Why the new housing bailout helps even you
Most of the people I meet have little to no sympathy for homeowners facing foreclosure. And they’re not at all happy that many of these homeowners may soon be receiving government aid to prevent them from losing their homes.
It’s understandable. The U.S. economy is a disaster. Unemployment is soaring. And those of us who haven’t lost our jobs worry that it’s only a matter of time before our employers send us packing. Yet the vast majority of us still pay our mortgage bills on time.
It’s hard, then, to feel sorry for those who don’t.
But I know that foreclosures help no one. In fact, they hurt a lot more people in addition to those losing their homes.
A recent story in U.S. News & World Reports covers this well. The story says that whenever a house falls into foreclosure, it actually hurts surrounding homeowners.
The story cites a Chicago study that found that when a residence falls into foreclosure, it reduces the price of nearby homes by as much as 9 percent. Foreclosed homes also tend to quickly fall into disrepair, becoming eyesores in a community.
And that, succinctly put, is why it makes sense for the federal government to do everything it can to prevent homeowners from losing their residences to foreclosure.
Yes, it stinks that some homeowners who were simply greedy, who stretched themselves financially with dubious mortgage products to get into homes that were too costly for them, are going to escape serious consequences for their poor decisions. But consider this: Pres. Barack Obama’s $75 billion plan to reduce the monthly mortgage payments of as many as 4 million homeowners will also help many people who face foreclosure through no fault of their own. These are the people who lost their jobs or suffered serious illnesses and suddenly couldn’t make their payments.
Remember, too, that preventing foreclosures in your neighborhood is one way to keep the value of your own home strong.
Keep these facts in mind, and maybe that bailout won’t seem quite so bitter.
