Stimulus and Mortgage Help

Stimulus package?  Sure, it sounds good.  Mortgage help to millions of homeowners defaulting on their loan?  And that somehow is going to help ease the real estate crisis? Who are we kidding?

So, the government will subsidize people's mortgages.  They want homeowners in distress to renegotiate a lower payment and the government will make up the difference to the bank.  Lots of things wrong with this idea.

First, let me say that there may be *some* homeowners that are in distress through no fault of their own.  But, let's look at the most likely scenario of how most of them got in trouble.

I make $35K year, and after many years, I save $20K as a down payment, and go to the bank to get a loan for a $200K home, which is about the most I can afford.   The slimy loan officer tells me, "...you know what, I can set up the papers so that I can show you can afford that new $450K house they just built, up on the hill".  My heart is pounding,...  "what that beautiful 3-car garage home, are you serious?"  "Yes, don't worry, we'll set it up so you only pay the interest for a the first two years, and then we'll re-negotiate a term at that time, it'll be O.K."   I'm so excited, of course, "go ahead, draw up the papers,...."  that beautiful house on the hill...  it will be mine, oh my God.  Of course, it doesn't cross my mind that I am only making $35K a year, that I can't even afford to keep-up the house, never mind pay the real mortgage.   So, here we are a few years later, and I want the government to help me, I am screaming bloody murder, I was misled by the loan officers, the government has to do something about it.  Give me a break!  What, I didn't know that I was only making $35K a year?  I didn't know that all I could afford was a $200K home?  Who are we kidding here.  And, even if we assume for a second that I didn't know, is that an excuse?  Shouldn't I know?  Can you imagine going to court for having bought a stolen car, and trying to use the excuse... "Your honor, it's not my fault, I didn't know that when I was paying $5K for that brand sparkling new $80K Mercedes, there was something wrong".  And what, do you expect the judge to say, "...Oh, don't worry... it's not your fault, we'll just help you pay for the difference so you can keep it".

Doesn't that sound like what's going on here?

And then, there is another issue.  The government is going to supplement these mortgages, and the want people to keep making payments on a property that keeps losing value?  Now, how much of a business sense does that make?

Oh, I forgot, the government will only help those families in distress.  So, let's see.  Finally, three years ago, after working long hours for many years, my wife and I were able to save enough money to put as a down payment to build a home the way we wanted it.  Last year, my wife lost her job, and is now working part time, that's the only thing she could find.  To make enough to carry our new home mortgage, I am working an average of 65 hours a week in a descent paying job (thank God I have this job).  We are just able to stay above water.  But guess what, we do not qualify as a "family in economic distress".  If I go back to working just 40 hours a week, we would.  Talk about an incentive to become state-dependent.

No Bail-out for Wall street

Eventually, as we all know, the s*it hits the fan.  And it did!  Wall street came to a screeching halt, that totally messed up the UK and other European markets, banks stared to fold right and left, and just like a few weeks ago (which I think it might have been testing the waters), the government proposed to step in and save the day using someone else's money - yours and mine.  

So, you figure, well, sometimes governments need to do that, for the common good.  They step in, infuse all sorts of (*our*) capital, end up with all sorts of equity (on *our* behalf) and then, if things work out, they (and *we*) get something in return.  But no, the original version of this ingenious plan didn't call for any equity or any other ownership.  It would simply buy the *bad debt* from those failing institutions... and the what?  Oh, I forgot, in 5 years the government would re-evaluate the situation and see if there was any windfall to collect, and *at that time* come up with a plan for repayment.  Are you kidding me?

I think the American people are waking up to what is going on, which transcends political party affiliations...  They (politicians and big wigs on Wall street) are all interested in a free ride.  All willing to take the credit for something going well, and nobody willing to accept responsibility. Sounds all too familiar?  Well, it is.  It's happening every day.

I don;t want to bail out the investment banks.  I don't want to bail out a million people that got mortgages way higher than they could afford and are now having their homes foreclosed. Most of them knew they were getting into something they could afford.  And, if they didn't they should have.   Why is it that "ignorance of the law" is no excuse in any legal setting, but in this instance "claimed" ignorance needs to be excused?   Why should I and the next persion have to work harder to now bail them out.  

Here is the Oxymoron...  A bail-out plan is proposed by Bush and his administration, Democrats are all for it and are pushing for its passage and republicans vote it down.  Is this ironic, or what...

And, the day after that, the dollar goes up against the euro by the highest percentage since its inception.

This is a weird world we live in.