Alright, stop it. This has gone far enough. Somebody explain to me why the government needs to refinance your house just because the value has dropped. I understand people who have lost their jobs or have less income, but what is this nonsense about not being able to make your payments just because your house is worth less than when you bought it?
But that’s exactly what President Obama unveiled this week. He has loosened the terms of the Home Affordable Refinance Program (HARP), the program that gives some slack to borrowers who’ve made their mortgage payments on time. He’s going to allow more people to lower their payments just because the value of their houses has decreased since 2008.
Now think about this for a moment. How many times have you bought a car, financed it, then driven it off the lot? Before you even get it in the driveway it’s worth less than when you bought it. Do you go whining to the government that you can’t make your car payment because your car is worth less than you paid for it? Same thing for furniture or appliances or anything else you buy on time.
This is absolutely ridiculous but so many people accept it at face value. “Oh, yeah, that guy’s home value dropped by 50 percent. I don’t blame him for not making the payments.” Good grief, what possible sense does that make?
What on earth do you care unless you’re selling? Just because someone says your home is worth less has no bearing on you unless you’re trying to move it. Just like it had no bearing on you when the paper value went through the roof. No one should stop making payments and no one should be given a government-assisted payment drop just because of the value of their house.
But that’s the mentality of the world we live in. “Oh, but the banks should do this to keep more people in their houses,” you say. Look, I’d love to see people stay in their houses. Nothing pains me more than to see a family turned out of their house, but let the banks decide.
Don’t you think the banks want to keep as many people in their houses as they can? Foreclosure these days in all likelihood means the bank’s going to lose money on that house; in many cases, a lot of money. That’s the last thing they want. But let them decide. The banks are fully capable of deciding who’s creditworthy and who’s not. They don’t need the federal government mandating how they do their business. That’s how we got into this mess in the first place.
Don’t forget that it was the Community Reinvestment Act that forced many of these lenders to make risky loans. Don’t forget it was Fannie and Freddie who insisted on these high-risk loans being bundled with regular loans before they would buy them. Don’t forget it was Congressman Barney Frank and Senator Chris Dodd who pushed for all this government meddling that got us into this mortgage meltdown only to “come to the rescue” with the Dodd-Frank Act that is already having numerous unintended consequences like higher bank fees.
Dodd and Frank were much like the rogue firemen who go around setting fires then flash up in their fire truck to save the day.
And President Obama is right in there with them. He has no clue about how all this works. What we need to do is let the system work. And the system works best when the shots aren’t being called from Washington.