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Is it fair to force people who have faithfully paid their mortgages to bail out those who haven't?
Is it fair to force people who have faithfully paid their mortgages to bail out those who haven't?
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Results so far:
| Yes | 18% | 45 votes | Total: 246 votes | |
| No | 82% | 201 votes |
Yes
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Yes, we must as a humanistic and democratic society bail out the thousands/millions of people who took out home mortgages for more than they could ever dream of paying back. Why, you may ask? I will explain why. You get married, have a couple of kids, both parents work full-time, and the bank is more than willing to lend 125% of a home's value. Add to that, both parents are paying off student loans and credit card bills from before they were even married. Now, you are offered a low interest rate to pay off your other bills and buy a new home. Who wouldn't accept the offer? Ask yourself that and answer truthfully. Not what is right or the moral thing to do, but given the circumstances what would you do.
Now, let us take into account that approximately twenty percent of society is on some form of public aid at any given time. The other eighty percent of people are basically paying for those twenty percent. Does that anger you? Look at this way, you are hit by the recession, get laid off from work, and draw unemployment for awhile. And you have worked for the same factory for twenty years and your retirement is now even in question. Did I mention you do not have any insurance for you or your family? Okay, no big deal right? Well, you never get called back to work, you didn't go to college, and no companies are hiring. And even if you did go to college and graduate with a degree, maybe still no one is hiring. Now what are you going to do? By the way, you also have a wife and three kids.
Ask yourself this question: should I lose my house, my health, and my family for something that is completely out of my control. You have worked hard for twenty years, showing up at the same job, on time, and doing exactly what you are supposed to do; but now because of the failing economy you lose it all. Even though for the past twenty years you have been paying for people on Medicaid, Food Stamps, and other welfare programs. If you have paid taxes in your life, you have paid for some form of welfare program. So if you need a form of welfare, why not accept it? Corporations and other companies accept welfare in the form of tax credits and breaks, so why not the typical, hard-working, middle-class American?
Honestly, I was personally against the bail-out at first until I took an objective point of view and realized everyone receives some form of government assistance which taxpayers pay for. Farmers receive government money for set-aside ground and other expenses. College students receive student loans. Home owners get to write-off their interest payments. So, if you look at the entire situation objectively, you will understand that yes, we do have to bail-out each other in order to function as we have for centuries.
Learn more about this author, Michelle Strockbine.
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No
Not only no, but "there oughta be a law!" There should be legal and criminal sanctions against lenders which dump losses onto the backs of good borrowers. Where on earth do lenders get the notion that they have a right to maintain their profits at the expense of good customers who never did agree to pay for their bad or unfortunate lending decisions?
Lenders who engage in this practice should be required to disclose that they engage in such practices, perhaps in the form of an international warning sign that has to be placed on every advertisement, every contract, and all other printed materials related to their loans. Lenders who engage in this practice should be required to produce current and accurate details of their loan failure rates, too!
Why not insure that the borrower is made aware of the lender's profit taking practices in a form that is clear and easy to understand?
In the lending business, profit is made when the lender makes contracts with those who pay back their loan principal and interest. The interest is calculated to cover overhead and other costs and to insure a certain amount of profit. Losses occur when a borrower cannot pay back the money and the collateral is taken to clear the debt. The collateral can be sold to recover at part , most, or all of the principal.
In far too many cases, if the lender had simply renegotiated the loan to allow for lower payments, there would be no foreclosure and there would be far less lost profit. So the lenders are at fault in those foreclosures, too. Why should the other borrowers absorb the consequences of the lenders' bad decisions?
This is an incredible situation. Lenders can keep the property as assets and sell the assets to recover money. The lender has already taken money from the borrower who may have paid down payments and paid other upfront costs. For a time, the failed borrower may have made mortgage payments for a time. Add in the money taken from the good borrowers, and the lender can actually orchestrate enormous and completely unethical schemes to convert funds and to take enormous profits.
The incentive should be for the lenders to exercise caution when making loan agreements, to renegotiate mortgages or lower interest rates in order to allow troubled borrowers to remain in their homes, or to prepare to take the losses out of their own profits.
With full disclosure, potential borrowers can make more informed decisions when they choose a lender. At least the most qualified borrowers can choose to go with a more ethical lender.
If this was a matter of law, further incentives in the form of fines and criminal prosecution would help to end this practice.
Learn more about this author, Elizabeth M. Young.
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