I have read with interest the following article, which indicates that a Republican Congressman from New York has attached an amendment to the recently passed FHA reform Act that would prohibit “Strategic Defaulters” from obtaining FHA-guaranteed loans in the future.  I believe that this rider, and its intent, punishes the very people who received (and receive) no relief of any kind under the various bills passed by the US Congress and signed by the President to “solve the national financial crisis.”  Let’s see:1. Banks are too big to fail, and so they get money from us, the taxpayers, to guarantee their loans.2. Companies are too big to fail, so they get money from us, the taxpayers, to prevent their businesses from failing.3. States and municipalities cannot fail, so they get “stimulus money” to support their bloated pension plans.4. Congress cannot fail, so it exempts itself from the same rules that apply to us, the taxpayers.5. The Federal Government cannot fail, so it prints money (through the Federal Reserve), depleting the value of my saved dollars.In the midst of these bailouts, the Congress decides that the taxpayer, who makes a private decision to allow the lender to accept what he’s contracted to do (take the house in exchange for the taxpayer’s debt) is to be PUNISHED??? PLEASE!!! Congress has refused to put teeth into the laws that regulate the Federal Reserve by requiring open and transparent dealing; it has voted to give people who made money selling worthless securities MORE money; it has offered extra cash to folks who’ve refused to honor their basic commitments of fair and honest dealing with all the “little people,” and now the Congress has decided that some of those “little people” are bad and should be punished because they choose to walk away from a deflated asset. Amazing.Now I need to tell you that I haven’t defaulted, and hopefully won’t. But this is  the most short-sighted thing I’ve seen in a long time.Is it any wonder that incumbent Republican Congresspeople and Senators are being defeated in record numbers? And that the “new left” is in the process of being replaced by “common sense money people,” who expect everyone to play by the same rules?Please do not write in defense of this vote. It was stupid and ill-considered.  It passed without opposition, so unless you were not there, you voted “Aye.”Here’s the article:   http://www.dsnews.com/articles/house-republicans-want-penalties-for-strategic-defaulters-2010-06-17

The San Diego Union Tribune is gleefully reporting a rise in real estate prices, and points out that this rise in prices has continued for a number of months.  That’s good. What apparently is lost on the statisticians, though, is the incredible difficulty of closing transactions.  One of my colleagues, who has been selling real estate for nearly 30 years, indicated that this was the “toughest 1st half he’s ever experienced.” The same is true of me, and of many others in my business.  But there are several “ground-level trends” that give me a lot of reason for hope:

Estimates have it that up to 31% of all foreclosures in March of this year were the result of “strategic defaults.” A strategic default is when the homeowner just stops paying. He may be ABLE to pay, but he stops. When the lender finally kicks him out of the house, he leaves, and rents somewhere. People are skipping 6-12 months of payments this way, and getting out of a huge load of debt. Is it moral? Is it reasonable? Is it a good idea? The question of “moral” is not answerable. The Federal Government has put you and your children (and possibly grandchildren) on the hook for most of these loans in some way or other.  Since your kids will pay anyway…