The end-unit house in my row is in foreclosure, again. This is the third time owners have moved out of that house since I moved into the neighborhood a little more than four years ago. This time, however, it’s a little bit different if not downright ironic.
The owner who was foreclosed upon this time had lost her job about a year ago, not too long after she bought the house. She had worked at Fannie Mae. Her former employer had backed the mortgage on her house, but when she tried to rework her payment terms after going into default (because she lost her job), Fannie Mae refused to work with her. Of course, when Fannie Mae got in trouble the government helped them out, but that principle doesn’t apply to little people.
In a final insult, my former neighbor got a new job not too long after she started missing payments, but that wasn’t enough to let her keep her house. Even with evidence of employment, Fannie Mae foreclosed on her. And now, the house at the end of my row is growing weeds in the flowerbeds and has paint cans in trash bags lined up on the porch. (Update) – As of this afternoon, there was a crew cleaning the house and wedding its yard, hired by the bank’s realtor.What happens in the mortgage business is simply crazy. Remember Wells Fargo suing itself to recover money from itself? This stuff is still happening. In spite of government programs that try to help, people aren’t getting help. Our housing finance system is still a mess, and there is only one candidate for Congress talking about it, Jeff Barnett.
With one of five mortgages “underwater,” tens of thousands of our neighbors live in constant fear of losing everything. They are one bad break — sickness, job loss — away from going bankrupt. They lose their home and their life savings.
I will champion three immediate steps to help homeowners:
- Institutionalize the short-sale process so homeowners can force a short-sale when their bank refuses to modify an underwater mortgage.
- Guarantee an FHA loan two years after the short sale – so homeowners with good credit can recover.
- Give homeowners the same bankruptcy protections we give big corporations.
None of these proposals should cost the federal government a penny. They won’t weaken the financial system – banks have already written off underwater mortgages. Our government must help middle class homeowners caught up in the housing bubble. We cannot forget the Too-Small-To-Save.
This is a problem that isn’t going away. Jeff Barnett knows that there is a lot of work still to be done.
[Update] Following on Doorbellqueen’s comment, here’s an idea from a couple years ago that would definitely solve these problems, but it got nowhere: Own To Rent.
Here’s how the plan works. Currently, if a homeowner is not able to make their mortgage payments, the holder of the mortgage can go to court to place the house in foreclosure. At that point, if the homeowner is not able to come up with back payments on the mortgage, or work out an acceptable arrangement with the mortgage holder, the bank or financial institution that holds the mortgage retakes ownership of the house and can have the homeowner evicted.
Under this security of housing proposal, the foreclosure process would be changed so that the current homeowner would have the option to remain in their house as a renter paying the fair market rent. If a homeowner chose to go this route, the judge in the foreclosure proceeding would appoint an independent appraiser to determine the fair market rent for the house. This is similar to the process a bank undertakes when it hires an appraiser to determine the value of the house before issuing a mortgage, except the appraiser will be asked to determine the rent rather than the sale price. – Dean Baker, TPM Cafe
I watched the video and then sat shaking my head for a few minutes wondering when this is ever going to end. Nobody loses but the dumb stiff who wanted to buy a house for his family. The bankers: “I got mine, screw you….”
No problem. This is a seriously messed-up situation. Thanks for posting it and the lawyer information. Hopefully it will help some folks in the short term.
If corporations are “persons” with regard to constitutional rights, why aren’t they also persons with regard to their criminal conduct?
Thanks again for fixing the link
Here’s the full link to the You Tube video:
http://www.youtube.com/user/fi…
http://www.youtube.com/user/fi…
one of my architect buddies from San Francisco sent me this video that explains the whole mortgage fraud scheme.
I re posted this here as per the informative request by
the Doorbellqueen
Thanks girl and lests get a interchange and school site from the lerners for their proposed town center. I will be driving this topic every chance I get about the interchange and school site from the Lerners, and yes I have drawn a sketch how this interchange can be built without condemning property.
We need to think outside the box once in awhile in this county. I travel and do work all over the world so I see things that work that many here do not see. So lets work together and get the proper proffers for this proposed town center and not let the lerners run all over this county and Loudoun’s politicians. I am going to be relentless on this so it can happen.
Here is the lawyer that specializes in loan modification and everything else involved with this fraud loans, and this should be exposed and delt with on a national level. By congress and the supreme court.
Anyway this lawyers name is
Miguel Vaca
703 924 0223
I might be worth a shot to at least call him and see what he says.
Wow! But why I am not surprised. Wonder is my loan is one of these? How does one find out?
Last night, I got my eyes wide open after hearing about the investor loans so called adjustable loans that the payment skyrockets after so many 2 to 5 years. people were thinking they were getting a mortgage from a real bank. Well they did not get a loan from a typical bank. And they are not banks they just serving the loan for the investor. Anyway this lawyer I know who specializes in helping people with theses loans told me how the scam works. It is all about the insurance the investor has on the loan, which pays him back including the interest they would make. So they have no interest in modifying the loan they want the home to go into default then foreclose so the investor can collect the insurance to pay them back. Even real banks are doing this, collecting the insurance on foreclosed loans, so many of the banks are actually making money off a foreclosed home. Florida and New York have had people sue because of this scam and actually won and got their home for free. I will have much more to say on this in the future. Another reason for the double and triple dip, that so many in my business are forecasting.
Well, we got ourselves into this mess. Bought at the peak of the market from a flipper, and having lost money on two of three previous houses, we took what we could get for financing. The employment picture did not work out quite as we had planned so that accounts for the short fall. We’ll dig out of it. I don’t anticipate or really want any help from a Congress that has to water down every measure to get past a reactionary republican Senate fillibuster threat. They would probably do more harm than good.
A lot of people rolled the dice and came up craps. Happened 80 years ago and most of them survived…we will too. The lack of major boom/bust cycles in this country is a realitively new phenomenon…the 1700’s and 1800’s each had several of them that turned relatively financially stable middle class families out on the streets with alarming regularity. We haven’t seen one of those in a while…time to remember that they can and do happen.
We tried something new in the 1990’s and 2000’s…an attempt at raising the level of home ownership to what turned out to be unsustainable levels. Started under Clinton it became Bush’s “ownership society”. Fannie Mae and Freddie Mac were restructured to provide as many people as possible with as many mortgages as they could issue or insure. They just were not sound loans and when they securitized them, it just passed to future problems through the financial system like a virus. The rest is history. I am always amazed at how well Rove was able to use relatively benign terms as a mask for schemes to benefit their wealthy constituency. It was never about the people. Maybe we’ve learned our lesson….until the next time.
Mark,
This is an awful, and true, story that so many have told. Thanks for sharing it. There’s more that needs doing and we need to tell our Congress to help us out!
While we are able to pay our mortgage (read subprime) we are paying a very high rate of interest relative to what a 30 year fixed rate mortgage is going for now. We are roughly $150,000 underwater on this loan. Having had only a slight (<2%) family pay increase over the last 4 years has put a lot of pressure on cash flow and this mortgage is the biggest issue. We have attempted 3 times to work with our lender to get interest rate relief. The first time we enlisted the aid of an attorney friend and were able to get a 6 month 3 point interest reprieve which dropped our payment by $1000+ each month. At the end of that period, we attempted to renew the reprieve for an additional 18 months on our own and after multiple paperwork submissions over 4 months we were turned down because we made too much money and in their estimation, we could pay for the house.
Recently, I tried again. Provided more complete figures and an informal assessment by a customer service representative was that our fixed expenses exceeded our income. Two weeks later I get a letter declining our petition again. When I called up the mortgage company to ask why, a very agressive representative said that I made enough money to pay the mortgage payment and nothing else mattered to them. Car payments and insurance could be eliminated he said, utility bills – stiff them, credit card payments — default, the house comes first, everyone else gets the crumbs. I countered that with out the cars we couldn’t get to work to bring home the money to pay the mortgage. He said car expenses could always be trimmed. The bank doesn’t count any of these bills against the ability to pay so….pay up or else.
This attitude is a marked shift from a year ago. The same day I heard on the radio that this particular bank had decided to clear their books of every non-performing mortgage in the US, take the forclosure loss, and move on.
So to “the Doorbell Queen” and others of like mind, the banks believe they are acting rationally, just take their lumps and move on. The human toll does not enter into the equation so please don’t expect pity, understanding, human decency, or the long view from your banker. They just are not likely to think that way.
I like pizza.
I’m hopeful about my house, and housing in general, but that’s because the alternative is depressing. I am also frustrated with what hasn’t been done to help homeowners who have done the right thing(s), but am hopeful more will be done.
I am in the building business and thhs s the worse have eve seen. And I have been thru 5 recessions in Houston & Dallas & Austin & Southern California and this is the worst ever in housing.
What makes a boom and prices rise is first cheap and easy to get money. And demand. We have cheap money but it is hard to get.
Many people that had great credit are also gone because their credit has gone way down because of many factors including job loss so we have lost many of these people in home ownership.
Many will never be able to own a home again. Home ownership is at one of it’s lowest levels.
We also have the vultures buying up homes in foreclosures etc. Wanting to flip them, but many of these flippers will not be able to flip and will lose their investment and money and go broke just like the flippers did during the boom years. Flippers should not be allowed in the home market, but there is no way to keep them out unfortunately, and they really hurt the housing market.
People in my business believe there will be a second big dip this fall or spring and bring another big round of foreclosures and slow home sales and deflate home prices again. Some even believe there will be a third future dip.
Home prices will never rise like the last boom, perhaps never in our lifetime, I believe home prices will not recover or go up much for many many years to come if ever in our lifetime.
Housing has always pulled the economy out of recessions but not happening this time, which will keep this recession going on for many many more years.
Obama is hurting any recovery with all our future generations money with his bail out programs but has really not done much to bail out homeowners in trouble.
Obama will be a one term president and most likely Romney will be our next president and I am a Independent.
Bottom line the housing is not going to recover for a zillion years. And real estate agents are useless to listen to because they are programed to be eternally optimistic and I know my wife is one. I am going to leave the building business and I am going to start the next national chain of pizza delivery and take out places. The the first one going in Ashburn sometime this fall. And I will have a very different and fun kind of pizza places and product then anyone has ever seen the the pizza business so stay tuned.
You’d think so, wouldn’t you? Apparently not. Having tried to get my home refinanced, I know first hand just how crazy this business is from the borrower-side. And the lender side is even worse, considering that the current crisis was brought on by securitizing these craptastic loans.
Isn’t it better to work with people to help them pay? If they make the payments smaller but the length of time longer, don’t they ultimately make more money in interest over the life-time of the loan?