Thursday, December 6, 2007

The mortgage rate freeze is a bad idea

I'm sure I'm not the only one - outside of those who took out mortgages they couldn't afford - who thinks the rate freeze bailout is a bad idea. Ignoring all the potential legal issues with the plan, or the fact that it might be impossible to actually define who will be helped, this basically amounts to a bailout for those that made a poor decision.

I certainly didn't get any help 5 years ago when some of my internet stocks crashed. That's not nearly as heart-wrenching as watching little Johnny lose his house because his parents bought a house they couldn't afford with a mortgage that shouldn't have existed in the first place.

I hope the bailout gets tossed out in court. As painful as it might be for everybody, letting the market correct itself is the best way to go. If we don't get the bad loans off the books, we'll be in the same situation that Japan was in 20 years ago. And I'm sure nobody wants that.

1 comment:

Jen M said...

Amen, Ian! Jon and I both felt that we were forced out of the market (as people too sensible to get suckered into one of those terrible interest-only loans). Now, if those people get bailed out, who knows how long it will be before we will be able to buy (assuming the bailout would also help keep housing prices up). I'm not cold-hearted, but we all know that when something is too good to be true, well, it usually is. Thank you for saying what those of us on the "outside" are really thinking. Jen & Jon