Mortgages & the Milking of America

Government propagandists, playing the press like the Devil's Bagpipes, are telling us how wonderful the President's new mortgage plan is. CNBC and other liberal government press organs shouted down dissenter Rick Santelli, who called for a new millennium tea party. Danielle Babb, dean of business at Andrew Jackson University, has written a fine piece that dares to question the wisdom of this latest redistributionist effort.

The plan isn't all it's cracked up to be. There are several issues on both the homeowner and investor side as well as the lender and builder side that make this plan problematic in the long term. As the Economic Advisor for Vice President Biden said yesterday, we will "share the pain" -- we being the government and the banks.

There is only one problem -- "we" are the taxpayers, and of those that own homes, over 90% of them are still paying on time. It seems like the "Ask not what your country can do for you..." idiom doesn't apply to everyone. The plan won't work. It doesn't address jumbo mortgages, many of which are about to reset this year and through 2011 and don't qualify for Freddie or Fannie mortgages.

It doesn't address the moral hazard of so many people I read about and hear from that are literally not paying their mortgage, but instead are waiting for a government handout.

It doesn't address those who are frustrated by seeing big banks and the "Big 3" given billions of our taxpayer dollars while they pay their negative amortization mortgage on a home that is $200,000 under water -- homeowners that are now encouraging their spouses to quit their jobs so they can get an even lower payment under the new 31% DTI.

She details the perverse incentives that only a government could devise: Incentivising people to quit their jobs and quit paying their mortgages to qualify for government assistance, not to mention those underwater who are scooping up a new property at firesale prices and then abandoning the old home. Professor Babb's article is an excellent argument against this plan. Arm yourself. Go read the entire article here.

http://www.thestreet.com/print/story/10465005.html
http://www.chicagotribune.com/business/chi-rosenthal-23-feb23,0,6124753.story

Government Sponsored Greed, Ignorance & Stupidity

Is your wallet feeling a little lighter? I'm not referring to your latest trip to the gas pump. President Bush just signed the gargantuan $300 Billion mortgage bill that bails out the stupid, the ignorant and the greedy. As a bonus, your government has now also shouldered a large percentage of mortgage failure risk.

Plain language: They just acted as cosigners for millions of home loans that are already in trouble. Is it any wonder our federal debt is approaching $10 Trillion?

My favorite senator, Dr. Tom Coburn, likes to remind us that spending other people's money is not generosity. Congress has a 9% approval rating while Senator Coburn's is around 60%. Hmmm...

Even the most flint hearted fiscal conservative agrees that we must help the wounded veteran, the aged, infirm and truly needy. But the goomer who bought too much house does not belong on that list.

If the president and our elected officials want to help such people, they should use their own money. After all, our congress has a much higher percentage of millionaires than the general population. Shoot, Teddy Kennedy could probably solve this "crisis" single-handedly with the cash pile he's sitting on. Get the Pelosis and the Feinsteins to kick in some San Fran cash and they could really make things happen! But no, it's so much more satisfying handing out other people's money. The power rush must be incredible.

Bottom Line: I bought a house I could afford; Boy do I feel stupid. You too? The government has a word for people like us: SUCKERS!

Suckers Bail out the Stupid, Ignorant, Greedy

Once again, our esteemed leaders have conspired to reward the stupid, the venal, and the ignorant, thereby guaranteeing more of the same in the near future (It’s called creating a Moral Hazard). And of course, they do it at the expense of the prudent and the thrifty. Our tax dollars are already bailing out the Wall Street pigs, so why not reward the irresponsible home buyers as well?

Are you sitting in a home you wish was bigger, but it's all your budget will allow? Our government has a word for you: SUCKER!