End the Days of Home Slavery

Though this might be viewed as a progressive and magnanimous goal by some, it could also be interpreted as one of the most naïve or devious decisions of all time by our government. By eliminating the 28-36 mortgage rule many well intentioned homeowners have become prisoners and slaves to their homes. And for an increasingly large number of homeowners the elimination of the 28-36 mortgage rule has led to bankruptcy and destroyed families.

Over the past few years we have watched home bankruptcies soar, and trillions of tax dollars spent by our government bailing out banks and other financial institutions tied to the residential real estate industry. The rapid rise and collapse of the housing market could have been avoided if the mortgage lending disciplines of the past, such as the 28-36 mortgage rule had not been tossed out. Eliminating the 28-36 mortgage rule not only allowed people to buy homes that shouldn’t have, it also allowed homeowners to buy more than they could afford.

What is even more mind blowing, is that the process goes on today unabated. Turn on any home real estate TV show today and you will see first time 20 something home buyers specifying kitchen granite countertops and bathroom Jacuzzi tubs for their housing requirements. Even more outrageous is the fact that frequently they have no money to put down on the homes. Where are the days when first time homebuyers bought the “starter home” or unfinished home? Even in the government’s VA loan program, they are still offering $300K jumbo loans with no money down for first time homeowners that are qualified veterans.

It is obvious the banking industry and government won’t clean up the housing market on their own. Printing money to effectively reward the loan mortgage industry executives will only perpetuate the housing problem. Apparently the government still thinks it’s just too “Mr. Potter” like to reinstitute rules such as the 28-36 mortgage rule and actually require deposits when buying homes. As current and future homeowners, however, we can each do something about it. We can be more responsible for ourselves in setting our own financial housing cost limits and by following the mortgage rules of the past. By doing so, we can accomplish multiple things. We can end the days of home slavery, where we can have some discretionary income left over in our paychecks to enjoy the other things in life besides “owning” a home.

We can reduce the family stresses that come with high financial indebtedness.  And finally, we can demonstrate personal and civic responsibility to our government by living within our means again. Maybe by setting an example, we can begin to change the way our government thinks and operates.