Disabled Credit

It’s definitely a buyers market when it comes to real estate. There are so many houses for sale that it makes the mind reel with the choices. In the past few weeks I have looked at quite a few homes. Houses that, just a couple of years ago would have run a quarter million bucks are selling for 180 thousand. Quite a discount. People are putting money into their homes, updating kitchens and bathrooms, in addition to painting or installing insulation and new windows. These people are doing this work and taking on the expense just to make their house more sellable. They will, they say, lose the money in the end, but the gain of selling a home just languishing on the market and rotting away motivates them to take the loss. The gain is for those of us out there looking for a home to buy.

Then again, it’s gotten fairly difficult to find a mortgage. The mortgage rates are excellent, but getting a home loan is taking a lot more work and is a much more complex process than ever before, never mind the mortgage feeding frenzy that caused all these homes to lose their inflated values in the first place. So it’s a good time to buy a home with a great chance you won’t overpay for the property. Assuming you can get a loan.

My credit isn’t great. But then again, it’s not that bad. To look at my credit report is an eye opener though. There are all sorts of bad marks on my report that are pulling my credit-worthiness down –in spite of the fact that they have nothing to do with me. Reading the report I see a number of things I don’t recognize, emblazoned with a social security number and name that is not mine, but for some reason these things are on my report. They are counting against me and raising the interest rate I might hope for while making it a lot more difficult to find a lender.

A few years ago when I first saw the many bogus entries giving me the look of a class A goldbrick, I was angered and outraged. It pissed me off to be saddled with someone else’s mistakes, what with my medical history already doing a good job of denting my credit rating. If you spoke with my creditors, all of them would say that I always pay my bills on time, and often early. The credit profile for me as displayed by Equifax, TransAmerica, et al is as bogus as a three dollar bill. So I paid fees and joined initiative groups. I wrote letters and had other people write letters in my favor. I did everything I could to get the bogus entries removed. What was accomplished in this flurry of activity was merely discovering a few new entries which had nothing to do with me. In fact, a couple of accounts listed in my negative column were actually in good stead and always had been. The creditors writing in for a correction of the record and getting no reaction.

The thing is, it serves the money market to have borrowers represented as badly as possible because it means that borrowers will have to pay higher interest rates and fees, increasing mortgage profits. Asking companies like TransAmerica to guard credit is much like asking the mice to guard the cheese. Of course, it’s not like we asked them to in the first place. Those who control who has money and who doesn’t set themselves up for the job and people just went along with it, much like nodding acceptance at Bernie Madof being elected president. So here I am with an excellent payment record and the undying admiration of my creditors being treated like a red headed step child as I request a loan.

I don’t have a credit card. Not like the Capital Ones of the world haven’t tried hard to give me one. Like most of you, I get invitations all the time to sign up for a card with hundred dollar annual fees and an interest rate of one third or more of my expenditures. For every buck I borrow, they want to charge me 33 cents. This is not any kind of good deal in my book, and so the invitations go straight into the garbage after a brief perusal and a laugh. I have had that kind of “deal” before. A few years back my company got a 0% interest credit card. For the first year there were no fees and interest. Since we needed a rise in inventory, this seemed a good solution to help. So we picked up the card and got our inventory. We owed 5 grand on it all. Then one day our bookkeeper made a mistake. She missed mailing the payment on time. The next thing we knew, our balance of just under $5000 turned into $19,000. It took them no time to assess a 36% interest rate and lay all sorts of fees on us. In less than a single month we threw $14,000 in the trash. Of course we paid off the debt immediately, which was a horrendous expense to bear. But if we hadn’t done it, we’d have owed more and more and more adding ridiculous interest to the principal we owed. That pretty much soured me permanently on credit cards. I’d never liked them personally, feeling that a guy should live within his means, but now I objected to them on a company basis as well.

I believe in credit for large item expense. By that I mean a car or a house. I do not mean recreational purchases like boats, RVs or airplanes. I mean the kind of large ticket purchase one really needs; a home, a decent vehicle.  Of course, that is why I have lived in the somewhat meager way I have. I stay within my means. That’s why I have always been able to pay my debts, except for the medical expenses I had to bear before the VA took over my care. Credit is for suckers who want to live beyond their means. That’s a pretty draconian attitude, but I just don’t have any sympathy for the people who saddle themselves with credit card and recreational debt that takes them beyond their means to stay abreast of their expenses.  When it comes to people who ruined themselves by purchasing real estate, I divide them into two categories. The first is people who bought a home knowing they couldn’t afford the home and based their purchase on the blue sky belief that their financial situation would magically increase before the ridiculously high balloon payment kicked in. They bought a home talking about all the entertaining they could do and how, if they happened to have a few more kids that there would be room for them. This is magical thinking and has always, without fail, unswervingly led to disaster. I’m sorry for the trouble these people got into, but I figured they asked for it and had their eyes wide open when they did.

The other group is made up of people who merely tried to consolidate their debt as they made a real estate purchase. They were swept into the current of catastrophe after doing nothing wrong or irresponsible. The collapse of the house of cards mortgage system, which I perceive as the greatest of all pyramid schemes, fell apart and left these good people with nothing. To make it worse, their taxes went to give the people who screwed up the mortgage system the money to bail themselves out. They took the money and paid incredibly large bonuses to the very people responsible for the collapse. Personally, I think that the financial institutions of America should all be socialized and the profits taken to support the nation that supported them. When they need money the whole world has to pay for it. But when the world needs money, they demand a heavy price for the loan. Think about an interest rate on the 700 billion dollars we just handed the financial corporations and what the interest they would owe if they were charged the same one-third they charge us. It would certainly fix a lot of what ails the nation.

But still, we are the beggars who have to go to the money lenders and beg their indulgence to allow us to make them a profit. When I look at it that way, suddenly my vision of a buyers home market fades to black. The money people have built a system which, like a casino, always pays the house its due and no one ever leaves a winner. So I’m not all that anxious to play their game. I don’t care what their incorrect records have to say about me, because I know that they enjoy a greater position of power and can get a higher return when my credit record looks bad, and so they’re happy to keep it looking bad. There is no motivation for them to fix the mistakes that were made. In fact, I sometimes wonder if bogus records are automatically inserted randomly into people’s records, just to sweeten the pot. Yes, that does mean I consider them to be crooks, and not the backbone of American progress. I blame the ruin we all face squarely on their shoulders.

Will I ever buy a home? I really don’t know. I am getting awfully tired of the idea of home ownership. The point to it is having an investment in the future, which we now know is fallacious thinking. It is a stake in our mortgage lender’s future more than ours. Home ownership imparts a better credit rating –so you can buy more and dig yourself deeper in debt. I’m just not sure that I want to play that game.  I have lived all of my adult life as a renter and done pretty well, all in all. I grant that I have no property to leave to my kids this way, but in fact, my kids all have their own homes and don’t need mine. Then again, a home in Spokane is far from the beaten path their lives are taking. Better to put the money into an account to pass along when I die. Then my estate is not divided into the creditors, the state and federal government. I bypass the middle man and simply give the money away in a living trust. No muss, no fuss.

This all means I am a reluctant buyer. I think that right about now, everyone should be a reluctant buyer. I think that we should be holding out for 3% interest on mortgage loans and 6% on vehicles. The thing is, if we all took this attitude, that is exactly where the interest rates would go, else the mortgage companies would go out of business.

Which I also don’t think is all that bad an idea.