My name is Joe Smith. Six years ago when the housing market was white-hot, my wife and I decided to jump in and buy a house of our own so we wouldn't be left behind by our friends and family. We'd been lifelong renters but come on! When everyone you know is buying and flipping and making all kinds of cash, how could we resist? We've had some problems in the past - getting fired from jobs, missing payments on stuff we'd bought, $50,000 in credit card debt and stuff like that - so we were really surprised when the bank approved our application, especially with no down payment, but the loan officer said we were getting something he called an "adjustable rate mortgage" that was tailor-made for people like us. We could move into the house with a really low interest rate to start off, and by the time the rate went up, we would have our finances squared away. It sounded pretty good to us at the time and like I said, we didn't want to be left out when every house in America was being bought up, so we took it.
Unfortunately, things have gotten worse, not better. We've been late on a few of our mortgage payments because we decided to play the lottery and take a trip to Cabo instead - booyah! - and we got sued by one of our creditors because we wrote a rubber check as a down payment for our car. (Don't judge us! How else could we get a new Escalade with our credit score?) The bank jacked up the interest rate on our mortgage which Hello! we couldn't afford and now they're threatening to foreclose on us. The good news is that Barack Obama is President now and he wants to help us out, like if things get really bad and we declare bankruptcy, we can ask the judge to lower our interest rate, lower our monthly payments, lengthen our mortgage out to forty years or even cancel part of our balance which would really be cool - we could stay in our house as long as we wanted, on our terms and the bank couldn't do a thing about it! After all, shouldn't everyone have the American Dream, not just the people who can afford it?
My name is Joe Smith and I am the president of First Neighborhood Bank of Anywhere, USA. Ten years ago when the subprime lending craze was starting to sweep the nation, I tried my hardest to stay out of it because the money I lend belongs to my friends and neighbors and I would no sooner risk their life savings than I would risk my own. If I jeopardize their kids' college fund, or their retirement savings, or their home, I violate their trust and deserve to lose their business.
That is not to say that I haven't been pressured to compromise. It seemed like every week HUD or Fannie Mae was issuing new guidelines for "underserved demographics," meaning people you'd never loan your car keys to, let alone $300,000 for a house. Bankruptcies, lawsuits, judgments, defaults on other loans, nothing seemed bad enough to disqualify these people from a mortgage, every basic premise of good credit being sacrificed for some damned Washington social experiment, and now we're taking it on the chin. In fact, the world is taking it on the chin because of this idiotic lab test. Things are tight in my town and at my bank, we've seen a few of our customers laid off from their jobs but overall, we seem to be weathering the storm OK unless Obama gets this new legislation through Congress that I've heard about. Judges dictating the terms of a mortgage? Interest rates and balances and monthly payments subject to their whimsy and not financial principles? That's nuts. Mortgages are contracts, Mr. President, and as a lawyer you should know that - they're not collectibles you buy on QVC and return in thirty days if you don't like them. Giving millions of bad credit risks a break on their mortgages sounds great on TV but is extraordinarily destructive for my customers since they would have to pay for it. I'd be forced to raise their fees, increase interest rates on their new loans or reject their loan applications, punishing hundreds of diligent, responsible, thrifty people so some deadbeats can get over. Bunk! It's not politically popular right now but if someone defaults on their mortgage, that's why we have foreclosures, and that might be the opportunity someone else is looking for: Joe's mortgage, you might say.
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