Tuesday, March 3, 2009 | 2:04 a.m.
Do some people really believe that people supporting families would “walk away” from their TV set, automobile, home or small business simply because they realize they owe more than the item’s estimated market value? My answer is a firm no.
Would lengthening the mortgage term or adding the burden of a business-saving line of credit to the loan change this attitude? Again, no. Owners may even have anticipated a temporary drop in value from first use or start-up. People are losing these possessions only if they have lost the ability to make timely payments on loans.
Why, then, isn’t the bailout program money directed toward helping those in need make their payments? Buyout attempts to restructure overpriced mortgages have proven a failure partly because foreclosures are happening faster than they can be swept up.
Present defaulters are substantial citizens who no longer have anticipated income and therefore cannot continue making payments. Earlier failures may have stemmed from greed and lies encouraging over-leveraging of assets, with borrowers lacking any capability of making the demanding payments; but most people entered into these credit arrangements believing they could make required payments on time.
Some way must be found to restart the flow of loan payments, returning money to lenders, releasing venture capital into investments (resulting in jobs) and finally letting the overpriced properties find their own level of value.
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