I read another rant by some housing group complaining about how the various "Nehemiah-type" down payment assistance programs are screwing the very people they're trying to help. Under this complaint, the home prices tend to increase in sales price by the exact amount of the down payment gift. Most gifts top out at about 3 percent of the sales price, so the price of the home is "inflated" from, say $100,000 to $103,000. That's inflation?

The problem, say these folks, is that due to the higher sales prices of the homes the foreclosure rates are higher, and it's those darned lenders making loans to people who don't deserve them, only to gleefully foreclose upon those hapless homeowners right around Christmas-time.

Those facts are correct. At least the part about the sellers who participate in down payment assistance programs also sell their houses about 2-3 percent higher than similar comps in their neighborhood. There's no denying that. And the foreclosure rates are higher on those homes as well. Again, no argument.

But someone's confusing coincidence with causality. The monthly payment for an increase of $3,000 on a $100,000 is 17 bucks or so. People don't go into foreclosure for nothing more than the cost of a two-topping pizza. Yet still, it's all the rage to blame lenders for the world's housing woes and those woes get tons of ink. I think there are plenty of other reasons for higher foreclosure rates but none of them have to do with "home inflation."

Still another pet peeve of these "consumer" groups is sub prime lending. Just because a sub prime lender commands a higher interest rate due to a past bankruptcy or collection accounts on a credit card, those lenders are automatically the bad guys, charging outrageous interest rates that are two, three or even four percent above rates reserved for those with spotless credit.

Whoa Nellie! Where are those same consumer groups when it comes to other forms of credit? Hmmm? Ever hear of a term called "cross check?" Credit card issuers can increase your rate on your credit card, not if you send a late payment to them, because you sent in a late payment to somebody else?

I'm not talking about not paying a card at all then forcing it into collection, I'm talking about being just a few days past the due date. Less than 30 days late. People who have a credit card rate of say 10 percent can have their rates nearly double. Or more. For nothing other than being late on another card?

I suggest one of the reasons people go into foreclosure is because their other credit payments increase so dramatically. People will be late on credit cards before they'll be late on their mortgage, so when something bad happens such as a loss of job, pay reduction or other financial disaster it's the cards that go late first. Guess what? Suddenly those monthly payments go stratospheric, increasing debt ratios along with the likelihood of foreclosure. Maybe it's the sudden increase in consumer payments that start the foreclosure process altogether. Maybe it's not the lender's fault. Maybe it's those trigger-happy credit card issuers who start the ball rolling.

Anyone thought of that lately? Hmmm?

If someone's mortgage rate went from 6 percent to 12 percent, or more, don't you think mortgage companies would be drawn, then quartered? Then quartered yet again?

Where's the outrage? I don't see it. It's just that mortgage companies are the bad guys and consumers need protection from the bad guys, right?

Okay, so credit card rates are higher because they're unsecured, not like a house. Fine. But using that logic, why can secured credit card rates be higher than unsecured ones?

When interest rates were at record lows and the Fed Funds rate hit 1.00% (with inflation at 2.00% that means free money) credit card rates along with their fees could be as high as whatever they could get away with.

Credit card rates at 18.00 percent, 20.00 percent, or even 28.0 percent when Fed Funds were at 1.00 percent? At the same time, sub prime mortgages could be found in the low 8.00 percent range. And those same sub prime lenders were getting creamed by any number of consumer groups for charging sky-high rates. Compared to what? Credit cards?

I'll get emails trying to explain to me the various reasons for this disparity but what I won't get is an answer to why consumer groups who routinely slam lenders then keep their mouths shut when it comes to consumer loans. Maybe they're out there, but they don't get near the press.

I don't get it. I understand it, but I don't get it.

Published: December 16, 2005

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.