Why does home value matter?
"In introducing his plan, Obama rightly said that we're all in this together. Helping families avoid foreclosure would prop up the value of every house in a neighborhood, so we all have an interest in keeping these people in their homes. That justifies the use of taxpayer money."
"Or does it? Step back for a minute and think about the assumptions behind the president's logic. They show the same mind-set that got us into this mess. If you saved for years, built up a big down payment and then bought a house you could afford, you're not really thinking of a decline in the value of your house as an immediate problem. You intend to live there. It's shelter. An asset for the long haul."
"Propping up the price of your home in the here and now is important if you still think of your house as an ATM. Forking over tax dollars to prop up home prices in your neighborhood is worthwhile if you need a higher price so you can increase the size of your home equity line of credit to finance a lifestyle you couldn't otherwise afford."
A shelter or an investment?
"From the point of view of someone who sees a house as a place to live -- and not as an ATM -- that's just nuts. And once you reject the president's logic that spending taxpayer money like this helps us all, the plan starts to seem even more unfair to us chumps."
"The administration's plan to help 7 million to 9 million homeowners with unaffordable mortgages isn't going to make any effort to separate the victims from the venal. I know the task of discriminating the real-estate sheep from the wolves in sheep's clothing can be horrendously difficult, but let's at least try before we spend taxpayer money. Some effort to detect fraud on the original application should be part of the plan, no?"
"What about the careful folks, prototypical chumps in this financial world, who have been saving while renting and waiting for the day that housing prices would come down. In today's mortgage market -- if they can get a mortgage at all -- they'll need not 10% down but 20% down. And they'll need a FICO credit score of 740 to get the best rate."
"These conservative savers who have planned ahead would like housing prices to go down a bit more, and they're certainly not rooting for a quick U-turn in the housing market. And we ought to be cheering them on -- individually and as taxpayers who would like to see a recovery in the economy. It's new buyers like these who will, at some price, clear the housing market of what is now excess inventory."
"If we're out to help people who are facing foreclosure because they've lost a job, surely the best plan would be something to create jobs (call it a fiscal stimulus plan) and targeted loans or mortgage renegotiations or refinancing to help families bridge what may be a lengthy period of unemployment."
"I doubt that the Obama mortgage plan would cause so many people to see red if it were occurring in isolation. But it's not. The plan is hitting us when we're already angry at CEOs collecting millions or tens of millions in pay and bonuses while, to put it lightly, underperforming. Get ready for the next wave: mutual fund company management that earned millions while their funds plummeted. To single out just one example among many, Duncan Richardson, the chief stock investment officer for Eaton Vance (EV, news, msgs), got paid $3.7 million for the year that ended Oct. 31, 2008, while the company's stock mutual funds fell 38%."
-Jim Jubak
I received my newsletter from Mr. Jubak today and couldn't agree more with him (as usual). If we as a people could ever get past all the hype surrounding our current president, we'd see that he is no different than any of our most recent presidents. He is completely out of touch with what he doing. The only thing I agree with him on is that the economy will recover. I just wish he'd stop doing things to slow that recovery down.
I understand how painful the downturn is. I'm one of the people who bought a house I could afford - that is until the greedy SOBs who used housing as an ATM and bought/gave mortgages that people couldn't afford crashed and burned. Those people get a bailout - I get to be unemployed and probably lose my house. Does that make sense. Why can't we let those who gambled and lost, actually lose? It's like watching a NBA game with Tim Donaghy. He decides who wins and loses, not the market.
I'm starting to think the only "change" we are seeing in Washington is the color of the guy's skin. But I guess that's what we deserve, that's what most people based their vote on.
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