Wednesday, March 19, 2008

How to get more affordable housing

I thought today instead of ranting about the latest thefts perpetrated by Wall Street insiders in collusion with their insider buddies (read: the Fed), I'd write an educational piece for legislators who want to contribute positively to society. You see, it's good for society for people to own homes, but legislators don't always understand how to accomplish that noble goal. So, I will provide some insight.

In order for people to own homes, they need to be affordable. Now, contrary to what Greenspan might have said in flimsy defense of his flimsy oversight, that doesn't mean exotic 100 year 5/95 fixed to adjustable loans with ridiculously low intro rate, balloon payments, and pre-pay penalties. It means houses need to be priced where people can afford them, over the long run, at the current [real, documented, not made-up] salaries.

Now, we're a ways from there, but you can help get there. You know how? I bet you can figure it out if you think about it, but... I might be overly optimistic. I'll give you a hint: if the government tries to bail out lenders and keep the housing asset prices artificially inflated, does that help or hinder houses getting more affordable? That's right, it hinders (that's a fancy word for it's bad).

So I bet you're asking yourself, "self, what legislation could I pass that would help houses get more affordable sooner?" Well, for starters, you can make sure banks don't hold houses off the market waiting for values to go up, and make sure they unload them at market within a reasonable amount of time. Then, you can make sure foreclosures proceed as swiftly and efficiently as possible, to ensure that houses people cannot afford get back on the market ASAP, allowing their prices to correct sooner and helping the overall market get more affordable faster. You could also streamline the process of houses where the mortgages are held in securities and are in default getting foreclosed on and sold back on the market. Finally, you can push to make sure the government doesn't create excessive inflation to offload the bad debts on to everyone who was responsible and saved their money.

If you do these things, you're helping housing become more affordable, and helping society in the long run. Obviously, if you do the opposite of these things, you're hurting society, and you're a bad person. Only dumb people vote for bad legislators, so don't be a bad legislator, or a dumb voter.

I hope this has been educational. :)

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