John Feehery: Speaking Engagements

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The Housing Shank

Posted on May 17, 2010


“Every golf shot makes somebody happy."

I thought about that old sport adage when driving in this morning and listening to a radio commercial about foreclosures.  This ad wasn’t about how to avoid foreclosure.  It was about how to take advantage of somebody else’s foreclosure.

Foreclosures are an unhappy reality in today’s struggling economy.  It is an unhappy circumstance for those who can’t afford their mortgage payments and are getting kicked out of their house.

It is an unhappy circumstance for the bank which has to kick the non-payers out of the house and then take a bath on the remainder of the loan, which won’t be paid off.

And it is an unhappy circumstance for the neighbors, who see a foreclosed property and immediately assume that the neighborhood is going to the dogs.

But it is not an unhappy circumstance for those who are looking for a house bargain.

And who would that be?

A new family who couldn’t buy a house in the overheated market five years ago.   A new retiree who is looking to downsize.  An expanding family that needs more space for all the kids.

The free market works in mysterious ways.  Those who are careful with their money, cautious with debt, and responsible with their spending decisions tend to do pretty well.  They plan for the future and they can take advantage of opportunities when they come their way.

Those who are irresponsible with their spending, not careful with their money, and free-wheeling with their personal debt can get themselves in big trouble.

Foreclosure is an important way to keep people honest and careful with their spending decisions.

When the government makes it easier for people to stay in their houses when they can’t afford them, that may seem compassionate, but it is really not.  By distorting the free market, the government can create a false bottom in the market place, and it can keep people out of the housing market who would be able to afford a new house if the market was allowed to work.

Foreclosure is a personal tragedy for thousands of Americans.  Some who lost their homes because they lost their jobs have been victimized doubly by the sinking economy.

But getting too much government interference in the housing market is a sure way to promote more uncertainty and confusion among buyers and sellers.

In the housing market, one family’s loss can be another family’s gain, just like one golfer’s shank can make another golfer smile

It’s not necessarily a happy reality, but it is a reality nonetheless.