Why won’t the government pay for my mortgage?
From Huffington Post, regarding Obama’s mortgage modification plan:
In testimony to be delivered Tuesday afternoon, David Lowman, chief executive officer for home lending at the “Too Big To Fail” behemoth, will fight back against the program which calls for lenders and investors to decrease the outstanding debt owed on a home mortgage.
“Like all loans, mortgage contracts are based on a promise to repay money borrowed,” Lowman’s prepared remarks read. “Importantly, there is no provision in the mortgage contract, express or implied, that the lender will restore equity or reduce the repayment amount if the value of the collateral — be it a home, a car or a stock market investment — depreciates.
“If we re-write the mortgage contract retroactively to restore equity to any mortgage borrower because the value of his or her home declined, what responsible lender will take the equity risk of financing mortgages in the future? What responsible regulator would want lenders to take such risk?”
While I’m all about making sure every American has access to affordable healthcare, this is an issue that divides me.
Do we need to help those who’s mortgages are beyond their means due to loss of a job? Sure. But the issue is more then that and delves into the last 30 years of those in the middle class trying to emulate those in the upper class through credit and a sense of entitlement.
I grew up middle class. Folks bought their house from savings, a little luck in the stock market and taking over an existing mortgage. It was a nice house in a nice neighborhood.
My dad worked like a maniac to keep a roof over our heads, even in tough times. What my parents never did was live beyond their means.
When I watch shows like “House Hunters” where couples have NOTHING to put down on a house - and are buying these huge 3,800 square foot monsters with the hope that they will get enough of a raise in the future to continue to afford it, I shake my head. When anyone with questionable credit gets a mortgage with a 15% interest rate that, after five years, increases, I see someone who is not thinking straight.
We live in an optimistic society. People want to believe that their next step will always be a better one, a more lucrative one. This is not always the case.
I bought a house in 2003 with the mindset that if my wife and I both lose our jobs and had to work at MacDonalds, we would still be able to scrape together enough to live there. I could have bought a more expensive house. I was approved for more money. I just remember my parents having those tough months where my dad (a freelancer) wasn’t making as much as the previous and there was worry there. I decided I didn’t want that kind of stress in my life when it came to my home.
And my house if fine for us. Modest. Four bedrooms. A nice yard. Still, as I knew would happen, my taxes increased - from $3,800 to $7,400. And I can still afford it. I factored that in.
So, do I agree with JP Morgan Chase on this issue? I do and I don’t. The last thing we want in this country is another string of foreclosures, so we have to do something. But when I see someone with a mcmansion in a similar neighborhood to mine, someone who 30 years ago wouldn’t even be close to being approved for a mortgage to buy such a house, someone who accepted the floating rate mortgage because, hey, that’s five years away - this steams me. Unlike that person, I actually weighted the negatives - the possibility of losing a job, getting older and not getting paid as much, the continuous rise of my taxes. I was responsible. They were not. Yet, they may get a huge amount of help to stay in their home while I continue to pay more with no help.
This is not a case of jealousy or fairness. My life is far too busy to spend any time but this post to ponder the inequities of the world. It’s about responsibility. A friend of mine once said, “I’ve got no issue with buying a house too expensive for me because it will force me to work harder to keep it.” Very optimistic. Then we hit the end result of the Bush years which, despite the willful blindness of some, was actually pretty predictable.
