• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • With the Left in Power, Only Morons Pay Their Mortgages

    Reporting on Fannie Mae’s and Freddie Mac’s new program to reduce monthly mortgage payments for those people who have missed at least 90 days worth of payments, The San Francisco Chronicle’s Kathleen Pender reports:

    Peter Schiff, president of Euro Pacific Capital, predicts that many homeowners who have little or no equity will stop paying their mortgage and then reduce their income to get the biggest payment cut possible. They could stop working overtime or, if two spouses work, one could quit. After the modification, they could try to boost their income again.

    “This is a once-in-a-lifetime opportunity,” Schiff says. “People are going to feel like complete morons if they don’t participate. The people getting punished are the ones who never made an irresponsible decision to buy a house they couldn’t afford.”

    How many people will take advantage of this once-in-a-lifetime opportunity? One study shows that as many as 20% of homeowners in the California’s Bay Area owe more  than their home is worth. That’s a lot of morons who may soon get wise to the government give away. And what happens when all these people take the government up on their offer? Financial Times reports:

    Most mortgage securities on banks’ books are now marked at a fraction of their par value. Analysts and bankers had been hoping the worst was over, but recent events have called that assumption into question, raising the prospect of further writedowns – on top of the $1,000bn made by global institutions. “The unintended consequences of a series of government actions are putting further pressure on the valuation of mortgage assets,” a senior US banker said.

    Wall Street executives estimate the Treasury’s U-turn on using the Tarp and efforts to modify loans had caused a fall of about 5-10 per cent in the value of some mortgage assets. An index of subprime mortgage derivatives, the Markit ABX index, fell 17 per cent in the past week.

    Posted in Economics [slideshow_deploy]

    3 Responses to With the Left in Power, Only Morons Pay Their Mortgages

    1. Kevin E. vonMoses says:


      As a small child, we were want to say that, "… a fox smells his own hole first…" Take that as you may.

      Peter Schiff, as president of Euro Pacific Capital, would certainly think towards strategies of greed to fleece the system…

      More practically, 80% of the Public is honest and are far more likely to get fleeced, and Peter Schiff knows this, but heaven forbid that he encourage honest behavior by developing stratagems that reward honest behavior. He would rather focus on the "… Legal but 'wrong'…" behaviors he used to make his way to the top.

      Sadly, he is correct, 80% of the people are Sheep, and there are only three things you can do with a Sheep… Two of which you can do over and over and they never know the difference…

    2. Robert Meyer, San An says:

      While not experienced with sheep, I do see an analogy to "lemmings into the sea". Financial illiteracy is rampant, and ethical behavior is certainly not a high priority among those fluent in playing the system. Many responsible people now find themselves surrounded by a herd (flock, gaggle, group?) of lemmings.

    3. Ken Van Doren, Wisco says:

      Perhaps Mr. von Moses does not know Peter Schiff and his political/economic ideas well. (

      Mr. Schiff has been one of the few voices "crying in the wilderness' for sound money, real savings and investment as the way to wealth, NOT the fiat money, legal counterfeiting of the Federal Reserve. Both he and the presidential candidate he advised, Ron Paul, are not surprised by the serious economic problems of today. They both predicted them. By his comments, Peter Schiff is pointing to the likely moral hazard of proposed policies that will make our economic future worse. No point in killing the messenger here.

      Schiff and Ron Paul are far more worth listening to and following than the banksters, Paulson and Bernanke, or any of the more prominent Democrats OR Republicans.

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.