No good deed goes unpunished
The US Treasury department is readying a $40 billion bill that will help bail homeowners out of mortgages that are way beyond the current value of the houses. This leaves those of us who borrowed responsibly scratching our heads wondering where our free lunch is... Example A: John Smith buys a house for $800,000 and the resulting mortgage payment is 60% of his income including bonuses. The house is now worth $400,000, but John isn't getting any bonuses, so he has missed a couple payments and is considering walking away from the house. This bailout could lower his mortgage as low as $380,000 so he does not get foreclosed on. Example B: Mike Jones bought a house for $400,000 and when its worth went to $800,000 at the height of the boom, he refinanced and pulled out $300,000 of equity and bought a couple BMW's and went on a few trips to the Caribbean. Now he owes $700,000 on a house that is worth $250,000, and is having trouble paying because his wife lost her job. This bai...