“I am looking for someone to blame.”
At least that is the statement made by every homeowner that comes into my office, article written, testimony by official (elected or appointed), commentator, news reporter or blogger. Society has come to conclude that if they somehow they discover who is to blame, then a solution will appear. It will not. Being the smartest guy in the room and pointing to a key point in the time line with Glass Steagall was repealed as the cause, will not buy you a cup of coffee. Discussing key decisions made by the great criminal mind Barney Frank while he was ranking member of the Financial Services Committee, will take years off of your life and solve nothing. Making grand claims that we should just let the banks fail, is just silliness and naive. Waking up a realizing that there are over $60 Trillion dollars in contracts i.e. Mortgage Backed Securities, Collateralized Debt Obligations, CDO squared transactions etc etc that are backed by less than $11 Trillion in mortgage loans and then telling the world about it, makes for good material to get the kids to go to sleep at night. Enforcement, or the lack thereof, should be a major conversation point, but focus it toward those that need to enforce it and they cry when you realize it is the same entities that participated in the first place.
I run a large practice group at a law firm here in Phoenix, AZ. I do about 50 consults a month personally. I have been doing it for the last 4 years. That is over 2,000 homeowners. I can tell you that it is an urban myth that this problem has anything to do with irresponsible homeowners. I can count on two hands the number of people that I might raise my eyebrows about how they purchased their home and how they could afford it.
These people purchased these homes and or financed these homes from 2003 to 2008 (yes, I have homeowners as late as 2008 affected) and they paid their payments on time till something happened (Death, disability, lay offs, pay cuts, sickness, divorce etc) The only reason it was ever a problem is that their home was no longer worth what they owed. Negative Equity is the key issue for homeowners. It is only now that I am beginning to see people come in facing a lack of affordability of their mortgage tied to the type of mortgage i.e. Interest Only period expiring, Negative Amortization mortgage is recasting etc. The ARM folks are laughing right now. Their ARM is adjusting and their payment is going down. NOT UP. The only exception to this are those who obtained their loan from greedy criminal minded originators who sold the loan with margins between 4 and 5.5%. I have reviewed HUDS with mortgage broker commissions as high as $20K on a $300,000 mortgage, but this was not irresponsibility of the homeowner. It was a lack of enforcement of current laws.
There is a blind octopus we call a servicer which with one tentacle is attempting to modify the loan, another attempting to threaten the homeowner, yet another filing a foreclosure with completely inadequate or worse yet fraudulent affidavits, the homeowner attempts to short sale the home just to be met by a $20 an hour Rivet Faced, Tattooed Ass’d kid who can’ tell the difference between a pay stub and hall pass, denying the short sale because the homeowner failed to turn in all documents. We have an entity that cannot find its Ass with all tentacles, a bright light and Google Maps.
After thousands of clients and reviews and audits of their documents I conclude, what many have discussed, these servicers are NOT the Banks, They DO NOT own the loan in question. They DO NOT have legal rights to even collect on the payments. Most times these servicers do NOT even know who does. This dance we are involved in is one of the largest coverups that I think history will ever know. This includes even a population of Fannie and Freddie loans.
Homeowners and their advocates are in a position to cease being distracted by conversations about TARP, Home Affordable etc. and start focusing on one thing. It was not irresponsible homeowners that caused it. It was decisions by Congress, Treasury and the Federal Reserve to begin a systematic removal over a 17 yr period of those controls that would prevent this Ponzi Scheme that Mortgage Securitization became from becoming what it is today. It was not one President, It was not one political party. It was not two purported GSE’s that caused it.
The scheme is becoming unraveled as we speak. It will take years to be able follow it to its source. In the mean time, each and every homeowner should fight for their right to keep control of their property till the proper party appears and demonstrates that they are in fact the one with authority to enforce the mortgage / deed of trust and and have presented proper and legal documents demonstrating that before they deny someone their quiet enjoyment of their home. If Life, Liberty and the Pursuit of Happiness are the keys, then we must fight for those rights.
Remember it is not about getting a free home. It is about the Law, and the legal right of some “party” to take the home. You would never allow someone to steel from you. You would never allow a court to put a person in jail. You would never allow a court to condemn a person to death. Without Due Process and proof.
Stop blaming what caused it. That is for the historians and frankly will not assist in the solution at all. I wish I had the hundreds of hours back that I have wasted on these conversations so I could devote them to just helping a few more homeowners navigate their own personal hell they are in.
