It’s disappointing that when it comes to this Federal government, so often, we can tell whether that government of, for, and by the people is lying, by whether or not those same governmental lips are moving. In this world, for regular folks, we find that they typically have to work very hard for an extended period of time, just to get some small portion of the American dream, usually signified by owning their own home, and/or by owning other assets of value, signifying to themselves as well as to others, that they have achieved some degree of success in their life.
The thing about mortgages on homes, is that the payoff period on most of those home mortgages is thirty years; and a heck of a lot, good or bad, can certainty happen over those thirty years. For instance, on the bad side, a given person’s health might fail, or they might get laid off, or their income might be reduced, or some other unexpected and undesirable event may occur to them, which makes it thus difficult for them to keep current on their bill obligations, and seeing that a given person’s biggest debt obligation on a monthly basis is typically their home, then it is that home, that many a person, may be susceptible to becoming delinquent upon. One might think, in consideration, that people’s circumstances can change for better or for worse, that in general when bad economic times occur, that this government might want to step in, from time-to-time to help the common man. It isn’t as if, the government, never steps in and helps; but rather, more times than not, the government because it is often run or managed by elite people with considerable personal amounts of assets and connections – often find it to be more conducive for them to work out deals with corporate interests at the expense of the public.
In America, not every bank is going to remain solvent, and of which, the way some of these banks are run and managed, it is often just a question of time, before they become insolvent -- through being overleveraged, or not diversified enough, or in their inability to adjust with the times. Those banks, thus failing, in which they have some significant amount of exposure in mortgage loans, outstanding, of which a high percentage of these are delinquent or problematic, would seem to be the type of institution in which the government, might just come in, and thus come up with a solution which would be beneficial for that bank as well as the mortgagors. Regrettably, this government prefers often not to do that, but rather, prefers to engage other established banks, that are permitted to acquire a failing bank, and thereby to become responsible for the non-performing mortgage loans, through a program called loss-sharing. One might be excused, if they interpreted loss-sharing, to mean, something in which, each side risks something of substance, in order to gain something of worth, and if they so fail in doing so, the losses are subsequently then fairly shared. That would be a reasonable interpretation, but that isn’t how this loss-sharing program works in action; for rather, past history has demonstrated that the Federal Deposit Insurance Corporation (FDIC) seemingly defaults to absorbing a huge percentage of the loss by the structure of the deal, so done, and of which the delinquent home owners aren’t saved at all, but are often foreclosed upon by the new bank that has acquired the assets of the failing bank at not only a discounted price; but at a price that is good enough, that by now owning the home as an asset, permits that new bank to either flip the property to thereby make money, that way, or to engage with an enterprise consortium to instead rent the property out at a profitable price.