Homeowners In Distress – Doesn’t Your Heart Bleed?

I fail to be heartbroken that millions of Americans bought more home than they could afford and that they are now struggling to stay in it.

Why should I care about people’s bad financial decisions? Why is the decision to buy a home out of one’s financial range deserving of special sympathy? People make bad financial decisions every day. Why should those who didn’t make such bad decisions bail them out?

If you subsidize bad decision-making, you’ll only get more of it.

Here’s a news story about the slow-moving world of foreclosures. Yes, this gives breathing room, yes, this gives a break, to those who made bad financial decisions. But is this good news for America? Is this good news for the economy as a whole? Is it good news for the housing industry?

No! This just means that the free market is working less efficiently. That is the drag on the entire economy and only delays the inevitable price declines and settling out in housing that will be necessary before the market takes off again.

The New York Times reports:

In the 27 states where the courts play no role in foreclosures, the pace is much more brisk — three years in California, two years in Nevada and Colorado — but the dynamic is the same: the foreclosure system is bogged down by the volume of cases, borrowers are fighting to keep their houses and many lenders seem to be in no hurry to add repossessed houses to their books.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’ ” said Herb Blecher, an LPS senior vice president. “Now you’re probably not losing any sleep.”

When major banks acknowledged last fall that they had been illegally processing foreclosures by filing false court documents, they said that any pause in repossessions and evictions would be brief. All of the major servicers agreed to institute reforms in their foreclosure procedures. In April, the Office of the Comptroller of the Currency and other regulators gave the banks 60 days to draw up a plan to do so.

But nothing is happening quickly. When the comptroller’s deadline was reached last week, it was extended another month.

About Luke Ford

Raised a Seventh-Day Adventist at Avondale College in Australia, Luke Ford moved to California in 1977. He graduated from Placer High School in 1984, reported the news at KAHI/KHYL radio for three years, attended Sierra College and UCLA, was largely bedridden by Chronic Fatigue Syndrome for six years, and converted to Judaism in 1993. From 1997-2007, Luke made his living from blogging. Living by Beverly Hills (Alexander90210.com), he now teaches the Alexander Technique (moving the way the body likes to move). Lessons cost $100 each and last about 45 minutes. In 2011, Luke completed a three-year teaching course at the Alexander Training Institute of Los Angeles. His personal Alexander Technique website is Alexander90210.com. Luke is the author of five books, including: » The Producers: Profiles in Frustration » Yesterday’s News Tomorrow: Inside American Jewish Journalism
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