About the Author
Moe Bedard is a leading expert and trusted authority in regards to loan workouts and loan modifications. Moe is the founder and President of Loan Safe Solutions, LoanSafe.org and the main contributor to LoanWorkout.org. He has blogged on this subject more than any other person on earth and has personally been involved in over 300 loan workouts and mortgage audits.
We are looking for Countrywide borrowers that are in unaffordable and predatory loans
We are looking for Coutrywide borrowers that are stuck in a mortgage that is unaffordable or predatory. We want to help you fight back against Countrwyide Home Retention Department and make them fix your mortgage with a loan modification.
If you are having no luck in obtaining help from Countrywide, the we want to hear from you. We want to help you fight for your property rights and save your home. But if we don’t hear from you, then we can’t help. We want to expose the truth about this company and we cannot do it without you. Please JOIN NOW!
To obtain help in fighting Countrywide for a loan modification, then please join us in our homeowners forum.
Please join our one of a kind homeowner’s forum where you can ask questions and get answers in this unique and interactive community that was created to assist people in an anonymous, yet open question format. Meet other homeowners that are going through the same thing and get the help you need from industry experts and foreclosure defense and mortgage law attorneys.
Popularity: 26% [?]
Jan 4th, 2008 at 3:28 pm
I want to wholeheartedly recommond this forum to those who just popped up here or may have been lurking and are scared, unsure — perhaps you’ve just realized you’ve been taken for a roller coaster ride, and the price of the trip is more than they said, more than you can afford — the point is, the forum is a wonderful place, and it is SAFE!
THe internet can be a scary place, with people posing as someone who wants to help you but what they really want to do is make a buck. This is NOT one of those places.
You can save your home OR do something about what is happening to you. Even though you’ve been victimized, you don’t have to be a victim. Take power over your life again!!!
This forum can help you make choices that are right for you, and you’ll be amongst people who are just like you, and who care. I’m speaking from personal experience AND I’m not getting anything for saying this!!!
Jan 4th, 2008 at 3:35 pm
Well said JacMac.
I will try and help anybody I can.
Jan 4th, 2008 at 4:12 pm
Good job JacMac
Jan 4th, 2008 at 4:38 pm
I agree with you JacMac. I’m already a member of the forum and I highly recommend it for all homeowners stuck in predatory loans with predatory servicers…..This site is a wealth of information.
Jan 4th, 2008 at 5:11 pm
Thanks everyone. It’s been a lot of hard work but I am so glad that I can provide this website for homeowners in this time of need. It gives us all a chance to unite in one place and fight to save our homes, even though we are from all over America.
I think we are all doing well and all our members are advocates of paying it forward.
Jan 6th, 2008 at 12:29 am
My wife and I are in a situation that is spinning out of control. We have an ARM that is currently at 10.99 and is schedule to adjust again in March. We are current on our mortgage but have recently been turned down for a rate and term refi because my lender, Saxon Mortgage is no longer doing non-conforming loans. The Saxon loan rep suggested I try a loan modification request. Can anyone share any advice on how to present my financial picture so that we can get a favorable modification? Also can anyone recommend other lenders who will do a non-conforming loan in Georgia?
Jan 7th, 2008 at 11:28 am
Kevin, ask if saxon is F.H.A. approved, if so, see if you qualify for F.H.A. bailout. This is a full doc. loan, if you can not verify income, contact saxon in writing to request a modification agreement. Good Luck, Don Stephens M.C.A. (retired)
Jan 7th, 2008 at 4:32 pm
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.
Jan 7th, 2008 at 4:35 pm
TJeff were’nt no dummy.
Jan 7th, 2008 at 5:31 pm
Great observations and comments. You are a great thinker also JacMac.
Jan 7th, 2008 at 8:11 pm
Gee thanks, Moe!!!
Jan 7th, 2008 at 8:43 pm
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.
Jan 7th, 2008 at 8:46 pm
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?
Jan 7th, 2008 at 9:23 pm
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
Jan 7th, 2008 at 11:53 pm
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.
Jan 8th, 2008 at 12:49 am
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.
Jan 8th, 2008 at 2:59 am
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…
Jan 8th, 2008 at 9:14 am
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.
Jan 8th, 2008 at 4:42 pm
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.
Jan 9th, 2008 at 8:30 am
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.
Jan 9th, 2008 at 11:54 am
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!!!!!!!!!!!!
Jan 9th, 2008 at 12:17 pm
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.
Jan 9th, 2008 at 12:49 pm
Has anyone had any success with Saxon on a loan modification? We will default on our home loan within the next 30-60 days. We cannot refi due to the market value of our home has plunged 150k and we do not have the resources to make up the delta between what we owe and what the market value of our home is. Our only hope is loan modification. I have read the horror stories about Saxon and although we have not had any problems yet, I fear for the worse. Does anybody have any success stories with Saxon?
Jan 9th, 2008 at 12:50 pm
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.
Jan 9th, 2008 at 12:51 pm
One other thing, what is the F.H.A. bailout situation? Do we have to be behind on our mortgage to qualify? Any information on this would be most appreciated. Thank you…
Jan 9th, 2008 at 1:31 pm
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.
Jan 9th, 2008 at 1:32 pm
oops sorry Al, I called you Alan. My bad.
Jan 9th, 2008 at 2:03 pm
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?
Jan 9th, 2008 at 2:26 pm
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
Jan 9th, 2008 at 4:45 pm
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.
Jan 9th, 2008 at 11:50 pm
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.
Jan 10th, 2008 at 9:18 am
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.
Jan 10th, 2008 at 10:46 am
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.
Jan 10th, 2008 at 3:33 pm
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!
Jan 10th, 2008 at 11:13 pm
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.
Jan 10th, 2008 at 11:44 pm
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.
Jan 11th, 2008 at 12:24 am
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.
Jan 11th, 2008 at 12:28 am
Al,
Sorry, I meant to say (or type) Alan.
Regards!
Jan 14th, 2008 at 1:46 pm
Someone needs to say something about this! http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they “WERE” making during the booming 90’s!!! Now we are BAILING OUT THESE CROOKS….SOUNDS LIKE the good ol’ 1980’s Savings and Loan BAILOUT DAYS to me! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
Jan 17th, 2008 at 10:50 am
30 homes destroyed - Milwaukee…
The last time severe summerlike weather struck southern Wisconsin in winter was in February 1999, when storms produced golf-ball size…
Jan 17th, 2008 at 6:30 pm
[...] JacMac - Homeowner From New York - I want to wholeheartedly recommend this forum to those who just popped up here or may have been lurking and are scared, unsure — perhaps you’ve just realized you’ve been taken for a roller coaster ride, and the price of the trip is more than they said, more than you can afford — the point is, the forum is a wonderful place, and it is SAFE! [...]
Jan 24th, 2008 at 5:01 pm
Hello team, I hope I can get some help. I did spent hours and hours on the phone with Countrywide, but was unsuccessful. My situation is simple.
My rate is adjusting in June, and I will not be able to pay 8.25% P + I payment. I can’t refy, because I am 40k upside-down on the Loan to Value. Can anyone walk me through the process on how to deal wit Country Wide people?
Jan 24th, 2008 at 5:17 pm
Eli, come on over to http://www.LoanSafe.org and there are several homeowners with Countrywide that can help you out.
Feb 1st, 2008 at 12:54 am
atlanta metro daycare that accept medicaid…
identifier!pacification activate squeak …
Feb 1st, 2008 at 10:53 pm
healthcare cnas aids mas homehealth…
yelled indirect?Wynn transcontinental….
Feb 14th, 2008 at 10:09 am
insurance p c property and casualty…
lighthouse:barge Sumerian?societies predicted …
Feb 18th, 2008 at 3:23 am
internet hasardspel…
Mick wiretapping dry sluggish horror …
Feb 18th, 2008 at 10:55 pm
new york health insurance family quote…
.!…
Feb 28th, 2008 at 8:03 am
casinoglamour…
hamster dissatisfied quadrangular troubleshooters Townley …
Jun 11th, 2008 at 4:09 pm
I am trying to get a loan modification with countrywide. I am current on my payments. I have sent in my hardship letter and bank statements but, haven’t received my hardship package. I am getting the runaround from them.
Jun 11th, 2008 at 7:52 pm
Heather-
if you are current and asking for a modification you will wait 4-6 months and will get an above market rate.
It seems they will only play ball when you are close to forclosure (at least 90 days behind). I have heard many people who try to be proactive with CW and get the big run around.
Keep calling and email everyone on the list….you may end up getting what you want but know you are fighting an uphill battle and prepare yourself mentally.
good luck