Should the foreclosure crisis be socialized?

Interesting report today on KUER about the Utah foreclosure crisis. Apparently Utah is one of the leading states for people losing their homes, but Utah’s Legislature did little about this in its last session.

The story could be interpreted by the listener as making it seem as of Legislative inaction is a bad thing. The Mayor of Layton is interviewed telling how Bank of America led him down the rosy path thinking his home was being put into a federal program to help his mortgage problems, while all the time Bank of America was setting him up to lose his house.

And of course that is evil and we can’t abide evil.

But on the other hand, we have the Legislature that turned down extra unemployment benefits because the unemployed need to get off their butts and find jobs. Seriously, that was the reason given. Those guys staunchly believe in the free market and capitalism and getting government out of people’s lives. I presume they feel the Mayor of Layton is responsible for his troubles and should just man-up and deal with it.

But, the article on KUER makes clear, homes being foreclosed have an affect on society. Short sale and foreclosed homes lower the values of neighboring homes. Abandoned homes turn neighborhoods into slums, if you get enough of them.

It’s a quandry. People who screamed during the last bit of the Bush administration that TARP was an abomination, or told Obama to let GM go bankrupt, are much like those who say, now, that the state has no business helping foreclosed homeowners.

But if the state (the federal government, actually) hadn’t helped with TARP, or saved GM, how much worse would the suffering of the entire nation have been?

Quite a bit. But that’s not pure capitalism, which is apparently what the Utah Legislature wants to practice, come hell or high water. Ask any Tea Partier.

Speaking of which, better hope they leave funding for emergency services alone, or homeowners will have to start buying their own sandbags as the spring runoff starts.

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11 Responses to Should the foreclosure crisis be socialized?

  1. Mikeasell says:

    The financial life cycle of bad decisions is free to run its course in a open market economy. People do not need to own homes, it is not a need. We have just become spoiled that way and having the government interfere whenever financial consequences arrive at our door. People bought homes and stopped paying, this has to run its natural course. This chain of evens should have naturally hurt banks that were lending based on an artificial market, however the government interfered again and bailed them out. Further government interference will not fix the problem. If some one looses their homes, sure, it will hurt us all, it will take time for the market to adjust and for home prices and neighborhoods to recover. However, this inability to deal with the unpleasant consequences of bad financial decisions is what has us in this situation to begin with. We need to bite the bullet and stop looking for the government to fix things for us. If the Layton mayor defaulted on his loan, he losses his house, pretty simple, he knew this, he signed dozens of papers explaining this, he cannot play the victim here. If his lender lied, then there should be consequences for the lender, not free housing for the mayor. Lets stop passing the buck around, because we are running out of them, the economy is bad lets deal with it.

  2. Howard Ratcliffe says:

    Mortgage means “Death Pledge”. Banks created the problem by loaning above the value of the properties at variable interest rates knowing default would come. They bundled these Titles and Mortgages into “Derivatives” and sold them as investment grade bonds to foreign investors who are now holding Titles to Foreclosed Properties.
    Socializing the problem shifts the burden to Taxpayers from Banks who have been largely bailed out by Taxpayers. It’s a triple whammy for those of us who pay our debts to pick up the tab for multi-national corporate banks as well as our neighbors. When properties in Detroit sell for $1 it’s downright insulting.
    Imminent Domain rights extend to State and Federal Governments to take physical posession of property for the “Greater Good”; when State Governments are in debt to the Federal Government and the Federal Government is in debt to Foreign Bankers it doesn’t take a genius to see what will happen.

  3. James "K" Florence says:

    A letter to Charley,

    The crisis in affordable housing not only exists in the default of
    morgauge, buyers and lenders; but is ever gauged in Senior and
    Disabled, survivors and there kinfolk. I have worked on and reported
    to, a Governors task force of the Aged & Mental Health consumers-
    along with those finding aide in pulling themselves up by there “boot-
    strings, after being through the “spin cycle” of Drug and substance
    use and abuse. Applying for “public-housing”, transportation issues.
    The empowering Consumer Leaison crudentials came my way from
    a Utah Coalition of bright “high functioning” individuals from the
    Utah State Health and Human Services Commission, under the
    talented reighns of Mr. Bill Fletcher & Mr. Rhett Potter.[PAAG]
    Without increminating myself, I work with a Dual-Diagnosis and
    attend to a low regimented, low maintence attendence with my
    private Mental Health Agency. I reside in low-income housing
    where I social network in a Home Vocational setting.
    I had all 50 working quarters into our SS insurence trust fund
    prior to my “break” with cognitive recollection skills.
    Because my beneficary is from Federal, I garner no State funds.
    Including Natural Gas, Electric ore SNAP subsides.
    Uncle Sam reviews my status, as per my award proclaimation every
    7 years. I have found that most consumers of Drug and Substance
    must subside on Supplemental Security monies where the State
    renders half. With the optimal residual on Food Stamps, HEAT, and
    the equating factor of 30% of the clients income towards housing.

    So Charley. I’ve ventured along way from my well appreciated days
    at the ™ Kier Management MARION. I’ve learned to live with less.
    7 years in the land of my ancestory. Everything I need I have.
    After all. After beholding a living “Bhagwan the Buddha” {circa’ 1985}
    “Disability dosn’t always equate, Inability”… May God Bless

  4. Michael Trujillo says:

    Hey Mikeasell,

    With your line of thinking, the publicly funded fire department should not respond to a fire at your house because you knew the consequences of stringing too many Christmas lights, or deep frying a turkey in your carport, or not supervising your children who played with matches, or using candles to set the romantic mood for dinner. The only purpose the publicly funded fire department should serve is to ensure the fire doesn’t spread to others.

    To assume that all home owners who “default” on their mortgage have only themselves to blame is the same as assuming that all bankers are honest. On a case-by-case basis, it has been shown that neither of those assumptions is correct.

    If your “survival of the fittest” criteria for financial matters were applied to all aspects of life, then we shouldn’t give up our seat to a pregnant woman or an elderly person because they knew the bus might be overcrowded when they decided to use public transporation, shouldn’t aid a lost child in the park because the parents should have kept a closer eye on the kid, shouldn’t send aid to the Japanese earthquake victims because, by golly, they knew the island is prone to earthquakes and they could have moved (but don’t come to American because we have too many G.D. foreigners as it is), shouldn’t inspect processed food to ensure that it’s fit for consumption because “buyer beware”, and on and on and on.

    On a case-by-case basis, some people were taken for a ride by the banks. That’s a fact. Your attitude is a detriment to a cohesive society. Move to Russia where you’ll feel more at home.

    • Mikeasell says:

      You make no sense, but lets try to sort our your ignorance. First, Russia: Russia is where YOU should be if you are referring to communist ideals.

      “my line of thinking”…some PUBLIC works like fire departments, PUBLIC schools, PUBLIC parks, etc are funded by the PUBLIC. Your PRIVATE residence is yours, and therefore YOUR responsibility, moron.

      Banks are regulated, if they break the law there are fines. BUT that does not imply that people should get free housing, UNLESS they go to PUBLIC housing.
      Did I lose you, amigo?
      Your name Is Trujillo and you are talking about the “G.D. foreigners”, don’t know what that has to do with the topic, but what the #$%^?

      Liability: if you burn YOUR house down you have insurance for that, they cover the cost because you insured your PRIVATE residence, the fire dept will not rebuild it for you.

      It is not “neither of those assumptions is correct” use “are”, please…you are sounding like one of those foreigners you warn us against, Trujillo.

      We help the needy on a PERSONAL basis, I give up MY seat to a pregnant woman, what does that have to do with bailouts to deadbeats?

  5. Owain says:

    While it would be nice to have the government bail out mortgages, or extend unemployment benefits indefinately, the main bit of reality that liberals cannot wrap their minds around is that THERE IS NO MONEY to indulge in that kind of nonsense any more. There hasn’t been for quite a while, which is why the national debt has reached crippling levels. Over 50% of Americans pay no taxes to support the services the government has heretofore lavished out so generously, and the less than 50% of Americans who DO pay all the taxes are not longer willing to support the freeloaders in they style to which the freeloaders have become accustomed.

    Pay your own damn way. Pay your own damn mortgage. If you are unemployed, get one of those jobs I keep hearing about that “Americans just won’t do”. Keep your damn hands off my wallet.

    • ctrentelman says:

      there’s plenty of money, owain, it’s just concentrated on the rich.

      AS to the current meme that “more than half of all americans pay no taxes!!!!!” well, first off that’s false — they pay sales, property, other taxes. Everyone does, either directly or passed through.

      But you mean income tax — you are correct, when your salary is so slow that, after deductions, you are below the minimum level of taxable income, you pay no taxes. The cure for that is to pay workers more and executives less so that more people have more taxable income.

      Yeah yeah, I know, that’s communistic, the business owners have a legal right to screw the workers, but then they don’t also have the right to bitch that those workers aren’t paying taxes because they don’t earn enough to have taxable income.

      You can’t have it both ways.

    • Mikeasell says:

      Owain, you seem to understand what most American won’t. We can’t afford to buy everyone a house. We can’t afford to pay people personal debts for them. People think that because we can continue to print money that there is no end to the supply.

  6. Owain says:

    “But you mean income tax — you are correct, when your salary is so slow that, after deductions, you are below the minimum level of taxable income, you pay no taxes. The cure for that is to pay workers more and executives less so that more people have more taxable income.”

    Or, regardless of your level of taxable income, to be FAIR, everyone should pay at least some tax. If you have no ‘skin’ in the game, OF COURSE you have no problem with wanting to do stupid things like socialize mortgages. OF COURSE you’d like to raise SOMEONE ELSES taxes to subsidize stupid financial decisions. OF COURSE we should extend unemployment benefits indefinately. It’s not like the over 50% that pay no taxes are paying for that.

  7. Owain says:

    “business owners have a legal right to screw the workers, but then they don’t also have the right to bitch that those workers aren’t paying taxes because they don’t earn enough to have taxable income.”

    Nonsense. Wages are a commodity subject to the law of Supply and Demand. If a job really pays too little, no one will accept it. Once anyone accepts a job for the wage being offered, that is what that job is worth, no more no less. You may want to be paid more, but that doesn’t mean that the job is worth more.

    Where I work, there are plenty of well paid jobs available if you are either an electrical engineer or a computer scientist. That is because scientists and engineers are in high demand, but in short supply. If you dropped out of high school or college, you are out of luck. If you got a degree in Women’s Studies, Ethnic Studies, Journalism, or something equally worthless, you are out of luck.

    If you have no skills, or if the skills you have are the same as 1000 other applicants for the same job, you will NOT get paid a high salary, regardless of what a wonderful person you are.

    If you want a high paying job, you have to do it the old fashioned way. WORK for it by developing skills that someone is willing to pay you for.

    That is how it works in the real world.

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