In 1967 when I was still in high school, I joined the US Navy. I did this because I hate being in filth and mud that people in the infantry find themselves in. I also knew that the casualty rate in Vietnam for the US Navy was very low when compared to the US Army and The US Marine Corps. (Despite all of these good statistics on my side, I did suffer a shrapnel wound in 1971.)
Many of my friends were not forward-looking enough to enlist in the US Navy, Coast Guard, or Air Force. They started college relying on the security of having a college deferment. They were sure this would keep them out of the terror of the Vietnam War. Suddenly the authorities changed the rules and the game. They required all male students with college deferments to take an academic proficiency test. If you scored below a certain number, you were pulled out of college and sent right to the US Army or the US Marine Corps. Many of these unlucky souls found themselves killed or permanently disabled. Students lining up to take this test felt great apprehension and dread. The famous saying among these students was "Score high or die!"
Let us now move ahead 43 years to 2010. Many Americans facing foreclosure hope for some miracle to save them from being put on the street. They take heart in President Obama's Making Home Affordable Program. You sign up and supply a massive amount of information on your income, assets, etc. If you are unemployed or had a catastrophic drop in income, you are out of luck and will be put out of your house. If you can still prove income and employment at a sufficient level, you have some hope of getting a loan modification where the final principal and interest payment will be 31% of your salary. Sadly very few people actually get such loan modifications.
One applying for the loan modification must make three trial payments perfectly and on time. If there is any problem with any of the three payments you are immediately disqualified from the program. Many people fail right here. I got the good news this morning that payment #3 had cleared the bank right on time and we were through this hard part of the program. We are among the small percentage of people who survived this far. Now we await our final offer from Bank of America. We have to accept what they offer us or we are out of our house.
As you can see it is a game that is truly "the survival of the fittest" for home owners. It is not" the survival of the fittest" for the banks. The banks can "cherry pick" only the strongest borrowers. On each homeowner a bank rejects and send to foreclosure, the US government pays them 95% of any loss they suffer in the foreclosure process.
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