The Bush administration and the mortgage industry, trying to combat a massive wave of foreclosures, are hammering out a proposal to temporarily freeze interest rates on certain troubled subprime mortgages. If adopted, it would be the biggest action taken to cope with the unfolding crisis.
I certainly don't have a problem with everyone getting their knuckles rapped for this idiotic mess that everyone agreed upon when the times were better, but I certainly do NOT want to see people start to get help on their mortgages like Hillary Clinton suggested earlier this year.
In fact, just yesterday, I got a piece of junk mail from Countrywide trying to get me to refinance my home at some ridiculous rate of 6.5% and some other exotic fine print came along with it.
So I doubt that these people are learning a valuable lesson here.
An estimated 2 million of those initial low, teaser rates are scheduled to reset to much higher levels by the end of next year, pushing the payment on a typical mortgage from $1,200 per month to $1,550, an increase of $350. The concern is that many homeowners will not be able to meet the higher payments, triggering hundreds of thousands of defaults.
Sometimes people need to lose to learn. If you bail them out on the mortgage payments, then you run the risk of having people think "well, I can afford it in a few years when the rates go up again" and we'll be right back where we started from.
God how I wish my mortgage was $1,550 a month. That certainly would save me a few bucks a month. :) However, since I do live in a slightly larger home, (4 bedroom, 3 bath if you must know), I had a plan from the beginning to make sure that if something catastrophic happened, I would still have a place to live.
If my wife or I were fired, had a medical disability, or anything else, we would be perfectly fine.
Perfect planning prevents piss poor performance. Remember that people and you'll never run into issues like these people are right now.
Plus, with the glut of homes on the market, now is a great time to buy a home. :) Price wars can work in your favor.
Travis
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