Ok, I keep hearing that this 700 billion dollars is going to buy up 'toxic mortgage investments'. If these are mortgages, is there not real estate behind them? I mean that is the definition of a mortgage, right...a loan on real estate. So does that mean the government is going to now own billions or tens or hundreds of billions of dollars worth of real estate (homes, businesses, property, etc)? If there are assets behind these 'toxic mortgages' then what is the government going to do with them? If there are not assets behind them, this is a bigger scam than even I think it is.
yep there is real estate behind them, I believe the idea is that they buy them now which takes the preasure off the morgage lenders and hope to re sell them if and when the financial situation improves at a profit.
It actually sounds like a good idea. The taxpayers would get something of value and maybe even make a profit.
So what is the status of this real estate? I assume these are foreclosures otherwise how would they be a problem if people were still paying their mortgages? How much are they worth? I don't see $200K homes being offered up for $50K or 100K anywhere around here. Are people who have stopped paying their mortgages still living in them or using these properties? Who is taking care of these properties? There are a lot of things here that don;t add up.
Oh, and I don't think for a minute the Gov't is going to make money on this. If there was any realistic hope to make a buck off these things, Wall Street wouldn't be trying to dump them on the taxpayer. They have already made their money on them. They are trying not to lose it.
It really depends on what way the real estate market goes, though. If the Gov pays a bank $100,000 for a mortgage that someone defaulted on, the house was worth $150,000 when it was bought but the real estate market having dropped 50% the house is now worth $75,000. The Gov, not being expert on selling real estate has to sell it on the cheap and many houses that go into foreclosure are distressed to begin with, they might realize $50,000 from the sale. They have to sell it cheap in order to get a real estate investor to buy it and have enough left to fix it up and make a profit on the sale which is a huge risk in a down market like this. Of course, I'm making up these numbers, but just to illustrate the point have a look at this and the stories it links to.
How could any sane company loan even a dollar for that kind of real estate; let alone whatever it was mortgaged for before it sold on ebay. Any property value of the land is offset by the cost of demolishing and carting away the structures on it. If this is what our economy has been based on the last 5-10 years, we are going to have a reboot. 700 billion is going to be like peeing in the grand canyon.
