What about the guy that got laid off?

No surprise that I’m not a big fan of Obama’s plan to bailout the mortgage deadbeats.

For starters, consider the following (none of which I’ve heard the pundits pounce on):

First, even I am sympathetic to the working stiff who anted in a down payment and has a history of making his payments on time, but has been jolted by the economy with declining home prices and, worst of all, a lost job.  I say, cut that guy mucho slack.  I don’t mind my tax dollars helping him out.

But, Plan Obama says multiply earnings times 31% to calc mortgage payment.  The nuns taught me that anything times nothing is nothing — so this guy — the most deserving, in my opinion —  is out in the street,  That’s not fair, is it?

Second, Obama says 10 million mortgages will be impacted at a cost of $75 billion.  That’s $7,500 per loan — of which $5,000 is the sum of the annual incentives (principal reduction) if the borrower makes his payments, and at least $1,500 are processing costs to the lender.  That leaves a whopping $1,000 that goes to modify loans that average over $200,000.  Doesn’t add up to me.

Third, politically incorrect, but shouldn’t this plan be limited to social security card carrying US citizens.

Fourth, keep in mind that 1/3 of all home owners don’t have a mortgage — they own their homes free and clear of any liens or mortgages … and over 90% of all mortgage holders are making their payments — just as they always have.

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2 Responses to “What about the guy that got laid off?”

  1. SMH Says:

    “Mr. Obama nodded to a potential backlash from diligent homeowners who have been making their payments, suggesting they’d ‘benefit from stable neighborhoods with fewer vacant houses.'”

    – Translation: the reward for being a fiscally responsible homeowner and living within one’s means is the rich positive externality associated with fewer homes for sale in one’s neighborhood.

    – No one should feel more stupid than those who never bought (because they saw flippers/speculators and knew housing was inflated, knew it would eventually come down, knew it was immoral and stupid to take on more than what they could afford). Now the government is going to keep the market artificially inflated with tax payer dollars.

    – Adjustments to principal are particularly disgusting. For one thing, they won’t be taxed. Harry Homedebtor and Suzy Speculator can get a $100,000 gift from Uncle Sam tax free. Working people would have to earn $200,000 to net $100K.

    – The legislation clearly hurts one class of individual hardest: those who do not own a home, but could afford to (or be willing to) buy one if prices settled to a realistic, market dictated, level. These people are being adversely affected three ways: 1) Housing prices are being artificially propped up by these government efforts; 2) The tax dollars of these renters are being used to effect house prices; and 3) interest rates have been kept artificially low via additional government intervention for years, thereby reducing the inflation-adjusted assets these renters have for making a purchase.

    – The housing market needs to readjust, and the government seems to be doing everything it can to prevent that. It is not a right to own a home, it’s an earned privilege. The market itself can/will straighten this out more quickly than any government “solution”. There will be some pain, but most of it would be borne by the person(s) who deserve it.

    – Those who work hardest and contribute the most, usually are rewarded the most. In Obama’s view, those who have succeeded (with the exception of the politicians are pros at cheating on their taxes) should be punished and have their wealth redistributed. Those who don’t want to work or prefer to play the victim are rewarded with the wealth of those who produce. The concept of this trickle-up poverty has already been effectively demonstrated in the USSR.

    – Our government has increasingly failed to recognize the difference between governmental responsibility and charity; for their part, people have neglected to understand with some precision the difference between wants and needs.

  2. Robert K Minniti, CPA, CFE, Cr.FA, CFF, MBA Says:

    Here is a link to a commentary on the government’s proposed mortgage bailout program that you might find interesting  http://tinyurl.com/ckw7y4

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