It's not fair!

This is a wonderful post and raises very good questions.

Unfortunately, it was beyond the level of conversation enjoyed by most of the readers of this blog.

Merry Christmas, Rona, and thanks for a wonderful year of blog posts. You and the rest of the Globe real estate blog team have done a wonderful job and I have enjoyed each and every post, even those that I disagreed with (vehemently!).

"Anyone who makes median income should be able to buy a house, but they can't"

That is an interesting premise... we already have more than 60% home ownership, so, by definition, the median income does own a home. I believe a better statement is that “Anyone should be able to find clean, safe and affordable housing”.

As for you three type of “Fairness”

Equity: everyone should have good housing available to them, this does not mean everyone should own a home, renting is an option.

Mercy: If you cannot afford good housing there are options available to you, section 8 vouchers for example.

Justice: Everyone is treated fairly, and you treat everyone fairly. That means brokers do not tell you to put a higher income on your application, and if they do, you tell them you will not sign.

Let’s look at your questions…
“Is it fair that some people got rich in the real estate run-up at the same time others lost their shirts?”
Well, if you got “rich” or “lost your shirt” you were investing in the real estate market not looking for a home. Same as the people in the dot.com bubble. How many people that lost their shirt in real estate were “fair” to the people lending them money? Did they state an income that was untrue?

“Should we bail out those who have been economically hurt, both people and corporations?”
Personally I do not believe people or corporations should be bailed out.

There will always be people who purchased a house and cannot continue to make payment due to health, job loss or other issues. Unfortunately, these people can go thru bankruptcy/foreclosure and will lose their homes, but that has always been true. Don’t forget, if you have equity in the home you are allowed to keep it thru the homestead exemption.

It seems that a lot of the questions revolve around people who are in trouble with their mortgage. I believe you have to look at why they are in trouble, if their financial situation is the same as when they bought the house, they should be fine… right? Nobody would ever accept a loan they could not repay. If they did take out a loan they could not repay the house will be foreclosed on. Is this fair? The banks do not want the house; they want the money they lent. Was it fair that you took out a loan you could not afford?

When I purchased my first place in 1990 I had to have 20% down, they required 2 years of tax returns and they called my employer two weeks before my closing to confirm my salary and that I still had the job. They knew I could/would repay my loan.

“People who are shut out of the housing market are mad.”
They should wait, prices are coming down and eventually, if they continue to save, they will be able to purchase a house with 20% down and at a decent price. If they are unable to save anything every month they will probably never be able to purchase. I believe that housing prices will stabilize at a point where if you put 20% down and take out a qualifying loan, your monthly PITI payment will equal the monthly rent you would receive if you decided to rent your property.

“People who got in over their heads are mad.”
Why, were they cheated? Treated unfairly? My guess is they got into a property that they could never afford and were hoping that the property would appreciate so they could sell and make a killing. They invested in something and lost.

I believe the only thing that should be done is congress should pass a law stating that that any new mortgages will have to be a non-recourse loan to qualify for the mortgage interest deduction. That way banks would not lend money if they were not confident they would get their money. And if you did take out a loan and felt you are in over your head and cannot sell you could always return your keys to the bank.