Stimulus stupidity

Jeremy recently had a run in with what is wrong with the governments efforts to bail out banks.  He closed on a condo that was purchased from a “distressed” seller.  However in the process of the closing he got some numbers that made my stomach turn.

The seller originally bought the condo for around 100k prior to the real estate boom.  At the height of the boom she thought she would take advantage of her sky high property appraisal and refinanced the condo for 300K!!!!!!  She basically wanted free money, thinking whenever she sold the condo for 300K plus she would be fine.

Well we all know what happened, her condo value plummeted and she was left holding a 300K tab for her property that was now worth less than third of that.  Well of course like many people today, the former owner did not want to take responsibility for her ill advised money grab.  She instead stopped paying on the property.

So not only did she stiff the bank on her loan, she was actually rewarded for her behavior at closing, receiving a $20K payout from that same bank for selling the property.  This is so wrong on so many levels.

The government basically is rewarding the dead beet owner for ridiculously over financing the property and the bank for being stupid enough to do it.  Who gets to pay the bill for that irresponsibility?  You and I do of course.

The question is what do you do about it?  Every single government program is riddled with scum bags that are just working the system, regardless of their true need for the benefit.  If you reward bad behavior, you encourage it.  However there are also the millions that legitimately need the assistance and whom are not looking to defraud anyone.  You can’t ignore their needs either.

Hell I am pretty sure the exact same situation occurred next door with our old neighbor.  I know he made no payments on his home for at least a year before it was eventually short sold.  I would not be surprised if he got a little bonus check from the bank as well.