I've spoken to many people lately about the prospect of abandoning their home given the current housing market and economic situation.
The problem with this kind of decision is that often the options are clouded by uncertainly. In addition, the [left-wing] media has a vested interest in keeping the housing market "up" as long as possible.
In order to make the right decision; dismiss the morality! It's incredibly difficult in the Obama economy to find the moral high ground (by design). Not to mention that defaulting on a mortgage is not necessarily a violation of good faith, provided the collateral (the house) is surrendered in the same condition it was in when the loan was closed when the bank had an opportunity to properly evaluate the property (appraisal). I will be dismissing the morality arguments in this post. I also will not cover recourse laws, which vary state-to-state--consult an attorney before making any decisions.
The latest housing bailout, er I mean "rescue" bill, further takes the "housing crisis" and distributes it to each working class American on top of the record breaking national deficit of $482 Billion we'll be facing next year.I could say a lot here about what a conservative President would do, but it's not necessary, since we don't currently have one in office.While the bailout is politically intended to help out struggling homeowners in an election year, it will certainly be used by the banking industry and Wall St. to clear the books of bad subprime loans that originators knew homeowners could never pay. The $300 Billion will be used by Fannie Mae/Freddie Mac to buy up subprime notes after the banks write them down by 10%. This will cap the banking industries losses at 10% of "current market value," a subjective standard to begin with, while pushing the 90% back onto the backs of taxpayers. All after Wall St. has made billions banking on subprime. And yes, the banks know exactly which notes to unload and which ones they can safely continue to hold.Enough about the banks, let's look at the values here...If we are going to have a free market, then consumers must be free to make their own choices. With freedom comes accountability. When people are free to make their own choices we have to accept that some of them will make bad choices. This happens all the time and certainly isn't limited to housing.If we are going to bailout people when they make bad choices, we will be removing the natural consequences thus encouraging more bad choices. It's the slippery slope and soon individual freedom becomes too expensive for the collective.So while some Americans may receive some assistance to stay in the homes they could never afford and should have never purchased, we will all be left picking up the tab which will likely be passed to future Americans in the form of taxes, inflation, and market controls.I can't wait for our next "crisis!"
