The Wall Street Journal ran an interesting story Monday looking at the flip-side of a proposed housing aid package being pushed aggressively by Congressional Democrats — namely, that there are a pretty good number of people that don’t want to see Federal dollars used to help troubled borrowers.
It’s a polarizing question, according to the WSJ:
The public is split. “If you’re the Secretary of Bailouts, and people come in and show you that they’re worthy of being helped out, everybody will have a story,” says Robert Krance, 64 years old, a Houston physician and McCain backer. “I don’t know how you can create a reasonable, enforceable method for deciding who should be helped.”
A hands-off approach by the government is “the right thing to do,” agrees Jeff Cohu, a 40-year-old professor attending a McCain rally last week. “The market will readjust faster and better than the government could.”
A Gallup Poll in late March found that 56% of Americans favor government intervention to prevent people from losing their homes because they can’t pay their mortgages, while 42% oppose it. The partisan divide was sharp: 58% of Republicans opposed intervention; 71% of Democrats and 55% of independents supported the idea.
We’ve interestingly seen housing and mortgages move to the back-burner for the Presidential wanna-bes from both major parties. It’s strongly polarizing results like this that suggest the issue won’t be on the back burner for very long — and that any Presidential candidate ignores housing policies at their own peril, regardless of party affiliation.
[…] of homeowners facing foreclosure? Should we bail them out too? Turns out plenty of people don’t like the idea of bailing out homeowners, even though by stabilizing their loans we can stabilize the entire economy (that’s what I […]
If you need to give a tax credit to incentive for people to buy a foreclosure, then what the market is really telling us is the price is still too high. There are plenty of people who will buy homes if the price is right. Subsidizing housing artificially props up prices where they become unsustainable by normal market forces. We need prices levels that are sustainable by normal market forces not tax subsidies. It’s not fair for the prudent and the savers of our society to bailout the reckless and foolish.
The promoters of this bill make a big deal out of the fact some people don’t have equity in their homes. The bill wants to re-finance loans so homeowners have a 10% immediate equity saying these people need an incentive to pay their mortgage. Excuse me, but I know there were thousands of people in recent years that took out 80/20 loans with no down payment and of course no equity. These folks didn’t seem to need an incentive then when they signed their name on the contracts. Lenders didn’t seem to mind underwriting loans for people with no equity. There equity was to come from prices continuing to rise. Buying and lending on homes with no equity is SPECULATION . I don’t believe for minute borrowers didn’t know their rate would adjust. They believed prices would rise forever. No bailouts!