[Image: Mt. Royal Station, 2014, JA Van Devender]
Matthew 10:16 (NKJV)
16 “Behold, I send you out as sheep in the midst of wolves. Therefore be wise as serpents and harmless as doves.
There's a curious piece in the NYT today. [Here]
It has to do with the "Pitfalls of Reverse Mortgages" and it appears that folks are borrowing against the equity of their home (a perfectly reasonable practice and, within limits, may be good business sense) beyond the ability of their heirs to payback if and when they die. The author expresses concern that the families residing there may lose "their homes" if they cannot pay the 95% of fair market value that regulations require that the lender must accept as full payment for the debt owed. In one instance cited, the family was facing a $124k loan balance against a house whose market value was around $16k. This meant that if they came up with $14k they would own the house free and clear. Now, unless I am reading this wrong, and someone please correct me if I am, that means that under these rules the lender was going to be facing a $110k loss.
And the author is concerned about the heirs.
Times are tough... but it seems strange to me that this mortgage company allowed borrowing against a house to get this far out of whack. Further, why, on this earth, would a person borrow money beyond the value of the house? Does anyone else but me see a total failure of common sense on both sides of this equation?
Yes, I know, that as age advances and health care costs go up and problems accumulate faster than the resources to handle them, that often people are desperate. The urge to survive can push an older person to make very poor decisions as complexity of business opportunities exceed their declining abilities to understand them. Believe me... I am becoming very acquainted with this process. And it doesn't help to have high priced, respected politicians making a few bucks on TV hawking reverse mortgages and other such instruments that impart a false sense of "it can't go wrong" atmosphere to these things.
But the bottom line is this. It's a business decision... and, "let the buyer beware." Look for the fine print, and there is always "fine print."
With regard to heirs... I'm sorry but an inheritance is not a "right." It is incumbent upon parents to prepare their children for their future... it is not incumbent upon parents to provide for their childrens' future. Parents should take every precaution possible to not burden their childrens' future unduly... sometimes it just doesn't work out that way... but if a parent so manages their life that the last nickle is spent furnishing them their last breath of air... there is nothing unfair or unjust about that.
This article is less egregious than some but it still seems to rest on the notion that "it's not fair that life is not easy." Further, by evoking sympathy for the heirs and ignoring the impact on the mortgage company (in this instance), it tends to make it seem that the company is unjust in requiring that the home be foreclosed so that they may recoup some of their money. That mortgage company employs some number of people in paying jobs. Whether they do their jobs well (and in this instance it doesn't appear they did since they loaned money in an amount far in excess of the home's value) or not, they are contributing to the economy, paying their own mortgage, putting kids through school, etc. etc. An undue regard for the "heirs" in this situation translates into a regulatory mess that only leads to having these working people join the ranks of these "heirs" who are unable to pay $14k against a mortgage 10-fold times that amount.
"Let the buyer beware" is a time honored maxim. "Be wise as serpents" is another. Neither God nor the government are obligated to bail out individuals or businesses who make incredibly poor business decisions. God, in His good grace, can pull our fat out of the fire when it is His counsel to do so, but God causes all things to work together for good. When He bails us out He can actually make it work out well. Government? -- Not so much.
The problem with this situation is that the economy has collapsed about our ears and people are getting hurt. We are not going to work our way out of this hole we are in by seeing the inflationary trends of government deficit spending as security against our bad decisions. From top to bottom we, as a people, have to start being smarter in our decisions and then taking our lumps when we are stupid. Experience is a tough teacher but the lessons last a long time.
In this case, I hope the "heirs" are able to find jobs and a place to live. I hope those who have jobs with the mortgage company keep them. Those desires are not promoted when helping one side is contrary to the prospects of the other.
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