Buffer Or A Bailout: What's Your Opinion?

There's lots of stories in today's paper about the government's plan to freeze certain mortgage rates for five years to help troubled borrowers. Only those who took out subprime loans between 2005 and this summer, live in their homes and have credit scores of less than 660 will be able to obtain a rate freeze with little hassle, under the plan. It's estimated the plan would help fewer than 600,000, although another 600,000 may find it easier to refinance but with no guarantee they can avoid a prepayment penalty, according to this story.

Some people think the plan does not go far enough. Others say its too much; the industry should have known better.

Columnist Steve Pearlstein writes that the biggest beneficiaries aren't the homeowners but the investors who have got the most money at stake here.

What do you think? Send us your thoughts.

By Dan Beyers  |  December 7, 2007; 7:57 AM ET
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I'm a social liberal and a fiscal conservative. I am not enthralled by a government bailout. If I was confident the abusers of home financing in the past would not benefit, I would be comforted into helping those who need it. But, I have no confidence it will not assist the rich, and those who lived lifestyles way beyond their means. As usual, the penalty for living within your means, being honest and not being greedy is watching the selfish, well healed, and self-indulgent get off the hook. We have built an economy that feeds on the spending of the rich and the "wanna be rich". I don't know how we solve this dilemma and reclaim better values without a tumble.

Posted by: K. Francis | December 7, 2007 9:44 AM

The debtors are not being bailed out, the bankers are. As these debtors continue to make payments, two or three years from now, the bankers would have got back some returns on their investments while the same debtors will still be in debt and would need to continue making payments beyond their retirement age. By that time, these debtors will be hooked as addicts are on a certain drug. Picture a gambler who is hoping to recover some of his losses by continuing to bet on a deal that favors the house, the bankers, in this case. The only way you can get back at these greedy bankers and real estate brokers is by letting these foreclosures happen. Make them pay!
Pessimistically, when that property gains equity, it will then be the target of the health providers when the medical bills cannot be paid by those who got sick working all those hours to pay for the house.
In the past Clinton era, the R.E. speculators benefitted because $250k of capital gains would not be subjected to tax. Due to the overpriced housing market, people searching for that dreamhouse had to move to locations where there is no civilization, ergo no jobs.

Posted by: Othello Oca | December 8, 2007 10:03 AM

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