Renegotiating mortgages

[FelixEstrella]

So, the B.O.'s economic plan includes renegotiation of mortgages for those "homeowners" who are facing foreclosure.

So, let's say for argument's sake that banks are "forced" to eat the difference between the current loan and the current assessed value of the home and the "homeowner" gets a "break". [Will his credit rating reflect the fact that he cost the bank a ton of money?]

Twenty years down the line, when the value of the house appreciates, will the homeowner own the equity in the home, or will the bank be allowed to reclaim its loss?

Seems to me, fairness to those homeowners who didn't get in over their heads and made their mortgage payments on time aside, this is bad policy and cannot become reality.

But are voters eating this up believing it will become policy, only to be disappointed when banks say ''Um, no, we can't do this!" ?

What am I missing?

[Aglifter]

That we're in a socialist state, when it comes to the banks...

[Precision]

you are missing nothing.

It is no different than most Democratic methods of vote buying via promises. Promises that they know will NEVER see the light of law, then they promptly turn around and blame everyone else for the failure to pass it into law.

Bait and switch at its lowest.

And if it does become law, god help us.

[FelixEstrella]

Reminds me of what the ANC did in South Africa towards the end of the century. Promised the bulk of ignorant blacks that they'll get free housing, jobs and land. Naturally, 15 years later the, not-connected-politically, black South African is no better off then he was under Apartheid, but the ANC's power is cemented.

Sigh! Who was it that said: "When voters can vote themselves benefits, democracy is dead!"

[rightisright]

Everyone loves "free" cake. Especially if they don't know how costly it really is.

[Bandito]

I'm not quite clear on how BO's plan differs much from that floated by McCain.

So either way, we're screwed.

[Jered]

I'm not quite clear on how BO's plan differs much from that floated by McCain.

So either way, we're screwed.

At least McCain proposes to use KY jelly...

[Scott Free]

Sigh! Who was it that said: "When voters can vote themselves benefits, democracy is dead!"

I think it was he:

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits the public treasury with the result that a democracy always collapses over lousy fiscal policy, always followed by a dictatorship.

-- Alexander Fraser Tyler - Cycle of Democracy (1770)

Of course, I say that voters voting themselves benefits is the essence of democracy, as a political form -- which is why the Founders chose a republic. (A representative democracy -- just a little harder to subvert than pure democracy.) But hey, democracy, republic -- what's important is the dictatorship at the end.

[Erik]

What these sorts of plans tend to lead to, is that now suddenly lots of other "homeowners" will suddenly be facing foreclosure, so they can get the same deal. Just like it happened with the health insurances in Hawaii.

One thing that happened here when government started helping people out with their houses was that the divorce rate went up, partly because now a single person could keep the house (with money from the government) so there was no need to keep the other person around.
And also there were/are lots of cases where the husband "moved out", and changed his adress to his parents, or their second house, or a trailerpark, or wherever. Suddenly the "single mother" got more money from the state. And if anyone wondered what the husband was still doing in the same house, they just said he was there to visit the children. In some cases only the government knew they were supposed to be split up at all, noone else noticed anything. In time, this sort of thing becomes accepted among people.