tag:blogger.com,1999:blog-3574536238757003081.post1606207240200132641..comments2022-11-05T02:51:26.210-05:00Comments on Christian Economics: Debt ForgivenessAlex Binderhttp://www.blogger.com/profile/07081761484559249129noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3574536238757003081.post-54791883662411372132011-10-21T11:26:47.107-05:002011-10-21T11:26:47.107-05:00Hmm. Very interesting. So much more research nee...Hmm. Very interesting. So much more research needs to be done. As far as I know predatory lending is a crime so I think that those who were responsible should be arrested and their victims compensated. And for compensation they should be able to renegotiate their loan for the true value of their house plus a discount. Victims they might be but that shouldn't mean a free house.<br /><br />As for OWS I am surprised to see the most of the complaints are not for home loans but for student debt. I think student debt is in the same bubble as housing was. For years presidents have been saying that if a student wants to go to college they should be able to. Now students are up to their eyeballs in loans and credit cards. They were given easy loans with no way to pay it back. Yes they would get a degree, but that degree may be in Gender studies or something that is totally useless. And because of bankruptcy laws they are unable to get out. Does all of this sound familiar? I think this is also the failure of modern economics. It looks at things as a science instead of sociology. It fails to predict that people will work against their own future interest for temporary comfort. Students are borrowing money to get a degree that has no market value. To qualify for a student loans perhaps students should have to show their past grades and that their degree can be used to get a salary that will be able to pay it back. I should know, I ended up with a English Lit degree after 5 years and $36,000 debt. I could have gone back to become a teacher, but some can't do that with their degree. Luckily my diocese paid off my debt when I joined the priesthood. Or I might be down there begging for some debt forgiveness.Fr. Damien Merrinhttps://www.blogger.com/profile/17821062504905546925noreply@blogger.comtag:blogger.com,1999:blog-3574536238757003081.post-40629971713707048802011-10-20T12:39:35.640-05:002011-10-20T12:39:35.640-05:00It seems to me that the question here is very much...It seems to me that the question here is very much in the details, not in the standard meta narrative.<br /><br />You say:<br /><i>I am in favor of debt forgiveness because of the fraudulent way in which the loans were originally made. Much of the debt for housing taken on by home-buyers and offered by banks was simply fraudulent.</i><br /><br />I'm unclear that one could state that "much" of the housing debt out there is fraudulent, in part because in the current rhetorical climate I'm not sure what you mean specifically by "fraudulent". There was a relatively small number of cases where downright criminal mortgage brokers were getting people into loans that those people truly did not understand, and those mortgage brokers have generally be put out of business, and in some cases people sent to jail. But the number of in-trouble mortgages even now is relatively low. Looking around, it appears that the percentage of mortgages that are delinquent is under 1 in 10:<br /><br />http://www.housingwire.com/2011/02/17/mba-delinquency-rate-on-u-s-mortgages-drops-to-8-22-in-4q<br /><br />Indeed, the number seems to be hovering fairly close to the unemployment rate -- perhaps not a surprising coincidence. Further, the issue is highly concentrated in a few areas of the country where people had a pretty good idea that housing values were crazy high. (As an ex-Californian I think I can attest to this pretty clearly. In fact, I moved away from there because of housing values.)<br /><br />While some people were in fact the victims of fraud, most people at most were convinced that their houses were worth a bit more than they were -- and so although they can afford their high housing payments (short of losing a job or some such) it's now hard for them to sell their houses at the going market price if the bought with little equity or took equity out.<br /><br />Giving these people some relief on their mortgage balances may look attractive in one sense, but it would very clearly be a transfer of money from those people who were more conservative in their housing decisions to those who were more profligate -- and in the end I think that would probably be wildly unpopular (not to mention being bad for the economy) once people got down into details.Darwinhttps://www.blogger.com/profile/08572976822786862149noreply@blogger.com