I’m Not a Total Idiot, You Know.
I’m not a total idiot. I know what many if not most people involved in the foreclosure crisis want me to write about… and I know what people don’t want to hear. You do realize that, right?
I mean, after writing 900 articles over the last four plus years… to say nothing of the hundred odd podcasts I’ve produced… and with my email and even my cell phone online… you do realize if there’s one thing I know a whole lot about it’s how this country’s homeowners think and feel about most things on most days.
So, I know… you want to read about how a homeowner won some major victory in the courts somewhere… or how someone filed and got quiet title to their property… or how a bank couldn’t figure out who owned a loan and therefore was not allowed to foreclose… or maybe even something from the hot-off-the-presses-reports about JPMorgan Chase being a criminal enterprise… or how a homeowner drove over to their local county recorder’s office, found a forged signature and won their home free and clear as a result… you want to read anything to make you feel like there’s hope… anything to make the pain and frustration stop, even if only for a few hours.
I know… and I understand.
Don’t you think I’d like to write about all of that stuff and more? I would, I assure you… in fact, after writing about the financial and foreclosure crises for going on five years, more than just about anything I’d like to post a meaningful article about something hopeful for this country’s homeowners? And since it’s always been my nature to be optimistic about things in general, you’d think I’d be able to come up with something that could at least be placed in the “positive development” column.
But, I can’t. And it’s not that I don’t want to give people what they want… it’s the lying that would be required that I can’t seem to get past, because lying would be a prerequisite to writing about any of those things in some positive way. And even if I could figure out a way to write something without outright lying, it sure as heck would require a whole lot of lily gilding at the absolute least and I don’t like doing that either.
Look, and I mean this in the nicest way possible, unless you’re the kind of person who’s suggest-able enough to be hypnotized on stage to bark like a dog after being told to relax while staring at a pocket watch for a few seconds, there’s just no way you can say anything positive about the topics previously mentioned with any sort of confidence, hopeful undertone…. or straight face.
We… and by “we” I mean “homeowners”… are NOT winning.
In point of fact, most of what’s being told to homeowners today, as related to preventing foreclosure is just one flavor shy of unadulterated crap…. a shot in the dark at the very best… and by any objective measure, the chances of anyone truly winning in court are… well, how about if we just euphemistically refer to them as being… remote… since the alternate phrase referring to a snowball’s chances of survival in the underworld would sound so harsh.
Don’t get upset with me… it’s not my fault.
Look around and the only honest conclusion one can draw is that the only path that can reasonably be considered close to an answer to foreclosure is to get your loan modified… and I know that absolutely NO ONE likes hearing that. I know some that would prefer starting chemotherapy than the loan mod process… at least as they know it. But that loan modifications offer by far the best chances for avoiding foreclosure and remaining in the home is not just my opinion… it’s an overwhelmingly, indisputable fact… based on any and all actual numbers… there is no credible question about it.
Let’s get the facts understood and out of the way…
According to the U.S. Department of the Treasury, the overseer of the Making Home Affordable Program and Home Affordable Modification Program (“HAMP”), as of February 2013…
|Trial & Permanent Loan Modifications through February 2013||HAMP Activity To-Date||Total|
|MHA First Lien Permanent Modifications Started2MP Modifications Started
HAFA Transactions Completed
UP Forbearance Plans Started (through January 2013.)
|Trial Modifications – All Started
Trials Cancelled Since June 1, 2010
Trials Since Jan. 2013 Reporting
|Permanent Modifications in January of 2013||15,386||15,386|
|Permanent Mods Cancelled To-Date||304,090||304,090|
|Active Permanent Modifications||862,636||862,636|
1. Servicers may enter new trial modifications into the HAMP system of record at any time.
2. 774,039 cumulative including 707,620 that had trial start dates prior to June 1, 2010 when Treasury implemented a verified income requirement.
3. A permanent modification is canceled when the borrower has missed three consecutive monthly payments. Includes 11,654 loans paid off.
Now according to The Hope Now Alliance, which I understand may not be seen as the most objective source for such data, as of February 2013, there have been 6.15 million loan modifications granted since the crisis began. Hope Now also says that in January, there were about 63,540 in-house or proprietary modifications granted, which places January’s total at around 78,400.
Now, don’t get started claiming the data is wrong… my overriding point is… so what if it is? How wrong would you like to peg it? Is it off by 50 percent? That would seem highly unlikely considering the number of people following it. But even so… were that the case, it still shows more loan modifications save homes than anything else… BY FAR, right?
We’ve lost roughly 6 million homes to foreclosure since the crisis began… and no one disputes that fact. And there are roughly 45-50 million mortgages in the United States… there were 48,394 in 2005… all according to the U.S. Statistical Abstract, table 961.
So, if we’ve lost 6 million to foreclosure, then we’re just over 10 percent… and if there are another 4-5 million at risk of foreclosure, according to LPS a couple months ago… then it looks like we’re in line to lost up near 20 percent of American homes to foreclosure before this tragedy even starts to be considered over.
And the only number that reaches anywhere the millions when talking about saving homes from foreclosure is that associated with loan modifications. Period. How many homeowners have saved their homes arguing in court? I’d bet you it’s not millions…. not hundreds of thousands either. I’d be totally shocked to find the number made it out of four digit category.
I don’t even know what the #2 way would be to save a home from foreclosure without moving out of it…. I would have to guess that it would be a Chapter 13 bankruptcy filing? I don’t know, but I do know that its a doozy of a drop from #1 to number two on the list of ways people succeed in staying in homes saved from foreclosure.
What’s distressing is that last night, and just as one example, I listened to one of the new Internet radio programs being produced by someone who is ostensibly trying to help homeowners save their homes from foreclosure. I won’t mention any names… but for about an hour I listened to the various homeowner/guests share their ideas and strategies for saving their homes from foreclosure, while the host complemented them, saying she was taking notes, and acting almost giddy at how wonderfully they were all doing.
Not even one was anywhere close to having any possibility for success. They will all lose their homes eventually based on what they each explained they were doing to save them. Of that I am certain.
One woman from New Jersey brought up The Patriot Act as the basis for stopping a foreclosure and the show’s host became positively enthralled, saying how it was an idea she hadn’t heard before, how wonderful it was… how she was taking notes so she could share the idea with others on the show’s Website. If I had to put a number to it, I’d have to place the odds of the idea working to prevent a foreclosure at… let’s see… 4 – 7… carry the 3… hmmm… how about zero.
Listening didn’t make me mad at the show’s host because I don’t think she’s running any sort of scam… at least it didn’t seem like she was selling anything to homeowners based on what was being said. Rather, as I sat there listening, it just made me more and more sad for the homeowners who were pursuing paths that would end with their homes being lost, essentially without question.
Another homeowner guest on the program made a statement about how her bank could talk modification all they wanted, but she would only consider such an outcome under terms of her choosing, otherwise she said she would get her home free and clear because, she claimed with supposed confidence and based on signature irregularities on documents she had seen at her county recorder’s offices, they didn’t own her loan. Her voice quavered as she spoke and I could tell from my extensive experience talking with hundreds of homeowners, she was as close to breaking down in tears as she was to screaming out in anger.
That’s the sort of emotional instability that takes hold after someone gets so far behind on their mortgage that, although they might not ever admit it to anyone, they realize that there’s no way they’ll be able to catch up… that they’re already a victim of the foreclosure crisis… that they’re life is about to change as friends and family will soon look at them as “irresponsible borrowers,” and that they could at any time be waking up to their last day in the home they had never thought they would lose.
If they have kids at home, the idea of having to tell them what’s to come is near unthinkable, at least until it becomes unavoidable. They imagine pulling away on that last day in silence, no one daring to look in the rearview mirror, no one even able to turn on the radio… few things in their mind could seem less fair or inspire greater sadness. Some, during the nights when sleep becomes impossible, sit wondering whether a life insurance policies will pay off after suicide.
And it’s against such a backdrop of extreme emotional trauma that one’s mind either surrenders to what it views as an insurmountable battle, or it becomes susceptible to believing in things that mitigate the shame and reduce the stress… things that under different circumstances one would at the very least find the need to independently verify them before accepting them as true. Many in this mode, however, go to great lengths to avoid exposure to any information that dispels what they very much want to believe.
Modifications: Pro or Con
Okay, so I know some will try to tell you that loan modifications can’t work because you’ll have a clouded title for whatever reason and never end up owning your home even after you’ve paid off the modified mortgage, but if you want my answer to someone who says that sort of thing… here it is:
I don’t believe you… I think you’re wrong… and I don’t believe that story for a moment.
No, I’m not a lawyer, thank the good Lord, but to answer this question I’m confident that a law degree isn’t required. In fact, it could be a hindrance or impediment to clear thinking.
I don’t care what anyone says on this point… I’m saying that if you pay off your mortgage in 20, 30 or 40 years from now, there’s no way that any judge in this country rules that you don’t own the home for which you just finished paying. And I don’t care if an assignment was signed by Mickey Mouse, notarized by Donald Duck and filed up your butt… you’ll still own that house once you’ve made all the payments… period.
That’s just what I believe. If you want to believe otherwise that’s up to you… but, lawyer or not… I think you’re nuts.
The truth is you should hope I’m wrong and it does happen… you should hope that someday when you’ve made all your mortgage payments, Bank of America or JPMorgan Chase or whoever you’re “bank” is at that point, tries to get away with not sending you the release of the lien on your property… you should pray that’s exactly what happens to you at 70 or 80 something years old after paying on your mortgage each month for 30 or 40 years. Because if that does actually happen… if you actually get that lucky… you’re going to find yourself in front of a judge that’s going to hear what’s happened and be hopping mad at the bank standing on the other side of the courtroom.
After that, I’d have to guess that you’re not going to have to worry about working as a “Greeter” at Wal-Mart in your golden years… in fact, I’d say that would be about the right time to call your travel agent and book that cruise you’ve always dreamed of taking because you’re going home a winner.
And I’m not going to argue with anyone about this point, okay? There have been millions of loans modified in this country since 2008, and if you think any of those people are about to pay their monthly mortgage payments for the next so many decades and then be told they’re out in the cold and don’t own their homes, you’re just fruit loopy.
Where’s all this good news coming from?
It’s nothing short of astonishing, but this country is positively awash in positive economic news… it’s like it’s oozing from every pore of our national being. And what’s so amazing about the whole thing is that everything is better every day… even without anything measurable actually improving. It’s like a magic economy in which we’re told that everything is getting happier by the moment, while no one knows anyone who’s happier and everyone continues their own personal downward slide towards the poverty line.
I remember feeling like this at the end of the first quarter in 2009. Do you remember back then… it was like six months after Treasury Secretary Paulson and Fed Chief Ben Bernanke assured everyone in Congress that our global financial system was only hours away from complete collapse… hundreds of billions were needed immediately… there wasn’t even time to tell us how the money would be used. Don’t ask questions, you’ll get us all killed… now write a check and let me get on with saving the planet Earth.
Remember all that? Right. So, then six months later, remember how everything had gotten better… Wall Street was having record bonuses again… we had been saved by… a TARP? Just like when I went camping once when I was about 11 years old and it ended up pouring rain the whole weekend. Thank God one of the adults had brought a TARP. I don’t know what we would have done otherwise… probably all would have died… ummm… from all that rain… in July… I guess… maybe… it could happen.
What the heck am I babbling about? I don’t know… but what do you care? Why does my TARP story make any less sense than the one Secretary Paulson told us in October of 2008? Besides, by the end of the first quarter of 2009, everything was hunky dory again, and I remember writing that if whatever had happened was the sort of thing that was going to be fixed by the end of Q1 – 2009, then next time something like that happens, I’d be okay if the government just kept the whole thing to themselves and just woke me after things were fixed.
If it’s going to be fixed in six months or less, just leave me out of the whole “news” thing… I don’t really need to know, I’m often running more than six months behind on stuff anyway. I don’t even know who won on American Idol in 2011 yet… and don’t tell me… I’ve got it on TiVo to watch. Next time, just handle the Fall’s end-of-the-world-type-problem-that-gets-solved-in-six-months… and give yourself a pat on the back in the Spring.
So, then we were humming along just fine for a few months until nothing changed and then everything went straight off a cliff while I was napping on a Saturday, I’m pretty sure. And then after that things were bad… really bad… and getting worse… somewhere… I’m not sure where… nothing has really changed for me this whole time. My house keeps dropping in value, but once the credit markets are frozen and you’re underwater by six figures… what difference does that make?
It’s harder to make as much money as I used to, but that’s not that big a deal… I just spend less, work more, and make sure my life insurance premiums are current no matter what. I figure if I die next Tuesday at lunch… it’ll be perfect.
I guess one thing is different… our president helps me make my picks for The Final Four… and that’s about all he does really. He’s cool though… and I wish I was a little bit taller, I wish I was a baller, I wish I had a friend with a phone I could call her. I think that was a song from a few years back, but I’m sorry… now it reminds me of the leader of the free world.
I didn’t vote for him this last time… in fact, I didn’t vote at all this last time. Why? Because I was okay with just leaving the position open for the next four years while we looked around. I don’t think we needed to fill the spot for a couple of years. There’s no chance of our government accomplishing much good or bad in a couple of years without a president.
I would have been okay putting a toaster in the Oval Office for four years. Why? Because then… we’d have toast. I would have liked toast. CNN could announce that today it’s “Rye,” and I could have said to myself… “Now, that sounds delicious.”
And what do we have now? No toast. It sucks, really.
Instead we’ve got… well, come on now… what have we got? Oh, that’s right… we’ve got GOOD NEWS breaking out all over the place, or at least in all the places I’m not with all the people I don’t know or never meet.
Foreclosures aren’t down, housing isn’t up… but more people are apparently stupid.
Real estate prices do not just magically re-inflate themselves by the month. No, they do not… ever. Neither do they fall that fast either. Real estate prices behave nothing like a Duncan Yo-Yo. No one ever puts their home on the market for $300,000… and then a week or even a month later lowers the asking price to $200,000. Never happens… unless it’s someone on crack, I suppose. That’s why housing prices, when they decline, they decline gradually and often not in a straight line.
They don’t go shooting up by 25 percent in a matter of months either. Not even during the unprecedented bubble of 2003-2006 did they do that. No, they did not. I know… you heard a story from your cousin… but your cousin was full of crap and is broke now anyway, so why are we listening to him or her.
For housing prices to increase, the demand for homes has to increase. And because homes cost a lot, for people to express their demand for homes, there has to be plenty of credit available… and jobs help too… people generally shy away from buying homes when they don’t have jobs… historically speaking anyway.
Well, none of those things has changed over this past year… except maybe to have worsened. Credit markets are as tight as ever… the only jobs we’ve created are minimum wage and part time, and we’ve got five million people in default awaiting foreclosure and thinking at least on occasion about killing themselves or someone else.
If you’re between 20-30… the only way you’re getting a good job is if you can hit the three-pointer, you become a sex worker, or your parents own a bank. And besides that, you’ve got enough student loan debt to choke a doctorate in computer science, so you’re not buying anything that costs more than you’ll likely make over the next 20 years.
And we’ve lost more than six million homes to foreclosure. I think based on that number alone, it would be safe to say that 10 million people are spending less than they used to, right? Can we all agree on that one teensey-weensey piece of economic brilliance? Losing six million homes to foreclosure and property values falling by 30 percent or more probably hasn’t done all that much to increasing the tax base in any given state either, right? Or, should we commission some people with degrees Piled Higher and Deeper to study the situation for a couple years before we jump to any conclusions on that point?
Our central bank buys 90 percent of our national debt these days, and speaking of that crazy bald guy with the beard whose quantitatively squeezing $80 billion worth of something in and out of our money supply, like he’s working the paste in and out of a toothpaste tube on a monthly basis. Have you heard how “repurchase agreements” work?
Bernanke loans money to the banks and broker/dealers who give him various pieces of paper as collateral for a few weeks and then they pay the money back and Bernanke gives them their worthless pieces of paper back and next month he does the whole thing all over again… and somehow THAT makes the stock market go up… and some people are actually calling and emailing me to ask why what he’s doing does what it does?
Shut up, shut up, shut up. It doesn’t do anything, just like it sounds like it couldn’t possibly do anything… at least nothing lasting or significant. If you want to accomplish more in the long run, you could just get drunk and pretend things were better. That would do more for the problem you were having in the long run than what we’ve got going on.
And yet, Warren Buffett, just a few days ago was quoted as saying:
The U.S. economy might be “dead in the water” without the stimulus provided by the Federal Reserve under Chairman Ben Bernanke, according to Warren Buffett, CEO of Berkshire Hathaway. “I think very cheap money makes things happen, it makes asset values higher. When asset values are higher, people do have a greater propensity to spend,” Buffett told CNBC. “I think Bernanke has sort of carried the load himself during this period.”
Buffett thinks Bernanke has, talking about the economy of the United States of America, “carried the load himself?” And I’m supposed to somehow consider what’s been going on “good news?” One guy is carrying our collective load and we’re doing better? Better than what, for heaven’s sake? Unless the one guy carrying our economy is wearing an ‘S’ on his chest, and can actually move faster than a speeding bullet and is more powerful than a locomotive… able to leap tall buildings in a single bound… then Buffet’s statement terrifies me to the point that I may pee in my pants at any moment.
According to the Bureau of Economic Analysis, U.S. GDP actually contracted at an annual rate of 0.1 percent during the fourth quarter of 2012, marking the first contraction in the official numbers in more than three years… and if you’re technically oriented enough to follow John Williams’ site, shadowstats.com, you’ll find things are much worse than even that.
And, Europe’s EU, it’s worth mentioning, is positively imploding. I’m not sure, but what would you like to bet that Greece… the sovereign nation is worth less than “Grease”… the musical. I don’t know if that’s actually true on paper or not, but I know which one I’d rather own… how about you?
Foreclosures aren’t down because of “good news,” because there is no significant “good news.”
New state laws in some states and delays by servicers and homeowners are temporarily making foreclosures appear to be decreasing. I promise you that the foreclosure crisis is not one of those things that they can make go away in any number of months. People hear prices are up and in this market, Realtors will list almost anything.
I found a Realtor on my lawn the other day, asking me if we wanted to sell our house. Can you imagine that? I mean, door-to-door… would you like to sell your house? That’s got to be a lot harder than selling magazine subscriptions or Girl Scout cookies. But our housing markets are “cooking,” right? Back to normal… at least a third of the sales are all cash in most states… and in some states HALF?
A real estate market? I’d say not.
And so, I really am sorry that I can’t write more “happy homeowner”stories of how Mr. & Mrs. Jones are prevailing in courts across this land and ending up getting their homes fro free because of something being wrong that involves a signature… or ten signatures. It’s just not happening.
You don’t have to like what I write all the time, but you ignore it at your own peril. Take your power back and get on a track that makes the best of a terrible situation… regain control of your life… they may be able to take your money… but they can’t take your time unless you let them.
And I’m not telling anyone not to defend their homes through whatever means they deem necessary. I’m just saying that you should know the facts of the path on which you’ve decided to travel.