In the banking profession and the government. We already knew that both administrations were lawless when it came to immigration and voting-rights enforcement. Why should this be any different?
14 thoughts on “Lawlessness”
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In the banking profession and the government. We already knew that both administrations were lawless when it came to immigration and voting-rights enforcement. Why should this be any different?
Comments are closed.
The phrase ‘fabric of society’ keeps running through my mind.
I saw what looked like a nice pump action shotgun for about $250. Not that I’m into guns but that seemed like a good price for an eight shot 12 gage.
Is that frog done yet?
The underlying premise of Tickerguy’s article to the extent that you could find any logic in it at all is as follows: Simple honest folks were bambozzled into entering into mortgages by Wall Street slickers eager for billion dollar bonuses. In the specific case apparently the Earls were slicked into taking out multiple loans and pulling out $300,000+ in equity out of their house (the article is unclear if the donated it all to Mother Theresa or invested it in a chincilla ranch) and then “got a little behind on their payments. They waited to get tough until after the new owner had made improvements, had the property sold and then broke into their former home. But that’s okay because Wall Streeter and bankers did fraud, fraud, fraud (not clear what the fraud to the Earls was). The only fraud that I’ve heard associated with these deals by Wall Street was that people would pay the mortgages and therefore I should buy a mortgage backed security. But we have heard this story before where is Senator Nye when we need him.
There were a lot of people who made money during this housing bubble. Building contractors in particular. After the bubble burst it was time for the speculators doing credit default swaps to rake in the cash. But it is now that the real fortunes are being made. By buying debt for pennies on the dollar and executing foreclosures. Remember Beal from Beal Aerospace? He made his fortune off the back of the S&L crisis.
The people who got shafted are the saps who got in over their head and accumulated debt, plus the rest of us who actually have to pay taxes even if we have zero debt. However I am pretty sure a lot of people are laughing all the way to their offshore bank accounts.
I could not do what the Earls did. If I didn’t pay my mortgage and I knew I was behind, rationalizing a crime because someone else did would not enter my head. What an example to set for your kids. Yes son, we’re breaking the law but everyone else is too so it’s okay. Nice.
So last night, I listened to an investment show explain the robosigning issue. Without that information, I have no idea from reading Tickerguy’s comments what fraud was committed by Conejo Capital.
The root of the issue here, assuming the allegations against Conejo are true, is that the Earls refinanced their home to pull out equity that was greater than the value they originally paid for their home. In the process of handling the paper work with the mortgage, the bank using the robosigning system had the Earls sign their document and then notorized their signature without a notary ever witnessing the signature. At that point, fraud was committed.
I’ll give Tickerguy credit for suggesting both parties are at the wrong, and the better way to handle this is in a court with a jury.
Just want to remind that Bill Maron was speaking sarcastically here:
“Yes son, we’re breaking the law but everyone else is too so it’s okay. Nice.”
Everyone in this story sounds like scumbags and I wish they could all lose.
Here’s the thing we need to remember. We’re supposed to be a nation of laws. When the banks play games to avoid paying taxes on their gains from those mortgages, and screw up the chain of custody of “right to foreclose,” they deserve what happens to them. Common people who do that kind of thing go to jail.
That doesn’t mean the Earls should automatically get their house back. Ideally they’d lose the house and the banks would still suffer some kind of loss, like, they can’t resell it for a year, or there’d be a tax penalty or, best yet, some bank officer goes to jail.
Ken,
How about a link for that $250 shotgun you mentioned?
We’re going to be needing those soon.
George,
You have a very good point in that the Earls weren’t entirely innocent victims. I don’t care how smooth the salesman talks you should have the good sense not to take out a 100% LTV loan and then take out another 100% in “equity” and not expect to end up insolvent. A more horrific example was recently linked by instapundit here:
http://gonzalolira.blogspot.com/2010/10/coming-middle-class-anarchy.html
this couple bought a normal loan, found themselves underwater not because they didn’t make payments but because they lost their equity when the real estate market collapsed. They applied for the federal mortgage relief program, were told they were eligible, got their loan re-negotiated, and then after paying the lower payment for several months, were told they weren’t eligible, the payment went back up and Wells Fargo charged them interest and penalties for all the payments during the time they thought they had a renegotiated loan. I’m sorry, but there’s just no defense for charging late fees and penalties when the homeowner thought in good faith they had a renegotiated loan. If banks are doing this sort of thing regularly they need to be stopped.
Leland said “The root of the issue here, assuming the allegations against Conejo are true, is that the Earls refinanced their home to pull out equity that was greater than the value they originally paid for their home. In the process of handling the paper work with the mortgage, the bank using the robosigning system had the Earls sign their document and then notorized their signature without a notary ever witnessing the signature. At that point, fraud was committed.”
Actually, as I understand it the “robosigning” occurs in the foreclosure process when in either the complaint or summary judgment someone professing personal knowledge swears that the loan is in default, that the mortgage holder is x (assuming that it has been assigned, maybe multiple times) and the mortgagee has been provided there rights of redemption in accordance with state law etc, etc, when the person taking the affidavit probably does not know those things and in some cases the actual documentation has not caught up with the electronic. So a bunch of paperwork is signed by someone relying on others who swears he knows this stuff firsthand, then the stack goes down the hall to a notary who notarizes it without actually swearing the affiant (maybe the notary doesn’t even have a bible who knows). The point is not that the Earls didn’t sign the papers in front of a Notary, that doubtless happened, but then their mortgage go sold and transferred and assigned and maybe the assignment didn’t get recorded. Of course if Tickerguy is correct then nobody is going to be selling their houses soon, there will be no secondary market in mortgages and George Bailey better hope that Clarence is hanging around.
that should be “their right of redemption” and “got sold”
The people who got shafted are the saps who got in over their head and accumulated debt…
OK, I’ll bite, how did the BORROWER get shafted?
In this case, at least, they had to know that they were borrowing the money, they had to know their bills would exceed their income if they continued to borrow, they had to know that the house of cards would become shaky in a slight economic wind, mostly because the amounts of money involved. The ability to borrow $1M speaks to a certain amount of education and earning capacity. That amount tells volumes about the people borrowing, just based on how I’ve hired and fired based on education and employment history, based on Ventura County Census Records and based on personal experience.
You can’t get $1M in debt, even under the crazy system that just fell apart, unless there was some way to approximate re-payment. Even if the repayment plan would take 30 years after each re-fi on that mortgage, the lenders had an expectation of re-payment.
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Although I do know that the bar for mortgages / renting a home moved over the last 40 years, which muddies the water on how the lenders think.
When I got married 40 odd years ago, the “norm” suggested for housing was 1/4 of your (combined) income(s). (I still have the booklet given to us during a, ‘So you’re getting Married’ class) When I tried to buy my first house, it had moved to 1/3. When I bought my house in the late 90’s it was, and is, 1/2 of your income. And I’m not talking about how much the average person IS spending, I’m talking about how the mortgagers look at how YOU can designate YOUR income percentage wise for getting a mortgage approved.
I say this because, in the midst of the current financial madness, I just went through the process three times in the last 14 months. I had two different lenders attempt to get me to buy much more house than I wanted. Both of them wanted to loan us enough money that it would have made the mortgage payment almost 1/2 of our monthly incomes. I had the same experience in the late 1990’s when I bought my last house.
One lender got down right nasty about how little I was borrowing and how he would have to ‘struggle to get it through underwriting’, based on the low percentage of our incomes.
Either way, I still wouldn’t blame the lender, if I got in over my head!! And even though I lost my last house to foreclosure due to illness and lost jobs, I never considered stealing the house back!
And finally, doesn’t all of this go directly to a total lack of ethics on the part of damned near everyone involved in lending and borrowing? I don’t blame EITHER party alone here, I blame the lender AND the borrower.
I believe the word that works best is ‘cahoots’.
The borrower saddled with recourse debt got shafted because he will find all his property, even the one which he did not get on credit, pawned off in order to pay. He will lose any ability to get credit for a long time. In some cases he may even have his working salary siphoned off to pay for the debt turning him into a modern indentured servant.
These guys in the story are not the unlucky ones. The really unlucky are the ones who bought a house just before the bubble burst, lost their jobs, then found themselves with negative equity.
Sure they shouldn’t have got into the loan to begin with. I am one of those guys who bought my car with cash, so I am not particularly sympathetic to people living above their means. But that does not mean I relish on it happening.
In comparison the banks are collecting the outstanding debt *and* charging the rest of us for any cash-flow shortages they experienced in the short term. I do not have any doubts about who profited from these little shell games. Follow the money.
I have little sympathy for those whinning about having negative equity or being underwater with their mortgages. I 1986, my wife and I bought our first home here in Colorado Springs. Little did we know that we were buying at the peak of a local housing bubble. A year or so later, the S&L mess hit this area hard. There were so many foreclosures here that “60 Minutes” did a story about the Springs titled “The Repossession Capital of America.”
I was in the military at the time and coming up for reassignment. We bought our home for $79,000 in 1986 and by 1989, it was worth less than $70,000. We would’ve had to come up with $10,000 just to sell the place. To avoid that, I took a remote assignment to the Aleutian Islands for a year (1990 in Shemya, good job, lousy location) so I could get a guaranteed follow-on assignment back to the Springs. By 1993, the market had turned around and we were able to sell our house comfortably.
At no time did we consider a “strategic default” or on walking away from our responsibilities. We took on the mortgage (9.5% interest rate on a VA loan) and accepted the responsibility to make the payments regardless of how much it hurt at the time. I spent a year away from my family to avoid the economic hardship moving would’ve caused.
If you took out the mortgage and the value of your house went down, wait it out. I can understand if you lost your job but don’t come whinning to me (a taxpayer) to cut you some favor just because you owe more on your house than it’s currently worth. Your home is a place to live, not an investment or an ATM.
Sure they shouldn’t have got into the loan to begin with.
See, there WAS an answer as to NOT getting ass deep in debt, or loaning to people who can’t repay. It’s called fore thought.
The “Market level” is 20% down with decent credit. Mortgages have been around for a long damn time. Ending up “underwater” in a market that’s requiring 20% down is both quite rare and quite difficult even in a downturn. A full 20% market drop would catch… -zero- people underwater. And larger drops are all offset by the fact that most of the mortgagees have been paying in for years and have a lot more equity than 20% by then. A thirty percent drop (assuming my math is right) catches around 20% of the mortgages as “underwater”, and they’re pretty modestly underwater. That is, the payout date is far enough in the future that the market is far more likely to rebound the measly 10% that the worst case is underwater. (Worst case caused by the market drop, not counting specific house issues.)