What is worse than the bursting of the housing bubble (which I called, in print, while Nero..........oops!, I mean Bernanke and the Fed......fiddled and America burned, while the Democrats in Congress merely made it worse, including when they took control in January of 2007 and including SENATOR Barack Obama).?
It is worse if you make it impossible for the housing market to recover, and that is what we are in the
I am talking about the story from the incompetent Associated Press last week about how 288,000 homes were foreclosed upon last quarter--the MOST since the recession began )presumably the most since the housing bubble began to burst in 2006--although I have not checked on those specific figures). The AP went on to suggest something that will slow down foreclosures:(as if that were a "silver lining" in the incredibly bad news): Banks and other home lenders have messed up their paperwork, in at least a number of instances--such as to make foreclosures technically improper (foreclosures being, by the way, primarily a matter of state real estate lien law, and not Federal law, except as Federal law may either provide or prevent a defense to a state foreclosure action).
Isn't this "good news--especially since a number of leftist and consumer (a redundancy, most of the time) groups and advocates have used this bank stupidity as an excuse to call for a complete moratorium on foreclosures? Nope. It is about the WORST news we could have, especially if it delays and complicates a lot of foreclosures (or somehow results in a general moratorium, despite the stupidity of that move). If you don't understand that this whole problem with foreclosures is a DISASTER in the making, then you do not understand economics.
Note that the paperwork problem is NOT the result of people being wrongly accused of defaulting on their mortgages. It is truly a matter of sloppy paperwork (as illegal immigrants, for example, are NOT). This means that something still has to be done about those mortgages. Further, in many cases people have MOVED OUT of the houses, or are not keeping them up because they have no intention of paying the mortgage.
Thus, a FEW people may benefit from delays in foreclosures, while MANY people are hurt badly (including home owners who are current on their mortgages). This is because the OVERHANG in foreclosures is not getting solved so long as there are a lot of delayed foreclosures. That, in fact, has already been a DISASTER in the various Federal foreclosure relief programs, as people given a second chance default again on their mortgages (more than half, at last count). And BUYERS are suddenly leery of buying "foreclosure" homes, meaning that such homes continue to be there depressing the market. Sure, a lack of foreclosure sales might momentarily strengthen other home prices, but only to keep such prices DEPRESSED over a much longer period of time. The whole housing market gets depressed, and any general "moratorium" virtually guarantees a "double dip" housing recession as the housing market gets further roiled and disrupted.
It truly is a case of "good" news--for the very few--is a case of very, very BAD new for the many. Even for some of the few, this is a very mixed blessing. Is it good or bad that some people who have stopped paying their mortgage will be able to "squat" in the house for a longer period of time? Would it not be better if they have to face their situation, rather than remaining in denial as freeloaders? I am NOT saying that people who get their house foreclosed upon are freeloaders. I am saying that people who simply quit paying their mortgage with the idea of staying until they are forced out are freeloaders.
We desperately need to get back to a normal housing market, without this overhang of foreclosures--and coming foreclosures. Complications in foreclosures creating further uncertainty in the market does almost nobody any real good. Yes, I know that part of the problem is people losing their jobs, and not being able to get another one. But that is yet another FAILURE of attempted Big Government, central planning.
P.S. What the corrupt AP actually said was that banks "seized" 288,000 homes last quarter, but the AP is incapable of writing straight "news", and all you ever get is propaganda.