Obama, Sally and Stimulus Attitudes

Sally Rae has an attitude. In but the fewest of words there was a flare of disgust and a tinge of anger about the overindulgence homeowners had exercised during the sublime years of sub-prime loans and second-mortgage frenzies.

Although typically calm, cool and in control, Sally’s uncomely attitude was spurred by the Making Homes Affordable Plan. She grumbled for a moment but, quicker than Obama can swat a fly on the back of his hand, her demeanor returned to the sweet, charming little lady she is.

The Home Affordable Refinance Program targets 4 to 5 million homeowners with loans owned or guaranteed by Fannie Mae or Freddie Mac to lower their monthly payments. The Home Affordable Modification Program aims to keep an additional 3 to 4 million Americans from facing foreclosure.

The $75B allocated to the programs intends to lower interests rates to as low as 2% and/or give loan extensions up to 40 years – anything to bring the payment below 31% of pretax income, thus stemming the flow of bankruptcies and short-sales – but only applicable to owner-occupied, primary residences, not speculators or house-flippers, for up to $729,750 in unpaid balances. How sweet it is! For some, not all.

Sally has a problem with her tax dollars being given to irresponsible people who, with just a bit of common sense should have known the bottom-line monthly payment shown on the closing papers was unaffordable with their given incomes. An oversized house is nice to live in but when there’s a family to consider you not only have to plan for retirement but also consider college costs for the kids and, accept it or not, emergencies.

You can only blame lending practices so far because, in the end, it’s the person who signed the loan papers who are just as much at fault. Irresponsible indeed, dear sister, but I can top your angst with lenders who were too eager to give unsecured loans in the form of credit cards with little oversight of the individual’s ability of repayment.

A recent article in The NY Times related a cardholder who had been contacted by a lender that offered a 20% write-off on a $5,486 balance to which he declined but whose counter-offer of 50% was immediately accepted. An elderly gentleman who owed $112,00 on four credit cards, through a third-party settlement company that charged him a 12% fee, was able to reduce the balance to 35% of the outstanding balance, thus whittling down to 47% the outstanding balances.

In neither case was there a hint of them having to relinquish any of their assets. They had their cake and ate it too, and the rest of us are left with the crap that came out in the end – paying for the tasty morsels of their consumerism in the form of credit card companies jacking up interest rates much too quickly and all to often, even to those who continue to make on-time payments.

Obama’s Congress passed the Credit Card Act in May but the rule on 45 days advance notice of major changes won’t take affect until September and the majority of the new rules don’t apply until February next year. Consumers are of little concern compared to the demands of the corps or corporations.

The actions people took to enhance their immediate lifestyles were shameful. Whether by means of uncontrolled credit card usage or double-mortgage abuse, they set aside common sense for the good-time feeling of keeping up with other consumers who went on swanky spending sprees.

They beset themselves on the most difficult of futures with purchases of joyful trinkets like big screen TVs and monstrous vehicles that lose value the moment they’re taken off the showroom floor. Phantasmagoric vacations too, I’m sure.

There’s also the woman whose arrogance came out in full bloom when she bragged about the home equity loan she took, knowing the additional payment couldn’t be met. She pocketed the money. Despicably American.

The ones deserving of compassion, which doesn’t help them one bit, are those who became indebted due to health costs. I could make a wager and be fairly certain that, minus their conditions, their homes would still be secure investments, their stomachs less empty, their electric bills paid and they’d in be in much better off than the ones who pillaged their financial security for earthly pleasures.

Perhaps against Sally’s recommendation but in reader interest, particularly those faced with foreclosure, I suggest you visit www.financialsecurity.gov for information and www.makinghomeaffordable.gov to start the process that could ease your weary mind from the fears of losing your home. The entitlement was given by Obama. As far as other debt, call the number on the back of your credit card(s) and cry, “Fools!” You and them but the rest of us most of all.