Tuesday, January 29, 2008

The Mortgage Crisis and the Economy

The Texas Rainmaker blog shreds an AFP article meant to make the reader feel sorry for homeowners who have failed to repay their mortgage loans. TR argues:

"Am I heartless? Hardly. Unless I’m supposed to feel bad for companies who failed to conduct proper due diligence on those to whom they’re lending huge sums of money… or borrowers who over-extended themselves, didn’t take time to learn the terms of their loan or simply lied on their applications."

I agree. The exaggeration of the pain from the mortgage crisis might even be greater, because many of the borrowers were probably real estate speculators who had bought houses in order to ride the real estate bubble earlier in the decade. Not all of the borrowers were poor and oppressed. Why should the American public subsidize speculators whose bets turned sour?

As well, Captain Midnight of the Captain's Comments blog argues that government should leave the problem alone:

"if the government butts out of the economy and allows people to engage in commerce without restrictive and repressive rules and regulations, the economy can soar. When the government plays the role of buttinski, their actions can cause the economy to sour.

"There's no shortage of ideas in an election year. But it remains to be seen just how much the government can do to halt the continued slide in an economy battered by falling housing prices, rising energy costs and a lending slowdown caused by worries about how many more loans will go bad...

"Politicians get to look good twice: first when they cause a problem, and later when they try to "fix" the same problem they created."

Actually, they get to look good a third time: when they fix the problems that the fix created. And a fourth, when they fix the problems that the fix that fixed the fix goes bad, etc. There's no end to how much money Washington and the state capitols can waste.

1 comment:

creditxp said...

Lenders and how we get them to listen!
As many borrowers know from their own experience is that the resistance from
their lender is high and just getting through to the appropriate person is very
difficult. However, when MyRecast is
involved it seems as if the calls start to get answered and the letters are
responded to. On our MyRecast Team we have the best HUD advisors involved, state
wide attorney representation and the BEST sub-prime underwriters to QC / and
audit the original files.
We use powerful laws like the Truth in Lending Act (TILA) and the Real Estate
and Settlement Procedures Act (RESPA) to bring lenders to their knees. So,
naturally, the lenders will be very amicable to working and negotiating with
MyRecast Team for a modification of the note and work out to more
affordable terms to avoid costly
litigation. Not to mention your credit and
how this will affect your ability in the future.