These people are operating under a lot of false assumptions.
12:38 PM
Monday, December 08, 2003 Test
Okay, say you want to live in a house. Assume other factors constant and choose the financing option that most appeals to you.
Option A: Zero-interest, $220/month for 20 years, no closing costs
Option B: 13.75% interest, $732/month, $5,000 cash back at closing
If you chose B, read this story to see the consequences of your stupidity (or you could also read it if you chose A and you're just interested in the antics of drooling morons):
So, in exchange for $5,000 at closing, these poor people agreed to pay an additional $512 more per month for the next 20 (I assume it's still 20, but perhaps the morons were even dumber and made it 30) years. $512/month X 12 months/year X 20 years = $122,880. The present value of the additional payment is $41,782.09. So they screwed THEMSELVES out of $36,782.09 in present value. Decisions like that are the reasons people like these yokels are poor. Not cultural, societal, or any other external factors.
As a side note, perhaps instead of passing laws that will undoubtedly have the unintended effect of punishing legitimate lenders and intelligent borrowers, a better plan might be for Habitat to expressly forbid their "homeowners" from refinancing. This won't solve all their problems, because their problems lie in their own stupidity, not in the predatory nature of unscrupulous lenders.
