Life isn't fair, and neither is the mortgage rate freeze
Posted
Dec 12 2007, 04:02 PM
by
Karen Datko
Rating:
Who benefits from the mortgage bailout plan? Bankers and government, says The Baglady. And how about the subprime borrowers who will get to keep their homes under the plan? "These homeowners are just indentured servants to a gargantuan money-hungry force," Baglady writes. "Their rates will be frozen for five years, but they will have to keep on paying the price on an asset that has depreciated greatly" and spend just about all the money they make to do it.
The banks benefit because they'll continue to collect interest on the subprime loans, at rates much higher than they're paying on savings accounts. The government wins because people whose mortgage interest rate won't reset will be claiming a lower tax deduction than they would have if the rate had gone up. Everyone else is a loser, including the people who can afford a higher payment when their adjustable-rate mortgage resets and thus won't qualify for the freeze. "How is that fair?" Baglady asks. "I suppose life just isn’t fair. I think this plan and other mortgage-related bailouts are just further discouraging people from saving money and living a sustainable lifestyle."
