I do think something needs to be done about the education of the borrower though. For example, in plain black and white, the math that shows them each year what their payment is going to be, clearly stated, with an area for them to sign off on. If there is a policy that comes from a lawsuit that does that, that would be good.
Or how about stated income loans go away? I have a friend in the mortgage biz, and I remember him telling me about the Vons checker and her Trucker husband that finally got a home using a stated income loan (for $500K no less) – how is it that someone gave them that kind of money? That’s just so irresponsible.
I have personally never had a mortgage, but I understand the volume of paperwork that comes with your loan, and the way it’s written, is very difficult to read. It needs to be clearer. The people at the top cannot take advantage of the people at the bottom. Conversely, the people at the bottom cannot lie their way to the top. I guess that’s what really disgusts me: that all this happened in the first place.
I thought we were all more enlightened than this.
Krugman’s on him today:
“There is one big difference this time: the number of victims — misled borrowers, homeowners whose neighborhoods are being destroyed by foreclosures, investors who thought they were buying safe assets — is even larger.”
Since I think my comments above started some of the back and forth here, I thought I’d clarify a few of my thoughts on this.
I think its these “non-profit housing counselors” who are bugging me. If their client truly was misled or defrauded, or the loan servicer is making a mistake, these “experts” should get a lawyer on the phone ASAP to save the person’s house and possibly get them a ton of money back. Don’t just parade them to the press as a “victim” if they really are one- do something about it.
But these “housing counselors” are not doing any favors for their clients if all they do is yell and scream and demand that the mortgage payment be lowered 10% a month. Even if they negotiate this change, they still have a client drowning in debt and unable to save for other needs. Sending the keys to the lender is the best “modification” lots of people can make, and they need to start getting that advice. Too many people are going to be slaves to bad financial decisions they made in 2005-2006.
I just opened an account at Countrywide Bank and deposited less than FDIC limit. Hard to pass up risk free 5.5%. I am going to roll over my cash among highest paying FDIC/NCUA institutions. I like these disasters. If they all develop hunger for funds and give good rates for FDIC/NCUA insured deposits, savers should rejoice.
I think there are enough rational depositors who want to leverage FDIC protection. Once insured, there is no sense in shopping around for banks for reasons other than APR. Let the bank loan to highest risk and pay you high rates; if they go belly up, you get your money from insurance.
Countrywide and similar poorly managed Mortgage Banks are the S&L’s of the 21st century IMO. Many are already gone, I expect Countrywide to follow. If I’m wrong, I missed a great buy opp, but I’m sure I’ll get over it.
The internal campaign will feature a series of town hall meetings where employees will be asked to sign a "Protect Our House Pledge." Wristbands stamped with the slogan "Protect Our House" will be distributed in exchange for signing the pledge.
I would like to have one of those bands as a souvenir of the times. Tell me if you see it on ebay.
