Monday, August 4, 2008

Fpreclosure and Illegal Immigrants

Another story this morning (I heard it on Doug Stephan's "Good Day program, to which I don't listen but which is on my radio as the alarm goes off) exposed--as if it needed exposing--one of the major DECEPTIONS of the pro-illegal immigration people.  It turns out that new data suggests that 10 to 15% of illegal immigrants are voluntarily RETURNING to their own country.  It has always been true that there is no need to deport "12 million people", if we STOP encouraging people to come here and make it difficult for them to stay (preventing fraudulent use of social security numbers, which we CAN do already).
That story segued into somewhat anecdotal information about illegal immigrants securing, say, a $30,000.00 home equity lon, and then letting the house go into foreclosure--as the illegal immigrants use the money to go home as relatively rich people.  This CAN'T be than common NOW, because banks are cracking down on home equity loans (under pressure).  However, this highlights how COMPLITCATED the "mortgage crisis" is--rather than simply being a sstory of "predatory" lenders.  The problem was the BUBBLE BURST in housing prices, which always exposes problems waiting to happen. 
My brother came through here on a visit a few weeks ago.  He had a story of what was happening in the Phoenix area--which was a white hot real estate market not long ago.
Say a family bought a house with a loan of $100,000, and very little down payment. In Phoenix, a few years ago, that house might quickly RISE in value to $200,0000 over just a year or two.  It may not have been quite that "bad" (or good), but it was close.  Yet, even though the house now has an "equity" of $100,000, the family probably had bought the MOST EXPENSIVE house they could possibly afford.  But there were all of these companies out there advertising HOME EQUITY loans.  Suddenly the family might see a chance to get $80,000 in a home equity loan, in order to improve the house, buy a boat, gamble in Vegas, or become a rich family in Mexico.  Most people, after all, can find sues for $80,000 not doing them any good tied up in a house--especially when the house is CONTINUING to increase in value.  Nevertheless, the family could not really afford a $180,000 loan, which is why they did not buy that expensive a house in the first place.  Not to worrythey can always SELL and buy some cheaper house, or rent--with $80,000 in hand to spend.
Oops!!!!  The house suddenly went back to being worth, say, $120,000.  Now the family has a $180,000 loan on an asset worth $60,000 less (even though $20,000 more than they originally paid).  The $80,000 is long gone (or committed to other things).  What is this family LIKELY to do with a loan more than they could afford to repay, without a rising real estate market?  The family is likely to be FORCED to--and WANT to, rather than ruin their lifestyle or plans beyond the house--LET the house go into foreclosure.
You don't here the stories like this in the mainstream media, or the stories about illegal immigrants taking home equity money and going home.  In the media, the sob stories are all about hard working families forced into foreclosure through no "fault" of their own, or little fault.  It makes a better story, even if the mainstream media were not composed of LEFTIST central planners (as it is). 
Thus, you get the "pressure" for Federal bail outs--not only of people with loans they could not really afford (if real estate stopped going straight up), but for BANKS and MORTGAGE LENDERS Democrats profess to hate.  IN fact, often the ONLY ones to be "helped" are the LENDERS, because the Federal Government becomes the holder of the loan--which a family such as the one I describe above STILL is in no position to handle.
This is a recipe for disaster, as the Federal Government becomes nothing more than a means of the TAXPAYERS taking the hit for the mistakes of BOTH borrowers and lenders.  Yes, Republicans have given up fighting very hard against this idea that the Federal Government is there to solve ALL of EVERYONE'S problems.  That is why I do not regard myself as a Republican, and have not for some time.  Sure, Democrats are WORSE, but we seem to end up in the same place in the end (sometimes faster under Republicans, because they are then more interested in KEEPING power than in principle, or pretended principle).

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