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View From The Middle
It's a shame the report didn't come out a few weeks later. Mr. Staro might have changed his upbeat tone. Whereas things were swinging for first-time home buyers a year ago, the only thing that's swinging now is the door hitting them on the behind as they run out of time, credit, cash, credit, mortgage escapes, credit and, uh, oh, yeah…credit. All of a sudden, the mortgage industry is being faced with burgeoning delinquency rates and foreclosures, especially in the subprime loans made by those whose credit wasn't too good to start with. It was called "subprime" or "prime" loan time for a number of years while people of lesser means bought houses that, eventually, would demand higher means. Everybody knew it, but fingers were crossed that the housing market would continue in its upward spiral. People could get "easy" credit, of course, which helped the sellers. The people doing the lending - not necessarily unscrupulous, incidentally - even opted for giving loans with extremely low - or even no - interest for the first few years. That's years ! The new home owner, when being talked into buying that newly built house said, "Let's go for it!" and went for it. Now it seems some of those loans have become due. While the home owners are scraping together whatever they can to keep up the payments, it's obvious that Dad is taking a second (third?) job and Mom is on the job market working like hell just to keep up the payments before the mortgage holder or bank or whatever uses that "foreclosure" word. The panic comes along and, unfortunately, there goes the house. In the long run, the individual is saying to himself and his wife and kids that maybe owning the place was too much; that the family unit was surely suffering, with Dad hardly ever seeing Mom because of their work schedules. And the kids? What about them? Besides feeling shunted aside because their parents just didn't have time for them, they were left in day camp or school or to their own devices. The latter was the worst scenario, of course, and the others may be good for part of the day, but what about the rest, not to mention the cost? Dilemmas all over the place. And it's not really easy to see where the blame lies. Is it the lender, who is - maybe - a little greedy, but not so much as to be named a co-defendant in a scam. His interest rates might be high after a few years, but the buyer knows this before signing papers. Is it the buyer? In a way, it is - a human way, in some cases. He and the wife and kids see this market that appears to be Utopian, with no stopping in sight. There's the house; the dream; the answer to American life. There's this mortgage agency that, essentially, is forgiving of all past debt, saying, "Don't worry about it. When the interest increase comes due, we'll all be a lot richer!" That's not called scamming either. It's only high-pressured salesmanship. Aside from having a fairy godmother who will drop stardust and gold coins on you, and aside from hitting the Lottery, there are only a few ways a subprime borrower can get out of this fix without losing the house. You can try a private mortgage, which has no middle man and money passes just between you and him. Of course, there's a larger than life interest rate and there are a lot of fine-print vagaries to go along with it, but it's an option. Then there's the "Keep The Dream" refinancing program that Governor Spitzer came up with to answer the lending crisis. Without sounding like a p.r. man for the project, it sounds pretty good, with the state's SONYMA and the Federal Fannie May mortgage lenders using $100 million to offer first-time buyers fixed-rate mortgages they can afford at competitive interest rates. A hundred million dollars. That's pretty good! Senator Hillary Clinton, in a press release issued this week, announced a plan that would deal with the problem from a national standpoint, promising to crack down on unscrupulous brokers, etc, and talking about past discrepancies and abuses. A key point of her announcement, though, is to establish a $1 billion (that's with a "B") fund to assist the state programs. The program she mentioned, along with Spitzer's plan, also offers what officials called a "crucial"part of the program that would require eligible borrowers to take a "homeowner education" course and get intervention counseling should they become delinquent on their refinanced mortgage. Clinton's announcement came as part of her presidential bid and it was issued by her campaign committee. That doesn't mean I'm gonna vote for her; it's just another good idea. Spitzer's plan was created, however, last March, when Spitzer himself - even then - called the problems with the subprime mortgage foreclosures a "crisis." He must have seen the writing on the wall, which was probably written in small, fine print, just like that in the contract. Don't give up hope. There can be many reasons for falling back on that home loan, and they're not necessarily your fault. If you're really hit hard, try calling the national Home Ownership Preservation Foundation at 1-888-995-HOPE (4673).
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