The other day I was watching CNN. I know, believe it or not I actually do stay “informed.” At least that’s what you liberals call it; I think of it more like reconnaissance. Regardless, I was watching CNN and they were doing some puff piece about the hardships of one family who was in foreclosure. The family had not paid their mortgage in over two years. The husband was a businessman and his wife was a realtor. The house was at least two stories, was brick, had a nicely manicured yard and was obviously in a great neighborhood. In fact, the house was gorgeous. It’s exactly the kind of house I would love to buy one day—if/when I can afford it. And that is the key right there—when it’s affordable.
While in some ways I feel bad that this family will lose their house, in many ways I think it is justice. This family has not paid to live somewhere for two years! Can you imagine what you could do with the money saved not paying rent or mortgage? You could probably drive a nicer car, like the one the father drove or have a gorgeous flower bed like the mother’s. For me that would translate into approximately $8500 a year or $17,000 in two years! How is it fair that this family benefits by cheating the system and gets pass after pass? What incentive is there for me to pay on time or pay at all? I could use that money on something else. If default is allowed for this family, think of the implications expanded to the rest of society? Consider that for just a second.
What happened to fairness? Isn’t that a liberal principle? Is it fair some people get to live in homes they aren’t paying for or that people who don’t pay either enough or do not pay on time get reduced rates? What are the people with good finances supposed to do? I guess their reward for meeting their obligations is subsidizing those who can’t meet theirs…
Now, think about that from the bank’s perspective. Who knows what the mortgage on this house was, I guarantee it was significantly higher than mine. The bank is not being repaid its debit, not seeing a return on its investment. This reduces the bank’s ability to in turn loan more money and generate what ultimately turns into new jobs. Should there be rules for foreclosing? I think so; however, banks must be able to recoup their assets. They have to be protected and need a means to recoup what is RIGHTFULLY THEIRS. There’s a credit crunch in the US today. Banks do not have the capital to loan out and the capital they do have they are holding tight. And why would they make loans? If people default it’s becoming increasingly difficult for banks to recover their losses. We will not see more money flowing until banks feel protected and secure in their loaning practices.
You know the housing crisis has caused serious problems for the economy as a whole. It has also presented opportunities. I would like to take advantage of low home prices and perhaps start a small business in the process. I live in a west Texas town with three universities and a military base. There are a lot of people moving in and out of the area. It’s a perfect rental market. I would love to manage rentals and buy some rental property of my own at these low prices with the cash I have saved up. I was smart and saved my money, so I have capital to get a good start; however, part of what will make that business profitable depends on the availability of housing. If people cannot get loans, they rent. If people can’t afford a house because of inflation, they rent. If people are evicted by foreclosure, they rent. These key aspects are tied to the foreclosure mess and credit crunch.
The uncertainty of Washington’s policies prevents me from working towards opening a new business. I have no idea what Obama will do, I have no idea what will happen with this foreclosure debacle. That’s why I’m holding off on my business idea. I do know using the freeze as a ploy to buy votes only prolongs the problem and prevents more job creation.
Like I said before, there needs to be laws governing foreclosing on homes, but foreclosing sometimes needs to happen. Locking banks out hurts the economy overall. It creates more uncertainty. These types of government policies may look like ripples, but they quickly turn into tsunamis, wrecking havoc on the economy.