#601 Graft Legislation

Lately we’ve been hearing about the mortgage meltdown. Those in the know are using a more subtle alliteration and calling it the mortgage implosion.
There’s even a website dedicated to it called ML-Implode dot com. Employees of national mortgage chains visit it every morning to find out whether they lost their heads on the chopping block the previous night.
The last total I saw was 144.
This debacle is far from over. No-down payment loans, interest only loans, and most importantly, adjustable rate mortgages, affectionately known as ARMs, are wreaking untold financial havoc as homeowners with marginal credit are defaulting left and right.
As one financial wag put it: “Finally, a farewell to ARMs.”
This is the inevitable result of the ARMs race, when lenders out-competed one another for “creative” financing solutions.
Like the old inflate the price of a home and then come up with an imaginary “qualifying” down payment from the difference when you reduce it back to normal price.
Or qualify a barely qualifiable person with an incredibly low initial ARMs rate, and then try to farm out the mortgage to another lender, skim the commission and run like hell, knowing full well the homeowner was likely to go, um, tics up at the next reset.
I love that word, reset. That’s what they call it when your arm interest rate tics up to open market loan rate. In some cases doubling your house payment.
Reset. It sounds so innocuous. Like the timer on your oven. Or the clock on a time bomb.
All that was okay in a market where you could sell your home quickly if you got in too deep. Not okay now, when homes languish unsold for months on end.
So the homeowner defaults, the mortgage company eats it, then pleads to the government for help out of the situation they created.
There’s talk in congress of some sort of emergency bailout graft legislation, I mean draft legislation, to help.
Hmm. Seems to me there was some deal in the first Bush administration about savings and loans and shady loans. Weren’t we taxpayers the ones who finally had to eat it?
I’m just glad we learned our lesson.
America, ya gotta love it