Archive for April, 2014
I recently read a very interesting article in Dallas Morning News entitled “Fixed Mortgages Scrapped.” The front page story reads, in part, “In an action seen as the wave of the future by some industry analysts…one of the largest Dallas-based thrift institutions announced Monday it will no longer write fixed-rate home mortgage loans….The action was lauded by building industry officials, who fear that without the action there would be virtually no home loan money available…The announcement prompted an observer at a competing savings and loan to predict the end of fixed-rate loans in the Dallas area.”
Most people probably overlooked this story, even though it was front page and “above-the-fold.” How could someone miss a story this big? Well, it was because there was a slightly bigger news story on the front page that day: “Madman Kills John Lennon in New York.” Yes, the story I mentioned appeared in the December 9, 1980 edition of the Dallas Morning News.
Only a foreclosure defense nerd such as myself would overlook the article on the assassination of the former Beatle great to read an old article on mortgages!
I thought the article was interesting for a couple of reasons. The first is that it is evidence that banks have been bemoaning their financial position for literally decades. Thirty years ago they were complaining that they didn’t have enough money. Sound familiar?
The second reason I thought the article was significant is that it is evidence that no one can predict with certainty what is going to happen in the future in the banking and lending industry. Over thirty years ago, the so-called experts were predicting the end of the fixed-rate mortgage. But the fixed-rate mortgage is still here. Remember this article when you hear about some new financial product or some tricked-up loan that allows homeowners to borrow more money than they should. Remember the article when a banker is trying to sell a loan that may look good now, but may not look so attractive in 5-10 years, and he’s telling you if you don’t like it then you can just refinance (a common sales pitch from the mid-2000s). I hope out Congressmen and state legislators will remember this when the banking lobby is trying to push through legislation that stacks the deck in favor of the big banks and against homeowners.