foreclosure bailout

The breakdown in talks feels like a Hollywood picture or a reality show on CBS television. If Obama and McCain pool their talent fees that could about cover the damages:o)

Democrats blame McCain... sound like reality tv, right? McCain says there are legitimate concerns about the plan's....yada yada yada.

McCain will not take part in Friday's presidential debate unless a deal is done. Obama says he still intends to take part in the 90-minute debate in the southern state of Mississippi. (call casting, we need an A-list actor for the job, 'Arnold! -The Terminator is my first pick)

-This just in from the AP: the McCain campaign announced that the Arizona senator will travel to the University of Mississippi Friday.

Drama or Real? Shall we call on Enlightened leaders to step-up.

Now.

Washington Mutual is now under control of the Feds as the bank faced collapse under the weight of massive debt from selling risky sub-prime mortgages to homeowners who later defaulted.

It's also more than $700 billion apparently - that's only an installment.

From the text of the draft legislation:

"The Secretarys authority to purchase mortgage-related assets under this Act shall be limited to $700,000,000,000 outstanding at any one time"

$700 billion AT ANY ONE TIME. They've effectively written themselves a blank cheque with never ending credit, and could end up fleecing you guys for trillions. Un-be-lievable.

-Phnx

U.S. lawmakers and the Bush administration have reached a tentative agreement on a plan to bailout endangered financial institutions. VOA's Dan Robinson reports, key House and Senate negotiators, and U.S. Treasury Secretary Henry Paulson made the announcement early Sunday after around-the-clock negotiations.

Looking tired but pleased, House and Senate leaders, along with other key lawmakers walked to a microphone in the Capitol to announce they have an agreement they believe will rescue the financial markets and protect Americans.

House Speaker Nancy Pelosi said, "We have made great progress. We h ave to get it committed to paper so we can formally agree."

Saying their congressional staffs would work through the early hours of Sunday to put final words on paper, lawmakers turned to Secretary Paulson, who said, "We begin with a very important task, a task to stabilize the markets, to protect all Americans and do it in a way which protects the taxpayer to the maximum extent possible."

The original Bush administration proposal was for an estimated $700 billion plan to purchase troubled assets from imperiled financial institutions in order to prevent a collapse of the U.S. credit markets.

But lawmakers balked after a wave of public complaints and media reaction about the size of the proposal. They demanded more oversight and other measures.

Last week, despite an initial announcement of an agreement on basic principles, Republicans in the House of Representatives insisted on other changes.

House Republican whip Roy Blunt said he believes an agreement can be announced later Sunday, but his remarks were a bit more tentative than others. "We will be looking at the final wording of this, talking to my colleagues."

Details are expected later Sunday, and lawmakers would provide no specifics.

Is a government foreclosure bailout a good idea?

If this were almost anything else in a capitalist system but the "American Dream" (i.e. homeownership) we're talking about with a government bailout by protecting or legislating, for me the answer would be a simple and short: NO.

But for me it's not so cut and dry when thinking of a government foreclosure bailout.

Here's my "nugget" answer:

If a government foreclosure bailout happens once, then people will come to expect that they are protected in case it happens again, and we can then expect as a society that such a turn of events might well establish itself as a norm.

If government foreclosure bailouts became routine, the consequences on the economy would be disastrous. Real estate speculators would roll the dice when otherwise they might be cautious, inflation would run rampant, the buying power of people's life savings will be destroyed, and it's even possible that over the long term the scenario could ruin financial markets completely. On the other hand, I feel for people who are losing their grasp on the "American Dream".

So I might favor a two-pronged approach that is open to assistance for one group of those struggling with the crisis (owner-occupiers and especially first-time homebuyers) while telling the other group (real estate speculators) that my taxpayer dollars will not be used to subsidize their greed that led them into ignorant mistakes.

Now, for the longer answer.

As a real estate investor who majored in Government in College, I had to weigh in on this question. And I hope my credibility here will allow me to go beyond sharing the usual facts, strategies and advice I usually do and step up and opine on something for once.

Should speculators who bought houses and properties they couldn't afford with credit they couldn't afford to lose, with no intention of either occupying the property or providing a service to the community (i.e. as a landlord), only on the money-driven hope of flipping prior to a market reached its ultimate peak and profiting off of no more than speculative inflation, be bailed out?

That one's a heck no.

NO. NO. NO.

In a capitalist system, business entails risk vs. reward scenarios. It's YOUR job as the investor (not the government) to manage risk in return for gaining rewards. Unfortunately, many of these people were NOT investors but speculators.

If they were true investors they would not have invested solely for short-term gains (taxed at a capital gains rate) based merely on the assumption of an increasing asset value independent of themselves (i.e. the potential for property appreciation, a possibility dependent on many factors the investor can't control).

I've said it before and I'll say it again.

The potential for appreciation is great, but if the deal doesn't make sense without it- it's NOT a deal. True real estate investors invest for intrinsic value and income, and to build an asset over time, not to profit off of market conditions that may or may not continue.

Can you "time the market"? Sure, it's possible to be right a few times... but if it's your only strategy then when you are wrong you are dead.

These guys do not deserve taxpayer dollars with any kind of government foreclosure bailout.

I say to you who read this: Don't be those guys, and don't forget this lesson as history has proven it WILL happen again and again. Investing is not a game of hoping for something to go up in value. And to our legislators I would say: don't condone stupid greedy behavior by bailing speculative investors out of the mess they themselves got into.

Homeowners, though, especially those who are first time home buyer owner-occupiers, are different in my mind.

Do they deserve a government foreclosure bailout?

That's a tough one.

Many of these people struggling today are unsophisticated financially.

And honestly many were duped (many of whom would have difficulty passing geometry much less understanding the Truth in Lending Statement, trying to decipher federal mortgage guidelines, or comprehend the true realities of certain exotic mortgages like those touted to borrowers with shaky finances and credit during the Real Estate boom) by unscrupulous mortgage brokers...

But on the other hand, while it may be the government's responsibility to PROTECT such people from such mistakes, it's too late for that.

The damage is done.

It certainly IS the government's responsibility to enforce that oversight of protection FIRST by punishing those responsible for taking advantage of such people's naiveté and longing for a home IF and only IF that conduct was fraudulent or otherwise illegal.

But that doesn't help the homeowner who is struggling or going under to get the relief they need financially.

That said, I do not believe the government has a RESPONSIBILITY to help and/or financially compensate these people who are struggling with foreclosure of their own homes.

But just because it's not a responsibility doesn't mean it might not be the right thing to do.

While I don't believe the government has any responsibility to put forth a government foreclosure bailout effort, I would not as a taxpayer cry out against it should legislators decide to.

I haven't yet made up my mind completely, and this message a partner received not too long ago from a struggling homeowner in just such a situation is part of the reason why:

I'm spilling all this today before you all for the 1st time to anyone. Not even my children are aware that our house has been scheduled for sheriff's sale in less then a month. Worrying them won't help, that's for sure. But sitting here, with my life's belief's beaten and bruised around me, I have to advise you, as I do my children. We are luckier then we realize. That no matter what we go through there is someone that would gladly trade lives with you.

We are alive, and have each other. WE ARE TRULY BLESSED. But between you and me, I'm scared not to the point of near immobility. Raw, cold fear that I don't know how to solve, but I will say, that I wish there was hope for me somewhere, somehow.

Which is of course why I [sic: hope for government foreclosure bailout]. Even though I know many people just don't get it. And of course, I hope you, sincerely, you never do.

A government foreclosure bailout? Like I said, not an easy issue.

Danny Welsh represents HIS Real Estate Network and is an editor of real estate investing newsletter 'The Good Steward' with Investing Do's, Don'ts and Deals! Learn what kinds of real estate aren't hurting in 2008 and see how you can make even an Infinite Return with passive commercial real estate investing. Or research further into Government foreclosure bailout or other topis geared specifically or real estate investors when you use the real estate investor search engine

Article Source: http://EzineArticles.com/?expert=Danny_Welsh

The U.S. Senate has overwhelmingly passed the $700 billion rescue plan for the U.S. financial system.

The Senate vote was 74 to 25.

Both presidential candidates, Democrat Barack Obama and Republican John McCain, returned to Washington from the campaign trail to vote for the measure Wednesday night.

The bill is a revised version of the plan originally proposed by President Bush that the House of Representatives rejected Monday, sending stocks to their biggest one-day loss ever.

It grants the U.S. Treasury up to $700 billion to buy up bad mortgages held by banks and other financial institutions.

But Democrats and Republicans added a number of amendments to help get it through the Senate.

The plan now goes back to the House of Representatives, which plans to vote again Friday.

The Senate bill includes tax breaks for businesses and middle-class taxpayers, limits on large benefits and monetary settlements for the heads of failed financial institutions, and it raises the federal insurance on bank deposits from $100,000 to $250,000.

Buying up the bad mortgages would take a large financial burden off banks and other money lenders, allowing them to start issuing credit again to businesses and consumers.

Conservatives who oppose the bailout bill believe in principle that the federal government should not intervene in the financial markets. Liberals who oppose it believe the measure is aimed at bailing out Wall Street at the expense of U.S. taxpayers.

Some information for this report was provided by AP and Reuters, By VOA News