When government decides to dive into the water and rescue drowning homeowners, little thought is given to how so-called “bold” rescue plans will impact those who won’t be offered their very own bailout package. For instance, the Obama administration is bent on rescuing a core constituency: vulnerable, middle-class homeowners.
Here’s the problem with this thinking: Government has no money of its own. The only way government has two (borrowed) nickels to rub together is by asking the rest of us to pay for the rescue. Guess what? All homeowners are impacted by President Obama’s grand rescue schemes. HAMP, HARP (and HARP2.0, among others) are all funded by taxpayers. Not only do we pay for these ill-advised housing rescue programs, we’re also on the hook for the bailouts offered to Fannie Mae and Freddie Mac, to the tune of $170 billion. When you add in the potential for even greater future losses – up to $7 trillion – it’s easy to see that the stakes couldn’t be higher.
Millions of homeowners have seen the values of their homes hit the basement. There’s no dispute about this. There’s also no dispute that millions of Americans either can’t find jobs or can’t find jobs that pay enough to support their families. But throwing good money after bad isn’t the solution.
I understand that the ultimate goal with all of these housing rescue programs is to stabilize the U.S. housing market (and maybe even win a few votes for the president’s reelection). But it’s simply not working.
Yes, it’s true that each of these ideas has a temporary stabilizing impact on the U.S. housing market. But each time government tries their latest, greatest “guaranteed fix”, it doesn’t take long for reality to hit our policymakers in the face: There are no easy fixes to this complicated problem.
Instead of artificially propping up the housing market with expensive schemes that do no more than give talking heads fodder for often boring debates, government needs to get out of the way and let the chips fall where they may. Make no mistake: this will be a painful process. People will lose their homes. Prices will fall in the short term. But we will recover.
There is something the Obama administration could do for the U.S. housing market that doesn’t involve spending phantom dollars and borrowing even more money. It could stop talking about how dedicated it is to helping deserving homeowners keep their homes while continuing to fine lenders for not foreclosing in a timely fashion. Call me crazy but this looks hypocritical.
Fixing the U.S. housing market is about more than pleasing certain taxpayers. It also includes making hard decisions. Like deciding that it’s patently unfair to favor the wants and needs of some homeowners over others, while asking all taxpayers to pay for these social experiments.
It’s time politics is unceremoniously kicked to the curb. As an Independent, I’m tired of government thinking it can solve problems for a few on the backs of the many. I don’t care if the money government wants to spend is designed to provide a bailout to a few worthy homeowners, Freddie Mac or Fannie Mae, or even lending institutions. Manipulating the housing market with borrowed cash and good intentions is a good way to drown us all.
And there simply aren’t enough life jackets to go around – or money to pay for them.
What do you think? Should we keep borrowing money to try to artificially prop up the housing market, or is it time to step back and let the market correct itself naturally? Here's your chance to sound off now!
Ken Speegle is a direct response copywriter, ghostwriter, and conversational writing specialist. He works with real estate agents, brokers and investors to expand their reach with conversational writing. By working with Ken, his clients are able to focus on their strengths instead of trying to figure out the best way to use the written word to make more money. For more about Ken Speegle, visit him on the web at www.therealestatewriter.com or by email at [email protected]. Ken personally responds to all inquiries.