The stock market rallied yesterday upon hearing news of President Bush’s Proposal to help those about to be foreclosed on due getting a Sub-prime ARP crappy loan for a house that they couldn’t afford. I do not think it is the Governments role to bail people out of bad decisions (when you wine that you lost 50 bucks at the roulette table , the casino doesn’t give it back) but with the total of loans to be foreclosed on is approaching 1.2 million, we have to look at the damaging consequences this will have on the Nation’s economy. Many are saying this freeze will give these borrowers a chance to refinance…with WHAT! If they were in a sub-prime market before, trust me they’re in a subprime market now. Do we give them fixed interest rates that their credit rating doesn’t deserve or do we roll them into another APR that we’ll have to bail them out of in another three years. Once again everyone is offering simple solutions to difficult/complex problems and it is up to us Contemporary Conservative to come up with REAL solutions to the long term issue that these loans defaults represent. Interesting Quotes from the article:
"This reeks of moral hazard," said Mark Kiesel, a portfolio manager at Pacific
Investment Management Co., the world's largest bond fund. "A government bailout
which alters contractual interest payments to bondholders will fuel moral hazard
problems and raise mortgage rates for future borrowers and home buyers."
administration plan comes as the Mortgage Bankers Association announced that
delinquencies on adjustable-rate loans taken out by subprime borrowers jumped to
18.81 percent in the third quarter from 16.95 percent in the second quarter.
Nearly half of foreclosures on prime loans and about a third of foreclosures on
subprime loans are concentrated in California and Florida, the group said, but
foreclosures are on the rise everywhere.”
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