Dave Latture last week handed me the Wall Street Journal from April 23, 2006 with an article that made us all gasp and then laugh.

Washington Mutual Bank has been offering a 40 year mortgage for a while now but now Ownit Mortgage Solutions in California has rolled out a 45 year Adjustable Rate Mortgage and plans are underway amongst several other lenders to roll out a 50 year mortgage.

Obviously this is all for your benefit so you can buy a “bigger” house (translates into a house that you cannot afford really in the first place).

I don’t know whether to laugh or cry while reading this. It is crazy enough to see 8,827 houses in foreclosure in Michigan in 2006 already – a large number of them are carrying zero down mortgages let alone to see a half century mortgage.

The best quote came from Ms. Julie St. James from Ownit Mortgage who bravely defended the 45 year mortgage against the interest only mortgage with this priceless observation:

“There is some principal reduction, whereas the interest only does not give you any”. Even if there is a $1 of principal reduction, that is $1 less that you have to pay interest on.”

Right On!

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mark ijlal
Michigan
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