What's your house worth?

Seems to confirm that responsible individuals are disgusted that their tax dollars will be spent helping those who bit off more than they could chew. What were people thinking? Did they really think that the excessive run-up of home values would continue indefinitely? I say, let them foreclose, and the market will adjust accordingly.

"Seems there are a lot of folks out there who believe everyone who had an ARM really understood what they were getting into."

who cares if they didn't understand? Is it my fault? Life is tough. I understood the dangers of an ARM and didn't get one. Maybe I should get a handout for being smart.

Anyone who spent more than 3.5 or 4 times their annual salary, or spent much more to buy than would be spent to rent the same house, was irresponsible, not just the ARM buyers. I didn't understand the ARM stuff either, so I steered clear of it, tempting as it seemed at first blush. If you don't understand something and undertake a responsibility based on it, you accept the risk that the risk could be huge.

I bought a house a year ago well within my price range when rates were still low and I didn't have to put down 20%. I love it and intend to stay for a long, long time. Despite good credit and a well paying job, I probably wouldn't qualify for a loan today based on tightened lending standards.

Value of my home? Priceless.

I think there may be some misconceptions about the ARMs. Yes, the ARM will reset to higher rate but not by huge amounts. In some case the payment may only go up $100 or so. What people really ought to be talking about are the interest only ARMs. These loans carried 3,5, and 7 years terms typically. So you pay the low fixed rate for the term as well as only the interest. These loans were used by people with good credit and are refered to as Alt-A loans. These were popular from 2004 through 2006. So people were able to get into 400,000-500,000 houses for pretty a little over half of what the mortgage payment would have been it were a regular 30 year fixed. While the subprime has mostly affected the poorer communites in the area, the Alt-A loans were taken by people in the more middle class and affluent towns. When these loans reset the mortgage payment will essentially double. People will be whaced in three directions. 1) Interest Rate rest higher, 2) Principle due with loan interest and 3) say if it was a 5 year ARM and you were only paying the interest. Now you have to pay principle and interest ammoritized over a 25 year period instead of 30. So right now you have a lot of people who paid bewteen 300,000 and 500,000 making payments between $1,500 and 3,000 a month because of the ARM terms. What happens when these payments jump to $3,000 and 5,000 a month in the next year or two. I think some of these people see the writing on the wall and are trying to sell these houses. But because values have dropped they can't get what they paid and will be short of the loan. So when I keep hearing the bottom will be next year that is when most of these ALT-A resets will be occuring.

I am pretty liberal and all, and even I think it's silly to bail people out who got ARMs they couldn't afford. Unless there was some sort of fraud involved, I just don't see how a lack of understanding earns them a bailout. What sort of fool gets into a $300k+ financial investment without doing some research?

We bought our house on a 30 year fixed in 2005. I am almost positive it has lost value, even with the work we've put into it, but we went into the situation figuring that would happen. We have a mortgage we can afford to pay on one person's salary, so we can just wait it out, unless we both lose our jobs, which would screw anybody.

It's funny how so many people oppose bailing out homeowners, but not banks or airlines.

Excellent. The fact that most homeowners are still over optimistic about the value of their home means we are still far from capitulation in the real estate market. Just means that home prices have much further to plunge, which I already new.

Are people really this delusional? Home prices are already down some 20% nationwide. Then there are the other little details such as the contracting economy; the falling stock market; the credit crunch and soaring inflation.

Yet, somehow 3 out of 4 people believe their home's value will stay the same or rise over the next year. How much Kool Aid are these people drinking?

Not everyone who is in a foreclosure situation, because of an ARM. What about a financial situation? Maybe someone lost their job and or became disabled. There are other reasons people are in this situation. Why shouldn't the government, banks and or anyone else able to help, help these people?

It's also funny how everyone is talking about Stacy's last comment and ignoring all the rest. What the data say to me is that homeowners are fooling themselves about the market value of their properties. Until they bring their expectations in line with reality, they won't have much luck selling--and buyers won't find as many houses available to buy at prices they can afford as talk about a buyer's market may have led them to expect. It's a standoff.

I looked for a house for nearly 4 years and spent countless hours researching to ensure I had the best possible understanding of a local real estate market that was clearly an inflating bubble. My refusal to give in and make a bad decision caused stress on my relationships with my wife, my family and countless realtors, who assured me I was just wasting time and would be priced out soon.

I finally bought when we found the perfect house in 2007 as prices were on the way down and ensured I got a good deal at the time to pad myself, knowing I would still lose value over the next few years.

I sickens me to think about my tax dollars going to bail out those same people that first cost me money by driving up the prices by following like a bunch of lemmings into loans they could not afford, and then cost me more money when the market crashed due to those same bad decisions and the repercussions. So now I should pay them again with my tax dollars?

This mentality is the single biggest problem we face as a nation today and you can see it in the housing crisis, the credit crisis and even the national debt. There is no sense of personal responsibility and the prevailing attitude is that you should have what you think you "deserve" rather than what you can afford.

I have no sympathy for the majority of the people in this situation and helping them will only worsen the problem going forward. These people acted like children and need to learn a valuable lesson for their own (and the greater) good.

Homeowners don't employ workers. FWIW, individual homes being forclosed sucks for them, but it doesn't suck as hard as a whole company going under and taking thousands of jobs with it.

Liz,

Money is not free. Whether the bailout is for a bank, airline or homeowner we should all oppose these forms of welfare. If you are for a free market then we must let the market dictate which businesses/people thrive.

Our children and their children will surely despise the current generations for what they have done to ruin the economy and leave them holding the bag.

But this is how baby-boomers think....Me Me Me

Doesn't matter how positive people may feel about home values, fact is real estate prices are destined to crash. Hoping that the value of your home will go up will not make it so. Economic fundamentals and Free Markets trump wishful thinking.

The price declines thus far have been primarily the result of the bursting of the real estate bubble and supply/demand fundamentals. Now we will start seeing price declines due to the credit crisis; price declines due to the recession; and price declines due to rising interest rates.

Things are going to get much worse before they get any better.

has any of these commenters actually read the legislation? it's a lender bail out plain and simple. lenders have the option to accept the new terms or to proceed w/ foreclosure. they will choose which ever is less of a hit on the books. take a look at the appreciation pay backs. the bill as it's been widely reported in the media (reduction of principal, term reset on mortgages) would've been pretty problematic for the average tax payer. it's ironic that people chastise others for not educating themselves before jumping into a mortgage but then regurgitate propaganda about a bill that they haven't read more than a cursory summary of.

Ummm, banks don't get bailed out so much as depositors get federal insurance for their deposits up to the maximum level. Very different role and guarantee than for every Joe or Joannie who overmortgaged themselves.

I couldn't agree more with Frank S. The only way that homes will actually get to their true values is to let the foreclosures happen. Most of these people getting foreclosed on didn't put too much down anyway so they aren't even losing that much...only that which they couldn't afford to begin with. The ones who will be taking it on the chin are the banks and bad mortgage writers..and thats exactly what they should do, being educated enough to know better. Any bank bailout is just as bad in my opinion. Without any accountability, why wouldn't this problem just continue to happen. Its foolish beyond words.

"Seems there are a lot of folks out there who believe everyone who had an ARM really understood what they were getting into."

typical liberal conclusion! frankly, i believe most of us don't care what they understood. since when is ignorance a good defense? never has been, though you liberals want it to be. and i personally don't believe alot of it was ignorance. i believe many thought 'wow, i can buy this place while making virtually nothing each year....cool!!!!". that type of mentality should not be rewarded with bailouts, nor should ignorance.

The problem isn't with the payment structures themselves but with a) the unscrupulous mortgage brokers and other investment professionals who misstated borrower incomes or did a really crappy job of explaining these products to unsophisticated borrowers and b) the unsophisticated borrowers themselves who got themselves into situations they couldn't afford without a plan to get themselves out of it.

My wife's job was relocated 3 1/2 years ago to an area where we knew we woudn't be staying - but we liked the attractive moving package so we took a 5 year interest-only ARM knowing for certain that we'd be out of there before it reset. We moved in, renovated the house, lived in it cheaply for a little over a year, then flipped it. We didn't make much, but we got to live there for cheaper than comparable rents would have been and we were able to save up to buy the house we're in now, which we love. We would NEVER have taken the interest-only mortgage as a permanent solution to our housing situation. We used it as intended - a short term money saving vehicle.

Not to put it too bluntly, but the fact is that these payment structures simply are NOT intended for the unwashed masses. They should never have been allowed to have been marketed that way. You have to be reasonably sophisticated financially to be able to use them properly - and too many people used them as a vehicle to shoehorn themselves into homes they could not otherwise afford. Just because you've made a house temporarily affordable for yourself with a low teaser rate - guess what - eventually the bills are going to come due. It's not rocket science.

It angers me a little bit that we're all going to be paying for the colossally stupid mistakes of some of these borrowers who frankly, should have known better or at the very least should not have been given the option to commit financial suicide this way. It's going to hurt, but the better solution would be to let the foreclosures go forward and consider it a lesson learned.

Another argument put forward for these creative loans back in their heyday was that they open the door for ownership to an entire class of people who wouldn't otherwise be able to afford it. You know what? Home ownership isn't the answer for everyone. Some people SHOULD rent either because they lack the financial resources or the financial discipline to handle it. Home ownership is a noble and lofty goal - but is it the right situation for everyone? Absolutely not.

Despite the OCD-like reflexive blaming of "liberals," a majority of both Democratic and Republican voters are outraged by the thought of taxpayers bailing out reckless home debtors. It's the Democrats and Republicans in Congress that are the problem. As are the media; most reports portray deadbeat homeowners as helpless, blameless victims--deserving to be rescued by the mean, selfish people who actually pay their bills.

Of all proposals so far, the one that makes the most sense allows cramdowns of mortgage principal in bankruptcy. But Senate Republicans blocked that bill.

On the other issue, I agree with the sentiments posted by other commenters. The market has yet to capitulate, and most homeowners are living in la-la land. Which is why they are all so shocked and outraged when their home equity lines get cut, because they don't understand that they don't actually have any more equity. At the end of the day, though, it just doesn't matter what these homeowners think. The market doesn't care.

Of course people think that they're homes are increasing in value. The brutal truth will hit them when they go to sell or to refinance. Did the survey poll potential sellers? Or the general public at large? Until we decided to put our home up for sale, we had no idea what the market was doing in our neighborhood. (We had an idea, but until we ran the comps and looked at the quality of those homes, we didn't know exactly... )

And now that we've decided to sell, we've found that the prices in our area are all over the place. Some are priced so far below market it's laughable. Some are overpriced and have been sitting for months. The houses that are in good condition who land right in the middle of the market sell quickly--like in three weeks for 95 percent of the asking price. We've even had a couple of houses go for a few thousand above asking. (Those houses are in wonderful condition--buyers don't have to do a thing.)

It's confusing for buyers and sellers.

Wow! Three years into the bursting of the real estate bubble and still so many homeowners in the denial phase of the bust. At this rate, the bust will last another decade.

Weak economy hits the guy next door
Commentary: Home values propped up by wishful thinking
By MarketWatch
Last update: 3:29 p.m. EDT Aug. 6, 2008
Comments: 35
BOSTON (MarketWatch) -- While there's little doubt that the economy's problems are hitting home for most Americans, there is no question that most people just don't want to admit it.
The latest proof came in the second-quarter "Homeowner Confidence Survey" released by real-estate research Web site Zillow.com, which showed that consumers are inclined to believe that their neighbor's house is losing value, but that the crisis isn't happening in their own backyard.
According to the Zillow survey of homeowners, conducted by Harris Interactive, nearly two-thirds of U.S. homeowners think that the value of their own home has increased or remained stable over the last 12 months.
They must be living in the fictitious Lake Woebegon -- "where all of the children (and presumably home prices) are above average" -- because Zillow's real estate market research shows that more than three-quarters of U.S. homes lost value in the last year. Another 5% of U.S. home prices stayed stable over the last 12 months.
The disconnect between perception and reality isn't a problem for anyone thinking of their home as a "use asset" -- a place to live that will retain some or all of its value when it no longer is needed by the owner -- but it's a huge issue for people who were counting on their home to backstop retirement savings and their golden years.
Anyone factoring in a rich, growing home price into their net worth may be fooling themselves about their ability to retire, at least until the housing bubble ends and the market heals.
That won't happen overnight, and people relying on the value of their home as something more than a use asset must recognize that what's propping their home price up right now is mostly their own wishful thinking.

I agree that people who took out mortgages they clearly could not afford, should, in principle, not get bailed out. But because their hundreds of billions of bad debt was spread across the financial system, simply letting "nature take its course" and having these people get foreclosed on could destroy the real estate market. The key for lawmakers is to find that delicate balance action and non-action whereby the minimum amount of struggling homeowners are bailed out (to some extent) so that the housing market does not go well-below fair market value, putting even the disciplined homeowner into a situation of having negative equity.

Let's buy a house..... let's buy two new cars (these perfectly fine used ones won't do).... let's go on vacation (the neighbor's just did)..... that's what happened. The house's could have been paid for if people just tightened their lives up but they chose to live beyond their means. I didn't buy a house, I want some money, I call it the "not an idiot Fund". Fork it over taxpayers.

I dont blame anyone but the person signing the loan. If they didnt understand it they should have hired a lawyer as every expert/advisor recommends. I cant stand hearing the media doing stories on people living beyond their means making them sound as they are a victim. One woman lost her condo when he ARM reset. She said " I never read the loan papers" . How is this person a victim? Simple internet seaches give details on every mortgage available. I only believe help should be provided for people that lose their job / income or in cases were fraud was committed by the lender. Only a small percentage fall into this catagory...the rest signed their our fate...

I would rather see my tax dollars help most of these homeowners than go to the institutions who have reaped millions-if-not-billions off from our tax money by offering these nefarious loans to begin with. They knew from the beginning it was a sham that would reapeach of their corporations millions, & look at the windfall payouts/bonuses their executives received in return. If our taxes don't bail out the people who may lose their homes, the same money will end up going to these institutions. Look at the amount of money we gave to JP Morgan Chase to buy out Bear Stearns. WHY?????

If our taxes don't bail out the people who may lose their homes, the same money will end up going to these institutions.

If a homeowner facing foreclosure gets a bailout, where, precisely, do you think the bailout check goes?

"48% of respondents said homeowners facing foreclosure because they took out adjustable-rate mortgages shouldn't receive government assistance"

And 52% of respondents took out adjustable-rate mortgages and need a government bailout!

"48% of respondents said homeowners facing foreclosure because they took out adjustable-rate mortgages shouldn't receive government assistance"

And 52% of respondents took out adjustable-rate mortgages and need a government bailout!

If we do go bail out anyone (and I don't recommend we do), I suggest we bail out struggling homeowners using a fund paid for by increases in the corporate tax rates of mortgage providers and realtors. Then there's no issue for the average taxpayer who had nothing to do with the idiocy of the scammers and the fools. And then the companies only reap what they sow. Yeah, it'll be harder to get a mortgage as a result, but then the market will truly correct itself.

Make it feel just like big tobacco.