So, the federal government can either help many homeowners keep their homes or let the free market reign.
If the government steps in, they risk prolonging the inevitable – maybe a lot of the people facing foreclosure now will still end up losing their homes, even if they get out of their current loans into new loans (don’t forget, many people who go into foreclosure do so not because they can’t afford their homes because their interest rates reset, they go into foreclosure because they can’t afford their payments, now, either because they over-extended, or because they lose their jobs, get sick, etc.)
However, if they don’t step in, they risk letting the economy fall into a deep recession (which, of course, could happen regardless of which course of action they choose).
We’ll see what happens.
No matter what, some people are gonna get hurt.
And some people are gonna be mad.
From today’s Herald:
As more states and cities struggle to find the money to bail out homeowners caught up in the housing downturn, some Americans are wondering why government should be rewarding people for their greed or irresponsibility.
Some, like Thomas Roach of Sarasota, Fla., are even actively campaigning against a bailout for people who, using easy credit and exotic mortgages, bought more home than they could afford on a bet to make easy profits from rising real estate prices.
Even before President Bush put forth his proposals to help troubled homeowners last month, Roach, a 30-year-old information technology specialist for a financial firm, had posted an online petition called “Tax Payers Against a Wall Street and Mortgage Bailout”. It has collected nearly 3,800 signatures in two weeks.
“What the government doesn’t realize is that these people knew what they were getting into. They just thought that these housing prices were going to keep going up and up,” said Roach. “A bailout sets such a bad precedent. You’re encouraging bad behavior.”
More: Government steps up to help borrowers, but not without controversy – Associated Press, by way of The Boston Herald
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