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Federal Bailout--Helping Banks? or Homeowners?

By
Real Estate Agent with Babbitt Realty NYS# 30BA0740535

Federal Bailout-Helping Banks? or Homeowners?

We have all been reading and hearing about the bail out programs for the banking industry. The numbers are staggering of the billions of dollars appropriated by the government for this relief!

Those of us in real estate know how this developed and how the banking industry created their own problem by lowering the standards for getting a loan, especially for the investors.

Today thousands of homeowners are upside-down with their mortgages. This means they owe more on the loan than the property is worth. When this happened, the investors walked away from the properties, leaving them vacant. I remember hearing from a Realtor in Las Vegas after the crash that there were over 10,000 homes vacant that had never been lived in. Wow! Can you picture that?

However, a homeowner who is living in their home with their family, has no choice but to stay and stick it out. So along comes the government, spending yours and my tax dollars to bail out the banking industry. Many of us were naïve in thinking that the plan would include the individual homeowners who at no fault of their own was put in a bad situation.

This all hit home to me yesterday when I met with a homeowner who had lost her income because of the economy and had been struggling for the past 10 months to keep her head above water.

She had not made a mortgage payment since August, but had tried to contact the bank to talk to someone who could offer some advice or help. No luck! Months had gone by and suddenly she gets a letter saying they are going to help her! Wow, really??

Tell me if this is helping her, they sent her a document to sign within 5 days which was a new mortgage document. Here are the terms, they were adding $12,000 in late charges and attorney's fees to her mortgage balance, then charging her 7% when the going rate is 5% and then amortizing the remaining loan over 40 years!

Doesn't it make you mad? It does me! What is this money, yours and my tax money, being used for if not for people who have been affected by the downfall of the economy? I would like you to join me in contacting your representatives and senators and ask then why aren't the American people being helped! Thanks, if we each do what we can, it will make a difference!

Comments (7)

Charlie Ragonesi
AllMountainRealty.com - Big Canoe, GA
Homes - Big Canoe, Jasper, North Georgia Pros

As much as I sympathise , the bank is not a charity. They rewrote the loan and made a proposal. It would seem you could negotiate some of the terms., Maybe. As to your earlier point. Part of me says they all should have gone under and we could have started over. But then there would have been tons of other problems effecting working and middle class folks. So maybe the answer that is driving some folks so crazy is the answer. Laon them the money and get into their business thru oversight until we are paid back. There is no really good answer , but there are some feel good ones out there, to the mess.

Jun 08, 2009 12:56 AM
John Mulkey
TheHousingGuru.com - Waleska, GA
Housing Guru

Steve, unfortunately for homeowners, little of the trillions spent was ever intended to help them. Most of it was for the banks, "to get credit flowing again." With millions of homeowners already in foreclosure and millions more on the way, the government plan to help them is only a "drop in the bucket."  The government could have helped, but they chose a different route, and the banks have little incentive to take losses from modification when waiting may bring them more government assistance.

Jun 08, 2009 12:56 AM
Harry F. D'Elia III
WEDO Real Estate and Beyond, LLC - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

I believe most of the money has helped the banks in my opinion to purchase more assets. Many banks were just sitting on the money. They did not offer loan modifications at the start. Their reaction to the whole mess was too slow. We are in a state of emergency.

Jun 08, 2009 01:02 AM
Eric Bouler
Gardner Realtors, Licensed in La. - New Orleans, LA
Listening to your Needs

Hello? What were your expectations? Have you ever wondered what the overhead in these programs are? I am sure the program has helped a few people but it was the wrong approach.

Jun 08, 2009 01:13 AM
Katiejo Franks
Real Estate and Beyond, LLC - Scottsdale, AZ

I have my cup of coffee while reading your post. I very much enjoyed the information. Makes for a better day.

Jun 08, 2009 01:45 AM
Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"

I have someone like this...asked for help..they told her she had to be behind in  her payments.. so she got behind...then they told her..the would only take $500 a month off payment for 6 months... so she walked away.

Jun 08, 2009 02:46 AM
Anonymous
Steve Babbitt

Thanks each of you for takng the time to express your comments.  It just seems like once again the American public gets the shaft and big business gets the dollars!

Jun 08, 2009 11:20 AM
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