Responsibility versus Entitlement

I submit for your consideration the following from a Moneynews article today:

“One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months and even eight months,” said Comptroller of the Currency John C. Dugan.

“This trend of increasing delinquencies underscores the need to understand why these modifications have not been more sustainable.”

I can explain precisely why these modifications have not helped. Many of these mortgages were initially given to people who should not have qualified for the loans. In many cases, they were also used not to allow a working-class worker to move into a small suburban starter home, but to let people who have spent their entire lives expecting the government to provide for them stretch their budget to the limit to build or buy a "McMansion" on abandoned farmland. These are not people who are genuinely struggling to put proper clothing on their children and milk in the fridge. These are people who are "struggling" to keep up with their brand new car payments, their cell phone bills, and still have enough money left over to get their manicures.

I did not watch a lot of the Obama commercial that focused in on "poor families who need help" (from the Democrats, naturally), but I saw enough to remember the woman who said that her kids drank soda because she could not afford milk. I had two immediate thoughts. One was that if her kids drank water like water instead of drinking soda like water, no doubt she could afford a little milk for them. Maybe not a lot, but a little milk and a lot of water is healthier than a lot of soda. The other thing I noticed was her finely manicured nail job, which I asked around about and discovered that $40/month was a very low estimate for upkeep on that kind of beauty product. $40/month will buy a lot of milk... easily two gallons a week. That would give four children a little over a cup of milk each day right there.

My point? These are people who are used to expecting things. They likely got given what they wanted by their parents. They grew up watching commercials that told them what they needed to want. From allowances given for doing nothing to college credit cards gone sky-high, when have they ever learned that they can't have what they "must have"? What kind of standard of living do you have, anyways, if you can't have your hair the color you want it? And if they can't afford it, that's someone else's problem.

So why should they start paying now that they have a more reasonable loan? They've just learned that if they cry enough, banks will do everything possible to accomodate them, to ensure that they aren't (horrors) turned out of their five-bedroom lake-view domiciles. If they continue to cry and don't bother to pay, no doubt in the end they can get what they want for free, especially with a political party in place who doesn't seem to understand that the government does not create wealth... it just takes wealth away from other people.

In the midst of all this nonsense, one family acquired a modest raised ranch on a fixed-rate FHA and have held onto it with all they've got, forgoing cell phones for electricity, forgoing car loans for student loans, forgoing nail jobs and hair jobs for milk and potatoes. They have never missed a payment. It's that kind of attitude, responsibility rather than entitlement, that will bring down foreclosures of modified loans.