Monday, December 8, 2008

What is the definition of “insanity”?

What's the definition of "insanity"? Answer; doing the same thing over and over again, expecting different results.

Today, The Washington Post reported, Homeowners redefaulting after getting aid. According to John Poirier's and Patrick Rucker's article, "more than half of mortgages modified in a bid to avoid foreclosure fell delinquent within six months"! They go on to report that Comptroller of the Currency, John Dugan, suggests the following reasons why (or a combination of all of them):

  • Was it because modifications did not reduce monthly payments enough?
  • Was it because consumers replaced lower mortgage payments with increased credit card debt?
  • Was it because the mortgages were so badly underwritten that borrowers simply could not afford them, even at reduced payments?

The one question Mr. Dugan forgot was; was it because these borrowers never should have been approved for a mortgage in the first place? What makes us, anyone, think that by reducing the SAME borrowers' payment, the BORROWERS' behavior will change???

Unfortunately, sometimes we must be "cruel to be kind". Nature has its own primitive way of ensuring the survival of the species; the weak, sick and old are picked off by the predators. It's the "Natural Order" of things. Let's take a lesson from Nature and save our, the tax payers money, by allowing this round of foreclosures to run its course. Save the "bail out" for the borrowers' who deserve it; Mr. & Mrs. Homeowner, who can no longer afford their mortgage because he or she lost their job, NOT because he or she NEVER should have received a mortgage in the first place!


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