Should we insure someone's gamble?
That is the the key question in the continuing saga of foreclosures on mortgages that should never have been written. Here is Boston there is a group called "City Life." They are organizing protests to hinder or prevent evictions by the constable(s) of persons who have had their properties foreclosed on.
Sadly, the persons now being foreclosed on are largely those who are on the bottom rung of the financial ladder, trying to get ahead. These people took mortgages out on properties they simply could not afford, essentially betting on continued appreciation of property values to allow them to jump on that property train and "get theirs."Laudable of the risk taker in some way ... and irresponsible of the persons who actually made the loans.
But was it a "scam" being perpetrated on the borrowers? No. They got their money and they got the risk that went with it. For these people now to stand up and state that they were damaged by their choice to take out a loan they couldn't afford to pay is ridiculous. Simply asinine.
Should the lenders have been permitted to make the loans? Arguably, "no." But then if there is no legislation to the contrary, we have no violation of the law, and get this: there was no duty owned by the lender to say to the borrower, "no lady, you are too stupid to see the risk you are placing yourself in ... no money for you." There was a contract. If the borrower can't figure out how it works, it is not the fault of the lender. The borrower should have had an independent lawyer explain it or even go to a pro bono legal clinic. But largely, with the prospect of mucho dinero in their eyes, the borrowers took the money and jumped right in. The "no"at the beginning of this paragraph relates to the idiocy of accepting paper from someone who cannot possibly pay it back -- someone who was bound to default given the slightest economic bump.
But that is another story and different parties involved -- the borrower can have nothing to say about some moron packaging the securities created by their loan and some other idiot buying it. The borrower is not damaged by transactions whereby an Australian bank buys this paper for its yield based on wishful credit ratings: the owner of the paper owes the borrower nothing ... it is the other way around.
So instead we have Obama and Worthless Patrick (a Masshole governor) trying to prevent the foreclosures, re-package them, give more room to the borrowers, wait for unnamed third party charities to buy the houses to rent as low income housing (right) and generally screwing up responsibility for the choices people make: this is why the UK will flow shortly down the poop-chute of socialism -- where people are relieved of their responsibility to themselves and sanity, the situation rapidly spirals out of control into even greater debt crises.
If properties are not allowed to be foreclosed on, then we have placed a put option on them for the benefit of the reckless and greedy (or stupid). This floor prevents others -- probably in similar financial capacities -- from buying into these units at costs that truly reflect their worth to society. These same would-be buyers are prevented from receiving the benefit of their financial prudence. In essence, why be prudent if the government will bail you out?
This is a bad idea. So is the idea of our tax dollars buying these houses and the government running them as landlords "until they can be profitably sold on." That would be ... never. It is the creation of vast new sink-holes for our taxes and swathes of property consigned to become wastelands of what actually is the income-assisted. No hope for re-investment and appreciation when that paradigm sets in and a slammed-shut door in the face of aspiring local financially prudent investors.
Our country is founded on self-responsibility. Europe is not. Where would you rather live if you have even a shred of ambition. Think about it.
Sadly, the persons now being foreclosed on are largely those who are on the bottom rung of the financial ladder, trying to get ahead. These people took mortgages out on properties they simply could not afford, essentially betting on continued appreciation of property values to allow them to jump on that property train and "get theirs."Laudable of the risk taker in some way ... and irresponsible of the persons who actually made the loans.
But was it a "scam" being perpetrated on the borrowers? No. They got their money and they got the risk that went with it. For these people now to stand up and state that they were damaged by their choice to take out a loan they couldn't afford to pay is ridiculous. Simply asinine.
Should the lenders have been permitted to make the loans? Arguably, "no." But then if there is no legislation to the contrary, we have no violation of the law, and get this: there was no duty owned by the lender to say to the borrower, "no lady, you are too stupid to see the risk you are placing yourself in ... no money for you." There was a contract. If the borrower can't figure out how it works, it is not the fault of the lender. The borrower should have had an independent lawyer explain it or even go to a pro bono legal clinic. But largely, with the prospect of mucho dinero in their eyes, the borrowers took the money and jumped right in. The "no"at the beginning of this paragraph relates to the idiocy of accepting paper from someone who cannot possibly pay it back -- someone who was bound to default given the slightest economic bump.
But that is another story and different parties involved -- the borrower can have nothing to say about some moron packaging the securities created by their loan and some other idiot buying it. The borrower is not damaged by transactions whereby an Australian bank buys this paper for its yield based on wishful credit ratings: the owner of the paper owes the borrower nothing ... it is the other way around.
So instead we have Obama and Worthless Patrick (a Masshole governor) trying to prevent the foreclosures, re-package them, give more room to the borrowers, wait for unnamed third party charities to buy the houses to rent as low income housing (right) and generally screwing up responsibility for the choices people make: this is why the UK will flow shortly down the poop-chute of socialism -- where people are relieved of their responsibility to themselves and sanity, the situation rapidly spirals out of control into even greater debt crises.
If properties are not allowed to be foreclosed on, then we have placed a put option on them for the benefit of the reckless and greedy (or stupid). This floor prevents others -- probably in similar financial capacities -- from buying into these units at costs that truly reflect their worth to society. These same would-be buyers are prevented from receiving the benefit of their financial prudence. In essence, why be prudent if the government will bail you out?
This is a bad idea. So is the idea of our tax dollars buying these houses and the government running them as landlords "until they can be profitably sold on." That would be ... never. It is the creation of vast new sink-holes for our taxes and swathes of property consigned to become wastelands of what actually is the income-assisted. No hope for re-investment and appreciation when that paradigm sets in and a slammed-shut door in the face of aspiring local financially prudent investors.
Our country is founded on self-responsibility. Europe is not. Where would you rather live if you have even a shred of ambition. Think about it.
posted by Zaphod at Thursday, January 24, 2008
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