Foreclosure Protections for All

Not so fast.

Settlement conferences don't necessarily mean that the expenses of a workout will be passed on to taxpayers. What it can mean is simply that the bank does not make quite as much profit as it would have otherwise. The people stay in the house and the neighborhood is more stable than it would be otherwise.

The significance is, if foreclosures become widespread in an area (such as parts of Calif., Ariz., Florida, Nevada and Michigan), even job-holding paying homeowners can be forced underwater by just sitting there. Yet, people do need to move from time to time. Property goes cheap, Neighborhoods deteriorate and this benefits no one, Republicans included.

I am all too familiar with the workouts happening in Michigan, because my sister's house went into foreclosure. They were prime, not subprime, borrowers, with a prudent fixed-rate mortgage. The workout offered by Bank of America gave plenty of protection to the bank, but it was also very good for the borrowers. My sister and her hubby didn't accept it, however, they had other options, but people in another situation than theirs would have found it hugely helpful.

These things are just a little more complicated that the sound bites would have you believe. The details are the thing to look at. The 90 day warning is helpful also because information from the bank can be contradictory and confusing.

{Manhattan real estate agent}

Yup - throw more money at overpriced real estate! Sounds good to me.

How much is real estate worth?

How do you know?

Where does real estate worth come from?

We're in this crisis because otherwise intelligent people made incredibly stupid, short-sighted decisions, in the absence of regulations that in times gone by prevented these kinds of lending patterns.

The solutions being offered aren't perfect. But I guess you're too young to have spent any time in deep conversation with people who lived through the Great Depression. Avoiding another Great Depression is in your interest, whether you understand it or not, or have the educational background to understand why these proposals are being pursued.

i hope you're right. as has been often noted here, we are at a place where there are no good choices, just ones that hopefully are less bad. i remain confused and disappointed that the government is not being more forthright in explaining what they are doing and why; so many people (myself included from time to time) have an unfortunate tendency to assume the worst in the abscence of clear explanation.

i just wish that they would let the other shoe drop or explain why there is no other shoe to fear.

"I guess you're too young to have spent any time in deep conversation with people who lived through the Great Depression"

Actually, my great-grandmother was born in 1888 and I knew her well.

Propping up housing will not save us from a depression. All it will do is slow down the decline until prices realign with income and rents. What avoids a depression is a) flooding the market with liquidity, to increase the money supply; and b) government spending, to increase the velocity of money.

That's it. Supporting malingerers, flippers, fraudsters, or protecting someone else's equity (which in the long-term can't be protected) only crowds other people out of the market and extends the pain. Gains votes, but extends the pain and wastes a whole heck of a lot of money.

I more than understand the economics behind what is being done - this programme, however, doesn't do it. It props up the real estate industry, which caused this.

I didn't hear any realtors crying when prices were increasing astronomically, to save affordable housing. Seems like you want to enjoy the upside, but you want your ass covered on the down.

Nope.

How can this not result in even tighter lending standards --as it did in other downward spiraling markets-- and therefore more downward pressure on prices in NY. Though we have bought and sold several apts, never was the borrowing process more difficult --excruciatingly difficult---than when we bought in Miami last year. We have primo credit and had enough cash to cover the purchase price but it was impossible to get anything better than 30% LTV. If every apt purchase in NYC required 30% cash down, the market would take years to adjust and it would definitely favor foreign buyers.

Apt23, you're probably right. If renters can be removed from an apt easily after failing to pay rent, the upfront cost of renting would not be nearly as high.

Nothing will favor "foreign buyers" - too much exchange rate risk.

stevejhx: Foreign buyers are buying in the US for the greencards. And as far as risk, there is real upside to buy assets in US when dollar is so weak. They may not have the potential upside of dollar recovery because that doesn't seem imminent but the plus column is still more attractive than negative column at the moment. That is why they are buying in all the distressed cities. In this article from the Miami Herald, cut to the end, about how greencards are fueling foreign buying. You really don't think it could happen in NY?

http://www.miamiherald.com/business/economy/story/1310794.html?story_link=email_msg

So, for a half a million, you can basically buy a greencard, so foreigners are buying in many distressed markets. My bet: Next stop, Williamsburg. From Miami Herald:

Foreign buyers these days are also looking for an added return on their investments. Developers are taking advantage of a little-before-used visa program that makes it easier for them to get green cards when they invest between $500,000 and $1 million in projects that create jobs for U.S. workers.

Manrique is working with Sergio Pino's Century Homebuilders, which has launched an investor visa program to finish developing 350 acres at its Century Grand community in Doral. He was in Venezuela last month speaking to interested buyers.

``For them, to stay here legally and work legally, they have to have a visa, that's why the program is of huge interest to them. If you have the option to buy a house, but you don't have papers to live and work here, you start wondering what you're doing,'' Manrique said.

During the boom, real estate agent Evelina Dobyshava said Russians were snapping up condos in Sunny Isles Beach. When immigration plans fell through, she would simply sell for them. Now, she said, fear of not being able to land a green card is keeping many Russians from buying.

``They would rather come and rent something for $10,000 or $12,000 a month because still it will be much less money. Before it made sense because property was growing in price,'' she said.

A Russian developer, however, is hoping to launch its own investor visa program to raise money to finish the 50-story Solis Resort Spa & Residences project in Sunny Isles Beach. So far, 11 stories have been finished.

Dobyshava said she's confident Russian buyers will return. ``If they only have to invest half a million dollars,'' she said, ``I feel like I could sell those apartments in three days.''

how does buying an existing apartment in manhattan create at least 10 new jobs? that is a requirement for the eb5 visa program.

When housing prices are at truly affordable levels relative to income, it will favor everyone. Long term, this even include the ones who lost their homes to foreclosure. I would think even realtors would be in favor of regular income that comes from predictable/consistent sales volumes.

One thing many people fail to understand is that any law that cost a business to make less money in the short term usually result in having the cost distributed to the consumers in the long term. A business will continue to exist only if they can make a certain amount of profit relative to risk and capital used.

A democratically elected government is more interested in stability than anything else, even at the expense of the future.

would have to disagree: businesses can pass along price increases to consumers only to the extent that consumers accept them and continue to use the product or service at the higher price.

two: businesses continue to exist as long as capital providers believe it is in their interest to continue to fund them. and that determination cannot be reduced to one or two sentences.

and finally---stability would seem to be a prerequisite for having a future. no?

cc: I'm not exactly sure but from talking to a RE broker in Miami, this is how I think it works -- and I could be very wrong. You take a stalled project. You start an investment fund to take over the project and that new fund qualifies for creating jobs where there had been no jobs on the stalled version of the project. Therefore when you invest $500,000 you qualify for greencard. Of course, when you consider the exchange rate, it is a lot less in real value. In addition, you are allowed to buy an apt in this new property for a deeply discounted price -- whether your investment covers the price of your discounted apt is where it gets a little murky. So buying an existing apt, would not qualify but how many stalled construction projects are in NYC? Why couldn't this happen in W'burg? Perhaps this is why LeFrak is lobbying to change the greencard rules and make it easier to buy an existing apt and get a greencard. Maybe he sees this investor visa program as competition.

from the little i read, i think you've got it fundamentally correct. of course, there is risk (considerable to me) from the entity that is structuring the entire transaction, not to mention your co-- investors. doesn't seem like this is going to play a significant impact in ny; and, as noted, has not application where building is completed but unsold.

"Foreign buyers are buying in the US for the greencards"

You can't get a green card from buying a property. You need to invest in a business, not a place to live.

Unless you buy all cash, the exchange rate is a real problem, regardless of asset appreciation or depreciation. The problem lies in servicing the debt - you earn pesos or euros but your debt is in dollars. A slide in the exchange rate can very quickly bankrupt you.

CC, more short-term stability for less prosperous long term future is acceptable to law makers and most people they represent.

When a type of business if very profitable, more players will join until the profit comes down to Earth. As the profit begins to fall, they will find ways to increase that profit by lower lower cost and/or increase prices. Some players will drop out because the profit will get to a point where other type of business has better return on their capital relative to the amount of risk. Less players means less choices. Less choices means the business can increase prices more easily. Bottom line, the consumers pay for it at the end. The responsible consumers always pay the bigger share.

steve: as mentioned in the article, most foreign buyers are all cash buyers because they cannot get loans here.

Somewhere btwn holding your hands to buy a home and killing the soup kitchen there is a righteous path. The greencard/90 cool off period ain't it IMHO. We've given these 'prime' borrowers 1 full yr to get their financials in order. If you are popping into foreclosure now, the joke's on you prime lemming.

From w67, aka joker.

"Seems like the best thing you can do is borrow what you can't afford, and let everybody else take the hit."

That's unfair, and at this point, largely not true at all.

In my conversations with people in the real estate industry, the first wave of foreclosures was, in fact, largely a result of people overspending, using exotic mortgages to hold and flip, and like the game of musical chairs, got caught standing when the music stopped.

This new round that's just beginning, however (which will start hitting co-ops particularly hard), has nothing to do with people overextending themselves (otherwise they wouldn't have passed muster with the boards in the first place). What we're seeing now are foreclosures initiated because responsible buyers *lost their jobs*, have been unemployed for more than a year, and have literally run out of money and can't afford to pay their bills.

No one saw this coming (actually, some DID, but the media and the "experts" paid them no attention, and thus didn't pass word along to the general public). The conventional wisdom held that you keep 3 to 6 months' worth of living expenses in the bank. And most people did that (particularly co-op buyers, who were required to show proof of post-closing liquidity).

That's fine, however, for job loss in a healthy economy. Now we're seeing people who've blown through their their savings, investments, retirement accounts, and even home equity lines just to survive, and now they've reached rock bottom.

This legislation is designed to protect THEM from being homeless by at least buying them some extra time to find employment.

It's easy to be judgemental when you have a job. But as someone who's currently hosting TWO homeless friends in his apartment (one a lawyer out of work for 16 months, another an unemployed architect -- both of whom lost their apartments), I can tell you it's damn scary out there right now. If such talented, skilled, and educated people need to share a sofa at a friend's place just to keep a roof over their heads, trust me -- it can happen to you. AND me.

The Govenment shouldn't be using tax dollars to reward and placate the unlucky, greedy, or just plain dumb. First we heard that the banking industry needed to be bailed out because otherwise we would face Armegeddon. Now we hear that every underwater homebuyer needs to be bailed out, otherwise they face living with a higher principal payment than if they had waited a few years? Or maybe they would be forced to move to a place that was more affordable and take a hit to there credit rating?
The long term cost of our bailout mentality and defacto nationalization of risk can't be calculated yet, but the price will dwarf the inconvenience of looking for a new home and accepting a lower credit score.

"Now we hear that every underwater homebuyer needs to be bailed out, otherwise they face living with a higher principal payment than if they had waited a few years? "

No.

Otherwise they face FORECLOSURE, and the prospect of having NO PLACE TO LIVE.

"No one saw this coming"

Yes we did.

""No one saw this coming"

Yes we did."

I did qualify that statement. Re-read my post.

And good for you, if you did. Most of America did NOT expect to see the entire banking system melt down, throwing us into the Great Depression of the 21st Century.

"Otherwise they face FORECLOSURE, and the prospect of having NO PLACE TO LIVE."

If they have a budget they will find a place to live. Are you suggesting the homeless shelters and bus terminals are filling up with people who could afford market rents, but all the landlords are turning them away?

"No one saw this coming (actually, some DID, but the media and the "experts" paid them no attention, and thus didn't pass word along to the general public)."

This is untrue. The general public had every opportunity to prepare themselves. I talked to many regular people at the time who saw this coming, but like the banking industry and the real estate industry, no one wanted to listen to them as long as the easy money was flowing. No one (or very few) people were deceived, they just had a vested interest in beliving the unbelivable.

they had a yr, fuck them... nycmatt, should we reward stupidity?

so you matt would be a captain of a firehouse as your lowest grade would put you on top... flamo

NYCMatt, you're a good friend. Hopefully your guests have not made you regret your generosity.

I think the new round of foreclosures do include prime borrowers who made decisions to borrow more than they can afford. They just happen to have more resources to avoid foreclosure longer.

I would feel very uneasy with only 3 to 6 months of living expenses in the bank even with a steady job. Maybe that's because I have a couple of kids and I remember what it was like to have no money.

"If they have a budget they will find a place to live. Are you suggesting the homeless shelters and bus terminals are filling up with people who could afford market rents, but all the landlords are turning them away?"

Let me explain to you how this works.

You lose your job. You don't expect to be out of work for more than a year (no one really does -- or at least at the time this whole mess started DIDN'T). You start collecting unemployment at the princely rate in New York of $405 per week (which for most people just covers food, cable/internet, and ConEd). You dip into your savings for everything else (health insurance, phone bill, cell phone bill, homeowners insurance, transportation, and of course, the two big-ticket bills, mortgage and maintenance.

After six months, your savings is gone. Now you start cashing in the 401(k), paying insane penalties. After another six months or so, THAT is gone. Now you start tapping the credit cards and the home equity, all the while expecting that *any day now* you'll find a job.

Eventually, you're down to your very last $4000 or so -- which at this point is all the money you have in the world. Your credit is maxed out. You are forced to stop paying the mortgage because you need that money just to keep the lights on and food on the table.

Eventually, you're going to have to either sell your apartment, or wait for the foreclosure to happen. When either of those scenarios DOES happen (as it is starting to for many New Yorkers, my friends included), where is it do you think these people can go? Even moving to a shit hole in the Bronx will cost you $1000/month, first and last month's rent plus security deposit, and the cost of actually MOVING. All told, at best, that's $6,000 that YOU DON'T HAVE. And even if you did, once you've moved into your new shit hole, how long do you think you can survive on NO savings and $405/week on unemployment. And what happens when the unemployment runs out? Good luck trying to find even a subsistence-level job waiting tables (most places, believe it or not, require at least FIVE YEARS of full-time wait experience!), or doing office temp work (even the professional office temps can't find work).

So where do you go? On your friend's sofa. If you can find someone who can take you in.

"I would feel very uneasy with only 3 to 6 months of living expenses in the bank even with a steady job. Maybe that's because I have a couple of kids and I remember what it was like to have no money."

Sunday, I think once this depression is behind us, like our grandparents did back in the '30s, this generation of Americans will have adopted a new paradigm of saving. One to two YEARS will be the new three to six MONTHS when it comes to your savings cushion.

NYCMatt, your great-grandparents didn't have credit cards.

Matt, you do paint a grim scenario. In that case, I am happy to have my tax dollars and my daughter's future debt load go to bail out your unemployed lawyer and banker friends who need to live in Manhattan with families and stick it out until they hit rock bottom. Glad I can help.

"NYCMatt, your great-grandparents didn't have credit cards."

What difference does that make?

"I am happy to have my tax dollars and my daughter's future debt load go to bail out your unemployed lawyer and banker friends who need to live in Manhattan with families and stick it out until they hit rock bottom."

Working and living as a professional in New York City often means that the only place your industry or need for your specific skill set exists is IN New York City. And in case you haven't noticed, this unemployment is nation-wide, not just here in New York. Moving to be unemployed in Cleveland won't help anyone.

Oh yes. How'd that fable go where the entire town went I to starvain mode to let the greedy fucker keep his rolls Royce!!!!! Nice Matt.

"What difference does that make?"

Uhm, you don't need to pay for things in cash in the short- to medium-term?

"Uhm, you don't need to pay for things in cash in the short- to medium-term?"

All the more reason why this depression in many respects is worse than the Great Depression; even with the cushion of credit, people are losing their homes.

When the manufacturing jobs left it was too bad. When the dot com bubble crashed it was too bad. When the recent recession started it was too bad - unless you bought a home! Then your lifestyle and assets must be protected, no matter how unsustainable.

How about extending unemployement benefits and creating job programs that improve the nation's infrastructure? Instead we throw money at propping up an asset bubble.

Bankers and lawyers should understand risk. You are defending taking our scarce national wealth to give to incredibly educated people who choose a lifestyle (including the 100% premium to buy an apartment) that could only be supported in a single city at a handful of firms, who then watched as the underlying system crumbled over the last two years without making any Plan B.

"When the manufacturing jobs left it was too bad. When the dot com bubble crashed it was too bad. When the recent recession started it was too bad - unless you bought a home! Then your lifestyle and assets must be protected, no matter how unsustainable."

When the manufacturing jobs left, we didn't have an effective NATIONAL unemployment rate of 22% like we do today.

Ditto for the dot-com burst.

Apples and oranges.

And extending paltry unemployment benefits in a city that barely cover food and electricity -- once household savings are gone -- isn't going to help anyone.

And it's unfair to assert that these people didn't have a Plan B. They DID. But no one was expecting the kind of rampant and LONG TERM unemployment we're faced with today.

"people are losing their homes"

They aren't thier homes, they are the banks'. I've lived in probably a dozen houses/apartments in my life and moving was never considered a tragedy.

Funny how three years ago people would proudly say "oh, this is just a starter apartment. We will flip it for a profit in three years and move to a better place." Now having to move is considered unendurable suffering, especially if it is moving across a river or 96th St.

"I've lived in probably a dozen houses/apartments in my life and moving was never considered a tragedy."

Not everyone likes to live like a gypsy.

Especially if you have kids, and you don't want to uproot them out of their zoned schools.

And we're not talking about "moving" as we've always known it. Moving is such a hardship today because many of these people are so broke they CAN'T AFFORD TO MOVE -- there's no money left for the rent and security deposit for the new place, nor is there any money left to pay movers.

"even with the cushion of credit, people are losing their homes."

The credit was the problem. It's one thing to overborrow to buy a house; quite another to borrow unsecured to pay living expenses.

You say, NYCMatt, that people didn't see it coming but many, many people did, they chose to ignore it. They are still ignoring it. There is a lot of risk in the market right now. There are many pundits and books and learned financial experts who have expressed the possibility of a second major leg down in the financial markets. Yet people still ignore the risk.

Take the people who way overpaid for apts at The Caledonia --or a multitude of other buildings. If they have ever read a newspaper they would know that currently the govt is supporting the market and giving them an opportunity to sell. But are they? No. Those that are selling are not putting their apts on the market for discounted prices just to save their asses. They are trying to flip the apts for more than they paid. They seem unaware that paying $1700 psf for a building next to a project and a noisy club is insane. So, unless that multitude of young professionals who live there are trust fund babies or are smart enough to have a few decades worth of savings to tide them over till the RE market hits $1700 psf for a very average apt again, all those people are going to end up on your couch.

When do we stop bailing out these people who should know better and start investing in jobs and infrastructure. What about saying that starting today, if you don't get out of your overpriced apt. you don't get bailed out if there is another leg down. If you paid $1700 psf, you are on your own.

"The credit was the problem. It's one thing to overborrow to buy a house; quite another to borrow unsecured to pay living expenses."

Not in the case of people who bought within their means but lost their jobs and remained unemployed for more than a year, blowing through their savings.

"Take the people who way overpaid for apts at The Caledonia --or a multitude of other buildings. If they have ever read a newspaper they would know that currently the govt is supporting the market and giving them an opportunity to sell. But are they? No. Those that are selling are not putting their apts on the market for discounted prices just to save their asses. They are trying to flip the apts for more than they paid."

Again, wrong.

I am talking about people who didn't overextend themselves, but who lost their jobs, remained unemployed as a group longer than any group since the Great Depression, and simply ran out of money.

They're not selling their apartments at discounted prices "just to save their asses", they're not discounting BECAUSE THEY CAN'T AFFORD TO.

"No one saw this coming (actually, some DID, but the media and the "experts" paid them no attention, and thus didn't pass word along to the general public)."

We saw this coming - check out google trends - the peak of the search for "real estate bubble" was in 2005 - why have people forgotten how much everyone was screaming that people were stupid to be paying 2006, 07, and 08 prices? http://www.google.com/trends?q=real+estate+bubble

Why do people think foreclosure is so bad? So what!!! So you've got to rent like 66% of the rest of the people in the city. If you lost your job and can't pay your mortgage then why should the bank have to house you for free? Get out - move on - move in with family, friends, church members, rent a room or go to a shelter. You don't die!!! You just have to rent.

Then someone else can come in an buy your old house at a much more affordable price. I'm screaming here for affordable housing. Prices got way out of control and have to fall a lot further before they become affordable. Why the government continues to want housing to be unaffordable is beyond me. I would expect such behavior from Republicans but not the Dems. It's just terrible social engineering - in an effort to help a few you screw over millions.

Amen and Shalom JM.....

"They're not selling their apartments at discounted prices "just to save their asses", they're not discounting BECAUSE THEY CAN'T AFFORD TO."
Why should the bank not be allowed to take back their (the banks) house? Why shouldn't these people be forced to move? It's just moving - people do it all of the time. My wife has move 25 times in her life.
Move out, move on - let someone else move in at a lower, more affordable price.

Matt, if tax dollars are to be used to bail people out it should only be as a last resort. Only after people move to less expensive cities. After people move in with friends or families. After people change careers and drastically downsize thier lifestyles.

I have sympathy for a person living in PA with a modest income who is laid off from a job and doesn't have much room to downsize. But a person who made 800K last year and lives in a classic seven on the UES and expects the taxpayer to maintain their standard of living? Not so much.

There are only two arguments for why we should bail them out:

One is out of sympathy or pity. Highly paid lawyers and finance people don't have much "sympathy equity" in our society by their own making.

The second argument for bailing them out is because they are a national priority. I suggest that if they were making seven figures a year ago - after having gone to a top school for 6+ years and working with the brightest in the country, if after all that they are coming after MY tax dollars one year after being laid off - well, I suggest that they aren't that exceptional and the country would be better off if they learned a trade and moved to a less expensive city.

"It's just moving - people do it all of the time."

Not if they have no money TO move.

"But a person who made 800K last year and lives in a classic seven on the UES and expects the taxpayer to maintain their standard of living?"

I'm talking about someone who was making $90K, living in a one-bedroom on the Upper East Side, who lost their job a year ago and ran out of money. And I'm not talking about the "taxpayer" "bailing him out". I'm talking about legislation that would force banks to work with these homeowners in restructuring their debt (corporations do it all the time -- why can't individuals?) until their financial picture brightens. This has nothing to do with "tax dollars".

"Why should the bank not be allowed to take back their (the banks) house? Why shouldn't these people be forced to move?"

Because, quite frankly, it was the banks who fucked up the banking system, throwing the entire economy into a depression, and nearly 1/4 of the working population into unemployment.

"I'm talking about legislation that would force banks to work with these homeowners in restructuring their debt"

These people can't afford thier debt. The only restructuring will be with more taxpayer guarrantees to the bank that they won't lose money. And who pays for the administration and enforcement of this legislation?

"These people can't afford thier debt."

Not at the moment.

Unemployment is temporary. What I believe we need is legislation forcing banks to restructure until the mortgage holder is re-employed. Even if it means paying only a portion of the interest, and tacking the balance on the back end of the mortgage.

"Not if they have no money TO move."

Really - this is your argument as to why we shouldn't allow banks to foreclose on their homes? Because they don't have any money to move?

Who doesn't have enough to move? You mean someone bought a house and then ran out of all of their money and were dumb enough not keep a couple hundred bucks for movers and don't have any possessions that they can sell to get a couple of hundred bucks to pay for movers, and they can't get a cash advance on their credit card, and they don't have any friends who will help them move and they don't have any family who will help them move and they don't have a church who will help them, and don't have any legs so they can't just move their stuff by carrying it? If they don't have anything to sell to get the money to move then why do they need movers?

Certainly the bankers were stupid and they should have been nationalized (it really pisses me off that there is such thing as a bond holder of Citi bonds - asinine) - but the Dems didn't want to see their banker friends get hurt so we bailed them out and have created banks that are now really too big to fail.
BUT, if the homeowners paid their mortgages that they agreed to pay the banks wouldn't be having these problems. Now the banks should be allowed to take their property back, then they take a huge hit, and sell the homes at much more affordable prices.

People should move, homes should foreclose, banks should take the hit, and a new buyer should move into their new home at a much more reasonable and sustainable level. It's just what's best for our city, country, and citizens.

NO ONE was forced to buy an unaffordable and/or over priced home! Even if one can afford it, that does not mean one HAS to buy it! Anyone who bought/upgraded in the past few years have no one to blame if they end up foreclosing.

Banks are partially responsible, but they should not be taking more than 50% of the blame.

"What I believe we need is legislation forcing banks to restructure until the mortgage holder is re-employed. Even if it means paying only a portion of the interest, and tacking the balance on the back end of the mortgage."
This could work - but why would you have the government involved - it's the bank's decision. You can't have the government getting involved in private contracts. It would ruin foreign investment in the US.

"a couple hundred bucks for movers"

When is the last time YOU moved?

My move cost me $3700 three years ago.

"BUT, if the homeowners paid their mortgages that they agreed to pay the banks wouldn't be having these problems."

These people WOULD be paying their mortgages "as agreed" if they were still EMPLOYED.

"My move cost me $3700 three years ago." - My last move cost me $5K. If your move cost $3,700 then isn't it safe to say you have more than $3,700 worth of stuff? Otherwise you wouldn't move it and you would take your $3,700 and just buy new stuff for your next place. If you don't have money for movers then you certainly shouldn't need to spend $5K for a move. So now what, you think that the people who are getting foreclosed on should stay in their house because they deserve to keep their $5,000 mattress, $8,000 couch, $3,000 tv etc - God forbid we would expect these people to sell these things to pay for their movers.

If you lost your job it's not the banks fault. You didn't sign a note that said you'd pay your mortgage only if you were employed.

I'm a landlord and have loans with the bank. Should the bank not foreclose on me because my tenants aren't paying their rents because they are unemployed. Or should the bank be allowed to take back THEIR BUILDING? I signed a note - I said I'd pay - there is no clause that allows me a payment respite because my tenants lost their jobs.

and NYCMatt - I thought you were a capitalist?

Matt, I respect what you are trying to say. I just disagree with you. Like the Jazzman said, 'leave the government out of it'...

" If you don't have money for movers then you certainly shouldn't need to spend $5K for a move. So now what, you think that the people who are getting foreclosed on should stay in their house because they deserve to keep their $5,000 mattress, $8,000 couch, $3,000 tv etc - God forbid we would expect these people to sell these things to pay for their movers."

Don't be naive. No one buys second-hand except at ridiculously steep discounts. It's unreasonable to expect someone to sell a bedroom set for which they paid $12,000 for $800. Or family heirlooms.

"f you lost your job it's not the banks fault."

In this economy -- for most people, it IS the banks' fault. Collectively. They fucked up the economy.

"and NYCMatt - I thought you were a capitalist?"

I am. I'm a free market capitalist, in favor of a completely free market system, with a level playing field for all.

But as long as BANKS are allowed to act recklessly with impunity -- "moral hazard" -- knowing full well that the government will bail them out, then the same protection should be afforded consumers.

What's good for the goose is good for the gander.

These people WOULD be paying their mortgages "as agreed" if they were still EMPLOYED.

When you buy a house, you must plan for unforeseen events. If you bought in 2004 or after, when every financial advisor on the planet was forecasting a real estate bubble then you are an idiot if you are educated. If you are not educated, then perhaps you got caught up in a whirlwind you didn't understand. But let's face it, anyone who bought after 2004 was after financial gain riding a bubble. And worse, they are personally responsible for the disparity between affordable and ridiculous housing. They made a bet and it didn't pay off. If they didn't plan for at least a year or even two for the unlikely circumstance of being unemployed during a bubble then they didn't do their homework. You didn't need to go back to the depression, you only had to realize what happened during the dot.com bubble when young wiseguys lost EVERYTHING.

Btw, I have moved over 20 times and never had a mover till I was over 30. I moved last week from a beautiful, luxe apt because Glenwood raised the rent. I didn't want to move, but it was prudent to do so -- in spite of the fact that it would have been easy to dip into my hard earned savings-- more than 5 years of living expenses. So, I am not happy to pay for the guys who lived off $500 bottles of vodka and lap dancers over the past decade. Jazzman is absolutely right. If you have a college degree and you get to the point where you can't afford to move then you are a pathetic, entitled loser. To bail out the idiots who kept buying fancy apts when they were gambling is unacceptable.

To bail out my cleaning lady who is kind and honest and was solicited by and completely hoodwinked by Countrywide is another matter and as a nation we should help out the dispossessed. I feel bad for your friends on your couch, but you are enabling their unsustainable notions by heaping pity on someone who can't "afford" to move. Americans have a notion of entitlement that is crazy.

When did Matt go from a "suck it up" hard-line individualist to someone who thinks it's ok that someone doesn't have the savings to move?

"When you buy a house, you must plan for unforeseen events."

Mass unemployment of more than a year hasn't been seen in this generation, or even the previous generation. No one foresaw this.

"If you bought in 2004 or after, when every financial advisor on the planet was forecasting a real estate bubble then you are an idiot if you are educated."

Real estate bubbles are one thing. If you buy within your means, even in a bubble, you can afford it regardless of the property rising or falling in value. Mass unemployment is quite another, regardless of whether you bought within your means or not.

"If they didn't plan for at least a year or even two for the unlikely circumstance of being unemployed during a bubble then they didn't do their homework. "

Americans have never had to make such a plan for the past 70 years.

"Btw, I have moved over 20 times and never had a mover till I was over 30. I moved last week from a beautiful, luxe apt because Glenwood raised the rent. I didn't want to move, but it was prudent to do so -- in spite of the fact that it would have been easy to dip into my hard earned savings-- more than 5 years of living expenses. So, I am not happy to pay for the guys who lived off $500 bottles of vodka and lap dancers over the past decade. Jazzman is absolutely right. If you have a college degree and you get to the point where you can't afford to move then you are a pathetic, entitled loser. To bail out the idiots who kept buying fancy apts when they were gambling is unacceptable."

OK, now you're just being a cunt.

I haven't been here in a while but this bothers me as much as people who say that the $175K limit for rent stabilization should be raised because it is tough to raise a family of 4 on just $175K. Personal responsibility should be regardless of a renter or a buyer. And maybe a lawyer sleeping on a couch ought to open a small business, a laundromat, whatever, realize that maybe the law wasn't the right call but that he or she still has the innate intellect that makes a lack of personal responsibility inexcusable .

Matt, movers don't have some kind of magic telekinetic powers to move furniture. Regular people can do it too! As a good friend you should offer your help, I've helped friends and family move plenty of times.

Anyone who believes that it's ALL the banks' fault has not learn the proper lesson in this recession. People need to take responsibility for their choices.

"Because, quite frankly, it was the banks who fucked up the banking system, throwing the entire economy into a depression, and nearly 1/4 of the working population into unemployment."

Yes, let's just blame the banks, not ourselves. After all, it was they who bought overpriced assets with massive leverage all the while ignoring fundamentals of underlying value and not looking at the possibility of seemingly unlikely events. We did nothing of the sort, right Matt?

Real estate bubbles are one thing. If you buy within your means, even in a bubble, you can afford it regardless of the property rising or falling in value.

If you can afford the million dollar tulip, we should feel sorry for you and bail you out when it turns out to not have been a good investment and you couldn't sell it and make a profit and pay for an expensive mover to move your family when you lost your job and your personal circumstances changed? You are an idiot.

"I am. I'm a free market capitalist, in favor of a completely free market system, with a level playing field for all."

Matt, on this thread, you're fighting a fight you don't even believe. 2 wrongs don't make a right. The banks messed up but not nearly as bad as the general populous did. Our government made a huge mistake in bailing out the banks and rich bankers, but the sooner we get back to sound economic principles the better. Get people out of their overpriced homes, reset the value, and have the bank sell it for a lot less. We need this to happen in order to get things right again.

i really hate to support matt, goes against everything in me, but there is a middle ground here. banks refused to do mods in cases where it would have worked because they felt they would be better off letting the foreclosures happen and they would make more money. well, gee, that's not true because the foreclosure rate is so much higher than the banks "anticipated" so that now they'd be better off doing the mods. but guess what. in the time that they've spent not doing the mods, they're no longer possible because the situation has deteriorated so significantly.

sadly, we the people now own most of the mortgages at risk. we have no good choices. the bank losses will become our own. the losses of the homeowners will become our own. but what we really need to think about is the extended effect of such losses, collateral damage if you will. your grandmother who lives in a declining but not awful community may find herself at risk of crime, poverty, and the like, as the community becomes truly awful due to foreclosures.

there are no simple answers. none. and drawing the line in the sand on one side or the other is purely simplistic. apt23 carves out an exception for someone. matt carves out an exception for others. but what we need is something that does the greatest good while doing the least harm. so far i have not seem anything of the sort from the last or current administrations. and now, sadly, it is probably too late to legitimately assist those who could have been likely candidates for successful mortgage mods.

but to just care about your daughter and her future, and not realize the tremendous amount of suffering that is occurring today, sometimes due to greed and folly but at least as often not due to naivete, is very shallow. many, many people did not buy to make the big bucks. many bought to buy a home, thinking that if they couldn't do so now they'd be "priced out forever." inonada, no, it's not appropriate to just blame the banks, but once again in the transaction i'd say the mortgage originators ought to have known better, they should have been taking part in the risk, and should have the banks. please, there should be huge amounts of shame there. huge. and his orangeness still walks free.

"If they didn't plan for at least a year or even two for the unlikely circumstance of being unemployed during a bubble then they didn't do their homework. "

Americans have never had to make such a plan for the past 70 years.

That is bullshit. Dot comers lost jobs, companies, and millions of dollars during the last bubble just a scant 7 years ago. Short memory. Many were unemployed for years. And, please note I was talking about these guys buying and spending in what everyone agreed was a BUBBLE!

OK, now you're just being a cunt.

Really? Because I expect people with extremely expensive educations to be accountable for their actions -- unlike the poor and uneducated who are usually just sucked into these events?

I would posit that your whining about not being able to move because you can't come up with $3700 is exactly why a good percentage of the world hates Americans. Do you think the Hutus were complaining that they couldn't get a good mover on the phone before they were forced to march with all their belongings and their starving children across the desert? No, they just did it. Pls read Jazzman comment re: moving, above. It is the absolute truth you whiner.

So you believe people just have $3700 lying around and if not then they aren't as good as Hutus?

"but to just care about your daughter and her future, and not realize the tremendous amount of suffering that is occurring today, sometimes due to greed and folly but at least as often not due to naivete, is very shallow"

Oh christ. More of the "having to move is tremendous suffering" crap, and it took four paragraphs.

Explain to us how you live with fences around your life and aren't affected by the environment.

chasingwamus, no. i pointed out that you're paying for the results regardless. do you get that? you're paying as a taxpayer regardless of whether or not someone is allowed to keep their home. and you're probably going to be paying more if they're not.

it's not having to move, it's being homeless. and it's increasing rapidly. and it's the damage that's occurring in neighborhoods that are becoming crime-ridden rapidly. it's not just the people who have to move, it's the people who are left remaining in the neighborhoods that are now blighted. of course you don't see that, nor do you wish to think about that.

I am amazed at the level of evil that is coming from some of these posts. NYCMatt you seem to have a realistic approach to what you are saying and you are a very good friend to let your less fortunate friends stay with you.
The people on here who think it is better for a bank to foreclose on someone rather than trying to work it out with the homeowner is just plain stupid. If a property gets taken back by the lender and is sold to another buyer at a steep discount, compared to doing a workout program with the current owner. The workout program is usually more coast effective for the bank. It is quite expensive to foreclose on someone, and if the bank is going to take a hit on the principal anyway it just makes more sense for the bank to reduce the principal to the current owner (less homeless people make for a better society). It is funny to hear some of these post as I am sure they are just so pissed off that they are not getting a piece. I have some greedy ass friends who sound just like most of you. Example, Friend A makes 450k per year and has earned this much for a good amount of time. Owns many properties and had a few million in the bank as well as in other investments. This person has been slandering the current programs that have been put out for "responsible" homeowners who are victim to job losses.
A month ago my 450K friend lost their job and now they qualify to work out their mortgage to a 2% interest rate, they are so excited by this that once this is done they are going to go out a buy a porsche with the monthly saving from their mortgage. The folks that NYCMatt are speaking of, are the people these programs were designed for "responsible" homeowners who have lost their jobs and have exhausted their savings. These programs do not look at assets, they look at change of income only. If the banks weren't so sluggish to come on board with what needs to be done, we would be further down the road in regard to the housing crisis. If you have any anger about "taxpayers" taking the brunt of this... Blame the banks not the government. If the banks (who received Bailout money) were willing to work with homeowners without being forced by the government this would not be a "taxpayers" issue.
On another note, last I checked... Underestimating RISK is considered Fraud... Where is the justice when it comes to the bankers who made the decisions that put the world into the disaster we are currently in.

Yes, we are all paying for the greedy and stupid. The result is the unknown - after the dust settles will we have affordable home prices and a banking system, legal system and currency that the world has faith in?

So what is your solution wiseass?

"it's not having to move, it's being homeless. "

THANK YOU.

When you've run out of money and the foreclosure is happening right under you, there is NOWHERE ELSE TO GO, because the money has RUN OUT. There is no moving to "someplace cheaper". Someplace Cheaper doesn't exist in the world of $405/week unemployment checks.

Matt, I suppose you think landlords should also be forced to reduce the rent to a level that an unemployement check can cover? If not, why?

So homelessness is better than landlord concessions?

chasingwamus, no. we won't. we may have more affordable home prices, and in much of the US we now do (except of course that people keep losing their jobs), but we will have and have had declining real personal income after expenses.

we're a terribly declining empire that has had fantastic higher education. now that is being threatened, and was terribly diminished during the last administration. our science grants declined horrifically. look at what is happening to the california state system. we're doomed if we can't come up with something soon.

Apples and oranges.

For one thing, it's a hell of a lot easier to move out of an expensive rental than it is to move out of an expensive co-op or condo that's currently underwater.

For another, the landlord depends on that income to actually pay for the building, and its associated costs.

Banks only hold mortgages. Chase is in a much better position to delay receiving payments on mortgages than landlords are to receive rent payments.

"Get people out of their overpriced homes, reset the value, and have the bank sell it for a lot less. "

And put them where?

" And maybe a lawyer sleeping on a couch ought to open a small business, a laundromat, whatever, realize that maybe the law wasn't the right call but that he or she still has the innate intellect that makes a lack of personal responsibility inexcusable ."

Are you seriously for real?

Someone who loses their job through no fault of their own -- after a successful career -- you're saying wasn't the "right call" for them?

They should just open a small business? A laundromat? Or whatever?

Ever try to open a small business? How the hell can someone who can't even afford to rent an apartment come up with $40,000 to start a small business?

A couple years ago I thought about getting out of broadcasting, and opening a laundromat. Do you know what kind of investment is required? After buying a piece of property (or securing a long-term lease), you have to pay the city a one-time tap-in fee of -- get this -- $10,000 PER WASHER. Even a small laundromat with just 10 machines will set you back $100,000 just for the start-up tax.

"The people on here who think it is better for a bank to foreclose on someone rather than trying to work it out with the homeowner is just plain stupid." This is not my stance - I think it's better for the bank to work something out - what is evil is encouraging our government (in a fascist way) to come in and regulate private contracts. Keep them out of this. Friends, family, civic groups, and churches are there to pick up the pieces, we don't need the government to take on this role of sympathizer - it's much better done (like everything else) by the private sector. (Matt is much better at helping his friends than the government is - his friends don't need a government bailout because a friend is there to bail them out).

Further what is evil is making our kids pay for our mistakes. Our lives should suck - collectively we as a society spend money we didn't have - to borrow money from our kids to pay for our mistakes is what's evil.

Omfg. Why don't we just charge people 5% on their money in the bank for not spending it? Ay caramba!!!!! When did saving and living within one's means become un-american. So my kids should get a cc at age 10, cell phone at 7yo, mortgage at 18, get knocked up at 15, take crack at 12, and spend every waking moment thinking about prada shoes. Seriously wake me up when living in NYC is no longer a 'right' afforded to every dog walker, borker and hangers on.

"NOWHERE ELSE TO GO, because the money has RUN OUT" yes there is - you move in with your family, your friends, your church members whatever - whoever - you rent a room for $100/week if you can afford it - you go to a shelter if you have none of the above. Then you re-tool. You work hard, and eventually you get back on your feet - YOU DON'T DIE!!! Suck it up Matt - pull up your boot straps - borrow money from my kids because your friends couldn't make their mortgage payments is asinine. We should pay for our own mistakes.

Jazzman, which civic or church group do you belong to and support that is covering people's housing expenses because we know you haven't invited anyone on to your family's couch.

I am a liberal because I have grown up in countries where most of the population is homeless - Libya for example. To equate homelessness with a $450 per week benefit with homelessness as it exists in most of the world is appalling. It is extreme hubris to think that you can't downsize because you can't bear for your children to leave their private schools, that you stay where you are because you can't afford a mover, etc. It pushes every button in my entire psyche. If you live in America, you have no idea what WANT is.

I agree in most part with AR on many political points. But she is wrong to suggest that I am asking for one exception. I think the education system in this country sucks --about economics, about death, about a multitude of issues. I believe we should bail out a majority of people that we failed to educate and essentially brainwashed through endless marketing ploys and commercials. They are pawns in this system. If they end up homeless, it is bad for us all.

But most of this thread was about Manhattan. And I stand firm. People who bought into a known bubble after 2004 and continue to buy at ridiculous prices should be subject to a moratorium. If you have 2 million to buy an overinflated apt. you should be on your own and quit whining about not being able to pay to move or that in spite of a multi million dollar education, you did not have enough savings to get you through even one year. How many of us over the years in Manhattan saw them buying $1000 strollers, $2000 handbags, And now they are broke and as jazzman says, they can't figure out how to sell belongings to pay for a mover. It makes me crazy. Move your belongings yourself or give them to people with more needs. I don't believe we should bail out anyone who has a jumbo loan. That is my line in the sand. They are Liberace Lemmings -- all show, no substance.

"So homelessness is better than landlord concessions?" Why all this crap about homelessness - everyone in NYC has a place to sleep indoors - it's mandated by the courts.

Matt. Just heloc it. With our govt programs your couch can serve as collateral.

Jazzman let me take a 15 min nap on his couch. Is that civic enugh?

jazzman, it's also horrible to make our elderly pay for our mistakes. you do realize that the number of people relying on soup kitchens has skyrocketed? and we're not just talking about the stupid baby boomers. we're talking about people like my father-in-law, who's 86, and has lost a huge amount (401k) and has little interest income (although he himself is doing ok, he just has so many stories of others).

we all will have to pay. nobody denies that. but just deciding that all people who are having trouble paying their mortgage should be kicked out doesn't necessarily lead to the result that saves the most money long term. actually it doesn't at all. but it might lead to the greatest decline in property values, which might make some happy. winners and losers, which one will i be today.

JM, I agree with you totally but being that the government has extended a bail out to wall street (who caused this mess) they must do something for main street if the banks are not cooperating.
I am all for free markets... Personally, I would have preferred if the Government did not bail out wall street, then we would have a true free market.

"And put them where?"
On your couch - in their parent's basement - in their kid's living room - on their Rabbi's floor - it's a society, we're the greatest nation ever - let us help each other out - you're proof that we're willing to help - keep the government out of this. They are brainless, inefficient, and corrupt and you know it - giving them more power, making them even bigger than they are now is not the answer - you know their role is not to make everyone's life happy - for instance, the lady in Brooklyn the other day who tragically lost her husband - it's sad, but why did the government pay for the funeral? They were both working, they should have had life insurance - we can't bail everyone out - what's going to happen when the big earthquake finally hits CA? People there know it's going to happen - they can't get earthquake insurance - are we going to pitch in a reimburse people for their $4M homes in Malibu? People should take care of themselves and if they can't then other people (not the government) should be there to help.