Wednesday, July 30, 2008

Home on the range

Continuing on the foreclosure theme of and a comment in the previous post, there is a relevant article in the Sun today. It is about a single mom in Columbia who purchased a $545,000 home for her and her three children (I assume all the kids live with her). She’s not a doctor or an attorney; she is a day care operator. Surprise, surprise, she is now facing foreclosure.

The most shocking part of the article, in my opinion, is the blurb beneath the photo. The woman accuses her mortgage broker of inflating her income and asset value to qualify her for a mortgage that she couldn’t afford. I do not doubt that the broker did this, and this is fraud. However, the woman is obviously not a completely innocent victim of the mortgage broker, because she let the broker commit this fraud. She is as guilty as fraud as the mortgage broker, but in the end she defrauded herself in addition to the mortgage lender. And she signed on the dotted line that she could make the payments.

Our politicians are wasting no time “fixing” the "problem" of reaping what you sew:

A sweeping federal foreclosure bill approved last week is expected to help 400,000 homeowners nationwide refinance lower-cost mortgages with $300 billion in loans guaranteed by the government.

The measure also increases lending to Fannie Mae and Freddie Mac, two mortgage companies that deal with nearly half of the nation's mortgages.

Other measures include $15 billion in tax breaks, which include a provision giving first-time homebuyers interest-free loans of up to $7,500, the creation of an affordable rental housing fund, and funds for additional housing counseling and for buying and rehabilitating homes that have been foreclosed upon.

To his credit, Ken Ulman had the best response to this of any politician I have seen. Just do some posturing.


Anonymous said...

Worse still is the fact that people with negative equity think walking away resolves their own responsibility, but actually they owe taxes on the amount the bank forgave when the property was resold at less than the mortgage.

Yes anon, it is very much a product of crazy actions based on a crazy culture that thinks everyone should live like a celebrity.

But either way, those of us who were responsible will be affected --if we don't bail them out, the economy/financial institutions represent a large domino toppling in the economic path, and if we do bail them out, well, there goes our tax contribution.

You could've set a watch to this mess - some saw it coming years ago, hardly rocket science.