You should pay my mortgage

I was reading a story on CNN tonight. It was one of those stories that made me bang my head up against the wall because it feels so good when I stop.

I’m going to quote a bit of the story so you can see what pissed me off.

Take Joe Martinez of Bristow, Va., who fits the profile of the “responsible” homeowner Obama cited in the plan. The government contractor and his wife thought they did everything right when they bought their brand new $600,000 house two years ago. They put 5% down and got a 30-year fixed-rate mortgage they could afford.

So far, so good.  But unless they bring home $200k per year, they bought more house than they should have.  Their mortgage payment is about $4000 per month, and it shouldn’t be more than 25% of your take home pay.  That means they need an after tax/take home income of about $200K.  Having no information about their income in the story, I’ll assume they have adequate income.

Others in their neighborhood, however, couldn’t keep up with the payments. As foreclosure rose, the value of the couple’s home plummeted to $450,000, leaving them doubtful they’d ever recover their investment.

Martinez called their lender to try to get into the Hope for Homeowners program, which would reduce their loan balance to 90% of the home’s current value. But they were turned down because they weren’t in default.

So two months ago, the couple stopped paying their mortgage, hoping they could then qualify. But even if they don’t, they are willing to take the hit on their credit scores to stop throwing money down the drain.

“There’s just no point to stay here,” said Martinez, 29, adding he could rent the house across the street for half his monthly mortgage payment. “We don’t want to give up our home, but it’s never going to come back.”

Sounds to me like they just want out of the deal they agreed to.  If “they could afford” the payments but “the couple stopped paying their mortgage” anyway, they are crooks.  They are trying to scam the system.  And they should go to jail.

What difference does it make if your home is worth less than you paid for it?  This happens with cars all the time – is there some rule that says a home always has to go up in value?  No?  That’s what I thought.

You made a deal.  You agreed to it without anyone holding a gun to your head.  You signed dozens of documents at closing agreeing to do certain things.  Now you want out.  Tough shit.

Joe Martinez is a crook.  He should be arrested and jailed for attempted fraud.

If you read through the CNN story, you eventually get to this part.  Martinez isn’t interested in having his interest rate lowered. He would like to see some of his principal forgiven.  “Why would it be such a big deal for them to modify my loan?” he said, noting that his tax dollars are being used to finance the program. “Wouldn’t that stabilize the economy?”

Hey, I’d like some of the principal on my home forgiven too!  Those are my tax dollars going to pay off your mortgage too.  That’s a great idea Joe!  Let’s get the greedy bankers to simply “forgive” part of what we owe them – not because we can’t make the payments – but simply because we want them to.  Damn – I wish I would’ve thought of that first!

All sarcasm aside, that’s the behavior you get when the government starts giving money away.  Why is it so hard for the government to understand that people change their behaviors to take advantage of government policies?  It’s happened for thousands of years, yet they always forget to take that into account.

When something is taxed, less people do it.  Increase the tax on dividends and less companies will announce dividends.  Increase the tax on cigarettes, and less people will smoke.  Decrease the tax on income, and people produce more income.  Pass a law that makes it easier for people to get out of contracts, and more people will try to get out of contracts.  This ain’t rocket science – you can play along at home.

Here’s my simple, one step plan to solve the problem:

  1. Pay the debt you agreed to pay when you signed on the dotted line – or lose the asset and go to jail.

Problem solved.

gk

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  1. […] You should pay my mortgage (Effor) The first four year plan (The Daily Capitalist) Down from Freedom (Silverwolf) What Lehman brothers should have tought us (SaveCapitalism) […]

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