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)