12.14.2007

Merry Christmas, Mortgage Lenders

by Jeff Siegel

I am a white, middle-class, college-educated American who has excellent credit and a 30-year, fixed-rate mortgage. And even I have a lender trying to pull a fast one on me.

So how bad must it really be for all those poor souls caught in the middle of the mortgage mess?

My lender, CitiMortgage, wants to charge me $375 plus $1.50 every two weeks. This will allow me to make 26 payments a year instead of 12, so that I can pay off my mortgage more quickly. "Our goal is to be a trusted advisor," says the mailing that I got touting the program. Yet nowhere in the mailing does my trusted advisor mention that I can do the exact same thing myself without paying their fees, according to the terms of my mortgage.

With trusted advisors like that, who needs con men?

This is just one reason why no one should have any sympathy for the lenders in this crisis. Their lax – and in some cases deceptive – lending practices played a major role in causing the crisis, and I'll be damned if anyone should bail them out. Bailing out the borrowers is a different matter, of course, since so many of them apparently had pieces of paper thrust in their faces and told not to worry – trusted advisors would take care of them.

There is considerable doubt about whether the rate freeze will do any good, given the continuing collapse in home prices and the limited number of borrowers it will help. But that's not surprising, given that the Bush administration came up with the idea.

What is surprising is that the Bushies, aided and abetted by the Democrats in Congress, aren't bailing out the lenders. This is a far different tack than 2005's so-called Bankruptcy Reform Act, which was written to benefit lenders. I expected the White House to throw piles of cash at CitiBank, Countrywide, and their brethren, egged on by a Congress eager, as always, for campaign contributions. Can't you see Hillary Clinton, palm out, intoning sonorously about the need to protect the integrity of the lending system by giving tax money to lenders who made mortgages to people who couldn't afford them? It would give new meaning to the term Corporate Democrat.

But that didn't happen. I can only assume that the problem is even worse than they're letting on, and the cost of a bailout would be so prohibitive that even the business-as-usual types in the White House and Congress would balk at it.

This doesn't help anyone keep their home, but these days, even small victories count.

(Political cartoon from radicalgraphics.org, which offers its material for free.)







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