March 18, 2008
Thoughts on saving homeowners who are upside-down/underwater
So there are people who signed up for mortgages they can’t afford to pay, for houses that are worth less than they paid for. These people are upside down/underwater.
There are plans afoot to use taxpayer dollars (meaning, your money and my money) to make sure these people can stay in their homes.
This one quote does a pretty good job of summarizing my thoughts on these plans:
UPDATE: Consumer Groups Decry Bear Stearns Bailout As Homeowners Suffer
Dean Baker, co-director of the Center for Economic and Policy Research, said a number of proposals that are geared toward helping homeowners facing foreclosure will actually benefit banks and other holders of bad mortgage debt — institutions that could “earn tens of billions of dollars at taxpayer expense.” He added that owning can be much more expensive than renting.“It’s really infuriating for me that we pushed low- and moderate-income people to buy overpriced houses with really bad mortgages,” he said. “And even now, after it’s proven so disastrous, you have politicians that still can’t take two minutes and think for a second that maybe it’s not a good idea for everyone to be homeowner regardless of what price they’re buying at.”
I could say more – but I’ll just leave it at this for now.
2 Comments to “Thoughts on saving homeowners who are upside-down/underwater”
March 24th, 2008 at 5:58 am
Have you considered what the foreclosures are doing to local property values and thus to local tax revenue? This is not a problem for only investment banks and homeowners who cannot afford the mortgage they have.
Yes, owning a home can be expensive. Anyone considering the purchase of a home should always go through the buying vs. renting matrix to see if home ownership is right for them. Home ownership has been, and may continue to be, one way to build wealth, i.e., through appreciation.
Some thought must be given to the ‘purveyors of bad faith’ who created mortgages whose rates would re-set to levels owners could not afford. The bet was on an increasing home prices forever – or at least until the property could be sold.
Politicians must be involved. The regulations that apply to commercial banks have not applied to investment banks. Had they we might not be in this mess. Barney Frank is noteworthy in his efforts to create meaningful oversight for an industry that lacks it.
March 24th, 2008 at 8:32 am
Have you considered what the foreclosures are doing to local property values and thus to local tax revenue?
You’re right! Taxpayers across the nation should stand up, open their wallets, and pour the contents out to the Federal/State Government so that the money can be distributed to all the local counties and cities that will suffer from lower tax revenue.
We as a people must do whatever it takes to make sure that house prices never drop. EVER. Pain is unAmerican. We should have a constitutional amendment that guarantees that when you buy a house, you’ll be able to sell it at a profit – ALWAYS.
Furthermore, I propose that we guarantee that cars NEVER lose value too. Just think about all the state governments which are hammered because the value of the Ford Windstar drops YoY and that they count on the tax revenue from the value of the car.
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