It’s impossible not to turn on the news lately and not listen to the breathless reportage of the problems within the mortgage industry. Of course, it’s a CRISIS now and WE MUST DO SOMETHING. Quite naturally in the America, the land of growing government, the something we need to do is get the government involved.
This is what is termed “unintended consequences”, folks, because it was only a short time ago that the same breathless reportage was prating on about how the mortgage industry was unfairly restricting access to mortgages for the poor, the minorities, etc. And just as naturally, our Congress, ever happy to pander to anyone with a vote, figured that they could just jack around with the mortgage industry and subtly induce them, via the sledgehammer of Federal law, to go out and change time-honored standards so that mortgages were available to people who, for various reasons, weren’t quite up to the standards of mortgages under the old rules.
Remember Ronald Reagan’s words? “Government is not the solution to our problem. Government is the problem.”
Chickens, meet roost.
I got news for you, people. A lot of people who weren’t good enough credit risks to rate a mortgage under the old system, well, they got mortgages under the new system, and the fact that now they had a home and a mortgage to pay did NOT (surprise!!!) turn them into fiscally responsible citizens who would SUDDENLY begin making good financial decisions.
So now, that single mom who was raising kids in an apartment, she’s got a house of her own. And she can’t make the house note, and the utilities, and the car note, and the groceries. And unlike the apartment, when something breaks in her house, SHE has to get it fixed… And she’s still making the wrong decisions. Instead of running a couple of years more with the old car, there’s this sleek NEW one… and she’s GOT to have a cellphone, and a new TV, etc., etc., and then the end of the month comes and the income is a whole lot less than the outgo, even with WIC helping out on the groceries and CHIP helping with the kids’ medical expenses. And a couple of cartons of cigarettes a week, well, that’s a NEED and so the mortgage doesn’t get paid and somehow that’s the NATION’S FAULT, or it’s (New BUZZWORD Alert) the result of PREDATORY LENDING.
Yeah, that’s it, PREDATORY LENDING! Like EVERY big financial institution is just going out there and grabbing our poor and disadvantaged (and stupid) and threatening their lives so they’ll borrow money for a new home. Just so said PREDATORY LENDING institution can wait until the poor and disadvantaged (and stupid) stop making payments so that the PREDATORY LENDING institution can foreclose and take ownership of some house trashed out by a bunch of people who couldn’t manage their finances in the first place.
No, bunky, the lending institutions HOPED they’d make money. They only make money when people who BORROW the money actually PAY the money back. And for every one of those poor and disadvantaged (and stupid) who’s in trouble and about to go under, there are dozens who took advantage of the situation and actually DID become home owners and made the right decisions and are enjoying a better situation in life. I know some of these people.
But just like hurricane victims, responsible people who take advantage of a boost to better themselves, those people don’t make the news…
And the news people, they NEED a crisis just like a skanky ho NEEDS another rock of crack… So we have a mortgage crisis…
The other part of the problem is when the people who could have made the payments on a modest house were encouraged to “make a good investment for a lifetime” and buy a house they didn’t have enough FURNITURE for…
They end up losing everything too.
As an aside, MrsDoF is a teacher’s assistant, and says Jr. HS kids seem to wonder why they need to know math and English. How to tell them that the greatest danger of self-destruction in their lives is when they affix their adult signature to contracts that contain words and numbers which they do not really understand? How to put that healthy fear in them?
Any talk of taxpayer money “bailing out” these people frosts my ass. Consider two home buyers a few years ago. Buyer No. 1 saw the sub-prime rates and bought a bigass house, not worrying about the future when the interest rate goes up. Buyer No. 2, more prudent, bought a modest home using a higher but fixed interest rate. Now Buyer No. 2 in his modest home will have to bail out Buyer No. 1? Baloney!
It is not so much the sub-prime loans that are hurting so many people..it is the damn variable rate that kicks in eventually. The development I am in sold a lot of redneck double wides on a five year fixed at a decent rate then the next fifteen at a variable that was as much as five percent or even more over the discount rate. Some were smart enough to get refinanced before the variable kicked in and the bottom fell out of their property. But I know at least two young couples who were doing fine until the variable got them and their house payment went up about 300 a month and coupled with the insurance that has doubled in the past four years they lost their homes..
It pays to read the small print..
A lot of it depends on what lending institutions are running the mortgage scam. Yes, I said scam, mortgages are passed or sold from institution to institution as most of you know. Now here is the good part, it is timed to make a payment problem for the consumer for some of the more low life institutes and a few of the other more well known ones. Payments suddenly get lost, never recorded, even automatic deductions. How do I know this, they played that game on me or tried too. It took two years to get it somewhat fixed, even with all the records in the world, cancelled checks, the banks own records, they still denied that payments had been made and piled on the late fee’s and interest. The “bank” hit my credit hard, refused to correct errors made by their own employee’s and told me even though it was automatic deductions and their employee’s as messed up it was m responsablity to correct their errors. After one rather nasty session on the phone the “manager” I talked to laughed at me and told me to “Go ahead and get in line and sue us”, it will be years before it comes up and we will forclose on your sorry ass. Why were they being so customer friendly? My house was worth three times what was owed on it and they wanted the property and not the payment. So if you are a mortage lender and you show up at my house I will shoot your ass dead in the front yard, no questions asked. How did I finally fix the problem, I didn’t, I paid off the load in full , it cost me over $8,000.00 in bullshit charges and cleaned out my savings but the house is now mine. Could I sue, yeah, but my lawyer told me it would be years before it came up in court, and by then more than likely be dismissed because the company would be merged or out of buisness and the employee’s responsable would be long gone.
Here in So Cal the teachers are seeing a drop in the number of Mexicans in schools.
How many of those kids’ families are bailing on subprime loans & heading out towards Louisiana or Texas?