From Hillary Clinton’s campaign press release, detailing her plan to ”Preserve the Dream of Home Ownership”:

New Hampshire resident Kristi Schofield joined Senator Clinton in Derry today. On July 31st, Kristi and her husband Paul lost their home of eight years in East Hamstead, NH because it had been purchased by the bank at a foreclosure auction. Yesterday, their mortgage company asked them to be out of the house in 17 days. They had planned to raise their three children and spend the rest of their lives in their home, but their adjustable rate mortgage payments continued to climb from $2,400 to its current level of $6,000 a month. “We tried to do the right thing and continued to make the payments as long as we could with our savings and what earnings we had from unemployment, temporary and part time work. My husband had a good job, we had a great home. We were living our dream. Hillary Clinton is standing up today because she wants to help protect the American dream,” said Schofield.

Let me get this straight – the Schofields took out an adjustable rate mortgage and didn’t realize that the interest rate could adjust upward?

This is why most Americans, for years and years and years, went with fixed-rate mortgages. Yes, they’re often higher than the low end of an adjustable rate mortgage. But they don’t change. That’s why they’re called fixed rate. You know what you’re gonna be paying, from here on out.

Another disturbing line from Hillary’s release:

To make matters worse, home prices are weakening and sales have slowed. It would now take almost nine months to work off the inventory of unsold homes.

It makes matters worse if you’re trying to sell right now. If you’re a buyer, you’re enjoying a long overdue correction.

The Mrs. and I were looking at homes earlier this year; during that search, I came across a modest three bedroom townhouse in Alexandria, Va. where the local assessment – calculated by the sale price of comparable homes in the area – went up:

2003: increased $48,600 2004: increased $60,9002005: increased $63,6002006: increased $119,600

You might as well have a big red flashing neon sign that says, “HOUSING BUBBLE! HOUSING BUBBLE! DANGER, WILL ROBINSON!”

I give Hillary a half a point for recognizing the problem; I’d prefer if she observed that part of the problem was that some lenders obliterated any standards for verifying income, assets, etc. You know, stories like this one:

Turned out it all tracked back to that day last year when Lara’s wallet was stolen. Elizabeth Cabrera-Rivera found it and used Lara’s identification to buy . . . a house.
A $419,000 townhouse in Springfield. With no money down. A townhouse she and her family moved into, refinanced and then quickly fled not long after Lara turned up at the bank in December. Some of Cabrera-Rivera’s Christmas decorations are still on the tree out front, and the place remains empty.

Some of Hillary’s proposals are pretty mild – disclosure of mortgage broker compensation rates, more uniform broker licensing standards, etc. But then she says she wants to “establish a $1 billion fund to support state programs that help at-risk borrowers avoid foreclosure.” Whoa, whoa, whoa. I’m sure some of these folks are genuine hard-luck cases. But a good chunk of these foreclosures are people who bought a hell of a lot more house than they could afford, and who expected to be able to “flip” them quickly for a big profit. They gambled, and lost. Why are taxpayers expected to shell out to save their McMansions?

If even a softie like Avarosis is skeptical, that idea ought to be dead on arrival.

UPDATE: You may or may not have seen Jim Cramer’s mortgage-market-related meltdown on CNBC from last Friday — it’s big, even by his chair-throwing standards – and his walkback, in which he says some folks behind the scenes are privately very worried about the economic fallout from people defaulting on those mortgages.

Cramer’s argument is that fourteen million Americans took out mortgages in the past three years, and half of those are “teaser rates” or “piggyback rates,” and he expects them to lose their homes.

I’m sure some folks have taken out home loans at teaser rates and emerged just fine, but I think a lot of lendees don’t think through the consequences. If long-term planning were easy, nobody would overeat or max out their credit cards, and everyone would have a healthy nest egg.

FINAL UPDATE: Kristi Schofield has asked that her comments be removed from this post.