Mortgage Plan Emails: "NO bailouts! Let The Market Place Settle"
Call it what you want: a bailout, a subprime freeze plan, or government intervention. Whatever it is or becomes, a lot of you wrote in with your opinions on the Bush/Paulson mortgage "plan." Most of what you said, to state what may be obvious, was this idea pretty much "stinks." If I had to guess, I'd say the ratio of negative to positive emails was 30 to 1, and that's being conservative.
Reasons against it were pretty much along the same lines: both lenders and homeowners got into this "mess," let them get out of it. Here's a further sampling of your thoughts from today, with even one reader (Max) not too crazy about our coverage.
"Diana: Now that we are on the bailout topic, we should bail out the delinquent subprime auto loans too since these people need a car to go to work to keep the economy going. Thanks"
"According to Freddie Mac, the average 30 year mortgage is going for a little over 6%. Yet 25 years ago (1982) a 30-year went for between 13% and 17%. According to Nouriel Roubini, the average subprime mortgage has a teaser rate of 7%. The average reset rate is 10%. And don't forget that between 55 and 60% of subprime mortgages are held by people with prime credit. Does that sound like a crisis to you?"
"I had read on your blog that Bush's plan might be little more than public relations. If these terms are true, it was never intended to help anyone. I mean, I knew the program was "voluntary" for lenders to accept, that the borrowers couldn't already be past due and must be able to verify that they can afford the current terms. What I didn't expect is that the borrower must have less than 3% of equity in the home (???), and that the home must be worth more than the mortgage (???). Those two provisos make this plan worthless. And what is the main headline on CNBC's webpage? "Mortgage Plan Could Help Thousands of Homeowners." Unbelievable. Spin, spin sugar."
"NO bailouts! Let the market place settle this. Most of these people thought they could beat the system and get rich and if prices had keep going up,would have.The government is partly responsible also for pressuring lenders to make loans to people who had no money or jobs."
"Is there a limit on the value of a home that is eligible for the rate freeze? Are people who have $600,000+ homes able to get the rate freeze? Will people who qualify for the rate freeze have lower rates than those of us who get a traditional 30-year mortgage in today's "free market"? The people who talk about sub-prime say the average teaser rate is 7% but aren't some 4% or even less? How can they streamline the bailout when a good number of the borrowers never submitted documentation? Hasn't anyone learned from the mistakes of the past?"
"After reviewing the bailout plan, I am starting to think I will be a lifetime renter. I understand the need to help, but this will make becoming a first-time buyer almost impossible. In California, where I live, home affordability has been gone for four years. Just at it is within sight, it gets pushed away by this plan. So much for saving and being responsible. I quit. I guess I'll just plan on a lifetime of renting. That sucks!"
"This plan is a bailout and the Feds should let the free market determine house prices. Remember, for every loser there is a winner. The winner would be the first time home buyers that didn't but into the frenzy, and waited for prices to come down. They buy a foreclosed home for $400,000 that originally sold for $600,000 and was financed 100% The person that loses that home to foreclosure didn't have any money in it anyway. The losers are the idiot lenders and investors who made these ridiculous loans, and the feds want to stop this wonderful example of free market capitalism??? Also, the investors that hold the MBS & CDO's need the reset higher rates to off set the defaults just like the credit card companies that charge 29.99%"
Questions? Comments? RealtyCheck@cnbc.com