"What is mysterious, what is mysterious about the phrase 'variable rate'?"—George Will, This Week, March 30, 2008Mystery is in the eyes of the borrower–and the MSM. The term "variable rate" in a mortgage might seem straightforward enough to George Will and our erudite NB readers, but to a college-educated homeowner–and ABC's Kate Snow–it's apparently a real brain twister.
Snow hosted a segment on this morning's GMA dedicated to determining how the various presidential candidates' proposals would address the problems of sub-prime borrowers. As is the MSM's wont, ABC focused on a single sympathetic case, that of the Cruz-Rivera family in Philly.
The essence of the Cruz-Rivera's problem is that their monthly mortgage payment, is much higher than she was counting on when the couple took out the loan. The possibility that her mortgage payment might rise apparently came as a nasty surprise to Mrs. Cruz-Rivera. But why? Check out this exchange between the homeowner and Snow.
SNOW: They thought they were signing up for a 30-year, 7% fixed mortgage, paying $920 a month. And you could afford that?
YAJAIRA CRUZ-RIVERA: No problem.
SNOW: But what they got was a rate that was actually much higher, and went higher still, and they felt duped.
CRUZ-RIVERA: That next rate hike was 11.25%, and a new mortgage payment of $1,671 a month.A sympathetic Snow . . .
SNOW: So now you're about double what you thought your original mortgage payment was going to be.Later in the segment, it was mentioned that Mrs. Cruz-Rivera is college-educated. Just how were the borrowers "duped"? ABC didn't try to explain how someone could have thought that a variable-rate mortgage was a fixed one. Was there misleading language in the loan agreement, some improperly small print? Snow never said. Hard not to conclude ABC didn't want anything to get in the way of a sympathetic story line.