Professor Elam

Accounting & Investing Info for San Antonio A & M

recent posts

about

Pay Your Neighbor’s Mortgage?

Rick Santelli reports form the floor of the Chicago Board of Trade every day on CNBC. 

Yesterday he asked the traders if they wanted to pay their neighbor's mortgage bill. 

for a clip that was shown again this morning on CNBC.  The government is suggesting a cram down on mortgages, bankruptcy judges could force mortgage balances down. But someone will have to make up the difference on the bank balance sheet, 

Retained Earnings    xx
        Mortgage Portfolio    xx

that is the entry the bankruptcy judge would force. Well what about the 91% that are paying their mortgages, should all of us be forced to pay for those that cannot pay?

Good question. 

Here is an excerpt of what Rick had to say, 

If you can't watch the video – and you really should — here's a taste of what he had to say about Obama's home mortgage plan: "The new administration is big on computers and technology – how about this, President and new administration? Why don't you put up a Web site to have people vote on the Internet as a referendum to see if we really want to subsidize the losers' mortgages, or would we like to at least buy cars and buy houses in foreclosure and give them to people that might have a change to actually prosper down the road and reward people that could carry the water instead of drink the water."

Clearly the market agreed with those sentiments. The Dow Jones tumbled to a six-year low yesterday .. and as I write these notes for today's show the futures index shows another bad day for investors.

An article in The Economist
takes a look at the Cannot or Will Not pay issue. 

Posted in

2 responses to “Pay Your Neighbor’s Mortgage?”

  1. Yovela Rico Avatar
    Yovela Rico

    No, I don’t want to pay for their houses when I made a wise decision on my home purchase but, at the same time. What will my neighborhood look like after it’s all said and done. There are For Sale signs popping up all over the neighborhood. The most important thing to think of is what is the best choice we can make for our future and our kids future. Is it for us to sacrifice ourselves now or later. What will the future hold if we don’t help our neighbors out? No one really knows. We can just try to make the most logical decision now and wish for the best.

    Like

    Reply
  2. Dennis Elam Avatar
    Dennis Elam

    A hard life lesson is that some problems defy solution.
    This is the case with folks that are in over their heads, there is no one to buy such houses. So what to do?
    Let the house go and it goes up for auction but
    the bank is kidding itself if it wants full price so
    Let the price drop and the bank takes a hit
    Well why not force the bank to take the hit and let the person stay in the house already, this is the curent admin thinking but studies show it never works out that way, and it will not if the admin promises a deal for everyone that cannot pay on their mortgage, then everyone simply stops paying hoping for a bailout
    The bank and the borrower made the deal…..
    GM Chrysler, the big four banks, folks with no equity, how deep is Uncle Sams wallet?

    Like

    Reply

Leave a comment