Mortgage Mess

As I read about the 75 BILLION that the taxpayers are dishing out to help those facing foreclosure, I found myself asking WHY?!

According to this article, it will be helping some 9 million Americans. Ok. So 9 million people out there are facing foreclosure. (4 million facing it now, 5 million under water) I think some questions need to be asked before the government comes and 'saves' the day.

1. Why are these people facing foreclosure?

If the reason is that they lost their income and have no way of paying for their home, then ok, perhaps they should be helped out a little. My family looked foreclosure in the face once before, and any help would have been great. So, by all means, save the day.

According to Peter Ubel, author of "Free Market Madness" people are FAR too optomistic about their futures. In an interview with the Harvard Business Review, Ubel states that the governments role in a free market is not to protect the citizen from the 'predators', but to protect people from themselves. I say our leaders have failed us then.

Now, if someone is facing foreclosure because they had no business buying the home they purchased, that's a completely different story. Some may scream "Ah, the predatory lenders! They are evil! It was all their fault!" That may be true, however, that wont work with me. Nobody forced these people to accept a mortgage at these terms. The reason why these folks couldnt get better terms for their loans is because they were too great a risk for the banks. Many, including myself, place blame on past Presidents for thier highjacking of the American dream. (See LINK ) This was pure and simple - banks had to loan the money out to high risk families.

Uber also states that "Most people have a hard time comprehending numbers, things like percentiles. If you asked the average American what is 10% of 1000, probably 1 in 3 people wont be able to answer that quesiton correctly. Now, put those same people in front of a mortgage broker who is talking about an adjustable rate mortgage that starts at x percent and goes potentially up to y or z percent. Remeber, these are people who dont understand what a percent is, and we're expecting them to understand ARMs? I think sensable regulation would say that we need to either help make sure people understand things like that better or we need to set acutal limits on how much people would need to put down on a house before they can qualify for a certan type of mortgage to keep them from over-extending themselves. "

This sounds a lot like the way mortgages were done before the multi-national banks, when each city had their own savings and loan.

Not everyone should own a home. Only those of us who have shown over time that we are credit worthy pepole.

Now, back to this mortgage bailout. The next tier of folks to receive some help, are the 5 million under water. I really feel for these people. These are people who's mortgages are for more than their home is worth. One more time. Their property values have fallen, and now they owe more than their home is worth.

Why? Because the housing market has collapesed; the first 4 million who were a litte too optomistic about their incomes lost their shirts.

So now, we have people who pay their bills on time and are otherwise good citizens being dragged down bigtime. This will eventually be felt all the way to the top.

I am all for helping these folks, but, for the ones who caused this, I say
NOTHING. Uncle Sam is closed.