Update 3:15pm Eastern. Here’s video of my appearance on Fox Business Network announcing my three-point “Suck It Up” plan.
Update 1:50pm Eastern. Treasury Secretary Paulson is making his bailout announcement. Wait! He has decided to change his mind, drop the federal intervention plan, and is offering my new three-point plan instead:
Suck. It. Up.
Nah. Not really.
Agh! Just as I predicted: Paulson has adopted Hillary’s euphemism for the bailout–the comprehensive “work out plan.”
HUD Secretary Alphonso Jackson is blubbering platitudes about home ownership and the American Dream. Tell that to all the responsible taxpayers who chose not to take on risky subprime mortgages and who chose not to overextend themselves and who aren’t getting any breaks or rewards.
Here’s video via WSJ of Hillary’s Wall Street finger-wagging speech that I wrote about yesterday:
Later today, the Bush administration jumps on the bandwagon with the formal announcement of the not-a-bailout-homeowners’ bailout at 1:40pm Eastern. Wonder if Bush will use Hillary’s new euphemism, “Comprehensive work out.” Blech.
I’ll be talking housing and politics on Fox Business Network at noon Eastern.
Meantime, I noticed an interesting comment from a self-identified “moderate to liberal Democrat” on the Hillary campaign blog that’s worth reprinting in full here:
12/5/2007 7:14:09 PM
I wish Hillary would reconsider her suggestion to freeze mortgage loans – since it sounds like nationalizing industry to me. It’s definitely a mess but trying to examine it from different perspectives raises a lot of questions.
Here in northern Va, homeowners are watching the wealth in their homes (that accumulated rapidly in the last 5 years) shrink. Some recent homeowners bought high, with loans they could barely afford, and are now ‘upside down’ on their mortgages. Some have suffered hardship with the weakening economy or health problems. If they plan on being long term homeowners and can make housing costs a priority, perhaps they can ride it out. If they were speculators or must move soon, probably they can’t.
Remember that many other prospective homebuyers stayed on the sidelines, saving up for a downpayment and not shoehorning themselves into loans they couldn’t afford beyond the intro period. They’re still waiting to participate in the American dream of homeownership. So they get punished for being responsible and the high risk-takers get bailed out?
Many of these first time prospective homebuyers are hoping that the high cost of housing relative to income will decline, interest rates will stay affordable, and that the tightening of financing guidelines won’t freeze them out of borrowing.
Investors who bought real-estate backed bond securities – including Moms and Pops on fixed incomes – are facing massive losses by accepting ‘short sales’ or going to foreclosure, after bending over backwards to try to work things out with the borrowers. So now they also face the prospect of the federal government stepping in and rewriting the terms of contracts under which they loaned money.
So is it fair to future homebuyers to pay more for credit because rates rise from the uncertain possibility of contracted loan terms being “frozen” – for 5 years! Is it fair that they pay for the irresponsibility of some previous homebuyers and some bad mortgage brokers? Is it fair that the bond holders lose the benefit of their bargain? It’s not just foreign investors who will be stiffed. It’s easy to ‘blame the banks’ but they have shareholders, too. And they definitely would prefer to work things out with borrowers rather than acquire depreciating real estate.
I’m a moderate to liberal Democrat – and a real estate broker who represents homebuyers (including investors), homeowners, and home sellers – and counsels them responsibly. I get great deals for clients, some with 100% financing, but they are homes they can afford. So I watch and listen to all this talk with more than a passing interest. And I feel a certain chill with the prospect of government control in rewriting negotiated contracts between private parties.