Monday, August 13, 2007

Hillary wants you to pay your neighbors mortgage

What would you do if your neighbor knocked on your door and told you that his ARM is adjusting and he can't afford his mortgage anymore? Would you write him a check? Hillary Clinton thinks you should.

Direct from her website:

Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.
In other words, your tax money is going to help pay other people's mortgages so they can keep their homes. Never mind that the borrowers chose to dive into risky loans, never mind that it is the banks that took the risk, not the other taxpayers, never mind that this completely flies in the face of personal responsibility. They can't pay their mortgage, so she thinks you should.

And let's not forget that 1) it won't work and 2) we're not just talking about a "single payment". To be in foreclosure, you need to be behind several payments. I've heard of people not having paid their mortgage bill for many months before getting a notice of the banks intent to foreclose. When you are behind on your mortgage, you can't make a single payment. They want all the money you owe up until this date, or nothing at all. They'll send your single payment check back to you. So to save someone from foreclosure, we're actually talking about a few or more months of payments to bring them current.

And that doesn't even solve the real problem: they can't afford their mortgage. So more money comes out of our pockets to help them refinance into better loans, loans they don't deserve because they have a history of not repaying their debts - which is why they accepted a loan with lousy terms in the first place.

People like that don't need a hand-out, they need education and personal responsibility. My thoughts? Just let banks know they won't be bailed out, and that consumers won't be bailed out either. The lending standards will tighten and poor people with bad credit won't be borrowing money they have no hope of repaying. These people are not going to be homeless. They will just end up renting.

Take that billion and fund some school financial education courses. I'll pay for that!

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