The Mortgage Nightmare

Doing What's Right

Hidden deep in the small print, lies the fact that people have agreed to enormous jumps in their mortgage rates.

SURPRISE!

Around 2 million to 2.5 million adjustable-rate mortgages are scheduled to “reset” this year and next and will jump from the “teaser” rates of the first two or three years to much steeper rates that could cost borrowers their homes. Many thousands of homes have been lost to the process since subprime loans taken out during a housing boom of the early 2000s began going to higher rates in 2005. (source)

There are some who believe that it is just too bad that people didn’t fully read the documents they were signing, and if they lose their homes as a result, well tough for them, but it is their obligation to protect themselves, not Government.

Then there are those who believe that Big Business, who is seeing a drop in their investments because people are suddenly defaulting en masse, and values of their assets are depreciated, need urgent Government Help, above the need of the Millions losing their homes.

Funny, how it is generally the same people who have no sympathy for the home owner, that are demanding aid for Banks and Mortgage Brokers.

Some of the Candidates have even jumped on the bandwagon, attempting to secure votes with their quick promises of help. Like Hilary Clinton who people credit for leading the fray. However, the fact is that she isn’t doing anything, but talking. WHERE IS THE ACTION?

What Senator Clinton is doing, is THREATENING TO DO SOMETHING, if she is elected. In the meantime the Senate passes a bill to guarantee loans, the house passes a similar bill, and sometime next year they will send a bill to President Bush for signing. LIKE THAT HELPS PEOPLE TODAY?

The issue is NOW, but it is a complex issue. So how about a very simple fix, until the facts can be looked at? I know, radical thinking that anyone in Congress or the White House would be interested in the facts, but it would seem that if any issues needs to be addressed carefully, this is one of them.

Remember the Savings & Loan Bail Outs?

Frankly Congress & the White House should simply IMPOSE A MORATORIUM on ALL MORTGAGE RATE INCREASES. Freeze the damn rates now, at the so called ‘TEASER‘ level, and then get the real experts in to help them figure out what has gone wrong, and how it can best be corrected. This will avoid many more people from entering into Foreclosures.

Second, FREEZE FORECLOSURES. Simply refuse to allow homes to be taken away, and allow those in default to ignore playing catch up. Roll back any RATE INCREASE to the ‘TEASER‘ rates, hold back ANY & ALL PENALTIES DUE, and let them pay what is CURRENTLY DUE from that point on. In short, ignore the debt for now, until CONGRESS CAN PROPERLY ADDRESS THE MATTER.

By doing these two simple acts, the Congress can take its time in developing a proper response. It avoids ANY GOVERNMENT BAIL OUT, plus it holds the line of property values. It also prevents banks and such from huge immediate financial losses. More importantly it doesn’t suddenly force people out on the streets. It lets them have a breathing space, where they can put their finances back in line.

Set a time limit, of perhaps 2 or 3 years. This gives everyone a chance to calmly look at the problems, and come up with solutions. It doesn’t cost the taxpayer a nickel, and it avoids a possible depression. Sometimes you simply can’t rush in a fix, and you need time to look at the whole issue. You need time to find out what went wrong, who is at fault, and then seek a solution. However, by trying to FIX THE ISSUE IN AN ELECTION YEAR, is not going to SOLVE ANYTHING. It becomes POLITICAL instead of having serious minds addressing the issue.

And that is far more dangerous than TWO MILLION FORECLOSURES.

The Moratorium is a temporary fix, to give everyone involved some breathing space. In addition, it removes it out of the Political Arena, where it does NOT belong.

There are a lot of factors in this entire debacle. Some of it, is people are in a rush to buy a home, without realizing all that is involved, or the expense. There are also those who do know what is involved, but have been tricked or pressured into purchases they shouldn’t have made. On top of that, is a shrinking job market, where good wages are scarce. There is the whole IMPORTS and OUTSOURCING that effects all of this too. It comes down to also those who TAKE ADVANTAGE. I mean let us be honest. We all know virtually NO ONE READS ALL THE SMALL PRINT. Fees that are hidden, or are worded so no one can understand, is common, and any fix has to address all of these issues. That is why a simple FREEZE is essential.

Ian @ December 20, 2007