The problem with housing “solutions” …

I just finished reading this story on CNN about a foreclosure court in Fort Myers, Florida.

The story explains that this foreclosure court is the place where people officially lose their homes. And as you’d expect, it is largely written from a “woe are all these people” angle.

Make no mistake, I do have sympathy for anyone who is losing a home through no (or little) fault of their own. But the problem is those cases are the minority.

For starters, the story notes that 60 percent of the court’s foreclosures involve out-of-state owners (i.e. speculators) who don’t even show up for the hearings.

And then there’s this little slice of life:

“Patricia Valverde, a mortgage broker who had been laid off, thought she was about to lose her home to foreclosure. Valverde had an adjustable-rate mortgage on a house she paid $300,000 for.

“She watched her monthly payment jump from $1,700 to $2,250, while her property value fell to about $80,000. She was so upside-down on the house that no one would refinance her, she said.”

Okay, wait a minute. This woman was a mortgage broker? And she got herself into an ARM she couldn’t afford?

Yet the article continues by saying this mortgage broker has recently been given a temporary reprieve from foreclosure, and is hopeful she will benefit from Obama’s new initiatives.

See, this is where I really lose it. Whenever I get into a conversation about this housing crisis, people argue that it was all a scam on innocent, unwary buyers committed by some evil powers that be.

But it’s not. Yes, in some cases outright fraud was committed. And in plenty of others, the lenders were enablers at the very least.

It was really greed on the part of buyers that DROVE this mess. And how can anyone argue that a mortgage broker who got herself into a house and loan she couldn’t afford deserves anything other than foreclosure? Certainly she understood the terms of the documents she signed … the market she was operating in … and the potential difficulty of obtaining a new loan later.

There is no way that any “solution” is going to be targeted enough to help only those who truly deserve it. And even if there were, it then wouldn’t be big enough to make a difference to the market anyway.

The only real solution to housing is market action.

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