Homeowners foreclose on Bank of America

[Windpower]

http://www.digtriad.com/news/watercooler/article/178031/176/Florida-Homeowner-Forecloses-On-Bank-Of-America

[StinkerBell]

Love it!

[rwanders]

 

Now there's a windmill worth tilting at! 

Bet the homeowners and their lawyer still haven't been able to get the smile off their faces.

Oh to be a fly on the walls of the Bank of America executive offices when the branch manager called with that news!

[rick91351]

Oh how I wish we all could have been there to give Bank of America our complete support they so well deserve.

 

[peternap]

The scary part is how many people get screwed by banks.

[rwanders]

The scary part is how many people get screwed by banks.

And how many people screw the banks-----then it's all passed on to the rest of us.

Scary part is how many are happy to screw anyone and anything at anytime.

It's a jungle out there.

[glenn kangiser]

...or how the banks get bailed out with taxpayer money but the taxpayers are still liable for the debt.... but that doesn't stop the rip off artists at the bank from walking home with big bonuses.....   I think it's a conspiracy, RW.

[StinkerBell]

I hate the banks. Yes it is a personal issue.

[rwanders]

...or how the banks get bailed out with taxpayer money but the taxpayers are still liable for the debt.... but that doesn't stop the rip off artists at the bank from walking home with big bonuses.....   I think it's a conspiracy, RW.

It's a conspiracy without conspirators, without masterminds. Take the large percentage of our population that are financially illiterate---add a generous handful of businessmen who have been trained and incentivised to focus no further than the next quarterly report, garnish with government policies based on utopian ideologies which deny the history of human nature, cheered on by media reporters and pundits, also financially illiterate and ignorant of basic economics. They baked up a sweet pie eagerly gobbled up by the foolish and the clueless. The housing and general credit bubble was not unique. The history of the world is filled with similar "bubbles"-----The common thread is the neverending ability of humans to believe that; "If you will agree to lie to me, I will agree to believe you." Everything will be great----Tell me what I want to hear and i will do business with you, vote for you, deny obvious principals, deny my lying eyes, believe that, this time, it'll be different----we're all going to get rich!

A few do, vast majority don't and, like a drunk the next morning, they all swear they won't be fooled like that again and now we've got to hunt down the guilty conspirators. It's our way of setting up our excuse for falling off the wagon to help blow up the next bubble----those clever conspirators will just let us believe what we really really want reality to be---the dream lives on.

[glenn kangiser]

I guess that's what fiat money is for --

We all pretend it is worth something... trade it for goods ...trade it for work... borrow it from the banks - they take their profits from their computer generated money and the system keeps running.... the dream is fake like the money.

But it is there until some one, or some other country quits pretending...

[Squirl]

The most interesting part of the story that I found was it took them only one hour to decide to cut a check for the full amount.


Great summary rwanders.

[ScottA]

Banks never pay until you sue them or get them by the short hair. I think it's some kind of unwritten rule. I lost count how many times I had to use a lawyer to get paid by a bank. Usually putting a lein on house they are about to close on will get the job done.

[Native_NM]

Just for fun, pay off a credit card and send them an extra $20 bucks.  See how long it takes them to issue you a refund.  After 30 days call them up and tell them there is a $39 late fee and you expect to be paid 29% APR.   

[rwanders]

 

What really amazes me is how many people think living from paycheck to paycheck is ok. Have one son who thought he was doing just fine as long as he could pay his bills as they came in. Took him a long time to value what his mom and I tried to get in his head----"Live beneath your means" He thought living on the edge of a financial cliff was just fine---but, miss one paycheck and you're over the edge. He finally got past that fantasy and now he actually is ok.

It's not just the "poor folk" who do that. I worked with technicians making 100,000+ salaries who were still on the paycheck to paycheck lifestyle. My wife was the acct super and the payroll office would get frantic calls if their checks were even a few hours behind schedule. Several were even families where both mom and dad were knocking down $100,000+ each and never saved a dime.

Being duped makes life tough----but it's even tougher when you're duping yourself.

[Windpower]

I submit that every citizen of the US was duped.

By a Federal Reserve that promoted 'loans to everyone'

And the bankers gambling with the 'securitized debt portfolios' or what ever they called them.

we (the American middle class) were 'sold down river' by the banksters

and no one seems to be pissed off enough to go after the bastards

[dug]

I submit that every citizen of the US was duped.

By a Federal Reserve that promoted 'loans to everyone'

And the bankers gambling with the 'securitized debt portfolios' or what ever they called them.

we (the American middle class) were 'sold down river' by the banksters

and no one seems to be pissed off enough to go after the bastards

Well stated Windpower!

[rwanders]

Windpower, you are wrong----not all of us were "duped".  Most of us actually recognized the bubble for what it was---some hoped to get in and out with their fair share of the loot and some of us just watched in amazement as normally intelligent humans ignored reality in favor of fantasy.

I am surprised that you assign no responsibility to the borrowers----if they did not know what they could afford (in the real world) then, I submit they were either truly idiots or deliberately choosing to act like one. Twenty-somethings buying $500,000 starter homes in CA, NV and FL?-------give me a break----A fool and his money are soon parted---true then and still true today.

Where were their parents? Did they even try to impart a little financial knowledge to their sons and daughters while they were younger? I realize I'm assuming mom and dad had learned a little financial wisdom themselves. Failing that, perhaps they expected the government to hold their kids' hands, read the loan terms for them and finally pick them up when life pulls the magic carpet from under their soft little tushes. Some of life's lessons can be harsh when we try the OJT method.

It's so soothing to blame the bankers, the government, anyone but ourselves when we make bad choices in life-----I don't give anything like a pass to lenders and buyers of securitized debt derivatives. They were acting recklessly and without the excuse of financial ignorance to blame--old fashioned greed was the driver for them.

Looking around for scapegoats for ignorance only serves to perpetuate ignorance.

RW

[Native_NM]

 ^^^^^^ Well stated.  

My education was in finance, and my father's family was in banking, so I probably had a comparative advantage over many of my peers.  When we bought our first house, our goal was to limit the payment to 20% of gross income.  At the time the industry ratio was 28/36.  Our house payment was under $600 a month including taxes and insurance.  It was a fairly nice, smaller home.  My father was very conservative.  My grandfather and my great-uncles and my aunts were very conservative also.  My siblings and I were raised with financial sense.  It didn't make it all the way through the family....

My youngest cousin and her husband bought a house in SoCal in about 2005.  They called me for advice, and I told them not to buy.  Actually, I begged them not to buy!  She was a nurse and he was a fireman.  He was in the union, and she was an RN with a Masters.  They earned over $100,000 with his OT, and her shift pay.  They bought a $750,000 house with almost nothing down.   I don't remember the exact numbers but the payment was close to 50% of their gross income at a low floating rate.  Within a year they were complaining that it was too much, but they held on and didn't actually lose the house until last year.  

Their rational for buying was that houses would always go up, and if they didn't buy they would never be able to afford a home.  If they couldn't afford it, they would just sell it and bank the profit in a couple years.  They didn't want to move to the suburbs because the commute was too far and expensive, so they decided to stay in the area they grew up in.  My uncle bought his house in 1965, when ocean view property was $35,000, and never moved.  My cousin's expectations were a little too high.  

I talked with them during the foreclosure process, and tried to help them out of their problem, but there really was not much to do.  Between the time of purchase and when they lost the house, they had a child, bought an expensive $45,000 SUV to haul him around, and the economy tanked.  Their rate reset to higher than market rates, but there was no way to refi or modify.  They had negative equity.  He lost his OT due to budget cuts, and she lost her shift pay because she had to care for the kid.  The few times I talked with them they blamed the bank.  He blamed the fire department and the union for losing his OT.  She blamed the illegals for ruining the economy.  They both blamed Arnold and George W.  I resisted the urge to say anything, but I sure wanted to.  They were warned by me and their uncle, as well as their father.  They made a bad decision.  Made worse decisions after they bought the house.  I blame them, and only them.  Ironically they are renting in the same area, and their rent is only about $500 less a month than their old house payment.  They dumped the beast and she is driving my aunt's old Toyota, and he still has his small truck.  For them, the $1000 a month was the difference between surviving or not.  They still live beyond their means, save nothing but don't care because of his union pension (which is NOT safe), and otherwise live the good life in SoCal.  There are probably a million stories just like theirs.  Last time I talked to my brother, who keeps in touch with them, the gas prices were really hurting them.  They are still on the edge.  

I don't doubt that some lenders were unscrupulous, or that some buyers truly didn't know what they were signing.  I still blame them.  When the government quits underwriting paper, the secondary market will dry up.  Banks will be forced to hold their paper, and the lending standards will tighten dramatically.  The money supply will contract, and house prices will fall.  Unsecured credit will dry up, and families will be forced to live off today's earnings instead of their Visa.  This will further contract the money supply, lowering the GDP and increasing unemployment in the short-term until the market finds equilibrium.  Oh wait, that is happening now...

[peternap]

Good post!

[Squirl]

One of the areas of my formal education was also in Finance (undergrad).  I can't tell you how many times I went through the same discussions with people.  Many people were in the same fields with decent pay, but little financial education.  Some asked for my advice, some took it.  Many though responded that the banker told them they could afford it and it was the norm.  My different perspective is the bankers and brokers giving them the money knew or should have known the individuals could never afford it.  It was their job and they had the education to know it.

[dug]

One group (home buyers) guided by opportunity and greed foolishly overbought and ended up broke and homeless.

Another group (banks, government, wall street) also guided by greed and opportunity, cleverly, knowingly, and collectively orchestrated a scheme that would bankrupt America and it's citizens while creating vast fortunes for themselves. Plenty of people at the top of the food chain were well aware of the consequences of these actions and yet chose the cash.

So, many folks went haywire with misguided credit opportunity and paid the price. A few sold America down the river for fun and absurd profit. Which party is the guilty one?

Anyway that's how I see it.

[rwanders]

It would be interesting to know how many mid to lower level bank and mortgage lenders have joined their customers in the foreclosure or short sale system. I would submit that their knowledge of personal financial principles (and compliance with them) is probably not any better than the general population.

There are many snake oil salespersons yelling out bad advice on personal finances it's no wonder they find so many disciples among our ignorant population.  There are some good mass market $$$ gurus out there too. i.e. Suze Orman, Clark Howard, Dave Ramsey who offer basic and generally good advice.  Hucksters telling us that buying gold coins will save us all are just that, hucksters selling  a commodity that undergoes regular boom and bust cycles. Avoid those pushing whole or universal life insurance and variable annuities----they are not giving good advice, just seeking large commissions.

The best thing you can do for your kids is to get some knowledge of basic financial subjects and, as a family, make it a regular task to bring the kids and for god's sake, your spouse, to the desk or table and make sure they know the realities of your family finances. make sure they know where $$ comes from and where it's going. Tell them the sad stories of foolish choices and good ones you may have made in the past---they will surprise you years later when they recite these examples to their own children. Knowledge of the financial realities of life and how to avoid it's minefields may be the most important gift you can give them---truly a gift that goes on giving their whole life. Your religious faith may be it's only competitor.  

In a country full of the financially blind, those with sight are truly kings and probably relatively prosperous too.  

[peternap]

One group (home buyers) guided by opportunity and greed foolishly overbought and ended up broke and homeless.

Another group (banks, government, wall street) also guided by greed and opportunity, cleverly, knowingly, and collectively orchestrated a scheme that would bankrupt America and it's citizens while creating vast fortunes for themselves. Plenty of people at the top of the food chain were well aware of the consequences of these actions and yet chose the cash.

So, many folks went haywire with misguided credit opportunity and paid the price. A few sold America down the river for fun and absurd profit. Which party is the guilty one?

Anyway that's how I see it.

There is a third group that may have more responsibility for the mess than the banks. That's the mortgage brokers.
They worked hand in hand with the banks but pushed things like taking second mortgages to pay the down payment on the first. The seconds were always sky high. I saw some as high as 18%.

The banks knew what they were doing but looked the other way.

[rwanders]

The worst for peddling crazy loans were the independent mortgage brokers but some were bank-run companies like washington mutual-----WAMU (both now gone). Very high percentage of their loans were id'd as fraudulent  by auditors after they collapsed---was as high as 84% in some of their offices.

Alaska had little of that craziness---and has essentially not suffered a recession or house value losses like the other states. It's one of only a few states that are not in the hole now----have close to 40 billion in investments and cash stashed away.

[archimedes]

I worked as a mortgage banker for a quarter of a century,  retiring in December of 2006 (how's that for timing?).

I had a front row seat to the catastrophy.  We all saw it coming.  At least those of us with any sense of history and financial common sense.

There is more than enough blame to go around, bankers, wall street, consumers, lack of gov't oversight.

One of the greatest myths I see perpetuated,  by the idealogically driven,  is that somehow poor people caused the economic collapse with their carelessness.  When in fact it was the poor that were used as a means of generating huge profits by the financial industry.  While nobody has clean hands,  the poor were used as a means to generate loan paper to meet the ever increasing demand for CDO's.  The pool of qualified buyers wasn't big enough to meet the demand for loans generated by the CDO market,  so lending standards had to be lowered.

We all knew it was going to end in a train wreck.  As a matter of fact,  there was a joke among my friends in our office whenever we received new loan guidelines (which were continually lowered to satisfy the demand for loans from the CDO's) .  The refrain was,  "this is gonna end badly"  and we would all shake our heads.

It all could have been stopped by prudent gov't regulation.  But we all know how the suggestion of any form of gov't regulation is received in this political environment.  Even now,  after the catastrophe has taken place, very little has been done to prevent the next one.