Going through my daily news this morning I found an article (see reference) that just about blew my mind. Some out there are thinking that since so many people bought a house when the market was at its height, and now those homes are worth less the government should step up and adjust their mortgage to meet that of the home’s value. This is simply absurd! What in the world ever happened to personal responsibility in America?
First off no true "responsible" homeowner would ever look for welfare from the Government. Being responsible means that they realize they did something that now leaves them in a compromised position, but since they are RESPONSIBLE they will lay in the bed they made. That anyone would think otherwise is abhorrent!
For some reason no one seems to care that when you purchase a new car the second you drive it off the lot it's lost value, and after one year of ownership it's typically down 50% in value. It's smart to buy a one or two year old used car and let the idiot that bought it new take the butt kicking on the price. Well, sometimes you buy a house and a similar situation happens due to market forces. However, in the car situation if you drive it long enough you get the value out of the purchase and in the end can make out OK on resale, the same holds true in a house deal.
You may not get to turn around and sell your house in two years for a wild profit anymore, but most likely after living there for 7-10 years when you sell there will be enough equity that you can pay all your sellers fees and still make a few dollars to go toward your next purchase. This is what's been normal for a long time, and it's how things should be.
I know that I'm an odd Realtor thinking that not everyone should buy a home, but come on, if you have no money and a record of not paying any of your bills on time or at all, you probably shouldn't be a homeowner. If you don't pay for a credit card the account gets closed and you may go to collections or get sued. If you don't pay the car payment it will get repossessed and you'll be riding the bus or bumming rides from friends. However, if you don't make your house payment they foreclose and you have no place to live. This is a little more serious than the other situations mentioned above.
The only reason the market ever got as inflated as it did was because the Government made banks lend to people they normally wouldn't touch with a ten foot pole. Now the banks were OK with that because the Government through FHA, Fannie & Freddie were backing all the mortgages so that no one would get hurt. The prices will skyrocket in a housing market when the only requirement to get a loan is the ability to breathe. I'm pretty confident that we saw how well that worked, and while our Government isn't smart enough to learn from history I'm hoping the majority of American's are.
With everything else said, if these responsible homeowners stay in their home & keep making their payments, all will be just fine in the end. No one get's harmed and no one had to be bailed out. Asking Government to step in is simply idiotic, & I hope I'm not the only one who has that feeling.
Let me know what your thoughts are, Perhaps I'm way off base here...