Senate takes on Housing Stimulus
Despite the fact that I’m not a homeowner, I’ve become more and more troubled by the proposals I’ve heard buzzing around the Hill, all aimed at trying save those homeowners who are having a hard time making payments on their sub-prime mortgage loans.
While I think it’s unfortunate when people don’t have the money they need to pay down their debts, it’s almost impossible for me to feel sorry for those who are in trouble because they cant afford their mortgage payments.
These loans were initiated by the homeowner, with terms that were clearly spelled out and agreed to. Just like when you open a credit card, you know exactly what interest rate you’re going to get. The same holds true with any home loan, before you sign on the dotted line, the terms are clearly laid out. If you don’t understand, or something seems fishy, it’s your responsibility to get clarification.
Yes, even for those who borrowed sub-prime loans.
People who took out these loans knew that their teaser rate would only be temporary or else it wouldn’t have been called a “teaser” or “introductory” rates. Even with these temporary (teaser) rates, these people knew that there would come a time down the road when their payments would increase and they would be held responsible for ensuring those payments were made. Just like any contract, if you don’t meet the terms, there are consequences and penalties.
I was always told that part of being an adult was living up to your responsibilities and making sure you never take on more debt than you can handle. However, if you do, you have to pay the consequences and live with your mistake and learn a lesson for the future.
I guess it’s that logic that is making the latest housing stimulus proposal so difficult for me to comprehend and accept.
Here are some of the details of what it could contain if passed (via cnn.com) :
* $4 billion in community block grants for states and local governments to buy and refurbish foreclosed properties
* New bond authority for states that can be used to refinance subprime mortgages
* Tax credits for people who buy and occupy homes in or near foreclosure. Sen. Johnny Isakson, R-Georgia, has proposed a $15,000 credit, but no dollar amount has been agreed on so far
* Tax benefits for homebuilders to reclaim past taxes paid
* New disclosure and transparency requirements for loans
* New money for foreclosure counseling
* New Federal Housing Administration rules that would reduce down payments on FHA loans and an increase in the size of a mortgage the FHA can insure
What happened to holding people responsible for their action? Are people no longer required to live with the consequences of bad decisions? Is the government going to bail out everyone when they have a problem?
While these are all questions that need to be addressed, the more important question that needs to be asked is why are responsible people, those who decided to rent, or take on fixed-rate mortgages, being penalized because of the actions of those who didn’t do their homework? Why should I have to pay for people who made a bad decision?
Do people not realize that government bailouts only provide a temporary fix, but more importantly as I just mentioned, cause responsible people to have to take on the burden of those who weren’t prudent. This seems worse than welfare!
If it wasn’t an election year, I can guarantee that no conservative Republican would be supporting measures that had these terms. However, since it is an election year, it seems that ideology and party platform are commonly thrown aside to win points back in their states.
But what about those in the district who are being responsible, those who did their research and planned ahead? Are each of these members willing to go back home and say, “I’m glad you’re responsible, but because your neighbor isn’t, we’ll pass their bill on to you?”
Unfortunately, the congressional spin machine will deliver this bill as if it was a cure-all to cancer and nobody will have to break down the cost or long-term consequences.
The media will tout this as a great accomplishment, and the House and Senate leadership will receive many accolades. Getting credit for promoting responsibility, I guess it’s that logic that gives Congress its high approval ratings.
Once the final bill is passed, I hope to go through it and get a breakdown of how much this will cost per taxpayer so people can get a better understanding of just how much money the government is throwing away on these rediculous bailout efforts.
Beyond the dollar amount, the reality is that none of these bailouts are going to last long. People will still be irresponsible. Companies will still find themselves in debt. However, thats will always be a concern and things have gotten better over time.
Instead of the government fixing everything, maybe we should just sit back and let the market make its necessary corrections and see what happens from there. For those who made the poor decision of taking out these loans, I guarantee that they will be the first to Google “financial responsibility” and make sure everyone they know does the same. If not, let them learn the hard way.
I’ve noticed that every time there is a panic, at least $1billion (thats $1,000,000,000) is guaranteed to come out of Washington to try and solve the problem. However, these problems always seem to keep coming back in some form.
Maybe its Washington, not the economy thats really the problem. Thoughts?