Thursday, February 19, 2009

Home sweet home - The Atlantic Business Channel

Megan McCardle: Home sweet home - The Atlantic Business Channel: "Well, the obvious point is that it represents a massive transfer to borrowers from lenders and the rest of us. As far as I can tell, there is no penalty for having borrowed more than you could realistically afford to repay--not so much as a speck of dirt on the credit report. The administration's release talks a lot about 'responsible homeowners', but very few responsible homeowners have payments that amount to 43% of their monthly income. There are exceptions, of course, such as people who have just lost their jobs, but most of the people being helped are, nearly definitionally, people who bought more house than they could afford in the belief that prices would keep rising indefinitely and they would make big bucks. It was leveraged investing, just like a hedge fund, and often at the same kind of leverage ratios."
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1 comment:

Anonymous said...

Hmmm. But then mortgages aren't the only cost associated with home "ownership". Add in property taxes, HOA dues, home maintenance for those production homes, HOA fines, management company collection fees, litigation costs due to the inevitable HOA lawsuit. Don't forget the income taxes that the homeowner pays to bail out the banks reduced the homeowners available income for paying the parasites. That's before addressing the health issues, reduction in productivity, etc. that result from "living" in an HOA regime.