If Biden had done the winking last night, would people be up in arms screaming, how could he treat a woman like that!  He has no respect for women and looks at them as objects.


but no one says anything about her flirting?  She gets away with that!

I feel this is blasphemy and she should of been reprimanded.  This is not a one sided issue here yet she thinks she can push men around...

I love how every side claims they won!

-- Modified on 10/3/2008 6:12:40 PM

I HAVE PROOF!!!  This is what he said in the debate!!!! He wants to give judges the right to reduce interest rates on mortgages AND REDUCE THE PRINCIPAL OF MORTGAGES FOR DIRTY ROTTEN DEADBEATS!!!

Who's going to pay for that?!?!!  I buy a 20K car and don't make payments and avoid the repo-man or the sheriff with the replevin summons until some dirty rotten lefty commie judge says I only have to pay 15K?  10K? OR 5K!!!!!!!

Biden is a commie lunatic.  He loves deadbeats!!

DEADBEATS FOR DEMOCRATS!!! DEADBEATS FOR DEMOCRATS!!!  That's the dem. battle cry.

-- Modified on 10/3/2008 8:44:27 PM

her eyes, Bidens hair plugs stood up.  He must have been imagining that Sarah was looking at his weenie but he probably didn't get a woody because he most likely did not take a hit of viagra before the debate.

Yeah that winking will certainly help in a national or international crisis.

Someone is missing something...  If the banks loan you the money to purchase a house and you stop making payments it goes into foreclosure and the bank gets back 25 cents on a dollar, but under what biden was proposing the banks would get 75 cents on a dollar...  25 cents and 75 cents aren't the exact amounts, but close enough... Who loses you ask? The banks that did the predatory lending, but guess what they don't lose out as much as they would if they go through the foreclosure process...  Banks aren't in the business of selling real estate (they don't like holding costs) so they sell at an auction where people get some damn good deals on homes...

So in essence it is a win/win situation because banks are therefore getting more of their money back and still profiting or atleast breaking even if those people can make the payments under the new fixed/lower interest rate and lower principle amount (which will be closer to what the house is actually worth)...  Taxpayers don't have to contribute at all I repeat TAXPAYERS DON'T HAVE TO CONTRIBUTE AT ALL because its still between the banks and the purchaser/owner not between the government, the banks and homeowner...

See the fact that banks get 25 cents on a dollar back on foreclosures is one of if not the main reason there is a credit crunch...  You can't lose that much money and still have money to loan or enough money to meet the margin required by the FED...  I assume if more Americans understood what Biden was saying they might appreciate and agree with what he was saying...

Put simply I gaurantee if Banks lower interest and principle on the so called bad mortgages there isn't a need for the bailout because plenty more people will be able to afford the payments...  Understand with ARMS (adjustable rate mortgages) peoples payments went from 1k to 2k and higher a month (Would you comfortably be able to handle your mortgage if it doubled; again numbers vary, but the concept is still the same)...  People got shafted when they signed up for the loans they did (their fault, also the banks, and everyone is suffering)... Out of all thats been said the most important thing is nobody needs to bail them out besides the banks not the taxpayers...

I would assume people would say thats capitalism/free market at its worst, but is far from socialist/communist in nature where as the bailout plan that was just passed is more along the lines of socialist/communist in nature...


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-- Modified on 10/3/2008 11:18:51 PM

-- Modified on 10/3/2008 11:20:51 PM

Setting aside for the moment the amount of common sense in the approach. . . .

You said, “. . . banks are therefore getting more of their money back and still profiting if those people can make the payments. . .”

You used the word ‘profit’. How is the bank still profiting if they loan you $1 and you only repay 75 cents (or less)? They may not lose as much but it's hard to call it profit. It doesn't take much reduction in principal and interest rate before the total amount 'returned' to the bank is negative.

Also and more importantly. . . Assuming the home owner deserves his share of the blame, how is he being penalized in your plan? He isn’t giving up anything. Shouldn’t there be some sacrifice on his part?

If we assume that the new mortgage balance is reduced to something closer to actual market value (75% in your example) then wouldn’t that value (75%) be closer to what the bank would ‘take in’ after selling a foreclosed home? Now of course that assumes there is a market to sell it. The bank would only get 25% if the market value was actually closer to 25%. Now, Is there a market available in which to sell? Well, the original homeowner needs some place to live, but then again many areas have large quantities of homes already sitting empty. Empty so that there is no homeowner available to partake in your ‘deal’. Empty because many of the homes were built, bought and flipped with no one ever living in them.


-- Modified on 10/4/2008 12:04:56 AM

I say profiting/breaking even because if the bank loans 150k and reduce the principle to lets say 120k there is a strong chance that over a 20-30 year period the bank will make a total of 150k or more depending on the interest rate...  For instance 120k at 5% interest is 6k a year multiply that by 20 years=120k and that doesn't include principle that will be paid back (so additional Principal of 120k + Interest of 120k=240k... They have made above/profited from what was initially lended 150k... Lets say the bank is currently lending 150k at 8% interest which is 12k a year so homeowner is paying 625 in Principal a month over 20 year period + 1000 in interest a month= 1625 for a 150k house...  Bottomline in 150k/Current option Bank is making 240k over the life of the loan (20 years) in interest alone and still being repaid the 150k, which homeowner considers equity because when they eventually sell they will get that plus however much the value of the house has appreciated...  In 120k/Biden/My option Bank would make 120k interest over life of loan + 120k Principal amount being paid back to them... No it isn't as much as the 150k option, but its better than just taking a foreclosed sale price of 40-50k and taking a lose of 100k...

The bank selling a foreclosed home gets 25 cents on a dollar... They don't get anywhere near the actual value of the house or 75 cents on the dollar...  Thats why its better for them to allow homeowners to stay in the house just restructure the loan agreement so they aren't continueing to take advantage of the home owner and therefore putting themselves at risk as well as America's economy...

The penalty for the homeowner in the foreclosure proceedings should be made evident on there credit report so hopefully they understand that this second chance is a real opportunity... If they fail this time it will affect them tremendously in obtaining a loan/home/apartment in the future...

You say, "Empty so that there is no homeowner available to partake in your ‘deal’."  The only people that are making the deal is the HOMEOWNER FACING FORECLOSURE AND THE BANK THAT LENT THE MONEY...    



-- Modified on 10/4/2008 1:10:52 AM

is considered an asset. The higher the mortgage the bigger the asset. For a homeowner the mortgage is considered a liability. This different accounting perspective is a fundamental problem in understanding why rescuing homeowners from mortgages is difficult.

If the mortgage's principal is reduced, the bank's assets are reduced. When a bank forecloses on a home, the bank can write-off the loss on their taxes. If a bank is going to write-off a loss it's best to do so from a high number.

By reducing taxable income, the bank can actually make a profit. I am afraid my dear, the homeowner who bought the house with interest-only mortgage loans etc. with a high principle is simply going to have to eat it. The alternative is for the homewoner to wait for prices to increase but the latest Case-Shiller Home Index does not bode well in the immediate future. Due to the large inventory of homes, prices should decrease another twenty percent depending on your geographical area to reach what economists call the price equilibrium.

Sen. Joe Biden's idea though noble, is not rational. His idea is to have the government attempt to manipulate the Law of Supply and Demand and it's not going to work. It's not called the Law of Supply and Demand for nothing, as my macroeconomics professor once said.

If the problem was only between the bank and the homeowner, there might be chance. However, however, what happened is that these same banks securitized these loans in bundles to other banks i.e. investment houses now called bank holding companies and to other lending institutions around the world. These same investment houses hedged losses from these mortgage loans to other institutions specifically A.IG. in what they are calling credit default swaps. The exact details, I am still learning, but it's insurance.

Bottom line, is we are in a recession, there will be a loss of jobs, no matter who is President. Loss of jobs means less demand for homes. Warren Buffett predicts a recession bottoming out in 9 months. I am not so optomistic.

This is the time we all have to stick together. Don't depend on the government for a bailout. I have an Army buddy who might lose his job, I told him yesterday, mi casa su casa. My brother and his family is having a tough time. So it's going to be one happy family. By the way, thank you for your intelligent posts. Your contributions are appreciated.

-- Modified on 10/4/2008 2:11:20 PM

Yet here is the problem... Declaring it a loss right now isn't benefitting them because there money is locked up/overextended and they don't have enough to meet margin requirements which recently went up by 60%...  So now do you declare them as a loss and require government assistance or do you restructure to save yourself and taxpayer money... Come on...

From what I understand mortgages are backed by bonds that essentially set the interest rate on a mortgage (i.e.-securitized instruments I assume you were talking about)...  Well the bonds interest payments must be changed, along with annuities, etc so that the newly restructured loans can pay the securitized instruments payments and so those securitized instruments don't go into default...  Might be wrong about all that, but the real finance people show up and I don't think I'm off about that accessment...  The best option cannot be to simply buy up those bad bonds and hope the values will go up thats to the banks benefit and possibly to the American peoples benefit, but there is a big risk inherent...

Credit is already tight so the banks can slowly restructure packages and get more cash in while slowly releasing there credit to well qualified individuals/businesses... Imagine on the 1st or whenever your mortgage is due and you can actually pay it... The banks will get large chunks of cash payments...  With immediately bailing out a bank where is the lesson they are learning they should bail themselves out even if it means they aren't going to be getting those terribly fat executive bonus checks...

-- Modified on 10/4/2008 1:57:07 AM

Not to belabor the point but your calculations of interest payments over the loan life are about double reality. 5% interest on $120K is $6K ONLY on the first payment. Interest payments reduce each and every month. The approximate TOTAL interest paid is not $120K, but is closer to $60K to $70K.

Also, there is no hard and fast rule that says the bank only gets 25 cents on the dollar. It depends on the market. Nowadays, that's affected by the area of the country as much as anything. In my area there are no 25% deals.

About empty houses. There are several areas of the country where people bought multiple homes on speculation.

I still do not approve of any plan that does not put some of the blame and financial burden on the homeowner. I can see refinancing ARMs to fixed, extending 15 year fixed to 30 year fixed. If anything that reduces the debt is allowed then there must also be a sales prohibition without paying that reduction back. i.e. you can't refinance and then shortly there after sell and then walk.

-- Modified on 10/4/2008 1:54:01 AM

Your absolutely right about the simple interest I definitely left out some calculations so my apologizes on that...

And yes a while back I suggested the idea that when they are coming to sell the home and if the home has appreciated enough then they pay the banks back the amount of principle that was taken away...

Again the details should be worked out by banks and homeowners I was merely trying to suggest something different than the bailout plan that I think has a possibility of working... I was also pointing out that Biden/Obama are the only people I have heard talk about that...

-- Modified on 10/4/2008 2:05:55 AM

''I’ve also said that if I’m President, I will review the entire plan on the day I take office to make sure that it is working to save our economy and that you are getting your money back'' Obama

Merrill was the only one in the Spring who made an honest attempt to sell this stuff and even then only got 22 cents on the dollar.
We ain't gonna make money on it and I am  no expert but gather that from  experts like  Krugman.
I told a friend if we did it would go to the general fund and he laughed and said do you still believe in the tooth fairy

-- Modified on 10/4/2008 3:12:57 AM

and it turns out Biden/Obama expressed their approval... Go figure...  Not sure what you've been reading above???  Sounds like your thinking someone is supporting the bailout

I forget to change the header a  lot of times and what I posted was not directed at  any poster. I just think  Obama's  quote which has not been talked about in the press shows ignorance.

If someone is in default it is because the house is worth less than they borrowed.  

For example, the bank loaned $100,000, and the house is only worth 95, the bank will get back a property at less than its loan, which is why it is distresed.

If the property is really worth 110, and the bank is owed the same amount, there is 10 in equity, and the borrower can sell the house for 110, keep 10 and pay the bank.

The bank only takes the property if it is worth less than what is owed.  

To re-adjust the principle is to make the bank lose part of its loan.

I know I used hypothethical numbers, but let's use your original per centage, and see how it works.

In Los Angeles, there are tons of houses worth over 1 million.  (Kind of dumb to phrase it that way. Every house if over a ton.)

If the bank is owed 750,000 on a house worth 1 million, and the borrower can't afford the payments, he can sell it before the foreclosure, which takes months.  Let's say he is in a rush. If it is really worth 1 mill, he can get 900,000 in a "emergency sale," since the new buyer can make 100 just by flipping it.  The borrower pays of the bank and walks with 150K.

The only time the bank takes it back is when the bank is owed more than it is worth.

... in debates where the man does a little cry-cry.  They both won in their own little way.

year ago. Frankly, I am not for any type of government finanicial assistance i.e. bailouts for anyone either the homeowner, bank, investment houses, wealth funds etc. The recent finanical bailout passed by the US Congress and signed by the President will prolong the inevitablity. The inevitability that house values will decrease to a price equilibrium as dictated by the Law of Supply and Demand curves.

The problem with these securitized loans is that we do not know the value amount or who has them and where. I repeat if the problem was between the local banker and the homeowner the government might be able to intervene to act as they say in macroeconomic terminology; a "counterveiling power".

These securtized loans and credit default swaps have been transferred around the world through ETFs -Electronic Transfer Funds. I am not saying your analysis is wrong but that it does not describe fully the current economic conditions.

These financial crisis is bigger than one government even one as large as the United States can handle. If regulations are to be imposed or help provided to homeowners, I am afraid it will require a multi-lateral i.e. worldwide economic power. The economic and financial institutions that have served us for the past 100 years since the birth of the Federal Reserve in 1913 is rapidly becoming obsolete. This economic transformation is nothing new, it is what the Economist Joseph Schumpeter called" Creative Destruction".

In the last few months the five biggest investment houses and that survived the Great Depression are now gone. Three went bankrupt and the other two were transformed to bank holding houses. That absolutely takes my breath away, but no one is mentioning it.

Now if you look at the financial bailout bill, it recognizes this economic transformation. The bill authorizes the Secretary of Treasury to buy "toxic assets" from financial institutions around the world, not just the United States. I will not discuss the possible future political economy but all I am saying prepare and plan and do not waste time looking for the government to help you.

This economic paradigm shift may cause financial pain to a lot of people. I look at this positively. For it is up to us to learn the lessons from this situation. The false assumption that has carried us for the past twenty-years is long gone which is that asset values will increase. What people did not realize is that debt accumulation may also increase to a point it becomes toxic. It is now a matter of your money or your life.


Right now, I am thanking God for all my Blessings and rejoicing that I live in a country where I can speak freely. It is also a pleasure talking with you.

I still do not approve of any plan that does not put some of the blame and financial burden on the homeowner. I can see refinancing ARMs to fixed, extending 15 year fixed to 30 year fixed. If anything that reduces the debt is allowed then there must also be a sales prohibition without paying that reduction back. i.e. you can't refinance and then shortly there after sell and then walk.

In short, I say, whatever the bank and owner want to negotiate is OK with me. Problem is that some fed bureaucrat now gets to decide.

See section 110 starting on page 27.

I know when I write I write a lot and its hard to read through it all...

You said, "To re-adjust the principle is to make the bank lose part of its loan."

We are talking about people that have proven to not be able to consistently make payments on time or at all...  So maybe the banks go before these individuals that are heading down the wrong road, and say (1) you can either sell your home and hope to sell it for above the mortgage value or (2) continue trying to pay your current mortgage payments (if the bank is confronting them then they are having problems with making the payments) which will probably take you into the foreclosure process or (3) we can make a new deal and restructure the agreement so you can make the payments...  

(1) Banks Reduce Principle, Interest, Loan Length, etc.
(2) Banks change securitized loan/bond terms to adjust for changes in new principle, interest, loan length.
(3) Sale Prohibition and Credit Damage to Homeowner that has to go through this process. Sale Prohibition- homeowner cannot restructure and then sell for profit whenever they sell they will have to repay the principle amount reduced so they will only be selling when the home has appreciated significantly (also means ideally homeowner will stay in home longer and not be flipping around)...

The banks would lose part of their loan in foreclosure sale as well a large portion mind you...  I'm not saying the people can't sell their house if their house is worth more than what they borrowed...  All I'm saying is the loan amount, loan length or loan interest should be changed so banks can recieve a more consistent income...

Even though the bank is lossing part of their loan they are still profiting just not as much... My numbers above weren't completely correct, because I didn't subtract principle payments from the loan balance each month, but the concept still stands (Banks profit from interest payments over a period of time)...

The problem now and days is the value of peoples homes is below the loan amount for a lot of people so there isn't a benefit to selling and those same people have shitty loans (i.e.-interest only, ARMs, etc...)...  

I guess I'm done trying to explain this... I do understand Breaker Morants comments about those bonds have been sold around the globe essentially...  Look quite simply there is a paper trail/transaction trail/bread crumbs that can be tracked from the original loaner/mortgage, to what securitized package the mortgage is in, who owns the securitized package now...  You simple say we will have to restructure the bond so it will continue performing... Anyway I'm not trying to make it sound extremely simple, but hope someone gets the idea/point...


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-- Modified on 10/4/2008 1:07:57 PM

Thats good stuff... Definitely didn't know that... Just felt I was being attacked for believing in something like that...

You and their Whack Pack racist Daniel J Carver could provide the funniest radio segment ever.

-- Modified on 10/5/2008 1:35:41 AM

I just wanted to see if you could take your balls out of your pocket to give an explanation...  Just wanted to hear your syllogistic reasoning...



-- Modified on 10/5/2008 3:39:36 AM