Would The Government Bailout Renters?
There is a grand standing rush for our political leaders to act like they are doing something about the mortgage crisis. Much of what I have seen in the way of proposed legislation and initiatives fall far short in solving the problems. In fact, I see them causing more harm than good.
Our media and politicians are crying out for some type of home owner bailout. In fact, there are initiatives already under way. Massive amounts of taxpayer money are being earmarked for bailout funds and education/counseling.
This brings me to my question. Would the government do the same if these home owners were renters? Would they setup rent assistance funds and allot taxpayer money for the purpose of educating and counseling people who rent their dwellings?
A recent Market Watch article provided this characteristic of first time buyers…
But consider this: 45% of first-time buyers bought with no money down, and the median down payment of a first-time buyer was 2%.
Is there a difference between a home owner who has zero equity and never put any equity into a house and a renter who also has zero equity in their dwelling? From a personal balance sheet perspective, there isn’t. At least not to the net worth bottom line.
I don’t think there is a difference and that is why I question initiatives to assist this particular group of home owners in trouble. Lacking any differences, why do these people get special treatment over renters?
The government and media need to realize that not only is it impossible, but it is a waste of time and money to try to legislate…
- A minimal amount of financial sophistication
- Credit worthiness
- Personal responsibility
- A capability to meet credit obligations
While the focus of the media and politicians is on doing the impossible, the real problem goes unsolved thereby becoming more ominous with each passing day.
The mortgage and real estate industry cannot exist without a fine tuned and efficiently running mortgage securitization machine. The machine is broken and no one is doing anything about it. They aren’t even talking about it.
Until integrity, confidence and efficiency is restored to the mortgage securitization process, the crisis will continue grow. There no way the industry can survive without it and every effort must be made in order to save it. Every American’s economic well being depends on it.