Articles My Neighbors Send Me
A couple of articles came my way from neighbors in Aviano.
The first article (click here) talks about the moral issues around paying on a mortgage that is seriously underwater. A relevant paragragh:
"A spurt of strategic defaults in a neighborhood might also reduce some other psychic costs. For example, defaulting is more attractive if I can rent a nearby house that is much like mine (whose owner has also defaulted) without taking my children away from their friends and their school."
There are more folks in Aviano doing this than you would imagine. And this:
"More commonly these days, however, the loan was initiated by an aggressive mortgage broker who maximized his fees at the expense of the borrower’s costs, while the debt was packaged and sold to investors who bought mortgage-backed securities in the hope of earning high returns, using models that predicted possible default rates."
Sorry, but no one put a gun to borrowers heads and said 'you must accept this adjustable rate mortgage'. Legislation that attempts to eliminate risk in a society will only serve to stiffle freedom.
The second article (click here) talks about the housing recovery timetable.
Some interesting paragraphs:
"Economists worry that the housing market could stumble later this year when government measures to boost sales, including ultra-low interest rates and a tax credit for home buyers, expire.
"We're just not convinced that the housing market can stand on its own two feet without the fiscal support of the tax credit," said Paul Dales, an economist for Capital Economics, a research firm."
The housing issue at its root was caused by the government mandating that banks give loans to folks that would not ordinarily qualify for them in the interest of fairness. They don't have a real estate problem in Canada because the Canadien government never forced the banks to lower lending standards. The actions taken by the government in the last year have only served to
prolong the problem by shifting the financial burden to future generations. My kids amount of discretionary income will be affected by this mess and that sucks. Your kids too.
