They're trying. President Bush announced that along with more of those tax cuts that helped put us in the position we're in now to begin with, he'd also sweeten the deal by adding upgrades to loans by Freddie Mac and Fannie Mae from $417,000 to $729,000. It seems to me that someone who couldn't afford $417,000 can't afford $729,000, but I'm guessing the purpose here is to allow people with more expensive homes to refinance their home via federal mortgage programs.
I have two problems with this:
No one should be taking out a home loan for $400K+ and not be able to pay their mortgage. This is a mortgage payment of around $3,500.00 per month, give or take. If you can make enough to afford that much of a mortgage, regardless of the area you live in, and not be smart enough to realize that a sub-prime is going to balloon your payment by $600-$1,000 per month in a few years, you're not smart enough to be able to buy a home to begin with.
Why did the federal government ever get into the mortgage industry to begin with? It seems like in a system of capitalism, this is a completely detrimental aspect of free market ideals. The federal government has a job to protect the interests of the people in many ways, however, buying a home is not one of them. For this we can blame many presidents, but right or left, you have a happy scapegoat named either George or William (he likes to be called Bill).
What may be even more disheartening is...
...that every political candidate for the office of president is currently outlining their own plans for saving us. How about the plan that says the government is going to get out of the finance business altogether. Let banks rise and fall as they should and let investors (this includes home buyers) give a little thought to what it is they're doing. President Bush, in the meantime, has been touting the cause for his war and letting us know the troops have not died in vain. It may have been for a lie, and it may have cost this country it's future, but at least its not in vain.
Bush's stance on mortgages seems almost nonchalant. Were he to stay out of it completely, I'd be happier. Then again, I'd be happier if Congress would do the same. The role of Congress, however, is a bit different, since they are supposedly the watchdogs for a very small, very private group of mega wealthy people who own a little organization called the federal reserve bank. I haven't seen much publicity to the audits of the fed, but I'm sure everything there is on the level. Stop snickering.
Here's one idea of how it could work: Take a group of people with some money to spare. $1,000, $10,000, $100,000, whatever. They come together until they have fifteen or twenty million. They then create a company called a “bank.” That's my name for it anyway, you can call it what you want. That bank, run by it's primary investors, can then make loans to people on their own terms. The people taking the loans should be sure to read those terms. If they cannot understand them, they should hire an attorney. That loan, would then be a transaction between the bank and the borrower.
This next part is a bit radical, but bear with me... the “bank” should be able to decide who gets to borrow money from them. After they've made that decision, they should then be held accountable for it. Should they make too many bad decisions, they may have to sell the profits of their good decisions off to someone else to stay in business, but that would be between them and whoever wanted the profits. This is a bit far out for some people, for others it is what's known as capitalism.
