Recently, a columnist from one of the California dailies posited an interesting premise on the subprime mortgage and housing crisis.

He wondered why do we consistently laud a drop in the prices of such things as food, electronics and transportation, but cringe when the price tags on homes fall?

Instead of being bombarded with 30-point type headlines about the pending disaster of falling home prices, he asked shouldn’t we be seeing stories of how low and middle-income families, who were formerly priced out of the market, are “finally getting their chance at the American Dream?”

A different take on a bad situation to say the least, but alas, not really a solution to the problem. And his point is contingent of course whether they can obtain the necessary financing.

However, there’s no short supply of folks who’ve proffered solutions, while others simply bloviate about predatory lending practices (see: Schumer, Charles, D-N.Y.)

Yet, it seems those who continually champion affordable housing are doing everything in their power to maintain the high cost of housing while allowing both lenders and borrowers to sidestep responsibility for their past actions.

Case in point, 2008 presidential candidate and sometime senator from New York, Hillary Clinton, has proposed a 90-day moratorium on foreclosures for homeowners who default on subprime mortgages. As an added bonus, she and others have petitioned for a five-year freeze on the monthly rate for subprime adjustable mortgages, which late last week the White House agreed to, albeit in a somewhat truncated version.

She also wants $5 billion earmarked for aid to communities who are suffering from high rates of foreclosures, solidifying her long-held belief that bigger government is the panacea for the country’s ills.

America’s predictable activist-de jour, Jesse Jackson, has promised his usual menu of marches and protests as many who are facing foreclosure are low-income and minorities. The sad irony of that is that he would be among the first to scream if these same people were not given mortgages in the first place.

This in fact may be one of the rare cases where there was far too little discrimination practiced by the lenders who accepted applicants with credit scores lower than my SATs coupled with an ability to manage money like a sailor on shore leave.

I would expect more sense however from people like Fed Chair Ben Bernanke and Treasury Secretary Hank Paulson. Both have sort of floated strategies that in my mind — and others’ as well —in essence reward people with bad credit histories.

Paulson for example has engineered a bailout plan for homeowners with faulty credit, whereupon they’d be given a pass from additional monthly payments when their mortgage rates are adjusted. Those of you who have been diligent about your credit will be, well, S.O.L.

Bernanke wants government-sponsored mortgage concerns like Fannie Mae and Freddie Mac to be given the go-ahead to raise their loan limits and have their debt guaranteed by well, the public.
At this juncture it won’t do much good to finger point, as there aren’t enough digits on both hands to include everyone who’s contributed to this mess – and, of course, lenders included.

But those who made their mortgage payments and worked to maintain decent credit histories shouldn’t be the ones to suffer as part of the solution.


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