This Home Owner Rescue Package is Starting to Tick Me Off!!
All of this is completely predictable. There are so many reasons why attempts to prevent foreclosure won't work, are bad public policy and are frankly immoral.
First, why would any lender continue to loan money at low interest rates if they know that they would either (a) have to forfeit a portion of the principal they loaned if the borrower defaults or goes into bankruptcy or (b) won't be able to exercise their right to foreclose on the collateral to mitigate their loss on the loan? The answer is that it is inevitable in this environment that interest rates will rise - the risk analysis has shifted. Credit will become harder to get (already happening) and more expensive.
The moral hazard is that by helping people who have, for whatever reason, not fulfilled their contractual obligations by preventing foreclosure, it makes it more difficult for those who have a history of fulfilling their contractual obligations to obtain a mortgage loan. This means fewer home buyers in a buyers' market. That hurts home sellers and everyone whose livelihood depends on real estate transactions - from agents to appraisers and home inspectors and title examiners, closing attorneys - the list is endless. Government has chosen winners and losers - predictably making the wrong choice.
Foreclosure is sad for the families affected by it. However, by intervening in a private contract, the government has caused an unintended result that is worse than the "problem." Foreclosure is a REMEDY for the holder of a contract right. It is not a PROBLEM. When a foreclosure occurs, a lender is made whole, the borrower gets a fresh start free of the debt (yes - there are credit implications) and the sale creates a value for that asset. Are we experiencing "declining asset values" in real estate because of foreclosures? Yes - however, this problem is exacerbated by government policies that make private mortgage money harder to get by otherwise qualified home buyers.
Please send this to the rocket scientists on Capitol Hill and Pennsylvania Avenue. We need someone to inject some sanity into their policy.
Hmmm . . . Obama signed a measure allowing mortgage companies and banks to restructure loans for millions of American families facing foreclosure. This is like bandaid that won't stick to the wound! What good is this going to do?
I am so bumfuddled as to the lack of common knowledge of cause and effect within our government. Are they really this stupid?
Why? Why are MOST American's facing foreclosure today?
I keep hearing that people shouldn't have applied for mortgages they couldn't afford. Okay. But that is just the scum on the top of the pond of problems. Most people who lose their jobs can't afford ANY mortgage. How many of those people had income before they had a job? Is anyone paying attention?
How many of our jobs have gone over seas? How many manufacturing jobs? How many food processing plants? How many clothing and textile mills got handed over to foreign countries?
The people who fell for the "adjustable mortgage" play were fractional in comparison to those who are losing their homes. Banks got the bailout money, taxpayers got the shaft. We are still getting the shaft.
Maybe we can all get jobs in the Environmental Protection Agency, the unions or the military, because after the bailouts and the payoffs, there will be no other private sector jobs . . . unless you want to start investing in real estate in Taiwan.
I don't see the rescue package doing much good unless we can somehow materialize some 13 million jobs back to the U.S. of A.
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