Subprimates

Or, watch your wallet!

Once again realtors and lenders have created a mess. Once again the taxpayer is going to bail them out.

I recall several years ago when the housing market in California collapsed due to rope-a-dope appraisals. When the borrowers went into default, the banks realized that the houses weren’t worth nearly as much as the appraisals showed.

Subprime loans are defaulting all over the place. The total now tops $100 BILLION. One shouldn’t marvel at this since low interest loans have been recklessly offered for years now. You’ve got your ARMs. You’ve got your “interest only” loans. You’ve got consolidation and refinancing going on as though it were no big deal.

Add to that the fact that credit card debt is UP again and the savings rate is nil.

Like the guy on the radio mortgage ads says, “It’s the biggest no brainer in the history of earth.”

Enter presidential candidates. The Senator born and raised in Illinois, lived her adult life in Arkansas, and now represents New York – Hillary Clinton, steps forward to save us all from the consequences of our actions. She is proposing changes in the mortgage industry to protect the naïve who have come to expect a free lunch.

Clinton’s new lending rules:
*Lender fees must be clear and in plain language
*Monthly taxes and insurance must be clearly stated
WATCH THE REDISTRIBUTION OF WEALTH BELOW:
*Ban prepayment penalties on all mortgages

The masses will lap it up, especially in an election year. We’ll be lucky if they don’t add more freebies before they’re done.

I missed the most important change that no one is talking about, something no candidate will ever go for: Require proof of citizenship or legal permanent residency to own residential property.

Stop the presses! If Congress starts tinkering with our trade relationship with China, Beijing has threatened to withdraw the $1 TRILLION it has invested in the U S bond market.

Now that would make the subprime mess look like Sunday School. I suppose that’s the price you pay for dancing with the dragon.