Individual Development Accounts

Here are two very contrasting stories...

In 2007,the four major investment banks ( Bear Sterns, Lehman Brothers, Merrill Lynch and Morgan Stanley ) responsible for the sub-prime lending crisis handed out year-end bonuses totaling $39 billion.  Yet, that number is three times the combined profits of all the firms last year.  So, while the economy soars toward recession and the government is bailing out these investment banks, the executives are receiving bonuses in the billions.

In spite of all these crappy people in the ranks of the money business, there are also other people creating opportunities for the less fortunate, yet ambitious, people in our society.  There are accounts called Individual Development Accounts that have been created that assist the poor in our society.

Bizarre Request

Several weeks ago, I was telling a few of my co-workers that AT&T asked for my physical Social Security card in order to remove my cell phone from our family plan.  AT&T claimed they could not acquire enough information about my credit history to remove my phone from the plan  Completely fucking bizarre request especially since I was removing, not adding, a name/plan to the account.  I came to the conclusion that this is another tactic these dishonest telecom companies use to make it difficult to change and/or terminate a plan.  Basically, the premis is that people will react just like I did "whoa, you not only need my SSN, but you actually need to have the card???".  That is insane and wrong.

Additionally, as I was telling this story to some of my co-workers, one jackass in our Development group ( and, yes, he is a real jackass ) chimed in and said "man, I'd hate to see your credit history".  Well, when I got pre-approved for our new home loan a few days ago, my credit score was 826.  It was the second highest credit score our banker had ever seen.  So, once again, this guy I'm referring to was speaking out of his ass again like he normally does.

Sub-Prime Mortgage Crisis

I've been curious how most of the sub-prime mortgage crisis is going to be funded.  In other words, who is going to pay for the failings of the sub-prime mortgage companies.  We've heard a lot in the news lately.  There has been lots of talk around whether or not the government would step in and cover these losses.

Well, I had a rude awakening the other day.  Dayna and I have decided to pursue a mortgage on a new house.  I set up an appointment with our trusted lender at Valley National Bank.  Lynn Majors at VNB was very good to us when we refinanced our existing home and, as a result, I wanted to give her our repeat business.

As Lynn was working up the Good Faith Estimate, she was walking through the closing costs with me.  Turns out that Fannie Mae ( FNMA ) has decided to gracefully allow the rest of us with good clean records to finance the sub-prime crisis.  YES!!!  This nice new fee within everyone's closing costs now is not a trivial $20 or $30 bucks.  FNMA lobbed a nice big fat fee of $420 onto our closing costs specifically for finding the sub-prime problem.  And, mark my word, I bet once the crisis is over and paid for that good ol FNMA just decides to keep that fee on all mortgages.