A Few Simple Real Estate Truths

(MoneyWatch)  Are we all going to get a bailout and live happily ever after in granite-filled homes we can't afford? Let's hope not.

As I look out at the new real estate world we're building with our bailouts and ballooning budgets, let me start with a few truths:

• I don't think people who lied on their mortgage applications should be saved by my tax dollars (although some of this will happen);
• I don't think you should stop paying your mortgage (assuming you have the cash flow to make your payments) because you think you'll get a better deal or more attention from your lender;
• I think people who ran up credit card debt in order to have a bigger flat-screen TV or a spring break trip to Mexico ought to tighten their belts, take a second or third job (if they can find the work) and pay their bills;
• I don't believe that allowing bankruptcy judges the right to cram down primary-home loans is going to profoundly change the cost of getting a mortgage. (If that paradigm were true, we'd have seen it change how people get car loans, boat loans and loans for vacation property, where cram downs are already allowed). Nor is it going to drive an extra 10 million people into bankruptcy;
• As the unemployment rate rises, the number of people behind on their mortgages late will rise from 12 percent to as much as 18 percent;

But I also think we're in the worst recession since the Great D, and if you lose your job, your health care, your 401(k) and your pension (if you had one), your savings isn't going to go that far. You'll need some help and the only entity with cash at the moment is Uncle Sam.