Video: Bail me out, Obama!

posted at 1:50 pm on February 23, 2009 by Ed Morrissey

Michelle has a clip from CNN that demonstrates the silliness of the mortgage-bailout efforts of the Obama administration. Minta Garcia and her family bought an $800,000 home that they could not afford, using speculative lending as a lever. The value of the house has dropped to $675,000, and now Garcia faces foreclosure. However, the coverage omits a critical piece of the puzzle:

JIM ACOSTA, CNN CORRESPONDENT (voice-over): School bus driver and mother of two, Minta Garcia got the letter every homeowner dreads, your mortgage is in jeopardy of going into foreclosure.

MINTA GARCIA, DISTRESSED HOMEOWNER: We’re going to be losing the house. We’re going to lose everything.

ACOSTA (on camera): You think you’re going to lose everything?


ACOSTA (voice-over): Her message to the president…

GARCIA: Stop with the foreclosure.

ACOSTA (on camera): Stop the foreclosures?

GARCIA: Yes. Right now, because if people are losing houses, losing jobs, what are we going to do? …

ACOSTA: Like countless other Americans, Garcia admits she and her husband bought more house than they could afford, but she says the lender made the purchase all too easy. Now her mortgage is worth more than her house.

(on camera): How much was the house when you bought it?

GARCIA: Eight hundred.

ACOSTA: Eight hundred thousand dollars?. And how much is the house worth?

GARCIA: Right now, it’s like $675,000 on the market.

I guess the first question I’d ask is what made a bus driver believe she could afford an $800,000 house. Unless she makes six figures and had a hell of a down payment, the figures themselves seem so far out of whack that one has to wonder how it occurred at all. The lenders certainly deserve blame here, too, but no one forced Minta Garcia into that house and that mortgage.

What has happened in too many cases is that homeowners took a speculative risk on their house, either buying a home they couldn’t afford or emptying the equity in their existing home in anticipation of above-inflation value growth. Once the market reinflated the equity, the owners could refinance with better terms on a fixed-rate mortgage and have a payment they could (barely) afford. Unfortunately, this Ponzi scheme imploded when housing at first failed to increase in value and then began to drop.

In other words, the homeowners took a risk based on market appreciation. Those who completed their refinancing before 2007 managed to avoid losses. Others took a risk and lost out. Let’s remember that Garcia’s home value only matters if she tries to sell the property. Lenders do not foreclose just because the valuation drops; they foreclose when borrowers can’t make the payments. Being under water on a mortgage doesn’t mean one can’t make payments as long as the owner bought a home and a mortgage he or she could afford.

Garcia didn’t do that, and now she wants taxpayers to indemnify her for taking a loss on a risk she assumed on her own. The government doesn’t exist to remove risk from speculative investments, and to the extent that they do so, they only ensure that more speculation rather than less takes place in the future.

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getalife on February 23, 2009 at 8:54 PM

You are welcomed to help the lady with her eight hundred thousand dollar mortgage.

Johan Klaus on February 23, 2009 at 11:47 PM

O’Donnell: Well it doesn’t sound clear that the republican party knows exactly what to do quite frankly since there’s this disagreement between the government on what to do. I want to read from the Politico, which has an interesting story today which says: Republicans are hatching a political comeback by dusting off a strategic playbook written nearly two decades ago.

While the Democratic Party playbook goes back to, what, 1932? Is there no one in that party capable of any fresh thought?

ddrintn on February 24, 2009 at 12:11 AM

The Democrats may be closer to 1933 than 1932. When a certain government started providing brown shirts to everyone and expecting them to act like good little Germans. Obambi’s getting his banking ideas from Hugo Chavez and Eric Holder already beating the drum of what ethnicity he wants to blame. General Motors becomes People’s Car. Citibank becomes People’s Bank. Fahrenheit 451 becomes more than a book by Ray Bradbury.

viking01 on February 24, 2009 at 12:43 AM

When hearing all of this from “adults”, I can imagine what they have taught their children.

hillbilly on February 23, 2009 at 6:31 PM

A true story. My wife and I had dinner Sunday night with a school teacher who told us about one of her Jr. High students. She asked him what he wanted to do when he grew up. “I wanna draw”, he said. “You mean you want to be an artist?” “Naw,” he said, “I wanna draw, like my Mom. She draws welfare and she draws SSI, and some other stuff. That’s what I wanna do.”

I figure we have four years to get this boat started turning around, or we’re going over the falls. It may take us another 20 or 30 years before we go over completely, but I really think time is running before it becomes inevitable. Then I look at who the skipper is, and — oh well.

RegularJoe on February 24, 2009 at 7:53 AM

“I wanna draw”, he said. “You mean you want to be an artist?” “Naw,” he said, “I wanna draw, like my Mom. She draws welfare and she draws SSI, and some other stuff. That’s what I wanna do.”
RegularJoe on February 24, 2009 at 7:53 AM

It’s an artform! My sister is a teacher in the Alabama school system and administers the IQ testing. She tells stories every year about Moms coming into her office cussing at her because their kid didn’t score below 70. These sorry excuses for parents want the kids to be labled stupid so they can get paid the “crazychecks”. It used to be about $400 per month per child. If they put half as much brain power into fending for themselves as they do into trying to steal from me (through taking my tax dollars) they’d be doing just fine. We sat down one day and ran some numbers, adding up welfare, food stamps, heating subsidies, crazy checks, etc. This was at least ten years ago and the amount was close to $30,000 per year. It would almost have to be higher now… why am I working???

pebbles on February 24, 2009 at 8:43 AM

pebbles on February 24, 2009 at 8:43 AM

It’s so sad that so many people think of kids as a way to supplement their income. Instead of growing up with dreams and ambitions, they learn the easy way out. Society loses out by getting, instead of a new generation of productive and talented individuals, a generation of deadbeats waiting for a government handout. It’s our own fault for creating more and more entitlement programs instead of incentives for success.

scalleywag on February 24, 2009 at 9:05 AM

The government doesn’t exist to remove risk from speculative investments, and to the extent that they do so, they only ensure that more speculation rather than less takes place in the future.

…say it again…louder!

…the government has, as its historical mandate, the mission of providing for the common defense and promoting the general welfare…we’ve reversed the wording here…the government, particularly with the Democrats in the ascendent, seem willing to promote the common defense — so long as fashionably radical national enemies aren’t inconvenienced — and are all in a rush to provide, provide, provide when folks like this bus driver “grab at the American dream”…which today seems to be a dream like those dreams I used to have as a younger man, with me slow dancing with Pia Zadora…only involving real estate….

…but, under socialism, the mandate du jour, everybody should get everything they want, right? That’s socialism, isn’t it? Or…is socialism rather that everybody gets what the leadership — in Lenin’s case, the vanguard of the proletariat — thinks we deserve.


Puritan1648 on February 24, 2009 at 2:38 PM

What about those who were responsible enough to sacrifice for years, and now own their homes outright? We sacrificed much for 25 years and finally were able to buy a whopping 912 sqft house and have no mortgage. We always either rented or bought cheap homes and most of the time we could not even deduct the interest on our taxes because it did not add up enough to be more than the standard deduction. Where is the help for responsible people

VoiceOfTruth on February 24, 2009 at 3:09 PM

I used to make over 6 figures till I got laid off last month and no way could I have afforded or even thought of buying an $800K house. How idotic.

I’ll be looking for Obama to bail me out soon on my $380K house that I put 20% down on and never missed a payment for 8 years, let alone been late.

RobertJ78704 on February 24, 2009 at 5:20 PM

SHE is one of the people who helped to inflate the real estate market and now she’s crying victim…Ridiculous.
Meanwhile, Barney Fwank and Chris Countrywide Dodd should be in jail.

Christine on February 24, 2009 at 6:12 PM

What she doesn’t tell us is that she owned at least 3 properties from 2006 to 2008. Poor woman.

She has owned a condo at 6001 Arlington #721, Falls Church, VA since 1999.

She purchased 3438 Charles Street, Falls Church, VA on 1/05/05 for $510,000 and sold it on 6/10/08 for $429,000.

Her current home – 1920 N. Dinwiddie Street, Arlington, Va -was purchased with her husband (Luis Guillermo Flores) on 11/16/06 for $800,000.

Looks like they just got greedy. Are these the poor people that we’re supposed to help????

sherryande on February 24, 2009 at 8:39 PM

Bail me out too.
Hell, we’re all broke, just at differant levels.

johnnyU on February 24, 2009 at 10:37 PM

I need a bailout.

I must play WoW. And Empire Total War. And… Anyway, Obama, bail me out, I need those games.

Penguin on February 25, 2009 at 2:54 AM