I will admit up-front that there’s no friggin’ way Senator McCain is getting my vote. He baffles and infuriates me on topics as equally and frequently as Senator Obama does, but his choosing of that backwoods, macaroni and cheese-eating, moose-murdering, bible-thumping, crazy-ass bitch Sarah Palin sealed where my vote is going.
That being said, I’m still interested in his proposals. I’m a Libertarian. That means that I’m a Republican when it comes to my dollars, and I’m a Democrat when it comes to everything else. If McCain hadn’t moved the above-mentioned whorebag of hypocrisy to his campaign (or began employing the scare tactics and smears that she’s brought out in the past week (but that’s blog entry about what a piece of shit she is)), I might very well be an undecided voter.
He said something last night that made me smack my head, though. What McCain suggested makes just as little sense as Obama’s proposal to cure everything while somehow cutting taxes. I’d love to be told that this was another one of his so-called ‘senior moments’ (his joke, not mine), but I need some things clarified for me. Last night he suggested that the government renegotiate the principal balance of mortgages on behalf of the people in danger of losing their homes.
Thinking this situation through, I see three possible solutions in the housing matter.
I wrote but never posted a rant about the previous proposal to freeze interest rates for those with ARMs that were about to go up and couldn’t afford those increased payments. (I resisted posting it because I can’t seem to write a rant without using the word ‘fuck’. But then again, I’ve already called Sarah Palin a ‘crazy-ass bitch’ and a ‘whorebag’. *sigh* I’d never make it as a political journalist.) Essentially my profanity-littered entry talked about the inequities of being a responsible mortgage-paying individual with a 5.75% fixed-rate mortgage while someone who abused the privilege of being allowed to borrow hundreds of thousands of dollars is keeping their 4.5% ARM rate. Simply put: This is not an equitable solution.
What McCain’s suggesting is also not an equitable solution. Dropping the principal to the home’s current value causes even more harm to responsible citizens. Let’s say that everyone not facing foreclosure has a mortgage for $185k on what’s now a $150k home. Those with $150k mortgages will face less hardship when trying to sell their homes and those with the $35k ‘good-behavior tax’. What are we teaching people here? McCain goes on and on and on about Obama’s muddling of the free economy and his socialist tendencies, yet what he’s offering is no better. This, like the freeze on rates, essentially punishes those who do what they’re supposed to do.
The final solution I see would be to extend mortgage durations from 30 years to 50 years and fix the rate. Every $100k at 6% at the 50-year term is about $525 per month instead of $600 at 30 years. For reference, an ARM at 4.5% is about $510 per month. Mortgages would increase for these people by $15 per $100k. If you can’t forego one pizza night to keep your home, you need a good shaking. Mortgage companies are making their money, people are staying in their homes, and those who fulfill their financial obligations without government assistance aren’t getting shafted.
My above words aside, I do understand that sometimes shit happens and that those defaulting on their loans aren’t all irresponsible yahoos. I also understand that all of the defaults are causing an issue for banks. Banks are not in the real estate business; they are in the money business. Banks do not want depreciating assets (foreclosed homes) on their books. Having all of that lessens their abilities to loan money to businesses, which reduces economic growth, which increases joblessness, which contributes to why people are defaulting on their loans. It’s a bad cycle.
Now that I’m a stakeholder (as all of you are) in the Fannie Mae and Freddie Mac $700b+ bail-out, I’m all for strict oversight over what’s going on with my money. (How very Democrat of me!) But when average everyday people are stuck with a bill to take care of a mess that greed (on both the parts of the banks lending the money and the individuals who knew they had no business buying a home on their salaries), someone’s gotta step in to police the process. Sad but true.
What baffles me the most about this entire housing situation is on the side of the people facing issues with paying their mortgages. So many of these people bury the issue until there’s no other option besides foreclosure. If you’re anticipating a problem, CALL YOUR MORTGAGE COMPANY. They would so much rather work with you than to sell your home an investor at 60% of its fair market value to just get it off their books.
If you’re afraid of your mortgage company, work with an investor. He or she can negotiate on your behalf to find an equitable solution. Expect to lose any equity you’ve built up on your home. (Investors don’t do this work just for a warm, fuzzy feeling.) Also be prepared to either not be worked with if you don’t have equity, to rent your home back from the investor for about the same price you were paying for your mortgage (just without the back payment baggage and ridiculous fees), or to move before a new renter moves in.
Well, it’s about time for me to get outta here. I didn’t set out to write anything in particular, but these are just some things I’ve been thinking about and their offshoots since McCain’s pronouncement last night.