Should Wasington Forgive the Mortgage Debt for Millions of Americans?

Ah, Florida, how I love it. We moved from Florida to Pennsylvania a year ago to get medical help for my husband. I miss it so much. The move hurt us financially because we went through so much the prior five years with heart bypasses, losing our boat distributorship, caring for family members who lost their homes, etc., and we eventually had to short sell our home. Right now, the possibility of losing tax deductions is more rumor than anything. I hope it never becomes fact; it will finish burying the housing market. Good luck in that beautiful state. I hope it recovers well.

Who pays for the "forgiveness" and how will that money be recovered? What about the people who lived within their means and bought a house they could afford and have been making payments. Are they not worth saving also? What about all the small business people who lost everything or will lose everything because they can not get credit (money from the forgiven loans is lost for making new loans). I don't think that more government bailouts or increasing the national debt is the answer. As a country we have faced worse economic crises and have come out of it not by more spending but by tax cuts and reduced government spending. This is what brought the US out of the worst economic down turn in our history. President Harding reduced the size of government, reduced the debt and did not increase the supply of money. The recession/depression lasted 18 months. Unlike the one that followed where the president did the opposite and the recession/depression lasted 43 months and took a war to turn things around. We are experiencing a downturn in the housing market and the market has to correct itself or we will repeat the same boom and bust.

It's very hot down here, mystic...but then again, I've heard about the heat wave up north so your weather may be just as hot. Did the value of your home take a tumble or were you able to sell before it got too bad? My BIL is a developer on the Treasure Coast who was very hard hit because his company built 1/4 of the homes in the upscale communities he created. He still has some on the market but was able to sell others at a loss.

"No one knowingly took a gamble when it came to the *value* of their property." If they didn't know it was a gamble then that was their own fault for not paying attention. There was a clear boom where houses were being sold for far more than they were worth and anyone who knew anything about trends should have seen that such a rise can not happen without an eventual fall. My sister sold her $59,000 house for $140,000 early in that boom and the guy who bought it from her sold it a year later for $240,000. There's no question that the people who bought are are beyond upside down now, but that's their own fault. Nobody MADE them buy the house. It was a 2 bedroom 2 bath house in a mediocre part of town. I honestly have to wonder what they were smoking when they decided to pay so much for that place.

It isn't just the health care bill, it is all the money they have literally thrown everywhere. The incentive money went to stupid unnecessary useless programs. If they were going to spend money, they should have spent it on things that the US needed...LIKE SCHOOLS, or the soon to be proposed health care...Yeah right, that would be like thinking wouldn't it. Then it was the car companies...The public sector does not bail out the private sector,done...said. Then the banks...again...public to private.. Of course, we only hear tiny amounts that are being slung around the world to our "enemies" and the Big"0"s "friends". What a joke. Shalom~Adoniah

If I'm understanding the OD correctly, and I believe that I am, the plan is not to forgive entire mortgages. If, for instance, you purchased a home for $300k and that home is now valued at $125k because of what has happened to real estate values, you are paying more than you would if you had purchased the home at it's current value. So, in an effort to help both the homeowners and the lenders, the home can be re-valued at $125k and the mortgage refinanced based on that price. No one knowingly took a gamble when it came to the *value* of their property. Real estate traditionally increases in value, it does not decrease. This is a win/win proposition because the homeowner ends up with a lower monthly payment and the bank does not end up with a property that it cannot resell for the original loan amount. There are many people down here in Florida who are so upside down on their homes that they simply walk away because it will take too long for the property to recover it's original value.

The problem isn't whether the values will go up or not, but whether the people with the mortgages can afford them even if they refinance. When the market started to turn upside down, people were already in trouble because they took on more mortgage than they could afford. Now, the problem is compounded with job layoffs, so that many people, even if they refinance, still cannot make their monthly payments. Of course, an additional problem is that many banks refuse to lend no matter who the person may be or what type credit they have. They are holding onto much of the money passed to them through the bailouts. In some cases, they used it to buy other banks. But with Freddie Mac and Fannie Mae, we gave them over a 150 billion in bailouts and there have been so many loan defaults, they now want $400 billion more. Adding to the people's woes who are paying the bailout in taxes, is the removal of a limit to what Freddie and Fannie can borrow. By the way, the top dogs of these two institutions are still getting millions in bonuses - signed off on by the current administration.

I think Frannie and freddie should have gone away a long time ago. It may sound cold, but not every American has to own a house. Home ownership comes with a host of responsibilities and commitment, some people just are not cut out for it.

Unless we let those business, banks, etc., that are weak collapse and new, stronger ones take their places, which is the normal business cycle, we will not get out of this. We cannot bail out every business that is going bust. Now, the government wants us to bail out states that are in the red. There are only FOUR that are not. Do you think, as our government leaders do, that if they've already used all their credit cards (just a term) and maxed them out, used all their savings, stocks, bonds, and cash from the sofa, that the only thing we can do is apply for more credit cards???? They keep spending like mad, using the plastic, and don't seem to realize that the play money they are printing won't pay the tab. There isn't anything to back it up. Whether they want to admit it or not, the only way to save the country is to STOP trying to save everyone's rear end and make businesses, states, and people accountable for their actions. Eventually, someone has to tell the people THERE AIN'T NO FREE LUNCH! But, so far, no one has the guts to do that. The government isn't the fix for the problem - so far, it IS the problem while it keeps promising the moon but can't afford a grain of sand.

Well those people don't count. They are part of the problem. I'm sick of these people who believe in "personal responsibility". We need someone to blame cause it's not the "people's" fault. It's some big evil bank. But then it's not really the bank's fault. It's Bush's fault so we need to bail those banks out too. You need to quit taking care of yourself and your family and let the government do all that. Nanny states are the only way to go.

LOL You're funny.

Why?