Posted by
RabbiHaim on Friday, July 23, 2010 12:19:44 AM
It just doesn’t seem right. I listen to the news, and even watch it sometimes. I get emails with snippets of what passes for intelligent analysis of what is going on in the world around me. I try not to be sucked in to the cause célèbre of whatever day it is. I practice looking at what I perceive to be the “magician’s other hand.” I am aware that we are all being fooled most of the time, and often we are being purposefully misled to keep us docile and manageable.
Still, sometimes, the deep truth of what is actually going on jumps up and smacks me in the face so that I can’t avoid noticing how far America has traveled on the downhill slope toward its ultimate demise. The bloom of youth has faded from the youthful cheeks of America’s people. We have changed. The American civilization of builders and conquerors is crumbling before our very eyes. Soon even those who are looking at the hand the magician wants us to follow will be able to see that there is no magic left.
One of my adult children called me this evening and told me the punch line to a very cruel joke. It is a joke that is being played on all of us just as it is being played on my daughter and others like her, and I don’t think it is funny.
Somehow, my daughter learned to embrace the American dream with both hands and clutch it tightly to her breast. My daughter has a husband, two children and a dog. She holds down a fine job with great prospects with a company that is a “player” of some consequence in the world of finance. She is brilliant; her husband is brilliant; their two children are brilliant, and; their dog is exceptional. My daughter lives in a beautiful McMansion in a fairly new subdivision of a major American city.
My daughter is underwater on her mortgage. This relatively new term has come into vogue with the “Housing Bust.” Once, when we bought our homes in America, we understood that we would owe much more than what our homes were worth for many years after we signed our mortgages. It is the way amortization of loans works. When we sign the loan papers, the interest becomes part of the debt, and once that is added in, the debt is greater than the fair market value of the house. It wasn’t much of a problem over the course of many years, especially when Americans bought their houses to live in.
I am not quite sure when, but some time ago, Americans began buying houses as “Quick turnover” investments. Americans no longer believed in “settling down” in their new homes, but believed that they could buy a house and in five or six years sell it for a big profit, and move on to another house. In shampoo talk, “wash, rinse, repeat.”
Then, a few years ago, that also changed. People were losing jobs; and people were underwater on their mortgages, and couldn’t make the monthly payment. People were losing their homes to foreclosure, and as there was a shortage of qualified buyers, the banks were being squeezed to do something about all the properties they were accumulating. A new term became popular in the mortgage industry; “short-sale.”
A short-sale allowed a person who was underwater with her home to negotiate with her bank to sell the house to a qualified buyer at a price under what was owed on the original loan. This allowed the bank to dump the property at what was now market value price and also allowed the original owner to escape with some dignity, a lower credit rating, and no further need to pay a mortgage which they could not afford to keep current.
While all of this was developing, the Federal Government, for its own reasons, seriously began depressing the interest rates on mortgages. Among the reasons that the government wanted mortgage rates artificially low was to encourage new, qualified buyers to hungrily buy up all of those newly revalued homes with tempting interest rate loans and thus prop-up the housing market. Today, we are at or near an historic low mortgage interest rate. Now I am ready to tell this cruel joke to all who want to hear and to some who need to hear.
My daughter and her husband have been paying their mortgage, on time for some years now. A month or so ago, she realized that she was paying a fairly high interest rate on her mortgage, (compared to current rates). Being pretty good at crunching numbers, my daughter realized that she could save a bundle, both in the short term and in the long term, if she could refinance her mortgage. I am her father and she still asks for my advice although I am sure that she understands much that I still have to learn about money matters.
My daughter asked me who I might recommend as a place to get her house refinanced. While I admitted that I don’t know anyone, I believe that companies who advertise a lot want to do business, and companies that can afford to advertise a lot might likely be doing well. I suggested that she might try a company that advertises on the radio in Jacksonville as “the people you call first.” Lacking any better choices, (I assume), off she went to consult with “the people you call first.”
This company’s mortgage consultant listened to all that my daughter had to say about how her family was able to continue paying on the mortgage as it stands; how her family was always current, and; how all she wanted was to re-fi to lower their payments and their total indebtedness. The mortgage consultant listened, I suppose attentively, and then suggested that my daughter “walk away” from the house; that they stop paying the mortgage and that he knew a realtor who was very good at convincing banks to go for short-sales.
A professional, (perhaps), in the mortgage industry, working for “the people you call first” advised my daughter that rather than continue to follow rules on which this country was built, she should renege on a promise that she and her husband had made. He advised her to go back on her word and stick it to the mortgage holder. He advised her that he “knew” a realtor who could make it work so that the mortgage holder would agree to a short sale. He told her all of this and basically called her stupid for wanting to just continue to keep her home. This consultant from “the people you call first” explained to her that if she walked away from the house, she could probably qualify for another house within three or four years, but that if she stayed in her house/home she would not “be ahead” for maybe as long as ten years. What he didn’t offer my daughter was the lower interest rate loan that is supposed to be available in today’s market.
It seems that in today’s America, the First Option is deception. It isn’t the America I grew up in.