Clinton to Call for Freeze on Foreclosures & 5 Year Freeze on ARM rates

http://online.wsj.com/article/SB119663648146011092.html?mod=googlenews_wsj

Clinton to Call for Freeze on Foreclosures
By CHRISTOPHER COOPER
December 2, 2007 6:30 p.m.

WASHINGTON -- In a sign that the housing crunch is increasingly resonating on the campaign trail, Sen. Hillary Clinton is expected to call Monday for a 90-day moratorium on home foreclosures, as well as a five-year freeze on the rates of adjustable mortgages -- an idea the Bush administration is already considering.

The Democratic presidential frontrunner's move signals a likely priority shift for political candidates, from one dominated by foreign affairs and domestic issues such as health insurance to one that more directly addresses the economic health of individual Americans. High oil prices, plummeting home values and an increasingly volatile stock market are making consumers nervous, and a credit crunch has them fretting about their personal liquidity.

"I think it's inevitable" that the political conversation will turn more sharply toward economic issues, as the campaigns move into 2008, Mrs. Clinton said in an interview. "There's just too many factors converging here."

Up to now, though, most of the rhetoric regarding subprime loans and skyrocketing foreclosure rates have come from the Democratic candidates. Former North Carolina Sen. John Edwards has been at the vanguard of the political conversation, proposing early on that bankruptcy laws be loosened to make it easier for homeowners to seek protection from creditors, that mortgage and credit card companies be more tightly regulated to ensure they aren't gouging consumers and that public money be used to help out homeowners who are in danger of losing their houses. Mrs. Clinton has made similar calls for reform as well; in August, she called for legislation banning prepayment penalty riders on mortgage products and to disclose more details about broker commissions.

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hopefully it will put pressure on bushco. Good for Clinton. k&r

What makes it such a good thing?

You have good instincts, Wolsh.

Recommended :kick: #2

bleeding way before the next election.I don't expect much more than crocodile tears from the White House.

...we have a rash of bank failures? Somebody (probably lots of people) are going to have to pay the piper for the extent to which we've been living beyond our means.

Those of us who didn't buy homes above our means shouldn't be left out of government largesse.

Think about this one guys. This is NOT a good idea, and it wont save anyone.

This process is already started, and there is no way to stop it. The Fed and the treasury allowed home values to inflate by allowing predatory lending practices, and unregulated credit expansion.

It has to contract. Putting a moratorium on foreclosures is ridiculous if not comical.

This would be like throwing gas on the fire. What happens to the banks when everybody stops paying their mortgages? And if the bank cant foreclose, why pay?

The system is poisoned, and the only way to get the poison out is go through the process.

You think Iraq is a long hard slog, wait till you see what is coming on the economic front. It aint going to be pretty.

adjustment up to the rate of a conventional mortgage. Some of those ARM rates are ridiculously low. Of course, there will be people who can't afford the mortgage with a conventional rate. Those are the people who shouldn't have gotten a mortgage in the first place. That is the lenders fault, not the buyers.

Nobody forced people to take on ARM's or to buy houses they couldn't afford. Bailing them out, at the risk of bank failures, is an absurd idea.

Wouldn't that create millions if not billions of losses in bank industry loans. I can see doing something to force lenders to negotiate with owners on an individual basis so they can determine who they want to extend risk and who they need to foreclose.

rising rates.

People who bought or refinanced w/ARMs knew what was coming in the future. These low interest loans weren't going to last forever.

What about the folks who actually paid down their debt in the 36-48 months of their ARM and then refinanced w/in the time limit? Do we get some sort of a break too?

Were they honest? Did they present all information to borrowers honestly and fairly?

as a person about to buy my first house, stupid home buyers hurt everyone. They had a responsibility to know what they were getting into before they signed on the dotted line. Now everyone else, and the banks have to pay for their stupidity?

Folks who allowed people to borrow up to 80% of the appraised (not assessed) value of their homes while they carried revolving (credit card and auto loans) debt.

At what point is too much debt too much debt?

But, shouldn't the borrower be held somewhat responsible to know how much debt they can take on (at what percentage rate)? Thinking through the potential of a job loss or medical emergency?(I know we can't all predict the future - but there should be some planning involved).

However, I recognize how bad economic conditions are for many out there. They don't have a few hundred every month to set aside for emergencies. They are desperately trying to get by and I think some lenders who were under tremendous pressure to increase the loan portfolios took advantage of them. In many cases, the lenders packaged these mortgages as mortgage backed securities and sold them in the credit markets to sell off the risk so they weren't caught holding the bag. It created a irresponsible and reckless lending practices.

I can already see it in my husband's business. When his clients don't pay their bills it makes it hard for us to pay ours. (which in turn makes it hard for our creditors to pay their bills and soon on).

It sucks because we did it right. Refinanced and paid off our debt. Watched our spending and credit scores and close to the end of the ARM locked in an even lower rate (I really worked that BS FICO score!).

Now, even though our housepayment can easily be made, with not much money coming into our home it makes it hard to pay the other bills.

x(

"Let's just let this bubble burst however it will and fuck everybody." that really isn't a practical solution. That's the problem with economic bubbles. When they burst they don't just hit the irresponsible. That's why the government has to come in in the first place and stop them from occurring.

I took an 80/20, 100% financing loan, with 7% rate on the first, and a 14.9!% on the 20%.(stated income) I had money, but I didn't want to use it for a down, I wanted to use it to upgrade the floors, appliances, screen house, etc. I bit the bullet and did it for about 18 months, then looked for a refi. I got 100% financing, on a new loan. 7%, 2 yr. arm. I knew I was not going to be comfortable with that, so before the arm came due, I did a refi, got a 30yr fixed, at 6%, no prepay penalty.

In the process, I was able to take about $30K out of it, and still be left with about $60K in equity, because of the bubble. A lot of people also went out and used their homes as a credit account, taking money out of the equity, so right now, those people are upside down on their house. My neighbor, who moved in right at the end of the bubble, is $50K upside down. He's not going to be able to sell for a long, long, time.

The other thing that people don't talk about is, that during that time, you could get a loan anywhere, and they didn't care, because they never intended to hold your loan. They just kept it a month or two, then sold it to another bank. Happened to me all 3 times. So, the original lenders are the ones who started this whole thing, selling off mortgages, because they were never worried about the buyers ability to pay.

Fortunately, I knew when to say when, and I still have about $40K in equity. But, you're right Debi, you have to think ahead. People probably never thought it through, or maybe they didn't think they could do a refi, but, unfortunately, as someone else said, we will all pay for it, with increased cost down the road.

And it appears that the idea may only be a bandage measure that will not stop the bleeding:

And freezing foreclosures for 90 days, is just a minor stay of the inevitable eviction.

She's acting very presidential IMO.