A heated debate is growing nationally concerning whether the U.S. Government should step into the mortgage mess, and with true Government efficiency, provide help. The problems are obvious, and the solutions are not so easy. The borrowers come in many shapes and sizes, including those people who truly worked hard, saved their money and were sold a bad mortgage, and on the other end of the spectrum, the investors or flippers, who some believe were truly gaming the system. At the same time, you have the lenders and the builders, who were poised to make a bundle. Tensions are running high, public opinion is high and it is an election year. What does this all mean? Well, we can either let the market take its course and shake these skeletons loose, or Congress can step in. Congress has already tried several different methods of dealing with this disaster, all of which were woefully inadequate, in my humble opinion.
Recently two new websites have burst onto the scene: angryrenter.com and nationalbubble. com have taken the position that the government should not get involved in the housing mess to bail out the lenders and borrowers who act recklessly. There are many people out there whose voices have not been heard yet, and they are the renters. Almost 32% of the people in this country are renters. Some prefer to rent, while others see renting as a way to save money until they are able to purchase a home. These are the people who are using the websites to voice their opinions. They do not want the government to help people to stay in a home that they never should have purchased in the first place, if they had used sound financial planning.
Both of these websites make the case for reform of the mortgage industry, and I am glad for the service that they are providing by allowing people to put their opinions out there for debate. Unfortunately, there is no real solution that will provide everyone with the answers that they are seeking. The builders want hundreds of millions in tax breaks (the free market theory can’t help here). The homeowners want relief to stay in a home they may not have been able to afford (this goes against the free market theory). The lenders want a bailout to save their businesses (this is not even rational). The people in foreclosure want the foreclosure process to stop.
If the choice is either between letting the market work and dealing with the fallout or letting the government deal with a problem. I would have to choose letting the market correct itself. Once we let the market take over, we know it will be painful, maybe even devastating; however, it will be over sooner, and the healing will begin. The government is severely broken and cannot fix itself. When it steps into a disaster only two things can happen, the solution won’t work and it’s going to cost a lot of money. What has the government fixed with its solutions?