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Crap like this..

burns me. Today's article in the NYT about possible government bailouts of folks who bought more homes than they could afford, while unsurprising, really pissed me off.

Not one of the folks profiled in this article sounds like anyone who truly needs government assistance in paying their mortgage. They might be losing money on the deals they made but they are not claiming any sort of fraud in their mortgage or home loan...they just don't like the deal they got into. I see no reason why a couple making over 250k, a granny making over 100k, and a couple with 100k in savings should be coming to taxpayers for a handout. It's simply amazing how much our country has bought into the notion of the "privitization of reward but the socialization of risk". You can bet your bottom dollar if the tables were reversed and these folks and made a "killing" on their "investments" in their homes they would have bitched to high heaven about the taxes, if any, they had to pay on that "investment". Yet now that they are over extended on a deal that didn't work in their favor...woe is me. Bleh, articles like this make me ill.

The lawyer couple extensively profiled in the article are one of the true wonders of modern America. Over 250k a year in income and they can't get their financial act together? Oh wait, apparently they've breed like rabbits, gotten divorced, fleaced their cars, ran up credit card debt to all hell and, last but not least, taken a view of their finances that makes one seriously wonder if bailing them out will help at all (“I used to think,” Mr. Breakstone said, “that I would pay the piper later and enjoy life now. I’ve totally reversed that view.”) And I'm supposed to feel sorry for them?

Rant is over...



Feb. 25th, 2008 06:09 pm (UTC)
I'm inclined to agree with you. Certainly, I can't know the situations of every person out there who are in that boat, but I don't like the idea of a government bail-out for a bunch of poor decision-making on the part of mortgage companies and individuals. I think both parties share the blame for where we are.

When Zhenia and I went to buy our house in 2005, we were appalled by the amount we qualified for (IIRC, it was somewhere in the neighborhood of twice what we actually bought and felt we could afford comfortably). One mortgage broker put a lot of energy into trying to pressure us into going with an interest-only loan that later converted to an ARM. He extolled the virtues of investing the money we were "saving" on our house payment and that tying up the money in equity wouldn't make us as much money as it would in investments. We did not appreciate this line of "logic", and ultimately went with a different broker, who was quite content to give us a 30-year fixed rate loan.

I'm sure the first broker's pitch probably worked on a lot of people who hadn't done as much homework and budgetary hand-wringing as I had. I think unsavory sales tactics combined with a widespread lack of financial education in this county have contributed to the mortgage crisis. That said, I don't think that ignorance is an excuse for bad decision-making, but it does help explain it. I do feel bad for people who are in this position, but I don't necessarily think it's fair to bail them out simply because they made a bad financial decision that happens to involve their home. I did a lot of research when we bought our house and tried very hard to understand what level of risk we were comfortable with and the ramifications of our decisions about how much house we bought and what kind of mortgage we got. It hardly seems right that someone who didn't gets bailed out precisely because they didn't understand the potential consequences of their decisions.
Feb. 25th, 2008 06:17 pm (UTC)
Indeed. Your comments on the broker's pitch are a right on. I should be clear that in a general sense I do feel for people who fell for such sales tatics but at the same time one does have to take a step back and ask - why didn't they do the research you did. The information to educate yourself is easily available at the public library, on the internet, from consumer groups, or even from the folks in your life - should you choose to do no review outside your circle of friends. Considering a home purchase is one of the biggest purchases many folks will ever make, to not even educate yourself a little bit makes no sense. Moreover, once you do that education - which usually can amout to reading two pieces of paper on the topic supplied by a consumer group - you will see that the brokers have a vested interest in hosing you over along with the banks.

I'm very happy to hear you guys played it conservative. Ohio is getting spanked by all this mess.

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