Banks Didn't Turn Their Back on Homeowners
They Turned Their Back on Our Nation
Billions and trillions of dollars of bail out money is what they have all got their hands out for. That’s not even counting the auto industry. Since I’m not expert about the auto industry I won’t be touching that subject with a ten foot union manufactured pole.
Just like you, I am in a miff over many aspects of the bail out plan we see streaming through the news. “Plan” doesn’t even seem to be the right word for this debacle as none of us have seen a plan now, have we? There really have been few rules set forth or stipulations regarding the use of the money. Color me crazy but I think it’s wrong for the tax payers of this nation to bail out a bank so it can turn around and invest ten billion dollars on a toll road in Spain. Google it and read it for yourself. Kind of makes ya wonder what else the banks are doing with our money that we don’t know about.
I want you to know something about banks and bad mortgages.
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Most of these banks didn’t lift a finger to protect them selves. Surely they have spread sheets and an alarm was going off on a computer somewhere because balances and statistics went hay wire. Most of the banks could have and should have tried to minimize the damage. They knew what they were up against and didn’t do a darn thing. The just ignored the problem while it festered and now we get to foot the bill.
So, how do I know that most of the banks didn’t do squat to minimize the damage? I deal with people that buy and sell real estate. I write articles for this paper and a couple of websites. Countless people shared their predicaments and stories with me. That’s how I know. Sure there are many facets to stories. Some of the mortgages just out and out shouldn’t have been written. I know.
Wouldn’t it be interesting to have forensic mortgage audits done on every bad loan and if the homeowner committed mortgage fraud they could be slapped with a judgment for what they owe the bank? I mean what they owe you, me and anyone else that pays taxes. Yeah Mr. Short Sale Seller, claiming those Florida condos you wanted to flip as a primary residence was mortgage fraud and since you lied you should pay the American taxpayers back.
For what its worth, while there were many ‘liar loans” not everyone in a bind was fibbing or committed mortgage fraud by using a “stated income” loan and claiming (but not actually verified by the lender) that they earned more than they actually made. Real life still happens and sometimes it’s just an unfortunate turn of events that ends in mortgage default.
Humor me for a minute and learn about Klaus and his mortgage on his primary residence to put things into perspective. I wasn’t the agent that helped Klaus buy his home but he came to me for help when he got in a trouble.
After being thoroughly versed in foreclosure, deed in lieu of foreclosure or short sale, he opted for a short sale. This wasn’t by choice and he worked really hard trying to get help from his bank to no avail. The bank put their foot down and refused to modify his loan. The bank could have adjusted his interest rate but they didn’t. Klaus still had a decent job and verifiable income. He just had a crappy mortgage from a mortgage broker that is probably sitting on the beach in Rio. He was a first time home buyer and it was a bad move on his part, which he admitted.
What would it have hurt for the bank to drop a percent or two to keep him in his home and not be burdened by foreclosing on it after they eventually wore him out? I was asked to sell his home for him but referred it to a real estate agent that was geographically closer. I spoke with his agent yesterday. The home is now valued at $40,000 and went under contract a few days ago.
If you’re not doing the math, I’ll do it for you. Instead of the bank just reducing the interest rate and making a few thousand dollars less over the life of that mortgage they chose to throw away $110,000 plus expenses to deal with labor and time intensive short sales. That was their solution. That was their plan A.
Does this make any sense to anyone? Does this make any sense to anyone in Washington that is now handing boatloads of money out to people who couldn’t manage their money the first time around?
This isn’t an isolated case. It’s happened with many lenders and many home owners. It’s all happened in quiet back rooms so you don’t find out. I thought you deserved to know so you can take five minutes out of your day and email your government officials and let them know how your want your tax dollars monitored from this point forward with regard to any bail out disbursements.
Maybe when you email them you can suggest that after they do the forensic mortgage audit on the seller they should do a forensic short sale audit or a forensic foreclosure audit to see if the bank could have helped prevent some of their massive losses and simply chose not to.
Real Life in Bonita Springs is a project by Chris Griffith dedicated to writing useful blog posts for consumers about the Bonita Springs, Florida area. Find out what it is really like to live in Bonita Springs, Florida by reading about our fair city. You’ll get the latest in local real estate information, Bonita Springs real estate market reports and a little bit of humor. If you have topic ideas, feel free to request a story about the idea, after all, this site is just for you.
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