It’s the Ownership Society, stupid!

It took me 9 years to save up a deposit for the house I now own. So, I don’t think I will qualify for John McCain’s mortgage buyout. Pity, really, as I would rather like McCain to pay off my mortgage and refinance it for me at today’s rates. I reckon it would save me money. But, I don’t think it would be right.

Firstly, there’s the big question of mark-to-market versus full-amount pricing. McCain seems to want to abandon the wisdom of the market setting value and have the government buy the mortgages for the full amount owed to the lender. That would mean that the original lender gets all the money, while the government just gets the house, regardless of what it is worth today. The difference will be the cost to you and I, the taxpayer.

The alternative would be for the government to pay market price. You know, go out on the market and bid the highest price for the stressed asset. If no-one is willing to pay any higher than the top bid, then that’s the price the government pays. To pay anymore seems foolish.

Ah, but there’s already such a mortgage-assistance plan in place, voted in by Congress last summer. Apparently, the program is off to a slow start, partly because lenders have been reluctant to accept the large losses they now face on troubled loans, according to analysts. Um, OK, they probably shouldn’t have made the loan in the first place, but I can understand why they want the government to accept the losses. I just don’t understand why the government should.

But, back to my home. I was very proud to buy my first home. I danced up and down on the front porch. I planted three trees in celebration, and I have spilled many a glass of wine on the hardwood floors! I had joined the President Bush’s Ownership Society and I didn’t need no stinking government program to help me get there. I took a fixed-rate mortgage and I have re-adjusted my spending so that I make my mortgage payments on-time, every time. And, did I mention that I am proud to own my own home?

Do I think every American should have the opportunity to buy their own home? Yes. Do I think every American should buy their own home? No.

Buying a home is the biggest financial transaction most of us will make in our lives. It shouldn’t be done on a whim. So, get some advice, huh? Calculate the break-even point on your investment, compared to other options for housing (does it still take 5 years in a house for it to save you money over renting the exact same house, given all the extra expenses that go along with owning the home – like mortgage insurance, property tax, maintenance costs, etc?) And, please, don’t buy more house than you can afford!

Buying a home signals a commitment to the community, an investing in the streets and struggles of the people who share with you the place in which you live. When the apple tree drop a branch over the fence next door, its your responsibility to go tidy up the damage. When the roof blows off in a storm, you have to dig deep to pay for the contractor to fix it for you. And when you head off on the great overseas experience, you have to find someone to look after your puppy dog, your garden, and all your world belongings. It’s a huge ball-and-chain that limits your footloose and fancy free behavior, but in return you are given the support and stability of your neighbors. We all win, so I guess it is a good thing.

I wonder if I’ve done something wrong. I saved. I rented for way too long. I bought a small house. And I like my neighbors. I feel accountable to them, just as they care about me.

So, why doesn’t McCain want to help me, as I struggle with my mortgage debt? Should I now stop paying my mortgage, letting it go into default, thereby qualifying for help? Because my car sure could use a little work on it, and my mortgage payments would go a long way to paying for those repairs!

I mean, if McCain wants the government to buy up homes, shouldn’t he shop for the nicest houses, at the best prices? What exactly does he want the government to own?


One Response

  1. Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

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