Mortgage Bailouts

So is it right to bail out people who cannot afford to pay their mortgages? One reporter denounces it, calling the defaulters “losers,” and saying that to do so just encourages bad behavior. Another says the government shouldn’t be bailing us out for stupid mistakes. About 92 percent of mortgage holders have paid their bills on time, and we get nothing. Another reporter says that the free market is already fixing the problem because first time home buyers are taking advantage of the big drop in home prices. “So let’s stop trying to prop up $500,000 mortgages taken out by fools earning $40,000 a year.” Of course, other reporters claim that it’s the banks and mortgage companies who are to blame for “pushing” unreasonable mortgages on people. And of course, others point out that it was the government which put pressure on these same companies to make mortgages to people who ultimately could not afford them.

A thought occurs to me that I have not heard anywhere else. A lot of the people who are losing their homes are people who could very well afford them at the time they took out the mortgage. They had good jobs, and bought a house which was within their means, with a good interest rate. But as the economy sank, they lost their jobs, and after going through their savings, they can no longer afford the payments. For these people, I have sympathy.

But for a great many people who are in trouble, there is no question that what they did was not only foolish, but totally irresponsible. I remember the ads from a few years ago. The promise of mortgage payments so low that anyone could afford them. Sure, the payments were not even high enough to cover the principal, but don’t worry about that, we’ll tack on some balloon payment in a few years, and surely by then, you’ll be making a lot more money, and the value of your house will be so much higher, that we’ll be able to work something out for you. I remember being tempted by these ads. The temptation lasted for all of three-tenths of a second, before I said, What are you, insane? What person in their right mind would ever fall for such a gimmick?

Do I think people who did this should be bailed out? Sorry, I just can’t see it. If there were some way to differentiate between the people who were honestly trying to live within their means, and the greedy ones who insisted on buying houses they could not possibly afford, then I would consider finding a way to help the former, just like we always try to help people who are victims of natural disasters. Other than that, I have to say that I feel very much resentment that my working hard to pay my bills gets me no farther than the irresponsible people who helped to create the mess we are in.