As readers of this space know, I don’t mind taking a shot or two (or five) at government follies, even if said bureaucratic folderol emanates from my beloved New York State.
Unless you’ve spent the last six months or so on a Jacques Cousteau-like dive, you may have read in one or two places, there’s a bit of a housing crisis and credit crunch in the U.S.
At our company, we currently have several mortgage-related publications and those at the editorial helm over there can surely explain in far better detail than I can here about the root causes of the sub-prime market meltdown as well as a more pithy analysis of the issue.
But since we in the accounting group write an article or two on taxes, you folks in the other 49 states may find the following somewhat amusing even if it’s in a “better you than me” sort of way.
But maybe not for long.
Recently the New York State Assembly, no doubt with onions wedged in their handkerchief for maximum effect, proposed a $180 million bailout for financially strapped sub-prime borrowers, who sadly, may lose their homes.
To get the full magnitude of this, one must realize that the state is planning to spend $4.3 billion MORE than they can collect in revenues over the next year. So if there’s no money to fund this action, well then, guess what? It begins with a “t.”
The “victims,” as the Assembly Speaker referred to them, would be helped not by a sudden discovery of unspent cash in the state treasury, no, but with yet another tax levied on more prudent financial citizens. They will have to shoulder the load for some 50,000 households, many of whom borrowed recklessly or foolishly signed on for loan agreement terms they couldn’t meet if they had held down three jobs. Forget the fact that many of them received mortgages via “no-doc” for income verification.
You may ask why the diligent should be made to make up for the shortfall of the reckless?
Conversely, should some lenders be taken to task for their unscrupulous practices? Absolutely. But by the same token so should some car dealers and health club chains.
As a sidebar to this mess, it’s interesting to note that mortgage fraud – a statistic, that includes false statements by borrowers on applications has roughly doubled over the past two years.
It’s a bad situation made worse, primarily by uneducated bureaucrats with little or no knowledge of the mortgage industry but who are long on experience with regard to drumming up new tax avenues.
For those residing outside New York, I don’t blame you if you chuckle a bit at our expense. But hope we aren’t given the opportunity to return the favor a year or so from now.
