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Wide White: So, so wrong

Tuesday, February 24, 2009

So, so wrong

I've kept my mouth shut on the stimulus package and various government bailouts because there's little I can do and like many other political subjects, I've largely stopped caring very much.

This made me care.
Patricia Valverde, a mortgage broker who had been laid off, thought she was about to lose her home to foreclosure. Valverde had an adjustable-rate mortgage on a house she paid $300,000 for.

She watched her monthly payment jump from $1,700 to $2,250, while her property value fell to about $80,000. She was so upside-down on the house that no one would refinance her, she said.

On the heels of the newly announced mortgage stimulus plan announced by President Obama, her bank temporarily halted all foreclosures. She now has time to try and work out a deal.

"I'm so happy with his ideas and everything. I think everything is going to change with him," she said of Obama.
Wow. Those statements are just remarkable.

First, we have a mortgage broker (of all people!) drowning herself in another ARM. Second, we have her thoughts on Obama, which given her predicament are both understandable and priceless.

Yes, everything will change with Obama. Irresponsible (and some plain unfortunate) people will lose their homes. Others will buy them. That is how it has always worked and fundamentally, it's how it should continue to work.


Anonymous Dustin declared,

Thank you for caring and commenting, you hit the nail on the head.

2/24/2009 7:55 AM  
Blogger Keithslady declared,

You can't know how long this has frustrated us. ARMs are not a new thing. Heed the warnings! We are considering starting a financial revolution--how many people/businesses would it take to stop paying taxes to get the country to notice?

2/24/2009 8:57 AM  
Blogger Joey declared,

Somehow I don't think not paying taxes would be in agreement with "paying Caesar what is Caesar's."

2/24/2009 9:01 AM  
Blogger Stephen declared,

Joey, I can’t disagree with you about what her situation sounds like, but you don’t know the details. She could have had a six figure salary, with a $300,000 home, with no expectation of a job loss, that is plausible. The way news is today, judgment based a news clip is like judgment based on shoe choice. The real question about who this helps is right here. We made the choice to live frugally on one income to ensure our kids have a mother who stays home so that we raise our children instead of a daycare provider. The organization I work for has been around and grown since the 1940s, survived the 70s and 80s, but today we are almost out of cash. If we go under, it will be a direct result of the economy, we rely on private and corporate donations and grants, and the few that we receive are coming from banks like Bremer that are cutting the amount into tiny slivers of what they used to be. Right now, I am trying to plan for a job loss. I am combining a home improvement loan and a car loan into one loan to reduce our monthly expenses if something happens. Monday, I learned my credit score is 793. We have enough cash in savings to last us several months, but what then? Nobody is hiring. What have I done wrong? Nothing! We are hurt because of the poor decisions by previous administrations on trade, American job-loss overseas, exorbitant and unnecessary expenditures that do nothing for the American economy, and now we have a President who is looking to the future, decades out, not just four years out to get re-elected, and people who disagree are just whining about what’s fair. You say some home losses are unfortunate. No, some of them are people like your post, most fall under my story. I don’t anticipate losing my house, but in my story, tell me what I have done wrong to make you upset.

2/25/2009 10:24 AM  
Blogger Joey declared,

Stephen, I'm not sure how you took my post the way you did. It wasn't a damning indictment of everyone struggling to keep up with payments. If I were to lose my job today, I'd have debt that would be difficult and likely impossible to keep up with.

There are two main problems with this story. The first is the ARM. They're generally a really, really bad idea and this story is more evidence of that. Regardless of what her previous income was, an ARM is rarely a smart choice.

The second issue I had is with the philosophy of "Obama will fix everything and bail me out of the debt I got myself into." Obama is the first to say he can't fix everything. Yet it seems that many who are drowning are simply turning to Obama to fix their problems. That attitude lacks any sense of responsibility. It doesn't help that we have an economic package that simply wipes clean the debt that many of these people have. That debt is getting thrown right back on all of the rest of us.

If I lose my job and can't make payments on my mortgage, it's my fault for getting in a mortgage I couldn't pay. It's not any administration's fault. We've got to quit blaming government for all of our problems.

And if I do lose my job, then how would I answer your question, "What did I do wrong?" Well, I got into a mortgage I wasn't prepared to support. That's what I would have done wrong. As wealthy Americans though, we too often take these things for granted. We call things "rights" that are really privileges. We also don't have an adequate grasp of what debt means. It means you don't own it. Someone else owns it and you have to pay them back. If you can't pay them back - whatever the reason - you have to give it up to them.

Why is that such a difficult concept for us to grasp? I think it goes back to seeing these things that we can obtain with debt as being things that we deserve - seeing them as things that are ours.

2/25/2009 11:41 AM  

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