Activists bare teeth over foreclosures

[intheflow]

Source: AP/Yahoo

By ADAM GELLER, AP National Writer
Sat Mar 1, 12:42 PM ET

CLEVELAND - Folks on Humphrey Hill Drive were still waking up on the icy Saturday morning the shark hunters came to town. They rounded the suburban traffic circle in a pair of rented school buses after a half-hour ride from far more modest neighborhoods, rumbling to a stop at the Garmone family's driveway. Forty-two caffeinated Clevelanders piled out, their leaders carrying bullhorns.

Their quarry, Mike Garmone — a regional vice president at Countrywide Financial Corp., the nation's largest mortgage lender — didn't answer his door. So they deployed, ringing bells at the big homes with three-car garages, handing out accusatory fliers and lambasting Garmone and his company's loans. Before departing, they left their calling card — thousands of 2 1/2-inch plastic sharks — flung across Garmone's frozen flower beds, up into the gutters, littering the doorstep.

The commotion was the work of an in-your-face activist group called the East Side Organizing Project, with a paid staff then of just two, mobilized to battle Cleveland's mortgage "loan sharks." Years before the rest of the country was rocked by the fallout from aggressive lending, their neighborhoods were already home to the nation's highest concentration of foreclosures — and they were fed up.

(snip)

When the tour ended and lunch was served, ESOP President Inez Killingsworth turned to Countrywide's Samuels. Would he sign a promise to negotiate? It was the same memorandum the lender had rejected for nearly two years.

Samuels paused. Then he reached for a pen.

Rising from their seats, ESOP's army cheered.

(snip)

Read more: http://news.yahoo.com/s/ap/20080301/ap_on_bi_ge/the_shark_hunters;_ylt=AjJ1UJSpMNuD33B7XmcTBsUDW7oF

---

There are too few stories of successful activism being reported, and certainly too few being reported nationally. As I post this, it's Yahoo's most emailed news story. That really gives me hope that more and more people are waking up to the corporate bullshit that's been plaguing this country since deregulation started running rampant in the '70's.

This article has a lot more details of the campaign. While they wouldn't have been the tactics I would have chosen to use, they were non-violent and effective, so who am I to quibble about their methodology? And maybe this success can be repeated in other high fore-closure areas.

[DS1]

1. Here's a hint

Don't buy shit you can't afford.

[eridani]

4. What if you could afford it before job loss or sickness?

What happens to "growth" and the economy when people stop buying what they can't afford? We need a new paradigm here.

[DS1]

5. I get that

and I get that some of fault lays in the lap of the lenders. However, when the foreclosure rate is this high, many of the people simply had no business buying these houses.

[sepulveda]

6. paycheck to paycheck

imo, you should not buy a house unless you have (at least) 6 months mortgage payment and general expenses (utilities, food, etc.) in reserve.

i readily agree that aggressive lenders exarcerbated the problem , but the primary issue is homeowners who were financially irresponsible, overleveraged, bought way too much house relative to their income, and used ARMS and other silly structures for their debt

iow, you are not OWED a house. until you have sufficient cash reserves, it's risky to buy one. cause the bank owns it until its paid off. not you

[eridani]

13. I say punish the charlatans, not their marks n/t

[sepulveda]

15. i say caveat friggin emptor

again, it was not the charlatans who CAUSED the problem. they were as much a side effect OF the bubble, as a cause of it

bubbles happen in all financial markets - gold, silver, oil, stocks, tulips, orange juice, coffee, etc.

always has been that way, always will be

i am sorry but i have seen way way way way too many examples of people acting irresponsibly and causing their own dismay in financial markets.

overleveraging is the #1 cause of failure for futures traders, and it's a big problem in housing as well

if you got a mortgage for more than 5 times your yearly income you are already in trouble imo and way way way too many people did that.

[timtom]

22. Let's factor in aggressive and not-so-forthright marketing of mortgages

over the past few years.

[YvonneCa]

24. And let's factor in...

...the cheerleading of our president about more people owning homes under his administration than ever (while they looked the other way and failed to enforce rules that regulate the financial business). Let corporations make money...that's his policy. This is the same pattern of all the other Bush failures...set a bad precedent at the top and let the chips fall where they may. It was totally irresponsible.

[sergeiAK]

49. I may not read the same news as you

But I don't see the banks making money on this right now. I see Citigroup taking $10B losses, Countrywide possibly going bankrupt, E-Trade Bank stock losing 80% of its value, and generally, the financial sector is anything but a picture of health right now.

What I do see, is people from both parties clamoring for a bailout. The Republicans want to bail out the banks (and in the process, some of the borrowers), and some Democrats want to bail out the borrowers (and in the process, the banks as well). If we do either of these, we are rewarding irresponsibility on both parts, and harming the nature of the free market system by saying to the banks "we won't let you fail, no matter how dumb/criminal you are". This encourages such practices, as we prevent the banks from seeing the true consequences of the dumb decisions they made. They made their bed, they can lie in it.

This entire "crisis" is made of irresponsibility. The government, for not enforcing the regulations and keeping them up to date, the lenders for making loans they knew wouldn't be paid off, and the borrowers for taking loans they knew they couldn't pay off. We should punish the first by voting them out of office, and the latter two by allowing the full consequences of their actions to hit them. If a bank made too many bad loans and can't collect, then bankruptcy it is. If someone borrowed too much on a "stated income" loan, then foreclosure it is. This is how the system is supposed to work.

[sepulveda]

32. i am

i am saying it is not the sole factor, and is much an EFFECT of bubble psychology, as it is a cause of it

and we see similar euphoric loosening IN ALL markets that experience bubbles.

this is nothing new for anybody who studies markets. they are the same. i don't care if it's soy, coffee, gold, real estate, or whatnot

people will always look for scapegoats. many here always look automatically from the top down - the big corporations, etc.

the reality is that they played a part, but the primary driver, and the people to whom the ultimate burden lies with, are those who CHOSE to overleverage, CHOSE to buy more mortgage than they could afford, and CHOSE ARM's, negative amortization loans, and other such rubbish

[barb162]

44. That's very sensible and of course the way it worked for decades.

We need to go back to that for the simple reason it worked. Too many people were buying houses they never could afford, living on the edge with no reserve. I'm surprised it lasted as long as it did.

[bulloney]

8. DS1 is right on a lot of people.

I know what I can afford and I live within my means. I withstood a recent job loss and was able to maintain my mortgage payments and other mandatory expenses because my family was able to cut what's not needed during that time, and we had a cushion to fall back on if needed.

I see many people making as much or less than my family and living like royalty. Building homes that are at least double what they can really afford. Buying new SUVs and big cars every couple or three years. Taking lavish vacations that cost several thousand dollars. Then, a calamity occurs such as illness, loss of job or the state of the economy and they're crying about losing everything.

[annabanana]

12. Perhaps. . But not MOST. I object to him jumping on that smaller

percentage without apparent consideration for the majority. bad form

[sepulveda]

16. i bought

my first house with the total cost of the house at less than 3 times my yearly income AND i put about 25 % down or so, so it was even less.

my realtor told me i could afford a much bigger house.

but i chose to be responsible

i know many people with similar incomes to myself (at that time - my income) who bought MUCH larger houses, with little or no money down. many even got friggin' ARMS for pete's sake. i got a 15 yr fixed.

i'm just saying that a home is the single biggest investment most people will ever make. to jump in and overleverage is irresponsible.

prior to the stock market crash of 1929 many people were using up to 10:1 leverage to purchase stocks via bucket shops. that is ABSURD.

similar absurdities abounded in the real estate market

in the long run, we will see a nice healthy pullback - a great buying opp for those who are patient, responsible, and follow the adage to buy panic and sell euphoria.

[knitter4democracy]

23. I live in Michigan. I don't see many of those people.

Not many fancy cars in Battle Creek. Not many super-expensive vacations. There are rumors of the Macy's in town (that's having constant sales) is going to close down, though the Steve and Barry's did well at Christmas, especially with their "everything for eight bucks" sale.

Housing prices here are fairly low, and they're going lower. People are moving out, hoping to find a job somewhere, anywhere. My daughter's losing two of her best friends this year, and so is my son--poor families just can't survive here anymore.

There are three empty houses on my street. Middle-class, cheaper homes selling for less than $150K. Families had to leave to find jobs, houses didn't sell, so they're trying, yet again, to sell them, though the bank's foreclosed on one of them and selling it now.

Honestly, when I hear about house-flipping and fancy living, I have no idea where that is. Michigan's the highest in foreclosures, and the vast majority are in poor areas and middle class areas here. I don't see people who've been living high on the hog losing their homes--instead, I see people barely making it losing their homes when they just can't do it anymore. Considering, for these people, that their house payments were lower than the going rental prices here, they're screwed and moving away.

So, please don't tell us in Michigan about how it's really all our fault for living extravagant lives and losing our homes because of stupidity or bad budgeting. Thanks.

[PassingFair]

26. I'm hearing you, Knitter. I'm just outside of Detroit. Same situation.

And you can BET that Cleveland is suffering along with us.

I don't care if you have a 6 month "cushion", your ass is
still going to be ground down if ENTIRE INDUSTRIES dry up
and leave your area.

My husband hasn't worked more than 2 months in a row for
FIVE YEARS. He free-lances, and thank goodness I landed
in a situation that pays for health care and covers the
bills.

We are in a small ranch, never "bought-up", never "cashed-out"
on a HELOC, BUT we are in the SAME BOAT AS EVERYONE ELSE
here in Michigan. If the economy does not pick-up, how long
will I have MY job?

When the Tsunami hits YOUR shore, I don't care HOW tall the
stilts that hold your hut up are, EVERYTHING will be swept
to sea.

[knitter4democracy]

28. Six months' savings does nothing if you're out of work for longer.

Food prices, gas, heat, electricity--all going up. Jobs are leaving the state, and those that stay aren't giving out raises. We're really hurting here, and I'm sick and tired of people posting here about all the people losing their homes because of bad budgeting. I don't care how great you budget: when no money's coming in and outlays are going up, something's gotta give.

[barb162]

45. I don't think posters here are talking about Ohio and Michigan

and the kind of horrible problems you're having with whole industries leaving forever. I know when I post about forecloures, I am typically talking about people who do ARMS and buy houses many times their incomes and they never could have bought those houses on a fixed rate with money down. What is happening in your state the last few years is going to be happening elsewhere in the country. Doesn't make any difference if you're the best budgeter in the universe and have five year's salary in reserve when all the jobs leave the state.

[knitter4democracy]

51. What a great way to lead the nation, huh.

Whoo, we're leading the recession! Yay! *sigh*

It's just so hard to see posts like that with people seeming so smug about how great they're doing and how wonderful their budget is when people who did have decent budgets and worked hard are losing their homes and everything. That sense that it won't happen to them is a bit galling when so many are suffering so badly and the odds are that we all will feel this recession, many a lot more than they'd prepared for.

[barb162]

53. It's just that the offshoring / free trade bastards hit manaufacturing states first

and that's the Midwest. But they've been hitting it all over the country the last several years too and a lot of people just can't find jobs because there are none to find. WHy a lot of the voters aren't getting this I don't know. They're hitting high tech the last few years and when science and all that is gone, what's left. Nothing. What's funny is people are looking for jobs like teachers, nurses, police, etc and when the people can't pay their bills, their taxes, who will be paying those professions?

Don't be upset about these other posts because noone is talking about you and your situation in Michigan and Ohio. We, and I think I can perhaps talk for the others (maybe not), are talking about the people who can't seem to stop going to Starbucks, can't stop weekly clothes buying sprees, have the latest SUVs and the biggest houses and have many maxed out credit cards and still have good jobs. But they did ARMS and seem to be losing their mcmansions now because they can't afford the readjusted rates they knew would be coming.

I have to tell you there was an Oprah show a few months ago on a woman whose large house was being readjusted and she was still doing birthday parties for her kids that cost thousands of dollars, bringing ponies and clowns in, and she'd start every day of shopping with the kids at Starbucks for 30-40 bucks. It was like watching a self-inflicted trainwreck because her husband made really good money but he could't keep up with her wild spending.

The presidential candidates are not really dealing with what's happening; they're talking around it with fixes that won't really fix the problems. Tinkering with NAFTA won't work. We have to start getting really serious about these damned free trade deals that are fucking and impoverishing millions in this country. And when you have candidates who are bought and owned by the coprorations and lobbyists, the voters have to be very, very careful. Saying retraining is the answer is basically bullshit because that retrained job will ge to Asia soon too unless this government wants to start getting TOUGH on free trade because it's killing this country.

Peace.

[knitter4democracy]

56. Thousands on a kid's birthday party?!

For real?! That's insane! I feel guilty if I spent a hundred on the party, and that's with five kids and all their families over and includes the birthday presents. Wow. That woman needs to get smacked with a clue-by-four.

[barb162]

65. Yeah, she was hiring

people with ponies, professional clowns, the parties were elaborate as all get-out. Then there were huge expensive gifts for each kid. Meanwhile she was maxed out on her credit cards and her solution was to get more cards. Her husband made a lot but there was no way he could keep up with her spending. Plus she had to have lots of massages and manicures. Oh and each year she threw out all the clothes, even if they were in great shape, and bought new clothes for everyone in the family. Now this was with her knowing the mortgage was readjusting and they couldn't afford it when it readjusted combined with the huge credit card bills. The show even talked to her neighbors... as a matter of fact, a neighbor wrote to Oprah about this woman's crazy spending and that's how Oprah did this show. So Oprah had a psychologist and a financial adviser on and they talked some sense into her and the husband. The first thing they told her was to sell the house, move into a small apt. and start paying down the credit card bills, then re-establish credit and start saving for a small house again. Oh and they had no medical insurance, which they could have afforded, except the shopping at Macy's took precedence over medical insurance. That was actually the first thing they were supposed to do, medical insurance. The husband spent no money but he was nuts because he kept letting the wife go on spending sprees and destroy their finances.

So these are the kinds of people I have a problem with.

[knitter4democracy]

67. That almost sounds like a form of illness.

To be so messed up on priorities and to keep shopping in the face of an unhappy hubby and big debt and losing the house? That's not rational or healthy. Man. That's seriously messed up thinking.

Threw out all her clothes? Heck, I have ones from a size or two ago on shelves, since I felt like I couldn't throw out perfectly good clothes for when we finally figure out what's going on with my health and I get my weight down. I'm all for donating clothes that don't fit anymore or you never wear, but that doesn't mean you go out and buy all new for everyone every year. That's crazy.

Wow. I can honestly say I don't know anyone like that.

[verdalaven]

27. Hello there from the Thumb!

Only a fellow Michigander would get that one. :)

I totally agree with your post. We have the same problem here with foreclosures in our part of Michigan, and very few are due to the unfortunate homeowner living like royalty. They are hardworking people with families who met with misfortune. Our neighbors lost their (extremely modest) home this past January because they had unexpected medical emergencies last year and even with insurance they could not recover once the medical bills started rolling in. It was the scariest thing I had ever seen happen to anyone.

My daughter also lost her best friend because her family moved to VA. It was heartbreaking, but their Mom was going into a job that supported the family. Survival is survival.

I have to add (referencing Supulveda's post)that if we had waited until we'd saved six months of reserve income to buy a house, we'd still be renting. We've been homeowners for over twenty years. Very responsible homeowners, albeit living month to month, like everyone else we know. The economy sucks and that sure isn't the fault of those of us on the bottom of this equation.

[knitter4democracy]

29. Hey, there from Battle Creek!

Life's getting harder here, that's for sure. I talked Hubby into moving here after med school, and even he says Michigan's the best place to be. We love it here, but it's so hard to see so many hurting and to have things so tight for us, too. Sure, he makes more, but those dang med school loans, gas prices for all of his commuting between two offices and two hospitals, and debt from residency are making things really tight.

Good thing we have a deep freezer and a crockpot. I'm putting in a much bigger garden this summer, and I'm going to can more, too. I've asked for a pressure canner for my birthday and hope to get one. That'll help.

[liberalhistorian]

34. And I'm a paralegal who spent over three years

working for a real estate attorney in the Cleveland area, and I can tell you unequivocally that ninety percent of this is the LENDER'S fault and I've seen firsthand the shit they pull, what they do, and the damage those fuckers gleefully do to even hard-working, responsible people. The predatory practices, the outright lies and misrepresentations artfully done against even very smart people, etc., etc. Fuck these fuckers and the horses they rode in on, they can all go straight to hell.

[barb162]

46. May I ask the most common thing the lenders were doing

that you are talking about. The most common lie. And may I also ask if it is common in your area to have attorneys review the loan documents also during or before a closing. I am just not understanding how buyers were signing these documents.

[barb162]

43. Back in the days before ARMS, which wasn't all that long ago,

the economy was okayish, growing, etc. Going back to the old paradigm is just fine with me. Buyers getting underwritten for loans they could afford and then buying property they could afford was sensible.

[snooper2]

60. That's what mortgage protection insurance is for...

You don't buy a $200,000 home for $500 a month...

Unless you are in to Huckabee math...

[DBoon]

18. That's un-American!

Taking big risks in the hope of becoming wealthy is what drives the American ideology of individualism and ambition.

If people renounced that ideology, they would have to accept that class divisions are real, and that people don't raise themselves up by their bootstraps.

You could no longer worship the wealthy for their intelligence and energy, nor could you despise the poor for being lazy and stupid.

In America we have people "visualizing" their success:

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x2947186

Blaming these people for believing (against all odds) that they would make a mint in real estate is like blaming a medieval peasant for believing that the feudal aristocracy rules in the name of the Christian God.

It would destroy the whole basis of the society that oppresses them. The stars would fall from the sky.

[DBoon]

20. Here's anothe hint

If you are a financial institution, don't make loans to people who are likely to default.

Properly regulated mortage financiers would never make these loans to begin with.

When looking for blame, find the party with the most power, money and understanding of the situation first. Those are are best able to take responsibility should be held accountable.

We jail the criminal, not the victim.

[shrike]

31. If "my victim was stupid" were a valid defense in court, the dockets would be empty

I've been told, and have read, that there are ongoing FBI investigations involving around 29 (?) lenders. How does that curse go: may you live in interesting times . . .

[DBoon]

33. same goes for "my victim was greedy"

nt

[sergeiAK]

39. What if both parties were stupid and greedy? -nt

[DBoon]

41. Whichever one committed the crime goes to jail

is it that hard to understand?

Are criminals not prosecuted if their victims are not intelligent and frugal?

[sergeiAK]

42. Again, what if both parties committed crimes?

As is the case here. Many borrowers lied on their loan applications (fraud), and many lenders ignored the (small amount) of regulation that does exist. Both groups should be prosecuted for their crimes, and as for the financial consequences of the deal, why should we bail out stupid criminals, on either side?

[shrike]

59. Probably the bigger fish

I may be wrong, but the prosecutor will likely be more interested in the loan company that defrauded hundreds of people than a few schmoes here and there who lied on their mortgage application.

[The Stranger]

36. Here's a hint.

Solidarity. There is a post right now in GD calling your name.

[Xithras]

55. Some people, many people, have little choice.

When you live in areas with astronomical real estate costs, your choices are either to move elsewhere or buy more than you can afford. It's easy to say "Just Move", but now you're talking about giving up your job, your health coverage (if the job is halfway decent), moving your kids away from neighborhoods and friends they've known all their lives, and probably moving to a region with lower overall wages, which simply means that instead of working your butt off to pay for an overpriced house, you're now working your butt off to pay for other accrued debt (college loans, financed cars) for a lower salary...debt you could afford when you lived in a more expensive area and were paid more money every month.

My sister bought because the rent on her modest 3 bedroom home went from $750 a month to $1400 a month in three years. In that same period, the average home sales price in that area went from $90,000 to over $350,000. She was a stay at home mom, and her husbands only job skill was making cabinets for his dads company. Moving wasn't an option, and renting was insanely expensive...especially when lenders were promising to move them into homes they would OWN for as little as $1200 a month.

Their bank started the foreclosure process last month. Their ARM adjusted and pushed their mortgage to nearly $2200 a month, and the house they paid $390,000 for is worth about $250000 today, so refinancing isn't an option. They're SOL.

The good news is that rents have dropped around here again. They can now get into a modest 3 bedroom for about $1100 a month...assuming they can find a landlord who isn't already on the verge of losing his property.

[Trajan]

66. Sometimes, it is just too easy to blame the party in power or their acolytes ...

Yeah .... your right : Toss those loser assholes out on the ears ... They should have known better ....

:sarcasm:

[pleah]

2. It's sharks all over the lawn!

When I read this, I immediately thought of Fire Sign Theater. "and it's hamburger all over the highway".
LOL

[annabanana]

3. Good for them! If the government won't crack down on predatory lenders

then public shaming is a useful tool.

[CountAllVotes]

7. you are so right

never underestimate the American people (and I mean NEVER)!!

:dem: :kick:

[trthnd4jstc]

9. Many People have a simple idea of what other peoples lives are like.

I have had some of the same people who flippantly, and oversimplistically state that these people should not have bought these homes. I have been flamed by some of these same people. I do not believe in their Hateful tactics. I will provide some other considerations to their prejudices:
1. Some of these people were in a better financial situation, and might have been late once, and the freaking interest rate jumped so high.
2. Some of these people suffering under the Mortgage loan crisis were making more money, and lost their middle class jobs due to out-sourcing, or
downsizing.
3. Finally, some of these people have had a Medical emergency that has taken out their savings.

Yes, myself, with my business loan, and others, with their mortgages should not have taken these loans out. I am not crying about my situation being someone elses fault. The slow down in the economy is effecting my income, and if the economy had not slowed down, I think I might have been able to keep up with my loan payments being made on time. But, after being late 1 day my Loan of 8 1/2% plus prime rate, at one time 12 to 14%, went up to 28%. As smug as you Haters are, can you truly say that this is fair? I wish being a Democrat meant that we cared and supported each other.

[Celebration]

10. So sorry

The loan sharks should be regulated, and they haven't been, at all. It is just ridiculous the crap that people like you have to put up with. There are a whole lot of people with good incomes from the boom in housing (cabinet makers, etc.) who took out loans to grow their businesses, without knowledge of the bubble. Now their incomes have taken a dive, and they can't meet their loan payments.

The Republicans should pay for this! The whole country is now in a precarious financial situation due to their ineptitude.

[trthnd4jstc]

11. I am finding a silver lining to all of this.

First off, after I finish paying off this loan, I will never take out a loan more than my cash on hand. Second, I do not go out to eat as regularly as I had been, this means approximately $1800.00 per year in my pocket. Finally, it has made me more humble and compassionate to the poor, being that I have become poor myself. Anyway, God bless. I am going to keep fighting, and keep working, and so are the other app. 150 Million Americans out there working. We will get through this.

[InkAddict]

14. It wasn't ineptitude...

IMO, it was very purposeful and practiced.

[barb162]

47. No it clearly is not fair

28% is totally outrageous.

I will ask you to understand that it isn't haters, it's people who don't understand. I am one who doesn't understand all the ARMS out there, when fixed rates were available.

[taught_me_patience]

50. This was probably all spelled out in the contract

that you signed and agreed to. Home loans are often 30 years, which is a lot of time for things to go wrong. But you know what you are signing into when you obtain a mortgage. My fiance and I make over 200k/yr but still rent. Why? Because we don't want to make a 30 yr commitment. I have zero sympanthy for anybody (except in the case of death) who loses their home to foreclosure.

[conflictgirl]

58. I'm sure a lot of that has to do with your income

When was the last time you supported a family on 50K a year and then your income got cut in half? So how is that person who bought a reasonably-priced house supposed to keep their house out of foreclosure when their income gets cut in half and never returns to its previous level?

If someone makes over 200K a year then yeah, they have the means to save money and live at a lower standard and keep themselves out of foreclosure. Those of us supporting entire families on 25% of your income or less don't have the same resources to work with.

[taught_me_patience]

62. It actually has to do with being humble

and the williness to rent even though we can afford to buy. You don't know how many times people have told me how stupid I am for not buying (over the last 4 years) or how I'll never be able to afford a house if I don't buy now. I understand that:

I might be laid off at any time
Work might force me to move
I might be forced to take a pay cut
I might want to move
Housing goes up and down
Thirty years is a long time to live in one house
I might want to have a family soon (therefore I didn't buy a condo)

any number of things can happen in 30 years!

[annm4peace]

17. I work in Mortgages, and a lot of crooked stuff going on !!!!!!

I had no idea all the horrible things. My dept did simple loans, conventional. If someone wanted a 5yr arm or 3 yr arm, we had to council why (were they going to move).

When some customers sent a good faith from another lender 1/2 the time "I" couldn't even understand it. loans with 1 yr ARMS, loans with paying interest only, and if you couldn't pay that month it could be tacked on. It was crazy.. how could that happen ?
I then found out that only mortgage companies that were also part of a bank, fell under the "bank" regulations.. Like Wells Fargo or Bank of America. They had more restrictions and more to risk if they had subprime or default loans.

But mortage lenders and brokers had no restrictions/no "real" licensing. They had kinds of crazy things happening. They could do things like pull someone's credit 5 or 6 times just so the person's credit score would go down and tney would pay a much higher rate.

A couple that rented next to us lost their home by straight out Fraud. The broker changed their application and said she made 50,000 when she only made 25,000.. it was a cash out refi, and they were using th emoney to help their daughter in college. The broker then had a friend who was an appraiser that said the house was worth more than what it was,, and 3rd,, he had anotehr guy workng at a title company who signed off on these lies. This couple was in their early 60's.. simple, the husband worked in manufacutind and she was a nurses aid. The crooked broker and his friend did this to many people before he was caught.. He and the others are in jail.. but that doesn't get the couple their money or house back.

Groups like "Acorn" and many elected officials where calling for an investigation into this 2-3 years ago.. yet the Repub.Congress in charge wouldnt' do anything about it.

[DBoon]

19. A small number of people being foreclosed is their own problem

A large number that threatens to bring down financial institutions isn't a problem with individuals taking on more than prudent - it is a failure of the banking system, including government regulations.

Government regulation in capitalist economies exists to prevent individual greed from bringing down the entire system

This is something that the republicans never understood.

[barb162]

48. They understand is the problem. The game is to get their money out

before the system collapses. It's very much like the S&L scandals under Reagan. As a matter of fact this economy is very much like under Reagan, lots of deregulation and no enforcement of regs that are there.

[YellowRubberDuckie]

25. I'm at the back end of the mortgage debacle.

I get to see what happens after the house goes to foreclosure, but I've worked in Loss Mitigation, Foreclosure, and Insurance for the mortgage company. I have a good idea of the default side of the mortgage business. There were several people who were just dumb as hell and should have known better. You can't make 12 bucks per hour and buy a 500,000 dollar house. They know this. And it's their own fault for falling for the predatory lenders. AND people don't read their mortgages.
Yes, there is some shady shit going down, and there are good people getting screwed, and my heart goes out to them, but this kind of shit like what happened in the OP is not going to get anything changed. And ACORN is shady themselves, only in a different way.
Duckie

[salin]

35. How could that happen?

where is the due diligence - to allow folks earning $12 an hour to get a loan for a $500,000 house (your example)? Sounds like a two-street problem for the example you give. After I bought my home (no mortgage - got a great deal on a forclosure in an urban area, and had been saving for years - instead of a big percentage downpayment- I was able to buy outright) - I started getting "refi" offers for more than double what I paid for theh house - and the adverstisements stressed how my income and my credit history didn't matter as I was "preapproved". Yes, it would be foolish to respond to such an ad - but after I got past laughing (as in - I own outright, so that I wouldn't have debt, why the h*ll would I take on debt) - I was disturbed at the orgs sending these (near monthly) solitications. Why the hell would you make such loans - knowing they would go down hill? Even if it is going after "foolish" people, it is still predatory - and down right fraudelent to the investors in the exotic funds sold on the market bundling these mortgages. IMO, this is the acid reflux response to two-decades of a mantra that ALL regulations are bad/evil/communistic, etc. Regulation was needed, and our economy will pay for it for years.

That said - in the story/article - I have been reading about the predatory lending problems in low-income urban areas for years - long before the exotic lending vehicles (ARMS and the rest) became vogue. Under Bushco, efforts by states to put in place regulations, or at least stiff penalties for fraudelent and/or predatory practices for lenders to home owners (not folks trying to buy McMansions -but folks dealing with financial hardships (loss of job, medical, etc.) in low-income areas was prevented. The guise was that there needed to be federal standards, and if those were more lax than states wanted... well, too bad.

[YellowRubberDuckie]

37. Stated income loans.

They did a credit check but they didn't have to confirm their income.
Duckie

[salin]

40. frankly - that is a lender problem

seriously - to not confirm income when giving a loan? In eras past, this would never have happened - as lenders would not want to take on such risk - and to not check at all - clealry indicates no fear of risk. I do not mean to free from fault those who knowingly took on debts that they could not pay, and in many circumstances only but for fanciful thinking could some folks take out the mortgages taken out, but I have even more scorn for the lenders than for the borrowers. The borrowers include both those scammed (some serious problems in low income areas esp those that predate the ARMS era), and the foolish/wishful thinkers (that they could really make payments far beyond their means, despite the sugar plum dreams sold to them by sales folks just really wanting the fees regardless of the ability to secure the payments on the loan), imo have less culpability (some have great culpability, others who were scammed, less so) - but the real financial responsibility are those in the lending industry following practices that in previous eras would have been actionable (firing for example) - no check of ability to pay - seriously?

Sorry for the rant, its been a building one.

[YellowRubberDuckie]

57. But you can't completely hold the lendee non culpable either, though.

To do so would make it seem like a gun was held to their head for taking on such a loan. And it wasn't.
Duckie

[salin]

63. Which I did not do in my post...

except for those who were victims of outright fraud - those folks are non culpable - but for the others, definitely culpable. Just placing a slightly greater blame on those in an industry who dropped former sound practices and set up this disaster (in the sheer volume of these loans going bad that was predictable.) The foolish lendees - were more often than not participating in single transactions where the mortgage folks were participating in many, many transactions.

[YellowRubberDuckie]

64. Point taken.

[shrike]

30. A state official in the Midwest told me basically the same thing

The mortgage industry has been like the "wild, wild west," with virtually no regulation.

I mentioned, jokingly, that a mortgage broker in Detroit turned out to be a former drug dealer. He didn't laugh. Some states have been working on making some mortgage practices Class D felonies and raising the licensing requirements. Willie Sutton robbed banks because "that's where the money is." I guess the modern-day crook is no different.

He also said that about two dozen companies are under investigation for fraud by the FBI. Didn't mention any names.

[knitter4democracy]

21. I posted this in the Poverty forum and GD. It's a great story.

It also shows that activism can really work. I'm going to see if our local group can start doing stuff like this to help Michigan. We're really hurting up here.

[The Stranger]

38. I can't wait for some DUer to complain that they abhor this as "violence."

:rofl:

[LeftyMom]

52. Somebody could step on one of those plastic sharks and hurt their foot. Terrorist toy flingers.

:grr:

[lonestarnot]

54. damn it! Too late to recommend!

[goforit]

61. Now if they would only do the same with the CEO of Monsanto.