Friday, December 14, 2007

Another failure waiting to happen

A week after Bailout round 1 was finished, bailout round 2 is complete. First we freeze rates for idiot home "owners". Except within 2 days everyone knew it was hopeless as well as pointless.

So now the Senate passed a new bailout proposal which will also be useless. They will raise the FHA limits to $417K allowing FHA to back mortgages up to $417K. They can raise the limit to $4.7M if they want and it won't change anything. Foreclosures are still climbing and home prices are still dropping. At the end of the day it comes back to that pesky equation of income to debt. And in that pesky equation someone making $40K cannot afford a $680K home now matter what FHA's limit becomes.

I have to applaud Sen. Jon Kyl from Arizona. He was the only Senator to vote against this bill. And he's from AZ too, where the housing crash is in full swing and has been for quite some time. I can see the ads now,Senator Kyl how could you vote against America's Families? You meanie. And so close to Christmas too.

My advice to all the home "owners" out there who need these bailouts is just walk away. Your credit is trashed already so that isn't a worry anymore. But why continue making payments on a depreciating asset? Stop listening to the lies of the MSM and NAR. The market is not rebounding. Every month you stay in your house, you lose money and you will continue to lose money for years to come. It may very well take a decade for you not to be upside down in your house.

You could rent the exact same house for less money, a lot less than your albatross of a mortgage and put the money away. Go to craigslist and see what your house rents for. It's a hell of a lot less than your mortgage payment. In some areas, like SoCal, Las Vegas, Tampa it is less than 50% of your mortgage. You would have to be an outright fool to not walk away.

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