Article Response

The Rainy Day Foundation is definitely counter acting government efforts to seek out mortgage lenders that make risky loans. They’re not helping the situation by making it appear that people are able to handle such loans; the Rainy Day Foundation is putting a band-aid on the situation, postponing the inevitable default of these loans. The government backs these loans not the Rainy Day Foundation or the lenders. When people default on them the government, aka taxpayer’s money, must assume the loss. It’s bad enough that lenders allow borrows to take out more than they can handle, but its worse that the Rainy Day Foundation isn’t even held accountable; maybe if they were they wouldn’t be so irrespirable. If the Rainy Day Foundation is truly pulling one over on the FHA than they should be held accountable for their actions not the government and our tax money. At this point the Rainy Day Foundation is being paid $600 a pop by lenders so they can continue to get away with letting people take on loans they can’t handle.

This article got me upset because of how true it is. My father a few years back and right after his divorce refinanced all his loans and mortgage and dipped into he equity to try and survive with four kids after my mother had left. The loan he made consolidated all his debt into his mortgage and since his house at the time, about five years ago, was worth a little over 250,000; he took out a new loan for about 250,000. At this point he had a 401k with about 50,000 and all his bills other than utilities and life expenses like food consolidated in a 30-year mortgage at about 250,000. Soon after this when the interest rates went up and the housing crises struck my father was left with a house that was only worth about 195,000 and a loan out for 250,000. Certain legal battles with my mother and other family craziness happened and my father 401k was all but gone. About a year ago my father eventually lost his house and the home my brother, sisters and I grew up in. There’s no doubt in my mind this was a predatory loan company and that my father was allowed to take out to much money and that it was inevitable that he would eventually default on the loan. The final cost of the loan was over 11,000 dollars, my father brought it to a lawyer and he said that an 11,000-dollar closing fee is unheard of for his type of loan and that he believes he lender stole about 8,000 from my father. Sure my Dad should have known better and yes that’s why they say never do business under distress, but in his desperate situation he shouldn’t have even been allowed to do what he did. At least there should have been some agency he could have gone to as a single parent to get a loan and financial plain that could have worked for him. Instead the loan agency saw that he was desperate, knew he would default on the loan, and gave it to him anyway to make a quick buck. My father had to file for bankruptcy and has been renting and struggling ever since. I know he might have been able to make some better decisions but in his mental state at the time he was taken advantage of and that’s why this article was so interesting to me. I believe in fact after talking to my Dad recently the lender he dealt with worked for Lend America!

Link to Article: http://www.publicintegrity.org/articles/entry/2038/

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One Response to “Article Response”

  1. Professor Dunphy Says:

    John,

    Really glad you did all these extra credits! They will help you later on…

    I know we spoke about things so I’m not going to go into them as much…

    Looking forward to reading the final post and the other one…

    Hope all is well.

    Prof. Dunphy

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