Imagine you bought a $400,000 house 2 years ago and today it is worth $250,000. Let's say you put down 20% so you owe $320,000. You pay $3000/month for your mortgage.
At the same time, your neighbor bought a similar house next door and financed 100% of his home. He owes $400,000. He pays $4000/month.
He gets behind and defaults on his mortgage because he can't afford the payments.
You make your payments on time.
The government writes down his mortgage to $250,000 and lowers his payment to $2500/month.
The government doesn't lower your payment, or write down your mortgage.
This is actually the proposal by Senator John McCain and Rep. Maxine Waters
Who do you shoot first?
The neighbor, who has lived beyond his means and was just rewarded for it?
The bank, for making the loan to your neighbor and who was just taken over by FDIC?
Fannie Mae, because they encouraged the bank to lend your neighbor money because they guaranteed he would pay it back?
The executives that ran this Ponzi scheme, because they made millions knowing that if the economy crashed it would bring down the world as we know it?
Wall Street, because they bought his mortgage and traded it around the world making 30-100% returns on a mortgage backed securities where the underlying mortgage paid 7%?
Politicians, for being so arrogant and quick to call racism, they actually think they have the power to alter the laws of the marketplace through social engineering?
The McCain Plan to bail out mortgages is simply wrong and is a vote buying gimmick. It should be shot down. Fast.
The answer to this crisis is to foreclose on the homeowners who don't pay their bills. Put the house up for sale and let buyers buy homes at the present value. Banks need to loan money based on sound principles. No more social engineering. A message to Democrats: we are not the richest county in the world and we can't continue to pour money into social programs so you can get more votes.
1 comment:
well said!
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