Debt Jubilee indicators

[vinoveri]

This is how it starts I would suppose....
State debt forgiveness is already in the cards. Why doesn't the Fed just give them the money and end the charade of any accountability (or accounting for that matter)?

http://www.nytimes.com/2009/01/22/ny...er=rss&emc=rss

New York State’s unemployment insurance system, besieged by claims from laid-off workers, ran out of money on the first business day of the year and is borrowing daily from the federal government to bridge a fast-growing and potentially huge deficit, state labor officials say.
...
...

[thedanimal]

Re: Debt Jubilee indicators

The Obama plan will use $75 billion from the $700 billion financial bailout fund to match reductions lenders make in interest payments that lower borrowers’ payments to 31 percent of their monthly income. Under the program, a lender would be responsible for reducing monthly payments to no more than 38 percent of a borrower’s income, with government sharing the cost to further cut the rate to 31 percent.


Treasury will share the cost when lenders reduce monthly payments by forgiving a portion of the borrower’s mortgage balance, the government said. The program may help as many as 4 million borrowers, the administration said. The average borrower’s home value could be stabilized against a price decline by up to $6,000, the White House fact sheet said.

Obama Pledges $275 Billion to Stem U.S. Foreclosures

[World Traveler]

Re: Debt Jubilee indicators

As much as I hate to say it, I think some form of debt forgiveness and taxpayer assistance is needed now for underwater homeowners.

I can say from experience that foreclosures beget more foreclosures and it becomes a self-reinforcing downward spiral. At least that's what happened in Houston in the 1980's, when we had our local depression.

It's very annoying, especially when you are responsible and have always been your bills and mortgage, as I did.

But the financial incentive with non-recourse, underwater mortgages is to walk away when times are tough, i.e. job loss or house is worth a lot less than purchase price. And a lot of people will do it.

The problem is that eventually everyone gets sucked into the vortex, whether you are fiscally responsible or not. The economy stinks because of all the job losses, you can't sell your home because it's lost so much value, etc., etc.

One way or another, the downward spiral has to be stopped.

[hoodoo]

Re: Debt Jubilee indicators

You have got to be kidding me, right? Protecting buyers against a $6000 drop in value?

#!$$$!@##!!

Let's see - a home in my community was sold for $645K in late 2007 and recently sold as an REO for $320K after standing empty for two years. Sadly - it was still overpriced.

Sheesh!

Hoo

Obama Pledges $275 Billion to Stem U.S. Foreclosures

[c1ue]

Re: Debt Jubilee indicators

Hoodoo,

I have a better example:

http://www.zillow.com/homedetails/71...68977793_zpid/

Paid $3.5M in 10/23/2007

Now Zillow says it is worth $2.185M.

Of course this guy is probably fine...

http://news.thomasnet.com/companystory/534927

Pelco will be consolidated in Schneider Electric's accounts as of October 16th, 2007.

But Fresno! A multi-million dollar home in Fresno!

[grapejelly]

Re: Debt Jubilee indicators

they ain't gonna do principal reductions on any regular basis for US homeowners. They just aren't. The whole economy is collapsing and they will not do those because they, the gubmint, are controlled by the lenders and the lenders don't want to do principal reductions.

[Slimprofits]

Re: Debt Jubilee indicators

Obama Pledges $275 Billion to Stem U.S. Foreclosures

More monthly debt slave nonsense.

The endpoint of that strategy is that the government will always have to be the big-time originator of mortgages and also engage in bubble practices - no doc, low doc, no down payment, etc.