May I Have a Bail Out?

Take this example: Mr. Johnson and his wife purchased a house. They hired a broker whose job was to find a lender and receive commission. The lender, who owns the mortgage, sells it to an investment banker for a profit. The investment banker borrows from a bank like the Feds and buys more mortgages. In the Johnson’s neighborhood, there are six neighbors who now pay the same bank and are placed into three categories: safe, average, and risky. Two of those neighbors, classified as “risky” eventually default on their homes and the bank seizes them. Another homeowner is victim to company downsizing and cannot keep his home, so he short- sells it to avoid foreclosure. Now one house has sold under market value and two other homes have been foreclosed upon without being resold.

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