The simple fact of the matter is when these banks and mortgages first started collapsing, the CRA loans and banks that did the most CRA business were the ones that were in the best shape. It wasn't those loans that started this mess - they were just the secondary effect. When the entire economy collapses, the poor will always be hit. But there's no rational way to blame those loans for creating this mess.
I've been having a hard time understanding why banks seem hellbent on foreclosure instead of adjusting the terms or short sales. This talks about it a little... Leaving out the discussion of people making stupid decisions about home ownership and second mortgages and such... when you have 20% of homeowners upside down and another 33% close to it, that's not a failing of individuals, but one of the system... and now, it seems like the system is rigged against most of us. Think about that... over 50% of homeowners in this country are upside down in their mortgages or close to it. You'd think somebody might do something.
what do you do? The mortgage interest deduction and non recourse provisions in certain states encourage people to over-leverage their homes. Does anyone have the courage to tackle those? Imagine if interest rates were 15% plus. The 50% number is tough to digest (though, in fairness, it excludes homes without mortgages). Ugly.
I think it would be pretty easy (and pretty funny) for some charismatic personality (not the rent is too damn high guy) to start a grass roots revolt against the banks. What if a significant number of people who are underwater on their loans just quit paying on them. The cash flow to the service banks gets cut off, the foreclosure system would get gridlocked, especially if every foreclosure was contested for chain of title, the used home sales market would be clogged with cheap houses, prices would drop, banks would become panicked, bank stock prices tumble, people would be fired, mortgage officers would be arrested for fraud. If the super-villian is going to kill the heroine with a factory, you've got to jam the gears. Then the repubs could get up and campaign for less regulation and oversight.
why would people revolt against banks for being underwater, that is one thing that isn't the banks' faults. I've never owned a home but I don't understand, if you don't need to sell and you're underwater and you can pay, just keep paying. yeah, its screwed up your house value went down but that's not a result a malice
Because it was a rigged market. The Banks, having bought off the government with campaign money and promises of wider home ownership and temporary prosperity ...always vote getters, created a synthetic demand, hyper-inflating home prices. It was a boiler room of churning sales and faked securities that circumvented the fiduciary duties of the mortgage lenders to their clients and investors. The banks took the profits and the people are left with the debt. Their greed overtook the sense of propriety. No paperwork loans? really? does that pass the smell test of good business practices?
yeah, the banks were irresponsible, still there's a difference between criminal and irresponsible. did some people not understand the products like variable rates, sure? but no reason to stop paying on your house if you can still afford to
First official report... If the banks are organizing the lobbyists to the degree implied in the story, then you know it's bad news for most of us.
Interview with the head of the AG effort... Sounds promising. I'd much rather have a bunch of money go into fixing this thing than have heavy fines. However, I still want major reform of the mortgage industry.
Ooops. Not so promising... The burden should be on the banks and mortgage companies to prove it was done correctly. To put the burden of proof on the homeowner and set it up to where they have to go into bureaucratic combat with these fraudsters is shameful. That's just giving these bastards a pass in most cases. All they have to do is delay and delay until most people can't afford to keep pursuing it and give up to get on with their lives.
Interesting article on the societal and psychological costs of this mess. One would think a politician or two would find this problem interesting and try to do something about it... That last bolded paragraph is an understatement of the highest order.
One of the reasons I'm fired up about this topic is because exactly the kind of boring, slow-moving type of issue that has the potential to totally transform our society. What's happening now in our country is the opposite of the GI Bill. I don't understand why more people aren't paying attention.
so banks shouldn't foreclose on a home because of the kids? this is a separate topic from the paperwork issues.
It's all part of the whole. There needs to be a decision on how we move forward, but that cannot be made by just considering the financial part. There's a psychological need to see this housing bubble/mortgage fraud/foreclosure crisis as just individual economic acts, but the potential to affect our larger society is huge from everything like local schools, jobs, family relationships, human potential, etc. It's beyond the banks at this point. We all need to look at this with the cumulative effects in view. On my street alone, there are 4 families who will be kicked out of their homes by February. Sure, they overextended themselves and bought more house than they could afford after their ARM adjusted and they lost some income and their home lost 1/3 of the value... but they also tried to work with the lenders, took second jobs, sold a bunch of their stuff, and really tried everything to make it work. The lender (BoA in the two cases I know the particulars about) refused to work with them and aggressively pursued foreclosure. If other homes are any indication, the house will sit vacant for months (or years) while a family is displaced in the middle of the school year, neighborhood prices will further decline pushing more people into the same boat, which depresses the local economy which means people get laid off which furthers the vortex of doom so many communities are facing. This one quote form the above article ought to scare the bejesus out of everyone with half a brain... Contrary to the myth of the greatest generation and all that Depression resiliency, there are many Great Depression survivors that never quite emotionally and psychologically recovered from their ordeals. That we're consciously threatening to put another generation through a similar dynamic is amazing to me. i know it's not as in-your-face in Texas as it in other parts of the country, but this is a big deal... and again, it will take a societal fix.
Because we've been conditioned with a us vs them attitude where we assume households being foreclosed are irresponsible spendthrifts that were responsible for the bubble bursting. If they payed off their debts, this would never have happened! What? I have CC debt and a HELOC too? Not as bad as those losers!
