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Have Confidence In Our Wise Leaders

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  • Have Confidence In Our Wise Leaders

    Treasury Secretary Timothy Geithner said "it is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets."

    Can "we" really do both? To the extent that Geithner et al. "arrest the damaging spiral in our housing markets"—i.e., stop home prices from falling—housing will be less affordable than it would otherwise be.
    Last edited by Nikolas; 03-09-2009, 01:10 PM.
    A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

    "$250,000 a year won't get me to Central Park West."

  • #2
    Re: Have Confidence In Our Wise Leaders

    Originally posted by Nikolas View Post
    Treasury Secretary Timothy Geithner said "it is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets." Can "we" really do both? To the extent that Geithner et al. "arrest the damaging spiral in our housing markets"—i.e., stop home prices from falling—housing will be less affordable than it would otherwise be.
    Sounds like he was talking about intrest rates. It won't fix any problems, but lowering intrest rates will make the assets less toxic.

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    • #3
      Re: Have Confidence In Our Wise Leaders

      He's Treasury Secretary, not President of the Federal Reserve.
      A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

      "$250,000 a year won't get me to Central Park West."

      Comment


      • #4
        Re: Have Confidence In Our Wise Leaders

        http://www.courant.com/business/real...,4103853.story

        The second program, called "Home Affordable Modification," is aimed at borrowers whose payments have become unaffordable, because of a hardship such as job loss or illness, or because the interest rate has been reset higher on an adjustable-rate mortgage. The government would provide cash payments and financial subsidies to help the lender lower the monthly payment to as much as 31 percent of the borrower's gross monthly income.

        In most cases, the lender would reduce the interest rate to as low as 2 percent for five years. If that did not bring down the payment, the lender also could extend the term of the loan to 40 years or temporarily reduce the principal.

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        • #5
          Re: Have Confidence In Our Wise Leaders

          The second program, called "Home Affordable Modification," ...
          Obama said he didn't want any more PORK in his bills...so they named this one HAM. >.>
          Last edited by Kerostasis; 03-09-2009, 03:18 PM.

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          • #6
            Re: Have Confidence In Our Wise Leaders

            40 year mortgage. Nice.
            A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

            "$250,000 a year won't get me to Central Park West."

            Comment


            • #7
              Re: Have Confidence In Our Wise Leaders

              Originally posted by Nikolas View Post
              40 year mortgage. Nice.
              Most mortgages are 30 years anyways. Those are rarely paid off. Most people end up refinancing again after 5-10 years to lower their payment or lock in a (hopefully) lower interest rate. My parents have been homeowners for almost 40 years and they don't actually "own" a home yet.

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              • #8
                Re: Have Confidence In Our Wise Leaders

                With a 40 year mortgage, you barely pay down the principal at all in the first 10 years, iirc. It's essentially interest only. So you're basically paying really expensive rent.
                A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

                "$250,000 a year won't get me to Central Park West."

                Comment


                • #9
                  Re: Have Confidence In Our Wise Leaders

                  Originally posted by Nikolas View Post
                  With a 40 year mortgage, you barely pay down the principal at all in the first 10 years, iirc. It's essentially interest only. So you're basically paying really expensive rent.
                  I pay out $600 a month on my primary 30-year mortgage. Of that ~$120 goes to principal. I've now lived in my house for 4 years.

                  Pardon me while I weep for those "stuck" with a 40 year loan....

                  Then again, without a system like this, the majority of people couldn't even consider owning a home. And banks need some way to recoup the cost of loaning you $100,000+ dollars for 30 years.

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                  • #10
                    Re: Have Confidence In Our Wise Leaders

                    With a 40 year, the total payment is reduced only slightly, while the principal payment is reduced drastically.

                    For example:

                    $100,000 loan @ 5.5%

                    30 year monthly payment: $568, $109 is principal
                    40 year monthly payment: $516, $57 is principal

                    This is the information for the first month. Essentially the entire payment reduction comes out of your principle payment.

                    A 40 year loan originating today wouldn't pay $109/month in principle until December of 2020.

                    Mess around with the numbers yourself at bankrate.com.
                    A policy of freedom for the individual is the only truly progressive policy. -F.A. Hayek

                    "$250,000 a year won't get me to Central Park West."

                    Comment


                    • #11
                      Re: Have Confidence In Our Wise Leaders

                      Originally posted by Nikolas View Post
                      With a 40 year mortgage, you barely pay down the principal at all in the first 10 years, iirc. It's essentially interest only. So you're basically paying really expensive rent.
                      But a lot of that rent is deductible.

                      I was just reading a story in the paper that Obama is floating the idea of tinkering with the mortgage deduction. What would be required to get rid of it? It's pretty deeply entrenched in the home financing system now, with the automatic assumption that much of a home's value is in the deduction.
                      Dude, seriously, WHAT handkerchief?

                      snooggums' density principal: "The more dense a population, the more dense a population."

                      Iliana: "You're a great friend but if we're ever chased by zombies I'm tripping you."

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                      • #12
                        Re: Have Confidence In Our Wise Leaders

                        Geitner was on Charlie Rose last night, for anyone who wants to hear it from the horse's mouth. I thought he did pretty well considering the position he's in, though he did seem a little too on-message. He certainly doesn't have Obama's speaking ability, nor does he exude confidence - a quality that in these times is glaringly lacking.

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