Mattress Mortgage

“Paying rent is wasting money,” said Bobby. “We should get together and buy our own place. At least then the money would count towards something.”

“How do we do that?” asked Shama. “Shall we all bring the money from beneath our beds and build a mattress mortgage?”

Bobby thought, there are ten rooms in the halfway house’s ground floor apartment; four male dorms, four female dorms, and two double rooms. There are four people in each dorm, plus four more in the double rooms, making thirty-six people in total. Combining their income and assets could really add up.

The problem was that residents of the halfway house were generally not working, and those that were didn’t earn much. But thirty-six people working together could surely do something. “I’m going to look into it,” said Bobby and went off to do so. He didn’t have much else on today.

The lady at the bank said, “Are you an existing customer of this bank, Mr Law?”

There is no chance of that, he thought. The residents of the halfway house had zero, or even negative, credit scores. “No, but I am considering it. I would like to discuss mortgages first. Please assume I know nothing, and run me through the basics. What does the word mortgage even mean?”

“Mortgage is a French word meaning death contract. Don’t look so shocked. It’s not what a gangster offers to an assassin.”

It was a joke, but Bobby was sobered by the thought.

“It is a pledge which ends when the obligation is fulfilled, or the property is foreclosed. Of course, everybody hopes for a successful transaction, the loan paid off and the house fully your possession. But I am legally obliged to tell you the other possibility. If you do not repay the loan in the prescribed manner, you can lose the house.”

This sobered Bobby some more. He said, “You mean a bank can take your home away if you miss a payment. That sounds…”

“Technically the bank owns your house till you repay the loan. It is only yours upon the loan’s fulfilment.”

She spoke of the 3 E’s: Evidence, Existence, and Encumbrance, and the various kinds of loans available: direct and indirect, partial and complete. She mentioned intermediaries, size, maturity, interest, payment method, fixed and adjustable rates, interest only and repayment loans, debt ratios, and time-money value formulas.

What to make of all this? Bobby’s head felt like a spinning coin.

When it finally landed – he wasn’t sure if on heads or tails – she was speaking of MOST mortgages – Multi Occupant Strategic Tenure – where you somehow owned and didn’t own your property at the same time.

The numbers looked good though. If they paid all their rents into the MOST fund, they would own the house outright in twenty-five years, possible via the 3 M’s: Multipliers, Matching, and Magnetic MoneyTM, the latter a financial technology patented by the bank, which involved “attraction and integration of negative-positive cash flows.”

Bobby didn’t understand the details of the mortgage. He didn’t understand its essential purpose either. They would spend twenty-five years repaying the loan, and when they finally owned the house, they would be old and alone with no one to pass it on to.

The residents of the halfway house were mostly strays, who had been abandoned or lost. Life held little promise for them, and they lived day to day. Maybe renting was better.

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