Sheila Blair giving out taxpayer’s money
Posted by Frugal on August 22nd, 2008
Isn’t it great to run a “charity” organization? The people will always thank you, while your “real boss” the taxpayers have no way to get to you, or simply at sleep.
Here is a snippet from press release from the head of FDIC Sheila Blair for loan modications at IndyMac FSB:
If, consistent with maximizing the net present value of the mortgage, an interest rate reduction below the current Freddie Mac survey rate is necessary to achieve a 38% DTI, then IndyMac Federal could reduce the rate further for five years. After five years, the interest rate would increase by no more than 1% per year until it capped at the Freddie Mac survey rate where it would remain for the balance of the loan term. Other modification features could be combined with an interest rate reduction, as necessary and consistent with maximizing the value of the mortgage, to achieve sustainable payments.
It is important to remember that there are no fees or other charges for this modification. All unpaid late charges will be waived.
How does IndyMac Federal determine whether the modified mortgage is affordable to the borrower?
IndyMac Federal determines whether a modification proposal is affordable based on income information received from the borrower. Modifications would be designed to achieve sustainable payments at a 38 percent housing debt-to-income (DTI) ratio of principal, interest, taxes and insurance. To reach this metric for affordable payments, modifications could adopt a combination of interest rate reductions, extended amortization, and/or principal forbearance.
That is just so “great”! Now that just really makes me PISSED! The current money that Sheila gives out is still collected from the insurance money that banks pay in. But given the current level of FDIC funding, it will probably run out ALL the money once it shuts down just a couple of bigger bank like Downey or Washington Mutual. What a great non-profit organization! All those people who shouldn’t have bought the homes in the first place are now getting rent-free in “their” home. More time thru loan-mod, and then default, and then back for loan-mod, the better for them. For all the responsible homeowners and renters, we are subsidizing the rent for these liars who lied on their no-doc or low-doc loan, one way or the other.
I know personally a very diligent and frugal tour guide who worked and saved all his life, just to lose some $180,000 at IndyMac bank after FDIC shut down the bank. He is so depressed about losing the money, and I hope that he doesn’t see this news. Yeah, these irresponsible leeches of the society are using his money, rent-free for many months to come.
For the first time, I feel strongly about wanting to default on my mortgage loan. When will this country jail the homeowners who commits perjury on their loan docs, people who rates AAA on the toxic Alt-A junk bonds, and all those greedy bankers who originates and sell these toxic bonds to every pension fund on earth? There is zero credibility in the US government and US dollar.
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August 22nd, 2008 at 10:57 am
All I can say is “That’s America for you.” We have been brought up to be irresponsible with money (with a lot of things). We have created a country in which the lazy and irresponsible thrive. We have whole states in the US that people live mainly on tax dollars contributed by the hard working. It does not surprise me that the irresponsible get yet another break in life, while hard working people pay for it (maybe that is the legacy of the responsible to keep the country running…). The real unfortunate thing here is if it were decided to pull back on all the freebie’s to the irresponsible, we would probably have higher crime and more bums wondering the streets. Eventually, time would go on and the new generations would start being more responsible again (one would hope…). Here is a give and take scenario that I have looked at that troubles me… There are plenty of single mothers out there that get, actually rely, on tax payers money to support them. They do nothing to, or maybe can’t do much, to become independent on their own. In fact these mothers will avoid marriage just to continue to receive the benefits (which ironically attracts dead beats to them so they can mooch off these mothers free money ride). If we were to take that money away from them, I contemplate what would happen. Would there be a huge influx of mothers and children on the street, or would there be a bunch of mothers forced into responsibility? At any rate in all this, I think that something needs to be done, of course, but it can’t all happen at once. As a country and society, we need to gradually change to fix the problem of irresponsibility.
In my notion: This country, due to its irresponsible nature, will eventually in our future experience an economic blow so big, the results will be quite devastating.
August 22nd, 2008 at 5:32 pm
On one hand, this kind of thing can make a hard-working responsible American pretty upset. Why should people get a break in interest rates for being irresponsible? On the other hand, if you are a responsible American, you should probably not spend too much time feeling angry about the situation. Rather than feeling cheated, why not feel proud to be a hard-working and responsible member of society. There are always going to be leaches, bottom feeders, and complete and total trash. These people with milk the system for all it’s worth, and there is little us responsible citizens can do about it other than choosing our officials more carefully.
August 23rd, 2008 at 5:24 pm
I know what you mean about those living off the “system”. I work for a living (36 hrs. a week), purchased and paid for my own house, buy my groceries and heating fuel with my own paycheck, have no air conditioner and only two TV channels.
The welfare queen next door to me gets everything: Rental assistance, food stamps, welfare and heating assistance. Has four children with three different guys. Don’t let me forget: they have an air conditioner and now a TV satellite dish. I guess when you sit around and Uncle Sugar gives them handouts, they need AC so they do not break a sweat and the Satellite Dish for many TV channels to keep their time occupied since you do not have to work.
Do not get me started on the live-in boyfriend. He’s usually around unless he is in jail.
My tax dollars NOT at work!
August 23rd, 2008 at 6:45 pm
Ha, you know when they tried to start “Workfare” programs everyone laughed. Now, I know why.
Where does the government keep this money. Do they just print more or what is the deal here?
August 24th, 2008 at 8:46 am
I have an 8.625% adjustable rate mortgage at Indymacbank and my payment history is perfect. When I called the other day and told Indymacbank that I wanted MY loan modified to a 6.5% fixed rate mortgage, they told ME that I don’t qualify because my loan is “current”. Now I’m wondering how many months I should stop paying my mortgage so I’ll qualfy for the 6.5% fixed rate , too. Anyone know ?
August 24th, 2008 at 10:49 am
“All those people who shouldn’t have bought the homes in the first place are now getting rent-free in “their” home.”
Your anger is misplaced, IMO.
All those lenders who shouldn’t have lent money to people who couldn’t repay are now getting their bad loans repaid anyway, is more accurate. If this was about people defaulting it wouldn’t be an issue: it’s about LENDERS defaulting by lending out, on a massive scale, to those who were risks. The banks defaulted in the responsibility to lend reasonably and report risk accurately and they did it on such a scale that not bailing them out harms those not responsible even more than bailing them out does. A win-win for the feckless lenders.
There could be no problem without the idiots who lent the money to those who couldn’t qualify any other way. They only lent out the money because they knew they’d turn around and sell the loan, making the profit and passing the risk. IMO, this whole thing is more the fault of the irresponsible businesses, than irresponsible borrowers.
A single irresponsible borrower can only do minimal economic damage. A single irresponsible lender can do much more, but a group of irresponsible lenders is what it takes to put us where we are today.
The lenders are supposed to know better than to lend to those who can’t afford it, and they are supposed to do their due diligence to prevent fraudulently stated incomes when applying for loans. They didn’t have any incentive to do that, as the profit for the loan was theirs regardless of the quality, because the risks of a bad or fraudulently declared loan would just be passed to whoever bought the loan bundle afterwards.
joe b.
August 25th, 2008 at 8:45 am
Good comment Joseph. I suppose I have been too one sided on this with the irresponsible poor people in our society (it is upsetting though). In fact there are two sides, the wealthy lenders trying to make more money, of which are the cause of the whole problem. Ironically now they are poor and are taking our tax dollars. You can’t really blame the poor people for dangling a shiny red apple in front of them I suppose, unaware of the blade about to cut the string holding it up. I guess the chain of money flow in this country is the rich take from the poor, when the rich become poor they take from the middle class, and the poor take from everyone. Just one big circle of taking, though it appears the middle class get screwed most the time.
Good topic.
August 25th, 2008 at 10:32 am
I am getting tired of the ‘lenders took advantage of homeowners’ line. On a more global scale, I’m growing weary of the lack of responsibility people take for their actions be it an individual or large lending institution. The fact is, the borrowers made a mistake by asking for too large of a loan that they could not pay back. And yes, it is the person signing the loan doc’s responsibility to figure out what they can afford. If they cant to this level of math or research, why would they buy something that costs so much? Stick with renting until you can do the math. As a speculation, I bet many of the currently distressed borrowers signed up for a zero-down no-doc loan knowing that the payments would be difficult/impossible to make but betting that this house was going to make them rich in 1-2 yrs. That is simple gambling greed. It is also the loan origination companies mistake for lending that money to somebody that could not afford it and it is slightly less the average persons mistake for investing in companies which were buying the derivative loan investments. However, in my humble opinion, everybody was on the same get rich quick train. Well, unfortunately that train derailed. Everybody who placed their bets should take responsibility for themselves.