Your house is ruining my economy!

Let’s get a show of hands here real quick. Who thinks it is right for the government to step in and bail out people that got into a car loan they couldn’t really support and now face the bank taking back their Porsche? How about if Best Buy comes to foreclose on that 60” plasma TV someone bought and now can’t pay for? Anyone? Anyone at all? So why do so many people feel the federal government has a duty to step in and protect anyone and everyone that’s having trouble with their mortgage?! I’m not saying that we should all turn a blind eye to the problem. But saying that we need to bail out everyone so that no one loses their house is ridiculous!

Where in the constitution does it say that as Americans we are granted to right to own a house? Nowhere. It’s a dream that most people have and something that almost everyone wants, but it’s clearly not a right. While you do have the right to pursue your dream, you don’t have a right to achieve it. Therefore, not everyone gets to own a house. More importantly, not everyone gets to own the house they dream of in the small area of the country that they’d like it to be in. The reality of making such a large purchase is that the house you want may not be affordable in the place you want it. If your dream is to own your own home, one of the sacrifices you may need to make is location. We would have loved to be living closer to downtown Boston, but the reality was that it would have involved too many sacrifices. We couldn’t find the condo we wanted with some of the required features we wanted in our price range. We could have gotten into a questionable mortgage that we weren’t sure we could support. But we instead did the responsible thing and only signed our names to something we knew was reasonable. Yes, a bank would have floated us an interest-only mortgage with very little down that would have allowed us to buy something better and more convenient for us. But guess what, we wouldn’t have been able to pay that thing off once we had to start paying the principle! That is exactly the situation a lot of people find themselves in right now. They got themselves into a mortgage with very high risks and no plan on how to deal with them. They got so caught up in the excitement of being able to actually achieve their dream that they completely ignored the realities of whether or not they should achieve that dream.

I have a dream of being a stay-at-home dad. That sure as hell doesn’t mean I’m swapping out Hayley’s pills for placebos and getting ready to quit my job. I could do that, but it’d be a very stupid thing to do right now. Instead I choose to act like a responsible adult {waits for the laughing to cease} and wait until the time is right and we can support that dream before I choose to go for it.

The real reason this is a problem is that housing prices sharply pulled back from their peaks. That means that if the banks foreclose on your house, they can’t turn around and sell it for anything close to what you owe them. Cause see, people aren’t the only ones that can act in a very irresponsible way. Suddenly all those interest-only and low-down payment mortgages to risky people are coming around to bite them in the ass. That’s the reason the government needs to step in to save the economy. People losing their houses puts a big squeeze on the economy. Combine that with the lending sector losing billions of dollars, and you get a recession. That’s bad for everyone, including the rest of us that acting responsibly when we bought our homes.

The best way out of this is not a bail-out. We don’t give people money and we don’t give the banks money. The government pays a more modest sum to help people refinance their current mortgages into something they can better afford. This keeps money flowing into the banks as people make payments and lets people keep their houses. Will this save everyone? No, but it doesn’t need to. People are still going to lose their homes. If you got in WAY over your head, you’re still screwed. But if you stretched yourself just a bit too far, or had some unforeseen circumstance come up that you’re recovering from, then you should be okay. The punishment should fit the crime.

Still, it kills me that the responsible people out there get punished for doing the right thing, same as always. We either lose a ton of tax money or have to suffer through a recession. Shouldn’t we be rewarded? Hell, I’d take a simple ‘thanks for not being a jerk and ruining things for everyone else’. Maybe our lender should buy me a cup of coffee or a dinner or something. Something! But alas, no good deed goes unpunished.