Over the weekend the US Congress passed a massive bailout of homeowners and put taxpayers on the hook for Fannie Mae and Freddie Mac.  President Bush will sign the bill this week.

It is just flat out discouraging to see this go down.  These are people who took out mortgages they couldn’t afford or didn’t understand, driving up house prices to the point where the more cautious buyers found it hard to find affordable housing.  Bailing them out only encourages similar reckless behavior from them and all who witness this handout.  And who’s backing up the mortgages given to these high risk individuals?  You and me.

And the Too Big To Fail argument being bandied about for propping up Fannie Mae and Freddie Mac is a non starter.  Let them fail.  Will it disrupt the lending industry.  Hell yes.  But the fuel behind the housing bubble and credit crisis was easy credit.  Negative consequences might actually encourage institutions to tighten up their lending standards.

I wonder if we’ll be bailing out these folks:

CLAYTON COUNTY, Ga. — An Extreme Home Makeover may be going bust. The first metro family who got a new home is facing foreclosure.

Channel 2 followed the progress as an army of volunteers swarmed a Clayton County neighborhood to build a new home for a deserving family on “Extreme Makeover: Home Edition” in 2005. When the show came to town, no one could have predicted what would happen less than four years later — foreclosure.

A foreclosure notice appeared last Friday, a $450,000 second mortgage they took out less than 15 months ago was in default.

How sad!  Right?  Well, not so fast.

Lake City mayor Willie Oswalt was among the 1,800 volunteers helping “Extreme Makeover: Home Edition” build the Harper’s new home 3 ½ years ago. Beazer Homes of Atlanta was the main sponsor. The mayor said he is baffled.

“Beazer gave them $100,000 cash, paid their mortgage off and they still can’t make it,” said Oswalt.

Maybe I’m just a heartless jerk, but if someone pays off your mortgage, gives you $100k, and you subsequently get two mortgages on your house (in less than four years!) that you can’t pay off it is hard for me to have a great deal of sympathy.

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This entry was posted by Brian on Monday, July 28th, 2008 at 8:59 pm and is filed under Government Waste. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.