Earth-Shatteringly Obvious Fact Stumps Liberals

From Reuters:

Recent data suggests that many borrowers who received help with mortgage modifications earlier this year tended to re-default on their payments, a top U.S. banking regulator said on Monday.

"The results, I confess, were somewhat surprising, and not in a good way," said John Dugan, head of the U.S. Office of the Comptroller of the Currency, in prepared remarks for a U.S. housing forum.

"Put simply, it shows that over half of mortgage modifications seemed not to be working after six months," he said.

Dugan said based on data collected from some of the biggest U.S. institutions, like Bank of America, Citibank and JPMorgan Chase, home foreclosure starts fell 2.6 percent in the three months ended in September.

However, data which is to be issued by the OCC and the Office of Thrift Supervision (OTS) next week could throw cold water on a push by some U.S. policymakers for loan modifications as the key remedy for the ailing U.S. financial and economic crisis.

Dugan said recent data showed that after three months, nearly 36 percent of borrowers who received restructured mortgages in the first quarter re-defaulted.

The rate of re-default jumped to about 53 percent after six months and 58 percent after eight months, Dugan said, without providing an explanation for the trend.

Seriously?? They don't get this??

I have no doubt that most of you reading this know exactly why those people re-defaulted, but just for the sake of thoroughness, let's spell it out.

Step one: we have a borrower who defaults on their mortgage (for whatever reason)
Step two: the government bails them out of that mortgage, changing the terms to something more manageable
Step three: the borrower figures out that there are no negative consequences for defaulting on the mortgage, so they do it again

Everybody now: DUH!!!

Anyone with a quarter of a working brain and a dash of common sense understands this. Simply waving a magical wand to bail out people who are irresponsible or make poor decisions rarely fixes the root problem. Oh, sure, it may get them out of the current scrape, but the underlying problem that got them into the scrape in the first place -- the risky behavior or poor decision making -- still remains. Thus, they quickly find themselves right back in the same ol' scrape again a short time later.

What do you bet that the number of re-defaulters goes even higher after 12 months?

This is why bailouts should never be done. They don't truly help the supposed beneficiary, and they certainly penalize those who fund them. It's a lose-lose scenario every time.

Remember the old saying? Give a man a fish, and you feed him for a day; teach a man to fish, and you feed him for a lifetime. It's cliche, but it's also 100% true. Bailing people out, whether it's the auto industry or a single mortgage defaulter, is simply giving a man a fish. Making those people learn from their mistakes via the natural consequences of those mistakes is teaching them to fish.

Now, do I think we should leave those people stranded high and dry? No, of course not. Some homes will be lost. There are plenty of temporary government services available for legitimate needs. I've used them myself in the past.

But, many of those homes that will be lost should never have been obtained in the first place. The people who got them were overreaching on their homes, getting mortgages they should never have been approved for. Some did it deliberately, and some were suckered by shady lenders; either way, they were a mistake, and consequences resulted. Enacting a bailout removes those consequences, thus removing the opportunity to learn from their mistakes.

The sooner those mistakes are corrected, the less painful it will be. Apartments are perfectly viable places to live, and there's absolutely no shame in renting or living in a smaller house while looking to the future of a larger one.

The point is that the loss of a house isn't the end of a person's or family's existence. These things can be -- and are -- overcome by millions of Americans every day, so it can be done by these people begging for a bailout, too. They just don't want to experience the pain of going through it. Well, guess what? Life isn't always fair, and pain can sometimes be the best teacher.

We'd all be better off if these people were taught how to fish. Oh, and if we stop listening to idiot liberals who lack the ability to see blindingly obvious truths like this one.

There's my two cents.