This is a reprint of an article that I wrote for my other blog Marc's Corner. Generally, I don't write about politics on ActiveRain and in fact try to steer clear of it when it comes to my business. But real estate and politics do mix a great deal. I thought that I'd give you a glimpse of what I write about on my other blogs. I will probably follow this up with another article that I've written as well.
I was asked by the staff at Zolve, after they read a couple of my blog posts, if I would contribute to this site. I must admit that I was thrilled at the opportunity and humbled at the same time.
As you can deduce from their site title, RealEstatePolitics.com, we will be talking about real estate and politics and how they intertwine in our present state of affairs. I won’t deny that I am opinionated, but at the same time I am willing to see other viewpoints and give credit where it is due. With that said – Welcome to Marc’s Corner!
I was formulating what to write in my head and wanted to speak about the Mortgage Aid/Foreclosure Rescue Plan that made its way through the House and is now stalled in the Senate. But while thinking on all the aspects that are involved, it just appeared to be too convoluted to tackle correctly in one post.
Before we go any further, I need to make a couple of statements. First, I think it is a horrible thing for someone to have their home foreclosed upon. I have a major issue seeing someone who has worked hard and has been doing what they were told to do, to wind up losing their home and almost everything else with it. I am not a bleeding heart nor am I a sadistic bastard. Well I’m sure I know some people that may say differently.
But one of the main questions that has to come to mind – Is the government the answer to our present situation? I have an issue with that on many levels. You have to remember, when you think the government is the answer, than you are therefore saying ‘we’ are the answer. Because the long and short of it, is that it’s us who will ultimately foot the bill.
Here’s an example, we have a slight issue with that in the State of Florida with property insurance. Amongst all of the insurers, there is a company called Citizens, which is the state’s insurance co. Unfortunately, this company was grossly under funded to handle the catastrophes that have occurred in this state. Because of that, every insurance policy in this state pays surcharges to cover those loses. But that’s a story for another day.
There are several other questions that need to be asked in regard to the measures being proposed by Congress. Who is really getting bailed out? Is it the people that will be saved from foreclosure or is it really the lending institutions? This needs to be taken a step further as to who are some of the major proponents of this bill beholden to. We’ll look at some of these players and their campaign contributors. I think some of the things that we will unearth will surprise you.
Just a little history before we wind up for today. Lending institutions make their loans based on risk. The rate the consumer pays is based on their risk factor. You hear now about lending criteria being tightened. Well really all we are seeing is it going back to the way that it was before these lending institutions decided to ease their lending restrictions.
You may ask why did they do this? Well there were several reasons. There are two main ones that I see. Firstly, they needed to tap into a market to procure more loans and this they did by easing restrictions and making it almost as simple as signing your name to get a loan. Almost anyone could get a stated income no documentation loan. Secondly, they were playing the risk game themselves. They saw, as did so many, that real estate was appreciating at double digit rates in many areas.
I remember when we hit the height in 2005, we would see properties that were appraising for values never seen before. It was unbelievable. Now, it’s really amazing to me because these lending institutions have economists. They had to know that this market was not sustainable. Goodness gracious who in their right mind could have thought otherwise.
So this begs the question, why should these companies be saved from themselves? And on top of that, why should we, the working people, be the ones to use our hard earned money to save them?
Just a thought!
Anyway, again Welcome to Marc’s Corner and I’ll see you soon!
;)
;)
Marc, I suppose the government bailing out mortgage holders or not can be argued both ways. I haven't thought about it too much to have an opinion, but it does seem the more the government comes to the rescue in each situation we move more into socialism as an economic system rather than capitalism. Capitalism has a lot of risks and people get hurt when things go awry, but the competitive nature of it is usually better than socialism. I'll be interested in others opinions in why they think this bill should be passed or not.