What's fueling the sub-prime mortgage crisis? Apparently, it isn't just that home owners' interest rates were adjusted up, but it's also the fact that some people who took out very low interest mortgages to buy their house then proceeded to take out home equity loans on the house in order to buy things that they wanted. Their cumulative debt is now far more than the house is worth, and they're apparently hoping that the rest of us bail them out.
Instapundit has this note from a mortgage broker:
Speaking as a mortgage broker, I can assure you this is the case in the vast majority of instances. I spoke with a woman today who has a credit report that looks like a train wreck, including a bankruptcy fours years ago and numerous chargeoffs and collections since. Her gross income is less than $850 a week -- but she drives a car with a $700 payment.
She called me up because her adjustable rate mortgage payment is going up. When I told her that the only way she could qualify for a loan is to pay off the car with her mortgage, she threw a fit. Apparently me saving her $500 a month isn't good enough, she wanted to tap her home equity one last time for $30,000 to spend on "home improvements" rather than paying off the car. She then asked if anyone would really check to see if the money went into home upgrades.
This is the behavior that some in our government and media want the rest of us to subsidize. Geez.
RLC