There are 50,175 borrowers with subprime loans in the Hudson Valley. That totals out to about $14.8 billion in outstanding debt, according to numbers crunched last month by U.S. Sen. Charles Schumer”™s office.
His staffers also determined that about 30 percent of those subprime borrowers may have qualified for lower-interest loans if they had known about them. But we don”™t think that should be a factor that should come into play. The phrase due diligence comes to mind; if you”™re going to borrow a lot of money do your homework.
According to foreclosures.com, there are: 777 homes in Rockland County in preforeclosure; 270 in Dutchess; 166 in Putnam; 138 in Orange; and three in Ulster.
This does not bode well for the region”™s economy. Economically strapped people and empty houses don”™t pay taxes.
It”™s one thing to borrow beyond one”™s means, and another to lend beyond those means.
The Bush administration is now in the latter category with its plan to help up to 1.2 million people who either borrowed beyond their means, but more likely didn”™t read the fine print. The devil is always in the details. And so it is in this latest government bailout.
Has this country, especially the president, not learned from other bailout plans, most notably the savings and loan implosion? Formally called the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), this bailout was unveiled in February 1989 by another familiar name, President George H. Bush. Incidentally, the president”™s son Neil was a member of the board of directors of Silverado Savings and Loan during its collapse. He was never charged with any crime other than being accused of conflicts of interest.
As of Dec. 31, 1999, the S&L crisis had cost taxpayers $124 billion, according to a report by the Federal Deposit Insurance Corp. However, that number is on the rise. The U.S. Supreme Court found in July 1996 the government had “violated contractual obligations” of thrifts that were in the throes of mergers and acquisitions.
By 2000, 141 thrift acquirers filed lawsuits. Judgments in the cases so far resolved is now in excess of $1.1 billion
The problem with the subprime mortgage bailout is that it doesn”™t hold the individual borrower truly accountable. These borrowers signed on to get loans whose payments would increase over their respective lifetimes. A lot of these same borrowers then realized that they couldn”™t meet their financial and contractual obligations. “We were duped,” they said.
How many homeowners were actually duped by unscrupulous mortgage lenders looking to make a buck? Can anyone name just one? It”™s starting to sound like an urban legend. “I have a friend who told me he has a friend who was screwed by the bank because they didn”™t tell him the mortgage would balloon within two years to these unbelievable rates.”
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How many lenders have been arrested for fraud or even accused of lying to potential borrowers?
Now the government is freezing some mortgages at their low introductory rates and helping people to stay in the homes they couldn”™t afford to live in in the first place.
What about the couple who took out a conventional mortgage and encountered a financial hardship such as a layoff or a major medical issue and now need a temporary hand to meet the monthly payment? Should they be excluded because the mortgage wasn”™t subprime?
There”™s no easy answer, just Monday morning quarterbacking. The banks and lenders should have been more discreet in whom they chose to give money to.
Just as with the S&L bailout, we have this sinking feeling we”™ll be paying off this mortgage mess for another 20 years.
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