The latest little wrinkle in the Greed Is Good Sweepstakes: remember all those banks who refused to allow homeowners in default to restructure their mortgages, mortgages often made fraudulent by greedy lenders? Like, um, banks? Remember how they wailed and whined and gnashed their teeth about how the debtors might get away with not having to pay, oh, say, as much as 5 or 6% of the full value of the (usurious) interest payments? And maybe even (dawg forbid!) 10% of the bloated price? Remember how they pounded the table and demanded every last penny they were owed had to be paid in order to protect the (cue the choir) sanctity of contracts?
Here's what's actually happening: they're walking away from the foreclosed properties because they're worth less than the value of the mortgage they foreclosed, and they're telling the previous owners they screwed over that they're responsible for them again.
SOUTH BEND, Ind. — Mercy James thought she had lost her rental property here to foreclosure. A date for a sheriff’s sale had been set, and notices about the foreclosure process were piling up in her mailbox.
Ms. James had the tenants move out, and soon her white house at the corner of Thomas and Maple Streets fell into the hands of looters and vandals, and then, into disrepair. Dejected and broke, Ms. James said she salvaged but a lesson from her loss.
So imagine her surprise when the City of South Bend contacted her recently, demanding that she resume maintenance on the property. The sheriff’s sale had been canceled at the last minute, leaving the property title — and a world of trouble — in her name.
“I thought, ‘What kind of game is this?’ ” Ms. James, 41, said while picking at trash at the house, now so worthless the city plans to demolish it — another bill for which she will be liable.
City officials and housing advocates here and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.
(emphasis added)
And you wonder why people are screaming about AIG.
The investor class in the US is utterly convinced that it should never NEVER have to pay for its own mistakes. The rest of us should. They are equally convinced that they can just sluff off their losses due to their arrogance, stoopidity, and greed onto whoever happens to be closest, that they're entitled to do so, and that we are, because we're just peons of course, obliged to pick up their garbage for them. That, in fact, they can charge us for the privilege of cleaning up their messes. There's no sense of entitlement in the world as all-encompassing, as pervasive, as demanding as the entitlement sense of the rich who expect everybody to pay for everything while they pay for nothing they use, take, or even exploit.
And they're doing it.
The so-called bank walkaways rarely mean relief for the property owners, caught unaware months after the fact, and often mean additional financial burdens and bureaucratic headaches. Technically, they still owe on the mortgage, but as a practicality, rarely would a mortgage holder receive any more payments on the loan. The way mortgages are bundled and resold, it can be enormously time-consuming just trying to determine what company holds the loan on a property thought to be in foreclosure.
In Ms. James’s case, the company that was most recently servicing her loan is now defunct. Its parent company filed for bankruptcy and dissolved. And the original bank that sold her the loan said it could not find a record of it.
She can't use it and she can't sell it but the banks have arranged things so that she still has to pay no matter what so that they won't have to eat a loss that was a direct result of their idiotically optimistic lending policies and often fraudulent business practices.
Is this a great country or what?
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