Our President's newest escape from reality is to propose that when a home is foreclosed, the defaulting borrower must be permitted to stay in the home simply by paying rent equal to the current market rent for “similar” homes.
First, we must understand that, because in most places home values have declined anywhere between 30% and 60% below the peak, the price to rent has also declined.
Even worse, because there are still millions of home owned by flippers who hoped to sell to a greater fool, these flippers are desperately trying to rent at any price in an effort to prolong their agony. Therefore, rents have declined even more than the price to buy a home declined.
Many of the rental homes are now being rented by deadbeats who got evicted because of foreclosures. If Obama says you can’t get evicted when you lose your foreclosed home, then there will be fewer people in the market to rent homes that are already vacant.
With fewer people in the market to rent, that is lower demand for rentals. Lower demand means the price of renting will drop even lower.
Also, fewer homes will be rented.
Total result of Obama interfering with the workings of the free market? More investors and flippers will be unable to pay their mortgages because they either (1) receive lower rents or (2) cannot rent at all because there are fewer free market rentals.
But wait! Brainless Barry makes it even worse!
We just showed that rents are disproportionately low, even compared to the decline in the price to buy a home.
If somebody has a home bought at the high prices with a 90 or 95% mortgage, plus property taxes and insurance premiums based on the old high price of the home, even these deadbeats will figure out that the so called “current market rent” is half of their mortgage, taxes and insurance.
So many more millions of people who are able to make their mortgage payments will decide to stop making payments on their old high mortgages, taxes and insurance, and let the homes be foreclosed.
In most states, the time from when you stop making mortgage payments until the home is finally foreclosed can exceed six months.
Got that? Six months free occupancy of your home! Wowee!!
And then in month seven you have to start paying rent equal to half of your old mortgage, taxes and insurance!
That is six months free AND a fifty percent reduction, and all the time you get to stay in your home!
Obama is the savior. Deadbeats have died and gone to heaven.
The number of homes in foreclosure will more than double.
The price of homes will plummet even further, as will the price to rent.
The economy will plunge into the Second Great Depression, but deadbeats will really love the Messiah.
Hallelujah!!
Franklynchusa
Stop picking on middle class homeowners. It's the BANKS and the MORTGAGE companies that profited from this horrendous heist.
ReplyDeleteDid you forget about the high unemployment rate? Honest, hard working americans that have paid their mortgage on time have found themselves out of work and unable to meet their monthly mortgate payments and taxes and put food on the table for their families. Are you suggesting these citizens be thrown out of the homes they have been paying HUGE amounts of interest on for years?
Come on. Free market? Don't make me laugh ! The only thing that's been free about this market is the banksters ability to FREELY steal from us and walk away.......
Under the Obama proposal tens of millions of people who are able to pay their mortgages will be able to stop paying their mortgages, taxes and insurance, and live cost free (except for electricity and water) for anywhere between four and nine months, depending on the locality.
ReplyDeleteThey would then be able to continue living in the home forever while paying rent less than half of their previous mortgage payments.
While I am no defender of the crooked mortgage brokers and banks, it would destroy the financial system and throw the nation into another Great Depression if tens of millions of financially able homeowners made the only decision that would make sense for them, and simply stop paying their mortgages.
If Obama rewards people for not paying their mortgages, perhaps next he might reward people for not making their car payments, or not paying on their credit cards?
That would teach those evil bankers!
Good to have You on board.
ReplyDeleteMr. Chusa is thinking analytically on proposals by the fascist elite. Please encourage newcomers and pick on us veterans,please. I think he is making sense.
ReplyDeleteThanks, kornisking!
ReplyDeleteOur president doesn't have escapes from reality. He just doesn't live in reality at all. I think he's trying to destroy our country in the 4 years we gave him, and then he will leave the scene.
ReplyDeleteI like your reasoning on how he's destroying the housing market, both prices and rents.
Acorn taught him well. Revolution! Disruption! Destruction!
Yes welcome to my baptism by fire frank ;)
ReplyDeleteHey, not paying on those usurious credit cards sounds perfectly fair to me! They've stolen from us and then want us to pay interest on the money they've stolen from us. How crazy is THAT?
Whose side are you on frank?
Whose side am I on? No one. Both political parties are (1) insane (2) corrupt and (3) oligarchies of thieves. All the big corporations have sold out to China. The politicians and corporate CEOs go on "fact finding missions" to Hong Kong casinos and sex palaces where they figure out how to steal everything we the people have left.
ReplyDeleteThey have made our money so worthless that China is willing to lend it back to us!
jerseyg, you have a point!
Afterall, the banks have stolen the interest they used to pay to me on my savings, now they keep it and keep my money.
Fidelity Investments now pays me only 0.21 percent on their Money Market fund, and the interest on my Chase credit card just went up to 22.0 percent.
Lets roll the banks into the public health option or into Medicare so Obama can ration credit cards.
Right on Frank... what's your view on health care?
ReplyDeleteAll federal programs to provide healthcare are a direct, black letter law violation of the Constitution, including Medicare, Medicaid, and Obama's new falsely named "public" option which is actually a "government" option.
ReplyDeleteI am preparing a post on this subject, which will point out consequences that no one has yet published.
Thanks all.
Now...Where'd you go Frank?
ReplyDeleteDid I miss your next article somehow?
It's been a long time.
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