The mortgage industry is the cause of the inconsistency in the market.
So all the financial talking heads are riding the Bush administration to save them from the risky investments of their obsessive greed.
First they role out Paulson with the "presolicitation"...all under the pretense that this is going to benefit the consumer.
So we sittin' our simple minded asses back happy we MAY avoid foreclosure.
This got me to thinkin...
You know how philisophocal I can get....
I personally have paid over $50,000 worth of mortgage payments over the last four years.
I have null equity... my principal balance has not shrank it has reversed...the only equity I have gained is through increased property value.
I know that I am not alone here.
The Consumer so dayum happy our dumb asses done forgot... the first years the bank applies the majority of our payments towards the interest while giving the buyer very miniscul principal credit.
Let me get this straight... the big greedy ass banks bought my mortgage along with several hundred others for lets say 60-70% of the original loan amount...while I was still held liable for lets say 100% of the original loan amount + interst....
....the banks have been collecting my majority interst payments to the tune of $50,000 over the last four years while increasing my principal balance $12,000...(which is $62,000 for the banks)...
Let's do the math here....
Say...
I bought for $132,000 + $12,000(bal increase) = $144,000(I owe the bank)
Bank bought for $92,400(70% org val) - $50,000(payments made) = $42,400(banks possible loss)
Oh...somebody please remind the readers, whats the purpose of that phuggin' mortgage insurance?
$166,000(house value/my loss) - $42,400(bank loss) = $123,600(bank wins)
The banks get pmi/mip... their loss is covered on the majority of foreclosed properties.
If you happen to live in an area, even with foreclosures where there is appreciating home value.
Even at auction....the bank comes out a winner.
What do you get?
Maybe somebody out there looking at this disparity thinks this is ok.
This is capitalism at its best.
How does this benefit the consumer?
Here's a plan...
If they really want to benefit the consumer: Ease up the second mortgage or refinance qualifications to allow those with equity to tap into that equity to meet past due mortgage balances and pay off any other debt the equity will cover. Have a period of interest only payments followed by a period of majority principal - partial interest payments. where
We tout and promote capitalism. At a time when people are working to acquire net worth, it is a cruel and unjust system that would allow consumers with equity in a property to walk away BROKE.
