The Escalating Mortgage Crisis: Questions, Answers & A Company

The Escalating Mortgage Crisis: Questions, Answers & A Company
You Should Know About


George Boelcke FCI

There is a huge amount of blame to be shared in this fiasco. But I haven´t heard any company take any
responsibility for anything. Nobody has stepped forward and acknowledged their role in millions of families
now living a financial nightmare. Hearings aren´t the same as solutions, and "ought to help families" has no
connection with tangible actions. What a relief and blessing that the FBI has stepped in to do some serious
digging and an extensive criminal investigation. I just hope it goes far enough to investigate individuals and not
just the 14 firms currently being looked at.

Everybody got rich beyond belief while throwing a millions of families under the bus and killing their financial
hopes, dreams and credit. I don´t know who should do what, if anything, but I do know that any decisions, or
help, need to have a whole lot more urgency. Every month that goes by, it´ll be too late for more and more
families who will have their life altered for years to come.

But here´s what I do know:

Experts say pre-pay your loan when you can. I disagree: Once it starts raining, don´t fix the roof – get an
umbrella! Get some emergency savings in place, instead. If you do run into a problem, need the money to
refinance, or to avoid going into arrears and dropping your credit score where there´ll be no way out, you´ll
have some savings. Once money is pre-paid on your mortgage loan it´s spent and can´t be accessed anymore. If
and when you´re out of the woods, you can always apply the savings to your balance at that time.

There are currently huge inconsistencies in what lenders will work with, won´t consider, refinance, do on a
forbearance, or consider for workouts. Remember that lenders will lose over $70,000 on an average foreclosure,
and they´re just as scared as you are. Half the people who start getting into trouble don´t even call their lender
and just give up. THAT is never a solution.
February 17, 2008
There is a great line from Homer Simpson that often comes to mind, as more and
more of the mortgage crisis continues to develop, and to seemingly get worse: "for
once in my life I´m confused." And here are some of the reasons:
Why hasn´t there been legislation passed to mandate income verifications, simple
plain-English disclosure and banning mortgages where the payments don´t even
cover the interest, and the balance actually goes up? It would have prevented many
kinky brokers getting millions of people confused between "you´re approved" and
"you qualify for this loan and these payments."


On the other hand, what your lender wouldn´t do last week can change this week. Don´t give up, keep asking,
and make sure you get to the right people with your lender. You do have to fight harder for this than they will!
It´s your life and your home. In these volatile times your lender doesn´t know any more than you do. Just make
sure that a solution is really a solution you can live with for some time. Ask a lot of "what if" questions of your
lender AND of yourself, something you likely didn´t do before you signed the loan you´re in now.

Isn´t it funny, in a sick way, that almost ever lender now advertising fixed rate loans? These are many of the
same lenders who are waist-deep in the nightmare they were instrumental in creating. Now a bunch of them are
the "good guys" that want to help you?

For most people, the most important criteria of who gets their business should be the credibility of a lender. Just
because someone pays money to be on TV or the radio does NOT make them credible. It only makes them
advertisers. Credibility is measured by what a company does – not what they say, and there is now ample
evidence of what the cost has been to ignore that difference.

Yet there is a huge company, Primerica Financial Services, a division of Citigroup, that has made vast numbers
of refinance mortgage loans through a product they call SMART. NONE of these are adjustable rate mortgages.
Read that again: Primerica has never originated any ARMs with their refinance products (done through Citicorp
Trust Bank). Their clients are watching the mortgage crisis from the sidelines and the safely of a fixed-rate term
and consolidation, thinking: "that could have been me in a foreclosure…"

Because they refuse to do false, misleading, or gimmick advertising, they need to work harder to make
themselves known, in spite of doing the right thing, in the right way, all the time? How sad that credibility can
so often be bought by simple advertising. But if you´re looking for a second opinion, some options, or perhaps a
way out, it might be worth your time to get in touch with them.

No, I don´t work for them, nor any of their associated companies, but there´s a good reason Primerica has its
own chapter in the It´s Your Money book!


George Boelcke, FCI is a financial consultant, speaker and frequent media go-to guest.

With more than 25 years of experience in finance, banking and credit, George has a degree in credit
management and is a member of the Credit Institute and the Association of Finance & Insurance Professionals.

In addition to his frequent media appearances and weekly radio tips, George is the author of the US, Spanish
and Canadian bestselling books:
It´s Your Money! Tools, Tips & Tricks To Borrow Smarter and Pay It Off Quicker.(¡Quédese con Su Dinero!
Los Secretos del Crédito y la Deuda)

Shortly after my 15th birthday, I asked my mother, “Am I going to have to do manual labor all of my life?” The wisdom of her response profoundly influenced the direction of my life. She put her hands on my head—one hand on each side—and looking me straight in the eyes, she said: “You have everything you need right here between your ears. You have everything you will ever need to take you anywhere you want to go, to have anything you want to have, and to be anything you want to be.”

I believed her. At that moment I knew the world’s abundance around me was mine—to earn and to possess. I could choose to remain a migrant fruit picker, or I could stake my claim on the world’s resources and riches. The choice was mine, and everything depended on my attitude!

"When people think of themselves as successful, they succeed."

Over the years, I have realized even more fully the powerful role attitude plays in determining success—including financial success. When people think of themselves as successful, they succeed. When they think of themselves as wealthy, they usually become wealthy. In contrast, people who feel inferior act inferior. People who consider themselves failures fail. People who think of themselves as poor remain poor. A poor self-image is an imposing, impenetrable barrier to achieving financial success.

Attitude toward money also determines financial success. What I think about the nature of money is equally as forceful as what I think about myself and my earning potential.

Money itself has no intrinsic value. It is simply printed paper or minted metal worth no more than other paper or metal of comparable size and quality. The difference is made by money’s exchange value.

The paper currency now in circulation consists merely of promissory notes guaranteed by the government. It is backed only by the faith people have in their government. The value of money lies in what others believe it is worth. Its value is based on belief and trust. In this context, money is only an idea.

Most people respect money, but money should earn our respect; in fact, money that is not working is disgraceful. Few wealthy people have a lot of cash because it is invested. It is busy working for them, making more money. For people with wealth, money and its buying power hold no great sense of awe. It is money’s investment power, the power to multiply itself, that commands the interest and attention of those who own it. As a result, most of the world’s money is invested in assets other than cash.

While the impulse buyer is not likely to become financially independent, I have learned by experience that neither is the overly cautious. Those who genuinely know money—with all its characteristic merits and foibles—and use it with judgment and daring gain the prize of financial success. These insightful individuals literally spend their way to wealth as they wisely invest and acquire assets that appreciate in value such as securities, real property, and equities.

When people ask me how they, too, might enjoy the same financial success I have earned, I can almost feel my mother’s hands on my head as her words echo in my memory: “You have everything you need right here between your ears.” First of all, I tell them, believe that you have unlimited potential for financial success and growth. Second, recognize that you are personally responsible for your financial achievements. Third, develop an attitude and belief that money is only an idea.