More Interest Rate Cuts, Stocks Drop

Read this article. I challenge you to prove to me that we're not already in recession.

Bush Announces Mortgage Freeze...

Then tells the White House chef to make him one for dessert.

Who knew it would come to this? If you meet the criteria, you might be able to get a five-year interest rate freeze on your ARM. But don't get excited yet, cautions The Washington Post:

The Center for Responsible Lending, which battles predatory lending, estimated that only 145,000 homeowners would qualify for the freeze because the criteria are too narrow.

The criteria include having consistently made mortgage payments on the lower rate and living in your home. This would exclude speculators. That can't be a bad thing.

And here I thought everyone who had an interest only loan should suffer the consequences of his or her stupid loan choices. These are not the rantings of a bitter woman with a 15-year fixed rate mortgage. This for all the people who *didn't* buy property because they realized that there was no way their income would increase commensurate with the interest rates they were going to pay on their "interest only" loans.

But really, the source of this problem isn't young people who want to buy properties they can't afford. The real problem is two-fold: American materialism and greedy lenders. Let me tell you a little story.

When my parents were just starting out (and, mind you, they were doctors), they bought a Fiat and lived in hospital housing. Over time, they bought nicer cars and bigger houses. Approximately 10 years after the Fiat and the hospital housing, they moved to America. And we lived in an apartment and had an ugly-yet-loveable Toyota Cressida, which we kept for the next ten years. So even though my parents were well into their 30s and 40s at that point, they were starting over at the beginning. But did they go and get an adjustable rate mortgage to buy property they couldn't yet afford? No. And when they had saved enough money for a down payment and had built up credit here, they bought a townhouse. Did they go buy a single-family-and-help mansion? No, they bought a townhouse. And, later, a nicer car. And, later, a nicer house with a 30-year fixed rate mortgage. Could they have bitten off more than they could chew? Well, of course. Did they? No.

And therein lies the lesson that's to be learned from all of this. As professional adults with a family, my parents started over and knew what they realistically could and could not afford. Couldn't they have thought, "Well, we had a house in England. We should have a house in America right away" and taken a subprime mortgage to make that happen? Yes, but they didn't.

It's hard to live in America in the new millennium. Believe me, I feel for you. But it's okay to rent an apartment for a while until you are in the position to make a sensible investment (or until your parents, out of the generosity of their hearts, buy a condo in which you can live). If you believe otherwise, it's because you've bought into a system that is telling you that you do not have enough for the sole purpose of exploiting you and taking your money. The subprime morgage rate is the new indentured servitude, and if enough people refuse to be indentured, then these lenders will get the message.

It's okay to work your way up to that de-luxe mansion in the skyyyyyy. George and Wheezy did it, and so can you.