Friday, February 10, 2012

As California Receives $18 Billion Mortgage Settlement, Responsible Renters Buy Overpriced Homes and Apply for Government Relief

SAN NARCISO, Calif. (Bennington Vale Evening Transcript) -- Attorney General Kamala Harris issued a statement Thursday announcing that California will receive up to $18 billion in relief benefits under a federal-state mortgage settlement. Of that money, $12 billion will be allocated to cutting debt for the state's distressed homeowners and to assist with short sales, a more favorable alternative to foreclosure proceedings. The decision comes on the heels of rules introduced in October 2011 by the Federal Housing Finance Agency to help underwater homeowners refinance their mortgages at lower rates through the federal Home Affordable Refinance Program (HARP). "If you view the situation as a microcosm," said Len Waybill, chief economist for San Narciso's Peter Pinguid Society, "these homeowners are now no different than AIG or Lehman Brothers. They've become institutions so large and interconnected to other financial players that their failures would be disastrous to the economy." As a result, millions of responsible Californians, who opted to rent instead of signing risky subprime loans during an outrageously overpriced market, are now scrambling to bury themselves in as much debt as possible in hopes of becoming "too big to fail."

Waybill explained that "this happened because a lot of people who probably should have known better made some irresponsible decisions, floated obligations they couldn't meet, and bought into something way over their heads. As their credit ratings got downgraded to dangerously low levels, they lost the power to borrow more. In their defense, they were likely duped by the overly complicated and abstruse nature of the deals. Homeowners, however, have less of an excuse."

Frasier Nesturn of Santa Calcetines willingly admits that he is prepared to shed a life of fiscal responsibility, hard work, and sound decision making to buy a five-bedroom, three-car garage home in the middle of the Bennington Vale Country Club.

"It's ridiculously lavish," Nesturn beamed. "Way outside my means. Nothing but waste and excess. And, I'm a single guy. I probably won't use two-thirds of this place. But with a price tag over seven digits, it made the most sense. By the time I involve realtors, lenders, movers, landscapers, interior decorators, insurance companies, and the local HOA, I will have created such an explosive chain of dependent economic interests that my failure could take down whole companies. The way I see it, I'll be underwater on day one. I should be defaulting on my mortgage within a couple of months, tops."

With a tone of regret, Nesturn described his life to this point as stable and debt-free, but not without sacrifices.

"Security has always been important to me," he said. "My father disliked purchasing things on credit, and he hated entitlement. I'm comfortable, but I'm also middle class, so I have to work my ass off and pay a larger share of taxes than most people outside my class. Still, I didn't want the stress of drowning in debt. When I saw what was happening with the housing market, I decided to keep renting. Some of my friends chose to buy, though. I thought it was stupid because they make a hell of a lot less than I do, but I'm the guy living in a one-bedroom apartment. If I don't pay rent, the sheriff will come to evict me. But if I don't pay my mortgage, the government will take care of it. Yeah, I feel like I should be seeing some reward for all my hard work."

Nesturn, as many others, knows that his tax dollars funded not only the TARP bailouts but also this mortgage settlement. "If I'm paying to save some idiot from foreclosure, he should be helping me pay for my house too," Nesturn said.

Nesturn moves into his new home on Saturday. He says he never would have been able to afford a property like this on his reasonable salary, but believes that with the government assistance, he should be able to keep the house for a long time despite his inability to make regular payments.

"Who says the dream of home ownership is dead?" he laughed.

(c) 2012. See disclaimers.