You may not like what I have to say, so let me warn you now. I have sat on the sidelines of this economic MESS without saying my piece for long enough. But after watching a piece on NBC last night, I'm irritated....and those of you who know me, know that I can't shut up when I'm irritated.
This particular piece was about a small town bank in NC that was making loans to homeowners at 3.5% so they could buy newly constructed homes from the local builders....AND they are paying the closing costs! That's all fine and well, but in the piece it was stated that local banks aren't suffering in this economy and that most have only had about 1% of their loans go bad. Well let me tell you the reason why:
Those local banks are too small to make loans direct to Fannie Mae, Freddie Mac, VA and FHA....and they are too small to have enough money to make mortgages every day, that's for sure! They use the correspondent wholesale lending divisions of the BIG banks. So, of course they have none of these loans on their books! They made the loans through the big lenders, such as Countrywide, Wells Fargo, National City, etc......and, in most cases, they did the underwriting on those loans themselves! A good portion of the loans that have gone "bad" were made by those small town, local banks and they aren't suffering the consequences. Well, I understand that whole thing and accept that it's just the way it is. But what really gets my goat is the media trying to make them look like "heroes"!!!
I do believe that there needs to be some relief.....but I believe it should be on a case by case basis. If a homeowner has lost their job as a result of this economy....help them out until they can find a new job! But if they can't afford their payment because they were too ignorant to read the documentation that is required when you apply for a loan, and they took a crazy mortgage knowing the rate would go up AND they paid $10,000 MORE for the house than it was worth when they bought AND they told the lender they made $50,000 more than they really do...don't save them with America's hard earned money!!!! Let the homes go into foreclosure and allow new homebuyers the opportunity to buy these homes with good, solid mortgage financing.
I can tell you about some foreclosures that would make the hair stand up on your neck......one such property was foreclosed on in April, 2002 and the borrower wasn't evicted until November, 2008!!! Why??? Because they were smart enough to drag the lender back into court every other month for ridiculous reasons to delay the eviction. And on the day of eviction, they wanted to take the light fixtures, electrical cover plates, ceiling fans, air conditioning systems....etc., etc., etc.. I know....I was there.
Another such poor, pitiful foreclosed homeowner bought the property 2 years ago...then refinanced it into a different relative's name every 6 months, each time for $25,000 than the last time! Great way to get "bogus equity" out of the property! How, you ask????? He was a mortgage broker....and his next door neighbor was the appraiser!!!!!!!!
Which brings to mind the NEXT step our government needs to take..................require that ALL mortgage loan officers be licensed and insured....and if it's found that they committed fraud, don't just smack their hands. We're talking about fraud....and lots of money. And you and I are going to have to repay those monies....along with our children, and their children, and their children! Spend some of that stinulus money to build new jails to house these crooks!
More than 90% of homeowners are paying their mortgage payments. Of the mortgages of distressed homeowners who have "modified" their loans....over 50% of them never made another payment after that.....it was a ploy to stay in the home longer for FREE.
Want more??? OK....I remember when President Clinton pushed Congress to "deregulate" lending so more people could buy homes. I had been in the business already for quite some time, so it was difficult for me to put people into loans I knew they had no business buying. THEN you had Wall Street's magic....they are the ones who valued these crappy loans so high, so of course everyone bought into it! THEN when President Bush tried to pull the reins back on Fannie Mae and Freddie Mac, who was one of those who voted against it????? You guessed it......and if you didn't, do some research and find out. Don't get me wrong, I still think we'd be in this mess....it had already gone on too long! But I don't think the mess would be as bad...and I think that we'd already be on the way to a better economy again.
I feel lucky to be an American, but I'm scared....more scared than I've ever been. Ok...I admit it....I didn't vote for President Obama, but I've never in my life wanted anyone to succeed more than I do him. But there are some pieces to the puzzle that have fallen on the floor......someone needs to get under that table and pick them up!