The Housing Issue

Wow what a last two days. Yesterday you had a rant from Rick Santelli about the housing stimulus. For me, I think Rick or The Great Santelli as I call him, spoke for a large portion of America. I think if you own a house or not, you do not want to help out someone that was irresponsible.

Now, today I heard Joe Biden’s economic advisor, Jared Bernstein, speak in regards to Mr. Santelli’s comments yesterday. Mr. Bernstein said that this bill is there to help out homeowners that are in a bind. He also said that these people they will be helped are not irresponsible. He said these people were caught out by the bursting of the house bubble. These people were caught out because the housing bubble burst and that these people lost equity in their homes and could not refi to a lower rate.

Ok, what? Rick Santelli came back with this point. What is the difference between you and I losing value in our 401k to someone losing value in their home?

As I am an Economics major, I know from economic point of view there’s not one. They are both classified as an investment, an INVESTMENT! People lose and make money in investments everyday.

Now, let me get back to the real estate bubble. I was a Realtor for 5 years. I saw deals where people barely qualified for homes. They look out 3 and 5 year ARM’s to get into these houses. Let me also state, that in my 5 years, not one of my clients ever did a 3 or 5 or 7 year ARM. The loan officers I worked with educated my clients. So for these that took out the ARM’s , I would like to ask them, what did you think was going to change in the next 3-5 years for you to be able to refi and be able to afford this house? I want you to tell me how they were responsible?

Quote from Ronald Reagan: Government does not solve problems; it subsidizes them.

Please feel free to leave a comment