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FDIC Chief Sheila Bair: Bailout Helps Banks, Does Little for Homeowners


Business  (tags: Sheila Bair, FDIC, bailout, banks, mortgages, brokerage firms, homeowners )

RC
- 2143 days ago - online.wsj.com
In a break with other top administration officials, the head of the Federal Deposit Insurance Corporation (that insures our bank savings up to a temporary limit of $250,000) sharply criticized the current bailout for institutionalizing its rescue efforts.



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Comments

RC deWinter (418)
Thursday October 16, 2008, 5:54 am
From the article: "Ms. Bair has argued the plan should have a bigger focus on homeowners, whose travails are at the heart of the current crisis. Until home prices stop falling, financial markets and the economy are unlikely to stabilize. 'This agency, probably as much as anybody, given our genesis in the Depression, has a sense of purpose now perhaps more than any other agency, Ms. Bair said.

Agreed.

And while she does support the major measures of the bailout, she feels the thrust of the program has been misdirected to firms and commercial interests instead of floundering homeowners.
 

Joycey B. (750)
Thursday October 16, 2008, 6:20 am
Of course they are not going to help the homeowner. Thanks Cate.
 

. (0)
Thursday October 16, 2008, 7:16 am
From a realist point of view: We are as close to being doomed as one can get, which means our current financial decisions might come back to haunt us later! Prepare for the worst and hope for the best, by preparing for 3-5 years of trouble. 3 years if things go well, and 5 years if they don't.

I could pretend to be an optimist, but then I would be dancing around in a flower garden somewhere, and truly lying to myself!!!

An ounce of prevention is worth more than a pound of cure!

Signature:
http://tinyurl.com/3fs5m8

If I pre
 

Deborah Hooper (59)
Thursday October 16, 2008, 8:05 am
Isn't it wonderful how quickly the educated come around to our view of the world?
 

Stephen Hannon (203)
Thursday October 16, 2008, 10:30 am
I agree with Ms. Bair that the Wall Street bailout will not benefit homeowners who are already facing foreclosure on their homes, and are about to be evicted by the County Sheriffís Office. This bailout plan will not help them at all, and the money should be going to homeowners who have been victims of predatory lenders.

Many Real Estate agents inflate the income of the applicant who is applying for a loan to purchase a home. Without the knowledge of the borrower. What the agent does is he/she leaves the income level on the application blank, and then inflates the income of the applicant. They do this so they can get the highest commission possible, and there are times when the commission is $20,000.00 or more in some cases. The Realtor cares less because he is not the one loaning the money for the home. All theyíre interested in is making a large commission at the expense of the borrower. Itís almost impossible to read the small print on the end of the loan application, and may applicants donít even read what theyíre signing. Theyíre just happy they were approved for the mortgage. Then as time goes by thatís when they find themselves in trouble and canít meet the mortgage payment.

When I bought my first house back in 1978 it was being sold by a bank, and the price was listed at $37,900.00. I waited and kept an eye on the property. When I noticed the price going down, and finally down to what I thought the house was worth. I called the bank and made arrangements to buy the house. I needed a 5% down payment, and the bank agreed to pay the closing costs. I paid the taxes, and utilities, and the state stamp tax. However, when I got to the mortgage company who was giving me the loan I discovered that the bank reneged on paying the closing costs. I told the lender that the bank was paying the closing costs and not me. We were suddenly in trouble. Before I even put a down payment on the house the bank asked me if I would move into the house at $10.00 per diem. Thatís only $10.00 a day. I agreed to move in at that price, but I made sure that the bank was going to pay for some repairs that were needed on the house, such as broken windows. I mowed the lawn and cleaned up the property. To make a long story short I had to take out a second mortgage in order to pay for the closing costs. What I should have done was to have them call the bank and go after them for the closing costs that the bank agreed to pay or cancel the agreement on the spot. Take my down payment back and walked out. But at the time I was married and had one child, and if I did that we have been homeless, and have no place to store our furniture. Fortunately for me I could make all the payments for both mortgages. Then I got fed up with the house and sold it. The house was jinxed, and everyone prior to me moving in went into foreclosure. When I got laid off I could no longer make the payments, so I called the mortgage holder and explained my situation. They were more than willing to work with me, and reduced my monthly payment to one I could afford. Since I had the house up for sale they knew I would pay off the balance of the loan immediately, and I did not go into foreclosure. I was one of the lucky oneís to avoid a foreclosure. I even made a profit when the house was finally sold. But in todayís market this is not always possible, and with the influx of predatory lenders itís almost impossible to work out a payment plan that is affordable so the mortgage company or bank carrying the loan wonít foreclose.

My loan was approved by Fannie Mae, and was later picked up by a local bank.
I didnít make much of a profit on the sale either. After paying the cost for an attorney, and all other charges I walked away with $1,100.00. I did not pay the taxes due on the sale because I didnít have the money. Needless to say the feds were on my tail for the back taxes, but they couldnít find what they were looking for at the County Deeds of Record. If they had turned one more page they would have found everything they were looking for, but they would not have found me. I moved across the country, did not register to vote, and hid out for years. The statute of limitations has run out, and now the feds or the state canít do anything about the back taxes. Plus Iím old enough now to take the one time tax credit that is allowed on the sale of a house.

Although it not the fault of the applicant when their income is inflated in order to get the loan, they really should not leave the Real Estate Office without reading what is legible to read, and make sure that the correct income they supplied is listed on the application. In many cases some applicants donít qualify for a loan because their income isnít sufficient. 25% of a persons income is used to qualify them for a loan. But houses are no longer selling for $31,500.00 they are now triple this amount in todayís market, and now you donít need a down payment. But if an applicant does not make a down payment as much as they can afford then theyíre looking at a much higher mortgage payment.

An income of at least $3000.00 a month is needed to purchase a house at around $120,000.00. 1/3 of your income will go towards the mortgage payment without a down payment of at least $15,000.00. I would recommend a higher down payment to be sure you can afford the monthly payment. Now is the best time to go house hunting if you have enough income to bid on a house that is being auctioned off by a bank or mortgage company. Some homes worth more than $250,000.00 are now selling for as low as $55,000.00 at an auction. Itís a good time to buy providing you can pay the balance owed on the house. The balance of the house must be paid in full when itís purchased at an auction. This is the only drawback when purchasing at an auction.
 

CHRISTIAN RYAN (11)
Friday October 17, 2008, 2:08 am
JUST ANOTHER MOUTHPIECE WE ARE CLOSE TO THE DEPRESSION OF THE 30'S AND PEOPLE DONT WANT TO SEE IT WE OWE CHINA 1/4 OF OUT NATIONAL BUDGET NO TELLING HOW MUCH WE OWE JAPAN AND SPAIN BOUGHT IN HERE IN TEXASA AND BUILT ALL OUT EXISTING AND NEW TO COME TOLL ROADS ISNT THAT NICE NOW IN TEXAS WE CAN DRIVE ON THE KING OF SPAINS TOLL ROADS.NOT TO MENTION OPEC GOT TO GETHER AND IS SLASHING PRODUCTION SO HERE COME THE 4-5 #$ GAL GAS AGAIN CHRIS
 

Blue Bunting (855)
Thursday October 30, 2008, 10:29 am
"Yes, let's give the banks free money with no strings!"

Another bizarre combination of unpredictable circumstances brought to you by the Nobody Could Have Predicted administration.

Heck of a job, Hankie.

 
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