There are a number of things about this story that trouble me, mostly because it's written from a "What Is The Government Going To Do For Me?" angle. Don't you know that can't rely on the government for anything? Obama's Home Affordable Modification Program has been nothing short of a disaster, yet where is the criticism of it in Iowa's newspapers? There has been almost none. In the Gazette story, it's treated as a numbers game.
As for the homeowner, his first mistake was buying his $199,000 home in February 2005 with an adjustable rate mortgage. Back then, he could have gotten a 30 year, fixed-rate mortgage for around 5.72%. Why in hell did he get an adjustable rate mortgage? This detail is huge, yet is glossed over in the story. Only a moron gets an adjustable rate mortgage, particularly when rates are near historic lows! Even if rates don't go up, why put yourself at risk? Lock it in! An even smarter thing to do would be to buy a home with a 15 year, fixed rate mortgage. The payment is a little more, but you're paying down principal much faster. If he had gotten a 15 year fixed rate mortgage he would have considerable equity at this point to tap in the event of an emergency. I'm not saying that tapping equity is the smartest idea, but it beats being unemployed and upside down nearly 6 years later or having no equity.
One look at the mortgage information via the Linn County Recorder shows that the guy took out a $199,000 mortgage. 100% of the sale price! Nothing down! I could go on for hours about what a terrible idea this is. A 100% mortgage with an adjustable rate is playing with fire!
Then in 2007 he somehow was able to get an $11,000 second mortgage which was paid off in June of 2010. What do you want to bet that the lender massaged the value of the home in order to get it qualified? That happens all the time.
Look at another thing on the guy's house. The tax assessment went up more than 10% in the past year! Do you really think home values have climbed 10% in the past year? I don't know about the Cedar Rapids/Marion market, but where I bought after moving back to Iowa a few months ago it was a buyer's market. If I were him, I'd challenge this.
There are some things where I do feel sorry for the guy. He lost a couple of jobs, one because of the flood. That can happen to anybody.
But then he's spending the next two years at Kirkwood Community College taking some courses in order to maybe get his foot in the door somewhere. Is that really a smart idea? Wouldn't it be better to look for jobs in another part of the country? When you've got an income crisis that affects your family's home you shouldn't be spending your days sitting in a classroom! You need to be working. What do you want to bet he took out a bunch of student loans?
Once again, newspapers choose to profile somebody who made a bunch of bad decisions and expects the rest of us taxpayers to bail his stupid ass out. I don't mean to pile on, but where is the newspaper story that admonishes stupid behavior like this? No, you have to turn to talk radio shows like Dave Ramsey or Bob Brinker to hear the truth about what is sensible money behavior.
In the liberal-run vacuum of news rooms around the country, the meme is to blame the Too Big To Fail bank that was gladly forced to take TARP money. I have no love for Wells Fargo Bank, but come on here, they are the least of the problem in this situation. And we don't criticize Obama, Fannie Mae, Barney Frank, Chuck Grassley, or any politician who signed on to all this nightmare of legislation. And god forbid blaming the guy who caused all the problems to begin with: the "homeowner" who threw logic and sense out the window in order to buy a new home he couldn't afford, and the mortgage companies who rubber-stamped this stupidity with the government's blessing.
0 comments:
Post a Comment