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Just walk away...

By Owen Paine on Tuesday December 1, 2009 03:24 PM

... as the Lord Humungus, shown above, once memorably advised.

Dean Baker, alas, though he's a fine fellow, is no Humungus. In a recent Counterpunch piece, El Dino has caught the smell of welfare-queen bankster handout number 13 in the recent POTUS mortgage relief plan. Dean sets it up nicely:

"Homeowners are effectively throwing money away every time they make a mortgage payment... the Center for Economic and Policy Research calculated that a family who purchased a small home in Los Angeles near the peak of the bubble could save $1,640 a month by renting rather than owning. This comes to almost $20,000 a year. In Phoenix, a family who purchased a home near the peak of the bubble could save $420 a month or $5,000 a year. In Miami, the savings would be $1,940 a month, more than $23,000 a year... These homeowners also have no reasonable prospect of ever getting equity in their homes. In many cases they are 20 or 30 percent underwater, possibly owing over $100,000 more than the current value of their home."
Okay, so walk away, right?

Nope. Dean wants the geefs and geefettes to be able to rent back their present "owned" digs for ten years at today's lower rental ratess.

Hmmm. Not gonna happen. The POTUS has a different remedy: why not have Uncle pay down a chunk of the mortgage? Reduce the nut, make it easier to carry. Hold the phone, our man sez:

"If the government pays for a mortgage modification where the homeowner is still paying more for the mortgage than they would for rent, then the bank gets a big gift from the government, but the homeowner is still coming out behind."
Steel-trap mind on that guy, no?

But we want walkaway to accelerate, so we unlike Dean, want all underwater households to bug out son-of-sam style today, all at once, and then go out and rent each others' houses at market rates from the banksters. Now there's a fearful symmetry for you. Why is our magic president talking a big bundle of buy-down money anyway? Maybe it's a twofer: one, it hands money to the banks they'll never collect otherwise; and two, it might slow the walkaway movement with a fusillade of false hopes -- which are, after all, something of an Obama house special.

Comments (2)

False hope and chump change.


Interesting argument. As someone facing this dilemna (not because of funny mortgage money or anything like that but because of my own psychological and moral failings vis a vis the crack cocaine of easy credit) it makes me wonder if I should even try.

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