Drowning, Not Waving

Megan McArdle is doing what Megan McArdle loves best, arguing with another blogger. Nothing calls attention to one's self like playing the victim, and McArdle eagerly enters the fray.

Felix Salmon discusses the sad case of a man who clearly cannot pay his mortgage and demands:

So this is what I'd like to ask Megan McArdle, and others who like to extol the moral virtues of paying one's debts: just how much of your life's savings should you give these snakes before they take your house?

Oooh, he demands an answer! What is a po' little ole blogging gal to do when attacked in the national press? Provide evidence? Unleash Blogging Fists of Fury? Bury him in cogent, fact-based argument? Let's see:

I don't really understand the question.

Heh. We are not surprised.

I am in favor of people are financially able to keep the house without getting foreclosed on, keeping the house rather than getting foreclosed upon. The guy in question clearly cannot, given that he lost his job and has no tenant for the property in question. Obviously he should have walked away immediately.

Yes, if you lose your job, you and your family should immediately abandon your house.

Indeed, I don't understand why he didn't, since the article makes no mention of any suggestion or promise that accepting a modification that didn't reduce his payment, would later qualify him for one that did. And since it's pretty clear that Mr. Vellucci cannot afford much of any payment at all, it's not clear why he--or Felix--thinks he should have gotten one. Modifications are supposed to be a deal that makes both sides better off by avoiding the huge costs of foreclosure, not a vehicle for transferring wealth from bondholders or bank shareholders to people we like better. The latter is what the progressive income tax is for.

Kudos for the snappy little comeback, even if it is both wrong and unfair. Naturally McArdle fails to mention the gross manipulations perpetrated by the mortgage industry. They are irrelevant. Corporations must be let off the hook always, or the banks will suffer. The individual is always on his own. Also ignore the fact that mortgages were sliced, diced, slapped with a fake rating, sold, leveraged, failed, and were bailed out by taxpayers. Just because you can.

Felix Salmon is being a tiny bit unfair to McArdle, whose indignation was aimed at a wealthy woman who wanted to walk away from her contracts while continuing her upper-class lifestyle. McArdle is careful to attack those who merit it here, hoping that her eager readers will apply her disdain and scorn for people with mortgage troubles to everyone, deserving or not. In return, McArdle is unfair to Salmon, both taking the example of the other to extrapolate beyond the specifics. I do not condemn Salmon; I think we have more than enough evidence from the McArdle oeuvre to assume she operates in bad faith and with no sympathy for anyone not named McArdle. Or, perhaps, Suderman, although I wouldn't count on that and neither should Mr. Suderman.

Do I feel sorry for Mr. Vellucci? Very sorry.

She has historically had so much sympathy for the poor.

Illness is usually framed by complaints about large medical bills, but for most people income loss is at least as great a problem, and often a much bigger one.

"Illness is framed by"? You become ill, you lose your job, but you're just "framing" the situation, not stating it? And when you lose your job because you are ill and can't work, that has nothing to do with the cost of being ill? McArdle returns to the glory days of her inept, inaccurate, inane "take-down" of Elizabeth Warren's bankruptcy study, which McArdle amply demonstrated that she either would not or could not understand. But being wrong has never bothered our princess before, and McArdle is still against helping the consumer when she can help the banker.

And Mr. Vellucci seems to have been a financial naif who was given bad-to-fraudulent advice at every turn. What happened to him is tragic, and I wouldn't be sorry to see the folks who defrauded him spend some time in the pokey.

But the implied combination of tiny savings, minimal income, and inability to find a paying tenant in a real-estate market with a sub-2% vacancy rate, does not suggest that the solution to his problems is a mortgage modification. I'm not sure what the servicer could have done, other than foreclosed outright. Or what Felix thinks this has to do with people who decide to default on their mortgages so that they'll have more money to spend on cruises and new furniture.

I sure hope McArdle's landlord isn't underwater and planning to sell the house out from under her or hand it back to the bank, tossing her and her boyfriend, dog and kitchen gadgets out on the street. That would be just tragic. Funny, but tragic.