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Should the Government Help Homeowners With Underwater Mortgages?
US News and World Report ^ | 02/06/2012 | US News

Posted on 02/06/2012 3:53:30 PM PST by whitedog57

According to real estate data firm CoreLogic, about 11 million American homeowners are underwater, and half of all U.S. mortgages are owned by non-government lenders. On Wednesday, President Obama announced plans to help homeowners facing foreclosure. Obama is seeking to make interests rates for borrowers lower, and he plans to pay for the estimated $5 billion to $10 billion cost with a fee on the nation’s largest banks.

“It is wrong for anyone to suggest that the only option for struggling, responsible homeowners is to sit and wait for the housing market to hit bottom,” Obama said. “I refuse to accept that, and so do the American people.”

Opponents of the president’s new plan vehemently disagree. House Speaker John Boehner explained that the market needs to correct itself, saying, “All it does is delay the clearing of the market. As soon as the market clears and we understand where the prices really are—[that] will be the most important thing we can do in order to improve home values around the country.”

Obama’s plan would save the average underwater American about $3,000 per year and would apply only to borrowers who have been current on their payments for at least six months. Still, many are skeptical of further help for Americans facing foreclosure, as even the president acknowledges that his previous attempts to tackle underwater debts have failed.

Should the government help homeowners with underwater mortgages? Here’s the Debate Club’s take:


TOPICS: Business/Economy; Politics
KEYWORDS: mortgage; obama; underwater
FREEP THIS POLL! There are two conservatives: Calabria from Cato and Sanders from Mercatus. Even if you are angry at the banks, this is an unbelievable expansion of government power. When will they stop? [IMHO - Sanders has the better points calling Obama's plan "Super Lotto" for votes.
1 posted on 02/06/2012 3:53:42 PM PST by whitedog57
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To: whitedog57
Heck yeh...

Get the cost of gasoline down to boost the economy and housing prices and make commuting from the 'burbs less expensive. Make the locals cut property taxes.

2 posted on 02/06/2012 3:57:03 PM PST by Paladin2
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To: whitedog57
I only owe the last 30% of my original mortgage.

My house has since depreciated 30%.

Chase should give me the title to my house right now!

3 posted on 02/06/2012 3:57:41 PM PST by TexasCajun
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To: whitedog57

While I’m generally against this sort of market intervention, much of the blame can be placed squarely on the shoulders of the idiots running our government.


4 posted on 02/06/2012 3:58:24 PM PST by rivercat
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To: whitedog57

Hell no its just another form of welfare. Asking to government to cover your losses for pathetic losers. I bet these takers wouldn’t offer up their gains when the market comes back....

If you borrow the money .... its yours pay to pay back not mine.....


5 posted on 02/06/2012 4:03:20 PM PST by Breto (The Establishment party is killing our country)
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To: whitedog57

This is a trick question, right???

We paid CA$H for this house in Jan 2010, $270K.
Put $30K into it.
We close on the sale of it Feb 29th.
We take a $115K hit.
Thank you (FU) Clinton, Dodd and Frank.

This fool can’t “Get the Hell of of My Country” fast enough!
Thank you LTCR Rep. Allen West (FL-22?)


6 posted on 02/06/2012 4:06:37 PM PST by bksanders (Old Gets Older the Older I Get)
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To: whitedog57

Should the govt interfere with the way a private entity runs its its business? NOPE. The stupidity of govt intervention has caused this mess, further mucking around will only make it worse. So, of course, further mucking around is what will happen.


7 posted on 02/06/2012 4:11:28 PM PST by Not The Other One
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To: whitedog57
"Obama is seeking to make interests rates for borrowers lower BUY VOTES!!!

8 posted on 02/06/2012 4:11:44 PM PST by bksanders (Old Gets Older the Older I Get)
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To: whitedog57

with the florida housing market taking it in the shorts, thanks entirely to the democrats thirst for power... my mortgage now exceeds the value of my property. doesn’t matter, as i keep paying the contract i agreed to 10 years ago.

meanwhile, democrat supporters will stop paying for their mortgages... and the democrats in congress will cover it for them...

USING MY MONEY

so i get to pay my mortgage... AND the mortgage of the scum bags on the left?!

WTF?! SCREW THAT


9 posted on 02/06/2012 4:14:58 PM PST by sten (fighting tyranny never goes out of style)
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To: whitedog57

simple hold banks to the letter of the law, JUST LIKE THE BANKS HELD THE BORROWERS, to PROVE they had standing.

MERS is not proof of ownership.

Owernship must be proven each and every transaction and each and every sale.

no proof, no forclosure = clear title = no money the taxpayers are spending.

ALSO 100% of all forclosure hearings are court reported either electronically or via person. This prevents the judges from playing fast and lose with the rules. Heck even stream it.


10 posted on 02/06/2012 4:17:10 PM PST by longtermmemmory (VOTE! http://www.senate.gov and http://www.house.gov)
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To: bksanders
We paid CA$H for this house .........

Mistake #1!

11 posted on 02/06/2012 4:18:03 PM PST by varon (Allegiance to the Constitution, always. Allegiance to a party, never!)
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To: whitedog57

No.


12 posted on 02/06/2012 4:19:23 PM PST by wtc911 (Amigo - you've been had.)
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To: whitedog57
Actually it crazier than that. They are helping people who are just fine with their mortgages, I got a call from my bank and they offered to lower my interest rate by 2.5 points. Why? I don't have a clue my LTV (loan-to-value) ratio is in the 30% range and I was fine with my loan. The refinancing would cost me nothing BTW. All I have to say is WTF. No wonder the entire housing market is in the toilet and not going to recover anytime soon.
13 posted on 02/06/2012 4:22:24 PM PST by WHBates
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To: whitedog57

The “government” isn’t “helping” ANYBODY!

The “government” only has MY MONEY to spread around!

The “government” should look to return the last TRILLIONS DOLLARS it wasted, before looking for more people to “help”.

When “they” say “help”, they mean “buy votes from”.


14 posted on 02/06/2012 4:22:38 PM PST by G Larry (I dream of a day when a man is judged by the content of his character)
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To: whitedog57; 2ndDivisionVet; A knight without armor; Alexander Rubin; all the best; AmericaUnite; ...
Our maximum leader will save us from the eeeeevil banks!

FREEP THIS POLL ***PING!*** FRmail me if you want to be added or removed from the Fearless Poll-Freeping Freepers Ping list. And be sure to ping me to any polls that need Freepin', if I miss them. (looks like a medium volume list) (gordongekko909, founder of the pinglist, stays on the list until his ghost signs up for the list)

15 posted on 02/06/2012 4:27:44 PM PST by dynachrome ("Our forefathers didn't bury their guns. They buried those that tried to take them.")
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To: whitedog57

“half of all U.S. mortgages are owned by non-government lenders”

0bama wants to own those. He also wants profits from any sales of homes that take his “fix.”


16 posted on 02/06/2012 4:32:14 PM PST by combat_boots (The Lion of Judah cometh. Hallelujah. Gloria Patri, Filio et Spiritui Sancto.)
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To: whitedog57

This “fee” that Obama is going to charge the banks is going to come from where? You know that the banks aren’t going to just take this in the shorts, they’ll just pass that expense onto the rest of us.


17 posted on 02/06/2012 4:34:28 PM PST by Malone LaVeigh
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To: whitedog57

FREE MARKET CAPITALISM WORKS EVERY TIME... BUT WHAT GOT US INTO THIS MESS WAS NOT FREE MARKET OR CAPITALISM... IT WAS SOCIALIST ENGINEERING LIKE DODD/FRANK AND EVERY OTHER SOCIALIST BILL EVER PASSED.

Sorry for the yelling but it needs to be shouted from the rooftops!

LLS


18 posted on 02/06/2012 4:36:03 PM PST by LibLieSlayer (Hey repubic elite scumbags... jam mitt up your collective arses!)
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To: whitedog57

Government must not transfer wealth from one group of citizens to another. If a family that can service their loan now finds themselves underwater, the only concession that I think is fair for government to grant to them is to allow their lender to convert the difference into a non-secured loan at the same total payment of the original loan. This allows the family to stay in their home and to fulfill their contractual agreement. It does not transfer wealth from/to any party. It respects everyone’s property rights.


19 posted on 02/06/2012 4:41:28 PM PST by theBuckwheat
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To: whitedog57
Obama is seeking to make interests rates for borrowers lower, and he plans to pay for the estimated $5 billion to $10 billion cost with a fee on the depositors in the nation’s largest banks.

Fixed it.

Still, many are skeptical of further help for Americans facing foreclosure, as even the president acknowledges that his previous attempts to tackle underwater debts have failed.

What is the definition of insanity?

One thing I'll remember about the Obama years will be feeling stupid for working and paying my bills on time.

20 posted on 02/06/2012 4:45:38 PM PST by TwelveOfTwenty (Compassionate Conservatism? Promoting self reliance is compassionate. Promoting dependency is not.)
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To: whitedog57

Not no, but hell no. They should get out of our lives except for national defense. No more bail outs for anything. The dust must be allowed to settle and free market principles must be allowed to work. If left alone the thing will correct itself. If they keep applying “Stimulus” and bailouts it will never reach equilibrium and steady state.


21 posted on 02/06/2012 4:52:22 PM PST by lwoodham (Time is what keeps everything from happening all at once.)
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To: whitedog57

...and after that they’ll compensate me for every security I ever bought and sold at a loss, right?


22 posted on 02/06/2012 4:59:54 PM PST by posterchild (I'm old enough to remember when journalists bothered to look things up on wikipedia.)
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To: whitedog57
The solution is simple:

Vote out Democrats. Vote in constitutional conservatives.

Problem solved !!!

23 posted on 02/06/2012 5:00:23 PM PST by lwoodham (Time is what keeps everything from happening all at once.)
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To: whitedog57

* Punish lenders, and they’ll avoid lending for a long time.

* The market’s answer to the hysterical policy of refinancing with government funding will be “No sale.”

* There will be fewer able to buy, as the de-industrialization and debt regime continues.

* My fellow Baby Boomers and I will be dying and/or “downsizing” over the 20 years or so to come.

* Who would be fool enough to give more than 10-20% of listing for that hovel, when the end of the economic world as we know it looms before us?


24 posted on 02/06/2012 5:02:29 PM PST by familyop (We Baby Boomers are croaking in an avalanche of rotten politics smelled around the planet.)
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To: rivercat
While I’m generally against this sort of market intervention, much of the blame can be placed squarely on the shoulders of the idiots running our government.

So, you trust the people who caused the problem to fix the problem by doing more of the same thing they did to get us here?

25 posted on 02/06/2012 5:10:02 PM PST by E. Pluribus Unum (FOREIGN AID: A transfer of money from poor people in rich countries to rich people in poor countries)
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To: whitedog57

I have one of those Underwater Mortgages, and no I don’t need the Government’s help.


26 posted on 02/06/2012 5:11:13 PM PST by NavyCanDo
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To: whitedog57

When people who are underwater $100,000 dollars refinance their homes, they are still $100,000 dollars underwater.

They may save some money with cheaper rates, and they may get their time extended to 40 years instead of 30, but they are still underwater.

Low Interest rates are why my CD’s are earning .10%. While the govt. tells everyone to save for their retirement.I am sorry Hoss but unless you save up a helluva lot of money so that you can live off the declining principal you are fugged.Same way with Money markets and Bonds.


27 posted on 02/06/2012 5:11:31 PM PST by Venturer
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To: varon

Open wound, apply salt…
More mistake to follow…


28 posted on 02/06/2012 5:30:44 PM PST by bksanders (Old Gets Older the Older I Get)
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He didn't donate

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A sponsoring FReeper will contribute $10
For each new monthly sign-up

29 posted on 02/06/2012 5:41:34 PM PST by TheOldLady (FReepmail me to get ON or OFF the ZOT LIGHTNING ping list)
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To: rivercat

Put politicians in charge of stuff and see what happens.

The money system....you get this stupid experiment in social engineering, totally against any sort of common sense.

The borders....dag....Leading Your Country 101 and look they done let all of Mexico waltz in.

Wars....if it weren’t for the soldiers provided by we the citizenry God knows we’d probably lose them. As it is we always end up walking away without any kind of secure victory cause like I said....the politicians get involved and it all goes to hell.

Obviously they shouldn’t be bailing out these people with underwater mortgages. How the hell did they get underwater mortgages anyway?

So they have a house worth $300,000 but the mortgage on it is like $450,000? How did this happen?

I must suppose the house depreciated in value to the tune of $150,000 since its purchase but that doesn’t make a whole lot of sense if the market were working right.

I’ve bought three houses in my life. For each the bank had appraisals done. I had to have at least 10% down and none of that down payment could be a loan from somewhere else. Banks running like they were supposed to would never be loaning over a hundred grand past the home’s value.

Before able to get a mortgage on one house, they found out that I had been late with ONE car payment. I had to write a big long letter about how that happened and promising first born that it would not happen again.

My in-laws gave us, as a gift, a thousand dollars on the first home. they had to write a letter stating the money was a gift and would not have to be repaid.

We did get home equity lines of credit on our various homes but our line of credit never exceeded 80% of the appraised value of the house (and we HAD to get it appraised again), less the current mortgage.

It ain’t rocket science. But you had to have a job, you had to have some money put down so your sweat is in the house, you had to pay your mortgage, insurance and property tax every month.

But you got voters with no jobs, unable to save down payments for the drugs, and, if able to buy a house, immediately take out big home equity loans and use up all that money.....

Like I said....a politician’s job is to get votes...NOT to legislate for a greater good.

It’s because we forget this that everything gets messed up.


30 posted on 02/06/2012 5:42:14 PM PST by Fishtalk (http://patfish.blogspot.com/)
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To: lwoodham

As far as I can tell, ain’t no such critters.
Yes, that includes Loon Paul.


31 posted on 02/06/2012 6:07:50 PM PST by Little Ray (FOR the best Conservative in the Primary; AGAINST Obama in the General.)
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To: Malone LaVeigh

Do what Romney does....open an account in the Caymans. Many more advantages as well.


32 posted on 02/06/2012 6:09:43 PM PST by sanjuanbob (Festina Lente)
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To: Venturer
"When people who are underwater $100,000 dollars refinance their homes, they are still $100,000 dollars underwater.

They may save some money with cheaper rates, and they may get their time extended to 40 years instead of 30, but they are still underwater.

All true. But there's plenty of folks out there willing to stick it out. One of the provisions of the HAMP/HMA program is to forebear up to 30% of the principle. That allows for lower interest on a lower amount. Now call me overly optimistic, but I believe in some 30 years values will probably recover.

33 posted on 02/06/2012 6:16:02 PM PST by moehoward
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To: whitedog57

Pay your mortgage or get booted out, no bailouts!!!!!


34 posted on 02/06/2012 6:19:14 PM PST by dalereed
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To: dalereed
Pay your mortgage or get booted out, no bailouts!!!!!

All well and good - but that must truly be the end of it.

The banks cannot be allowed to get a "deficiency judgement" against you when they sell that foreclosed property for pennies on the dollar. They must eat the losses on an underwater mortgage when they take back a property.

And the banks had better have very solid proof of valid title when they forclose and try to re-sell properties.

35 posted on 02/06/2012 6:31:57 PM PST by flamberge (What next?)
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To: flamberge

“The banks cannot be allowed to get a “deficiency judgement” against you when they sell that foreclosed property for pennies on the dollar. They must eat the losses on an underwater mortgage when they take back a property.”

Only on a first, if it’s a second or a refinance you eat the difference!

You signed a contract, live up to it or go live under a bush!!


36 posted on 02/06/2012 7:20:04 PM PST by dalereed
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To: E. Pluribus Unum
So, you trust the people who caused the problem to fix the problem by doing more of the same thing they did to get us here?

Oh, heck no!

37 posted on 02/06/2012 8:04:46 PM PST by rivercat
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To: Little Ray
"As far as I can tell, ain’t no such critters. Yes, that includes Loon Paul."

You're right, but I keep hoping that we have a few somewhere. I'm one, and I bet you are too so we have a chance.

38 posted on 02/06/2012 9:46:20 PM PST by lwoodham (Time is what keeps everything from happening all at once.)
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To: whitedog57

I’m the ultimate fiscal conservative and have been that way not for years but for decades. I’m for fiscal responsibility and putting the USA first and most importantly putting average responsible Americans first. But that is not happening. Instead the corrupt bankers who continue to rob us are being taken care of, and not us.

My bills and farm have been paid off for a number of years, and my bank CDs are paying relatively nothing thanks to the thieving corrupt NYC Federal Reserve. They wish first to force most of us to invest in the casino bubble of Wall St. Invest in you own real estate and not thieves.

I’ve lived my life as a fiscal conservative taking care not to get into any debt and to delay purchases until I could afford them, while the alleged conservatives in Congress took care of their thieving interest taking banker buddies. Bernanke and Greenspan took very good care of Wall St too, and they handed them not just billions but trillions of our US dollars, tax and interest free. They even gave their banker wives a hand off too.

So no I don’t look at one side or the other of politics as being bad, but instead I look at the corruption that pervades through our country and politicians that are rewarded to scrxw us for taking care of their donors, instead of average responsible Americans.

I no longer buy just the Party stuff unless it makes sense as being pro-USA and not just pro-money for a few.


39 posted on 02/07/2012 4:43:22 PM PST by apoliticalone (Honest govt. that operates in the interest of US sovereignty and the people, not global $$$)
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To: dalereed
You signed a contract, live up to it or go live under a bush!!

Rubbish! The bank takes back the property, which is exactly the recourse allowed by the contract. The former owner may indeed live under a bush afterwards, but more likely will rent an apartment.

In most states that is how the story ends.

In slightly fewer than half of the states, an unlimited deficiency judgement is available to banks. With the housing market falling as it will for the next twenty years, people who lose their homes in foreclosure may be still be left with debts that exceed their lifetime earnings potential.

A "contract" that results in a lifetime of indentured servitude to a bank should be disallowed by public policy. This in fact is what the bankruptcy laws are supposed to prevent.

Corporate executives have no problem with "strategic default" on loans secured by real-estate - which the banks generally reposess without further recourse. It is folly to supposed that individuals should be held to a harsher standard.

40 posted on 02/07/2012 9:44:58 PM PST by flamberge (What next?)
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To: Breto
Help me out if you will... As a pathetic loser who lost his job after the economy tanked, who, by the way, was a top performer in my company. I worked hard payed my taxes andh bought a house well within my means. Still, within about one year my home was 48,000 underwater because of gross criminal activity within the banking and mortgage arena. Now, don't get me wrong, I am not looking for the government to send me a check. However, since I bought a house that was priced well above it's real value, due to white collar crime. Why should I be penalized for playing by the rules? For instance, if I were to be forced into a short sale situation two things will happen: First, I will be taxed on the amount that is left after the home is sold. Even though the house was never worth what I payed for it, I will be taxed on the left over amount as kprofit! The banks we bailed out with our tax money see to it that I accept the underwater amount as profit via a 1099 tax form, and I will be expected to pay taxes fir the crimes of others. Secondly, my credit score, which is in the eight hundreds, will be hit with about a three hundred point drop. Now, all I want, if forced into a short sale, is to avoid being penalized on my credit score ... that is it, no penalty for selling my house for its actual worth. The real price I should have payed for the house in the first place. Not the inflated price set by the criminals who helped cause a world wide economic meltdown. And, by the way, I payed a 20.000 dollar down payment that I lose if I short sell my home. I simply believe that fairness is in order here.... Not a hand out just common sense fairness. So, help me understand why I should be penalized for playing by the rules.
41 posted on 02/16/2012 11:20:14 AM PST by PointBlank123
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To: PointBlank123

“Help me out if you will...” From this the ultimate conclusion is that I and all other taxpayers should absorb your loss. Sorry life isn’t designed that way for free people. I have had gains and losses and have enjoyed and suffered with each

If you believe some one committed an act of illegal contract with you the recourse is through the tort system not your neighbors wallet. I lived a life of deferred pleasure so that I could pay off my mortgage as soon as possible and I live in a very modest house. Did fix rate mortgages and saved like crazy so that I could retire with some independence. My saving habit got me through several bad times where I was unemployed for a s long as a year due to conditions outside of my control. I now don’t have a mortgage. But I also don’t have a big house in a nice neighborhood.

I feel for your circumstances I truly do but markets come back. At some point in the future the house value will return and turn into a gain I can assure you of that.

Because the government is irresponsible is no reason for us to be irresponsible. Life is not fair things happen to us outside our control all the time. How we cope with the circumstance tells us who we are.

There is no such taking as Fairness. No two people would define “fair” in the same way. Fairness is more about spreading individual pain to others than any morally worthy value one might assume it has.

I truly wish you the best and pray for Gods help to see you through this traumatic episode.


42 posted on 02/16/2012 11:39:05 AM PST by Breto (The Establishment party is killing our country)
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