Whoops: ANOTHER Trillion slid by.
Mortgage Payments Suspended!
The Wall Street Journal recently reported that Congress passed a bill that allows homeowners to suspend mortgage payments for up to a year. Although details are not clear, it probably means the scheduled payments get added to the loan balance.
The article went on to point out that they passed a law with little or no consultation with others who might be affected such as:
- First, the collection and processing agents’ income goes to zero; yet they too have ongoing expenses.
- Then most of a $1,000 mortgage payment goes to the person that purchases the loan. The owner of the loan could be ‘mom and pop’ investors, a bank, or consortium. In any case, their cash flow dries up for a year.
- Then, the portion to be set aside for insurance goes to never-never land.
- Then the portion set aside to pay real estate taxes goes unpaid as cities, counties, and the state have reduced funding and are unable to provide services while contractors have to be laid off.
- Then, in many cases, a portion set aside for special districts that perform services for the provider have to layoff another batch.
So, the article reported that the impact (on cash flow) could 1.03 TRILLION; a stealth borrowing of funds that won’t show up in the $3+ Trillion bailout.
Vintage Senator Ev Dirksen of 50’s coined a famous line said that “a million here and a million there eventually adds up to real money”. In 60 years, its gone from a ‘million’ to a ‘million million’— definitely “REAL REAL” money.
Rich Meyer, Author & Blogger