Friday, October 03, 2008

The Bailout

This whole economic situation is crazy, and here's a perfect example. The headline reads: Woman, 90, shoots self inside foreclosed home. I was intrigued that a 90 year-old was still paying a mortgage. So I read the article.

Here's what gets me about this story - the woman took out a 30-year mortgage in 2004. I'm not sure when her birthday is, but if she's 90 years old now, she was 86 then. And a bank gave her a 30-year mortgage.

Really?! In what universe did they expect this woman to live up to the terms of her contract? More people are living beyond 100, but not so many are making it until 116. I don't think I'm advocating age discrimination. But c'mon, don't we have to wonder what the loan officer was thinking? No wonder the banks are failing!

Okay - the issue isn't that she died and left 26 years on her mortgage for her heirs to figure out. It's that she couldn't make the payments. Maybe she owed her bookie? The article doesn't say whether she was working into her 80s and therefore had reason to believe she could pay, or whether her social security was enough for the payments.

I am not unsympathetic to the folks heading in to foreclosure. But I think a good number of them should have read the fine print, and I definitely don't feel bad for the banks who made stupid loans when any 7th grader can tell them that someone with a $30,000 income can't afford a $500,000 mortgage.

There was a item on the news recently about a woman's whose bank failed and she lost $20,000. I coudn't figure out how that could happen - everyone knows that accounts are insured to $100,000, right? So I kept watching. It turns out she had $120,000 in her account and therefore the last $20,000 wasn't insured. It's a shame to hear that people are losing money they've worked hard for, but she knew the rules. A second account at the bank down the street would have taken her 15 minutes to open whether she thought her bank might fail or not.

Wow - I had no idea I was so heartless....

Update on the woman who shot herself here.

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