I loved watching the I LOVE LUCY SHOW, it was very clean funny stuff, Lucy was always messing up and dragging her good friend Ethel with her and Ricky was coming along and cleaning up after her.. fixing it.
But before Ricky fixed anything he would yell out . LUCY YOU GOT SOME SPLAINING TO DO!
I wish Ricky were here to SPLAIN this bailout to me. Ok, I understand our Federal Treasury is writing a check to the Lenders (banks, wall street, etc) for $700 BILLION DOLLARS. Supposedly to BAILOUT the BAD DEBT the lenders have aquired due in part to the housing crises failure.
Now lets go one step further, I can't seem to get any answers for this part.
I write bank X1 a check to pay my monthly mortgage, my neighbor had a home financed with bank X1 also, my neighbor is in default and has received foreclosure notice to vacate the property. What happens to my neighbors house?
The government just bought out all those defaulted loans? Yes? No? Who now owns those defaulted loans? The Government does. Don't they? Who will sell that home now that my neighbor has left and it's vacant? I would think the Government would have thought that far ahead. They own HUD.. will these houses become the foreclosure homes that HUD owns and controlls and now sold thru HUD? Like typical FHA loan homes?
The bailed out loans were for something... Right? Not just money but money attached to a THING,an ASSET a house or a car. Loans that are being bought by the government in the bailout are they now controlled by the government? I think I have more questions than answers.
I fear we will need more than Ricky Ricardo to fix this.
Gail--That is one of the topics that has been brought up. This money will be tied to assets. My question/concern is who will manage the assets? In the 30's when the govt bought up houses, they were resold in the 50's and the govt got back the investment and MADE money. With all of the red tape and unaccountability in govt these days, I wonder if the assets will be managed properly or will they be written off and given away prior to the recovery--Thus the American public will lose again. You are right...A plan of this magnitude requires additional thought and planning...all the way through from buy to sell.
I suspect that investors will come along and buy the homes after they have hit rock bottom in packages and will do well. But the homeowners who lost their home and their neighbors whose values depreciate even more will not. Read Jim Crawfords posts, he has a real handle on it, as does Matt Heaton.
There is no quick fix to this problem. The powers that be need to think long and hard about all of the details, and you can't do that it a week. I think this mentality of "hurry, hurry we have to do it in a week or else" is a very bad thing. There need to be cooler heads really thinking about ALL of the implications and all of the details. This is a complex issue and it won't be solved overnight or before this election.
Thanks for another great post. I love your "I love Lucy" photos. I grew up watching that show and totally loved all the crazy things they did! Veeta vita vegimin anyone! It cures everything!
B
The government insures the loans, but the bank takes title usually. They sell to investors at a loss and loan that money under tighter U/W conditions the next time.
Reminds me of the budget episode.
You don't need Ricky to fix it, you just need one of Lucy's creative solutions. Maybe the government has been watching reruns? LOL
What people fail to understand when they think about buying and bailing or not co-operating with a work out from their lender is that whole neighborhoods suffer.
What the government fails to realize is the same thing: Whole neighborhoods suffer.
We haven't seen the end of this yet. Sadly.
My questions about who will oversee the asset side of the bailout still remains. I need to read the blogs Missy suggested (thanks for that :) ) I'm afraid the ramifications for this will be years in unraveling and will cause stable areas to suffer a significant drop in prices. As Kris said, whole neighborhoods will suffer from a few affected homes in the neighborhood. They suffer in lowering the overall price of the neighborhood, dragging down prices of everyone.
Gail, it would seem that the government would own the paperwork and be sitting on a bunch of houses that would continue to blithe a neighborhood with its vacancy while also bringing down the values in the neighborhood on a steady rate. At some point, it is my understanding of this government buyout that the government will then resell these same notes at a much reduced rate back to the buyout banks after years of total decay. Not a good scenario on the part of the government but especially on the part of neighborhoods.
This is a big problem that we need to get fixed sooner rather than later. I hope the government gets their act together!
Gail, Gena has it right in her comment. This is what happened in the 80's. They kick a family out of their house because they are 3 months behind and then they board up the house after the vandals hit it and then they hire caretakers that come and take all the appliances out and sell at their thrift stores. Then after several years, they sell them at 25cents on the dollar. Make sense? No, that's the government. No common sense. Ricki :)
Ricki, I couldn't agree with you more. What a snafu they create. This bailout will haunt our children and grandchildren for years to come. Where has common sense gone?