The cry for some sort of mortgage relief for troubled borrowers is everywhere.  Apparently all the subprime homebuyers in the US are in California, or at least they are the largest group to catch "bail out" fever, but then, what can you expect from a state that is so communistic it is oft referred to by its own citizens as the Peoples Republic of California.  What a place: beautiful weather, flashy cars, ever-rising real estate prices and when it all goes bad, just get together and scream and you don't have to own up to it.  Sounds like fantasy world to me.

As I noted in my last post, all this hubbub is about less than 1% of the homeowning population in this country.  You could have fooled me, I would have thought the entire country was going into foreclosure!

I'm not at all callous, I do know what it's like to worry about making payments, and in fact I feel quite bad for those in a pinch, no matter how they go there, but that doesn't mean walking away from your responsibility or expecting someone else to step in to clean up your mess.  Sometimes life takes unexpected turns for the worse.  Only in this generation, and seemingly only in this country, does everyone seem to feel that when that happens it's okay to just throw up your hands and file for bankruptcy or to expect everyone else to bail you out, be they wall street investors, the Federal Reserve or fellow taxpayers.  Whatever happened to a sense of responsibility? 

I think it's funny that I didn't get any checks from all those people selling homes in California in 2005 for double what they paid for them only two or three years earlier, yet they want people like me, again as an investor or as a taxpayer or both, to now step in and "rescue" them.  Here's a novel idea if your mortgage is $400,000 and your house is worth $300,000 - keep paying your mortgage and keep living there and move on with life.  So what if you're underwater on the loan, does that mean the house suddenly doesn't work for you?  It must still work for you if you just want the lender to take a writedown to $300,000 as one of the ideas Robert Kerr suggested on Brian Brady's Bloodhound Blog plays out, since you'd stay in it if the mortgage was only $300,000, right?  Hmm...

I think my grandparents on my dad's side owned the same house for about 50 years.  I'm sure it had great appreciation over time, but I'm equally certain that there were a few down years in there as well.  I don't remember the stories about how the Federal Reserve came to the rescue.  I do remember from many a person that went through the Great Depression, stories about bread lines and 18 hour work days - when they could get work.  How different in contrast is this subprime "disaster"?  On the radar screen of horrific events in the lives of the American populous this doesn't make the list, not even near the bottom.

Here's another conundrum I'm stuck on.  If the issue is people that bought homes with nothing down and can't make payments now, how is going through foreclosure such a horrible thing - are they really worse off now than before?  That does sound callous, I know.  Think about it for a second, though.  If they didn't have a home before, and have nothing invested in it (remember, nothing down), then they don't lose anything in being foreclosed on do they!?  Again, it's almost fantasy land.  Their already-bad credit will take beating, but then, it should if they don't want to own up to the financial responsibility they signed on for.  Last I knew that's actually what a credit score was supposed to indicate - how likely they are to not live up to their financial responsibilities.  Best of all, when the long foreclosure process finally ends, after they haven't paid a dime for six months or more to have those nice digs (which invariably they will trash before moving out) they get to go back into the rental market at a time when oversupply in the for sale market has been lowering rental rates.

This is especially relevant because as I noted to Lenn Harley and as Carole Cohen wondered, this is something of a local situation in some markets, but not in any way a national crisis or equally applicable to people in all areas of the country.  May G-d bless us to not have to ever face foreclosure ourselves, and may those in authority have the gumption to handle this fairly - for all involved, not just to make less than 1% of the population happy because they were irresponsible in their borrowing and spending habits.