"Mortgage Loan Welfare"

Posted by: Chris Palmeri on May 8, 2008

Figuring out a solution to the foreclosure crisis is turning out to be a divisive issue. Nobody wants to see people get kicked out of their home, but as my wife said reading the paper yesterday “Can I get a reduction in my mortgage too?”

Congress is presently debating Rep. Barney Frank’s proposal and others to offer federal funds to restructure home loans. The Bush Administration says its against such a widespread bailout. FreedomWorks, a Libertarian non-profit with former House majority leader Dick Armey at its head, is busy drumming up opposition to such a bailout. Their AngryRenter.com Web site says its generated 44,000 emails from folks protesting the bailout to the White House.

They’ve got a funny video as well, telling the story of one guy (Bob) who bought more house than he could afford and a woman (Sally) who saved her pennies in the hopes she could buy a home down the road. “Tax Sally to bail out Bob?” the video asks. It’s what the site calls “Mortgage Loan Welfare.”

Reader Comments

JackSprat

May 9, 2008 8:17 PM

That is exactly what it is!!

The bottom line is this--We are witnessing the end of a giant PONZI scheme, where greedy people made very wreckless decisions, and gutted every last dollar out of their homes, and NOW, they expect the financially prudent to bail them out!!! Ummmm....NOOOOOOOOO

As so many educated and aware economists have pointed out--There is NOTHING left to support these artificially run-up prices!! If you can't afford your house, then you just bought more than you can truly afford, and its time to RENT something for half the cost.

PRICES must be allowed to fall back to their natural levels, back in line with historical fundamentals. When that happens, we will move inventory and create a solid foundation of homeowners.

Barney Frank's plan does NOTHING but reward bad decisions and keep his banker buddies employed. It is morally bankrupt in every sense!!!

lorisoo

May 9, 2008 8:20 PM

Talk about the law of unintended consequences! Think about all of the people currently making their payments on time who will STOP if they see that their neighbors are being rewarded for their shady financial behavior.

This once great country has gone to the DOGS!

VETO the bill George! We are counting on you!

Maggie

May 15, 2008 7:39 PM

One point of disagreement with the writer, who says: "Nobody wants to see people get kicked out of their home.'' The ownership society had no trouble watching renters get evicted for condo conversions during the boom. The only difference between the renters and the mortgage defaulters is that the renters could have paid their bills on time, done nothing wrong and still been told to get lost -- purely in the interest of the free market. The mortgage deadbeats can stay in "their'' homes for months without making payments before the bank asks them to leave and Congressional saps throw them a pity party. This bailout is welfare for the wannabe gentry, not for the needy and not for the protection of people's living space.

Frances Orcinolo

June 30, 2009 1:37 PM

I am looking a house to buy. I do not get lots of money. I am on wefare and I 2 of my children are on SSI. I have no money to put down. I do not work. Can you help us. I need 6 bedrooms I have a large. Thank you. From Frances Orcinolo

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About

BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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