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The scariest thing Biden said; Thoughts?
Topic Started: Oct 3 2008, 10:29 AM (494 Views)
Kincaid
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HOLY CARP!!!
He said he supported the Gov't being able to retroactively change the amount of principle owed on home mortgages. What I'm hearing is that he didn't mispeak, this is something he and Obama support.
Kincaid - disgusted Republican Partisan since 2006.
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JBryan
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Up or down?
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Dewey
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HOLY CARP!!!
Yeah, my jaw dropped when I heard that, too.
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Frank_W
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Adjust it DOWN!!!! YES!!!! I'll pay this albatross OFF. It'll be like giving myself a $2K/mo. raise! :excited:
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Luke's Dad
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Emperor Pengin
I had thought he misspoke. I pray that was the case.
The problem with having an open mind is that people keep trying to put things in it.
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John D'Oh
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MAMIL
Presumably the idea is to reduce the debt when the mortgage goes south to enable people to pay a lesser amount off rather than just lose the house and/or walk away declaring bankrupcy, forcing the bank to sell the house for less than they're owed.
What do you mean "we", have you got a mouse in your pocket?
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jon-nyc
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Cheers
As I understand it, the proposal is to treat mortgage debt like any other debt in a bankruptcy.
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Axtremus
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HOLY CARP!!!
Yes, Biden was pretty explicit about it.

From the transcript:

Biden
 
Number two, with regard to bankruptcy now, Gwen, what we should be doing now -- and Barack Obama and I support it -- we should be allowing bankruptcy courts to be able to re-adjust not just the interest rate you're paying on your mortgage to be able to stay in your home, but be able to adjust the principal that you owe, the principal that you owe.


Link to transcript: http://elections.nytimes.com/2008/presiden...ial-debate.html

To jon's point, yeah, it's in the context of bankruptcy.
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jon-nyc
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Cheers
I wouldn't have a huge problem if the power were granted to bankruptcy judges only for mortgages written, say, between 2002 and 2006. Even then I'd want the authority pretty heavily circumscribed.

I don't think it would be workable moving forward, though. I think it would have a significant effect on who would qualify for mortgages in the future.

If they tried to do it for future mortgages, the only way I could see it working is if the bankruptcy judge could lower the principal based on the house's value, as opposed to the mortgagee's ability to pay. That would shift the risk of declining property values to the banks - which would be manageable and hedgeable. If the judge could adjust the principal based on ability to pay than only people with the very best credit would get mortgages. (Imagine going to your bank and asking for an unsecured loan for three times your gross income)
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Jack Frost
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The "cram down" as it is called is already a part of a chapter 11 bankruptcy for commercial debtors. I guess it has not been available to individuals with mortgages.

It might affect who qualifies for a mortgage, but that would largely be a result of banks being careful to require more equity, say 20%, instead of the "no money down" mortgages of the last half-decade.

When an individual debtor is in bankruptcy, he can walk away from his house and mortgage or he can "reaffirm" it--promise to continue to pay and thus keep the house. The "cram down" would be an alternative to walking away--keep the mortgage but strip off the negative equity. The bank is no worse off than if the debtor walks.

jf
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Phlebas
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Well, the fact that the US taxpayers are going to be buying off all these worthless securitized mortgages at inflated prices is pretty scary too.
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jon-nyc
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Jack Frost
Oct 4 2008, 07:10 AM
The "cram down" as it is called is already a part of a chapter 11 bankruptcy for commercial debtors. I guess it has not been available to individuals with mortgages.

It might affect who qualifies for a mortgage, but that would largely be a result of banks being careful to require more equity, say 20%, instead of the "no money down" mortgages of the last half-decade.

When an individual debtor is in bankruptcy, he can walk away from his house and mortgage or he can "reaffirm" it--promise to continue to pay and thus keep the house. The "cram down" would be an alternative to walking away--keep the mortgage but strip off the negative equity. The bank is no worse off than if the debtor walks.

jf

Jack - everything you say is only true if the 'cram down' is based on revised market value, NOT the mortgagees ability to pay (like other debt in bankruptcy is treated).

If its the latter, than I really think the effects on new mortgages would be dramatic. Again imagine going to your bank and asking for an unsecured loan of 3x your income...
In my defense, I was left unsupervised.
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Jack Frost
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jon-nyc
Oct 4 2008, 06:33 AM

Jack - everything you say is only true if the 'cram down' is based on revised market value, NOT the mortgagees ability to pay (like other debt in bankruptcy is treated).

If its the latter, than I really think the effects on new mortgages would be dramatic. Again imagine going to your bank and asking for an unsecured loan of 3x your income...

Agreed.

If anyone has seriously proposed a cram down to what a borrower can afford, I have missed it. That would be stupid

jf.
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Let it be said by our children's children that when we were tested we refused to let this journey end, that we did not turn back nor did we falter; and with eyes fixed on the horizon and God's grace upon us, we carried forth that great gift of freedom and delivered it safely to future generations.
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Axtremus
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HOLY CARP!!!
Now that's a well considered exchange on the issue.
Well done, gentlemen. :thumb:
Pats on backs all around.

Now enough on the substance of the issue.
Let's get back to nasty...
What Biden said, was it "scary," does it need prayer still?
Has it been effective in subtracting from the Obama-Biden ticket?
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Luke's Dad
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Emperor Pengin
Have a judge make changes to the interest? OK. Have a judge make changes to the number of payments? Ok. Change prepayment penalties? Not a problem.

Lower principle? Absurd. I feel the same way about credit cards, as well.

As an aside, I would think giving judges this ability would play even more havoc in determining the value on the securities that's causing the credit market to grind to a halt.
The problem with having an open mind is that people keep trying to put things in it.
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jon-nyc
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Luke's Dad
Oct 4 2008, 11:26 AM
As an aside, I would think giving judges this ability would play even more havoc in determining the value on the securities that's causing the credit market to grind to a halt.

Not if the reval is based on market value of the house. In fact thats probably a better deal for the bondholder than going through foreclosure.

If the reval is based on the mortgagees ability to pay, than you are right.


Which is why that one detail makes all the difference as to whether this is an interesting idea or a scary idea.
In my defense, I was left unsupervised.
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jon-nyc
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Luke's Dad
Oct 4 2008, 11:26 AM
Have a judge make changes to the interest? OK.

...

Lower principle? Absurd.

And by the way, if you're worried about the effect on the bond valuations, dropping the interest rate a few points can have the same effect as keeping the rate whole and taking 10-20% off the principal amount.
In my defense, I was left unsupervised.
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George K
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Finally
The scariest thing Biden said was that Dick Cheney was the most dangerous vice president in American history.


I think that Alexander Hamilton would disagree with that - Burr was certainly a better shot than Cheney.
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Ben
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George K
Oct 4 2008, 11:51 AM
The scariest thing Biden said was that Dick Cheney was the most dangerous vice president in American history.


I think that Alexander Hamilton would disagree with that - Burr was certainly a better shot than Cheney.

:lol: :lol: :lol:
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Jeffrey
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Kincaid
Oct 3 2008, 10:29 AM
He said he supported the Gov't being able to retroactively change the amount of principle owed on home mortgages. What I'm hearing is that he didn't mispeak, this is something he and Obama support.

Could be win-win, if the bank alternative is costly foreclosure on a nationwide scale (not possible).

I see this as a pro-banking industry proposal, preserving some value in busted debt, now trading at 20-30 cents on the dollar. New and old owners of such distressed debt should be quite open to pro-active, move-forward solutions like this that enhance value, while also being politically popular.
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ivorythumper
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Kincaid
Oct 3 2008, 11:29 AM
He said he supported the Gov't being able to retroactively change the amount of principle owed on home mortgages. What I'm hearing is that he didn't mispeak, this is something he and Obama support.

I am not worried about that. That might be a better use of the $700B to pay for the absorption of the declining market so that the lender would not have to bear the burden of the borrower's inability to perform on their obligation.
The dogma lives loudly within me.
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Daniel
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HOLY CARP!!!
He said "I'm going to send a married homosexual to hide under Kincaid's bed to rattle his bed in the middle of the night and make ghost sounds." He didn't say that? My bad.
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ivorythumper
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IFILL: Let's try to avoid nuance, Senator. Do you support gay marriage?

BIDEN: No. Barack Obama nor I support redefining from a civil side what constitutes marriage. We do not support that. That is basically the decision to be able to be able to be left to faiths and people who practice their faiths the determination what you call it.
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Dewey
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HOLY CARP!!!
Seems like there isn't a single thread that isn't eventually about Sarah Palin or teh gayz. :rolleyes:
"By nature, i prefer brevity." - John Calvin, Institutes of the Christian Religion, p. 685.

"Never waste your time trying to explain yourself to people who are committed to misunderstanding you." - Anonymous

"Oh sure, every once in a while a turd floated by, but other than that it was just fine." - Joe A., 2011

I'll answer your other comments later, but my primary priority for the rest of the evening is to get drunk." - Klaus, 12/31/14
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Radu
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Dewey
Oct 5 2008, 05:23 AM
Seems like there isn't a single thread that isn't eventually about Sarah Palin or teh gayz. :rolleyes:

There are at least two threads about God and faith ! Search and you shall find !
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