Thirty-Year Mortgages = Mortgage Rape

As a natural “contrarian” I was forced to incorporate a “quirk” into my research going all the way back to my days in university. Not being able to find research materials which coincided with my own positions, I would read materials which supposedly supported an opposite point of view – and then explain how such research actually supported my own viewpoint.

I had another opportunity to resort to that technique this morning, as I scanned a rather absurd piece of Bloomberg propaganda. Bloomberg had managed to find an anecdotal account of a U.S. homeowner who had actually shortened the term of their mortgage. Bloomberg then proceeded to call this a “trend”, and kicked-out a laughable headline about “equity-building” by U.S. homeowners.

Meanwhile, back in the real world, nearly 30% of U.S. homeowners have “underwater mortgages” meaning that overall, U.S. homeowners have less equity in their homes than at any time in history. Bloomberg could have found a more credible topic if it had chosen to talk about “sunbathing in Antarctica”. However, as is often the case, in attempting to present a totally ridiculous scenario and market it as “fact”, it has instead disclosed one of the banksters' “dirtiest little secrets”: the economic rape, or debt-slavery which these big-banks have created by extending the length of mortgages for countless millions of homeowners.

To illustrate this principle, I need only revert back to the anecdotal account supplied by Bloomberg. It noted that the U.S. couple which had cut in half the length of term of their mortgage from thirty years to fifteen years was only paying $250/month more on their mortgage but repaying principal twenty times as fast. This was accomplished largely due to the fact that by dramatically reducing the term of their mortgage, the couple qualified for an interest rate more than 30% lower than their previous interest rate (i.e. from 7% to 4.5%).

Now let's once again return to the real world. In the real world, for every U.S. homeowner shortening the length of their mortgage there are ten other mortgage-holders (twenty? one hundred?) increasing the length of their mortgage. Indeed the favorite “mortgage modification” being offered by the banksters to homeowners on the verge of foreclosure is to dupe them into refinancing over a longer term.

Given that reality, let's simply take the Bloomberg anecdote and reverse it. In going from a 15-year mortgage to a 30-year mortgage; in return for a modest savings of $250/month on the mortgage-payment, the mortgage-holder gets the “privilege” of spending an extra fifteen years doing nothing but paying interest to a banker. Again using the Bloomberg numbers, the homeowner going from the 15-year mortgage to the 30-year mortgage would only be paying 5% as much principle in the early years of that mortgage – and would likely be forced to pay an interest rate roughly 50% higher (using the Bloomberg numbers).