Posted on 02/25/2009 9:38:50 AM PST by gartrell bibberts
Michelle has a clip from CNN that demonstrates the silliness of the mortgage-bailout efforts of the Obama administration. Minta Garcia and her family bought an $800,000 home that they could not afford, using speculative lending as a lever. The value of the house has dropped to $675,000, and now Garcia faces foreclosure. However, the coverage omits a critical piece of the puzzle:
(Excerpt) Read more at hotair.com ...
What has happened in too many cases is that homeowners took a speculative risk on their house, either buying a home they couldn’t afford or emptying the equity in their existing home in anticipation of above-inflation value growth. Once the market reinflated the equity, the owners could refinance with better terms on a fixed-rate mortgage and have a payment they could (barely) afford. Unfortunately, this Ponzi scheme imploded when housing at first failed to increase in value and then began to drop.
In other words, the homeowners took a risk based on market appreciation. Those who completed their refinancing before 2007 managed to avoid losses. Others took a risk and lost out. Let’s remember that Garcia’s home value only matters if she tries to sell the property. Lenders do not foreclose just because the valuation drops; they foreclose when borrowers can’t make the payments. Being under water on a mortgage doesn’t mean one can’t make payments as long as the owner bought a home and a mortgage he or she could afford.
Garcia didn’t do that, and now she wants taxpayers to indemnify her for taking a loss on a risk she assumed on her own. The government doesn’t exist to remove risk from speculative investments, and to the extent that they do so, they only ensure that more speculation rather than less takes place in the future.
um. How is a bus driver urning enough to make payments on a $800 000 house? Is it possible that this is a over payed union worker? Maybe that’s the real problem in this story
I’m not accusing, just say MAYBE people should be questioning that. The person is obviously not a great handler of money yet she managed to save well enough to buy an $800 000 house? Something doesn’t seem right...Incidentally it’s also seems somewhat odd that this person can afford even a $675000 house
this is like any other INVESTMENT, if it tanks, it tanks, it’s not my responsibility to bail someone out if they invested in stocks and the market crashed, nor is it my neighbors responsibility to bail me out if i MADE A BAD INVESTMENT.
BTW, i knew that i couldn’t afford to OWN A HOUSE. I RENT. But for being responsible, I now have to pay for people to own a house, WHEN I CAN’T.
Unlike Garcia, I refuse to put my fellow American taxpayers on the hook for a foreclosure bailout.
amazing how many of our fellow citizens and “non-citizens” are perfectly willing to screw us.
hopefully we are the majority and we will all rise up to stop this nonsense and thievery.
Someone needs to start a “Bail me out, Obama!” website for everyone to put their pics and videos of themselves looking forelorn holding signs and declaring their personal needs that Obama should meet.
I believe that the foreclosure plan does not permit people to refinance if their mortgage is more than 105% of the homes current value. So people like the ones in the video howm bought an excessive amount of home won’t qualify.
If this where like “any other investment”, then the homeowner should be able to walk away and write off the loss against his income with NO OTHER RECOURSE against him.
Talked to my brother in Greeley, CO, the other day and he mentioned that there are a number of Hispanics in his neighborhoods whose homes, like Garcia’s, are in foreclosure. The surprising thing is that every one of them is driving a late model Cadillac Escalade. He asked one of the neighbors about that and he said that they had refinanced their house at 125% of what they paid for it and used the cash to buy the Escalade and a big-screen TV.
The original loan should have been denied. There was absolutely no need to buy a home of such value. Even in an expensive real estate market, there should have been something available for $225,000.
She signed on for something she knew she could not afford.
Mr. Obama, why am I being punished with a bailout?
From the comments:
A true story. My wife and I had dinner Sunday night with a school teacher who told us about one of her Jr. High students. She asked him what he wanted to do when he grew up. “I wanna draw”, he said. “You mean you want to be an artist?” “Naw,” he said, “I wanna draw, like my Mom. She draws welfare and she draws SSI, and some other stuff. That’s what I wanna do.”
Payments on an $800k house at 5% is about $8400 a month. Even if they had $200k in equity in their last home, payments on $600k would be $6400 a month. What kind of school bus driver brings home that kind of money in what is essentially a PART TIME job?
Are you sure that this is a “Fellow Citizen”? Have you seen his birth certificate or his naturalization papers”//
Seems to me a scam to sink all of one’s money (and credit) into a home (seeking homestead protection?).
My favorite comment was:
It wasn’t the greatest sell that CNN has ever made - they shouldn’t have picked someone with granite countertops.
You’re right, it doesn’t make sense. The one thing they left out of the story was what the husband did.
It’s possible that he made decent money.
It’s also likely that they had an interest-only loan, the time came to make principal payments and they were unable to either refinance or sell.
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