It just isn’t the issue where I live.

Please realize I am not denigrating your perspective. I am commenting on the general whole which prices most people out of any kind of realistic mortgage, and those that took the exotics a going to be in danger.

The only other thing about the Feds panic moves ( Bernake is supposed to be a student of the 1930s and beleives the Fed of the time didn’t do enough ) is the lowered interest rates mean that the LIBOR and CMT indexed ARMS won’t necessarily break the loan holders in short run. There payment may actually go down a little. Most of those loan types reset again and again over time and they will get smacked as the Fed raises rates to fight inflation. The problem of course is these people are sitting on properties where if the sell they can’t close the mortage.

The mortgage bankers were all too happy to lend 600,000 to somebody who makes 65 grand a year. The house prices in many markets are way above the means for most people who live in them.

Correct. Because that mortgage banker made his/her income based on percent of loan amount; the bigger the loan, the fatter the banker pockets.
Where I live, the sprawl is unbelievable and the environment seriously degraded in large part because of the go-go housing boom. My state and local governments have spent millions on ‘housing plans’ intended to implement more affordable, more environmentally sustainable housing that would cost about 20 – 35% less per month for homeowners. However, the homebuilders politically sabotaged those plans. Builders make a lot more from a McMansion than they’ll make from constructing an nicely designed little mixed-use housing project.

It all boils down to lack of leadership at many levels of government, but primarily at the federal level because all the road, agriculture, economic policies are all tied in one way or another to housing. And if I were an oil magnate, I’d love sprawl — it generates millions of auto trips daily.

And wavpeac, keep at it. I don’t doubt for an instant that the kinds of incompetent, as well as criminal conduct you mention absolutely occurs. Not everyone understands their job well enough to do it accurately; others take advantage of confused buyers (and dumb realtors).

They are not applying payments, they are forcing insurance, they are messing with escrow accounts, they are violating laws. And there is no one to stop them. When you want to focus on the borrower and blamning the victim you completely switch the focus in a way that benefits the corporate. Before you tell me about irresponsible borrowers, please follow my lead and look into the behaviors I have reported here. It is wide spread, not being reported in the media and in the end we will all end up paying for it while they get rich. (corporate owners)

If we choose to reduce the mortgage debt on people and rearrange the loan terms to fixed loans then you have forced the housing market lower and screw all of us 30 year fixed people. At the same time the foreclosure sales will force the market down anyway. I feel bad for people loosing their homes but you can’t screw everybody else. I don’t feel bad for any flippers or people who took out no downpayment loans. Or for the banks that did this. My cousin is about to loose their house in Lake Forest, CA and what will they do?

If you do the math with a 30year fixed 20% down loan with a 28 % income payment requirement with a an average income of 60K you get payments of 1400 a month. At a 5.75 loan this average person can only afford a house loan of around 233 K. In a lot of markets house prices have a long way down to get there.

Just one thing to think about before refinancing.

I’ll find the post and link…

And yes, this is a bailout on many levels including election year politics…