Dude, time to bail.

Well here it is, JR. chimes-in on the “bail-out.”

This is a more elaborate version of a comment I left on a fellow mortgage monkey and part-time blogger’s site.

I teeter back and forth on this topic. On one side, I can easily go Tyler Durden from Fight Club and say “Burn it all to the ground.” But from the other side, I say we need to fix this issue to save/stabilize the world economy and I honestly believe that.

However, I am really, really against the Gov’t. taking everything over.

But that being said, we see what happens when the free market regulates itself. Take that Republicans.

The blame starts at the top, with the Gov’t. As the Fed lowered interest rates to perpetuate lending and keep money flowing to “grow” the economy, it was actually creating artificially high real estate values. Instead of looking ahead at the potential consequences of “a house for everyone” policies, they just kept forcing money back into the primary mortgage market and pleaded with banks to come-up with more exotic ways to qualify and approve borrowers.

Which brings us to the banks. Yes, the poor, poor banks (sarcasm) who were forced to oblige the Gov’t. and craft “innovative” and “dynamic” niche loan programs that allowed anyone with a credit score and a pulse to qualify for a home loan. Not to mention drafting programs/guidelines that dismissed normal safeguards to loan qualifying by no longer verifying common sense things like: Income, Assets or even Employment.

Then there is what I truly believe is the biggest issue with the industry, the uneducated and still far too unregulated loan originators. Having been an LO myself, I have seen how little training goes into the job and how little oversight there is once taking loan applications. There was far too much money to be made by placing borrowers into short-term high-paying loan programs with too little oversight as to whether closing the transaction was actually in the borrower’s best interest.

This old system of paying more for placing borrowers into higher rate programs needs to stop. As it is rewarding everyone for placing borrowers into loans that are not beneficial to them. This applies to the wholesale (LO to bank) and Secondary (bank to bigger bank/Wall St) mortgage markets.

Then there are the borrowers themselves. People threw common sense to the wind as they were offered astronomical sums of money with little documentation and no money down. Who wouldn’t take that deal? The only issue was that people no longer bought what they could afford, they bought what they wanted. Which sounds like a good deal, until you can’t pay your bills and get foreclosed upon.

I don’t feel bad for homeowners.

Sure some people probably got duped, but not as many as are being claimed…I’ll put it like this, when I went car shopping I didn’t go to a Bentley dealer. I rolled to a used car lot, because that was in my price range…people should have applied the same reasoning to buying a home, but obviously, they didn’t.

So who fixes it? I think everyone should. As no one is without blame.

I didn’t like the first incarnation of the bail-out as it didn’t do anything for the average homeowner, who is stuck with devaluing property and payments they can’t afford. While the Lenders and Wall Street investors who made ridiculous sums of money securitizing and selling bad loans get off scott-free.

Gov’t. is a stop-gap, not a solution. Simply wiping the slate clean is a terrible idea as there are no consequences to learn from. There were huge amounts of money made from this debacle (See former WAMU CEO Kerry Killinger’s $16.5 million severance package) and these companies should be held responsible for their careless actions.

The real solution is better gov’t. regulation, not a takeover, which should ensure smarter lending practices by the (few remaining) banks.

You need a Kleenex?

“When I hear somebody sigh, ‘Life is hard,’ I am always tempted to ask, ‘Compared to what?’”
- Sydney J. Harris

I came across that quote this morning and it seems to encapsulate the sentiment of this post.

The economy looks to be in the toilet.

Seemingly everywhere you turn there is more bad news.

Housing prices are falling (glad I own a home), unemployment is up (at least it’s not me this time) and Starbucks is closing stores!

I am pretty sure that Starbucks closing stores is one of the 7 signs of the apocalypse, but I need to double-check Revelations.

I only half-heartedly pay attention to the talking heads on TV as they report on the worsening economy. It’s not until my life is affected that I begin to take note. (I’ve never said that I am NOT a selfish S.O.B.)

So it’s as my friends and I begin to ratchet-back spending, that I take note. Happy hour isn’t a daily occurrence anymore. After attending 15+ Mariners games last season, I’ve been to 2 this season. Most importantly, I am bringing my lunch to work, I’ve never done that…even in elementary school.

Apparently this is life in a recession. And yes, folks, we are in a recession.

I feel partially responsible for this financial quagmire, having been a part of the over-heated real estate/mortgage market that inflated housing prices which lead to the weakening of the dollar.

But I am not losing too much sleep over it, I was a small cog in a much bigger and supremely dysfunctional industry. Besides, I am too busy worrying about how I am going to make my next mortgage payment.

Somehow I am staying afloat, even though I am making less now as a working stiff, than when I was an unemployed bum. So I can sympathize with friends as they lament their current financial situations…to a point.

I am single, the last of a dying breed, among my friends. As such, I am the sole bread winner. I get to pay all bills on my own.

So when married/co-habitating friends being to whine about how hard it is to make ends-meet I say “Buck up.” You are crying to the wrong person.

Not to discredit the financial woes of anyone, but complaining to me about money when two people are putting pennies in the piggy bank, seems a little oblivious.

I feel for you to a point, but am amazed at how unaware of the audience you are.

Everyone needs a sounding board. And I’d imagine that discussing finances with a significant other can raise more issues than are resolved. So feel free to share your dilemmas, but keep my (and all single people’s) situation(s) in mind…Single folks are in the game with one had tied behind their back relative to couples. So if I seem a little hardcore or uncaring, I’m sorry.

I’ll admit, two people do still incur expenses, but the major ones: Rent/Mortgage, Utilities, Groceries, etc. are shared. As such, the are effectively halved when in a (fair) relationship. So when I look at the situation(s) from the outside it’s shocking that finances are a problem.

It’s not easy, but I have been able to make my finances work. So when I hear complaints, one question pops into my head: How can two people, two minds, two incomes have it that much harder than me?

I guess it could be that I am a financial wiz. But I doubt it.

Just had to get that off my chest.