Tuesday, April 1, 2008

Housing Bail-Out

I know home prices are a bit wrecked. And I have some sympathy for those people who have to sell for re-location or otherwise. However, if a person bought on speculation or for additional property investment, and are now a bit in-the-hole, that person should deal with the consequences of a sluggish housing market.

The Democratically-controlled Congress doesn't necessarily agree. They are working on a package that would give billions of dollars to homeowners, expand government programs (FHA) and aid local communities with bonds.

Wait. So, you make a bad decision and you don't have to pay for it. Ummm, okay.

The worst part of this package is below: (From the NY Times)

Both the Senate Banking Committee and the House Financial Services Committee have been working on bills that would allow the Federal Housing Administration to insure $300 billion to $400 billion in additional mortgages, with an upfront cost of $10 billion. The Bush administration has been developing a similar plan of its own that would expand an existing refinance program called F.H.A. Secure.

The solution that Congress came up with is more money for additional loans! Argh! The people are already in enough trouble and now the government wants to sign them up for more borrowed money. How will this help?

I like this solution. Suck it up.

The government bail-out bothers me so much. It's as if Americans have forgotten to take responsibility for actions. We all have consequences for our actions. But the government thinks that if the price is too steep, or it's too difficult, we shouldn't have to deal.

Wrong. There is a great injustice done to the human spirit when a consequence is not faced and then overcome. The spirit never learns that feeling of freedom by overcoming trials. It is not good for a person to never triumph through adversity. Bail-out programs rob persons of this experience.


Becky said...

And for those who "bought into" or got sucked into the loan refi (by a "Christian mortgage guy" at that) that is now adjusting on them, and at just the right time...when their home is not worth what it was a year ago...and because of that they won't write a refi on the home due to LTV, would you say suck it up?


I know a lot of really diligent, hard-working, wise people who were sold a bill of goods or who lost investment money (big) in this market...and now they are facing the loss of their own shelter. Or even a career residential real estate guy (25+ years) who hasn't been able to make ends meet in this market...I guess he should have had out his crystal ball.

I guess the punishment is always most fitting when it is not the experience of YOUR family.

Oh, and I believe lessons are being learned in the face of all of this...how about COMPASSION, or not judging because you don't know how people got into the situation they are in...but I should save my soapbox for the essential salvation issues, eh?

I believe there are a great many families who deserve a "financial stay of execution" some of which will come in the form of a loan or a rate freeze.

We bail out everyone else, why not the people who pay the taxes in this country?

PS - In case you are wondering, I am not a liberal democrat...just learning lessons from God in a non-conventional way.

Jessie said...

The government's job is not to bail out people financially. I am against it every time.

Furthermore, obviously you have a personal experience with this. And in no way am I condemning those who are suffering through this time. This is a great time for us to come along side those who need help, to show Christ.

Again, not for the government to take care of.

And yes, I'm always for less-taxes. But this government bail-out is not a cut in income taxes. It is additional spending that will, in the end, lead to higher taxes.

So, I am so sorry for your personal tragedy in this. I just don't think it's the federal government's job to take care of.

In closing, yes, the shady lenders should be punished. However, I would like to point out that had it not been for Congress leaning on the lenders to offer more "available" loans to people who may not have qualified normally, those people would not be in a housing crisis because they would not have taken on a mortgage.

chandy said...

Glad to see you're back, Jess!

I agree with you completely. It is very tragic what some families are going through. That means this is an excellent time for the church to really step up in offering suppport to people who need it, and education about how God wants us to handle our finances. (I highly recommend Dave Ramsey).

But we are creating a generation of overly-entitled citizens who think it is their right to have a Government that will catch them when they fall. And in today's circumstances (i.e. people our age should not be depending on SS) that is a horrible lesson to be teaching.

I am by no means a financial genius...I don't read the WSJ, didn't major in business in college, just not that savvy... Yet I remember having a conversation with my husband several years ago... I told him I thought with so many people getting IO and ARM loans to buy such expensive houses, I had to wonder if we'd see lots of forclosures a few years down the road when the ARMS ticked up. I just can't believe that I was the only one out there with this premonition.

Becky said...

In response to both replies to my post, I have this to offer.

As an educated person, but not a financial genius admittedly, I have a different take on the loan crisis. Often times people take on a particular type of loan, knowing that it is a temporary solution. Knowing full well that at some point a refinance will be necessary, and trusting that home equity will be there. Historically, there have been very few times when housing prices dropped...and over the long term, housing prices have inflated year after year, albeit not in the grand style of the 2005 housing surge.

I was actually referencing a friend's situation in my post. We had our house on the market, but thanks to foreclosures in the area, it makes for a bummer of a market and it doesn't look like we will sell any time soon. We wanted to move up to a bigger home for less money. Nothing irresponsible about that, eh?

We did not buy an overpriced home or more home than we could afford. We stuck to the percentage rules that apply to maximum housing expenses (Crown Financial Ministries is also a great resource, thanks.) and bought within our means. Over the past 5 years our income has varied by 6 figures. I share that as merely an example to suggest that sometimes, people are facing circumstances beyond their control.

As of right now, I don't have a personal tragedy in this. Who knows what the future holds, however.

As far as the second comment, I don't think most people are feeling entitlement...I think many of them are feeling fear.

The "entitlement" minded people in our country are usually not your average family, they are big businesses who begin to fail and ask the government to funnel $30 billion dollars into the restructuring of their cooperation. Now, that is what I see as a tragedy. (Google that one...and you can read all about it.)

Spend the $30 billion improving the lives of the military personnel, or on other ways of assisting our citizens in times of crises. After all, isn't that what Jesus would do? Or would he say, suck it up?

Sometimes our citizens are doing the best they can do.

I am for small government, but would rather see the HUGE taxes I do pay help the people in this country, and in such a time as this.