GOING UP The Rising Bar of Homeowner Rage

It all started last Friday morning when a Broward County sheriff went to a townhouse to serve its owner with an eviction notice.  It ended when Pembroke Pines police shot the homeowner several times as he set his foreclosed townhome on fire.

According to News4Jax.com, the 52 year-old Florida homeowner lost his home to foreclosure as a result of owing $10,000 in homeowner’s association dues.

Police said that the homeowner soaked the inside of his residence in gasoline, set it ablaze and then walked out of the burning townhome immediately getting into a fight with multiple officers.  He must have presented quite a threat because they shot him several times.

He ended up at Memorial Regional Hospital with injuries described by the fire and rescue people as serious and life threatening.  No police or firefighters we injured, and the fire was put out before it could cause damage to the connecting townhomes… this time… and thank God for that.

I’ve said it before… not more than a couple of hundred times and beginning almost three years ago… but, as a country we are playing with fire on a national scale, and there is no question but that this event should be viewed as foreboding.  No one besides the homeowner was hurt this time and that’s the result of… PURE LUCK.  I sure hope we’re that lucky next time, because there will most assuredly be a next time, and a next beyond that, and a next beyond that.

What this country’s mortgage servicers have been allowed to do to homeowners… and continue to be allowed to do to homeowners is surely criminal, but beyond that is so entirely unconscionable as to shock, disgust and repel all who come to understand it.

Routinely, homeowners struggling financially (and there are more and more every month in what remains the worst economic downturn this country has experienced in 70 years), are flagrantly, repeatedly and intentionally deceived, maligned and wholly abused.  And for their trouble… they are told nothing and therefore walk away from their homes having no idea why their lives have been so freely torn asunder, while clearly no one cared or cares about what they’ve been forced to endure… not even in the least.

It’s not an isolated incident, as the banking industry would have us believe, it’s commonplace… the norm… it happens to essentially everyone who gets involved with their mortgage servicer… every single day.  No one has even a reasonably unpleasant experience dealing with their servicer when trying to get their loan modified.  The simple fact is that servicers only come in only three flavors: Terribly Annoying, Unbearably Annoying, and Make-You-Want-to-Burn-Your-House-to-the-Ground Annoying.

To be sure, millions of homeowners have succeeded in getting their loans modified, but there’s no joy in the process, regardless of the outcome.

President Bush signed a bill at the end of July inn 2008, thus creating the Hope-4-Homeowners program, perhaps the most ill thought out and predictably least effective federal program in the history of the country.  It made government cheese look like Medicare.

Then we waited for Barack Obama to come to the rescue.  In late February of 2009 our new president announced his flagship Making Home Affordable program, which ultimately gave birth to HAMP, and we all know how underwhelming that has been.

Every single other program, federal or state, that has been allegedly made available to distressed homeowners as related to the foreclosure crisis… has been a dazzling failure.  And no one even debates that fact.

All this… and “DISDAIN” too?

Sheila Bair, just retired from her position at the FDIC, in her interview with Joe Nocera of The New York Times, shared her honest thoughts on the travesty… and here’s what the article in the Times said, among other things:

Bair, however, has always thought there were other reasons behind the general resistance to modifying mortgages. The government, she said, “thought maybe I was overstating the problem and that it wasn’t going to be that big a deal.” As for those in the industry, she added: “I think some of it was that they didn’t think borrowers were worth helping. There was some disdain for borrowers.”

Some disdain?  I’d say the evidence makes it abundantly clear that there’s disdain for borrowers.  I mean, there certainly isn’t love and respect… borrowers are a long way from being cherished by the banksters, I’ll tell you that for sure.  No, its damn obvious there’s a great deal of disdain in the banker-borrower equation, there would have to be for servicers to treat borrowers the way they have.

The bankers just didn’t think it was worth helping borrowers… that’s fascinating though, don’t you think?  Could have helped, but you’re just not worth helping.  Worthless… helping borrowers… a worthless endeavor as far as the bankers are concerned.

Hey banksters… Wow… that’s almost… well, its… hmm… umm… I’m not entirely sure what to… well, how about… maybe I should say… I mean… F#@K YOU!

It’s all very odd, because although loan modifications are not even mentioned on any of the major bank Websites, each one of the banks does have a special site dedicated to loan modifications and other foreclosure avoidance products and programs… and I read them all and it sure sounds like they care and they’re here to help.

For example, here’s what it says on the front page of Bank of America’s Website dedicated to Home Loan Help:

Let’s work together

Help is available for homeowners experiencing payment difficulties.  We’ll do everything possible to come up with a solution to help you.  No matter what your situation is, we’re here to help.

And here’s what it says on the Website of JPMorgan Chase:

If you have concerns about your ability to pay your Chase mortgage, we’re ready to help.

Over the past three years, we’ve helped prevent almost half a million foreclosures by helping homeowners with home loan modifications – and by helping them understand and access government-based homeowners assistance programs.  Our goal is to keep homeowners under financial stress in their homes.

Chase also offers this little gem sure to help a homeowner get his or her loan modification approved by Chase:

This review process may take up to 30 days.  During this time, it’s in your best interest to continue making your home loan payments.

And how about Wells Fargo Bank’s site…

Count on us to work with you

If you’re facing financial challenges, we’ll do everything we can to help you stay in your home.  Keeping up with payments can be difficult, especially with circumstances like job loss, decreasing home values, or overextended credit. By reaching out to us when challenges first arise, you keep more options open.

So, in case you’re confused as to who to believe… former FDIC Chair Sheila Bair speaking on the record with Joe Nocera of The New York Times… or the bankster Websites, let me clear it up for you.  She’s speaking out now that she’s finally able to tell the truth about what’s been going on in Washington D.C. related to the housing crisis and the administration’s apparent ambivalence to the most important economic issue we face in this country.

The bankster Websites, on the other hand, merely offer further proof that the banks are liars.

In the same article, Joe Nocera mentions that there are “certainly arguments against modifying mortgages.”  And then he offers what some of those might be.

A. Moral Hazard – This is the one about how even those that can afford their mortgages will intentionally stop paying them so that they too can get a lower payment too… just like those lucky people in financial distress.

This, my dear Watson is sheer idiocy in motion.  For one thing, loan modifications are not like stated income loans.  They require documentation of income and all sorts of other things, so it would be very difficult to cheat the system and obtain a modification if a person didn’t need one.  Besides, it’s hard enough for a person who desperately needs one to get one, so I really don’t think we need worry about modifying too many loans at this point no matter what.

Also, people don’t ruin their credit to reduce their mortgage payment, and that’s what would be required were someone who can afford their payment want to get their loan modified. From everyone I’ve talked to, you have to be at least 90 days late to get your loan modified, and on top of that, making a modified payment, as opposed to your full payment is reported to the credit bureaus as not making your full payment as agreed.  Presto change-o, if you get your loan modified, you’ll be saying so long to your 700+ FICO score at the same time.

B. The Horrors of Re-Default – Here’s how this one goes… Many people end up re-defaulting on a modified mortgage, and therefore… I’m not really sure.  The only reason “many” would re-default on a modified mortgage is that the modifications are not done corrently.  In some cases, like roughly 60% in 2008, loan modifications resulted in higher mortgage payments than before they were “modified.”

And wouldn’t you know it, there was a survey out that said that in 2008, 60% of modifications re-defaulted a little under a year later… I believe it was ten months later.

I argued with someone at HUD once about this, saying that a loan modification is not when the payment goes up… I said that was preposterous and no one should be including those increasing payment in their counts of modified moans.  The guy I was talking to was insistent that even if the payment goes up it was still a loan “modification.”

“What would you like us to call it when the modification results in a higher payment,” he asked me, exasperated.

I thought for a moment, wanting to be thoughtful in my response to HUD… “How about a ‘payment increase,” I said.

The bottom-line is that if the modification is done properly there’s no re-default threat that exists, the whole issue is merely another dodge in the continuing series of lies told by bankers who don’t want to modify loans.

C.  We NEED Foreclosures – This intellectually deficient line of thinking says that we actually NEED foreclosures if the housing market is to recover, just like we need forest fires so that forests may grow, or something like that.  Do I even have to answer this one… I think not.

D. It’s Impossible to Design a Program – As Nocera has been told by Treasury, “designing a mortgage-modification plan that works for a large number of people is excruciatingly difficult, maybe even impossible.”

Isn’t that funny, HAMP modified 600,000 loans so far, and Treasury claims that there have been several million loans modified outside of HAMP, last time I checked.  So… impossible?  Several million doesn’t sound “impossible.”  Neither does 600,000.  If you can modify 600,000, surely you can modify six million.

And if that’s really an issue at Treasury, might I suggest you issue an RFP to private companies requesting bids to administer such a program and I assure you there will be a flood of private companies that will fix this modification-is-impossible nonsense in a damn hurry.

It’s all just one big steaming pile of freshness. The banks have been telling the same tall tales for almost three years.  And as a country, with housing prices in a literal free fall for the last 60 consecutive month, our failure to stop foreclosures has already sealed our fate economically speaking for decades to come as over $10 trillion in wealth has already been lost by America’s middle class… and it’s a simple fact that at best it will take decades before that lost wealth has been rebuilt.

How long?  Well, consider this… I just turned 50 years old and it is extremely unlikely that the lost wealth resulting from this economic meltdown will be reconstituted in my lifetime.  So, for me… it’s a permanent change in how the remainder of my life will be lived.  And it’s mostly because both the Obama Administration, and Bush Administration were too stupid to see what was happening… and too taken with themselves to heed the warnings of dozens of economists and other experts who warned them that their course of action was misguided.

It’s because of their mishandling of the foreclosure crisis, that they let it go and pumped money into banks that remain insolvent and will ultimately fail anyway.

And would you like to know what we’re going to see happen in the next chapter in this bungled game of economic destruction dominoes?  Next, we’ll get to watch as thousands of homes are bulldozed to the ground.  That’s right… we’re not going to have any choice.  All of this will have been for nothing as the homes that once provided shelter and housed memories are reduced to rubble.  And then in time, someone else will come along and build another house there.

So, now in Florida… remember… this article is about the man shot by police in Florida as he set his home on fire… what a story, huh?  He doused it in gasoline, set it ablaze, and came walking out to ready to fight multiple police officers with guns.  Haven’t I seen this movie before… wasn’t it starring Denzel Washington?

The fact is that the path we’re on can only end badly, and although I quite proud of how this nation has managed to hold it together until this point at least, as the man said, it’s all downhill from here.

But today we can be happy that no one besides the homeowner was hurt… that only one home was damaged… that no one was killed… that we were very, very lucky.

How long are you figuring our luck is going to hold out, Mr. President?  Because you’re certainly doing nothing to alter our path, so we’re going to hit the iceberg that’s dead ahead for sure.  Is it like Sheila said about why you didn’t react sooner to loan modifications… do you think I’m over-stating the risk?  Is that it?

I’m not, sir.

And since you’ve been wrong about… well, everything having to do with the housing crisis, my advice would be to seek outside help… preferably someone who has no friends in banking, like… oh wow, do you even know anyone who fits that description?

Last year I wrote an article, “We’re on the Brink of A New Age of Rage.”  And after last Friday’s tragic shooting of a homeowner, the bar has just been raised.

We should consider ourselves warned.

Mandelman out.

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