Is it Fair to Force People Whove Paid their Mortages to Bail out those who have not – Yes

You waited until you could really afford it to buy a house. You shopped around for the best mortgage you could find, and one that was within your ability to pay. For ten or fifteen years, you’ve never missed a payment; on occasion foregoing that much-desired vacation or other luxury to make sure the bank got that check before the due date every month.

Your neighbor, on the other hand, felt entitled to have a ‘house.’ He bought the top of the line, way beyond his means, and then signed on for one of those flexible rates, who knows where it might go but most certainly up, mortgages, the payments of which strained his income even at the relatively cheap buying in rate. Not being one to deprive himself of anything, he runs up huge credit card bills to have the dream vacation and the latest toys. With both him and his wife working, they barely make ends meet, and always have too much month left over at the end of the money.

Then, lo and behold, disaster struck. The interest rate on his mortgage didn’t just balloon, it exploded. The mortgage bubble burst, and he, saddled with more credit card debt than he can handle and a credit rating that is somewhere south of 200, finds himself in danger of foreclosure.

Now, the question is this: should you, who have faithfully paid your mortgage and kept your debt load reasonable all these years, be penalized through increased taxes to bail out profligate spenders who don’t even understand, much less care, about the concept of budget planning and living within means? On an individual level, the answer to that question would have to be yes. It’s not fair to penalize the ants because of the grasshopper’s stupidity. But, what if there were ten, twenty, seventy-five million of those neighbors, and their financial collapse threatened the value of your property as well. If you’ve ever lived in a neighborhood that has faced a number of foreclosures, you know what I mean. Regardless of education or purported income level, when people are about to be evicted, they have a tendency to trash the property or at best, just stop taking care of it. Derelict foreclosed properties are blights on a neighborhood that bring down the value of other properties.

Allowing this to happen on a massive scale could depress the real estate markets in areas, leaving scars that will be long in healing. So, while it is not fair for people who’ve played by the rules to have to bail out those who ignored them. But, fair has nothing to do with it. If you’re in a boat, and the idiots in the stern drill a hole in the bottom, you have to help bail water and plug the hole lest you sink along with them.