Moonage Political Webdream

I get about five emails every day telling me how much money I can save on my mortgage.  I got one yesterday that offered me up to 80% equity on my appraised value of $830,000.  For what it’s worth, my current value is about 1/5th that.  I should have taken that one I guess.  However, ARM’s have been stealing traditional bank mortgages for about a decade with promises of cheaper mortgages.  However, this is what the reality is becoming for those that took them:

In 2003, Anita Britten refinanced her two-story brick cottage in Lithonia, Ga. using a hybrid adjustable rate mortgage, or ARM. Her lender reassured her that she could refinance out of the riskier loan into a traditional one when her interest rate started to reset.

Three years later, Britten can’t get a new mortgage and her monthly payment has jumped by a third in six months. She can’t afford her payments and may face foreclosure if her financial situation doesn’t change.

Folks, for lack of a simpler term, ARMs are the Universal Life Insurance policies of the 21st century.  They look great when the numbers are cooked.  Promises of future value, as in trading back to a normal mortgage, make them look safe.  As with anything that offers no value for a cheaper price, they’ll screw you when you can’t afford to be screwed.  When you’re least able to switch to a traditional policy, that’s when the rates go up.  Although the minimum rate is set by the feds for the most part, the maximum rate is totally at the discretion of the lender within federal law.  But, if you maxed out your credit at the cheaper rate, bumping it up 5% is not unlawful, and they will have your asset for a discounted price.  That asset will most likely be your home.

When you’re buying a home, get a fixed quote for 30 years.  If you can’t afford that, find a cheaper home.  Leave the creative financing to the speculators and those that can afford to lose that asset.

People peddling ARM’s to people that can barely afford them are practicing unethical lending practices.

In 2003, Bob Ney introduced the Responsible Lending Act.  It would have regulated brokers and defined some illegal activities.  It however, did not address what I consider the bait and switch tactics of ARMs. 25 Congressmen co-signed the legislation:

Rep Barrett, J. Gresham [SC-3] - 6/19/2003	Rep Beauprez, Bob [CO-7] - 9/23/2003
Rep Boyd, Allen [FL-2] - 9/17/2003	Rep Brown, Henry E., Jr. [SC-1] - 4/8/2003
Rep Brown-Waite, Ginny [FL-5] - 5/13/2004	Rep Cantor, Eric [VA-7] - 5/8/2003
Rep Cox, Christopher [CA-48] - 10/8/2003	Rep Fossella, Vito [NY-13] - 7/9/2003
Rep Gillmor, Paul E. [OH-5] - 2/13/2003	Rep Hart, Melissa A. [PA-4] - 9/23/2003
Rep Hill, Baron P. [IN-9] - 7/9/2003	Rep LaHood, Ray [IL-18] - 10/8/2003
Rep Lucas, Ken [KY-4] - 2/13/2003	Rep Manzullo, Donald A. [IL-16] - 11/4/2003
Rep Miller, Gary G. [CA-42] - 2/13/2003	Rep Myrick, Sue [NC-9] - 6/18/2003
Rep Peterson, Collin C. [MN-7] - 7/25/2003	Rep Platts, Todd Russell [PA-19] - 9/17/2003
Rep Rehberg, Dennis R. [MT] - 6/19/2003	Rep Rogers, Harold [KY-5] - 9/5/2003
Rep Stenholm, Charles W. [TX-17] - 7/25/2003	Rep Thompson, Bennie G. [MS-2] - 5/19/2003
Rep Tiberi, Patrick J. [OH-12] - 5/13/2004	Rep Towns, Edolphus [NY-10] - 10/28/2003
Rep Weller, Jerry [IL-11] - 4/8/2003

However, it promptly died in the Subcommittee on Housing and Community Opportunity.  Oddly enough, Bob Ney is chairman of that subcommittee:

Robert W. Ney OH  Chairman
Gary G. Miller CA Vice Chairman Richard H. Baker LA Walter B. Jones, Jr. NC Christopher Shays CT Patrick J. Tiberi OH Ginny Brown-Waite FL Katherine Harris FL Rick Renzi AZ Stevan Pearce NM Randy Neugebauer TX Michael G. Fitzpatrick PA Geoff Davis KY John Campbell CA		Maxine Waters CA Nydia M. Velázquez NY Julia Carson IN Barbara Lee CA Michael E. Capuano MA Bernard Sanders VT * Stephen F. Lynch MA Brad Miller NC David Scott GA Artur Davis AL Emanuel Cleaver MO Al Green TX

Now, what I’d like to see, is that legislation re-introduced, but with legislation addressing the abuses of ARMs added to it.  Unless the worst case scenario is provided to people buying ARMs, they are bait and switch preying on the people most vulnerable.

Then, maybe all those pesky deceptive spam emails will stop as well.  Let’s start with seeing if we can figure out why it died in Bob Ney’s subcommittee for starters.  This is no time for pandering.

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