How Greedy Are They?
HOW GREEDY ARE THEY?
Let’s just take a short look at a typical couple that lives in suburbia, USA. A nice young couple, with a couple of kids and both have decent jobs. About five years ago, they were lucky and decided to buy a new home. They had pristine credit, two incomes and could afford a $1,500.00 a month house payment.
They went to their local banker and because of their great credit; he talked them into buying a $250,000 home instead of a $150,000 home. He was able to do this by magic. The banker did not have any bad intentions, just wanted to help this young couple get into the fast appreciating real estate game. He provided a blended mortgage. That is he would give them a first mortgage for $200,000 at 6.25% and a second mortgage of $50,000 at 10.5%. This blended mortgage enabled this couple to buy this home with no money down.
Now, here is where the magic of finance started the snowball or tsunami of destroyed credit and the foreclosure dilemma. The product was an adjustable arm mortgage. That meant that the first couple of years the payments would fit into their budget, but at the end of three years, the payments would increase. After all, business was good, commissions would get better and the house would go up in value and the young couple could refinance and take the profit to pay down the principal. A great plan, IF it worked.
Now, here we are a couple of years later and no one, not the banker, the young couple or anyone could foresee what was coming down the road. Lurking in the shadows are the credit card companies, poised like venomous cobras waiting to strike for the kill. Here is what happened to the young couple and millions more folks just like them. It could quite possibly have happened to you.
The term of the mortgage changed because it was an adjustable loan. So, the payment went from $1,500 a month to $2,500 a month. This placed a strain on the budget of the young couple. They started to use the credit cards to pay part of the mortgage. The train wreck is now coming down the track.
Once, their credit cards started to max out, the wonderful folks sitting behind the desks counting dollars, at the credit card companies armed their weapons of mass destruction and lowered the boom on this young couple. They had about $50,000 of credit card debt and were paying a weighted average of 6%. So, by just paying interest alone, their monthly payments to just pay the minimum was $250.00 per month. A very manageable number.
But, the vultures had other ideas. Whether it was greed, job promotion, vengeance or bordered on criminal activity, these worthless members of the human race did the un-thinkable. They changed the young couple’s interest rates from 6% to 36% simply because they had maximized their credit limit. These folks were NEVER late in their entire lifetime.
Let’s look at what happens now. The house payment has increased by $1,000 and the credit card interest went from $250 a month to $1,500 a month. So, the total increase on payments was a whopping $2,250 a month. Put that in your pipe and smoke it. Now wonder they fell behind on their house payment and eventually lost it in foreclosure.
Were these kids guilty of anything? Not in my book. Could the banks/lenders have reset the loan to today’s present day value and kept these kids in their home? Yes indeed. Could the credit card companies simply placed a freeze on the use of their credit cards and kept the interest rate at 6%? Indeed.
Now, when we have idiots in Washington, like Sen. Chris Dodd professing to be the consumer’s artery to fiscal utopia, and he cannot even have the integrity to reveal his own backroom deals, now wonder the financial vultures can get away with this crime. Add in, Barney Frank and you have two of the biggest crooks in the history of this planet, lying to the public and using “smoke and mirrors” to make us believe they are on our side.
I am upset about the complacency shown in Washington towards the average family’s dire needs for relief. But as long as clowns like these two and their cohorts grin and make the Wall St club pad their wallets, you and I are the victims of greed.
Regis Sauger
Let’s just take a short look at a typical couple that lives in suburbia, USA. A nice young couple, with a couple of kids and both have decent jobs. About five years ago, they were lucky and decided to buy a new home. They had pristine credit, two incomes and could afford a $1,500.00 a month house payment.
They went to their local banker and because of their great credit; he talked them into buying a $250,000 home instead of a $150,000 home. He was able to do this by magic. The banker did not have any bad intentions, just wanted to help this young couple get into the fast appreciating real estate game. He provided a blended mortgage. That is he would give them a first mortgage for $200,000 at 6.25% and a second mortgage of $50,000 at 10.5%. This blended mortgage enabled this couple to buy this home with no money down.
Now, here is where the magic of finance started the snowball or tsunami of destroyed credit and the foreclosure dilemma. The product was an adjustable arm mortgage. That meant that the first couple of years the payments would fit into their budget, but at the end of three years, the payments would increase. After all, business was good, commissions would get better and the house would go up in value and the young couple could refinance and take the profit to pay down the principal. A great plan, IF it worked.
Now, here we are a couple of years later and no one, not the banker, the young couple or anyone could foresee what was coming down the road. Lurking in the shadows are the credit card companies, poised like venomous cobras waiting to strike for the kill. Here is what happened to the young couple and millions more folks just like them. It could quite possibly have happened to you.
The term of the mortgage changed because it was an adjustable loan. So, the payment went from $1,500 a month to $2,500 a month. This placed a strain on the budget of the young couple. They started to use the credit cards to pay part of the mortgage. The train wreck is now coming down the track.
Once, their credit cards started to max out, the wonderful folks sitting behind the desks counting dollars, at the credit card companies armed their weapons of mass destruction and lowered the boom on this young couple. They had about $50,000 of credit card debt and were paying a weighted average of 6%. So, by just paying interest alone, their monthly payments to just pay the minimum was $250.00 per month. A very manageable number.
But, the vultures had other ideas. Whether it was greed, job promotion, vengeance or bordered on criminal activity, these worthless members of the human race did the un-thinkable. They changed the young couple’s interest rates from 6% to 36% simply because they had maximized their credit limit. These folks were NEVER late in their entire lifetime.
Let’s look at what happens now. The house payment has increased by $1,000 and the credit card interest went from $250 a month to $1,500 a month. So, the total increase on payments was a whopping $2,250 a month. Put that in your pipe and smoke it. Now wonder they fell behind on their house payment and eventually lost it in foreclosure.
Were these kids guilty of anything? Not in my book. Could the banks/lenders have reset the loan to today’s present day value and kept these kids in their home? Yes indeed. Could the credit card companies simply placed a freeze on the use of their credit cards and kept the interest rate at 6%? Indeed.
Now, when we have idiots in Washington, like Sen. Chris Dodd professing to be the consumer’s artery to fiscal utopia, and he cannot even have the integrity to reveal his own backroom deals, now wonder the financial vultures can get away with this crime. Add in, Barney Frank and you have two of the biggest crooks in the history of this planet, lying to the public and using “smoke and mirrors” to make us believe they are on our side.
I am upset about the complacency shown in Washington towards the average family’s dire needs for relief. But as long as clowns like these two and their cohorts grin and make the Wall St club pad their wallets, you and I are the victims of greed.
Regis Sauger
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