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Bailouts of homeowners would be irresponsible

I believe that the last few weeks have been pretty outrageous in the business world, especially with the talks about bailing out Bear Stearns (BSC: 6.18 0.00%). Big businesses shouldn’t get the safety net of federal intervention. You took a gamble, and you lost. That’s just tough in the world of business.

However, there are others that believe that the homeowners (whom are the victims in the whole subprime meltdown) are the ones that should be bailed out. On some level, I agree. There was no reason for mortgage brokers to push ARMs (adjustable rate mortgages) onto those homeowners.

But on another level, I can’t in good conscious actually think that homeowners should be bailed out. Let’s face it. This is no different than if you racked up a large credit card bill and then wanted out because you didn’t know that the percentage was so high that you couldn’t pay. Several questions come to mind when this happens:

• Did you have to buy such a large house?
  
• Did you not understand what adjustable rate meant?
  
• Why didn’t you do the homework on how mortgages worked?
  
• What makes you think you can refinance, when in essence, you’re asking for more credit when you already have a load of debt?

There really isn’t any good reason to even go with an ARM at all unless you’re looking to pay it off, and pay it off quick. And that’s assuming you found a mortgage that had no penalties attached to it.

I hate to say it, but I personally just don’t believe that we should bailout homeowners whom didn’t shop around and/or ask their realtors if they themselves had fixed mortgages or not. In my experience, the most common mortgage seems to be the fixed thirty year. There’s a good reason why it’s the most common.

Yes, homeowners were the victims of predatory mortgage brokers. But we’re also all adults. It’s time people started acting like it.

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The opinion above is that of the author and does not represent the opinions of 888 Society.
Photo Credit: (gruntzooki)

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