September 23rd, 2008
05:13 PM ET

What about my mortgage?

Tami Luhby
CNNMoney.com Senior Writer

The Bush administration wants to help beleaguered financial institutions – and prevent the financial crisis from getting worse – by spending $700 billion to buy up troubled mortgage securities.

But many struggling homeowners are asking: "Where's my bailout?"

Democratic lawmakers have taken up their battle and say they will include more help for homeowners as part of the proposal, according to Rep. Barney Frank, D-Mass, who heads the House Financial Services Committee. Final details are still being hammered out, but it appears that the idea is gaining traction.

Here's how the bailout could work: Once the Treasury Department takes hold of the securities, it can review the terms of the underlying loans and the financial shape of each homeowner. The department then could opt to modify the loans – by reducing the interest rate or principal balance – to affordable terms for borrowers.

The problem, experts said, is that the mortgages will be bundled into investments and sold. Therefore, the ownership of each loan is divided among all the investors who purchased the security.

And that complicates the process of helping individual homeowners.


Filed under: Economy
soundoff (28 Responses)
  1. Chuck; Shelton, CT.

    Maureen- I don't think people were lied to. I think greed and the "I gotta have it mentality" is to blame. I was a project manager for a residential construction company but have now started my own handy man business as the new home market is in the tank. People now have me hanging pictures and miniblinds in their 4000 squar foot McMansions for $45.00 an hour. That's just asking for trouble! I could have built a new home for my family cheaper than anyone but still live in a modest 20 yr old home. Give up the new Lexus, speed boat or RV. Do you really need the 4000 minute cell phone plan? 176 cable channels? Students living on campus when they live 20 minutes from school? It's time to get back to basics! If you don't have the money...Do without! Drive a clunker, grow a garden, mow your own lawn. Most houshold budgets are like a seive and those people may need a wake up call. Rewriting a mortgage note is exactly like bailing people out but from the back door! It's still a hand out and you know the program will be abused. You lived within your means and so have I. These people were warned well in advance but refused to listen and live like ordinary people. They all thought the ride would last forever. Well... now they know...

    September 23, 2008 at 8:46 pm |
  2. C. Mercedes

    I have never purchased a home when mortages were free flowing or not. I resent the implication that my tax dollars should be responsilbe for bailing out American materialism and greed. I am sending this Blog to implore Congress, the Senate and whom ever else is responsilbe to not pass this "BAILOUT" Bill. Didn't we learn in Economics Class that the economy should fix itself.

    September 23, 2008 at 8:36 pm |
  3. ,Barbara-Dalton Ga

    I am really leary of this bailout. I know something has to be done, but
    I don't know what.
    I guess I just don't trust the government to decide how to get us out of
    this mess after all it's basically responsible for it being as bad as it
    Bush wants quick action, but hasty decisions don't need to be made/
    We need the best financial minds available working on the best way
    to get us back on track. A hasty decision could and probably will only
    make it worst than it is.
    I really feel for the future generations, they are the ones that will be
    paying for this bailout.

    September 23, 2008 at 7:52 pm |
  4. Frederick Culver

    The greedy people in the financial sector and President Bush will do to us that Osama binLaden could not do.

    September 23, 2008 at 7:50 pm |
  5. Robert, Portsmouth VA

    I'm not sure what to think about the homeowner issue. I'm in the military with a 1 income family of 3. My wife is a full time college student (thank God for grants) and my daughter is attending a private school because the public schools in our area are horrible. We pay our mortgage, live extremely frugal (no cable or satellite TV, use coupons, etc) and bills on time with little left over to pay off a $3,700 credit card. I'll get new orders in December and will probably have to move in August. My house is now worth $15K – $20K less than what we bought it for ($136K). If we have to move and sell the house then that will leave us and MANY other military families either bankrupt and/or on welfare. If we're lucky we'll be able to get military housing at the next command however, housing wasn't designed to accomodate all or even half the families of a base.
    Now I don't think people who were foolish enough to buy $250K houses when they can't afford them should be bailed out. But what about those of us who are did what we are supposed to do; live within our means and are slowly sinking?

    September 23, 2008 at 7:23 pm |
  6. david seattle

    Would someone please explain the executive compensation issue so that it can be understood?

    What does this mean in laymans terms….i don’t want to hear about golden parachutes, I don’t want to hear about vague notions…..

    The question is who is not getting compensated, how much money is involved in this compensation. Are we talking about multi millionaires having to bite the bullet and live on their current net worth?

    What is an executive salary? What is the range of executive salaries and why do they deserve it? What a bunch of greedy spoiled brats!!

    September 23, 2008 at 7:15 pm |
  7. John Purcell

    Why cant for every 5 loans we pay taxpayer dollars to buy we get one good performing loan, that may expedite the return on investment to us

    September 23, 2008 at 7:13 pm |
  8. Frank

    Who is the genius that came up with the acronym TARP (Troubled Asset Relief Package)? Anyone want a $700 billion tarp? It'll help cover up a huge problem, but not really stop the rain from pouring in.

    September 23, 2008 at 7:11 pm |
  9. Chuck; Shelton, CT.

    As far as your mortgage goes, you are where you are. Let them take the leased car back. repo the boat, let the credit cards go. They are dead wood as they all lose value. Just plug the leaks. But don't default on the mortgage. It's your best investment. They don't manufacture any more real estate and can't just print more like currancy or stock certificates. If your in trouble your credit probably has a few battle scars so don't worry about it. They will fade in time.

    September 23, 2008 at 7:09 pm |
  10. Mary V., Salt Lake City, UT

    I have read in a few blogs people blaming the Democrats for the whole financial mess!

    NOPE........... the Republicans were in charge of Congress 1994-2007 (January). Plus EIGHT years of Bush/Cheney and their spending trillions in fighting a war in Iraq based on lies.

    The buck stops with the GOP! In case, you are still not convinced here's more proof:

    There is the Gramm (as in PHIL)-Leach-Billey Financial Services Modernization Act of 1999, DE-REGULATION IS THE GOP'S GAME.

    September 23, 2008 at 7:06 pm |
  11. kathie

    LOANS, NOT BAILOUTS!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    September 23, 2008 at 7:06 pm |
  12. Mozart, VA

    Lately, there has not been a bailout for homeowners out there. Why are these people wasting their breaths about it? The proposed bailout is for the giants at Wall Street. If you oppose the bailout, you should rephrase your comments. It is not for homeowners, but for Wall Street. Or do you mean bail out Wall Street and forget everybody else? That doesn't make sense. If there should be help from the government, it should be geared towards the people.

    September 23, 2008 at 7:04 pm |
  13. Frank Nj

    To bail out wallstreet is doing not a thing for the american people.. We the people need that money back in our pockets to bail ourselves out our own wholes like wallstreet we dug for ourselves.. See wallstreet did it to themselves and there investers should help them not us.. Just think if your husband or wife took all your savings and gave it to the coner store to help them out of a situation on the basis that if they close you'll have to go futher for your groceries or other house hold goods.. you wouldn't like that would you so why should we the american people give our taxpayer money to do the same for wallstreet...

    September 23, 2008 at 6:59 pm |
  14. Chuck; Shelton, CT.

    I'm old school, I saved where I could. Like dad told me "make hay when the sun shines" I don't invest in stocks and understand nothing ventured nothing gained. I invested in real estate instead so I have had ups and downs. I have a small mortgage on my primary residence fixed at 5.24 Shame on any one for going for a sub prime variable rate mortgage. That's simply a gamble. More or less deficit spending whis is part of why we are where we are. The drop in property value is to be expected. It's the poverbial realignment. Hang in there and deal with it. Bail out? No, not the answer, I say let the cards fall where they may!

    September 23, 2008 at 6:52 pm |
  15. GF, Los Angeles

    That's great for those who bought a home Gregg but how about those who were responsible enough not to buy a home we couldn't afford in the first place? I don't get any tax credit as is without owning a house so why should I pay for a bailout and why should someone get even more of a tax credit if they're not in trouble? As a single person without a house I'm taxed to death in a state that's #1 in sales and income tax yet I don't get a bail out. I equate this to if a person bought a Ferrari and couldn't make the payments and is now expecting the government to help them out.

    As for Earl, you chose to buy two houses so if you lose $20,000 when you sell one – so be it. Not the American taxpayers problem.

    September 23, 2008 at 6:49 pm |
  16. Frank Wilson

    Sure if we can muster the will to bail out the stock market we the americam people can muster the will to take that same aim and force congress and the house to bail each and every american out of their current situation, instead of wall street we the people have our own crisis with debt that, that same money we are spending to help the finacial market rebond could be better spent on us the american people to clear up our personal debt since it is our tax payers dollars being spent.....

    September 23, 2008 at 6:48 pm |
  17. Annette in California

    It sounds to me the big rush to get the 700B is to buy back the mortgages sold to foreign countries. They won't lend us more money if we have dumped bad loans on them. Out country needs more loans from abroad.

    September 23, 2008 at 6:45 pm |
  18. Suzie

    We all agree something needs to be done. Middle America is hurting in a bad way. However, I think the taxes to pay for this bailout needs to on a sliding scale. For the person who has made millions in the last 7 years thru the improper workings of Wall Street should pay up to a 10% incrase in tax. The taxes should be on a sliding scale. Why should the family who makes 40,000 pay the same amount as the person who makes 4 million.

    Furthermore, there should be no golden diamond parachute for the CEO's of these campanies.

    Who are uninformed..... but not stupid!!

    September 23, 2008 at 6:35 pm |
  19. Maureen, Newman California

    Cindy – Nobody is taliing about bailing out mortgages. They are talking about rewriting these bad loans to an affordable rate so these mortgages can be paid. This ensures consistent cash flow back into the lending institutions. Why do you think this meltdown happened? It happened because people could not pay their mortgages. The banks loaned out the money, and went bankrupt because the people could not pay the mortgages. These people were lied to and misled. And yes, some knew what they were getting into. But if we all take on your selfish attitude and decide not to rewrite the loans, while we bail out Wall Street, what do you think will happen? Melt Down #2

    September 23, 2008 at 6:34 pm |
  20. Bob

    This bailout does absolutely nothing for the average homeowner. It has one purpose: to offload the losses accumulating from years of bad policy and bad decision-making to the American taxpayer. The beneficiaries are the fat cats who built this house of cards.

    Maybe it's time to let this flawed financial system go under. Otherwise, we merely push out the inevitable a few years.

    September 23, 2008 at 6:32 pm |
  21. GF, Los Angeles

    I firmly disagree with bailing out homeowners. Don't buy a house you can't afford and don't treat your house like an ATM machine. Let them fail so that those who saved responsibly can buy their houses at non-inflated prices. During the buying craze – houses went up to $500,000 and up in California. Absolutely ridiculous! Now prices have come down as much as 40% since last year. Let it keep on dropping!

    September 23, 2008 at 5:56 pm |
  22. Jason

    One of the bigger issues right now is that mortgage companies have a very difficult time communicating within their own organizations. I know of someone who is on the verge of a foreclosure but found a buyer for the house. Even though the house would sell short, isn't that better than the house being foreclosed and just sitting there for months and maybe even longer the way the economy is heading. I blame the banks for not making the best opportunity it can when dealt with a viable options at this point.

    September 23, 2008 at 5:49 pm |
  23. JC- Los Angeles

    I could care less about the "struggling homeowners" throughout our nation since millions upon millions had no right joining the fraudulent, get rich quick scam that swept post 9/11 America.

    What I am most upset about is the declining and decimated dollar; all the people get who worked tirelessly, ethically, advanced up the corporate ladder, saved money, invested money and shunned the fraudulent scams is the dollar driven into oblivion and one big do over.

    It's time to throw the executives and politcians into jail; let the struggling homeowners learn their homeownership lessons; and finally allow the people who actually saved money to be rewarded for sound and ethical behavior.

    September 23, 2008 at 5:45 pm |
  24. Cindy

    I don't think that we should be bailing out anyone from their mortgage. IMO why should I pay to bail out someone who was greedy and got into too big of a house that they couldn't afford to begin with? I can see if it was someone that lived within their means and lost a job or something but I don't think it is right to bail out people who didn't use common sense and tried to live way beyond what they could afford.

    If that is the case then why not have the government pay off all of our debts. I mean we all could use a break just like them! Most people over extend themselves on credit cards and such so just let the government pay them off and that would help us have more money to spend and put back into the economy! LOL See how stupid that sounds...exactly like bailing out the people with mortgages that they can't pay.


    September 23, 2008 at 5:43 pm |
  25. scott anderson memphis tn

    Would this be a final attempt by this administration to (Starve the Beast)?? Why has this not come up in this conversation (or did I miss it)?

    September 23, 2008 at 5:39 pm |
  26. Chris

    We are putting ourselves at more of a economic risk than ever before. There never should have been a bailout for any of the large companies. We are a capitalist society. In order for the small trees to grow giants must fall. The assets should have been sold, business moved to other companies and the difference along with economic impact aided by the government. What will we do when they fail again?

    September 23, 2008 at 5:29 pm |
  27. Maureen, Newman California

    Saving these homeowners will save us all. If we bail out Wall Street without helping the homeowners, we will have meltdown # 2 several months down the line.

    September 23, 2008 at 5:23 pm |
  28. Keith

    I am profoundly against any bailout; they made their beds, etc

    September 23, 2008 at 5:17 pm |