40% Of “Distressed” Mortgage Holders Can’t Make Payments Even At 2% Interest Rate
Part of Obama’s plan to rescue us all from our own mortgages is pressuring lenders into refinancing those mortgages at lower rates. But the government won’t subsidize any refinancing that goes below a 2% interest rate. Supposedly this is to avoid bailing out people who took mortgages they never had a chance of paying off.
That appeals to my sense of personal responsibility, but here’s the problem: According to this CNBC report some 40% of distressed borrowers wouldn’t be able to make payments on their mortgages even at a 2% rate. Which begs all sorts of questions about what happens next if this plan from Obama fails? Do the taxpayers just buy up the homes and give them to the people?
Or would it maybe be time to finally admit that the government can’t fix this problem? Time to finally admit that all these government “fixes” we’ve seen passed over the last several months are little more than pain avoidance, and that eventually we’re going to have to let the market take its natural course?
It is time to admit that these government fixes won’t work, but I don’t think Obama and the Democrats are ready to let go of their of the idea that there’s no problem that can’t be solved by hiring bureaucrats and spending money.
