Friday, December 07, 2007

Why should they get a free pass?

"President George W. Bush will outline on Thursday a plan to freeze mortgage rates for five years for many homeowners facing sharp interest-rate resets, an industry source said on Wednesday.

The source, who is familiar with details of the plan, said it would cover subprime loans originated between January 1, 2005, and July 31, 2007, with rates that are due to reset between January 1 of next year and June or July of 2010.

The plan is primarily aimed at borrowers who can afford their existing rates and who are current on their payments, but who would face default when the rate resets higher.

Among those borrowers, homeowners whose credit scores have risen since they took out their loan would qualify for "fast-tracked" loan modification that would hold their interest rate steady for five years.

Borrowers whose credits scores had not improved could still qualify for a five-year rate freeze, but would face more scrutiny before receiving any modification. kE1vAI

I really have mixed feelings about this. While I've been saddened by this housing bubble and the pain it is causing those who got stuck with really nasty ARM's I also know of a ton of people that leveraged their homes like crazy to live a life full of extravagant extra's. I know several people in town who have bragged about refinanancing their houses and takign the extra money out.

We drive cars for 10+ years or until they cost more to maintain then it's worth. We carry no credit card debt and live beneath our means, and have a modest lifestyle. Maybe I should have done the ARM at a crazy low interest rate too.

I just don't get some people. They say "Oh, I didn't understand what I was getting into," or "The bank loaned me the money so they must have thought I could pay it back," etc. . HELLO!! WAKE-UP PEOPLE! A home is most people's single biggest purchase and if you're too lazy to do the research and educate yourself and figure out exactly what you can afford, what all the terms being tossed around really mean, and exactly what you're committing to before you sign that dotted line, I have no sympathy.

I don't even understand those who say "this was the only way we could qualify for a house." Don't buy a house at this point in your life. Know what? That's the way it's always been. Homeownership has never been something that everyone qualifies for. You've always had to save up the downpayment, prove you could pay the loan, and have good credit. If you couldn't do that, then, unfortunately, you couldn't get into a house. I don't know when people started thinking that buying a house was as easy. I know the banks have some responsibility here as wel but people need be their own best resource.

1 comment:

AZgirl said...

So what's next? Oops, I didn't understand the contract when I bought my new car? Government bailout always sets a bad precedent. Personally, I think the whole racket stinks. Too many buyers who couldn't have qualified for regular loans, shady lenders hoping to make quick profits, real estate brokers/agents getting their cut too. Oh, and don't forget the appraisers who "upped" the value of the home. Loans for 125% of the value of the house. These homeowners may get off the hook for their stupidity, but the cost of this mess will be passed on to other consumers...that's the American way.