The Daily Press, continuing its series of questions to the candidates in the special election in the 1st Congressional District, today has answers from them on the housing crisis.
With the election just days away, please remember to help out Philip Forgit. Phonebanking, canvassing and, of course, contributions are welcome. Contact Jamey (Newport News) or Missy (Stafford) for more information.
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VIVIAN J. PAIGE | All Politics is Local 
I notice that this is an issue that there’s concensus on from both Forgit and his Republican opponent (though frankly I’m still looking for some other alternatives; rate-freezing provides short-term relief but preserves an unsustainable status quo in the housing market that *will* have to undergo a market correction sooner or later). The one thing I take issue with was this statement from the Republican, however:
“Finally, Congress should provide tax relief for borrowers when lenders forgive some portion of their mortgage debt. Under current law, when a lender forgives part of a mortgage to help its borrower stay afloat, that amount is treated as taxable income for that borrower.”
The current law works like that because we already made mortgage payments tax deductible to encourage and facilitate home ownership. Now my tax dollars are going to get shovelled into refunds for people who are *not* making their mortgage payments. It would be enough to make me wonder why I even bother renting, except the I remembered that it’s because folks started taking out ill-advised adjustable rate subprime loans, putting a lot more money out on the housing market and driving up the costs of home ownership.
I am totally in favor of ending predatory lending practices. I am totally not in favor of subsidizing either those predatory lending practices or the people who stupidly bought into them, thereby inflating the cost of housing.
What the housing crisis needs is a good market correction.
Stop stealing my talking points. 😉
This morning I noted, by the way, that I’m not the only person who tries to be responsible with his money who is livid about a Federal bailout for folks in the subprime lending market:
http://www.washingtonpost.com/wp-dyn/content/article/2007/12/06/AR2007120602572.html?nav=hcmodule
Now I don’t want anyone to go homeless or anything like that, and I’m all in favor of a plan that helps keep people in their homes while dealing with their bad credit and mounting debt. But how much of a message does it send to financially-stable Americans and the rest of the world that we favor artificially-strong markets and debt-driven consumerism over fiscal responsibility when we jump in to bail out the folks who artificially increased the money supply and demand in the housing market in the first place?
“In Washington, I would do more to strengthen the housing market and stabilize the economy, expand affordable mortgage loan opportunities for families at risk of foreclosure, and protect working families against risky loans. Buying a home should continue to be the American dream, not become the American nightmare.” — Forgit
“Dodge, parry, spin…” — Daffy Duck
“To aid those who are currently facing higher interest rates on their sub-prime loans, Congress should work with the mortgage and banking industry to implement a plan to freeze interest rates for borrowers who are able to make their payments as long as their interest rate doesn’t rise….” — Wittman
“To temper additional problems in housing, we should step in and freeze interest rates on certain troubled sub-prime home loans.” — Nain
So the banks, which make money taking short-term loans at low rates and lending the money at higher rates, start having to take out loans at higher rates, but cannot raise the rates on the loans they have made. So the banks go out of business. Great.
With the lowest interest rates in 40 years, idiots took out adjustable-rate mortgages, which had nowhere to go but up. They could have bought smaller, less expensive houses, but greed got the better of them.