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March 09, 2009
Hussein Mortgage Bailouts
Obama Bails Out Rich, Irresponsible People With LOW Mortgage Payments
by Hans Bader
Yesterday, I wrote about how high-income people with $700,000 homes, who are in no danger of becoming homeless, would benefit from the Obama Administration’s massive taxpayer-financed mortgage-bailout plan, and how it would harm the economy in the long-run.
But now, it has become clear that I massively understated the case. The bailout would reduce borrowers’ payments to far below what many borrowers have long paid, with no difficulty whatsoever — reducing the payments of some to 15 or 20 percent of their income! In some regions of the country, much of the population will be eligible for a bailout.
As the New York Times explains, “To qualify, your monthly housing payment needs to exceed more than 31 percent of your gross monthly income (that means before any payroll deductions are made). Keep in mind that your “payment” includes more than just your mortgage’s principal and interest. It also includes real estate taxes” and other charges.
So if you pay 16 percent of your income in mortgage payments, and another 16 percent in real estate taxes, and the total adds up to just over 31 percent, you can have your mortgage payments cut under the bailout!
At the time I took out my mortgage in 2004, my combined mortgage and real estate tax payments were over 40 percent of my income (32 percent mortgage, 8 percent property tax). I had no difficulty paying that, since I was thrifty. But people who pay far less of their income than I did will receive a bailout, provided they didn’t save any money (other than in their retirement plan). Why? Because if they have no non-retirement savings, they can claim (as is sufficient to qualify for the bailout) that they “do not have enough liquid assets to pay [their] mortgage at its existing level. [Their] retirement assets are not included in that equation.”
All of this unfairness might be tolerable if the plan had any hope of spurring an economic recovery. But it doesn’t. The stock markets have fallen like a stone since the Obama Administration pushed through its bailout and stimulus packages. And investors are spooked, as Stanford University economist Michael Boskin notes in his Wall Street Journal column, “Obama’s Radicalism Is Killing the Dow.”
Undeserving high-income households will benefit.
“Homeowners with loans as large as $729,750 could see their interest rates temporarily cut to as low as 2 percent under the program,” and in some cases, have their mortgage balances reduced, according to yesterday’s Washington Post.
Thus, American taxpayers — including low-income renters — will subsidize the affluent. The American public opposes mortgage bailouts, which are likely to impede economic recovery.
Bailouts and stimulus plans actually shrink the economy in the long run, while exploding government debt, as happened in Japan in the 1990s. Even the Congressional Budget Office admits that the $800 billion stimulus package signed by President Obama will slightly reduce the economy’s size in the long-run, although it claims it will increase the economy modestly in the short run (i.e., by the next election).
As one commentator notes, “In less than 50 days, Obama has spent more than three times the cost of the entire Iraq War so far. This year, he will more than triple the largest deficit of the Bush era.” His policies have not reassured international investors, either. Obama’s fiscal policies have been described as a “$4 Trillion Poker Game” in the London Times.
Wild Thing's comment......
Lefties are in control and the Lefties want to turn America into a socialist country.
The article points out that helping all these people is not going to stimulate the economy and I agree. I remember seeing on TV tons of ads telling people how they could make tons of money by buying houses with no money down or something and then they had these people giving their testimonials about it. How wonderful it is and how they did not work anymore just did what some video tapes or books showed them how to do. These were those stupid info. commercials that I can't stand and never listen to all the way.
I have been thinking that maybe a lot of these people that are in trouble are a lot of those that did this I mentioned and now can't sell their properties they are stuck with. Just an idea, but my gosh, if that is the case this is even worse then we knew before because this was something that no one should help them out with. It was a bad investment on their part and why should we that work hard have to pay off their debts.
....Thank you Mark for sending this to me.
Mark
3rd Mar.Div. 1st Battalion 9th Marine Regiment
1/9 Marines aka The Walking Dead
VN 66-67
Posted by Wild Thing at March 9, 2009 04:42 AM
Comments
Let's see here, I am laid off, have a mortgage and the clincher retired from the Sea Service. Guess which one disqualifies me?
Posted by: Glenn Cassel AMH1(AW) USN RET at March 9, 2009 11:55 AM
Socialism - destroy the middle class.
Posted by: TomR at March 9, 2009 12:48 PM
Glenn Cassel AMH1(AW) USN RET, on my gosh amazing, it must be your Sea Service. sheesh that is so wrong.
Posted by: Wild Thing at March 10, 2009 12:26 AM
Tom, yes, it sure can happen fast, especially when it is done breaking down the economy.
Posted by: Wild Thing at March 10, 2009 12:28 AM
