mortgage

Ants helping grasshoppers

Tuesday, July 21
Written 10:30 a.m. EDT

SUBSIDIZING THE GRASSHOPPER: Occasionally I get e-mails from readers who are incensed that the government is encouraging (or forcing) lenders to give breaks to homeowners who can no longer afford their monthly payments. The feds subsidize (or bribe) mortgage servicers and homeowners with cash payments for successful modifications.

In coming weeks, we'll dive into the murky definition of "successful modifications."

Anyway, I don't have tons of sympathy for the view that ants should do nothing to help the grasshoppers when it comes to mortgage modifications. But I do have a little bit of sympathy, because I'm slightly annoyed by the "Cash for clunkers" program, which, in my scrambled mind, is analogous to the Home Affordable Modification program.

Under "Cash for clunkers," you'll be able to get a government grant of $3,500 or $4,500 if you trade a gas guzzler for a new, more efficient car. It's probably good policy from the standpoint that the nation will waste less money on fuel and will reduce pollution. But it's just slightly unfair to me and my wife, who own fuel-efficient vehicles.

Why do we own a fuel-sipping diesel Jetta and a relatively efficient Toyota Sienna? Because when we bought the vehicles years ago, we knew that fuel prices were bound to rise someday. We didn't want to join the feckless masses of people who would be caught by surprise by something so predictable as $3 or $4 diesel and gasoline.

Maybe it helps that I turned 16 the summer of 1979, when there were long lines at the gas pump and we had odd-even rationing days, depending on license plate number. That sticks with you.

The bottom line is that my family is subsidizing, with our tax dollars, the vehicle purchases of people who bought gas guzzlers in years past, heedless of the entirely foreseeable costs. Just as we're subsidizing, with our tax dollars, the mortgage modifications of people who bought more house than they could afford, with mortgages that they didn't understand.

We're all in this together, darn it. Don't always like it. But maybe it's for the better.

MAKING A BUNDLE: If you use Google Reader to follow your RSS feeds, check out this bundle of feeds that I monitor all day. You can subscribe to the bundle and read some of the same stuff I read as I keep track of developments in the mortgage world.

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