Should tax payers foot the bill to bail out those who are about to lose their homes by foreclosure?
Question:
http://www.townhall.com/columnists/rayha...
Answer:
Recently, there has been more offhand and semi-official talk of a foreclosure bailout by the federal government. Some homeowners facing foreclosure may see this as a lifesaver, but it is destined to be anything but a saving grace for foreclosure victims. No, this is going to be a bad idea and probably as badly administrated as FEMA trying to take care of Hurricane Katrina victims. In all likelihood, the federal government will end up giving out the proposed $1 billion bailout fund to homeowners who were never in foreclosure, or provide alternate living arrangements that no foreclosure victim will ever live enjoy the benefit of, and the entire exercise will be an enormous waste of money.
First of all, a word on where the government would get its proposed bailout fund. Governments do not have anything, they do not have any money or any ability to produce anything with any value. So, when the government proposes a new fund such as this, the money has to come from either taxing citizens or printing money out of thin air. In terms of taxing citizens, the money for the bailout fund would come partially from homeowners in foreclosure who could use their own money right now to pay their mortgage. More money will come from other homeowners and citizens who will be forced to fund the bailouts of millions of homeowners that they have no responsibility for. Higher taxes may help a few homeowners save their homes now, but will cause an even further financial crunch for others, causing even more foreclosures. This is how the government creates problems and solves them with more problems, and how it leverages political decisions on the future, postponing the true cost of these foreclosures.
They government should not take or print another $1 billion of money to provide a service that is better offered at a local and state level. Instead of raising taxes for the additional money, or creating inflation by printing $1 billion, let communities figure out solutions. It is in the community's interest to have real people own homes, rather than large parts of these cities owned by multinational banks that will never have anyone living there and will drag property values down. That decreases the wealth at local levels by having fewer people as homeowners, paying taxes and patronizing local businesses. The inflation caused by printing the money causes even more wealth to be taken from individuals and communities, as it is usually the same multinational banks that have first use of the new money -- not the foreclosure victims that need help.
The federal government has no place and no credentials in protecting homeowners from foreclosure. It was the Federal Reserve that lowered the interest rate to near zero percent and then raised it over fifteen times that caused the problem in the first place, among other factors. But the interest rate manipulation led directly to the ease with which homeowners could refinance at low rates until their adjustable rate mortgage reset to a dangerous payment. So trusting any activity of the government to solve a problem they created will only result in the same or similar problem that will need to be solved, only on a much larger scale.
The foreclosure bailout fund is an idiotic proposal pandering to potential voters who believe that the federal government should take care of us from cradle to grave. Its goal is to take wealth from those who own homes and those who do not own homes, from foreclosure victims and homeowners who have never missed a payment, and redistribute it to those homeowners the government decides are worthy enough to save their homes. It does not address any of the underlying causes of these foreclosures, such as jobs being shipped overseas, an onerous income tax system, or inflation caused by an unsustainable foreign policy or domestic entitlement programs. Unless these are dealt with, the government will continue to create money out of nothing and cause homeowners' real wealth to fall year after year to inflation.
It would also not be surprising at all if the $1 billion bailout fund went straight to the hedge funds and mortgage companies to prop up their corrupt lending practices, rather than to real homeowners. The government has a habit of giving free gifts to such industries as the financial institutions, military companies, drug companies, and insurance companies. Taking a billion dollars away from individuals and redistributing it to Wall Street in a propagandized attempt at "helping homeowners" is a quite conceivable outcome.
Not to mention the fact that the proposal is so vague as to be ridiculous -- how would homeowners apply for some of the aid, and how much would they qualify for? In case the federal government is not aware, a homeowner paying an extra few hundred dollars is not going to help if they are behind by even one dollar more than their extra payment. Lenders simply do not take partial payments, and a free fund to have the government pay a homeowner's mortgage will only encourage more homeowners to fall behind, knowing they can take money from other people to pay their mortgage. Safety nets such as these often encourage jumping, although the net may be less safe than anyone realizes until they have landed.
Such a useless measure will not help homeowners in foreclosure. Only they can help themselves or find a community solution, as we have stated numerous times on this blog and in various articles published online. More government programs will only result in more incompetence at the federal level and a reliance on government babysitting, both of which have done nothing but harm the individual for years now in various forms.
Hope that answers your question.
ForeclosureFish
http://www.foreclosurefish.com/...
NO!
No. That's a big problem in this country: People are not taking responsibility for their own actions. We should not only NOT bail out the borrowers, we should not bail out the lenders either who made stupid loans to stupid people.
The banking industry has nothing to complain about. They got greedy and gave loans to people who didn't show they could afford them and so now they are in a pickle. All that juicy interest lost. What a shame. Now they can sell the property for a fat profit in some cases and lose in other cases.
Nope. It's called making more informed decisions and living within your means. People need to learn their lesson.
Of course not. Many people made bets on the market, as always happens -- stock market, housing market, or any other, and at some point reality kicks in. It is advisable, when planning your financial risks, to have at least three lines of defense, so that if one, or even two, go bad, you don't get done in. But the taxpayers generally should not be one of these.
Nope
If people can't control their money it isn't up to the government to help them out when they screw up.
Never. It is not the public's responsibility to coddle those who make poor business decisions. Those with unrealistic goals need to step down to a standard of living that they, themselves, can support.
We will all be paying for the bad practices of the lending industry. They should be prosecuted in some cases.
Taxpayers should not bail out the banks who loaned this money. The market should be free to fall on it's own. Happy are those who bet against the subprime market...
The simple answer is no. taxpayers should not have to bail out people that are facing forecloure. The problem is however, that eventually we all pay. Just like trickle down was supposed to help us all, it can also hurt. The cost will be absorbed in higher interest rates and all will even out.
Well I think it's the fault of the borrowers for borrowing over their heads AND the banking industry for offering and approving loans to people who are borrowing over their heads. Both are at fault.
And our goverment will eventually change interest rates and pass legislation to help the banking industry, so why shouldn't they do something to help the borrower as well?
Nope, we shouldn't.
I also find it funny, just how many people got mortages with the 2 year teaser interest rates,
That now try and say, that they didn't know the mortage payment was gonna go up in two years.
I listened to one women on TV, who had refinanced three homes that way, now shes trying to say they mortage companies tricked her.
If she owns three homes, she was smart enough to know what she was doing.
She was trying to make a quick buck, and got caught by market forces.
Now she has to pay the price.
The government cannot protect citizens from thier own stupitity , nor mortage companies from thier own greed.
Heck no!! What I'd like to know is who gave thumbs down to all the answers.
Most of those folks bought more house than they knew they could really afford. Screw them, go to a shelter.
No
I think laws should be made to ease those people out of that situation if dont already exist. But neither should they be given benefits to uphold an unsustainable financial decision nor should they be fleeced and punished for making it.
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