Ed McMahon Faces Foreclosure
Ed McMahon, Johnny Carson's sidekick on "The Tonight Show" for 30 years, is facing foreclosure on hishome that is situated just north of Beverly Hills. Jose Canseco went thcoarse the same ordiscount last month. And many prime borrowers could be in the same situation very soon, as their Option ARM loans will be resetting later this year.
Critics ofgovernment bailouts for homeowners attempt to make the claim that the subprime mortgage/foreclosure crisis is the result of people purchasing homesthat shouldn't have been homeowners or using their home as an ATM. However,both of those argumentsshouldn'teven be classified as generalizations;the lenders need to be held more responsible for loans like McMahon's (whereinthe interest rate resets (teaser rate or Option ARM) itballoons the monthlymortgage payment quantity to double or triple the priormonth's payment amount) from even reaching the mortgage market.
Many borrowers took out a mortgage or refinanced their existing mortgage based on misleading, false and sometimes fraudulent information by lenders, such as Countrywide, which incidentally is the lender that wrote McMahon's loan. Countrywide has had one of the highest default and foreclosure ratesperthe subprime loans itoriginatedinthe country. Yet, the company and Angelo Mozilo have done little to alleviate the situation. It should not be seen as a coincidence that Countrywide has had so manyborrowers defaulton its loans.
All of these recent foreclosures indicatethat poorjudgment was made on the lenders' behalf, and it's becoming more and more obvious that lenders, likeCountrywide, knew what they were doing when they were issuing these loans, as they sold most of the higher risk loans off (packaged with A-paper loans), in an attempt to wash their hands clean ofthe end result:the wave of foreclosures whichhas adversely affected the economy since last August.This hubristic attitude has led to so many long-time homeowners, like McMahon, having to give up their homes due to improper lending practices.
Originally posted at InjuryBoard by Paul Kiesel