Thursday, April 03, 2008

The mortgage bailout

My wife and I bought a house--a duplex, actually--a couple years ago. We could have purchased a much larger, nicer home if we had bought into the various morguate schemes that allowed people to pay much less now, knowing that the mortgate would go up later.

Instead, we opted for a more modest home with a standard, fixed rate mortgage that wouldn't go up.

At the same time, many others bought homes they really couldn't afford using these convenient mortgage schemes to buy with low payments now and pay the piper later. Now that the payments have gone up, they are paying the piper. But never fear! Congress is going to bail them out!

In other words, those of us who were responsible and bought what we could afford, now get to pay taxes to bail out the greedy, "keep up with the Joneses" type who overextended themselves on homes they couldn't afford.

Isn't the nanny govenment wonderful? When you make irresponsible decisions, the government is right there to take your neighbor's money to bail you out!

See Michelle Malkin's excellent article on "The Left-Wing Mortgage Counseling Racket."

10 comments:

Brent said...

I actually agree with you in large part, which makes me wonder if I'm missing something. :-)

However, it's not just the left proposing aid for homeowners who chose bad mortgages. According to an article I just read, a bill is moving through the Senate with bipartisan support. I refuse to give web hits to hateful people such as Michelle Malkin, but I would hazard a guess that she doesn't mention this.

Dennis said...

Brent,

I don't know, but I have a sneaking suspicion that, generally speaking, the Democrats are motivated to help the "poor" while the Republicans are motivated to help the banks and mortgage lenders. I think both Dems and Republicans are misguided in this case.

Michaelle does mention the bipartisan support and criticizes Republicans for it. What has has ever written that is so hateful?

Brent said...

I don't mean to distract from the issue you were actually posting about, but since you asked:

First, I find her just plain idiotic and annoying. (You've seen her cheerleader video, right? I'm not sure how anyone can take her seriously.) But that's just a matter of taste.

Second, she has a habit if getting the facts wrong on a frequent basis. But that's not what you asked about either.

As far as offensive comments are concerned, even fellow Fox News favorite Geraldo has said, "Michelle Malkin is the most vile, hateful commentator I’ve ever met in my life." (True, they don't exactly get along these days.)

Just a couple of examples:

She wrote an entire book ("In Defense of Internment") arguing that the internment of Japanese-Americans during WWII was justified.

After three prisoners at Guantanamo Bay committed suicide: "And really, the reaction to the suicides should be, 'Boo-freakin-hoo.'"

And don't forget how she stalked and constantly attacked the 12-year-old and his family after they dared to speak out in support of SCHIP.

Robert said...

Brent -

I think it's a real mistake bailing mortgage companies and owners out. It sets the precedent of the government bailing you out when you make bad loaning/buying decisions. What happens with the next bad set of investments? When banks and Wall Street get paid off, how long will it be before the little guy starts asking for his cut (if he isn’t already)? I’m frankly tired of paying for other people’s bad decisions.

However, the government is not blameless in this mess. For the past 20 years, the federal government has been putting pressure on lenders to extend credit to those people who might not be good credit risks. There has been intense pressure to loan to minorities and the “disadvantaged” regardless of their credit worthiness. Now with liquidity drying up, losses mounting, and those existing credit risks now becoming credit liabilities, lenders are turning back to the government saying, “Hey, we did what you said and now look what happened!”

That’s not to say that they aren’t at fault. Lenders certainly thought the good times were never going to end and were making worse and worse decisions to fatten their bottom lines. In fact, Greenspan had encouraged some “bubbles” in the economy during his tenure as chairman of the Fed. Lenders just believed that they could continue to take larger and larger risks and they would be immune from readjustments. Simply put, they got greedy.

Buyers (IMHO) are the most at fault. They were so busy keeping up with the Joneses that they never stopped to look at what they were signing. They couldn’t be bothered to read agreements, investigate their finances, or spend any amount of time understanding what it was they were doing. Some of them viewed it as a “get rich quick” scheme. Now they expect us to give them money for their lack of preparation or bad investments. That’s garbage. I’d love to have a $450,000 house too, but I can’t afford it. I certainly don’t expect my neighbors to pay for it for me.

The simple fact is, if we start bailing out people whenever something “bad” happens, we’re only going to encourage this behavior. Unfortunately, it sometimes takes some pain for people to learn from their mistakes.

Brent said...

Robert, if you'll read my original comments, I was agreeing with Dennis. I would agree with much of what you said as well. Maybe you saw my name and just assumed I was arguing with him. :-)

Robert said...

Brent -

LOL! I apologize if I seemed like I was arguing with you. In fact, I was just adding to the conversation not attempting to disagree with you (yes, I read your response). We all seem to be in agreement that bailing out companies and homeowners is screwy. I wonder why it is then that politicians are falling all over themselves to do this bailout when their constituency is not really in favor...

I guess I'm not really sure why I directed at you - maybe since you were the first poster. :)

St.Lee said...

Here's my take on it. Why do the bankers and mortage companies deserve my "charity"?

As for the unfortunate who will lose their houses, well, how much are they actually losing? It sounds like a tragedy when you hear someone will lose their house, but my guess is that most of those in that position have little or no equity in those houses. If you subtract the amount they would have been spending for rent from their monthly payments, have they really lost much? Enough for them to learn a lesson from it even? Pretty good chance they will learn a different lesson from a bailout though.

Brent said...

Robert, that's OK. I was more confused than anything. Glad we can all agree on something for once. :-)

Amy said...

st. lee has an interesting point. We don't "bail out" renters who can't afford an increase in rent, do we? People who have interest only loans and aren't paying anything extra toward the principal don't own any of their home. It's really no different then renting.

L'oiseau said...

I have to admit that I'm not really "up" on this topic, but isn't one of the reasons that we need to stop massive home foreclosures basically to help all the neighborhoods?

If you have a foreclosed house, an empty house, next to you, then selling your house will be harder, the neighborhood crime could go up, etc.

That's just one argument I've heard.