Friday, November 14, 2008

Not My Most Socialist Rant

I was just reading an article from the New York Times online, entitled "Negotiating Better Terms For Your Mortgage". The article appealed to me because (a) I have a mortgage, (b) I spend a lot of money on it (mostly interest), and (c) I've been an excellent customer, never late with a payment, so I figured my bank is happy with me and would be as willing to negotiate with me as with anyone.

Whoa. So wrong.

The first line of the article reads, "You don’t need to be behind on your mortgage payments to ask for a better deal from your bank. Surprised?" Um-- yes. When I took out my mortgage, having a good credit history was what got one a better deal-- now being behind on your payments is helpful?? Apparently so.

But the article went on to explain that, crazy as it sounds, you don't necessarily have to be three months behind on your payments to get a new, better interest rate. Some people who are foolishly making payments on time might still be eligible for renegotiation to more favorable terms. "There are several prerequisites to consider", the author writes. "if you’re a borrower who is paying on time and wants some kind of a break." For example, the house must be your primary residence.

Ultimately, however, "the big question will be how financially strained you are." The author cites several scenarios in which one might have become "financially strained", including this one: "Or, maybe you lied about how much money you were making when you applied for a mortgage back in 2006 when nobody bothered checking." For real?? Calling up the bank and saying you lied to them on your mortgage application is a strategy for getting a break?

The author gives some guidelines to help the homeowner judge whether the bank is likely to give an improved interest rate. If you were judicious when you bought your house, choosing something relatively modest so that your monthly payments would be a relatively small percentage of your income-- well, that will count against you: "Don’t bother trying to get a better deal if your [mortgage payment:monthly income] percentage is down near 25 percent." The author summarizes that "very few people current on a 30-year fixed-rate mortgage will get a better deal."

In the old days, telling the truth on your mortgage application was considering essential. In the old days, taking out a 15- or 30-year fixed mortgage was considered the responsible, fiscally admirable,-- dare I even say, patriotic?-- thing to do. In the old days, a bank might turn you down for favorable mortgage treatment due to limited savings or income. Now, as the author straightforwardly notes, "a bank may turn you down because you’re not struggling enough." This is a strange, new world.

How did we GET to this place? And, if we're going to have socialism in this country-- and I think we should-- why can't we do it in a rational, proactive way, rather than birthing it as a grotesque bastard child of capitalism run amok?

P.S. I'd venture a guess that many people who are having trouble with mortgage payments also have a spare room that they're using for a guest room, "home-theatre" room, ping-pong room, exercise room, or some such. And I'd venture that most of these could easily manage their payments if they took on a housemate for some extra income. I have not seen this simple idea suggested anywhere as a strategy to help struggling homeowners avoid foreclosure. Why? Because the idea of sharing your home with a person you aren't related to is abhorrently un-American, possibly even smacking of Communism?


Blogger Weeble said...

Oh come on now. Are you asking Americans to sacrifice?!? Of course we don't do that here... Besides we're fighting the terrorists when we buy the big screen TV on the credit card. My President tells me so.

11/15/08, 12:11 AM  

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