Jeff Horton has a job, two cars and money in the bank. Yet, he stopped paying his mortgage a year ago. With shoddy documentation by mortgage lenders now delaying foreclosures across the US, Jeff thinks he will continue living for free for at least another six months, and probably longer.
The 33-year-old IT specialist is keen to put an end to his disastrous home purchase that will likely leave his bank with a loss of at least $100,000. Until the bank actually makes him leave, he will keep living in the Orlando house, and pocket the $2,200 he used to pay on his monthly mortgage. “I’m not stupid,” he says. “I will live for free until the bank takes over the house.”
Shasta Gaughen, an anthropologist living in California, stopped paying her mortgage in February. She has no idea when her home will actually be taken over. “I have been able to save significantly,” she says. “Every penny that was supposed to go to my mortgage went into savings, around $1,200 a month.”
I honestly believe these people are the real criminals.
I think more like accessories to a crime.
The criminality goes way back to the “equal outcomes” liberal doctrine that first sought to bully banks into making loans to people who could not pay them back. Then to add fuel to the fire Barney & Chris & Maxine ginned up Freddie & Fannie to purchase any piece of paper shoved under their noses. And F & F were glad to do that as their bonuses depended on that loan purchase volume.
Then the shear speculators caught onto the scam and milked it for everything it was worth, flipping properties monthly among other things; knowing that you did not want to be the last guy onto the ponzi scheme.
So now you have “regular” people who got sheared in the mess figuring that morals didn’t apply to liberals, Barney, Chris, Maxine, Freddie, Fannie………so why should I be the guy who falls on the sword?
A nasty sordid mess indeed, which we have paid for, are paying for, and will continue to pay for in lots of ways for a long time to come. You don’t corrode the basic fabric of a society without severe consequences.
These do not appear to be people who cannot make their payments – rather people who have decided to game the system. I suspect they were not forced to buy their houses. This makes them thieves.
CDW, take it from someone who has seen this system from the inside for 18 years, CRA was a factor, but definitely not a large one. E.g., Fannie/Freddie did not do subprime loans, which precipitated the crisis, but Chase, Wells, and many others did. Nor did F/F do Option ARMs, but WaMu, Countrywide, and many lesser cuplrits did.
#1/#, I urge you to look a little more deeply. It had now become clear that the banks, investment houses, and raatings agencies conspired to create loans and derivatives that were misarepresented to borrowers and investors alike. They did so knowing full well that the bubble they created in violation of many Federal and state laws would ultimately burst, but they would have made their millions. Now that borrowers have discovered that they were victims of a deliberately rigged game, can they be blamed for refusing to continue to play?I think not.
To make matters worse, the banks now compund their sin with perjury and other legal violations in the foreclosure process. The big bank and other Wall Street execs are worse than Mmadoff; they should all be in prison.
So much for a man’s word. The price and terms were agreed upon. Everyone knew that the price of housing was elevated. That is what happens when you buy something in good times. We all know buy low, sell high. But if you don’t want to wait to the next recession, you pay more.
And the foreclosure documentation issue is not relevant in that this is a recent development and the freeloaders haven’t known about it, so they can hardly use it as an excuse.
“Nor did F/F do Option ARMs, but WaMu, Countrywide, and many lesser cuplrits did.”
Did WaMu, Countrywide and all the others print money? Did they have inexhaustable funds from some source? They didin’t print money (that we have learned of yet), but Yes they did have an inexhaustable source of funds. Every mortgage contract they wrote stated that the underlying mortgage might be sold to another entity and that depending on the structure of that sale, you might make your payments to Countrywide (as an example) or to someone else. And just as soon as that mortgage closed, off to F/F it went so that Countrywide (et al) was again flush with money to go out and find another prospective buyer with a pulse.
Did all the other accessories you mention get caught up in the game? Sure they did and we know they all cut corners “to make the deal” because deep down they knew the transaction would get blessed at the highest levels.
The direct evidence for all of this is that F/F have been the deal makers for something like 70% of all mortgages (that’s by memory, it may be worse)! And “we the people” have been pouring money into F/F at a furious rate to keep them solvent…………….so they can go buy more paper in the mistaken belief that we have to do that to fix the housing market………………..which is broken precisely because the government IS involved.
And I myself had the opportunity to participate unwittingly in this little game. After losing our house to Hurricane Katrina we moved and took a job in another city and bought a house (through Countrywide no less). Being unable to rebuild on our old coastal lot we proceeded to buy inland a little. During the purchase process of this second house (through Countrywide of course), the company I worked for went through difficult times and I ended up with no job.
We were devestated! We thought our hopes of buying a house back home were shattered. Here we had an existing mortgage and no job. Surely Countrywide would not allow our second transaction to go through. When I called Countrywide to give them the bad news their reply was “no problem, we can give you a [i] no documentation loan, but we will have to charge you a .25% higher rate[/i].
I had just been introduced to the “liars loan”.
When you look across a whole country and as massive an industry as building & construction, what outcome would you project if that industry is dependent on “liar’s loans”? The outcome we have, of course!
these people are not fighting foreclosure, rather they are waiting to be evicted. that the banks have not gotten around to it is actually preferable to a bank owned empty home that is not being kept up, at least the HVAC units are running. In places like Florida, if you don’t run the run the AC you get mold and a diminished value of the home.
the banks got themselves so far below water making bad (ie liar and no verification) loans (with an asst. from CRA/Barney Frank etc.) that now they don’t have the infrastructure to keep up with foreclosures and evictions. I don’t see how or why that becomes the borrower’s fault….
I think we have gone astray here. For the folks who have defaulted, whatever the reason, the foreclosure mess is one more hideous punishment they don’t need. Dragging this out is not good for anyone.
But what of the people, like in this story, who have the means to keep up payments but now look at their underwater situation (mortgage greater than current house value) and decide they won’t pay…….they can pay…….they just won’t pay. Whatever their excuse, whatever rationalization they use to absolve themselves of their obligation, what about the moral & ethical choices they are making?
Let me put it into a context that I might have to confront: let’s say I find out a successful and fairly well off parishoner has decided that he/she is making no more mortgage payments although they can do so easily (maybe it comes up in some chit chat during a fellowship hour). Let’s say further that this person is one of our best youth group volunteers, going the extra mile to give attention and adult leadership to our youth.
I will have to confront this parishoner and ask them about the situation. If they confirm this is true, then we have to have a discussion about morals & ethics. Let’s assume the discussion does not go well, repentance is not on the table. At this point, I am going to have to tell this person that he/she can unfortunately no longer function in the youth group volunteer position. What I am going to pray for is that this person will come to realize what they are doing, will agree to a new direction in their ways and seek the redemption that the church can offer.
Among many of the other things which have happened in the church over the last 30 years or so, is the unwillingness to talk to parishoners in frank terms about the choices they may be making and the consequences of those choices. Both in this world and the next.
To No 1 and Deacon W: — and so would you not accept their tithe and ask them to leave the church — or do you continue to dine with the tax collectors and investment bankers, should that be the individual’s calling—and set a living example for them in addition to prayer ? Or do we default to Calvin’s take, a sound doctrine to, and for, many, for centuries, on interest/business/investments and all that Calvin implies?–and the Crusades? — which is to say that the elect and concommitant short term profits are exempt from ethics in real time — especially if your business is to colonize/or exploit nations, neighborhoods, and/or individuals with a business plan that was endorsed by the Chamber of Commerce and Prayer Breakfast Committee? If you know the game is rigged you play it straight? The good Baptist John Rockefeller comes to mind, and every day on wall street platoons of Harry Limes (see The Third Man) set the stage —ethics is a top down game, as Ghandi, Christ and others have illustrated —The Christian Church proper itself does not exactly offer, especially within the last thirty years, a stellar historical example in the department of ethics (nor compassion) — after all, slavery was supported by Church High and Low throughout the southern United States —and continues, sadly, to aid and abet in insuring what is quickly approaching what might best be described as a “kinder, gentler” barbarity with regard to standards of living, health and welfare, income and education. Wise as a serpent? Hmmmm:
“The demand curves of the economy [and perhaps inherent ethics?] reflect consumer preferences –once income distribution is taken for granted and allowance is made for the cultural determination of preference systems. Coherence [and again, perhaps ethics] will be sustained even as excise taxes and subsidies [to and from Caesar–and those who make Caesar possible] are used to both constrain and expand various outputs. Laissez – faire is not resurrected, however, by the realization that coherence can rule; what is valid is that intervention into the details of the game might be unnecessary once the aggregate outcome of the game is rigged” Hyman P. Minsky, Stabilizing an Unstable Economy, 1986.
What “The Church” has done or is doing is not my issue here. What “Wall Street” has done or is doing is not my issue here.
Institutions do not have morals & ethics, people do. Pursuant to this story, the choices that many people are apparantly making are the wrong choices. All the rationalization in the world does not change that. As a society, if we do not stand up one by one and start to point this out and demand better of ourselves, then the very fabric of our social contract with each other may be torn to shreds.
“The Church” receives her authority from Holy Scripture. For those who follow Jesus Christ, the path forward on this is clear.
We have been attempting to have our mortgage modified since Feb 2010. We started the process knowing my husband’s UE was not meant to last forever. We started when we were still hopeful he would find work. During that time I always budgeted for the mortgage (actually that should be mortgages, we have 2nd.) to come first.
Well no more. I wish I could but I have to pay for some major home repairs. I have to set aside some cash in case the modification is rejected. I have to meet some other obligations I have been shunting aside to meet the mortgage. This decision was not done flippantly or with the idea the bank “deserved it.” It was done to make the best out of a very, very hard situation.
If the house had retained its value and we were in this situation I would sell the house, pay off the mortgages and move on. That would be the right thing. But we are not able to do the “right” thing. So we have to do the prudent thing. I hope to be able to get back to paying the mortgage on time and in full. But till then we are putting ourselves first.
Paula — for the record your situation — which sounds dire — is a very different thing from a person sitting in a good job with money and refusing to pay his mortgate because he happened to make a bad “investment” and buy a home that did not keep its value [which would be frankly almost all of us].
Dave Ramsey recommends doing exactly what you are doing in your situation [at least in the broad brushstrokes] . . . paying your bills until you can’t pay your bills anymore, and then having to do some prioritizing. They are tough choices.
I hope your husband finds a job someday. If you’re willing to share, I’d be interested in discovering what he is looking for.
Sarah,
Thank you. My husband is a simple guy with a simple work ethic. He works they pay him. He is pretty much open to any job prospect that lets us stay here. A job that lets him keep Saturday mornings free would be preferred but not absolute since he helps me set up for my market sales.
He is a glazier but is not holding out for job in his field. Even part time work would help keep us out of the danger zone. But I gotta warn you. Pole dancing is out. The man just can not manage stillettos.
I am aware that in many ways we are blessed. That God’s providence will never leave us without hope. I realize that even facing such hard times our circumstances still leave us better off than a great deal of the world. But most of all I know God is good all of the time.
Do you feel comfortable stating what State you are in?
Maybe there will be a network we can tap into in that state . . .
Paula, for what it may be worth, I was not speaking to your situation in my posts. Sarah is correct about Dave Ramsey. If you have not signed on to Dave (and it sounds like maybe you have), I would urge you to check out his website. Best wishes to you, I have a son with a family in a situation very similar to yours, and I pray that God will bless your good sense and intentions. One of the blessings He has given you is your husband and your husband is blessed with you!
Thanks Sarah and Captain. I am in Florida. So as you well know we are not alone. Many of us have become unwilling victims of the housing crisis fall out. I can not imagine just deciding not to pay an obligation when that obligation can be met without creating undue hardship. That to me is not right. And if somebody does do so they ought not be surprised at the Bank foreclosing. Cause at that point foreclosure is simply affirming that the bank agrees with their decision.
P.S. Boy are we in Florida. My grandson the other day asked “What’s a hill?”
#13/16 God bless you Paula and I will pray that you and your family are looked after at this time. Psalm 91:14-15.
I notice that everyone seems to be assuming that the media article has given an accurate spin to this situation. I am touched by your trust…