printBubble or no bubble, a property is worth what the market will pay for it at the time of the sale; no more, no less. If you bought a house for $350 thousand and nobody will pay you more than $250 thousand now, you are not owed $100 K. Yet Republicans and Democrats continuously voice the quaint and vacuous idea that an owner whose mortgage is worth more than his house ought to be compensated somehow. Ditto declining property values.
You don’t have a property title in the perceived value of your property. Nobody does. Suck it up.
Recall, during the first evening press conference of his presidency, Obama had forewarned of his intention to “help homeowners that are suffering foreclosure or homeowners who are still making their mortgage payments, but are seeing their property values decline.”
Amen. And that goes for any other voluntary trade. You bought it (or not) because it was better than the alternative. Guess wrong? Too bad. Don’t expect your neighbor to pick up the pieces of your bad choices in life. The alternative is the debacle we’re living through, and no one should have to deal with that.
You are correct. McCain promised equally nonsensical stuff during the debates. Even more outrageous is that for many of these alleged owners, it is not really their “property” – they put little or nothing down to assume a paper ownership without any meaningful equity in a fraudulent sham conspiracy involving mortage brokers, Fannie Mae, banks, “ownership society” socialistic political demagogues of both parties, hedge funds, etc.
Someone (possibly on the lewrockwell site) mentioned that perhaps some of these “owners” should be allowed to stay in the foreclosed homes as “renters” paying what they can at real market rates but that they are not entitled to any real “ownership” in the scam financial transactions. [“Should be”? It’s up to the real owners to decide what will be of these delinquents. I guess they can negotiate with the banks.–IM]
The trouble, Ilana, is that there was so much phony transactions that it is likely difficult to know who the hell the real owner of some of this hyped-up property is – “lenders” and banks and Fannies and Freddies just swapped, bundled, and leveraged paper taking paper “profits” along the way which, in turn, were further leveraged. If Obama has his way, the Messiah himself, as Savior-in-Chief is the “owner”. I am at a loss to know what word exists beyond disgusting. {I own my house outright so don’t think I am a happy camper on this issue!}
Another sticky bit to this question of ownership arises when you consider the nature of fractional reserve banking.
When you walk into a bank and sign the mortgage note, the bank monetizes the debt on the spot. In other words, your pledge is as good as gold (maybe), but the bank turns it into currency that didn’t exist until you promised to create enough value in the marketplace to pay back the currency. The bank doesn’t have the money to lend, it creates money this way up to the fractional limit.
Thus, the law gives the bank standing to create the money to buy the house with. Under the law, the bank then owns it. But the question arises; if the economy is collapsing because the banks found a way around the fractional limit (they did), do they really have the moral right to keep the property? I suppose equity dictates we must all suffer equally. But it’s still profoundly wrong that banks should own all the property by virtue of entering a pen-stroke into their ledger book, while the debtor may have poured years of his life into paying the interest and a pittance against principle.
When an inflationary fractional reserve system crumbles, the banks end up with most of the currency and title to most of the property.
So I cry no tears at the plight of the banks. They’ve managed to own most of the country through this ruse, and now they’re bankrupting it too. And taking the property.