Congress is looking at mortgage modification plans to help those “homeowners” facing foreclosure.

And the outlook isn’t good. According to Moody’s Economy.com, of the 52 million citizens with a home mortgages, close to 27% owe more on their mortgage than their house is now worth. (source: Fox Business)

Certainly owning a home is part of the American Dream. But owning a home is not a right. Nor is it a right to ensure that one’s home has appreciated in value! Nobody should be entitled to anything that someone else provides.

The Federal Reserve sets interest rates artificially low. This system and legislation such as the Community Reinvestment Act help people get loans that they can’t afford. Fannie and Freddie buy and guarantee these junk loans to free up the banks for making even more. Fannie and Freddie package these up and offer them as mortgage backed securities to investors, often foreigners. The banks want to provide more loans because they have little actual risk and they can do vooodoo to their balance sheets. With more buyers out there, home prices inflate. Responsible citizens, therefore, pay more than they otherwise would have.

And now foreign entities are saying that they won’t buy debt and mortgage-backed securities until they carry explicit guarantees like those offered on bonds issued by BofA and Citigroup (source: Bloomberg). When homeowners default and investors pull out, Fannie and Freddie faces a cash flow problem and the system fails. There can be no new loans. Less buyers = declining home values. Then the government paints gloom and doom and calls on the taxpayers to come to the rescue! Crisis, crisis, crisis ... give us more of your money!

Who was the one that setup this shitty system in the first place? Easy money causes disaster for all.

There ought be no government supported system in place that further burdens taxpayers when it fails. Any that do should be eliminated. Goodbye Social Security, the greatest Ponzi scheme of all time, the Federal Reserve System, Fannie/Freddie, etc.

Continuation of the absurdity:

Last week President Obama revealed an ambitious mortgage rescue plan to help up to nine million homeowners avoid foreclosure. The plan includes $75 billion to help at-risk homeowners make payments and $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae and Freddie Mac. The plan also allows four million to five million ineligible homeowners with mortgages through the two mortgage giants to refinance their home loans at lower rates.

On Thursday the House of Representatives is expected to vote on a bill that would extend help to struggling home owners. The bill, HR 200, would allow bankruptcy judges to rewrite home loans and shield mortgage providers from bondholder lawsuits.

If a homeowner purchases a home that declines in value, tough luck. Welcome to the free-market and investing. Propping up people that make bad investments and buy homes they can’t afford only punishes those that are responsible and save. And when the government forces taxpayers to bail people and companies out, others inevitably take advantage. Case in point: many homeowners have been foregoing their mortgage payments intentionally because they’ve been advised that it will help them get mortgage modifications!

It is not my problem, or anyone else’s, that a bus driver obtains and can’t handle a $800k mortgage. It’s also not my problem that people owe more money than their home is worth, or that they lost their job and had no reserved cash account to fall back on.

Stockholders aren’t entitled to, or guaranteed to, appreciating values. Nor should homeowners. Our country was built on risk and reward and has excelled because of it.