To the People

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or TO THE PEOPLE.

Tuesday, August 28, 2007

Forces Line Up to Bail Out Risky Mortgage Takers

The US is facing an unprecedented crisis in mortgage defaults. Perhaps as many as seven million people will default on their mortgage loans as those loans reset to very high interest rates after two years of low "teaser" rates. But whose problem is that?

The Democrats think that is the problem of the US taxpayer, and that the US taxpayer should fund a bailout. Clinton is proposing a $1BN bail-out fund. The pressure for this type of relief will only increase as the market will, inevitably, turn down more. It is going to get really ugly.

But should the people who took out responsible loans that they can afford, and renters, who get screwed by the IRS code and have no irresponsible loans, have to pay to bail out their neighbors who took on exotic loans to refinance their kitchen remodel, or this Wa Post reporter who put no money down:
Could we have lived farther from the District for less money, perhaps allowing us to get a less risky mortgage? Yes. Could we have continued to rent, waiting, perhaps, for the market to even out and our salaries to increase? Yes. But we already make nice livings. We pay taxes in the highest bracket. Our parents bought homes at our age. It may sound crass, but we deserved a nice home. We did what we had to do to get one.
Yes, it does sound crass that anyone thinks that they deserve a "nice home" in the DC suburbs while putting no money down. Taxpayes should not be forced to bail out such people.