The Foreclosing of America (Part 2): Freddie Gets Rich

[marmar]

from TomPaine.com:


The Foreclosing of America (Part 2): Freddie Gets Rich
Submitted by Rick Perlstein on July 10, 2007 - 12:37pm.


(Read Part 1 here: http://commonsense.ourfuture.org/homeownership_republican_dog_didnt_bark_part_1_3)

Let's say you're a young professional couple from Cleveland, eager to pop out some kids. It's 2004. You want to do what young professional couples eager to pop out children have done at least since World War II: own your own house in the suburbs. It's the American Dream.

Okay, you're not quite a young professional couple - more like an aspiring professional couple. Neither of you have been able to get a remunerative job in your chosen field yet, but you're getting by, and you think your prospects are good. You've been ambivalent, thinking about renting a few more years until you can get up on more solid financial footing. Then the president helps you push away your fears. You hear his exhortation, in June of 2004: "The more ownership there is in America, the more people have a vital stake in the future of this country." You put aside your doubts. For you deeply admire President Bush, deeply trust him.

You assemble your pay stubs for your appointment with the mortgage broker to document your too-meager income with fear and trembling. (You're working at Comp USA, waiting for a job worthy of your computer science master's to kick in. Your wife, a teacher, isn't working full-time at all.) Then a friend tells you something remarkable: he's just returned from the mortgage broker's himself, and lo and behold, he had not even been asked for documentation of his annual income - just to state it. Your friend, fudging a bit - he, too, feels his current income incommensurate with his true prospects - gives the number he expects to be pulling down next year, once that job he's interviewed for comes through.

You put away your pay stubs, and decide to make like Dick Cheney describing Iraq. Your assent into the upper-middle-class will be a cakewalk. You prepare to tell the broker your income is 75 percent more than it actually is, but still steal yourself for disappointment. You know what the mortgage deal was like for your older brother, the doctor, ten years ago, and there's no way you can afford those kinds of terms.

You turn out to be pleasantly surprised.

The interest rate? Next to nothing for a start, he says. We bank on people like you, whose incomes can only go up, up, up. We're able to do that by customizing a low, low interest rate for now, when you're just getting on your feet. It will "reset" to something higher in two years, and you smile confidently: you'll be doing great in two years. No need to pay down the principle on your mortgage for ten years, the smiling salesman then adds - you can pay it in a lump sum ten years down the line. By that time you'll be doing just fine, you tell him about how you might be buying into a cousin's contracting business in Fresno, California, where houses are popping up like dandelions after a summer rain. "I know," the salesman smiles. "We're doing a hell of a lot of business out there. I just read a magazine article that listed Fresno as one of the new 'headquarters of the American dream.' 'Ownership Society' and all that!"

You smile - a fellow Bushie! - and exchange a joke about John Kerry shooting himself in the foot in Vietnam. .....(more)

The complete piece is at: http://commonsense.ourfuture.org/foreclosing_america_part_2_freddie_gets_rich?tx=3

[AX10]

1. K & R!

[snappyturtle]

2. K&R Thanks so much for posting this....it is unbelievable!!!

My daughter got into an awful loan on her first home, a condo, in Minnetonka,MN....Minneapolis...She was hoodwinked into buying while looking forward to building equity and to property tax deductions. The realtor from a nationally known company got her a loan (shark) without disclosing the terms or presenting her with a HUD 1 prior to the arm twisting closing. This realtor has a contract with the real estate developer of these condos (Carlsen) to sell units....acting as a double agent she coerced the loan...even offerred $$$ for bigger down payment!!! We're supposed to hear today from my daughter if a rent to own deal will be forthcoming....hope so as then she can avoid foreclosure...well, as least for the time being. This "deal" was a sham and shame as its victim is a young, hardworking,college grad who paid most of her expenses through school to be debt free! HA! Lot of good that did.