A MCMANSION. -------- 9) Laura is absolutely right – people will temporarily lower their incomes to get this help ( remember these people are not very skilled people in the first place). LEAVING YOUR MCDONALDS JOB IS EASY BECAUSE YOU CAN EASILY GET ANOTHER JOB IN A MCDONALDS AFTER THE LOAN MODIFICATION IS DONE. Do people think before enacting rules ??? -------------- 10) One problem with the reader’s plan is that this plan would cause banks to make less money. Since banks and govt are now equal, it means less money for the govt, more govt debt. Even if banks have more capital, the real problem is DEARTH of CREDIT WORTHY borrowers. ----------- 11) But definitely, there must be some help for responsible borrowers. THERE CAN BE A DIFFERENCE BETWEEN THE HELP ( PER CAPITA ) TO RESPONSIBLE BORROWERS AND IRRESPONSIBLE BORROWERS – BUT IT SHOULD BE MODEST AND NOT HIGH. That really is the bottom line.

Yahoo! Finance User - Tuesday, December 9, 2008, 3:47PM ET  Report Abuse

• Overall: 5/5

Very insightful, however as long as there are people who fall prey to moral hazard (read as almost all politicians and the population in general) most people will not feel very sympathetic to people who have worked hard for their success and are financially responsible. Rather than make them the backbone of our country (much like how farmers were the backbone of colonial america), liberals and conservatives would rather dole out support to those who have failed to live outside their means, those who have joined the welfare generation. It may be harsh, but we HAVE to let these people fail. Mostly so that they can be less of a drain on society as a whole. If we constantly reward poor behavior and penalize the work ethic upon which our country was originally based, where will that lead us. The answer: where we are now, With failing big business, both banks and commercial interests, whose leaders/CEO/... have manipulated the system to increase their personal gains as the expense of their own constituency. is it any wonder why this crisis has come down upon us? Any business that becomes too lazy or complacent to compete should be allowed to fail. That ethos applies to small business everywhere. Big business should be no different. It may affect more people when that happens, but the long term consequences of propping up a failing system which has no real desire to save itself is staggering, Any time there is a loser in this world, in the market, where ever,... There obviously must be a winner. Let's choose to follow them, to emulate them. It's time to trim the fat.

Yahoo! Finance User - Tuesday, December 9, 2008, 3:00PM ET  Report Abuse

• Overall: 1/5

Why, oh why is this woman still trying to give advice that she doesn't understand? Laura, honey, you should be one of the unemployed.

Rob - Tuesday, December 9, 2008, 1:26PM ET  Report Abuse

• Overall: 1/5

BAD RAP!!! You are making the assumption that the good mortgages haven't been sold but most likely have been. Thus any change to these loans must be approved by the companies which hold the loans. Why would these companies agree to take less on a mortgage that is current and which isn't showing any signs of default? Your opinion should also include businesses the fall under your definition of the bailout. Why should a Bank not get bailout money because they are better run verses a poorly run Bank? What really shoots down your agruement is the use of the $700 billion bailout package. Many banks have taken the loans which weren't in trouble with the understanding that they would be loaning the money for the purchase of items thus stimulating the economy. Did this happen? No it didn't. Instead of doing this they purchased other banks which are in finacial crises and couldn't get the bailout money. This hasn't done anything good for the economy, if anything it has made the economy worse. Record number of foreclosesures, bankruptcy and layoffs have been the result. (This is more than people, this also includes other businesses which are dependant on sales.) What can be done? First thing we need to do is to free up the cash flow so that people can start purchasing again. No need of a bailout of businesses if the population can start buying again. How can we do this? The banks aren't rewriting the mortgages, thus the reason for the increase in foreclosures. The government will have to step in to force the situation. The government has the right to sieze property by Eminent Domain. 1. The banks would be paid by the government at a price that the Feds feel the value is at. The homeowners which are still in their homes then could purchase their house at the price the Feds have deemed it to be using FHA money if they qualify. This would actually make money for the government in the long term. 2. Houses that have been foreclosed and are now vacant would be put up for auction. The banks would get the money from the highest bidder. There should be banks/FHA at the auctions to workout loans for the winning bidders. The net effect from this would be a short term expense for the tax payers but a long term profit. (The FHA could even sell the loans if they so feel.) I don't see the banks accepting this as a long term fix. I would expect the banks to aggressively pursue a settlement BEFORE the government gets involved. This would clear the 2-3 year surplus of homes on the market. Within a year the housing market would stablize. The only problem with this resolution is that the definition of Eminate Domain might have to be altered to allow this. (Right now the government can sieze homes then sell the property to developers for stores or other projects that could be implied for public use.)

Yahoo! Finance User - Tuesday, December 9, 2008, 1:01PM ET  Report Abuse

• Overall: 5/5

It is about time someone said it. I have thought it since the beginning of the bailout talk. Don'e give more money to the people who already lost it all and were unwise. Reward those who understand. Further, educate!!! Prosecute people who tried to make a buck selling mortgages knowing the people they sold them to would default. Get rid of mortgage brokers. Banks and mortgage lenders can do it directly. I can still afford my loan. Took the 30 year fixed rate even though every broker told me I was "stupid/retarded/an idiot" for not buying a bigger home so they would make more money. But alas, everyone is looking for a handout and the government is ready to give it away, so I guess I will just piss and moan while my hard earned tax money goes to those with their hands out, who should never have bought what they knew themselves they could never afford.

vic_laszlo - Tuesday, December 9, 2008, 12:46PM ET  Report Abuse

• Overall: 2/5

If we are going to be spending money to help turn around the economy, then the proposal in this article is an interesting one to consider. However, when did the people in this country become so eager to spend funds (i.e., tax payer money aka your money and my money) towards social programs like this? Has anyone read the Constitution? Does anyone actually think that bailing out homeowners (or, as this article proposes, helping out responsible homeowners) was one of the reasons our federal government was created? During the election campaign, I got so sick and tired of people going up to McCain and Obama, talking about their problems, and then asking the candidate "What are you going to do to fix it?" When did this country become so dependent upon the federal government? When did we abandon the idea that we need take responsibility for our lives and our problems and not depend upon some politician in Washington to hopefully come to our rescue (using the tax dollars of other Americans, I might add)?

Mike - Tuesday, December 9, 2008, 12:32PM ET  Report Abuse

• Overall: 1/5

RAP sheet critique: 1. Could harm credit rating of responsible borrowers and implies effortless ability to move in and out of work force, which is unrealistic. Both are big constraints to people actually doing this. 2. Additional disposable income gained as a result of refinancing would, indeed, help the economy. Since lending is pro-cyclical, banks would recoup on the back end. 3. Banks do not lend their desposits. Bank lending is determined by the amount of capital a bank has, pure and simple. Moreover, actions taken by the Treasury and Fed have boosted bank reserves by nearly 100-fold in the past two months--an historic amount--yet lending is still rising slowly. Foreigners buy U.S. Gov't securities for many reasons and are not likely to sell in large quantities anytime soon. Moreover, the funds to pay for Gov't securities comes from gov't spending itself. Please re-read how reserve balances have been boosted by Gov't actions recently. 4. The gov't spends by crediting bank accounts and that is done BEFORE the sale of securities or the collection of taxes. If the government wanted to make new loans it is not constrained by any capital or asset requirement. 5. Banks are required under law to hold nothing but government regulated assets. This is the "toxic waste" you are referring to. The vast majority of this "toxic waste" is cash flow postive. It's the mark-to-market rule that is causing all the problems. Eliminate this accounting and, over time, the assets will recover. It's what we did back in the early 1980s when most of the U.S. banking system was technically insolvent due to loans to Latin America. 6. When we all save collectively national savings are actually reduced, not augmented. Read Keynes, "The Paradox of Thrift."

Yahoo! Finance User - Tuesday, December 9, 2008, 11:28AM ET  Report Abuse

• Overall: 5/5

i think the people responsible ARE getting rewarded

Yahoo! Finance User - Tuesday, December 9, 2008, 11:11AM ET  Report Abuse

• Overall: 2/5

The problem is that there are too few responsible people to make enough of a difference to get the US out of the hole that's been dug else there'd be no need for any bailouts at all. Why not just eliminate the moral hazard entirely by: 1) opening up the plan to anyone who can meet payment criteria (monthly payments less than 40% of income with the loan payed off in full in 30 years or less.) 2) tiering interest rates so that those with good histories get the most benefit. 3) Encourage rapid payoff by allowing a once per life time tax credit of the interest that would have been paid if the loan had been paid over the full time period. 4) Penalize late payments with both a small fee.

Yahoo! Finance User - Tuesday, December 9, 2008, 10:08AM ET  Report Abuse

• Overall: 5/5

Looks like the Market has finally found Bottom and the recession won't last as long as we all thought. Its time to get back into investing while the prices are at an all time Low. We will have a V shaped chart for the dow and S&P by next summer. Housing should begin making a comeback by then also. But the markets are always forward looking so that means the time to buy is now especially since the auto bailout has been approved.It will be the easiest way to double your money within 6 to 8 months.

Ron - Tuesday, December 9, 2008, 10:02AM ET  Report Abuse

• Overall: 5/5

AMEN! I've been preaching this ever since I heard about the government to reward the irresponsible.

Robert - Tuesday, December 9, 2008, 10:02AM ET  Report Abuse

• Overall: 5/5

rewarding responsible behavior? that's crazy talk!

netcomhawk - Tuesday, December 9, 2008, 9:58AM ET  Report Abuse

• Overall: 2/5

Same ol' con game, but the proposal lowers the number of marks.... How about a 3%-4% 10-20year loan for those of us who paided off thier homes?.... We didn't: __buy lattes, __buy big screen TVs, __buy expensive cell phones, _buy oversided homes, _Buy SUV's. I'd like to remodel my home, but all I'm offered is variable rates. In 5 years those rates will be sky-high as the increased money supply now will finally catch up. __ And please, don't stereotype people as "victitms" of "predatory loans". I got those mailings over the years and threw them in the trash.___ People KNEW what they were getting into____from 2005: http://www.cbsnews.com/stories/2005/05/31/earlyshow/contributors/raymartin/main698679.shtml __want more? http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/05/20/MNG5CCS82U1.DTL ..Looks like us ants are going to bailout the grasshoppers, as we play "kick the can down the road". __ here's a suggestion: Have people live within thier incomes and pay off thier debts.__ I know, it doesn't make for "news" like people borrowing to live the high-life and being "successful" and wihen the bill comes due, blaming it on someone else.__ another "BLAST FROM THE PAST"__ Interest-Only Mortgages All the Craze ___By MICHAEL LIEDTKE, AP Business Writer ___ Monday, June 6, 2005__(06-06) 15:41 PDT San Francisco (AP)___Once a frustrated renter, Chris Economou is now a happy homeowner, enjoying a splendid view of San Francisco and an $80,000 increase in his property's value since he bought the one-bedroom condominium for $435,000 a year ago. He credits his good fortune to an interest-only mortgage, an increasingly popular — and risky — loan that enables borrowers to lower their monthly payments enough for several years to afford rapidly escalating home prices in expensive markets like the San Francisco Bay area. Economou estimates he saves $1,000 a month by having his interest-only mortgage instead of a traditional 30-year fixed rate loan...."When this market adjusts, it's going to be painful," said UCLA economics professor Edward Leamer, who has been warning of a California housing bubble for three years. "Borrowers are getting in over their heads, and lenders are too." __Those are only 2 of the 1,0000s of articles in 2005 alone. No one way preying on people, it's a media/populist stereotype.

Travis - Tuesday, December 9, 2008, 9:38AM ET  Report Abuse

• Overall: 5/5

There you go again with logic and common sense.

Yahoo! Finance User - Tuesday, December 9, 2008, 9:23AM ET  Report Abuse

• Overall: 5/5

Now, the question is, how do we take this proposal to Congress and White House and make them respond positively, rather than just be a good idea left in the dust. Also, all consumer loan processes are automated nowadays -- there is really no need for a bank and closing costs etc. FDIC or some other federal agency can run the 'direct to consumer RAP' in a very cost-efficient manner and cut out the 2% rate benefit closing costs handed over to the incompetent banks. This makes the program very attractive to the tax payer in general. The program, with these savings, can also be expanded to some of the border-line sub-prime mortgages, similar to your suggestion for the elderly/retired. i.e. each sub-prime borrower can be evaluated and scored on a few factors to see if the reduced rate will enable them to keep the home and the program can be offered to them also, minimizing total social cost of bankruptcies.

Yahoo! Finance User - Tuesday, December 9, 2008, 9:09AM ET  Report Abuse

• Overall: 3/5

Since this is continuing to get larger and a bit out of hand. Lets really it this plan simple and a big benefit to tax payers. Let me out line it below: • Have all the banks return the money that was given to them, yes including the borrowed funds from the Federal Reserve. o The banks are doing much anyway. • Now use those funds and buy the securities at market value. o They banks are claiming HUGE losses so we the people will buy at market value. • Now that we (taxpayers) have the loans, do a workout of our own at 1% (percent) across the board for everyone. o More so the ones behind on payments. o We the tax payers will benefit immediately from the increase market value on the reworked loans at 1%.  Example: Tax payers buy note at 20-30 cents on the dollar o 300k home under foreclosure, we (tax payers) buy at 60k ($0.20 on the dollar). o Then we modify all loans at 1% of purchase price, new payment $964.00 o We get an increase in value by 240k (60k purchase - 300k mod. Loan) o Plus interest of 47k if the loan is held into maturity. • Even if you have lost your job due to this crisis, you and your family should be able to afford this new payment. • This will STOP home values from declining. • It will also allow people to spend more (whomever has it to spend) in order to rebuild our market. Banks will not like this because the government has a better plan to repay and turn a bigger profit than the banks ever will to the American taxpayer. The banks state they do not need the money and/or using it for something else; not even sure if we will get paid back in full. It will also stop others from not paying their mortgages, as home values would have stopped declining as no principal balance is reduced. Those that purchased homes already cannot qualify as they purchased at reduced prices (foreclosures & short sales). Just one American voice!

AC - Tuesday, December 9, 2008, 8:53AM ET  Report Abuse

• Overall: 5/5

You know we laugh off and dismiss these good ideas saying it makes too much sense, so Govt. will never go for it. As a result, good ideas like this never become reality and we just go on with our lives while our Govt continues to reward irresponsibility. This is not by bad decision making by or Govt,.THIS IS BY DESIGN! Government knows that most people are good. (as do I) We go to work each day, drive our kids, and the neighbors' kids to dance, soccer, you name it. We love our families and friends. We sacrifice and do what we must to pay our bills on time and try to resist daily the temptation of living beyond our means. Every morning I turn on the news. A cab driver is stabbed, an innocent kid is shot in a drive-by, a child is kidnapped. Later in the day we are subjected to freaks on Jerry Springer and similar shows. Do you get the feeling someone is trying to tell you that you, the good person that you are, that you are outnumbered by these deviants? Maybe you should just spend all of you effort keeping you family safe, so you don't have time to really see how your Govt. is systematically, continually, taking your money from you? The reason these good ideas don't happen is because THEY WILL WORK!, and they know it! The result would be a realization by the masses of good people that they have power!. And power transferred is power that must be yielded somewhere else, and this can not be allowed to happen. I hate to say it but we need to start voting Independent. I'm finding out the roll call on the bailout bill. This is the litmus test for those who protected the powers in control vs. those who were looking after you.