Friday, September 05, 2008

Yes, That's Quite a Crisis, Isn't It?

This article, even though it certainly wasn't intended to be, is one of the best meta-expositions of the whole mentality and circumstance that created the national mortgage crisis.

It comes in two lovely parts.

1) Six paragraphs excoriating Wachovia for allegedly not working with distressed buyers to modify their mortgages by Obama money-laundering organization ACORN and others, only to be undone by the seventh:

No group or individual, however, could point to any statistical evidence that Wachovia was less likely to modify troubled mortgages than any other large lender.

2) A profile of one of the "typical borrowers" to whom Wachovia is allegedly being so mean.
Susan Fallis, a communications professor at Saint Mary's College in Moraga, so far seems to fall into the "get the loans off the books" camp of Wachovia customers. In 2004, she sold the Santa Cruz parking lot her father bought in the 1960s for his mobile home business. She reinvested the approximately $3 million into 20 single-family houses in and around Reno, with a 40 percent down payment on each one.

Sixteen of the loans were Pick-a-Payment mortgages from Wachovia. Because Reno rents dropped as her minimum payments climbed, she is now losing about $7,000 per month. She has asked Wachovia to temporarily lower the interest rate on her loans by less than two percentage points, without asking for any adjustment on the loan principal. The change would enable her to break even, but company representatives have told her allowing it "would require a complete reversal in corporate policy," she said.

If Wachovia doesn't allow any modifications, Fallis expects she will have no choice but to default in the next few months. She said everyone loses in that scenario: Wachovia has to sell 16 homes at a loss, 16 families have to vacate their rental properties and her family loses wealth accrued over more than a generation.

"It's absolutely insane," she said. "I'm about ready to become the Cindy Sheehan of real estate; this is just making me so angry."

Lady, if you want to know the freaking problem, look in the mirror. You bought not one, not two, but twenty houses, leveraged yourself to the hilt to do it, and did so without even thinking that, "Oh, if I can't rent these houses for full price, I'll not be able to pay for them".

So let's see; we have "community organizations" who use taxpayer dollars to pay for political campaigns trying to keep people who leveraged themselves to the hilt to pay for a small village worth of houses from taking any kind of loss for making what can only be described as very risky decisions.

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