Archive for the ‘Housing market’ Category

Democrats oppose discomfort

March 26, 2010 Leave a comment

I don’t know why I still find myself astounded at the lengths to which they’ll go to make sure no one — well, except the rich — experiences any discomfort, any at all, in this life:

The administration’s new push also seeks to more aggressively help borrowers who owe more on their mortgages than their properties are worth, offering financial incentives for the first time to lenders to cut the loan balances of such distressed homeowners. Those who are still current on their mortgages could get the chance to refinance on better terms into loans backed by the Federal Housing Administration.

The problem of “underwater” borrowers has bedeviled earlier administration efforts to address the mortgage crisis as home prices plunged.

Officials said the new initiatives will take effect over the next six months and be funded out of $50 billion previously allocated for foreclosure relief in the emergency bailout program for the financial system. No new taxpayer funds will be needed, the officials said.

“Cut the balances,” huh? This really is a wonderful, revolutionary concept. I can get just about everything I own for free, after the fact, retroactively, if I’m as smart about it as Obama.

I’ll start with the 4Runner we bought two years ago for $22,000. We owe $13-14,000 on that, but according to, I’m “underwater” because its current market value is about $12,700. Don’t you think I deserve that difference back from Toyota? Because if no one in America should owe more for their homes than they’re worth, shouldn’t no one in America owe more than their cars are worth? Perhaps I can rinse and repeat and get away with this every six months until I get it most of my money back from those usurious capitalist bastards who sold it to me — knowing full well it was going to decrease in value, too! Oh, the humanity!

Why should I owe them what the car used to be worth when I signed that contract — “contract”: just another nefarious, rightwinger concept! — two years ago, if the Kelly Blue Book value today is far lower?

All this seems perfectly fair to me — which, according to the left, is what this life is all about: fairness defined down to mean never having to experience so much as a modicum of discomfort or stress from either (1) the consequences of your own poor decision-making or (2) the fact that sometimes things work out nicely and sometimes they simply don’t.

Kill Fannie & Freddie, but don’t replace them

January 23, 2010 1 comment

U.S. Rep. Barney Frank (D-Mass.) is probably right about abolishing Fannie Mae and Freddie Mac, which, as the article states, buy “loans from lenders, insuring them against default and supplying fresh cash to make more loans.” But replacing them with a single government-run entity because, according to Frank, “it’s important for the government to continue to play a role in fostering housing affordability,” is exactly the wrong thing to do since it’s precisely that notion that makes home-buying unaffordable for most in this country.

Artificially increasing demand for something necessarily diminishes its supply because more people exist in the market to drive up prices. This is one of the most fundamental laws of economics, and it’s one just about every school of economic thought agrees on.

The best thing the government can do to make housing more affordable is to get out of the process altogether. Let lenders keep their loans, rather than get them off their books by packaging and selling them to another entity that then sells them as securities. This would inject more sanity into the lending process, as lenders would no longer be tempted to sell homes to people who probably can’t afford them, as they do now because they won’t have to worry about the toxicity of subprime loans once they sell them to an entity like Fannie or Freddie (or whatever do-gooders like Frank and his ilk are eventually able to replace them with). Fewer people buying homes means existing home prices would have to come down to reach demand-and-supply equilibrium.

Computer prices have dropped; DVD players can now be bought for about what two DVDs cost; cars, flat-screen TVs, treadmills, plastic surgery — all of these once-outrageously-expensive things have become affordable to just about everyone, because — so far — the government has not established a right to them that must be facilitated by some government program. The market has worked.

But what prices have risen, instead of dropped, over the years? Tuitions, medical-care costs, home prices, and the cost of hiring new workers, to name a few — all things the government has determined it needs to “help” people to afford.

Curious, isn’t it?