Monday, 31 March 2008

Foreclosure

Everybody’s talking about foreclosure. I’ve been through it myself. The castle was foreclosed in 2003, at least partially as a result of a stroke I suffered the year before. I’m not proud of it, but you should know. The question seems to be, should the public till be tapped to provide relief for homeowners who can’t currently make their mortgage payments. Obama and Clinton are both quick to say yes, McCain is somewhat more reticent. They’re in the business of fishing for votes, I’m not.

The answer is, “No way in Hell!” Now before you lambaste me for insensitivity (I really am a caring monarch), let me point out that the lenders are going to be far more unhappy with my response than the borrowers. In a nutshell, what I want to say to the lenders is that they need to grow up and remember that mortgages are long-term instruments, routinely drawn for thirty years. If the market is such that lenders can’t resell the paper right this minute, they need to suck it up and smile.

If I Were King, here’s what the deal would be: No lender may impose penalties of any kind or any amount due to late payments on mortgages forĀ  a period of five years, or half of the remaining term of the mortgage, whichever is less. Interest will continue to accrue, and that’s the reward that lenders supposedly were after when they made the loans in the first place. But the current rush to charge a host of fees and penalties are incompatible with the very nature of a long-term financial instrument. Boys, it’s the time value of money we’re talking about here.

Yes, if a borrower loses his job and can’t make the payments for a year or two, that’s the way the world is right now. If he never gets back on his feet, you can go ahead and take the house back. If the property is abandoned, go ahead and foreclose, our neighborhoods do not benefit from empty houses. But if the borrower is in the house, reasonably taking care of the property, then damn it, you can let the clock run.

That thirty-year mortgage might turn into a thirty-five year mortgage as a result, but you’ll get your precious interest in the end. If I Were King, that’s the only recourse you would have. Remember, you’re the one that wanted to be a lender; the nature of being a lender is to hand out money and wait for it to come back with interest. So wait.

Delinquency

Okay, I’ll admit it, I’ve been delinquent in keeping up here. I’ll try to do better. I wrote hundreds of e-mails, some of which probably would have been excellent fodder for posts here had I really been on top of it, but I didn’t. In the interim, here’s my most recent sermon, touching on the nature of truth and fact.