Our Tax Dollars at Work

Senator Hillary Clinton, in an interview on CNBC, proposed a $1 billion fund to help homeowner with sub-prime loans that are in danger of foreclosure. She mentioned that the prepayment penalties found, in her words, “on page 700 in the fine print” were onerous and made it very difficult for these people to refinance and keep their homes.

Is this a good idea? Should the taxpayers have to bail out people that made bad decisions? We do it all the time – people who build in hurricane or earthquake areas get assistance to rebuild in the same stupid place. Why not these people?

Home ownership is part of the American dream. It seems that it has been pushed even harder in the last few decades as the only way to go. It is huge business. It keeps the home construction business busy, the realtors busy, and it’s important to our economy. Homeowners just buy more stuff than renters: lawn and garden equipment, snow blowers, new kitchen cabinets… There’s a lot of motivation in the business community to convince people that they must own a home to be happy.

What’s the rush? My dad didn’t own his first home until he was 48. He bought his first (and only) house in 1968. Prior to that, the 6 of us lived in a 3 bedroom apartment. As a kid I didn’t feel we lacked space. My parents may have thought differently, of course. But today, everyone seems to want to get into the house of their dreams way earlier than they should. Their expectations are high too. They want the newest and the best.

A lot of these people should just not own a home. They are not ready financially. They got in on no money down, adjustable rate mortgages. They did not read what they signed. And now that the teaser rate is expiring they are in trouble. I do feel bad – I would hate to lose my home. But, is it appropriate for the government to take our money to bail these people out? I think not.

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