Last week’s article on the latest in the SubPrime loan arena really irked me. Turns out that consumer groups called on congress to revise the current bankruptcy law to save the homes of borrowers drowning in the rising tide of foreclosures.
I am certainly a sympathetic person, but that smells like another government bailout to me. Shouldn’t a potential homeowner applying for a loan have some responsibility as a fully functioning adult in the wealthiest country on earth to know what he is getting into when purchasing a piece of real estate?
It just rubs me the wrong way. If this bailout comes to pass, surely it could be expanded. Maybe if you as a mutual fund investor lost money during the last bear market, you should be able to apply for a refund?
Of course, I am being ridiculous, but what’s your view?
Comments 8
Yeah, let’s bail ’em out.
Let’s bail out all the imprudent borrowers of the speculative real estate era.
And while we’re at it, let’s also bail out the imprudent lenders that fueled the irrational and irresponsible borrowers of homes that they never intended to live in. Only quickly flip for easy, painless profits.
Nevermind the rational, long term prudent investors in real estate. The ones like me, who bought vacant real estate years ago in places like Florida because it promised the ability to hold for long periods with a reasonable cost of ownership. Nevermind that due to purely speculative and irrational land rushes the people who invested in land for the long term are now faced with the possibility of having to liquidate some parcels to support the completely unreasonable tax rates on remaining holdings.
But nevermind that, the tax drawers are full of over appraised land property tax revenues even though in many areas the current appraisals are now 4 or more times as much as market rates, if even the property could be sold.
Yeah, let’s bail out those poor people who were taken advantage of by predatory lenders and use the money stolen from people whose good solid planning has been sabatoged by get rich quick Rich Dad-Poor Dad cult followers.
Thanks Ulli, for providing me with this opportunity to get it off my chest.
G.H.
Well said, G.H.
Well yes that is true but on the other hand the fed gov gave billions in rebates to the oil industry this past year and billions upon billions more tax break and incentives to other corporations. So if it is a pig trough why should only ocrporations that can afford lobbyists feed at the pig trough. Why not spread the tax money around
Ulli,
I have a bad feeling that this bailout will go through.
It seems to me that this will then play out like the S&L; fiasco of the 70’s. Many of the bank and loan officials made all kinds of bad loans, pumped up their company profits, and then absconded with large amounts of bonuses and cash. The remaining officials are left holding the bag, and saying that “they” are not responsible for the mess!
It all boils down to money, and how much lobbying power the bank and S&L;’s can exert on Congress.
Sanjoy
I think lenders should get much of the blame for what has happened. What were the education and English fluency levels of the borrowers? As you know, our schools do not do a very good job teaching economics. Most contracts are also written in legalese. The above should also be considered when discussing bail outs.
Joe…
I agree, Joe. I still fail to understand how any lending instituion is allowed to make loans to individuals who are not qualified to make the payments.
Ulli…
I agree with “G.H.” and you,Ulli, when you queried, “Shouldn’t a potential homeowner applying for a loan have some responsibility as a fully functioning adult in the wealthiest country on earth to know what he is getting into when purchasing a piece of real estate?”.
To add insult to financial injury, a few of my acquaintances sold their homes during past five years and used net proceeds as down payment in combo with temporarily very low, interest only loans (3%!!)to purchase 2-3X the house for which they would normally qualify, even after I analyzed what they were doing for them as a `CFP’ and advised that, upon loan conversion, all would not only lose the new house, but potentially all their down payment equity!!…Now, the first one whose loan just converted is already in forclosure!
So, yes, why are fiscally responsible people always saddled with paying for the mistakes of these idiots?!…
I’m about to liquidate and leave the U.S. permanently due to the decades of local, state, and federal government bailouts of the irresponsible, as well as the protections provided for politically connected “good ole boys”, that I have watched be taken out of the hides of fiscally responsible U.S. citizens.
Whoa! Leaving the country? Where would you go?