Saturday, February 02, 2008

It's A Wonderful Foreclosure

Michelle Malkin nails it with this column about how both parties are bending over to bail out those who face foreclosure because of sub-prime loans that they can't now afford because the increases have come due.

I think the media has made most of these people out to be like Bedford Falls residents who were hoodwinked by Henry Potter. But the red flags about ARMs and reverse mortgages were sounded years ago, and many just ignored them. And I don't think the government could ever be anything like George Bailey if it tried.

In fact, as Malkin points out, here's where Bailey-ism as practiced by the government has gotten us:

In California some of these homeowners Washington is rushing to rescue reportedly are simply walking away — abandoning their mortgage commitments and contractual obligations. Poof: "Foreclose me. ... I'll live in the house for free for 12 months, and I'll save my money and I'll move on," one homeowner blithely told the Los Angeles Times this week.

The stigma of default is gone. Political rhetoric absolving borrowers of their responsibilities — and encouraging them to spend, spend, spend even more — has made it possible. And so has federal legislation intended to "help." The omnibus spending bill passed last year prevents the Internal Revenue Service from taxing mortgage forgiveness as income up to $1 million for a two-year period.

And from personal experience, these are often the people who adopt a scorched-earth policy of trashing their house before leaving, in a fit of, "If we can't live here, no one's gonna live here." We saw such houses before we got married; one had all the baseboards torn up, while another one featured a living room painted fire-engine red.

I think a little more Potter-ism is called for with these foreclosures.