Saturday, June 20, 2009

The Return of the NINJA (or at least his cousin)

Beware – the NINJA is back! Or at least, his cousin. No, I'm not talking about some Oriental warrior dressed in dark, baggy clothes, some disciple of ancient methods of killing people barehanded, taught by some “college of violent knowledge.” Nor am I talking about the return of some indie, Asian-themed horror movie.

But I'm sure you will all remember the NINJA as I begin to describe him. He is the No Income, No Job, No Assets adjustable-rate, subprime loan foisted off on many working-class families by predatory lenders in the troubled years before our present economic collapse. He was seemingly run out of town in 2008 through the reluctant posturing of Federal lawmakers pushed by a wave of public outrage. But he now seems to be sneaking back upon us, albeit in a somewhat mangled form. Or maybe that's his one-armed cousin I see.

Observe the letter below:

I recently got this letter in the mail. I am sure it was sent to everyone in my neighborhood. (By the way, I live in a working-class neighborhood.)

At the top, you can see a statement in bold capital letters: “FHA BENEFITS UPDATE STIMULUS 2009.” Below are the words, “Passed by Congress and signed into law by the President.” The purpose of these words is to fool their readers into thinking that this letter is part of some Federal program. Next come the words, “HUD-approved Flagship Financial Group has been directed to:

  1. Get FHA homeowners instant relief yadda yadda...

  2. Yadda yadda...

This is a continuation of their opening ploy. “Flagship Financial Group has been directed...” By whom? By themselves and their own lust for your dollars? Certainly not by the Government!

Their “program” is available to anyone who has an FHA loan, with “No Appraisal, No Income Verification, No Credit Score Qualification, and No Out-Of-Pocket Costs,” according to the letter. This is not quite a NINJA loan, since it is meant for people with FHA loans who presumably are living in “starter” homes. Maybe we could call this a “NINJ” loan. The letter further advertises “4.375% Fixed Rates!” Although I don't owe any money on my house, I called their 1-800 number to ask about this 4.375% rate – just as a “private detective” exercise. When I asked whether this was a 30-year rate, the agent replied that due to present market conditions, they couldn't offer 30-year loans with this rate. However, they were willing to offer “hybrid” loans with this 4.375% rate for the first five years, then an adjustable rate afterward.

The agent's use of the word “hybrid” was quite creative (almost as creative as the use I heard this past week for the term “locally owned,” as I described in this post: "Localism" And Truthfulness). To me this sounds the same as the dishonest adjustable-rate mortgages with tempting introductory “teaser rates” pushed onto working-class families in the earlier part of this decade.

What all of this tells me is that in our present time of manifest economic distress, there are scam artists out there who are continuing to fleece ordinary people by playing on the crisis and on the coping strategies employed by these ordinary people. It is important to remember the basic coping strategies for these times, the strategies of frugality, which consist of paying down debts, becoming self-sufficient and living within one's means. Remember also that if something looks too good to be true, it usually is – and trying out things that are too good to be true may cost you everything you own.

One other thing this letter shows is how effective our lawmakers have been in reining in the excesses of the financial “industry” – which is to say, that they haven't done anything at all.

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