If you have nothing down, you can't afford it
Silly me, I thought the bottom-feeding operators who are trying to convince people to take out mortgages they can't afford might be laying low at this point.
So, I'm in the health club at Fort Mitchell the other day when someone's cell phone rings. I'm trying not to eavesdrop, but it's impossible not to hear the conversation. The gist is that my locker room colleague is suggesting to a potential home buyer that, hey, they could always look at getting an interest-only loan if they are having trouble with conventional financing.
Then I get a letter in the mail at my Hebron home from an outfit with a Florence address. It looks very official. "Secured document" it says. "To be opened by addressee only. Please respond within 5 days." It has the perforated sides you have to rip off to look at a paycheck or a tax statement.
It's a come-on to refinance my mortgage. Check these phrases out: Pick-A-Payment. More money. More programs. More freedom. Bankruptcy: OK. Late Payments: OK. Credit Problems: OK. Cash Out for Any Reason.
Why, I can refinance right now for 2.99%, though the double asterisks tell me that this is a "low negative equity payement." I can get an interest-only loan for 5.5 percent for 30 years, which means I could send them money for 30 years and have nothing to show for it.
I can't even begin to imagine what the fine print is like in a mortgage contract with these guys.
When will some people learn? If you are taking out a mortgage without a down payment or any equity, you're definitely buying more than you can afford. It is not my responsibility as a taxpayer to bail you out if you can't keep up the payments. And if you run a business such as one that sent me this mailing, you're a predator. I hope you're breaking a law, and I hope you get caught.
posted by Dennis Hetzel at 11:41 AM
5 Comments:
at 5:09 PM, January 19, 2008 
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at 4:13 PM, January 20, 2008 
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at 5:20 PM, January 21, 2008 
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at 1:25 PM, January 22, 2008 
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at 10:12 AM, January 26, 2008 
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Post a Comment*"I hope you're breaking a law, and I hope you get caught."
Hey, I've got an idea. Since you're the General Manager of a metropolitan newspaper, why don't you find out if they're breaking a law?
I'm pretty sure that's what journalism used to be about -- discovering the facts.
Instead, you use this anecdote to throw together a right-wing rant about how it's not your "responsibility as a taxpayer to bail you out if you can't keep up the payments."
No wonder newspaper readership is down.
Dear Poster No. 1,
Don't you know that the only way to find out anything anymore is via old style muckraking?? And that, by definition, it is all "left leaning" (I prefer "populist" myself). But they sure do go rooting around for facts (seldom challenged or sued) and I use those to get my information from which I then make my own judgments. (Alexander cockburn is a good example of the type I'm speaking of). Talk radio is right wing, inflammatory innuendo, but get a good muckraker on the job and that's where you get the dirt in detail.
Being in my mid 50s, I remember having to read Babbit and other wonderful books about degraded industries (meat packing: here we go again..) when such a world view was much admired for teaching your children about the right way for a civilized society to be structured. Of course the Great Depression was still in recent memory. Don't think we're not ripe for a new backlash., especially when we allow the undermining of home ownership, the ONE possibility for the accumulation of just a bit of middle class wealth in our society, (which will then be taken away if you grow old and need nursing home care - no wonder people forego saving and struggling to get health insurance and go straight to being reliant on Medicaid - why try to accumulate "wealth"?)
Now, we have a newly educated class which is intent on ensconcing themselves in a snug middle class world and harboring a very pinched, condescending attitude toward those who may still have a bit of dirt under their nails.....I guess that makes it easy to blame the victims of a con.
Unfortunately, it even extends to our coporate media who are pretty star struck by power, rather than curious/suspicious as they should be. What a waste of education; certainly not what was intended when it was promoted for all in the late 60s, early 70s.
If you can't come up with a down payment, you can't afford the house? BS. One has nothing to do with the other. the purpose of the down payment was intiially to demonstrate that the higher difference one would pay between renting expenses and buying expenses could be met - thus, the savings.
As t a taxpayer bail out? When you elect corrupt politicians to run this country - expect that someone will pay the price. These practices should have been regulated and buyers safeguarded, but nooooooo, the lobbyist for finances, insurance and energy have been running this country with incredible profits - and who do you think is paying for it? Have your filled your gas tank recently?
As someone who was a first time homebuyer during the boom a few years ago, I was able to scrounge up enough money for a downpayment on a respectable home, which I still have, and have never missed a payment on.
I've never missed a payment, despite the ARM with a "fully qualified rate that will never adjust up" that I was suckered into... adjusting from 4.25 to 6.85 inside of 3 years.
I've never missed a payment, despite being out of work for 2 months during that time period, and taking a substantial paycut to start a business during that time.
I've never missed a payment, and even refinanced to lock in a more reasonable 5.25 30 year fixed last year - handing the bank entirely too much money in processing fees to do nothing but change a single variable in a calculation.
If anyone needs to absorb the brunt of this craze, it's the individuals that can afford McDonalds 6 days a week for lunch, a $40,000 gas guzzling SUV, but expect someone to come to their rescue for their own irresponsibility.
Want to stimulate the economy congress? Maybe give a bigger tax break to the homeowner....maybe give incentives to lenders for dropping interest rates to ensure secure funds instead of the rampant defaulting that is occurring - because the lenders are going to be the next ones with their hands out to the government asking for help.
Dropping the interest rate on the "poor, defenseless people" who were dumb enough to spend more than they had is only going to encourage them to continue this behavior - by freeing up more money they can spend elsewhere. Once the bubble bursts - and it will burst, they're going to be hitting up social security and welfare either way.
If the greed by the banks in this country was replaced by banks purchainsg property from people and selling / lending at a reasonable rate - none of this would be a problem.
Greed of the banks? You put nothing down on a house with an adjustable rate, that means you can't affoard the house. You thought you were getting a great deal on a house and not thinking about the ramifications of your decision. You were being just as greedy.
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