It’s often said that Democrats are more about making people feel good, as well as making themselves look good, than actually doing something constructive to fix problems. Thus is the case these days regarding the rash of homeowner foreclosures in Nevada.
As you’ve probably seen or heard, either lenders made a lot of home loans to people, many real estate speculators, they shouldn’t have lent money to, or a lot of people took out home loans they shouldn’t have taken out, or, most likely, a combination of both. The result is a lot of people these days not being able to make their mortgage payments.
Is this a problem calling for government involvement and a government solution? Of course not. It’s the free market at work. Government involvement will only gum up the works and make the situation worse by artificially manipulating the market conditions.
But that isn’t stopping some Democrats.
Assemblyman Marcus Conklin (D-Las Vegas) is stepping up to “solve” this “crisis” by proposing that Nevada taxpayers - most of whom are busy paying their own home mortgages - pony $400,000 to set up a toll-free 1-800 “help” line which people can call and “get Nevadans in need in touch with nonprofits and state agencies for help.”
$400,000 for a phone “help” service is not only a ridiculous idea, it’s ridiculously expensive. Even phone sex services operate on a much smaller budget.
But that’s not the point. Conklin isn’t interested in actually helping people; he’s interested in getting re-elected. So all he wants is to help people feel better about him. This is all about a campaign mailer for his re-election bid next year. It’s a crass, cynical political ploy which, I’m sure, will attract some rubber-stamp Republican support, maybe even from Bob Beers, the Assemblyman.
More on him tomorrow. And it ain’t pretty.
Posted on October 23rd, 2007 by Chuck Muth
Filed under: National
Conklin should authorize that money for enhanced prosecution by the Nevada Attorney General. Cotez should go after the lenders, brokerage firms, real estate agents, title companies, mortgage brokers, appraisers that creeated ’straw purchases’ that reaped the purpotrators millions of dollars and have now decimated the property value of the honest buyers who are still in these neighborhoods, but whose homes are now worth $100,000 less.
This is the direction that Ohio’s AG has decided to take.
Prosecution is appropriate if any laws were broken. However, it appears that the vast majority of the foreclosures and pending foreclosures are a result of bad judgment. People bought property with the anticipation that the values would continue to go up, then they didn’t. I hope this situation doesn’t result in the mortgage companies being prosecuted for the miscalculations of home buyers.
This week’s Business Week has a story about the housing bubble in Las Vegas. The article noted that developers have large inventories of unsold new homes. The developers are dealing with this situation the way a manufacturer would deal with unsold inventory sitting in warehouses. They’re drastically reducing prices so they can clear inventory with the attitude that they need the cash flow even if it’s at a loss. This in turn is forcing down the prices of privately owned homes that people are trying to offload because they can’t make their higher payments. Business Week projects that it may be a couple of years before this situation settles. So if housing prices keep getting driven lower because of the developers’ actions, and private owners aren’t able to sell their houses because of this, should the AG prosecute the developers for making prudent business decisions?
The Dems are in somewhat of a quandary on this issue because they are typically pro little guy, anti big guy. They are pro employee, anti employer, but have a hard time understanding that you can’t have employees without employers. In this case, they’re pro homeowner, anti mortgage company. They’re still trying to work around the fact that the fates of the homeowners and the mortgage companies are somewhat tied together. It’s going to be pretty difficult to help one without helping the other, or hurt one without hurting the other.
From today’s Wall Street Journal:
“Barney Frank wants to create new registration requirements on mortgage brokers, and new liability for firms that securitize the riskiest mortgages. This is a sure-fire way to make mortgage lending more expensive, especially for people who lack perfect credit or high incomes. But the trial lawyers are overjoyed. Mr. Frank’s bailout also gives delinquent mortgage borrowers a new trick to essentially enjoy free rent for up to 30 years. If a borrower has to endure the sad experience of foreclosure, Mr. Frank wants him to enjoy the ability to recover all of the principal and interest paid over the entire history of the loan — as long as he can convince a court that he didn’t have a reasonable ability to pay at the time the loan was originated. It doesn’t take too much imagination to see how this could be abused.”
If mortgage companies are required to do this, the only people who will be getting loans will be the ones with perfect credit scores. I wonder if Congressman Frank believes that home ownership is still part of the American dream.
Leave it to a Democrat to come up with a solution to a problem by throwing more taxpayers money into the mix.
The development companies, mortgage lenders, and banker should be ashamed of themselves for the excessive profits reaped from actual buyers. The ’speculaters,’ that got burned…too bad. But folks that wanted a home should have been subjected to stringent credit background checks, down payment guidelines shoud have been established and the problem would not exist today.
The Dems want to spend more tax dollars which will end in further loss as it will not correct the problem. What will correct the problem is a hefty tax (Coming from a Conservative!) on developers and lending institutions for property developed and financed for any speculator! If it is not for an individual for residential purposes, tax it highly! But, earmark the taxes for use of blighted areas caused by rash development and loan practices.
It may be a small start but it is a start!
Don’t let any Dem get his/her hands on the ‘new’ taxes, it will disaaper on some ‘give away’ project meant to secure votes for themselves!