Even though Debbie Clavon admitted she was “dumb” and “didn’t read” her mortgage agreement, CBS showcased her adjustable-rate mortgage woes and her protest of foreclosures nationwide.
“For Alvin and Debbie Clavon of Los Angeles, the letter from their mortgage lender came last month, and the news was bad,” reporter Anthony Mason said on the September 13 “Evening News.”
The Clavons’ interest rate went from 6.5 percent to 9.5 percent. “So the payments on their $275,000 mortgage have soared from $1,450 to more than $2,200 a month,” Mason said.
But the Clavons should have known their rate was going to adjust.
“The Clavons admit they didn't read the terms of their loan carefully enough, and when Alvin was laid off from his job in personnel management for eight months, refinancing was impossible,” Mason said.
“… we were dumb when we got the loan and we didn't read,” Debbie Clavon admitted.
The Clavons’ original lender, New Century, went bankrupt and a company called Carrington bought their loan. Carrington is a target of a radical liberal group, the Association of Community Organizations for Reform Now (ACORN). During the CBS interview, Debbie Clavon wore an ACORN pin. And the “CBS Evening News” reported Alvin Clavon organized an anti-Carrington rally for ACORN.
“Companies like Carrington have been getting rich on our families,” Alvin Clavon said to a group of ACORN protesters.
According to the ACORN Web site, the “ACORN Financial Justice Center ” is fighting the home lending industry. “Evening News” showed the two ACORN protests against Carrington, one from Los Angeles and the other from Greenwich, Conn.
One of ACORN’s demands, reported by the September 6 Orange County Register, is that “if a borrower can't afford higher payments when a low introductory rate ends, that low rate should be extended to the full term of the mortgage.” A picture with that story showed a protestor holding a sign that read, “Stop Foreclosure Now!”
Debbie Clavon said her personal problem could affect more people nationwide.
“I'm not asking for help because my husband lost his job and because we were dumb when we got the loan and we didn't read,” Debbie Clavon said. “What I'm saying is that this is a crisis in America and we do need assistance.”
Although Carrington declined to comment to CBS, the “Evening News” featured economist Mark Zandi of Moody’s Economy.com, who is expecting the worst.
“Almost half of these home owners [with adjustable-rate mortgages] will ultimately be unable to hold on to their home,” Zandi said. “They just aren't up to making these higher mortgage payments.”
According to CBS, there are 4.5 million homeowners with adjustable-rate mortgages that should adjust upward in the next year.
Of the 44 million mortgages tracked by the Mortgage Bankers Association, the percentage of loans in the foreclosure process was only 1.4 percent of all loans outstanding at the end of the second quarter of 2007, according to a press release issued September 6. That’s a less than one-percent increase – 12 basis points (12/100 of one percent) – from the first quarter of 2007, and 41 basis points from the second quarter of 2006.
Mason also advocated assistance for home borrowers who got over their heads.
“If millions of borrowers like the Clavons don't get some help, it will be the rest of the economy that needs it,” Mason added.
The media have been piling on the bailout bandwagon. The September 12 USA Today made the case for taxpayer money to assist these distressed home owners. In August, the Associated Press advertised the idea put forth by Pimco Chief Investment Officer and founder Bill Gross in which the federal government would bail out homeowners.
