L.A. Times says no to bailout

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Good morning. The editorial page of the L.A. Times -- no relation to us -- weighs in strongly this morning against the idea of a bailout for L.A. homeowners at risk of foreclosure.

Back story: L.A. City Councilman Richard Alarcon is making noises about establishing a $5-million fund to make loans of $10,000 or less to homeowners facing foreclosure.

The Times’ opinion? Bad idea. Bad: ‘Nothing gets blood boiling like the mention of government ‘bailouts’ for sub-prime borrowers, and with good reason. Using public funds to rescue buyers who assume more debt than they can afford (and at terrible terms) rewards borrowers’ and lenders’ irresponsible behavior and props up an overpriced housing market that probably deserves to fall a bit.’

The Times also points out that, in a region where homes cost half a million dollars, and many borrowers put little or nothing down, loans of $10,000 won’t make much difference. The Times does support the idea of more funding for foreclosure counseling services, but makes an important point: honest counseling often means telling borrowers they can’t afford their house. It reports The Los Angeles Neighborhood Housing Services tells about 80% of strapped borrowers to sell their house.

Thoughts? Comments?