Plus, not a good deal at all for people who have pensions invested in these mortgages.

make need to be changed?

If the cities want to do something to help, they should seize the empty properties, clean them up, then offer low interest loans for longer terms (keeps payments down) to low and middle income families that want to buy a home.

Because the Federal government socialized the banks losses and left the mortgage owners out to die in the wind.

If we're going to have the government socialize losses, then we need to do it for everyone, not just the richest and wealthiest among us.

The way I look at it is that both the bank and the borrower went in on an investment. The investment tanked, so both parties should suffer losses from that, it shouldn't all be on the borrower. Especially if the Government has already given the banks a ton of money specifically to reduce mortgage principle in order to avoid future defaults when the banks have refused to do so.

I agreed to pay a certain price for my house, knowing that there was no guarantee that the value would continue to grow. It didn't grow, and in fact fell drastically. But so long as I'm able to make the payment, I don't believe I should expect a write down. The value of my home has nothing to do with my mortgage amount, i.e., so long as I keep my job, it's not harder to make my mortgage payment now than it was when the house was worth much more. I feel that I have an obligation to pay what I agreed to pay, so long as I am able to do so. YMMV.

And the homebuyer makes the investment, using the bank's money. The bank isn't investing in the property, so why should the bank take a loss when the homeowner is able to make the payments?

They made the loans knowing all the risk. Somehow it's OK to prop up the banks but not the individuals? Then these banks seize the homes and refuse to pay the property taxes on them and devastate the communities they're in. We're just supposed to sit back and eat that. Screw that, and screw them. Want to make loans to people you know they can't pay and then whine and cry when they fail, then you get to have society tell you how things are going to work.

The loans they're talking about taking over aren't loans that they made to people that can't pay them. That's obvious, since the cities are only looking at taking over properties on which all the payments are current.

In fact my mother is underwater but can't get a federal loan mod, and the only reason she's making her property taxes is because I'm propping her up year after year. Mortgage owners who are underwater are the most likely to lose everything, that's why they're targeting them.

And who cares, so they get a break, good for them, at least for once it's the little guy instead of the big corporations that is getting a good deal. These scum bag banks make billions every year, we're talking about one city slightly reducing some mortgages. That might turn out to be a couple million over 5-30 years. Assuming we don't see another real estate bubble crash, which is certainly possible looking at all that abandoned commercial space out there.

But hey, the city is just trying to keep the money flowing in, and I don't blame them for that. No money means no fire department, no cops, no libraries, schools, parks, museums, no nothing. Especially in CA where we've got Prop 13 nailing us to the wall on funding. Thanks Norquist.

They're targeting their actions to the ones they think are most likely to make money for the city. If they were interested in helping the people that need it most, they would take these same actions on homes that are in foreclosre rather than those that are current on their payments.

Owners of underwater mortgages that are making their payments on time are less likely to lose their homes than are owners of underwater mortgages that are not making their payments. If the cities really wanted to help people that need it most, they would target the latter, rather than the former.

As for Prop 13, why haven't the people demanded that it be overturned at the ballot box?

As for the rest, I agree, it's about securing funding for the city, and they need it so I don't blame them for going that route. I wish they'd do more.

The real estate bubble and artificially inflated prices were driven primarily by the lending practices of the banks themselves. The original valuations of the homes were set by the banking industries own fraudulent practices. Now that the lending bubble that caused the price spike has ended, most of these buyers would like their loans to reflect the homes actual value.

Let's say that I have a car for sale for $10,000, I show you documentation demonstrating that it's worth $10,000, I have a paid outside appraiser "expert" tell you that it's worth $10,000, I have five other people who want to pay $10,000 for it, and so you agree to pay $10,000 for it. After signing the papers, you learn that it's only worth $2,500.

My documentation was fraudulent, my appraiser was a fake, and those other buyers? Well, I offered them all a $10,000 credit at no cost to them and without any sort of income verification or expectation that it would be paid back, so their offers weren't made with "real" money anyway. They didn't actually HAVE the $10,000, but I gave them a piece of paper that allowed them to make the offers anyway.

And through all that, I suckered you into paying me $10,000 of your own hard earned cash. What are you gonna do about it?

The loans they did. The funds that are being repaid were paid out regardless of the value of the property being over or under valued.

I guess I live in the wrong country to think that when I give my word and sign something I'm going to do it. That doesn't seem to be something this country values.

But it is certainly something that lots of individuals in this country don't value.

It would seem to me that if the cities really wants to help people, it would take over the homes that are about to go into foreclosure so that those loans could be reduced and residents could keep their homes. But this story makes it sounds like the cities want to only take the safe loans, and help people that aren't in danger of losing their homes.

Sure, nobody had to take them out, but that doesn't make a bit of difference here. You legally entered into a contract, but were deceived about the true value of the item you were buying. Contracts made under false pretenses can be invalidated, and it isn't dishonest to do so. A criminal enterprise (literally, people actually went to jail) shouldn't get to profit simply because they were slick enough to get people to sign a piece of paper.

The idea of "sticking to your word" presumes that your word was given to close a fair deal between two honest people. Nobody is obliged to "stand by their word" when it's offered to liars and cheaters who hyperinflated the entire loan industry to pocket some extra profits.

Should motivate a few bankers.

As for the displeased investors: They don't complained when state or local governments use their eminent domain powers on their behalf.

- K&R