Obama: Make the Loans Afford the Borrower, Not the Other Way Around

Normally, when one takes out a mortgage or any other loan, the lender (be it a bank, mortgage company, or your "cousin" Paulie), the lender tells you how much the loan will cost and you, the borrower, determines how or if you can afford the mortgage.

The lending business has worked this way for as long as humans have walked the Earth.

Obama wants to flip that paradigm on its head.

In Obama's world, it is up to the lender to match the loan to your ability to pay.

Huh?

The first step is solely in the hands of the banks and other mortgage servicers. They have to somehow get the monthly mortgage payments down to 38 percent of the borrower's gross pay. The government will not assist in that part, leaving the banks and investors to take a loss as borrowers' monthly mortgage payments shrink.

This move is as anti-capitalist as any move by Obama or any president.

In other words, if you bought "too much" house (a house that was too big, in a better neighborhood, had that 2-car garage) for you to afford, it is up to the mortgage lender to find a way to make sure you can afford it.

That's not the United States; that's Bizarro World!

We are entering an era where the U.S. government can establish the value of your house, not the housing market. But, only if you are in a preferred class that has not been established yet.

You asked for change; you got it.