MORTGAGES AND FORECLOSURES

A FEW YEARS BACK IN SOUTHEASTERN CONNECTICUT, LIKE A LOT OF OTHER PLACES IN THE UNITED STATES, IT WAS A SELLERS MARKET IN THE HOUSING MARKET. THE PRICES OF HOUSES WENT THROUGH THE ROOF. INTEREST RATES WERE LOW, PEOPLE WERE BECOMING PART OF THE AMERICAN DREAM WHO NEVER FELT THEY COULD.

ABOUT FIFTY TO SIXTY YEARS AGO, WHEN A MAN AND WOMAN WERE GOING TO GET MARRIED, THEY WOULD GET UP SOME MONEY AND PURCHASE A HOME. AFTER THEY GOT MARRIED THEY WOULD MOVE INTO THEIR HOUSES AND SPEND THE REST OF THEIR LIVES THERE. THEY WOULD RAISE THEIR FAMILIES, AND EVENTUALLY SETTLE INTO RETIREMENT IN THEIR HOMES. THEIR CHILDREN HAD A MUCH HARDER TIME BUYING HOMES, HAVING TO COME UP WITH 10% TO 20% DOWN PAYMENTS ON THEIR HOUSES.

MOVE FORWARD TO THE 1990'S AND 2000'S. THE BANKS WANTED 20% DOWN ON HOUSES THAT WERE THE MOST EXPENSIVE OF ALL TIME. SO WHAT DO THE LOAN INSTITUTIONS DO? THEY OFFER, IF THE BUYER WILL PAY TWO POINTS (2%) EXTRA ON THEIR MORTGAGE INTEREST RATES, THEY CAN HAVE A NO CREDIT CHECK MORTGAGE. THEN THE BANKS CAME UP WITH VARIABLE MORTGAGES. THE BANKS WOULD GIVE THE PRUCHASER A MORTGAGE AT 3% UP TO 5 YEARS AND THEN THE RATE MIGHT CHANGE. AFTER FIVE YEARS IT DID CHANGE AND IN MANY CASES WENT TO 8% THAT THE BUYERS COULD NOT AFFORD. ANOTHER THING THE BANKS WOULD DO IS GIVE THE BUYERS AN EIGHTY PERCENT (80%) MORTGAGE AND THE DAY OF THE CLOSING ON THE HOUSE A SECOND MORTGAGE FOR TWENTY PERCENT (20%). IN OTHER WORDS THE BANK WAS PAYING FOR EVERYTHING EXCEPT MAYBE THE CLOSING COSTS. THE BUYER WALKED OUT AFTER CLOSING, HAVING A FIRST AND SECOND MORTGAGE, THAT THERE WAS NO WAY THE BUYERS COULD PAY.

IN MY OPINION, WHAT YOU HAD WAS A FAKE HOUSING MARKET, PEOPLE BUYING HOUSES WHO COULD NOT AFFORD THEM AND THE PRICES OF THE HOUSES BEING SOLD FOR MORE THAN THEY WERE REALLY WORTH.

LAST YEAR ONE PERCENT (1%) OF ALL MORTGAGES ENDED IN FORECLOSURES. THIS YEAR ONE AND A HALF PERCENT (1.5%) OF ALL MORTGAGES ARE IN FORECLOSURE. IT IS ESTIMATED THAT WITHIN TWO YEARS IF THINGS DO NOT TURN AROUND FIVE TO SIX PERCENT (5 TO 6%) OF ALL MORTGAGES WILL END IN FORECLOSURE.

THE BANKS DO NOT WANT TO TAKE A LOSS, SO THEY ARE BIDDING WHAT IS OWED ON THE MORTGAGES AND KEEPING THE HOUSES. WHO WANTS TO BUY A FORECLOSURE WITH A THREE HUNDRED THOUSAND DOLLARS ($300,000.00) MORTGAGE THAT THE HOUSE IS REALLY WORTH ONLY TWO HUNDRED THOUSAND ($200,000.00) DOLLARS?

HOW DOES ALL OF THIS EFFECT THE MOHEGAN PEOPLE? PEOPLE ARE NOW CHOOSING WHETHER TO PAY UTILITY BILLS, MORTGAGE PAYMENTS, CAR PAYMENTS, INSURANCE, TO BUY FOOD, CLOTHING, ETC. WHERE IN THESE ECONOMIC TIMES IS THE EXTRA INCOME TO GAMBLE? HOW WILL THIS EFFECT OUR CASINO? THE LENDING INSTITUTIONS BUILT A FALSE ECONOMY IN THE HOUSING MARKET AND NOW EVERYONE IS GOING TO PAY FOR IT. WHAT DO YOU THINK?