Wednesday, March 14, 2012

Front Seat in the Circus

I remember when the word mortgage meant I had achieved a certain level in a really good monopoly game; a coveted and revered card was “turned over”. Then I bought my first real house, and it achieved a weight all its own. The cards indeed have turned.

When my family and I moved to Modesto in 1999, we were warned by a family member who had lived in Modesto through the nineties that there had been a housing bubble that had burst and it could happen again. Given the frenzy of new construction, and the excitement of watching Village 1 go up before our very eyes, it seemed impossible. My daughter, a budding writer, wrote in to our local paper that she was disappointed by the new construction because it disturbed so much animal life and nature. We could hear a pack of coyotes regularly at night, as they made their rounds.  Just the same, when the building began, we loved touring the model homes, and watching the houses and landscaping transform a brown, dry lot into a green suburb teeming with new people. It seemed everyone wanted to live here!

Even more fascinating was watching the value of our home skyrocket, while we did nothing. Well, nothing that is, except take out a couple loans to fix it up. It seemed the right thing to do. In fact, it seemed almost stingy not to. Recently, I read an banking institution’s ad spread from 2006 that promised a low interest rate (which now would be considered highway robbery) and suggested all the things you could do with all that money! Times have changed.

Now, several years later, “underwater” in the dry valley is a household word and empty homes and businesses seem to mock our previous optimism.

Enter, with $18 billion dollars of stimulus money: THE FEDERAL GOVERNMENT! (Trumpets sound, drums roll) and $368 million of it is laid aside for our fair county, part of ‘the red zone’, or so I’m told. I just can’t see it for the twin elephants in the room, Freddie Mac and Fannie Mae. These are government backed entities who hold over half of all mortgages that are locked in what feels like impending doom. I don’t have statistics on how many of these have already been foreclosed on, but I know that if your loan is held by Freddie Mac or Fannie Mae it is exempt from some programs available to others, most notably principle reduction. Why? I keep asking, but can’t get an answer.

All the good news about the extra help for homeowners seems to have sidestepped the obvious recipients, and at least for now, no one seems to notice. Maybe we could learn from the circus. They usually kept the elephants tied up, unless they were performing.

If you’re wondering whether your loan is a Freddie Mac or a Fannie Mae you can go to these sites to find out. or

(Stats on the amount of stimulus by Amiel L. Wade of Wade Law Group on February 17, 2012)

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