I have made several threads on my distaste on the current mortgage mess...last one being "we are officially f*cked"...in that thread I was asked what would I suggest....so here is my suggestion:

For all of the people in serious trouble of foreclosure...instead of taking money from the rest of us, why not temporarily (I was thinking about 5 years) STOP their federal income taxes, and take that money (removed by their employer in the same manner taxes are) and pay that directly to the mortgage holder.
This money should be "principle-based" - meaning at least 80% or more should go directly to the principle.
After the 5 year period, the owner can either sell the house, or refinance with a much lower balance.

Notes:
There would be no normal deductions (child credits, mortgage deduction etc.) all of this would be paid to the lender.

As an example....
A household with $75,000 in earnings could pay about $18,000 for 5 years ($90,000) with 80% ($72,000) going against the principle.

What say you?

I don't think that would make any difference. If they dont pay taxes then others still end up paying them for them, and you're still "taking the money from the rest of us".

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Terrornoia: how the propa-ugandists used the omni-territorialization of terror for the fundamen-talismanization of criminal law in a multi-cultus-ritualistic society

not bad...how about any help they do get is lodged as a lien as to future sale and will be collected when a sale or change of ownership is performed?


add to that I am sitting here reading an involved article by the journals editor in chief of the Op ed page, who personally had talks years ago with principal characters in this mess, and assigned folks to follow indy mac et al….they saw it coming and were beat up for saying so. ..this shit is unbelievable as you said....I'll post it on the other topic.....unrealllllllllllllllllllllllllll

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

Well naturally this only deals with those who pay taxes...
And no it isn't removing from the rest of us - the government could EASILY do without the taxes by cutting a mere one or two pork projects.

Yes - I was also thinking of something similar, and what can be done with the few who do not pay taxes - or lose their job during the 5 year period....it's not perfect...but I don't think half bad.

thx, and we both agree , they, that is anyone how gets to stay in their home at anyone else’s expense must at some point atone. A "home" isn't subsidized housing and never should be, though it appears here we are.

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No individual can plan his own existence in their view.

So the state planners must arrogate to themselves the right to manipulate any sector of the economic system if the good of “society” or the “general welfare” is paramount.

Ipso- if the rights of the individual get in the way, the rights of the individual must be sublimated.

The Road to Serfdom
FA Hayek (interpretation)


Mortgage Backed Security survivor

This would not be useful at all.

The government can afford it, in the same way as it can afford everything else - by borrowing a lot of money. So, not sustainable. The companies would not accept this either. Why would they want to see their interest earnings eaten away? People would abuse this. Think about it, you're just going to pay your taxes to the mortgage company: That means people that *do* keep on paying their mortgage bills normally will end up paying out a lot more money than people just paying their taxes to the companies. It would also be an effective and complicit guarantee for all future mortgages. Companies wouldn't have to factor in risk at all. Hey, whatever happens now, the government covers us! We pick really bad mortgage customers, no problem, we'll just get their tax receipts... We pick REALLY bad ones, they just bail us out...

This is a very, very unrealistic idea. Doing this, you might as well just create a state housing fund to give people money to buy houses. It's done in a lot of other countries and would create a lot fewer problems and have the same positive effects. But, I'm guessing you'd think that smacks too much of socialism

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"Capitalism is the astounding belief that the most wickedest of men, will do the most wickedest of things for the greatest good of everyone."

- John Maynard Keynes

I doubt if any of you are old enough to remember the Whoops fiasco of the early 1980's.

I bring up the WPPSS (also know as Whoops!) Bonds from 1983 only because it has similarities. Investors loaned the Washington Public Power Supply System about 8.3 billion to build five nuclear power plants. But government regulation and legal delays increased the cost to 24 billion.

When WPPSS decided they couldn't pay, the investors had to eat it. In fact, the court nullified the contracts that the energy companies signed. If they had been forced to fullfil their obligations, Washington consumers would have paid higher utility rates.

So what has this to do with anything? Just this, if the Whoops investors can suffer the vagaries of the government regulations, and have the courts nullify legal contracts, and have to lose their investment, I don't see why today should be any different.

RJ

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There is not much here that resembles a semblance of sense.

I say it's a shitty idea.

Why should they be permitted to not pay income taxes? I pay my mortgage and my taxes, so why the fuck should these idiots not have to do it?

Oh, that's right, they're stupid fucking idiots who took out a mortgage they couldn't afford.

Fuck 'em. Life is full of hard lessons, and this is one of them.

They'd best learn it...

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Sayeth John Drake - 10/13/08: "OK, you're right, I admit to LYING"

Well, to put it in non-paragraph form, if you want:

- The companies won't like it because your 80% principle method may easily eat into the principle faster than planned. Doing this hurts their profits. Doing this drives up interest rates...

- The government won't be able to deal with it because unless vast public spending cuts occur, it will just pile onto the existing defecit.

- The market won't be able to deal with it because it provides an effective government guarantee to every single mortgage in the United States. This means mortgage companies will be even more reckless.

Is that clear? On no front does it work in a sustainable or even effective manner. It completely perverts the market and provides no incentive whatsoever for responsible lending.

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"Capitalism is the astounding belief that the most wickedest of men, will do the most wickedest of things for the greatest good of everyone."

- John Maynard Keynes

I think people not knowing anything about it would have to do with the fact that it was largely a regional thing.

A number of people here are certainly old enough to remember it, but simply didn't know anything about it...

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Obama's New "57 State Patriotic Pin":




Sayeth John Drake - 10/13/08: "OK, you're right, I admit to LYING"

Um - in case you haven't noticed their profits have suffered severely...last week the ugly mark of 100 lending institutions closed in CA alone.
Not a problem if the gov't stops giving tax "refunds" to people who don't pay taxes at all.
Well of course I wouldn't intend this to be a permanent solution, this is ONLY to deal with the current crises.

Again, I wouldn't dream of making this anything but an emergency fix for the CURRENT situation ONLY.
Banking regulation needs to be brought back to prevent this from re-occurring ever again.

The problem is that, by doing this, a dangerous precedent will have been set...

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Obama's New "57 State Patriotic Pin":




Sayeth John Drake - 10/13/08: "OK, you're right, I admit to LYING"

Gotta remember - if nothing is done - this could wreck the economy into a near-depression state...which is why the government is willing to give $5 trillion to the lenders. If they do not do so...we're seriously in trouble.
At this point - a bailout is eminent and unavoidable...less the rest of us get dragged into the mess with the idiots and crooks AND government that allowed this to take part in the first place.
This at least is perhaps a way to ease the pain.

No matter what the solution - any steps that do not include investigations and jail time is unacceptable. Your government in the Fannie and Freddie bailout TOOK OUT THE MEASURE that would have forced executives to take pay cuts if they take the bail-out....you should be highly pissed that our tax money is now paying salaries FOR THE VERY PEOPLE THAT GOT US INTO THIS MESS.