Every single politician or public official you ask about helping homeowners hold onto their homes says the following:
You want to dry a line between those who were irresponsible and those who are innocent victims.
The President says this, members of Congress say this, state politicians say this, even Alan Greenspan said this.
As many have pointed out, however, just because someone is “innocent” doesn’t mean that the person “deserves” to be bailed out of his or her financial obligation.
Many of those who took out loans they could ill-afford will never be able to pay them back.
Perhaps that’s why so few reach out to their lenders, to begin with, or don’t answer the phone when their lenders call.
I don’t know.
But, I also wonder about this:
Do many of these borrowers want to hold onto their homes?
I know. Sounds naive on my part, right?
I don’t know. I’m beginning to think a fair number of them just want to get out, as quickly as possible.
Certainly, having to pay five more years of payments which a borrower can barely afford, and then have their payments jump, anyway, isn’t an appealing alternative.
Not something I’d want to be facing.
I’m still not 100% convinced that any sort of government intervention (regardless of whom it helps) is necessary. Or prudent.
(I guess the government is thinking, if we help these people hold onto their homes for the next couple of years, then the housing market may recover enough that they can sell their homes, before their rates reset, again.)
I guess what everyone wants is stability. And so people are running around trying to come up with solutions, even ones risky or poorly-planned (and, no doubt, soon to be called “poorly-executed”).
Wait. For example, it just occurred to me, maybe we did the same thing after Hurricane Katrina? Didn’t everyone rush to take care of the problem, without knowing what the problem actually was?
And then, months later, didn’t we find out that billions (with a “b”) of dollars had gone a-missing, because it was spent quickly and without forethought?
As I said, I guess people just want stability. So they are grasping at anything that makes sense to them.
Decisions made in haste have a way of coming back to haunt you. (Like mine was when I bought Bank of New England stock at $0.50 per share … “The government’s not going to let it go out of business, be serious!” I said.)
Can we just hold off doing anything before it causes real harm?