Like many people, I agree that the economy needs to be bailed out, so I’m in favor of the basic tenets of the Paulson Plan. I have a major problem with the Democrat party leaders who want to allow judges to write off big chunks of mortgage debt for people in bankruptcy to let them stay in their homes- with a significant windfall- a drastically lower mortgage balance.When I bought a new house almost three years ago, I got the full court press by the mortgage broker to sign up for the “promotional rate” for the first year. Sure, getting a 2.9% rate for the first year would be great, but it took about four seconds to figure out what would happen after the teaser rate ended. Instead, I went with an adjustable rate mortgage slightly below a 30 year fixed, but with a 10 year lock. I figured 10 years would give me plenty of time to sell the house- or at the very least- refinance. For this security and peace of mind, I paid 1 ½ points, made a significant down-payment and got a higher interest rate from the start. My neighbor down the street bought his house about the same time, but he went with the no money down, interest only, super low teaser rate for the first year. A few months later, he took out a home equity line and bought a boat, new furniture and a big screen TV. A couple months after that he leased a new BMW, and then he took his family on vacation to Hawaii. He was living high off the hog, and I assumed he must be doing pretty well. I had been driving the same car for 10 years, my wife had her car for 7 years, and we certainly couldn’t afford a boat.Imagine my surprise when I learned that my neighbor defaulted on his mortgage. After his teaser interest rate ended, the bank promptly ratcheted up his interest rate. Imagine that. With the higher mortgage payments, he couldn’t make the lease payments on his BMW, the payment on his boat, or the maxed out credit cards. No problem- I think the government should bail him out. After all, I didn’t get the new car, boat or Hawaiian vacation, and I lived responsibly within my means- so I’m more than happy to pay a few thousand dollars extra in taxes to bail out my idiot neighbor and others like him. After all, isn’t it the government’s job to take care of people who were "victims" of the system? It’s certainly not my neighbor’s fault he made the decisions he did- he was just an innocent dupe- it’s those greedy bankers on Wall Street who took advantage of him. Yeah, right. While I think the Paulson Plan is necessary, why not keep going and let bankruptcy judges write off my idiot neighbor’s mortgage balance so he can stay in his house? In for a penny, in for a pound, right? The government should definitely use taxpayer money to bail out homeowners who bought houses they couldn’t afford or signed up for ridiculously low adjustable interest rates, gambling that they would never go up. At the very least, make the bank eat the difference on his mortgage balance- I don’t mind yet another hit to my 401k account if it helps out my idiot neighbor. While they’re at, the government should take over the payments for people who lease cars instead of buying them, and reimburse all these gamblers who lose money in Vegas. After all, they’re victims of the system, too.
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