The Housing Market

To understand just how serious (and hopeless) the attempt to cover up the housing crisis, read “The Government’s Loan Mod Bizarro World“. It reflects both the desperation and the futility of the government to design programs to “extend and pretend” the inevitable.

Even after the HAMP adjustments to mortgages, the article concludes:

How can these people possibly afford to pay their taxes, service their debt, and then have enough money left over to put food on the table and pay their utilities, let alone buy gasoline, clothes, and sock away a little money for retirement?

The government must be living in some kind of loan mod “bizarro world” to think that these “permanent” loans won’t go bad on a massive scale.

There is no, as in zero, hope for this program to succeed. The article ends on the following note:

Clearly Elizabeth Warren had it right yesterday when she told “homeowners”: ”Some of you should stay in your homes…and some of you don’t belong in those homes and you’ve got to be moved out. And frankly, those houses need to get back onto the market and get into the hands of people who can afford them. In other words, acknowledge the problem, deal with it, write off the losses and start rebuilding an economy on solid ground.”

Now that sounds like a good plan.

The bad news is that, in the government’s eyes, “extend and pretend” appears to be the order of the day – extend the period of time that banks keep getting sent monthly mortgage checks while pretending that all of the borrowed money will somehow be repaid.

All that is happening is a postponement of the inevitable. Political can-kicking to try to save political careers while the poor saps that should never have bought the homes are now given hope that will be dashed. The loan to income figures cannot work!

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