NationRight

There’s been a great deal of talk describing the recent economic rescue package as “corporate welfare,” and, in part, it certainly is (Its also been a tremdous failure so far, by the way).  The people involved in making, selling, and trafficking these loans should be punished by the loss of their jobs and not saved by the taxpayer.  However, there is another group of people who will benefit greatly from this massive bailout: over-leveraged homeowners.

Often, these people are made out to be the victim of predatory lending practices and the loosely-regulated mortgage industry; however, every one of them signed on the bottom line.  When they signed this document, they were committing to repay the loan under a certain set of conditions governing interest rates, fees, and schedules.  If they were the “victims” of a low-doc loan that didn’t require income verification, they knew how much their income was.  Even if their predatory lender told them to lie about their income, the applicant knew they were lying.

Now, not surprisingly to anyone with half a brain, these mortgage holders are having difficulty making their payments and their houses are not worth what they owe on them.  So, they are looking, at best, at many years of negative equity in their homes, or, at worst, foreclosure.  Obviously, a good socialist can’t allow this to happen, so what do we do about it?  Bail them out, of course!

This is the exact wording from the bill:

In the case of a residential mortgage loan, modifications made under paragraph (1) may include –

(A) reduction in interest rates

(B) reduction of loan principal; and

(C) other similar modifications.

OK, so, if you got into a “bad mortgage” (translation: you are living in a house you can’t afford), then the government will either reduce your interest rate or reduce your principal.  In either case, this amounts to the government writing you a check to help you make your payment.  Sure, if they reduce your principal by $50,000, you have to give them the first $50,000 you make on the sale of the house, but that just means the government is giving you an interest-free loan.

Don’t forget that they have already been living in this house they can’t afford for several years; now, they are going to get to stay in it for as long as they can make the (reduced) payment!  So, if, five years ago, the family down the street from me with the same income bought a house twice as expensive as mine, they have been enjoying that house for five years already and will get to continue to enjoy it for the forseeable future at a reduced monthly cost.  All this time, I am living in a less expensive home with no help from the government.

Here’s an alternate plan: let me trade houses with the “victim” and make both monthly payments equal to mine.  Now, I can enjoy the house that they couldn’t afford in exchange for allowing them to continue to live in a house (albeit smaller) at all.  That way, people stay in their homes, housing values are stabilized, and the “bailout” money actually benefits someone who was smart enough to buy a house they could afford in the first place!