Wednesday, November 14, 2007

Another Chance to Rant!

Okay, here's something you may or may not care about since many of you don't own a house ("where your treasure is, there shall your heart be also"). I find it interesting just how unscrupulous some of the American banks are being right now with this whole sub-prime housing mess. Sure, it's boring finance stuff, but it has been a red flag to not only investors here, but all around the world that the American economy isn't all it's cracked up to be, in fact, it's cracking at the seams.

In an article on MSNBC today, I read that 1 in 31 homes are being foreclosed on in Ventura, CA. Even here in KC, the foreclosure rate is 1 in 234, 80% higher than a year ago. The article states that Countrywide Financial, the largest lending business in the US, wrote $3.3 billion last October in sub-prime loans. This October, that figure is down to $42 MILLION. That's only 1.27% of the previous figure...

Something right there stinks in my mind. Of course, with all of these foreclosures coming on the market so rapidly, and with that number sure to continue to rise as last year's numbers begin to take a toll, there will be a new market for Countrywide and other lenders: the refinance market. Congress is pushing hard to get lenders to work with homeowners so people don't lose their homes. The government wants lenders to offer fixed-rate mortgages to these folks. They want Fanny Mae and Freddy Mac, government ran, privately invested lenders that own more than 40% of all bank notes in the US, to buy out these loans to lower the risks for these banks in the short-term.

In other words, these same companies who just got chewed out so badly for the sub-prime mess are going to be bailed out even when, for the moment, they aren't injured badly enough to put the bigger culprits out of business. Then they want these same greedy, selfish companies to offer homeowners, who are about to lose their homes and are completely desperate, the same homeowners whose credit ratings are taking a nose dive, and offer them a chance to refinance.

I see the conversation going a little like this: "Okay, okay, so we screwed you. Sorry... Hey, I have an idea! Here's a refinance plan that won't be like the last one! It's a fixed-rate loan. You probably couldn't afford it when you were looking last time, but now that the variable interest rates are through the roof, they don't look so bad now, do they? Of course, you'll be paying a much higher fixed interest rate because we can't trust you since you couldn't pay your last mortgage."

Homeowner: "Whatever, you suckered me once, but I'm desperate, so whatever you put in front of me, I'll sign, seeing as that's what got me in this mess in the first place."

Don't get me wrong, I don't want to put all the blame on the banks. When moneychangers and dove sellers were dealing in God's house, there had to be a market for them to be there, otherwise they would have gone elsewhere after a while. Some people, for whatever reason, don't read the fine print or do basic research when they're about to spend 1/4 - 1/2 of their monthly income on something that they'll be paying on for the next 15-30 years!

But in the end, these same lenders who made these lousy deals available are now cashing in on even more money for the problems they themselves caused and are being bailed out by the government to do so when they should have gone out of business for being ran so stupidly. A. maz. ing. They will be responsible for sinking this economy even more than it already is.

When you read Micah 6:10 - 13, you see what God has coming for these types of people:

"Can I forget any longer the treasures of wickedness in the house of the wicked, and the scant measure that is accursed? Shall I acquit the man with wicked scales and with a bag of deceitful weights? Your rich men are full of violence; your inhabitants speak lies, and their tongue is deceitful in their mouth. Therefore I strike you with a grievous blow, making you desolate because of your sins."

And to the people foolish enough to take these kinds of loans:

Proverbs 22:7: "The rich rules over the poor, and the borrower is servant to the lender."

I don't think people in debt realize just how much of a slave they could become. God will judge this nation for our selfish, get-ahead-at-all-costs lifestyles among many other things. I just think the whole thing stinks and implore those of you who don't own a home yet, but who might in the future, to greatly consider what you're getting into. Get advice, talk to many banks, get a trustworthy agent, etc., etc. etc.

Proverbs 4:5-6: "Get wisdom, get understanding; forget not; nor turn away from the words of my mouth. Do not forsake her, and she shall preserve you; love her, and she shall keep you."

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