The bill is not a freebie, but would force lenders to renegotiate loans of owner-occupied properties that have been devalued. The way it would work is that homeowner and lender would renegotiate the loan at the property’s present value with the difference from the original loan to the new loan being tacked on at the end of the loan. Basically, we’re talking about a 30-year fixed rate loan with a balloon payment.

To get to this point the lender and homeowner would be forced to mediate. This unfortunately, would further burden a legal system that is already overburdened.

This would allow many to be able to stay in their homes and afford them, especially during our current economic situation. Of course, the homeowner would have to qualify for the new loan, otherwise it would be for naught and just an even more costly mess.

According to Rep. Soto, “What we are trying to do is stabilize the market, we want these people to stay in there homes.”

If this legislation passes both the House & Senate, it would take effect on July 1, 2009.  It’ll be interesting to see how our legislators react to the bill.

Until next time….Marc It Sold!

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bailout

There’s more that needs to be addressed since writing the previous post, The Bailouts of 2008 – What’s the Cost? Take a few moments to read it if you haven’t. It will shed more light on to what you’re about to read here. OK, good, thanks for reading.

The long and short of it is that the $700B Emergency Economic Stabilization Act of 2008 needs to be stopped. It’s out of control already and is costing us, the people, more than any benefits that are being derived by us. Plain and simple that makes no business sense whatsoever.

One item that was mentioned in the previous post was in regard to “insurance companies are trying to get a piece of the pie by purchasing financial institutions (Insurers find path to bailout billions).” Even though there are many more articles to support this, there was another one in the Orlando Sentinel yesterday entitled, “Troubled Orlando-area bank is big prize for Hartford in bailout deal”

The Economic Bailout is a mess and there aren’t enough constraints in place. Look at TARP (Troubled Asset Relief Program). I wrote about this in the post, A Move Towards Socialism – Should the Government be Buying Stocks? Treasury Secretary Henry Paulson and gang can’t even decide how the heck to work it. It was supposedly designed to buy risky mortgage-backed securities. Now they are changing the game plan and in turn are creating a worse situation.

It appears that the focus of TARP is not only being shifted into purchasing stocks in non-bank financial institutions, but also to include consumer debt securities. Both of these are bad ideas. It’s not that the government is extending their reach into more and more areas, but that they are putting us at more risk. Something that we, the people, should not be asked to shoulder, but most likely will.

Now to the Automobile Industry Bailout. A couple of comments I received on the last post and what we’ve heard bantered around in the news were in regard to the CEO’s of the Big Three and their corporate jets. What the heck is the big deal here? There really is no need for this discussion. They are asking for money. Fine, I think that it might be necessary as I previously explained, but at the same time the government should be demanding concessions. Didn’t they learn anything from the AIG fiasco? Seriously now, so is there really a need for discussion of their jets. No, it should just be demanded. Hey, you want some money, get rid of those jets, etc. End of story!

As was also mentioned in the previous post, the UAW needs get a grip on reality as well. They stated that they don’t feel concessions are necessary. I read recently that labor costs for the American made imported vehicles are approximately $41 compared to the Big Three which are at $71. Hmmm, does anyone see a possible problem with this equation?

As with any bailout, there needs to be concessions on all fronts for it to work. Everyone needs to have a stake in its being profitable again. Otherwise, it’s more like hooray for me and the heck with you. That attitude won’t work and surely does not belong in the equation.

And maybe not a bailout, but bankruptcy is the correct answer. This way there would be no need for asking for concessions. They would just be imposed by the judge overseeing the bankruptcy. Simple, done, wash our hands!

We know the bailout of Chrysler worked in 1979, but will it work this time? Will the Big Three change their ways? Will they have learned a lesson? Many more questions need to be asked of the CEO’s. There is an interesting article in regard to this matter written by Andrew M. Grossman (no relation, or at least I don’t know of one) for The Heritage Foundation, The Automaker Bailout: Questions Congress Must Ask the Automakers.

Let me know what YOU think. Another viewpoint is always appreciated and you might be seeing something that I’m currently not seeing. Thanks for reading.

Til next time Marc It Sold!

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