Bail Out Waste

We all know that times are hard and the government has had to bailout several industries. Most of the mortgage crisis has been blamed on predatory lending and unsound loans. Let me tell you true story about a prime example of why we are in this crisis.

A house was built on a nice 5-acre lot and was listed for sale at a nice price. A family member of the builder wanted the house – even though they didn’t have enough income to justify the loan, but Freddie Mac, said not to worry, they’d give them the money anyway. Now it’s important to know that this house was selling at a premium price.

The new owner was struggling to pay bills, buy groceries, and still afford the mortgage. Eventually, he lost the battle and the house was foreclosed on. According to local laws, the house was sold to the highest bidder at the courthouse auction. Now there were some people there who wanted the house and could afford the house, but the mortgage company outbid them and bought the house back. After sitting on the house – well, they were supposed securing the house and winterizing it – the mortgage company listed it at $350,000. Some of the people who had attended the auction made some offers – more in line with what the market currently was – but they were rejected.

Sometime before Christmas a water line broke in the house and water flooded the house for 4 to 6 weeks before it was discovered. Ceilings fell, hardwood floors were ruined beyond repair, carpet soaked and subflooring ruined. Cherry kitchen cabinets destroyed, as well as the bathroom cabinets. Walls were water-soaked up four feet. Of course the water was shut off, but the pipe was not repaired - after all the house is sold "as is". Now we all know that when you add water and heat you get mold, but the Freddie Mac represenative has turned the heat on to"dry the house out." One potential buyer estimated the cost to repair and made an offer to purchase the house for less than half of what it was originally listed for. Nope, Freddie Mac held firm at $350,000.

So, now it’s getting warm, the mold is starting to grow and soon this house will be in such bad shape that it will have to be torn down. And we, the taxpayers, will be out the $300,000 plus that Freddie Mac has in it. Of course, they could have sold it several times for between $300,000 and $325,000. And, even after the flood, they still could have sold it for something. But now – if they ever let it go – it will be for a lot price because the house won’t be worth anything.

And this is what we “bailed out.”