A consumer group was recently reported as calling for "aid" to "victimized" individuals with subprime mortgages. The story, here, says that a housing "tsunami" is about to hit working class Americans. Here's why I'm confused:
Mortgage companies gave mortgages to individuals who had poor or risky credit ratings-- i.e. people who had less than a shining record of paying back loans or paying off credit card debt. This was definitely not the smartest move by mortgage companies, but I'm all about giving people a second chance.
HOWEVER-- the mortgage criss right now is due to the fact that these lucky homeowners aren't paying back their loans. In fact, many companies gave mortgages under what has become known as "liar loans"-- they allowed applicants to file their incomes as higher than they actually are. Heeelllloooo....those income background checks are there for a pretty darn good reason.
These subprime lenders gave loans to people they shouldn't have; those people are defaulting on their loans as the housing bubble pops and the economy grinds to a much slower pace---it's "cooling off" we could say-- and CONGRESS is supposed to AID them? Will the testimonies occur like this:
Lender - "We have become victimized by people who do not pay back their loans and are defaulting all over the place."
Lendee - "Well we are victimized by the people who loaned us the money-- they should have known we couldn't afford it."
Congress - "We are victimized by the Chinese."
Tax Payers - "What?"
Congress - "Well, tax payers, you aren't speaking up eloquently, so--- let's move some funds to the subprime consumers and a retirement package to the doofus CEO's who loaned you the money."
Here's my caveat though--- if homeowners, who aren't defaulting on their loans, are not on fixed interest rates and their rates go way UP because the mortgage companies gave out loans they shouldn't have-- we'll probably have an Enron-type issue with a whole bunch of angry desperate housewives and housemen. Then Congress can shake their heads, slam their fists around, and make sure the CEO's get off with a tidy benefit package while the "working class" gets hit by the Tsunami of "trickle down" unemployment.