...to back our mortgages?
The New York Times reports that the federal government is in talks to stop covering the risk of default on mortgages, using some high-cost neighborhoods to give this idea a training run.
Seriously? It's about fucking time.
There is a lot of pressure on federal regulators from buyers and lenders alike in higher-priced areas. Lenders will need to tighten restrictions on loans and demand higher down-payments, likely resulting in fewer mortgages; buyers will feel more pain in trying to secure a mortgage. Sellers will likely see property values drop. Overall, there is a lot of pain to be had from this.
All in all, however, I see it as a move in the right direction. The primary reason that this is causing so much pain for those affected is because the government put itself in this position in the first place. If Washington had not started back mortgages in the first place, then the market would have been operating privately and independently this whole time, and taxpayers would not be paying billions upon billions of dollars rescuing Fannie May and soaking up mortgage defaults.
It boils down to this: if you cannot handle your mortgage without government assistance, you should not have the mortgage in the first place. This is really a principle that applies to fiscal responsibility in general: if you yourself cannot afford it, do not buy it. Do not get that 60" HD Plasma if you cannot afford it. Do not lock yourself into a new car lease if you cannot afford it. Don't have a freaking child if you cannot afford it.
If Americans had been living according to this principle all along, this mortgage issue would be nonexistent. It's high time Americans were made to be responsible for ourselves - our own lives, decisions and responsibilities - rather than taking unnecessary financial risks and dumping them on our fellow citizens when those risks fall through.
