Posted on 07/14/2010 11:45:59 AM PDT by SeekAndFind
Housing: America still has far too many underwater debtors labeled as "homeowners," but Washington can't bear to let them liquidate. Instead, it saddles taxpayers with ever-costlier bailouts.
The federal government has tried just about every trick in the book to revive the nation's housing market and forestall a feared tsunami of foreclosures. How well have they worked?
The answer depends on how you judge success. If the object is to keep "owners" - really, maxed-out debtors - in their homes, the results have been so-so. But there's another way of framing the issue.
What if it would have been better all along to let the chips fall where they may and not try to stop the liquidation of all that housing debt? Then the answer would be that the government has tried too hard, and has racked up far too much debt for the taxpayers, in a futile effort to delay the inevitable.
We lean toward the latter view. And who knows? Even Treasury Secretary Timothy Geithner, in his private moments, may be inclined to agree. Geithner made an interesting admission last month to a Congressional oversight panel examining the Obama administration's mortgage modification plan. The program's performance looks spotty at best.
More than a third of the 1.24 million people who initially signed up for it dropped out, many of them because they could not verify their income and ability to pay. That in itself is a revealing story.
The Obama administration initially pressured the banks not to demand evidence of income - in effect, reviving the old "liar loan" model that helped create the global financial meltdown of 2008. It later relented and let the banks do a more complete job of checking out the applicants.
(Excerpt) Read more at realclearmarkets.com ...
The notion that homeownership is an unalloyed good is deeply ingrained in policy and politics. Powerful interests - homebuilders, the real estate industry, minority advocates - promote it. Congress, especially, seems in thrall to these lobbies and to their myth that homeownership is a ticket to the middle class.
This “American Dream” ideology has led to a massive real estate bubble and financial catastrophe in the past decade, and works its dark magic today. It’s surely one reason why Congress refuses to reform Fannie Mae and Freddie Mac, the mortgage market mainstays that, by one Congressional Budget Office estimate, could end up costing the taxpayers $389 billion to bail out. Others put the figure as high as $1 trillion.
Fannie and Freddie got into trouble because they lowered their credit standards, with government’s blessing, and tried to convert too many renters into homeowners.
Even now, as they try to clean up their portfolio, they are favoring potential homeowners over investors - that is, would-be landlords. Fannie Mae has a policy of not accepting offers from investors in the first 15 days that one of its foreclosed properties is on the market. The Dream dies hard.
It’s time for some politicians with backbone to start asking, publicly, what’s so wrong with investors snapping up foreclosed homes. If the market is allowed to work, we would expect perhaps several million Americans to become renters - and quite possibly see their living costs go down.
NO ONE has a RIGHT to own a home. It’s a priviledge.
I actually prefer to rent. Of course, there is nothing like owning your own home and painting your rooms whatever color you like, I feel more comfortable financially letting the landlord sweat the big stuff. And to those who are landlords - thank you. It isn’t easy, I know.
There are two components to that. First not everyone can own a home and many who can own a home try to own one they can’t afford. I read an article several years ago about a liberal couple in DC who got in a hole because they were too good to own a starter home and wanted “the home they deserve.”
Remember when if your home was underwater it was because you lived next to a river?
My home has now been underwater for 21 months and there is no sign the river is going down any time soon.
Have you 'cleared' this headline with Bwanee, Chris, and 'THE ONE?'
#####
In states with Property Tax, no one “owns” their home anyway.
Via property taxes alone, I pay RENT to the parasitic bureaucrats of about $600.00/month on my home and $1000/month on my commercial building.
We bought our home in 1990 and refinanced a couple of years later at a lower rate and a 15 year mortgage. Finished paying the last payment almost two years ago.
Another issue with homeownership: Researching where to buy a house. When I was looking for a house I went through town records and newspaper reports back a hundred plus years for each of the three final choices. One of them was prone to flooding and had been underwater twice in the past 40 years without much visible damage.
Needless to say, that one was off the list.
Fine, but don’t make me give up on my dream to own a pony!!
Allowing the sub-prime mortgages to happen was one of the biggest mistakes of the mid-2000s.
First & foremost is the power of the banking cartel to expand lending activities into all facets of private & public life. Once the issue is framed in terms of policies that favor debt merchants (why not, they bought the best representation they could, starting with Goldman's backing of Hussein), housing turns out to be just one of many avenues taken.
It's easy to make a list - it includes just about everything one produces and/or consumes. Government, housing, education, etc. About the only thing missing is the oxygen we breath, but that can be taken care of by cap n' trade.
If the USA is to survive as a political entity, we must address the banking interests. Jackson had the balls to do so 180 years ago. The country suffered a 10 year depression (called a panic in those days), but ultimately emerged stronger & healthier.
Of course, once the host was reformed, the parasites had a more vibrant victim in which to resume sapping. Still, that is our matter; we can either begin to address it now, or we can deal with it when the Union comes apart at the seams.
“We bought our home in 1990 and refinanced a couple of years later at a lower rate and a 15 year mortgage. Finished paying the last payment almost two years ago.”
....atta boy!!!....we paid our mortgage off about 6 years ago, sold our house and captured the accrued appreciation...then we downsized, and paid cash for our present home...this is the first home that I ever moved into not owing a penny on, and I can’t believe what a wonderful feeling it is....I love listening to Dave Ramsey and the way he encourages folks to pay off their house note...that’s truly the American Dream....OWNING your own home!
It’d be nice to own a home, yeah. But at my current credit rating and debt-to-income ratio, I can’t. And that’s OK, it’s my fault I’m in the pickle I’m in and can’t own a home. Hopefully in a few years, we’ll dig out of it and I can actually buy a home of my own. In the meantime, being a renter for the past 23 years in various places hasn’t always been much fun, but it’s how things are.
}:-)4
“I read an article several years ago about a liberal couple in DC who got in a hole because they were too good to own a starter home and wanted “the home they deserve.””
When our family moved to California in 1992, the housing prices were seemingly astronomical. Small houses with a carport in San Jose were selling for $450k. We took the friendly advice of an executive of the company which transferred us here, which was to buy a house with which we could live for a long time. He said he had seen too many families buy an unsatisfactory “starter” home, only to get stuck with it. (I think the “stuck with it” situation came from making shortsighted decisions with their disposable income which precluded realistically buying a better home.) Anyway, he advised us to tighten our belts temporarily, buy a decent home and wait for the inevitable raises to come for the “extras”.
We went with that. We bought a new home for $245k in a decent exurban neighborhood near schools for our kids and with a great athletic program in the city. We didn’t install a pool. We had hand-me-down furnishings. We didn’t take fabulous vacations. We bided our time and bought only when we could do so with cash. We were never even tempted to tap our equity. We are still in that home and my husband still works for the same company and we are both as secure as you can be in these uncertain times in both home and jobs. Yes, I realize we were/are extremely lucky in many ways, and I don’t discount that blessing.
All of this is to say you can have a decent home if you are willing to make sacrifices in other areas of your life. We did. A lot of people make different choices and I don’t contend our choice was the right one for everyone. It worked for us. What is clear is that people starting out can’t usually have everything they want. In fact, rarely can we have everything we want at any point in our lives (at least until age limits our wants substantially). We face choices and tradeoffs all our lives and we learn by making those tradeoffs over and over and over, learning lessons along the way, unless the nanny parents or government steps in and stops that learning process as has happened here. Those who were bailed out, or who will walk away from their bad choices with little consequence will learn nothing and make the same mistake again.
Some kids are burdened with helicopter parents. Our nation is burdened with a helicopter government.
I don’t think it’s a question of “deserves” or even of “rights.”
Every American, obviously, has the right to own a home - but not to have it given to them. People who have it given to them don’t even remotely appreciate what they have. I have a family member who was head of a Habitat chapter for several years, and I can tell you stories...
Some people are actually better off renting and don’t want a large property, and that’s what the condo market was developed for. They pay a little extra for maintenance services, but they don’t want the bother of maintaining the exterior or other services.
One of the problems Habitat and other lower income owners havae is that they often seem to believe the tooth fairy is supposed to change their doorknobs, stop their leaky faucets, replace their roofs, etc. They’re used to living in government housing, where all these things are done for them...done badly and slowly, but done eventually and they don’t have to pay for it.
Even high-end renters don’t have to worry about these things, however, and there’s nothing wrong with renting. Supposing you travel a lot and don’t have somebody to look after your house while you’re away? Supposing you hate being a home handyman or having to do anything but pick up the phone and call the rental agency? Supposing you’re someplace where you may not want to live forever and don’t want to be bothered selling your house when you leave?
Owning is good if you’re an owner type of person; renting is better if you’re not. And in any case, they all have to be at reasonable market rates, which is the fundamental problem when the government skews it, either through doing Section 8 for renters, or for giving away properties through Fannie and Freddie loans.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.