Be sure to take the poll about this subject at the end of the post!
I just finished reading a recent article about Treasury Secretary Henry Paulson saying that there are many foreclosures that cannot be helped; but I would venture to say that there were even more than he thinks that shouldn’t be bailed out, and for different reasons. Here is what the article says:
““Many of today’s unusually high number of foreclosures are not preventable,” he said in prepared remarks to a mortgage-lending forum meeting in Arlington, Va. “There is little public policymakers can, or should, do to compensate for untenable financial decisions.” Paulson said that there were 1.5 million home foreclosures started in 2007. He said some economists estimate there will be about 2.5 million foreclosures started this year.”
I know the Federal Gov’t has been working on different ways to help people keep their homes, and I know that a complete housing collapse would finally send this country into the Depression it has been dancing around for 2 years. But I still don’t think it is a good idea. Lost your job? I can see giving you some help. Became disabled? Sure, of course. But bail you out because you took on a loan for more than you could afford?
Some people say that is heartless, but I disagree – after all, if you bought a giant truck when gas was $2.50, should you get bailed out of your car loan because you cannot afford the gas for it any longer now that it is $4.89? Should someone who charges a flat-screen TV and home entertainment system to a credit card get bailed out of having to pay for it because they decide it’s too expensive for them after they get the TV hung on the wall?
Too many people are only about short-term reward and give no thought to long-term planning or consequences, and the housing crises is partially caused by those people.
I was on the phone the other day with friends I left behind in California having a discussion about just this topic, and I was telling them about home prices here and how “affordable” it is compared to Los Angeles. Myself and many of my friends do not own homes, yet most of us all make a decent living and are comfortable in their financial situation. However, because we couldn’t afford a solid, 30 year, fixed rate mortgage in the town we were living, we continued to rent. We are going to start looking at buying now that we live somewhere affordable and prices keep dropping – thanks to the people who took on more than they could handle. We can pretty much make an offer we are comfortable with and know that if they don’t accept it, there are plenty of other houses to choose from. It’s a good time to buy, and it could get even better. Patience comes to those who wait!
I know it is not PC to say that homeowners should not be bailed out by the Feds, but I cannot accept that it is OK – and neither can any of my friends who did the responsible thing and waited until they could actually afford something. Our government has bailed out some 1.5 million homeowners in the last 12 months – that is a lot of money being spent to rescue people from their own negligence. (which is money we don’t have anyway) Like I said, if you have a regular fixed mortgage that you could afford before and now you cannot due to job loss or an accident, I have no problem with offering a little helping hand. But if you took on a 5 year, interest-only, no payments for 60 days, “you too can afford a house the same price as someone making 10 times what you do” type of mortgage, then sorry – I don’t think anyone should be bailing you out. Walk away if you must; I would prefer that to my tax dollars being used for this. (Although I don’t think that is right either) I have written about this before but my conversation with my friends in California and this recent article got me thinking about it again. After all, if the government is going to bail out people who were negligent in their choices, what should the rest of us get? How about college education for my future children guaranteed at an incredibly low interest rate? That would sure help me out! Personally I don’t want anything from the Feds for my behavior, but it just doesn’t seem right how they are going about bailing out so many people that should have known better.