Today, the United States Senate overwhelmingly passed a landmark housing bill that will offer up to $300 billion in loans for troubled homeowners and establish a government rescue plan for mortgage finance giants Fannie Mae and Freddie Mac. President Bush is expected to sign it soon.
I live in Las Vegas, Nevada which has traded its nom de guerre of "Sin City" for "The Foreclosure Capital of the World." On either side of my home there are empty residences... one for two years and the other for six months. Ironically, the occupant of the property to the east was an executive for a leading national mortgage lender. A week ago, a representative of a class action attorney called my home and asked if I knew where they could find him.
As I ponder the government bail-out of the 'mortgage crisis' I'm left to consider who is innocent in this whole mess. Why is the government bailing anyone out, I ask somewhat rhetorically.
I remember in the real estate gold rush a few years ago, when I went to my local bank and tellers and customers standing near me were planning to get a motor home so that they could post up outside a soon to be opening housing tract, aspiring to be first in line. They expected, based on a few month's precedent, that buying a home would generate a quick $25-40k flip in a year or so.
I feel nothing for these people. Nothing at all. They bought a stock, a commodity, an investment. No one came to my door after the dot com fiasco and gave me a warm legislative blanket to cover my losses in The Health Channel or Atomic Burrito.
And I do feel that there needs to be some action in regard to lenders who in their zeal to covet those 'points' on closings, got creative, blind, or both and shoved people through the qualifying door who didn't know an A.R.M. from a leg. Find a friend who is now suffering under their once benign-seeming A.R.M. (Adjustable Rate Mortgage) and see how many of them truly understood what was going to happen. Or were they simply nodding mechanically as the escrow company ready through the phone book sized closing docs, pondering on which wall they'd be hanging their new flat screen in their new homes?
What happened in lending over that period reminds me a lot of an episode of The Twighlight Zone in which a person is given $50,000 if he will push a button that effectively causes someone he doesn't know to die somewhere else. I can't say for sure what percentage of borrowers knew what they were getting into but I'm pretty sure all of the mortgage brokers, or worse yet, mortgage brokers/realtor combos knew exactly what they were doing.
No, those I feel sorry for are the people of lower income or lower-middle income (think school teachers) who saw real estate values exploding in places like Las Vegas and South Florida and figured that if they didn't get a home NOW that they never would and they'd be relegated to urban apartment dwelling forever. They rushed in (as fools perhaps) in a desire to build a better life, the one they pictured before this crazy real estate run started and their visions of domestic bliss began getting more and more exorbitant.
Hopefully the bail-out is as good for these poor fools as it is supposed to be for the economy.
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