When I first planned to run for president, I had a great idea for what my platform would be: “somebody has to take it in the shorts.” It was simple, elegant, and caught the spirit of American politics in a nutshell, as well as providing the sort of common sense blueprint for recovery that we’ve so desperately needed. As we continue to hurtle toward fiscal ruin, particularly in a housing market that is either better, worse, or about the same (depending on who you listen to and what day of the week it is), I’d like to take a moment to expand on that admittedly simplistic notion of social justice and offer a better solution: “everybody has to take it in the shorts.”
So what does that mean exactly? Put simply, every American, regardless of your housing situation, needs to accept here and now that it’s time to take one for the team. Maybe you think you’ve already taken one for the team; maybe you think everybody else has gotten by and you haven’t gotten your free ride or your bail-out or your hand-up or what have you yet. Maybe you just think it’s time that somebody else who has more to spare steps up and gives for a change.
Well, I’ve got some bad news for you. This is America, and around here it doesn’t work like that. As my mother enjoyed telling me many times as a child (when she wasn’t threatening to sell me back to the Gypsies), life isn’t fair. It’s possible you’ve already taken a hit. Maybe you’re right and somebody else got a handout and you missed out. Almost certainly you’re right that there are people who have more than you do, but guess what? The fact that you’re able to read this at all means you have more than someone else, so that excuse carries not a lot of water. I’m not sure when in America we started glorifying the complainers instead of the doers (and I mean this on both sides of the political aisle), but it is a multi-generational thing, and it’s time we all stopped pointing fingers at someone else who should make the sacrifices (I include myself in that statement, don’t worry) and just accept the reality: if we’re going to get out of this, everybody has to take it in the shorts.
So here’s my plan. If you’re underwater on your mortgage or you can’t afford to pay your mortgage, you need to accept the fact that you will never get to cash out on your house. Your choices are stark: get help or lose the house, and option #2 doesn’t include paying for your retirement with the equity, so why should option #1? Here’s my solution: anyone can get a government-enforced write-down on their mortgage to the current estimated market value of their home, not what they borrowed. The lower valuation will be used to determine the new monthly payments, which should help to make things a bit easier for folks, as well as giving them a larger percentage of equity in their homes. But if you take the write-down, that’s exactly as much as you get to cash out for; if you ever sell the house for more than that, any excess sale price goes first to pay off the original mortgage holder and then the rest goes to Uncle Sam for his help so we can pay down the debt. Don’t like the terms? Don’t take the deal. The idea isn’t for it to make life easy or better for anyone, the idea is to keep people in their homes who would otherwise be homeless. Given a choice between the two, I doubt most people wouldn’t love the terms.
What banks get out of this is two things. First, they don’t have even more unsold foreclosure inventory just sitting around. Second, and here’s another thing the homeowners need to pay attention to, the homeowners agree to stay in the house for at least three years, or six years, or whatever term we can agree on as a society for the banks to feel like they at least got something out of the deal. In that time they will keep making those mortgage payments every month, on time every time, or they go out on the street, no questions asked, no second chances, because this was their second chance. Fool me once, shame on you, fool me twice, out in the cold. The banks also get something else for their part in this: a little reformation of character, which they could use right about now.
Now there’s one more group that gets to take it in the shorts here, and it’s one that rarely if ever gets mentioned, so I’m going to give a special shout out to them now. This would be anyone who didn’t buy a house when the market went crazy, or already had one. Anyone (and this includes my wife and myself) who saw the way things were going and said, “yeah… no,” because they didn’t think it was possible for housing values to go perpetually up and hey! looks like we were right, or for the folks who decades ago settled into a house and are getting punished for prudence now. Or hey, even the young folks coming up who never even had a chance to get into the market then and can’t get into the market now. For all of us, and for all the folks who did buy a house prudently and won’t need help, here’s what we get: not a god damn thing. If you own a house and don’t need help, you can sell it whenever you want for whatever you want. If you didn’t buy a house, you’re not locked into living in one place or having your credit rating suffer. You get exactly what you were promised, which is nothing at all.
Nobody wins, nobody loses. Everybody takes it in the shorts. Then we can finally put the whole thing behind us and move on. That’s my proposal, anyway.