“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”
“The art and mystery of banks… is established on the principle that ‘private debts are a public blessing.’ That the evidences of those private debts, called bank notes, become active capital, and aliment the whole commerce, manufactures, and agriculture of the United States. Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on; nay, who have made us so sensible of the blessings of letting them run in our debt, that we have exempted them by law from the repayment of these debts beyond a give proportion (generally estimated at one-third). And to fill up the measure of blessing, instead of paying, they receive an interest on what they owe from those to whom they owe; for all the notes, or evidences of what they owe, which we see in circulation, have been lent to somebody on an interest which is levied again on us through the medium of commerce. And they are so ready still to deal out their liberalities to us, that they are now willing to let themselves run in our debt ninety millions more, on our paying them the same premium of six or eight per cent interest, and on the same legal exemption from the repayment of more than thirty millions of the debt, when it shall be called for.” –Thomas Jefferson to John W. Eppes, 1813. ME 13:420
Please reread this Jefferson quote and please take the time to think about what he is saying. “Here are a set of people, for instance, who have bestowed on us the great blessing of running in our debt about two hundred millions of dollars, without our knowing who they are, where they are, or what property they have to pay this debt when called on.”
The facts are that millions of homeowners are facing foreclosure and out of these millions of people, very few ever contest their foreclosure, let alone show up in court. Many people think that since their lender is foreclosing on them, they owe the money and the bank should to take their home. “Private debt is a public blessing”, right?
But what if you found out that the entity trying to foreclose on you, in fact did not own your mortgage and when you challenge to see if they do in fact own the mortgage, you discover, that they can’t “prove” that they do in fact own the mortgage “legally” by producing the original note that you signed? What if they were acting on a perceived natural right to take outright ownership of your home?
Do you think that you should let them?
Attorneys are expensive and many require an up front retainer for thousands of dollars and then they take 35-40% of whatever the settlement is. Many people simply do not have that kind of money and they feel there is no way that they can represent themselves pro se or pro per in a foreclosure action.
The facts are you can contest your foreclosure, if you have the tools and knowledge where you can represent yourself and either significantly prolong your time in your home or quite possibly win what might possibly be an unlawful foreclosure action.
Friends, we are at a point where it is becoming obvious that the out-of-control private debt is becoming a public hazard. How many tent cities need to spring up around the country before this is realized? Jefferson was right, and the banking system uses the red herring argument of “prodigal borrowers” to deflect attention from their own prodigal ways.
Think about the gentleman from Ohio, Richard Davet , who had fought Bank of America for 11 years all by himself against a 6 man lawyer team from a high power law firm. 11 years!
The mortgage company that filed the suit, then NationsBanc Mortgage Corp., had so much trouble with the case that four years into it they brought in lawyers from Jones Day.
Such a problem can occur when mortgages are turned into securities and sold to investors. The companies involved in the transaction may not have checked that each mortgage was legally transferred, or “assigned,” to the new owners. In essence, the originating lender continued to legally own the mortgage — and would thus need to be the plaintiff in a foreclosure suit. In Mr. Davet’s case, however, the mortgage, which was not securitized, changed hands multiple times and wasn’t actually owned by NationsBanc until three years after the company filed suit.
Other judges have since followed Judge Boyko’s lead. The Ohio attorney general has asked numerous judges to dismiss or delay foreclosures based on similar grounds.
Why were they having so much trouble with this one man army form Ohio? Was it because he was so smart that he should have been a rocket scientist or was it because he had the guts to fight back against these guys and make them prove they had the right to take his home?
What about Joseph Lents from Florida. He has been fighting Washington Mutual for 5 years from what he believes to be a 100% unlawful foreclosure action;
If car dealers can keep track of titles, banks can track promissory notes, Joseph Lents says.
Somebody has been trying to foreclose on Joseph Lents’ Boca Raton home for five years. So far, they have been unsuccessful because he has legally fought them every step of the way.
The original lender, or the assignee, seems unable to produce the promissory note and prove it has the right to foreclose. In an era when Wall Street has sliced and diced mortgages to package them as securities, that could turn into a broader issue.
“I probably have been to the Palm Beach County courthouse 100 times or more over the last five years, just to observe,” Lents said. “In 99 percent of the residential foreclosure cases, plaintiffs are asking the court to accept a promissory note copy as the original because it is presumed lost.”
I spoke with both Richard Davet and Joseph Lents this past Sunday and let me tell you, these are two gentleman that I have a tremendous amount of respect for and would consider them heroes in my book.
Think about what Mt. Lents has said here. ““In 99 percent of the residential foreclosure cases, plaintiffs are asking the court to accept a promissory note copy as the original because it is presumed lost.”
When I spoke to Mr. Lents, he said that he regularly goes to court to just watch the foreclosure proceedings to see what’s going on. Almost 100% of the time they do not have the original note and the homeowner does not contesting this. He even said the judges know this, yet, when the defendant does not appear for a hearing, then they have to award a default judgement to the plaintiff (the bank). This is blatant railroading by the banks.
So it’s not as if the banks usually win by proving beyond a reasonable doubt that they do in fact own the mortgage and have the right to foreclose. No–they win by default because the other party (the homeowner) didn’t even bother showing up to court, let alone file a simple defense.
Is something terribly wrong here? You bet, and these two guys were smart enough to realize that their foreclosure action was illegal.
Hell, they know they owe the money. But as Mr. Joseph Lents told me on a Sunday afternoon, “Moe, I know I owe the money and I told the judge this, but I also told him that I don’t think I owe it to them (Bank of America) and since they cannot prove they have the right to foreclose on my home, why should I let them take my house? They agreed to settle, I make great money, this is not about money now, it’s about principle and they do not have the right to do what they are doing. So, I will fight.”
Now, those are words from a true patriot and a man that is fighting for his rights!
What about the honorable Judge Boyko;
Apparently Deutsche bank submitted several affidavits that claim that Deutsche was in fact the owner of the mortgage note, but none of these affidavits mention assignment or trust or successor interest.
Thus, the Judge ruled that in every instance, these submissions create a “conflict” and they “do not satisfy” the burden of demonstrating at the time of filing the complaint, that Deutsche Bank was in fact the “legal” note holder.
How about the honorable Judge Rose?;
“This court is well aware that entities who hold valid notes are entitled to receive timely payments in accordance with the notes. And, if they do not receive timely payments, the entities have the right to seek foreclosure on the accompanying mortgages.
However, with regard the enforcement of standing and other jurisdictional requirements pertaining to foreclosure actions, this court is in full agreement with Judge Christopher A Boyko for the Northern District of Ohio who recently stressed, ‘That the judicial integrity of the United States District Court is ‘Priceless.”
Hamilton County Common Pleas Judge Steven E. Martin said in a letter to Wells Fargo’s lawyer.
The foreclosure lawsuit was filed before Wells Fargo owned the mortgage - thus, the suit was premature.
Martin then ordered the Wells Fargo law firm, The Law Offices of John D. Clunk, that the law firm must file proof that its clients actually own the mortgages before filing any new foreclosure actions in Hamilton County
Ohio State District Judge Kathleen Mc Donald O’Malley dismissed 32 more foreclosures for lack of “documentation”. Read the ruling /files/89778-78388/Deutsche_Bank_Foreclosure_Ruling.pdf”>Deutsche Ruling.
April Charney a legal aid lawyer and foreclosure defense pioneer recently said to us;
This court order is what I have been saying in my cases. This is rampant fraud on every court in America or nonjudicial foreclosure fraud where the securitized trusts are filing foreclosures when they never own/hold the mortgage loan at the commencement of the foreclosure.
That means that the loans are clearly in default at the time of any eventual transfer of the ownership of the mortgage loans to the trusts. This means that the loans are being held by the originating lenders after the alleged “sale” to the trust despite what it says per the pooling and servicing agreements and despite what the securities laws require.
This also means that many securitized trusts don’t really, legally own these bad loans.
In my cases, many of the trusts try to argue equitable assignment that predates the filing of the foreclosure, but a securitized trust cannot take an equitable assignment of a mortgage loan. It also means that the securitized trusts own nothing.
These cases and recent rulings are by no means coincidence, but an emerging trend of illegal foreclosure actions, fraud on the courts and fraud on the American people.
Will the American people make a stand against these lenders and servicers that are slowly and deliberately taking our homes from us? Or will we continue to do just what they expect and want us to do (and what we have been doing for the past year): nothing, as over 1 million people (Americans) have suffered silently and fallen into foreclosure without raising a simple defense or even showing up to their court hearing.
What if the American homeowner started fighting back?
1,000… 10,000… 100,000 homeowners, all going to court to make these banks prove that they have the right to foreclose and prove that these mortgages they sold consumers are in fact legal. It would make a HUGE difference. Could we overwhelm these deep pocketed lenders with a grass roots effort to fight every one of these foreclosures?
I think we can, but it will take tens of thousands of people to join the fight.
Why should you take up the fight?
- How do you know if your foreclosure is valid or even legal, if you never show up in court or answer your lenders complaint?
- What if you could buy time? 1 year, 2 years to work out your mortgage and maybe settle to terms that are favorable for you?
- What if you could live payment free for quite sometime by just filing motions and answers you have a right to?
- Is your mortgage lawful? What if there were Truth in Lending Act and RESPA violations and you could use these violations to negotiate a loan workout or loan modification?
These lenders have sold you what is essentially a defective credit instrument. Snake oil or fools gold. Now, they are ruining your life by destroying your credit and taking your home as the result of a shady loan they sold you in the first place!
They made thousands of dollars from you and now they are done with you. So, now your’re kicked to the curb and called a “deadbeat” or “freeloader.”
This is theft and if you do not see that, well, then, let them take your home and be like the other million people who did nothing (just like the banks want) and left their homes. Now, these banks are owning more and more real estate, on top of everything else.
All the while their CEO’s cash in hundreds of millions of dollars as people go homeless. And to top it off, instead of homeowners getting help, these lenders get billions of dollars in bail out money from the Government, other banking institutions and now, powerful foreign investors are buying stakes in these institutions to keep them afloat.
So soon it will be foreign banks and individuals controlling the American people, a twist I do not think Mr. Jefferson envisioned in his writings.
We need to start a revolution against these banks and fight back for our rights.
Can a man like Thomas Jefferson, a founding father of our country and author of our constitution be wrong about the banks and their intentions? Was he just some wacko conspiracy theorist, or a man that wasn’t afraid to tell the truth and stand up against the powerful banks that threatened then and now rule of our nation?
I’ll end this from some more words TJ:
“Everything predicted by the enemies of banks, in the beginning, is now coming to pass. We are to be ruined now by the deluge of bank paper. It is cruel that such revolutions in private fortunes should be at the mercy of avaricious adventurers, who, instead of employing their capital, if any they have, in manufactures, commerce, and other useful pursuits, make it an instrument to burden all the interchanges of property with their swindling profits, profits which are the price of no useful industry of theirs.” –Thomas Jefferson to Thomas Cooper, 1814. ME 14:61
“Certainly no nation ever before abandoned to the avarice and jugglings of private individuals to regulate according to their own interests, the quantum of circulating medium for the nation — to inflate, by deluges of paper, the nominal prices of property, and then to buy up that property at 1s. in the pound, having first withdrawn the floating medium which might endanger a competition in purchase. Yet this is what has been done, and will be done, unless stayed by the protecting hand of the legislature. The evil has been produced by the error of their sanction of this ruinous machinery of banks; and justice, wisdom, duty, all require that they should interpose and arrest it before the schemes of plunder and spoilation desolate the country.” –Thomas Jefferson to William C. Rives, 1819. ME 15:232
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Well it looks like I’m going to be the first to chime in here. Not only was Thomas Jefferson’s words prophetic but it has been echoed again and again in history.
Here, President Dwight D. Eisenhower was speaking about what he dubbed “The Industrial Military Complex” in 1961, but it lends itself to the issue we face in regards to the Wall Street Investors, the Banks and the Real Estate Professionals all encompassing investment in keeping this failed formula of fraud churning profits at the expense of the American people.
There is a documentary that everyone should see about the Industrial Miliatry Complex called: Why We Fight . . .
Eisenhauer said in part: “. . . Proposal(s) must be weighed in the light of a broader consideration: the need to maintain balance in and among national programs — balance between the private and the public economy, balance between cost and hoped for advantage — balance between the clearly necessary and the comfortably desirable; balance between our essential requirements as a nation and the duties imposed by the nation upon the individual; balance between actions of the moment and the national welfare of the future. Good judgment seeks balance and progress; lack of it eventually finds imbalance and frustration.
” . . . this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be instead, a proud confederation of mutual trust and respect.
“Such a confederation must be one of equals. The weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield.
“We pray that peoples of all faiths, all races, all nations, may have their great human needs satisfied; that those now denied opportunity shall come to enjoy it to the full; that all who yearn for freedom may experience its spiritual blessings; that those who have freedom will understand, also, its heavy responsibilities; that all who are insensitive to the needs of others will learn charity; that the scourges of poverty, disease and ignorance will be made to disappear from the earth, and that, in the goodness of time, all peoples will come to live together in a peace guaranteed by the binding force of mutual respect and love.”
50 years later, are we closer or further from the hopes of President Eisenhower, and are we living out the fears of Thomas Jefferson?
I think the answers to those questions are clear.
TJeff were’nt no dummy.
Great observations and comments. You are a great thinker also JacMac.
Gee thanks, Moe!!!
Moe,
It’s very easy to escape banks control: DO NOT DIG YOURSELF INTO DEBT HOLE. You make it sound like money should be handed out for free. Sorry, no free lunch.
Alan, your view point is so one sided, it’s not even funny. Is it even in you to admit that no matter how greedy, self-serving, irresponsible consumers maybe that does not give Big Banks a pass to commit rampant fraud?
Moe,
I have been following you and your words for quite some time with much interest. You never fail to amaze me with these blod posts that are just so much different and fresh.
This is one of your best posts and these are great words because not only do they come from you, but also, like you said, Thomas Jefferson. This is not some man who just made some conspiracy theories up or was drinking a little too much wine.
No, no no, my fellow Americans, he is one of the founding fathers of our country and author of our darn constitution.
JacMac, you are a great woman. To devote some of your time to have the homeowners voice be heard is such a great thing. Your way with words and debating skills are top notch.
Keep up th egreat work Moe and I think you will make history with what you are doing. I feel it. God bless you all and good night!
Cary Hall - Nevada Homeowner
JacMac,
My view as one-sided as Moe’s or yours. Please stop waiving fingers because anything you can say about my position applies to yours just the same. So it’s nice to balance things out.
The fact of the matter no one held a gun to people’s heads to get them in debt hole.
http://sfbay.craigslist.org/forums/?act=Q&ID=80466432
Here is a perfect example of completely clueless guy who doesn’t have a faintest idea about money management and he needs to buy a house pronto despite the universal advice that he should rent until he gets his affairs sorted out.
Plenty of people like that were borrowing piles of money last few years with 0 down or serially refied themselves into debt abyss and suddenly they are playing homeownership victim and banks are evil card. You know what ? THEY DO NOT DESERVE TO BE HOMEOWNERS. I bet he will go off despite all the sound advice given to find some crooked LO and will bury himself into debt hole because he gotta buy home come hell of high water.
Alan, I have said more times than I can count what I am responsible for in terms of the mistakes I’ve made.
Who are you to say who DESERVES homeownership?
Some people need to put others down to feel superior, are you that type of person?
I reserve judgment about individual homeowners and what might have been their motivation for buying home, but I DO NOT reserve judgment on clear and blatant fraud by an industry, and their professionals who are charged with a fiduciary duty to disclose and provide in a sound and professional manner, a service which their clients pay dearly for.
This site has devolved into a bastion of crackpot theories. Look out - the black helicopters are coming for you. It’s the New World Order & the Illuminati all rolled up into one…
I don’t buy the evil banker & broker theories. What people were trying to do with ARMs was to screw the banks (and why not?). Pay the low rate for a couple of years and then refinance before the rate goes up. That’s sticking it to the man. The borrower wins by saving some money and the broker wins by getting better commissions. The banks were willing to accept this to expand market share. Brokers that had experimented with these products originally saw them working well for their clients (and themselves) so kept on recommending them. All seemed well, and it was for awhile.
It was the illogical assumption that housing values would alway increase that caused all these problems. Everyone that made decisions based on this was in error. Prices couldn’t keep going up beyond what people could really afford. The fact that “professionals” in the realestate and lending industry followed this assumption is sad. But I believe the real problem was the acceptance of risk. It is risky to take a mortgage with variable payments that are at the edge of what you can afford. It is risky to lend to someone without a complete picture of ability to repay. This acceptance of risk has lead to a situation that have left both borrower and lenders in trouble.
I can’t say I like Moe’s idea. The current problems in the courts are procedural as the lenders have done a poor job with the paperwork. It may not be clear who holds the mortgage, but if its not being paid then the borrower does not have the right to stay in the house beyond what is allowed by state law.
I am concerned about the long term implications on any broad based attack on lenders. How will the next generation get a mortgage? What lender would sell a mortgage if the borrowers could refuse to pay and stay in the property? There are millions of people that benefit from the current system, who take out mortgages that they can afford and pay them back and are better off for it. There will be millions more in the future. If we tear down the current banking system by refusing to pay based on a technicality (seems to be the basic proposal here) then what will replace it?
Finally, I don’t believe that Thomas Jefferson’s words are describing what is happening. The banks are not “depriving people of all property…” If not for banks, none of the people facing foreclosure would have properties to begin with, and the majority of people still have their homes because of their positive use of banking services.
Thats scary how countrywide would do that.
Yes, this is common sswiz. I wrote about this the other day and I had these lending executive hot shots trying to silence me.
http://loanworkout.org/2008/01/04/is-your-lender-charging-you-for-questionable-fees-fight-back-against-predatory-fees/
Homeowners need to know what they are being charged for and make lenders “DOCUMENT” these fees with a section 6 RESPA “QWR”
Countrywide has been the home of liar loans for years. “Stated Income” Option ARMs are still legal, despite the fact that California’s housing market has been poisoned by them and is just waiting to die - just like Litvinenko after he was poisoned with polonium 210 by Putin’s goons. Catching Countrywide forging documents should come as no surprise.
I think this is H U G E!!! Homeowners facing foreclosure may be intimidated by banks because they DO in fact owe the lenders and they may be grappling with feelings of guilt, because they’ve failed to uphold their obligations. I personally spent a number of days feeling completely stupid for not having realized what I was getting myself into.
Well, H EL L O, you know what I realized? That’s the initial feeling you have when you’ve been duped and lied to.
Contrary to what many Mortgage Brokers and Loan Officers who come on here like to portray, fraudsters who tried to take advantage of a low paying ARM DO NOT FIGHT to keep their home — they’d just walk away!!!
If you’re like me, you were were preyed upon, fooled into signing documents that put YOU into a loan that was doomed to fail!!!!
Mortgage Brokers might come on here and say, “It’s the Buyers responsibility — they signed it; they knew”. But in my opinion, many of the Mortgage Brokers who speak this way COUNTED on the ignorance of the buyer so that they COULD put them into a loan that THEY KNeW (since they are industry professionals) would probably go into foreclosure or default in the near future.
They walked away with their commission but homeowners were left holding the bag — the bad loan. Now those of us in these loans need to fight to keep our homes and this is part of the way we can do it.
Homeowners should fight the banks tooth and nail and challenge the banks to PROVE that they have THE RIGHT to foreclose. There is nothing illegal or fraudulant about this process.
In the court of law, you have to prove that you have a case!
Many homeowners might be feeling guilty that they’ve been unable to pay their loan, they may feel like failures but you know what? THAT CAN HAPPEN TO ANYONE!
ANYONE CAN GET SICK, LOSE A JOB, LOSE A HUSBAND, FALL INTO DEBT. IT DOESN’T MEAN YOU’RE A BAD PERSON OR A DEAD BEAT!
Don’t listen to people who say that you don’t deserve to own a home!
You deserve it just as much as anyone else!
IF everything was above board, Countrywide would not be fabricating documents. The trail of fabricated documents will lead right to the closing table, I think, and the more people who challenge Countrywide and other unsavory lenders, the more this will come to light. It is the only way things will change!
“They walked away with their commission but homeowners were left holding the bag \’e2\’80\rdblquote the bad loan. Now those of us in these loans need to fight to keep our homes and this is part of the way we can do it.”
That is a rather disingenuous statement - the part about homeowners left holding the bag I mean. That bag you refer to quite often contained a nice little sum of cash. Many of these “bad loans” were cash out refinances on 100%+ LTV notes. The lenders will not recoup that cash and are left with a depreciating asset. It seems to be me that many people - borrowers and lenders - benefited from this bubble and now you are all refusing to be held accountable. You want the pain to be felt only by the lenders and that is wrong but you will never understand that because you are the quintessential victim - “what I did was wrong and irresponsible but they were badder than me therefore my mistake doesn’t count!” It’s the same sorry excuse my 18-year old nephew tried to offer for getting busted drinking on his school’s bus trip to the Gator bowl last week - “everybody was doing it, how come I gotta pay?” Because you got busted and they didn’t!
WTF — really, what nonsense. What large amount of cash are you talking about? Let’s say the homeowners cashed out 10, 20, 30 even 50K — the homeowners fighting to save their homes — how fast did the bank make that back when they started hiking up the rate and charging their outrageous fees, how fast did they make that back in negative amortization — how fast will they make it back when they start charging their foreclosure fees?
If the defaulted borrower doesn’t pay a dime, the bank will still get the asset BACK! What will the borrower walk away with — nothing!
YOu need to start differentiating in your mind, all of the people on here who want to hop on the greedy borrower band wagon, between those who were defrauded and preyed upon and those who might have wanted to make a buck.
THere is a BIG difference, and I will repeat what I said: Fraudsters don’t fight to save their home — they walk away with the money they cashed out on.
I think there is a big problem with perception and an US vs. THEM mentality in operation here. A mentality intent on creating a group that can be the target of ridicule so the “US”s can feel better, smarter and superior.
Those who are so intent in bashing the bad choices of the borrower, labeling them as spend-crazy, debt addicts refuse to expand their perception to include the elderly, the targetted less-than-savvy minorities and all the others who were D E F R A U D E D.
Those who were defrauded DIDN’T cash out, didn’t make a buck and are facing the reality that a large chunk of their hard earned money will be gone and they’ll be left with nothing.
REALITY CHECK: Let’s stop thinking in black and white and start seeing the shades of grey.
If borrowers made bad choices, they can “pay” by dealing with the foreclosure and fighting for their home but no one deserves to be homeless, for goodness sake!
Al said: “I don’t buy the evil bank and broker theories.”
Don’t listen to theories, than, listen to a convicted Industry professional who now educated consumers about the fraud of the industry:
“Mortgage lenders employ a tiered business model that’s based on the retail theory of loan origination to supply a pipeline of loans for bundling and securitization in sophisticated financial markets.
“Both mortgage fraud and predatory lending are facilitated AT STREET LEVEL by REAL ESTATE INSIDERS who more often than not are intent on earning only commissions or professional fees.
“In the process, consumers with varying degrees of culpability confront the risk of financial loss ALONG WITH entities in elevated tiers of the lending model that RELIED ON the integrity of loan originators.
“An often cited FBI report states that 80 percent of all mortgage fraud involves the tacit participation of real estate professionals. I personally believe the percentage is much closer to 100 percent. Throughout this discussion, the term mortgage fraud is intended to encompass predatory lending practices as well.
“Contrary to a belief held by many, foreclosure rates are a dependable bellwether of fraudulent activity. STUDIES HAVE FOUND THAT THE FEES CHARGED BY LOAN ORIGINATORS HAVE A DIRECT BEARING ON THE INCIDENCE OF MISREPRESENTATION IN LOAN APPLICATIONS.”
“THE HIGHER THE FEE STRUCTURE THE MORE LIKELY AN APPLICATION IS TO CONTAIN MISREPRESENTATIONS.”
“IN TURN, A DIRECT CORRELATION EXISTS BETWEEN MISREPRESENTED APPLICATIONS AND THE LIKELIHOOD THE BORROWERS WILL DEFAULT ON MORTGAGE PAYMENTS”
Said in plain English: It wasn’t no surprise.
“A STUDY OF 100 STATED INCOME MORTGAGE APPLICATIONS REVEALED THE 90 OF THEM CONTAINED MISREPRESENTATIONS!!!!
“More startling, incomes were exaggerated by 50 percent, or more, in roughly 60 percent of the cases reviewed.
“At this time, 1 out of every 196 U.S. households is in foreclosure. Far too often, mortgage fraud impacts communities and individuals that can least afford the abuse.
“A boarded up home is the visible symptom of a deeply rooted problem; despair is the human cost that we hear so little about. Every aspect of our society, particularly the economy, suffers when a home is foreclosed and a family displaced” ~ Ed Rybczynski, FORMER OWNER OF A TITLE COMPANY IN BALTIMORE, THEN CONVICTED AND SERVED TIME FOR FRAUD, NOW A CONSUMER ADVOCATE.
“If the defaulted borrower doesn\’e2\’80\’99t pay a dime, the bank will still get the asset BACK! What will the borrower walk away with \’e2\’80\rdblquote nothing!” How not true! These were loans made with no down payment even if there was never a cash out refi (very rare). Many of these borrowers are in trouble long before their rates even reset so, at they very least, they will get to live rent/payment free for however long it takes to remove them from a house that was never really theirs. In addition quite a few of them will trash the “asset” on the way out.
YOU need to get it through your head that not all borrowers are victimized and not all lenders are evil incarnate. Sometimes borrowers are just irresponsible and lenders simply incompetent.
“REALITY CHECK: Let\’e2\’80\’99s stop thinking in black and white and start seeing the shades of grey.” That’s rich coming from you - I have been reading this blog from the beginning and you wouldn’t wouldn’t know “shades of grey” if they swam up and bit you in the a$$. Try taking taking some of your own advice.
I would never advocate that anyone “deserves” to be homeless but I will that not every one deserves to be a homeowner. Get the distinction - it’s a shade of grey!
I LOVE YOU JACMAC
WTF - “I would never advocate that anyone \’e2\’80\’9cdeserves\’e2\’80\’9d to be homeless but I will that not every one deserves to be a homeowner.”
Well, thank the Lord and all his Angels that it aint up to you! You can spout your rhetoric about not all borrowers being defrauded all you want — I have conceded time and time again that borrowers I’m sure made an effort to defraud banks, and if your “CLAIM” to have read through this blog “from the beginning” were true, you would know that.
But the TRUTH is you’ve read what you wanted to read, and until I scream along with you that ALL borrowers who have defaulted deserve what they got because they were dead beats and ALL the banks are just operating business as usual and making money, we will never meet in the middle.
YOUR shade of grey is actually shades of GREEN — the only color that true capitalists see.
Any home doesn’t belong to ANY ONE of us (that means you, too buddy) as long as we haven’t paid cash for it.
I pray to God no serious illness ever befalls you, or financial travesty so you won’t have to L E A R N first hand what it means NOT to be able to pay for something, NOT to have . . . but from the way you are writing it seems that is the ONLY thing that would help balance out your right-wing point of view.
Also, I know I speak for many who are reading along here, that’s why I bother to respond at all half the time because it can be EXASPERATING!
Thanks above poster for confirming the voices of the many times silent.
\’e2\’80\’9cWe can throw stones, complain about them, stumble on them, climb over them, or build with them\’e2\’80\’9d
~ William Arthur Ward
JacMac-
I usually go back and forth with you on most of topics. We usually don’t agree, but most of what you are saying here is correct. No one deserves to be homeless. I can speak from experience. I became homeless for a year and I accepted the responsibility for the part I played in that. At that time, I, by my own actions didn’t deserve a home so I lost mine. Other factors beyond my control contributed to that but the part I played was on me. EDUCATION, EDUCATION, EDUCATION.
The part I think you miss sometimes is that the system, which is purposely flawed is one NO ONE should ever trust. Ever. It’s designed to make you either successful or it will destroy you.
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EDUCATION EDUCATION EDUCATION
The lack of education in this industry is done on purpose. Alot of people took and is taking advantage of that. Innocent people have been screwed, but to be fair, there are alot of situations that people entered into to make that quick leap, and it backfired. In your case, the result was you really didn’t know and unfairly got it up the ass. Not your fault and those people should pay. And I hope they have. The case where the doctor attacks his loan officer before Christmas……that was his fault and he and the rest of the crew should pay.
Not just CW but a majority of large lenders, some defunct, did and are doing the same thing. Screwing over people. To some degree it’s design to function that way.
WTF- The lenders are losing and to some degree that is correct. But there are cases where fees are arbitrarily tacked on. Attention letters are sent out and sometimes they aren’t. That’s real. Let’s not act like it’s not. And months later because of whatever, the borrower opens the letter and the fees are crazy and incorrect. Emotions are mixed in. Guilt is there……Embarrassment……Failure. The borrower knows they owe, but it’s more than that with the borrower. That’s real too, so let’s not act like it’s not.
Some know the deal and that is on them, but some really don’t know and to some degree, that on them too. The problem I have is regardless of who it\’e2\’80\’99s on, be it the L.O. in the beginning because they didn’t explain or the borrower who didn’t listen, the system has made everyone liable.
However, the argument is also strong when the borrower is informed and does what they want to do despite good advisement. Everyone is trying to get into the psyche of people. No one will ever figure this out by blaming each other because it’s everyone’s fault. A product is put on the market to make money. That’s it. Whether it\’e2\’80\’99s a good product or not, that doesn’t matter. If the L.O./Bank/A.E./Title Attorney, Real Estate Agent, Insurance Agent, Appraiser, or whoever is an idiot and the borrower is the deer in the head lights then that’s spells disaster for everyone.
We can go back and forth all year long with this. We will undoubtedly defend our side of the street. I want the best for less and the industry wants money all day long. In lies the problem. No one wants the get educated in the beginning where both sides can accomplish their goal without damage.
The industry is design to screw me as the consumer and also me as the L.O. With that, let’s strive to fix the industry with EDUCATION, real rules and consequences. With the consumer, let\’e2\’80\’99s fix them with EDUCATION, real rules and consequences
Can someone please just tell the audience how to stop ignorant borrowers from continuing to fall prey and also how to make the industry who, so blatantly, on every level to stop fucking over people.
Chris, you have written a well reasoned response, looking at it from boths sides and I agree 110% with everything you’ve said EXCEPT for this:
You didn’t deserve to be homeless.
I’m sorry that you experienced that, but I’m so glad that you came out of it and got back on your feet.
It takes a lot of integrity to admit when you’ve made a mistake and even more and then some to actually do something about it.
I’m glad we’re continueing dialogue and even though we don’t sometimes see eye to eye, that we are still respectful of each other (well, I try — sometimes
)
Well, I’m looking over what you wrote, I guess you said “you didn’t deserve a home” not that you deserved to be homeless. I stand corrected.
But I’m still sorry that you ever went through such a life changing experienced, and my heart goes out to you for having lived through that.
Still I will say again, I’m glad you got back on top.
I can see both sides of the fence here. I think I’m in about the same predicament as JacMac. I live in SoCal, I make more then the annual median household income. However, the median cost of a home here is well outside what the median income (or in my case much higher) can afford. Still, with the market going crazy financial institutions found a way to sell folks with the median income homes that they could not afford. It became a frenzy; I know I can’t afford to pay the fully ammortized payment on a half a million dollar home - but so did the loan officer who sold me the loan. I have an Option Arm, bought it hook, line and sinker. The option arm is a refi, yes it’s a cash-out refi only to pay the prepayment penalty and closing costs of the other “purchase money loan” (a libor adjustable) that adjusted so much and so often that I had couldn’t pay it any longer. How that got out of hand is a completely different story. Nonetheless, it happened.
When I got the Option Arm I heard so much about the options, but the only ‘option’ that was disclosed was the minimum payment. Had I seen the other ‘options’ I probably would not have signed this new loan and would have stayed with the struggling LIBOR loan. But again, a whole new story there and a separate book.
Anyway, here we are and this loan is unmanagable - so I seriously started reviewing the loan documents. I have been writing letters to the mortgage company since I saw the first statement and saw what the other four options are. The numbers I provide are for example but are a true reflection of market comditions only in the SoCal area. I do this to show you the negative cash flow I have endured. I didn’t take cash/equity out of my home, but bought in the fall of 04 near the prime time of rise, and yes it was 100% financing. I had 20 grand to put down but after closing cost, fees, etc. that was nothing, still acknowledgably much less than 20% of a half a million dollars. I knew going in that I could never ‘pay off’ a half a million dollar loan; but was shown repeatedly how easy it was to afford this interest-only, etc. Real estate always does . . .
Yes, I took a risk. I ended up with the option arm, yes. Back to reviewing the documents. My ‘agent’ with the brokerage firm was a woman - I won’t use her or any other corporate names here. I review my application (which has a block that is checked off as received telephonically by a gentleman) a gentleman I’ve never heard of. On this application, which yes I signed my income is overstated by 150%. I did not catch this at closing. I sent the broker all of my financials, I receive a salary and my income does not change. However, by signing this document I realize that I am as culpable as they are in this ‘fraud’ and yes, I would consider this fraud. Nonetheless, I do not appreciate being misled and misguided in these affairs. PERIOD!
Okay, back to values. In my neighborhood a 3-4 bedroom home, rents for about $1850 - 1950 per month. My negative ammortization payment on my 3 bedroom, 1800 square foot home is $3300. Therefore, to have please of 2 grand per month being added to the balance of my mortgage in a declining market I additionally pay about $1400 per month more to “rent my home that I don’t own anyway.”
I fully realize that was a gamble I was willing to make and if my home were still worth what it was appraised at during funding, or were still appreciating, this would be something I would endure. However, we all know that isn’t the case. Which is why I have been trying to seek a loan modification. You see, I didn’t lose and the lender (investors) didn’t lose - we both lost. Yet, the lenders (or investors) don’t want to give any slack to us borrowers who bought into this smoke and mirrors act. I am not saying I will not accept some of this responsibility, but they need to accept some responsibility to and help some of us get through this roller coster of a ride. I get further and further upside down every month, all while I am racking up additional debt (negative ammortization in a declining market). Oh, and the options on an option arm - they aren’t options at all. And if the lenders are truly legit, why don’t the show you what the ‘options’ are before you close on the loan. Therein lies my biggest mistake, I assumed the options would be a little more closely spaced (by like a few hundred dollars). In actuality, (I’m sure you know) but if you don’t there is a several thousand dollar per month spread there.
I want to work with my lender, but I want to keep my balance from going up (negam). Unfortunately for me, my broker qualified me on this loan soley on my ability to pay the negam payment. So yes, I am screwed - but to what point do I take this. When I get to 110% LTV I’ll have to stop paying. There are no good solutions here. I don’t want to walk away and I don’t want a foreclosre - but this is the road I’ve been led down. Eventually (unless the market rebounds in the next year to 14 months/when I expect my loan to recast) - foreclosure is the destination. I have asked repeatedly for a modification in the form of reduced interest rate or forgiving a portion of the debt/accrued interest or a combination of both or some other form of ‘modification’ that I may not know of. Several letters and unreturned phone calls later all I have to show for months of trying to find an arrangement to avoid foreclosure is a loss mitigator that I have never talked to and occasioanally his voice mail isn’t full and I can leave him a messsge.
Oh, and why didn’t I complain too much when I didn’t see all of those ‘options’ when I signed the loan. Well, the broker told me “Even if you pay the minimum payment for the 5 years of the ‘option’ portion of the loan your balance will not grow greater than 52 grand.” Well, that was a half truth and leads me to believe that the loan officer didn’t really understand the loan either. My thought was if I pay the minimum and the mortgage ammortizes negatively over 5 years on a half a million dollars and only adds 52 grand or so, this isn’t that bad of a deal. Well, the 52 grand is the 110% LTV cap (I found this when I reviewed my loan documents and found the overstated income) and I am over halfway to that cap in just over a year in this loan.
I know, I’m an idiot and this is shit sandwich - but when is the lender (investors) going to realize that perhaps they should take a bite also. Foreclosure isn’t cheap, and short sales are selling just that - short! All they really need to do is realize this is a losing situation and MEDIATE to some place in the middle saving themselves money and possibly saving our homes (and the value or our neighbors homes as well) in the process.
Just a thought or two, randomly put together by an idiot who will walk away from dumping forty-thousand dollars per year on a home I could have rented for twenty all to get the pleasure of possibly having a 710 FICO score ruined and a possible judgement in excess of $100,000 filed against me.
You know, it has finally dawned on me - the reason the folks with the median incomes couldn’t afford the homes in their neighborhoods was because they weren’t really worth their inflated prices to begin with.
Maybe I’m not all idiot - so I’ll claim to be partially; be that in the black, white, or gray.
JacMac,
You are “good people.” I see pass some of what you say because I know in the in the end you mean well. You sometimes have to argue back and forth to get to the root of an issue. Keep it up. The answer is out there. Like WTF said earlier. It makes you think about how you are going to handle your future business. Self checking.
My situation was one of bad decisions I knew I was making from the beginning. Some of it was from ignorance and some because I was just being an asshole. I paid for it. I know more now and I don’t regret any of it because I can now tell someone going down the same road how not to live in a park
Gosh, Tom, thanks for sharing your story with us and being so damned honest.
No, you’re not an idiot, not in the least.
Can I ask, who is your loan with, and have you considered joing the homeowners forum?
Moe has a lot of good information on there about how to deal with modification with different lenders. I can help and it sure can’t help.
I love your analogy. This is a shit sandwhich, and when are the lenders gonna take a bite.
You’re right, it’s not fair to let us eat it up all by ourselves.
Sounds like, like I, you should have never been put into that loan, it was doomed to fail. I think if we fight this, we can see the light at the end of the tunnel.
Really, what will the banks have but an once overinflated, now deflated property in a market where who will be able to buy it?
I’m thinking out loud here, but it doesn’t sound good to me.
Best of luck to you, Tom and thanks again for sharing.
I meant it sure can’t hurt but I wrote “it sure can’t help” — hope that wasn’t a fraudean slip — it’s late. better get to bed!
I stress education in all of my posts because that’s all the consumer has as weapon. Nothing else. You will never know completely how the industry is functioning…….. But do know that the less you know, the more prone you are to being ripped.
Consumers for the most part won’t completely understand the system. Cool. However if you prepare yourself as best you can and stay on top of your business, you won’t lose your home. If possible, take the emotion out of it. The consumer is the only one with emotion. You can make a better decision without it. No one else cares about you. If everyone around you is going crazy, telling you to just do it, then get up and leave and find what you need somewhere else. The only thing you have lost is time.
I’ve said this many times. When you step out of your house, it’s you against the world. You have to keep it that simple
Hey JacMac
I agree that misrepresentations were happening and that the front line personnel were aware of them and participated. I also believe that the higher ups were aware as were the majority of the borrowers. How could the front line workers regard themselves as really doing anything wrong when everyone was condoning it? Fudging applications was like speeding, everyone does it. In fact, if a particular broker didn’t get creative, then the client would simply go to another broker who would. Just like some borrowers rushed out to buy investment properties because they didn’t want to miss out on the great deals their friends and family were scoring, the front line workers didn’t want to miss out on the great commissions their coworkers and competitors were scoring.
I’m not trying to say that lenders and brokers didn’t do anything wrong. I’m saying that many were no doubt individuals falling prey to the same mentallity as the buyers. Most brokers likely believed they were doing their clients a favour, as a little white lie was the only way the buyer could reap the amazing rewards of home ownership.
Having said that, I also believe that their were individual brokers who knew they were hurting the client for their own interests, but they are the minority. I would suggest for anyone who is making any major purchase ask the seller how they are getting paid. If they won’t answer walk away.
Moe’s proposal is that the entire lending/banking industry needs to be brought to it’s knees. However the quotes do not indicate that the entire lending industry was involved. For instance, high fees for brokers may increases the likelihood of fraud, but it doesn’t indicate that the entire lending industry increased their fees. It states that real estate professionals were aware that fraud was occurring, but it doesn’t indicate that the banks/brokers were the ones initiating the fraud (they were often the victims). It also doesn’t indicate that all real estate professionals (or lenders) were involved in fraud. For instance, a small percentage of real estate professionals could become known as the go to people if you are committing a fraud.
Advocating tearing down the banking system based upon what happened over the last few years is equivalent to saying the everyone that bought a home in the last few years was a greedy flipper. Both statements are equally innaccurate.
I still put forward that Moe’s proposal would effectively end lending practices as they currently exist and would hurt the majority of people who have received great benefit from it.
Al,
I appreciate your thoughtful comments.
I 100% agree with you that unsrupulous brokers were out numbered by ethical mortgage borkers and LO’s. Yes, but the spread on percentage wasn’t much. What 60% good and 40% bad.
It only take one infalted appraisal, inflated stated or samll incident of fraud for that LO or broker to end up in the Fraud category. You do not murder 1 person and since you didn’t kill 5, you’re noyt a killer. You are still a killer if you kill 1 or 5. The only difference is the label. “Serial Killer” and then as it pertains to brokers and lo’s, SERIAL FRAUDSTERS.
I really agree with what you are saying about this lawsuit issue. But I do not think it would bring it down. It would FORCE change. It would make them go from the offensive on foreclosing on every damn homeowner to being on the defensive.
#1 lenders need to obey that laws of the land. They are not above these laws and they act as if they are. What, they can just go into any court in America, file suit, when they don’t even have legal standing let alone the dran original note and we ahoul d;let them cirumvent the law, just because that homowner is delinquent or in dafault?
If soemone was to robe you and beat you, you cannot take the law into your own hands and do whatever Al feels justice should be. NO. You have to obey that laws of the land and use the courts process and respect the court process in order for justice to be served.
This is about principle. This is about our constitution. What is right and what is wrong.
It is wrong for these lenders have sold what is eesentially “FOOLS GOLD” to millions of Americans and now these people have to pay the price for buying this fools gold.
Rubbish. It’s worng and the only way to make sure this doesn’t happen again is to fight fire with fire and challenge these banks.
Hell, I know our governement is not going to do it.
If these were toys with lead basd paint or tainted beef, one person gets sick and then they recall every damn toy, ground of beef and they put that company out of business.
We have 1 million Americans kicked out of their homes from tainted loans and our US Treasure has closed door meeting and lunch with these same people.
People have committed suicide and murders have happend over foreclosures. This is a national epedemic and our government is treating is as a market problem!!!!!!!!!!!!
Al, I hear you and I don’t necessarilly disagree with anything that you’ve said, but I also support Moe in his stance, that their needs to be immediate and effective change.
You said, Al, “How could the front line workers regard themselves as really doing anything wrong when everyone was condoning it? Fudging applications was like speeding, everyone does it.”
Yet, while speeding if I kill or injure a pedestrian, there will be swift and immediate consequences. THe lenders, the fraudulant brokers and the industry as a whole has long since avoided the consequences of their actions to everyone’s detriment.
Now it has become everyone’s problem. In order to resolve it, I agree with Moe, we have to hold lenders — the entire industry to a certain standard and there must be immediate and swift penalities if they fail to adhere to those standards.
We cannot fall into the trap of dismissing the “bad” (the fraud) for the good (the fact that many who could not have purchases a home were given an opportunity to do so.)
Creating opportunities for those who would have been boxed out of the American dream was, is and will always be good. It is why people from all over the world flock to America in droves — because it is the land of opportunity.
However, creating that opportunity in such a way that it is designed to fail is predatory and wrong and should never be tolerated, no matter how many people participate in that wrong doing.
This would and should be true for any industry, as Moe pointed out, whether agricultural, economical or financial.
Think of a doctor. If he performs a surgery and kills a patient, and it is determined that the surgery had such high risks that any qualified surgeon should have known NOT to proceed with the surgery, no matter that the patient signed off on it and was consultated. The doctor will lose his license and the hospital penalized.
It is about be held to certain standards.
Hey, Chris, yes, education, education, education.
You know what I just realized frm reading your last two messages here?
You’re so hard on others because you’re so hard on yourself.
Cut yourself some slack! Life is about living, making mistakes and learning from them. When I was 20, you couldn’t tell me anything. I was an absolute complete know it all. By the time I got to be 25 I was a little less cocky and arrogant, a bit unsure.
By the time I reached about 30 I realized that I didn’t know squat, and I’ve been working my way up from there since then.
I look at all of my mistakes as opportunities to grow and become a better person, smarter, kinder, more compassionate and understanding.
For instance, I bet you can look at a person who is homeless and really understand how they must feel.
I guess personally this is what I wish every MB, LO could do, understand how the homeowner facing foreclosure might feel.
I know you’re a guy, but when we start to deal with people on a human level and not regard them as numbers or pay checks it changes the way we relate, at least that’s my opinion.
That is the antedote to the “you against the world” syndrome that many people suffer from.
We’re all in this together is the real truth, in my opinion, even though so many do not behave that way.
Good day Moe,
I agree that something needs to be done, but I don’t see how living in a house that you don’t own and can’t pay for is just or principled. Your suggestion will force change, which will be the banks sorting out their paperwork. That’s a good use of time and resources at a time like this.
My proposal is what many people are doing already. Leaving their houses. They’re accepting that homeownership is not the “be all and end all” of existence. It’s shelter, as is a rental. They made a mistake taking on the mortgage and they’ll take the hit to their credit rating plus whatever money they sunk into trying to stay afloat. At a later date they’ll be able to buy at a reasonable price once the market comes in line. Walking away, while painful, shouldn’t be a suicide/murder type event unless the individual is too caught up in the hype of homeownership.
And don’t think walking away is a win for the bank. They get stuck with a house worth much less than what they’re owed plus the costs that go with foreclosure. That’s the price they pay for not performing their due diligence in underwriting. The upsides of this approach are:
a. The banks that were the worst for bad underwriting get hurt the most
b. Mass foreclosures will make the lenders use rational underwriting procedures
c. Values of homes will fall to affordable levels quickly, helping the middle class
I’m not saying that everyone in any kind of mortgage trouble should just give up, but using legal tricks to stay in a house you don’t own because of poor records management by lenders isn’t a solution.
I disagree with your b. and c., Alan.
Mass foreclosures will have a detrimental ripple effect to our economy and will not help the middle class. Where will all of those people go with their credit ruined — what will they do.
The loss of income from the foreclosures to industries that support homeowners will be disasterous.
It will lead to a recession, as Moe has predicted.
THe thing is this idea of homeownership — no one truly owns the home until they have burnt the mortgage. The bank always has the ability to take it back.
We are all truly renters.
oops sorry Al, I called you Alan. My bad.
Hey JacMac,
I didn’t see your post after Moe’s when I was typing my response at 12:50. I agree with you fully that anyone who committed fraud should be charged and punished, be it lender, broker, borrower or real estate agent. We should not be overlooking the bad due to the good, but at the same time we cannot dismiss the good with the bad either. The original concept of this post was the “banking institutions are more dangerous to our liberties than standing armies”. Not some lenders with poor practices but all banks.
I also should be more specific with my objection to Moe’s plan. People should go to court and participate, and try to negotiate if it makes sense (ie there is a plan that could keep you in your home and not leave you house poor for the next 30-50 years). However, filing motions to buy time and fighting over technicalities is wasteful. Filing motions will not create opportunities to negotiate with the lender.
Standards do need to be set and followed. Any lender that does not do so will be bankrupt quickly enough. I don’t see, however, how filing motions will induce lenders to use logical underwriting techniques. I do find it sadly amusing how the main stream media refers to “tighter lending standards” when they should be saying “tradional lending standards”. The “tighter” phrasing implies that recent history was somehow normal.
It does raise a question in my mind, if looser lending standards had never been introduced, how many people currently facing foreclosure would never have been given a mortgage? How many fewer houses would have been built over the last decade and how many more rental units?
Oh JacMac I still can’t agree with your 1:31 post.
Looking at the middle class as a whole, as one individual moves out of a house and it goes back on the market at a low price, someone else from the middle class will be able to purchase it. The new buyer will have a mortgage that will allow them to do wonderful things like buy groceries and save for the future.
The old “owner” (do agree with that point) will have smaller rental payments and be able to buy groceries and save for a down payment at a later date. There shouldn’t be any concern about whether there will be a recession or not, because there will be. We’re over due for one. The supporting industries will be better served in the long run by owners who are not housepoor. The former owners will be better served by renting to give them flexibility to ride out the recession.
Keep in mind here I’m dealing with generalities. If your individual circumstance dictates a fight then do it.
a. If your loan application was modified after you signed it then go to court. At a minimum, you should ask for damages that would buy down your mortgage to one you would have been eligible for given your original information.
b. If there was no fraud and there is a mortgage that would work for you, then call the lender and propose it (I know this is less than garaunteed). Have all the numbers for them. If you owe $250K on a house that will get $200K on the market, the bank may be open to a 30 yr fixed at 6% to avoid that 50K+ loss. Have all the documents close at hand that they’ll want (income info, assets, other debts).
c. If you run the numbers and it doesn’t just make sense, then start packing. You’ll get your life back
JacMac,
My reasoning behind the education emphasis is because when you and I go to our loan officer to do some business, we expected a level of understanding and to some degree some compassion to our situation.
Why, because you are dealing with another human being. To consumers it makes sense. However, when things go left, then the humanity on the business side is disgarded and everyone stands behind “it’s business.” That’s when some of those who have been taken advantage of feel like tearing their L.O. to pieces. So I just circumvent the emotional thing and just go straight business. To do that, I must arm myself with the necessary knowledge to get what I want and to get it just how I want it.
In this industry the consumer needs to have these things already figured out:
1. The credit must in good. 700 good
2. If It’s a purchase, be prepared to spend money and spend it.
3. If it’s a refinance, make sure it does just what you need, nothing more.
4. If you are investing, be prepared to lose. People lose site of what investing entails. You can win and you can lose.
5. Understand in detail 1-4
6. Make a plan from finish to start and then execute from start to finish
7. Plan in advance what you will and won’t accept and stick to that.
8. Once you are satisfied, then and only then sign your life away.
JacMac, my syndrome kicks in only when doing business. ;). I shut it off when I get home. If I acted like that all day I would probably explode. You are right. Life is all about living it. To make good sound decision, one needs to know how a thing works. Don’t just rely on the professionals to tell you. That’s the issue in this industry. Not all, but alot of people on both sides don’t know what they are doing.
Chris: “Not all, but alot of people on both sides don\’e2\’80\’99t know what they are doing.”
Absolutely, I used to be one of those people. Am still, in some ways but I am learning. I like your list. We all have to armed like that when entering the business world. And we especially need what you described, the “off” switch
— maybe MBs can come up with a list of what a borrower needs to know, the basics of what a borrower should absolutely understand when coming to a closing table.
For instance, the talk about YSP. What do I care if the broker get’s paid a YSP? I think a broker deserves to be paid for work he/she has done.
I want to know about the YSP because I want to know that there is a possibility that I can get a loan at a lower rate. I want to know what kind of loan that would be and make an informed decision about what kind of loan I’m gonna close on.
So what would MBs here advice as a 1-10, must know for borrowers?
Al, I think a lot of what you’re saying makes sense, especially the last post. I absolutely agree that we should probably go right back to the standards that have existed in the past. But that is an argument of semantics.
I like your options at the end of your second post because they’re realistic, and I certainly don’t advise people to fight blindly for a house which in the end will just bleed them dry of cash.
I do think, though, that there is a dark side to the foreclosure disaster and it will not always play out the way you’ve described.
For instance, emotionally foreclosure is a terrible experience for people. There will be divorces, people will lose jobs, et cetera purely because of the emotional stress they’ll be under. Depression is a serious possibility for most. Depression is a clinical disorder. People cannot function when they’re depressed. Loss of self-esteem, self-worth, suicidal feelings. The possiblility of job loss purely because of an inability to function is real.
There is of course, the lowering value of the property for both the forclosee and the neighbors. You say that is good because it lowers the homes to what they were actually worth in the first place. However, if your neighbor refi’d as well, he/she may also be upside down on his loan
The debt to loan value will change for many homes, increasing the risk of foreclosure for those who once had equity in their home.
Credit damage will prevent those who were foreclosed on from making purchases. Might be a good thing, you say. They can’t afford it, right? But the economy will suffer from the lack of spending.
Some employees require good credit to maintain a position. AGain, the risk of unemployment.
Foreclosees might be required to pay taxes on the property they’ve lost. This will tie up any extra cash they have. Plus, the loss of credit will require them to operate on a cash only basis. If they have limited income or have recently lost a job, buying groceries may become a real problem.
An unexpected sickness, a car problem — most of us rely on credit to cover that. Without credit, how many of us would be up $hits creek w/o a paddle?
The housing boom accounted for many jobs in construction, real estate, Loan origination et cetera. These people now face unemployment or being layed off — here is an after shock of the crisis we are already dealing with.
A foreclosed home, boarded up with wooden planks is an eye sore in a neighborhood. THe more financial stable and affluent might decide to live elsewhere. Vandals and the “dregs” of society will find the foreclosed home a nice place to do business. Add another, and another and another. THis will bring down the value of the neighborhood on the whole, which will continue to lower the value of the surroudning properties.
The whole allure of home ownership is the ability to build wealth through increased equity. For many poor people, that is one of the only ways they’ll be able to raised their socio-economic status from poor to middle class. Without that, in the face of foreclosure, many hopeful to be middle class will find themselves right back in the “poor man’s” trap of working and living from pay check to pay check without an ability to save at all.
The mean price of an apartment in my neighborhood is $1,200 for a one bedroom
THe builders build the new homes with little closet space bedrooms that cannot even fit a complete bedroom set. With minimum wage at $7.15 an hour, if you are a family with children, what could be left over after you manage to pay your rent and utitlities, especially when so many households are headed by single parents?
How about when little Johnny comes home with the permission slip?
A play, he needs to buy a costume?
Braces for Jill?
Money here, there and the end of the month you’re left with nothing.
I am a single mother of two children, and I understand the realities of the difficulties that one faces in trying to climb out of the trap of being poor.
My mother is an immigrant who never made more than $10K a year, yet she was financial responsible and believed in hard work. It was her scraping to buy a home which raised her status on the financial ladder and enabled her to buy yet another home, raise six kids who all became college educated and buy land and build a home in her country where she could retire.
She struggled to pay her mortgage and bills and many a night the fridge echoed with emptiness. But she was able to hold onto the house and in the end she sold it at a small profit, using the money she earned to fund her retirement.
If she stayed here in New York, she would make $350 a month as a pension. Where would she live? How would she live?
Still, I have friends who’s mother’s rented all their lives. In their older years, they are still working, they don’t have an idea what their pension years will look like, and no plans, believe me. Their children are renters as well, living from pay check to pay check.
Homeownership is part of the American dream of bettering your life, and this is why I believe the lenders should have to answer for destroying the dreams of so many Americans with their predatory lending practices.
Sorry to have been so long winded.
JacMac
And in your first paragraph lies the moment things go wrong. When the L.O. recognizes that the borrower is either lacking on paper or in the mind. The evil L.O. does bad. He/She realizes that the borrower is not working from a position of knowledge. No list will be provided in this one. The good ones will stop and suggest or advise not to do the loan. The list here is the good advice. You must heed good advice. But the bad ones don’t say anything and there you have it. Problems
In terms of the YSP. It’s there. It’s always there. The use of the YSP for brokers is case by case. The use of the YSP is slightly different when dealing with a banker.
When shopping for rates, understand that the market is setting a rate that lenders and banks will all follow suit from and present to you. It’s an almost “it is what it is” thing with that. The golden rule theory. You will see small deviations here and there but it’s basically consistent throughout. The criteria are usually the same.
If your situation applies to what they are offering, then there it is. You get the good rate. Verify the rate with several lenders and banks. If it\’e2\’80\’99s the same, then that’s where you start. At that point it’s service and a feeling of comfort. Remember this is not you mom or your grand moms. Comfort can still get you caught up. Stay on guard.
Anyway, you have the option of discount points to lower your rate, but it cost money to do that. No way around that. Sometimes it\’e2\’80\’99s worth the money, sometimes it’s not. The biggest thing is to know what you will and won’t settle for. In realistic terms.
If the going rate is 5.875%, pressuring for the 5% just because, will not be taken serious and you’ll be handled accordingly. Not good. Always have logical reasoning behind all of this, especially the rate. When a customer asks me for a rate other than the one I’m presenting them, my response is why and based on what?
Keep in mind, if even one aspect of there criteria is not met, and then everything can be affected, including the rate you receive. The more you stray away from their criteria, the worst you get. Keep in mind, the YSP is still there. I know there are constant debates about the YSP but that is really a small part of the problems in this industry.
I’ll let the lender make YSP all day over a crazy product. The product is what hurting people. The lender can only make so much. If I can’t handle the rate, then no deal. He gets a YSP of nothing. If it’s a deal I can get better somewhere else, he knows from the start. It’s worth a try for him. I not mad at that. I probably hit him with some “but can you do this.” Then when the blue dust settles, I’ll let him call me the next day with a good story on how he had to “Kill the Dragon” to get this rate for me.
JacMac,
Thanks, I am in the other forum as StangFlyer70. Appreciate the insight. I just get really bent when reading about the free ride some are led to believe some of us our on. I took it in the tailpipe from the beginning and now its being pulled through the urethra. Certainly isn’t a free ride in my neck of the woods.
Tom
By List, Chris, I meant here in this forum, Iwas suggesting that the mortgage professionals posting here could come together and compile a list to help consumers come to the table as educated consumers and not uninformed, a sort of 10 things to Know Before You Go to Closing.
You said: “When the L.O. recognizes that the borrower is either lacking on paper or in the mind. The evil L.O. does bad. He/She realizes that the borrower is not working from a position of knowledge.” — t
This is just plain wrong and needs to change.
JacMac,
Who are you to say any one deserves a home ? Homeownership is a privilege, not a right. If anyone has loose screws to the point he can’t do simple arithmetics he better stay renting.
I really find it pretty ironic: people borrow up the wazoo and then rail about being in debt. Hello, anybody home ? Who forced them to borrow that much in the first place ? Besides no one is putting them in debtor prison, file bankruptcy and take it as a lesson. But no, they want cake and eat it too.
Alan, the more you talk, the more you show your negative, condescending mindset. You ask: Who are you to say any one deserves a home?
Are you serious?
Such a question doesn’t even deserve an answer.
Let me give you a heads up, if you haven’t bought your home cash, you’re renting.
You’re renting from the bank, okay. And if you get ill, lose your job or something else happens, God forbid, you’ll be at risk for losing that home just like anyone else.
Alan, I hope to God you never have to experience that but keep it up, there for the Grace of God go I — remember that saying?
But I know, I know, you’re smarter, better, more responsible, wealthier — this is classic Narcissim at it’s best, us vs them thinking, putting others down to feel superior — it’s very unattractive and unbecoming.
Tom, you’ve got a great way with words.
Those who want to label all of the struggling homeowners as greedy, self-serving debt addicts are just trying to keep their own demons at bay.
It’s easy to piont fingers and blame others, easier than it is to look in the mirror and think about what YOU personally might have done wrong.
I read all of those posts in that light. See ya on the other side of the forum!
Alan,
I agree with you in general terms that borrowing too much is foolish (I’m very financially conservative myself). I studied business in University and have a mind for it. Unfortunately many do not and made bad choices trying to cope with a difficult time. The circumstances were ideal to facilitate the bad decision making. I’m not in the industry, but this is how I picture things happening:
1. Jack gets a mortgage that is subprime. He was close to prime but missed by a minor margin, so it seemed worthwhile to take the extra risk. Things worked out well for Jack and a few like him, so the risk seemed reduced. Jack’s budget is a little tight but manageable. The 401K is going to be neglected but the house is a good retirement investment too.
2. Jill isn’t so close to prime, but isn’t a complete hard case either. Since things worked out so well for Jack with his mortgage, and with the right premiums, its worth taking the risk on Jill. Jill’s really excited about owning a home just like Jack and is willing to be house poor to do it. She’ll have to do without a few luxuries (or buy them on credit card….), but it’s worth it to get the lifestyle Jack has. The housing market is moving in the area since Jack and his fellow almost-prime folks are buying droves.
3. Joe shows up next and gets turned away because he’s just toooo risky. Fortunately for Joe, Fly By Night Lending Inc decides they can qualify him. After all with the market booming thanks to Jack and Jill, Joe should be able to survive until price appreciation builds some equity for him. Joe isn’t taking a rejection from a bank or two as a warning that he shouldn’t be buying a house. Jack and Jill have done really well so why shouldn’t he. As long as he gets that raise in the new year, everything will work out fine.
4. Jane shows up with all the same credentials as Joe. The bank’s first inclination is to turn her away, but Fly By Night Lending has been eating away at market share. Better to qualify her to keep sales up. Jane’s desperate to get this deal done before things really get expensive next quarter like the real estate agent told her they would.
5. The market falls and everyone gets burned. The borrower faces foreclosure, the lender faces bankruptcy and broker faces the unemployment line.
As much as we all like to picture ourselves as rugged individualists, we’re still very heavily influenced by the herd. Many people, be they borrowers, lenders or any other player in the housing market, went with the herd in creating one big housing mess. Some people surely knew what was going on, but either were drowned out by the incessant mooing of the herd or were of low ethical standards and chose to take advantage of the situation. I think JacMac would back me on this one, as the little voice saying ARM = Bad got drowned out.
You’re right, Al, I back you 100% on this description. It’s just not simple and cut and dry, why people got into these loans and you’ve done a bang up job of describing a typical scenario that I’m sure got played out time and time again. I just hate to see all homeowners faing difficulties lumped into this category of debt-hungry credit card feens. It’s just not true for everyone.
I can’t even sleep at night if I haven’t paid my bills, as many of my posts indicate. Dealing w/ this issue with Countrywide and worrying about my mortgage, I am lucky if I get to bed at 2:00 a.m. — 3:00 to 4:00 has become the norm.
So I’m not sleeping, and imagine if I got sick — like many self-employed Americans, I don’t have insurance!
Al,
I absolutely agree with you on the scenario: typical layout of speculative mania exhibits strong herd effect. It’s hard wired
into our DNA. There are PLENTY of interesting studies on behavioral
economics and how group influences individual decisions. The basic fact of all those decisions you enumerated is that Jack, Jill, Joe have too high of the debt load that they can’t service. The solution is obviously to reduce the debt load. That I agree with. What I do not agree with is how people want to get done. It does appear some want to play victim card and therefore demand as few undesirable consequences for them as possible due to being “victims exploited by evil banks”.
I’m not advocating putting over encumbered people in prison but they shouldn’t just get away with slap on the hand there are already existing legal instruments like bankruptcy that allow debts to be reduced and if cram downs are allowed even keep the home with more manageable balance. Yet, I don’t see many people pushing for that route. No, quite a few folks want to pay as little as possible for bad decisions. However the same studies on behavioral economics showed the only way to learn from bad decision and not to repeat it is to live through decision’s consequences.
JacMac,
Just as serious as you with your questions. Are you serious on your part asking silly question “Who are you to say who DESERVES homeownership?” and then playing innocence when asked the same in return ? I can play demagogic ping pong very well, don’t be surprised.
Yep, I’m renting money from the bank, as you correctly noted. However I’m not whining and crying that bank is mooching off me. I’m fully aware of the risks though obviously there are “unknown unknowns” as infamous Donald Rumsfield put it that I can’t mitigate against. But because I had to survive on minimal wage I know that there are risks and life can be hard and that’s why I stay alert and don’t get sloppy. I can downsize my footprint in few days and move across the country or globe in few weeks if assessment shows that’s the course of actions necessary to produce the best outcome for my family. I’m not going to complain about shady bookie who took my bad bets that didn’t pan out they way I hoped. I have made few myself that didn’t come out too good for me and lesson I learned: there is no free lunch.
Al,
You’re right, there is no free lunch. However, as a struggling homeowner I can tell you that this ride ain’t a free lunch. Most anyone who bought a home in the last 3 years or so is struggling in this market - even if they have a wonderful loan. This is a market correction and those of us in the areas with the greatest declines in property value feel it more so than others and if your LTV or equity isn’t quite the buffer you’d hope for (in my case upside down) its a little harder to swallow.
There were a lot of bad loans out there and products that were riskier and more prevalant than they’ve been in the past because the market had done so well and home prices were ficticiously driven up because money was so cheap to borrow. Remember low interest rates from the last bailout of the dotcom industy. Interest rates were at historic lows and stayed there for quite some time. Money became cheap to borrow, so folks were borrowing more of it. This drove up the price of homes, as homes were being driven up in price exponentially interest rates began to rise back up. Couple that with a weaking dollar, I’m sure you remember inflation from the 70s. Well, inflation is rearing it’s ugly head again soon. If the value of the dollar keeps going down and home values keep going down as well - inflation widens that gap even further from the simplicity of basic arithmetic.
In case you thought this was just a home issue, it’s the entire economy that is going to feel this wave. My guess is you probably didn’t enter the housing market in the last three or four years. If you bought your house or had significant equity prior to the boom and rolled that into a new home - then this isn’t going to effect you all that much. But if you entered the housing market in the last four years, even if your loan is great - today you could be losing. Not that losing equates to whining and every issue isn’t the ‘bank’ or ‘LO/MB’ falut and we all know shit happens, there’s even a bumper sticker for it - but a lot of what went on the last few years in the real estate market wasn’t good business on anyone’s part. It was a huge smoke and mirrors act, and the smoke hasn’t cleared yet. This issue will get much more complicated as it evolves.
Al,
Sorry, I meant to say (or type) Alan.
Regards!
Good morning!
I found this blog as I was seraching for information on renting to persons who are soon to foreclose on their homes. I have a potential renter who is foreclosing on the 18. I found that out as I searched the address he gave me as his current home and property. What to do? I am concerned most of my calls are coming from foreclosing homeowners.
\’e2\’80\’9cI believe that banking institutions are more dangerous to our liberties than standing armies\’e2\’80\’9d - Thomas Jefferson
07
Jan
\’e2\’80\’9cI believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.\’e2\’80\’9d
Thomas Jefferson, Letter to the Secretary of the Treasury Albert Gallatin (1802)
3rd president of US (1743 - 1826)
These are the words from one of the most influential presidents to ever serve \’e2\’80\’9cour country\’e2\’80\’9d in the White House and one of the authors of the declaration of independence.
Let’s face it..Bankers and Lawyers are STEALING us ALL blind!!! When it’s all over, and China moves in, and parts us out to Russia..and/or whoever, it will be becasue Bankers and Lawyers have Sold us out!
EVERYONE needs to get prepared to live in poverty…Our forefathers would JUST SHIT!!
The ONLY way to turn it around, is to STOP electing Lawyers, and STOP borrowing money….Pay as you go!!!! Like our Grandparents used to!
I’m not surprised…just look at how they handle their reo’s…forcing my client to get pre-approved through them, when i’ve already pre-approved my client. then, when my client refuses to give up all info to countrywide, countrywide then refuses to negotiate…if that isn’t steering…
I have a “stated income” fraud case against countrywide. 86 year old client, who purchased a home just about to go into foreclosure, with a sign “no money down”. The realtors and the lender told her don’t worry we’ll make the numbers work, just show up at closing. Countrywide raised her income from under $2500 to almost $6300 on the application. Her monthly payment was more than her monthly income. The realtors kept $22,000 of commission, and countrywide got fees related to the loan. The client mailed the keys back to countrywide after the first payment and moved out. Countrywide did an 80% first, interest only for 10 years, and a piggyback second of 20% to avoid the mortgage insurance. The client got nothing from the transaction, it is pure fraud.