06
Mar
09

Opposing The Mortgage Reform Bill Shows Why These Banks Have Failed

I don’t get economics. Let’s just get that out of the way right off the bat. Here’s something I do understand, though: Repossessing people’s houses that are worthless and won’t sell doesn’t benefit anybody. I speak from experience, having just (finally) sold a house after 6 months of trying in a neighborhood where, up till this year, houses were selling within 2 days of listing. Why such a wait? Nobody has money, and nobody can get money. Plus, we had to adjust ourselves to the notion of selling the house for maybe 80% of what it was worth just a year ago. It’s just the market right now.

The just-passed legislation on mortgage reform and anti-predatory lending practices may help these poor bastards out:

The bill, passed 234-191, largely along party lines, encourages lenders to renegotiate mortgages with troubled homeowners. If they can’t, the bill allows bankruptcy judges to modify the mortgages, a reform that bankers have argued undermines the sanctity of a contract and rewards bad behavior.

Rewarding bad behavior isn’t the issue. The issue is helping people not default on their loans, so the bank keeps getting payments on money it’s already put out there. How in the hell would taking a worthless piece of real estate no one can buy help anyone, when the other option is to continue receiving some money?

This reminds me of something I’ve found that is United-States-specific: It seems near impossible to live there and not be in debt. It’s assumed that you have a pretty substantial amount of debt once you hit a certain age, and getting out of it is ridiculously difficult. After paying off a bunch of credit cards recently, I was about to cut them up when I was reminded that doing so is bad for your credit. Instead, they sit in a drawer, where they have remained, only to charge me annual fees for the privelege. As for our recent home sale, we took a serious bath because of early payment on the home equity loan we took out. What? Why in the hell would we be penalized for giving these thirsty bankers a drink?

This is why people are in trouble. Living beyond your means is not only a tradition in the States; it has become increasingly more normal than not. Yes yes yes, I think it comes down to rampant consumerism and hyperactive marketing, but it also comes from the American lack of restraint in general. For a country so obsessed with its Christian values come election time, both avarice and gluttony seem to be the cornerstones of our way of life.

When the hell did this happen? When did it become downright unAmerican to ask people to turn their lights off when they leave the house, or to maybe not buy a car that is engineered to seat 8 people when you only have 2 kids? When did acting for the betterment of everybody in the big picture take a complete and utter backseat to acting for the betterment of you right now?

This is my problem with conservatism. While a firm advocate of individual responsibility (I firmly believe people who file frivolous lawsuits should be dragged into the streets and caned), I just don’t understand the extreme to which it’s been pushed of late. Yes, government can be ineffective and irritatingly bureaucratic, but since when have we given up on it completely? We don’t execute repeat offenders automatically, so why are we so against even the guise of federal rehabiliation?

This is a more involved topic than I meant to write about. Suffice to say: I’m glad this bill passed. I hope it teaches the banks a lesson. That is to say, I hope it teaches them the right lesson. Which is not that they have less power in D.C. now than they’ve wielded the last 15 years, but is that they should sometimes compromise for the good of the whole.  Since “the whole” included “themselves.”  Yeesh!

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