Thursday, July 10, 2008

Depression Via Congress and Vitamin D Deficiency

I really hate to be the proverbial wet blanket, but I don't think I can help it today. First of all, I live in the great state of North Carolina where we appear to be stuck the perpetual thunderstorm - so I'm deprived of the sunshine I desperately need to keep my outlook on life real. Secondly, I heard on the radio today that the bill offering mortgage "relief" to struggling families had passed through its final hurdle in the Senate and it's on to the House. 

I can't even begin to express my irritation at this. But never fear! I am still going to try. :-)

Here's my general synopsis of the situation: A large number of American families decided during the housing boom that they wanted to buy a house. Some decided it was time to upgrade to a larger home, some just decided to get in on the market. They went to a realtor, looked at houses in their "price range" which was largely determined by their lender. Their lender was willing to lend them way more money than they could reasonably afford, often getting people into large homes by giving them interest-only loans. Yes, this means that your loan will not ever decrease in size - and occasionally would even INCREASE in size because some of these loans would add interest to the principal of the loan rather than charging the full interest to the borrower. Then, like people in a greed-induced trance, these folks went out and bought the most expensive house for which they could qualify. 

Now, I ask you thinking folks out there, is there anything in the above paragraph that looks like a good deal to you?? Of course not. Forward-thinking people would see this scenario and realize that qualifying for a loan does not necessarily mean that one can afford to pay. Reasonable people should be thinking of their own welfare and making choices based on what is the best and most reasonable approach for their family. Did they do that? NO!!

So, now there are a large number of families being foreclosed on.... but WAIT! There's more to this story. A number of these people also bought at peak market. This means that there are many people who have a beautiful house on which they are making interest-only payments... which is worth, say... a hundred thousand dollars less than what they paid for it. (I know this in part because I sold a house at peak to some people who were doing exactly this - and it's now worth a hundred thousand dollars less than what we got for it.) 

I think it's pretty well established that the lenders were not behaving responsibly. I think it's also pretty clear that buyers were not being too responsible, either. But now the government sees people going through foreclosure because they cannot afford their payments... and the government also sees a bunch of people with no reason to stay and pay their payments. These people are going to walk away from their homes, leaving the bank holding the bag (so to speak). A glut of foreclosure homes on the market never does any market much good... and if the markets further fall, there will be more people in this predicament, leading to more foreclosures and so on. Ah, yes... another crisis we can write about and discuss at length...

But the big question I have is this: Why should I pay to bail out a bunch of irresponsible people? Now, maybe it's just my lack of sun-supplied vitamin D talking here, but I'm SICK and TIRED of people being STUPID and then expecting other people to foot the bill for their stupidity. This sort of thing leads to irritating lettering placed on absolutely everything. Buy something in a plastic bag? Read: THIS BAG IS NOT A TOY. Ah, yes... so glad you mentioned that. I was about to show my baby how to put it over his head... Using your blow dryer? Read: WARNING! DANGER OF ELECTRIC SHOCK! DO NOT USE WHILE BATHING! 

We need a new warning sticker to place on congress... anybody up for giving suggestions??

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