Stone Pigs

undeniable underlying truths

Just the Facts, Ma’am

Posted By on March 14, 2009

I heard Mike Malloy, a liberal talk radio host, the other night make the claim that 1 in 9 homes in America are now sitting empty due to foreclosures.  That’s patently false, but the figure was used repeatedly and was the basis for all his following arguments in support of the economic plans and policies of his champion: B. Obama.  Theses that must be supported by faulty underlying arguments are indeed very weak themselves and should be given greater scrutiny.  Theses that are dependent upon fear for support should be rejected outright.

For a home to be subject to a foreclosure it must have a mortgage on it.  Using round numbers, there are roughly 100 million homes in America and only 50 million mortgages (some people rent their homes or apartments and a good many people own their own homes outright — often having been responsible over the years and paid them off).  If 11% of homes are currently sitting empty (as Mike Malloy suggested), that would be over 10 million homes and that equates to 20% of all mortgages.  It also means that roughly 30 million people are homeless or displaced and that’s also simply not close to true.  The truth is that over 95% of mortgages are up to date (leaving no more than 2.5 million that are behind though not necessarily in foreclosure).

I’ve also heard the “1 in 9” figure used recently to describe the number of homeowners who are upside down in the mortgages i.e. the house is currently worth less on the market than is owed to the bank holding the mortgage.  At roughly 5 million homes I’m still not sure I believe that, but I believe it’s at least closer to reality.  However, just because a homeowner is upside down doesn’t mean that foreclosure is pending.  Indeed, if the homeowner remains among the 92% of employed Americans (a most likely scenario) and just continues to make his payments for a couple years, the housing market is likely to come back and restore at least some of the owner’s equity.

So that leaves us with really a fairly small percentage of people who find themselves in a tight financial spot.  For some percentage of those people, their situation is the result of a self-inflicted wound and they may need to learn the hard way from their mistakes (the School of Hard Knocks tends to produce the most well-educated folks).  For others, there is little reason not to help them out, but helping them is an easy argument to make to reasonable people … and doesn’t require telling lies about the circumstances.

Please don’t insult our intelligence.


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