Hillary. Clinton. Scares. Me.

Protecting the Dream of Home Ownership.

You have to admit though, it's brilliant timing. With the markets down all over the place due to lenders that are going belly up and mortgages going de-bunk and sub-primes not having the funds to back their good loans ... her timing is really impeccable.

But as a person who just came out of a mortgage buying situation her plan is absolutely ludicrous. If you're a smaller government, personal responbility type voter.

So her plan is this ... say John and Jane Doe bought a house 3 years ago. They really fell in love with a 3,000 foot new construction. They make roughly $80,000 a year between them. The price of their new house is $300,000. On the back of the flier from ABC Lending, they read that they can get a mortgage to buy this house and only pay $1,000 a month! What a deal!

John and Jane Doe, still completely in love with their house and not willing to give it up ... ignore words like ARM (adjustable rate mortgage) and 3-year interest only. They only hear "if in 3 years you don't move ... you can just refinance."

So what happens in three years? Well, John and Jane have put absolutely nothing towards the principal of their home. They have essentially been renting their home from the bank. And rather than being fiscally responsible and socking away the cash that they were advised to "save" ... they have no savings. And now they have to refinance.

Trouble is, refinancing gets them a rate of 7.5 (or worse) and the actual cost of their beloved home is $3,000 a month. Way, way too much. They can't afford their home. They miss payments. They go into foreclosure.

Now ... under Hillary's plan there would be $1B in money set aside by the government to help the Doe's keep their home.

Help Reduce Foreclosures:
Establish a $1 billion fund to assist state programs that help at-risk borrowers avoid foreclosure. Hillary will establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure. Some state programs help borrowers make the single payment necessary to become current on their loans; others help borrowers renegotiate their loan terms, or simply provide financial counseling. These foreclosure mitigation efforts are more important than ever right now. Federal assistance for state programs that assist at-risk borrowers supplements Hillary's call earlier in the year for "foreclosure timeout." At-risk borrowers and lenders should be encouraged to work out alternatives to foreclosure.

Expand Fannie Mae's and Freddie Mac's Foreclosure Prevention Efforts. Hillary would expand the goals of Fannie and Freddie, the government sponsored enterprises (GSEs) that help stabilize the mortgage markets, to include helping a larger number of at-risk homeowners avoid foreclosure. This would be consistent with Fannie's and Freddie's existing goals that promote home ownership. The GSEs already help mitigate foreclosures by enabling some borrowers to swap into less risky, lower-cost loans. Fannie also helps homeowners arrange payment forbearance, financial counseling, and loan restructurings. Hillary will expand those initiatives to make foreclosure mitigation a greater priority.

At first glance, it seems innocuous enough. But the italic portion (highlighted by me) ... for most people that got in over their heads, one payment isn't going to help put them back on track.

Her plan to force mortgage brokers to disclose insurance and tax costs ... Texas already has that law. I can't remember what it's called. But our mortgage broker had to disclose that to us. And frankly we knew enough to ask and we had a really good realtor. They were very straight forward with us, our payment is exactly what we thought it would be and our closing costs were actually $200 less than what they told us to anticipate. (Our lender was really proud of that.)

The problem is ... people are stupid. I was. I was really stupid. It took me talking to the lender guy about 4 times (in person) before we learned enough to even know what to look for on the internet and what questions to ask. That guy earned his commission, I tell you. But I don't think that just because people are stupid, the government should step in and save the day. I also don't think that just because people make one bad choice their financial future should be ruined. But I don't think $2B in earmarks is going to help solve anything. Not for the individuals who made bad choices. It may help Fannie Mae ... but won't help John and Jane.

I don't think Hillary really thinks it will help that much either.

The question you have to ask yourself is, are you willing to pay more in taxes because lenders gave loans to people who really didn't qualify? Are you willing to pay more in taxes because individual buyers took large risks without setting up safety nets?

It's not like paying more taxes for roads or for better schools or for a new firehouse, this is paying for another individuals mistake. This is paying for another banks mistake.

There's a site that talks about Hillary's plan ... I'm not linking to it because it's title has a swear word in it. But he agrees with me (or I agree with him?) that bad loan / buying practices should not be rewarded and only those who put 10% down or who did a complete finance with a 10, 20, or 30 year fixed should be eligible for assistance.

But no such trigger exists in Hillary's current plan.

And Hillary's website lists lots of personal stories ... most of which I read and go ... okay but this bad choice and this bad choice and this bad choice led you to your current problem. These things didn't just HAPPEN to you ... you made them happen by choice a, b, and c.

Another thing that swear happy guy says is that we don't need Hillary's plan because the market is already correcting the issue. Which is true ... subprime buyers can't get loans any more because the banks can't make money on them. So the solution is already in the water. Hillary is just trying to capitolize on the current situation.

Here's another article from a non-swear happy person. It says the same stuff without bad language.

My advice to all home buyers is this: if you are anal and thorough about nothing else in your life ... be really, really anal and thorough about buying a house.