This article from the Arizona Republic discusses the proposed bailout in the mortgage crisis that is afoot. Mainly, it talks about aptly named Thomas Roach, who opposes any government help for the people affected.
If the government was proposing paying off debt or doing a huge bailout of the finance industry, I think I would agree with him, but the proposal is modest. It basically gives people a path to refinance at a better rate. I guess I don't understand the problem. Mr. Roach is the kind of guy that opposes everything until it directly affects him and then changes his tune (Like if he bought a house with an ARM). You know the type, hates government subsides for the poor or health care, etc, but when you point out that taxe payers are subsidising his mortgage through the interest deduction or his child through the child-tax-credit then things are different.
At the end of the day, this is a real crisis that has the potential to negatively affect the overall economy. We should let the market correct itself, but a soft landing is preferable to a hard one.
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If this situation were just due to stupid decisions made by stupid people.... (actually, that kind of describes so much of what this administration has done, so strike that analogy)
If this situation were simply due to people over-extending themselves and the bills suddenly catching up with them, I'd agree with Roach. But the fact that this whole housing/mortgage bust is due to in part to positions taken by Greenspan and the Federal reserve then there needs to be some form of federal assistance.
A plan that would help folks avoid foreclosure and still keep their house an excellent idea. Foreclosure rates are already high are just going to get worse. We haven't even felt the effects of the major layoffs/terminations from Countrywide and First Magnus. Many of those folks are having difficulty getting jobs, and some of them could lose their houses. If something isn't done, we could see a hit to the economy.
Your analog of a soft landing vs a hard one is right on target.
You are horribly misguided in proposing a mortgage bailout. A mortgage bailout would make matters worse.
I'm all for helping my fellow man - that is why I oppose any form of bailout. Please do not claim to take the moral high ground while spending my tax money.
Do you understand that a bailout would encourage financial irresponsibility and discourage financial prudence? How do you think continued financial imprudence will make the country better off?
An economic hit is unavoidable. Let's get these bad purchases and bad decisions cleared out so we can begin to allocate resources towards more productive activities.
Let's make this clear: these people are not going to become 'homeless'. There are plenty of homes available for rent.
Most of these people didn't even put any money down in the first place so the 'home' that they are losing was never theirs in the firstplace.
Your heart may be in the right place but I don't believe that your head is.
http://no-mortgage-bailout.blogspot.com/
First lets call this what it is, refinancing of loans at a fixed rate. It is not a bailout. I would not support a bailout. Tell me how it affects your tax dollars, it doesn't. Fanny May and Freddy Mac are public entities that make huge profits. The government is covering the risk from the loan, but allowing people to fix an interest rate will not only keep many of them out of default, it will also allow for soft landing (which will still be a correction). A crashing housing market does not help anyone and is not good for our overall economy. Should many of these loans have been made? No. Should we have stronger regulations? Absolutely. This is another screw up of the Bush Administration. They could have forced lenders to tighten standards two years ago, but they didn't. When you have an administration that only serves big business, this is what you get. I don’t want to hear that no one could have anticipated this crisis, it was clearly coming.
Clearly, many people spent more than they should have. Let's not forget that many subprime buyers were taken advantage of by unscrupulous lenders. I am very conscientious and even I can admit that I did not understand everything I was signing when I bought my house (and no I don't have an ARM or a problem mortgage). Not only that but almost every person I spoke with before buying thought I was crazy for how little I was willing to spend (Real estate agent, mortgage broker, family and friends). Luckily, I did not listen to any of them, but not everyone is that educated on financial matters.
Of course these plans bailouts!! Modest as they are, but bailouts nonetheless. If you read closely, you can see talk of how to **finance** these refis. The money that will be spent on these bailouts would be better spent subsidizing healthcare for the poor and the elderly, or helping out the homeless.
What's more, the true beneficiaries of the bailout will be the mortgage companies, the banks! Post-bubble, when someone is foreclosed on, the banks are force to take possession of a property that is no longer worth the money still owed for it. They are often forced to sell at a significant price cut. Yep, the banks would rather have big brother bailout the masses than let them learn from their mistakes. Of course, if their pal Ben would also cut the interest rates, that'd be even better. Party time yet again! And that before their hangover is fully gone! Fun fun times! (feel free to read sarcasm there)
It's true that real estate agents and mortgage brokers mislead a bunch of people. But guess what? A good portion of these people were often misled by appealing to their greed. Sorry but it's true....At least from what I've seen. I used to work in the real estate industry (quit in 2006 because of how unethical everyone was behaving and I didn't want to have anything to do with it any more). I saw it happen. Even the people who bought or refied and were living in the property that they had just financed, didn't intend to stay there for very long. They thought they could make a good profit when they sold "for a lot more in 3 years."
Caveat emptor, people!
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