Wednesday, November 5, 2008

Housing Crisis, what housing crisis

I finally had enough with our government and it's bailouts when I read the latest "idea" that they are kicking around. I wrote a letter and fired it off to Feinstein and Boxer (a lot of good that will do). This is a more editorialized (blog worthy) version of what I sent.

Housing Crisis, what housing crisis?

Hello…..Congress…we don’t have a housing crisis. Why is it so hard for our elected leaders to comprehend this mind numbingly obvious fact. The housing crisis was between 2002 and 2006. When regulations and lending standards were thrown out the window, allowing houses to become ATM machines instead of “homes”. What we have now is a consequence crisis, brought about by doing nothing during the real housing crisis.

The real housing crisis went like this. Strawberry pickers making $14k a year bought $720k homes. People bought new homes and sold them for $100k profit weeks if not hours after taking ownership. Foreign college students were buying half-million dollar homes with no income and no job, and getting paid to do it. Banks looked the other way as real estate agents, mortgage brokers and appraisers conspired to inflate prices, fabricate documentation and do what ever was required to close a deal. All of them making a healthy profit along the way.

That was the real housing crisis. Our leaders did nothing to stem the tide back then. There was no one listening as young families complained about not being able to afford housing. Home ownership had never been higher, Hummers were flying off the lots and governments were raking in record property and sales taxes. Life was good!

Did our leaders think that all was well with the world when my neighbor, the Taco Bell counter girl was driving a $50k Denali? Did they think the entire country had hit the lotto? None of them thought to ask who was going to pay for all this consumption. They know now!

Congress is running around trying to solve a problem that has long since been solved. The financial markets, banks and hedge funds that created this train wreck have already imploded. Like a pyramid scheme those that stayed in too long or bought in too late are losing everything. Those people that bought a bigger house than they could afford are losing it. Problem solved!

If congress wants to help they should enact legislation to hurry this process along. They should enact legislation that speeds up the foreclosure process, not slows it down. They could offer low interest loans to responsible people that would like to purchase “affordable” homes. Possibly even using down payments (I know, a novel concept. But I’m a “maverick”). There are millions of responsible families out there that would love an affordable home. Why are they being punished with interest rates of 7%, 8% or higher. The government is giving the banks billions of dollars to bail them out. Surely they can put some conditions on that money to ensure low interest loans are available to responsible Americans.

Our bleeding heart leaders seem hell bend on saving the financially inept at the expense of the rest of us. Those that over spent and possibly (probably) lied or cheated in order to purchase that grand house are being rewarded with a multitude of government bail-outs. People the used their homes as ATM machines and lived like rock stars are now being rewarded. They get to keep the Escalade running on 24” spinners, the big screen TV, the boat. The rest of us, well, we get to pay for it. Is that the American dream?


jennalee ryan said...

and now the atate of california plans to raise the sales tax another 1.5% to offset the deficit from all of those homeowners that cant pay their taxes...and that is only the tip of the iceburg.

Market said...

Very good letter - although it made me depressed! I wonder if you got a standard automated response (sigh).