Bloomberg’s story titled “Subprime Borrowers to Lose Homes at Record Pace as Rates Rise” offers some surprising data showing that as many as half of the 450,000 subprime borrowers may lose their homes. The obvious reasons are increases in their adjustable mortgage payments which, in combination with lower real estate prices, won’t allow them to sell, refinance or “qualify for help from the U.S. government.”
Hmm, qualify for help? Why? Isn’t buying a piece of real estate a personal decision that adults make knowing full well that they will have to live with the consequences? If we want all of the profits if that real estate investment works out fine, should we not have all of the responsibilities that come with it, if it fails?
I am sympathetic to others, but you can’t have it both ways. I have had some real estate investments that worked out better than others but, no matter what the results, they were my problem and not the government’s.
One issue is that people want a bailout solution; the other one is that most of them are homeowners who should not have purchased a property in the first place. Remember, ‘Subprime’ means “you don’t qualify for a loan!”
The real responsible parties are the unscrupulous mortgage companies, and other lenders, who used unethical, yet legal, methods of creating a large group of non-qualified homeowners, who did nothing but provide a broad buyer base in a pyramid scheme which pushed the housing market into a bubble stage.
Pyramid schemes never last for the simple reason that eventually you run out of people to feed the base. It’s time to pay the piper for the reckless lending and, if a fall guy is needed, it should be those who created the problem in the first place.
Comments 4
I AGREE 100 PERCENT.
RAY
PS: Keep Your Bog up, Love it.
Yeah man…say it Ulli!
Why should I (the taxpayer) have to bail out people who make these decisions and when the chips fall..why am I on the hook for it????
We live in a free market system. There has to be a way to fail in this or else its’ just another socialist economic model.
I believe there are two other responsible parties that deserve some recognition for excacerbating the circumstances. They have remained under the radar for some mysterious reason.
If half of 450000 are in danger, then 225000 must be making it. Of the 225000 that aren’t making it, surely there are those whose imprudence has come home to roost. But my question is this: how many could make it without govt. intervention if it weren’t for, 1. inflated and unjustified property values and the resulting erroneous tax rates, and 2. insurance companies asking for and receiving the permission to require all homeowners, including those who don’t live in high-risk areas, to pay for the risk of covering the few who do live in high-risk areas.
State and local taxing authorities (property appraisers) have been making hay while the sun has been shining on speculation and have taken property value taxation to extremes. Insurance companies have made all policyholders cover their cost of doing business when the times have gone against them. Where’s the responsibility for ones actions now?
How many mortagage product consumers, of all varieties, could make it on there own of it weren’t for the unforseen and IMO unjustified increasing costs of tax rape and ins. co. rape?
And Mr. Murray, at $90K/yr. salary, anyone who finds themselves in your predicament is just plain stupid.
G.H.
Well why not put the blame at the feet of the Laisez-faire Bushies. Didnt Busheroo take credit for record home ownership. Why *itch about the a 1st time home buyer having ownership in “Bushe’s American Dream” when the bail out was directed for the Goldmans and other fianncial and hedge fund institutions and big money boys.
It was The Street that packaged these loans thru mortage brokers.
These contacts (how many small print contracts have yu read recently in any of yur purchases) shud have a clear chart example of what the monthly payments as the various stages of the loan. The mortage brokers saw a middle and took it and left the industry when it soured. If S&Ls; were holding the/yur loans then this wud have not happened. Its not no gov help but some basic regs to prevent “upside down” home investing.
As to bailout, I am in a neighborhood city that is now blighted with “”bank owned”” homes going up for auction. Hey I was not part of this either now I wont be able to move for years until the surplus is off the housing mkt.