Saturday, March 29, 2008

mortgage bailout for flippers and speculators

The Bush administration is finalizing details of a plan to rescue thousands of homeowners at risk of foreclosure by helping them refinance into more affordable mortgages backed by public funds, government officials said.

The devil is in the details. But pardon me for being suspicious about ANYTHING the de facto Bush Administration does that is allegedly to help the little guy. I mean, why start now, 7.25 years into his regime?

I am somewhat sympathetic in principle to homeowners who find themselves upside-down (i.e., they owe more than the house would sell for) and can't afford the monthly mortage payments - a tough position to be in. But that category doesn't just cover the hard-luck story like a family that lost a job. It includes morons and blackguards that take out some sort of iffy mortgage (interest only, absurdly low initial rate, etc) based on the idea that they'd live in it for a year or two and then flip it for a big profit, pay off the mortgage before the higher payments kick in, and do it again. And again.

THOSE people shouldn't get a dime. No more than big companies that bought funky mortgage-backed securities should. They were both engaged in acts of speculation. In speculation, you bank on that 20% or 50% or 100% quick payoff. BUT YOU SHOULD NOT GET ANY GUARANTEE OF NOT GOING BUST.

Sorry for the shouting. But it's true. Guaranteeing to cut losses for risky speculations encourages further risky speculations. And that's not good.

So if the program is designed wisely to help the truly unfortunate, and not some upper-middle-class speculator types, fine. But color me dubious.

For the first time in my life, I can write the following sentence: I agree with Senator Tom Coburn (R-Oklahoma). Coburn hopes "the administration is not into subsidizing stupid behavior. It's one thing to help people who made a rational decision, who were spammed or defrauded. But it's another thing to reward people who thought they were getting something for nothing, and knew what they were getting into."

Well said.

1 Comments:

Blogger J.M.C. said...

I got one worse than that. The ALS Registry act S.1382. ALS patients nation wide are being held hostage on Capitol Hill by Tom Coburn, the Senator from Oklahoma. Held by senate trickery called a "Hold". This legislation would authorize the establishment of an ALS Registry at the Centers for Disease Control and Prevention. The House of Representatives passed the bill on Oct.16, 2007 by an overwhelming 411-3 vote. The Senate H.E.L.P. Committee favorably reported the Senate version of the bill on Nov. 14, 2007 and more than two-thirds of the Senate has cosponsored the bill. The ALS Registry Act is needed to build on projects underway in three test cities and is supported even the Administration. No explanation by the Senator.

6:49 PM  

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