Monday, September 07, 2009

Glass Lickers

Ever read a news story that pisses you off ... only to go read the comments and get even more riled up?

Yeah? Well, here's my venture into that particular world for this weekend:

Sac Bee: Backlash Against Banks...

For a guy like me who wants, overall, to see mortgages foreclosed faster rather than modified (read: delayed), the article is just painful. But then I get to the comment from someone with the moniker of "cwraider." Dated 9/6/09 @ 5:53:07pm, it reads thusly:

My two cents: State workers (wife and me) -- Countrywide home converted to BofA. 480K original loan -- now assessed at 240K. Nevertheless with the 14% drop in income we missed two months (not in a row - over a 6 month period). Did get BofA to reduce int. from 6% to 4% fixed. Now bad news...original loan was 30 yrs. Now we are at 40 yrs, plus the two pmts were added to the loan -- yes we are paying slightly less than original (including taxes and insurance) but with a 40 yrs term -- BofA is making out. Moreover, apparently BofA and Countrywide haven't completely converted their systems and even though we are paying on time Countrywide is reporting us delinquent -- go figure. My question to anybody out there -- what happened to three years of interest only payments? (approx. 75K). Essentially we went from 30 - 3 (27 yrs) to a 40 fixed. Thanks.

The emphasis above is mine.

What happened to three years of interest-only payments?


It went to the bank, cwraider. It was interest only. Your $75k was the pure profit you paid to Countrywide/BOA for the honor of taking out a death-wish loan on a home you had no business buying (or refinancing).

Most of the time I run the other way when folks talk about implementing policies to "protect people from themselves." But I really can't argue with the fact that the failures in the current system have been widespread, and immense.


— Posted by Michael @ 10:23 AM


broken link: try (there are no comments on this version though...)


There are two ways to read his question, so he may not be quite as clueless as all that.

Totally clueless interpretation: "I paid $75,000 toward interest. Why didn't any of it go to principal?" If that's the underlying question, that he needs remedial money management classes immediately.

Not quite so clueless interpretation: "I had a 30 year mortgage and refinanced it to a 40 year mortgage 3 years in. But I thought that would make the total term (old and new mortgages) to be 40 years, and I'm not sure why it isn't." If that's his underlying question, I have a bit sympathy. I will sometimes say that I refinanced my home, but really, it was an interest rate adjustment, and nothing else changed, including the overall term of the loan. If he was thinking that the 40 year term would start from the original mortgage date (and the payments would then be calculated as a 37 year loan), I can sort of understand it. A little.

But even then, I would want to introduce him to excel and the FV function and other nifty tools like that. Because I'll bet that no one is telling him that he has to pay exactly what is on the payment coupon and not a penny more. (And if the mortgage *does* penalize for early payment? Then he needs that remedial money management class.)

So yeah, clueless, definitely, but perhaps not as totally clueless as it might appear on first reading.


This year 2010 ,me and my family have started one thing which was no seriously attended to before.My wage packet was given to wife,then distributed evenly ,but in the end of month we used to find some more (-)than (+)adding to the savings account.Money used to come and it was going away very fast.Now last two days we are jotting down our daily expenses and 1st day was (-)but next day it was almost same.We will be reviewing again on coming Sunday our expenses and explore avenues where it can be reduced.

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Thoughts on my personal finances, goals, experiences, motivations, and accomplishments (or lack thereof).

My financial life began turning around when I took responsibility for it.
— Dave Ramsey


Start (2005-12): ~$21,900
Currently: $0
[About Our Debt Paydown]


Savings Goal: $15,000
Currently: ~$15,115
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