Dear Congress, You’re Fired! Go Play Your Childish Games Elsewhere.

What Congress does instead of working for Americans. Posturing, tantrums and power trips.

Federal Government Shuts Down

Wouldn’t it be nice to live in a country where the legislators worked for the greater good instead of playing whiney-baby power games? I sure think it would.

Voters on Congress: Throw the bums out! All of them. *

* (Ed: Except Elizabeth Warren. I think we need to clone her. And bring back Gabby Giffords.)

 

Don’t Blame Homeowners Whose Mortgage Mods Didn’t Work

“A government auditor has warned that the U.S. Treasury Department doesn’t understand why distressed homeowners are re-defaulting at an “alarming” rate on government-aided mortgages …”
                     Obama’s HAMP Initiative Struggling To Help Homeowners

If the Treasury Department ever actually asks these homeowners why they ended up defaulting on their modified mortgages, I’m guessing I know what one of the big reasons will be.

No, not the tired chant of the narrow-minded and the bank shill, who insist that stupid, lazy people “bought too much house.” That may have been the case for some people, but those are the ones who walked away in the first wave of foreclosures. The rest of us got caught up in circumstances beyond our control, an economic crisis brought about by the very banks we were turning to for assistance.

I believe a huge contributing factor was the way those banks screwed around playing games to drag out the loan mod review process, driving people to the financial and emotional edge and then getting them to agree to terrible deals because they were, by then, so desperate to avoid foreclosure.

Take my case in point. In March 2010 when I wrote to Wells Fargo to tell them that my business had taken a huge hit and my sig-other who was paying half the household had skipped out on me, things weren’t that bad. I was current on my mortgage; I had excellent credit and very little other debt; and I had some money in savings. If my erstwhile mortgage servicer had looked at the information I provided and done the math, had looked at my credit history and had given me some consideration for being a decades-long customer, my mortgage loan would have been restructured while I was still well able to easily make a lower payment. I would have carried on paying my mortgage every month and all would have been well.

Contrary to what the ignoramus people would tell you, I would not have been getting a “free house.” For the privilege of paying a lower monthly payment, I would, in fact, end up paying MORE for my home than my original mortgage called for.

The bank would re-structure my loan to stretch the payments out over a longer time and temporarily decrease the interest rate, providing me with a lower monthly payment. But they wouldn’t end up getting paid less for the house. Usually the difference between my old payment and my new, lower one would be tacked on to the end of the loan as a “balloon payment.” That means that instead of having my house free and clear after the last monthly incremental payment, I’d still owe several thousand dollars.

Banks restructure debt all the time for companies, even countries. No big deal. Market conditions change and their customers’ ability to pay can change, too. Better to modify the loan now to help the client keep paying than to face a loss later when he defaults or goes into bankruptcy. Seems like a no-brainer, doesn’t it?

But restructuring only works if it’s done in a timely manner, while the entity – person, company, utility, country – is financially fit to keep paying the new, lesser payment. Wait until the client is on financial life support and of course you’re setting yourself up for a redefault. Doesn’t take an economic genius to predict that.

So, back to Wells Fargo and my experience. I sent my request for a mortgage loan modification in March. I didn’t get an answer (denial) until October! By that time I had depleted my savings as much as I dared to keep my mortgage paid each month. I stopped paying and reapplied for a loan mod. I was on the HAMPster wheel with Wells Fargo until February 2012, when they offered me a loan mod just ONE HOUR before my house was slated to be sold on the courthouse steps. Two years. Twenty-four document submissions. Eighteen “single point of contact” people.

They waited until the 11th hour and what they offered me was a terrible deal. I would have ended up paying about $500,000 for a house worth about a fifth of that. Meaning I would have been stuck with it forever. And the “home preservation specialist” who I was dealing with at the time reminded me of a used-car salesman, trying to get me to agree to the terms over the phone, with nothing in writing, while I was standing on the curb next to the courthouse steps. She called me and pressed me over and over. Think Wells Fargo wasn’t banking on my emotional distress over the foreclosure sale to get me to make a bad bargain? That’s just slimy business practice.

I opted out. I had already resigned myself to the fact that Wells Fargo wanted the house waayyy more than I did. I had found another place to live – cheaper, newer, much closer to my work – and was in the process of moving.

Wells Fargo’s offer was way too little and came way too late. They had already driven me over the edge. If they had offered me a sensible restructure within a couple months of my request, I would have taken it and I would have successfully kept on paying.

But if I had taken the terrible deal they offered after jerking me around for two years and if my business hadn’t rebounded, I might have ended up in a situation where I would have lost the house anyway. Not because I bought too much house, but because the bank waited too long to acknowledge what I said in my first communication – that I was on the verge of default and I wanted help to keep paying my debt.

So don’t blame the built-in failure of the modification program on homeowners. The blame rests with the companies who created the need for so many mortgage loans to be modified in the first place – the big greed-powered banks.

“Wake me up when someone goes to jail.”

The headline is a quote from investigative journalist Matt Taibbi, who has written some of the best articles on Wall Street fraud and greed and the mortgage/financial debacle. He’s writing about yet another bogus investigation into the unbridled greed and blatant fraud that brought the economy to its knees back in 2008.

Despite the hue and cry of millions of foreclosed homeowners and more than a few excellent journalists, there’s been nothing like real justice for what the big banks and Wall Street did to cause so much grief. And, aided and abetted by Congress (with a few notable exceptions), the Justice and Treasury departments, the President and the colluding “regulators,” the greed-crazed financial execs are winding up to take another whack at the economy.

How? By going on doing exactly what they were doing pre-2008, only now with even more arrogance and sense of entitlement, secure in the knowledge that they’ll get richer and get away with it again.

“These banks are not getting smaller; they’re getting larger. There are now more too-big-to-fail institutions than there were prior to the 2008 crisis.” 
~
Gretchen Morgenson, Why Banks Are Still Too Big To Fail

 The “too big to fail” myth is still alive and well five years after the first domino, Lehman, fell and seems to be accompanied by an overwhelming belief that the perpetrators are also too big to jail. That’s a very dangerous situation. Overthrowing countries dangerous.

And it’s not going to get reined in any time soon, not as long as our political leaders are so cozy with Wall Street and the big banks.

“When JPMorgan Chase CEO Jamie Dimon testified before the Senate Banking Committee earlier this year about the “London Whale” scandal, only two of the senators facing him had not received campaign contributions from his bank. Dimon was also called “Obama’s Favorite Banker” for a while.”
~
From Seven Things You Wanted to Know About Prosecuting Wall Street

Still holding out hope that somewhere, someone is investigating the facts behind your predatory mortgage loan or any of the fast-and-loose dealings that brought on the crisis? Sorry to say, the statute of limitations for some of the infractions is about to expire.

And that special task force on the mortgage crisis that President Obama announced in his January 2012 State of the Union speech? Well, without funds and staff, NY AG Eric Schniederman didn’t have much of a chance to

“…hold accountable those who broke the law, speed assistance to homeowners and help turn the page on an era of recklessness that hurt so many homeowners.”
~ Barack Obama, 2012 State of the Union

I predicted at the time that it was just another of Obama’s false promises to beleaguered homeowners. Very disappointing that I was right.

What would revive our economy and our faith in the nation where we live? Easy. If you’re of a “certain age,” you probably said it every morning of your grade-school days:

“Liberty and justice for all.”

In the meantime, you can stop supporting the companies that are getting away with fraud by simply removing your patronage. Move your accounts to a community-oriented local or regional bank or credit union and go on about your business as if the big banks simply don’t exist.

I only want to hear about the banksters in one context: Wake me when someone goes to jail.