An Interesting Conversation

I was sitting in a local Super Cuts yesterday, just sitting on the couch and spending some time with Jordan waiting for my name to be called. As I was sitting there I overheard (and no I wasn’t intently listening at first) a conversation by a customer getting his hair cut and the person doing the cutting. I am paraphrasing but it went something like this…
Customer: So I lost my job and I fell 6 months behind on my house payment and they were ready to foreclose.
Stylist: (like the politically correct job term?): Oh that’s too bad.
Customer: So I called my mortgage company and told them that I would like to do something about modifying my existing loan.
Stylist: Did it do any good?
Customer: Well it took some talking on my part but I was able to get them to forgive the 6 months that I had not paid my house payment.
Editor (that’s me) my ears perked up to hear what happened.
Customer: Well I did some real talking to them and I got them to forgive the late payments and all fees and they rewrote me a new loan at interest only. I will only be paying interest and nothing on the principal.
Stylist: Well that sounds like a good deal what do you think? (I love how she ended most comments with a question.
Customer: Well that’s not all either.
Stylist: What else was there?
Customer: They rewrote the loan to a 40 year loan for me. It was 30 years but now it’s 40.
Stylist: Well that seems like a long time doesn’t it? (I love her style of keeping the conversation going)
Customer: Well the house lost $40,000 in value over the past 2 years and with me only paying interest I am sure that the price will go up over the next couple of years and then I can sell it and make some money.
At this point I just shook my head. What I learned in this short conversation about this guy was that he went from being a HOMEOWNER to a renter and he isn’t even aware of it. His contribution to the payment of the house is to do nothing more than to keep it in good order until the interest rate goes up so high he will have to move out and the bank can resell it to a more financially stable customer.
This is the new scam in American homeownership and the banks have seized on it. There are too many vacant houses that are plundered by the locals so it is better to have someone living there (and hey, making an interest payment too) then have it vandalized.
This guy is a total schmuck if he thinks he will get any money ever from this financial venture.
All he got is a roof over his head for the foreseeable future but I guarantee you once the economy changes in a few years he will not see any return on his investment, oh yeah, that’s zero, isn’t it? So I guess he will afterall.