New Home Buyers: Beware the LIBOR

Although the mortgage meltdown is still continuing primarily in the West and Southwest and Sunbelt States since the only real assistance that has been facilitated by the new Obama Administration has been directed toward new home buyers and pushing refinancing (which actually stimulates the bankers and Wall Street once more with all those upfront fees and costs for those new loans), hopefully take the advice of one who lost hers in this tsunami for various reasons - escalating property taxes due to the short lived "boom", property insurance costs due to its then increased valuation tied to those rates, auto insurance costs due to the open borders thefts and higher than normal accident rates for the Phoenix metro area, and ease and enjoyment of it due to covenants and restrictions on the property that increased in severity and costs of my enjoyment of it inflicted by "the state" after its purchase during my 12 year "ownership" of it.

Read the fine print, especially with respect to the basis for the loan itself.

My loan actually was sold by one of those "riskier" lenders due to a refinance that I was forced into for some of the above reasons, and was based upon a London market based rate - the LIBOR.

Not even U.S. prime, mind you, but a London banking rate.

Since the British pound or Euro is at higher levels in the currency exchange market, of course, that also made the increases in the ARM rate that was also a part of the loan terms increase even more than one based on the U.S. dollar and U.S. prime.

How those banks could sell loans based on the British market in this country, I haven't a clue.

But new home buyers and refinancers look out and read that fine print and make sure it is based on at least U.S. prime, since it doesn't appear any further regulation of those banks was at all part of this "rescue" for those still at this juncture losing theirs.

In fact, absolutely no regulation at all has been included addressing the terms of some of those loans in their "usurous" terms and interest rates, and of course the huge junk fees that were charged in order to even get some of those loans to begin with.

Last month again saw more foreclosures, and also a slower market than the year before.

Apparently, the buying public is getting wise to the fact that a home purchase at this point in this country is becoming more of a liability, than an asset and a "high risk" investment that can be snatched from them during the next banker/Congressional manipulated meltdown.

Take a clue from one who learned at an advanced age (56) and after 12 years of "non-ownership" and one who this was not the first home purchase, and had legal knowledge and experience - be careful before signing on the dotted line since it seems the market is now geared toward the sharks, and not the Constitution with respect to home or land property rights and ownership.

The tsunami was one huge "taking," facilitated by Congress and the Fed in their negligence since those loans were primarily sold in the West Coast market and strangely Michigan for several years during that boom and bust cycle, and fixed rate and assumables have almost gone the way of the dinosaur for added banker profits - meaning you may qualify for that home today, but since those rates are based on a foreign currency and market better now than that of the U.S. - it will be, of course, Americans and not foreigners (from Canada and Europe now living in the U.S.) who will lose those homes.

Or those that can't speak English in order to even read those now forty to fifty page loan documents to begin with.

And remember that any lawyer legally required at closing by the states, works more for the industry than for you since most are referred by those title companies, banks or realtors getting those huge fees also at close of escrow.

Beware the LIBOR.