It's a two-way street; lenders share blame

There's a lot of responsibility with becoming a homeowner. Two of the biggest are making your monthly mortgage payment and properly maintaining your property cutting the grass, raking the leaves, etc. A lot of people seem to be finding this out and they don't like it. One group is people who signed up for too-good-to-be-true mortgage terms that they are now finding, not surprisingly, turned out to be too good to be true. You've heard about them, now that the introductory period is over, principal has kicked in, variable rates have gone up, etc., making the monthly payment in some cases double what it was just two or three years ago. Probably a majority of those who bought into these schemes are now unable to make their payments and are finding themselves on the short end of foreclosure proceedings. The other group, the one you don't hear much about, are the mortgage companies who concocted these schemes and pushed and in some cases mislead nave and unsuspecting consumers into taking on these unsustainable mortgage commitments.
Norwalk Reflector Staff
Jul 25, 2010

 

There's a lot of responsibility with becoming a homeowner. Two of the biggest are making your monthly mortgage payment and properly maintaining your property cutting the grass, raking the leaves, etc.

A lot of people seem to be finding this out and they don't like it.

One group is people who signed up for too-good-to-be-true mortgage terms that they are now finding, not surprisingly, turned out to be too good to be true. You've heard about them, now that the introductory period is over, principal has kicked in, variable rates have gone up, etc., making the monthly payment in some cases double what it was just two or three years ago. Probably a majority of those who bought into these schemes are now unable to make their payments and are finding themselves on the short end of foreclosure proceedings.

The other group, the one you don't hear much about, are the mortgage companies who concocted these schemes and pushed and in some cases mislead nave and unsuspecting consumers into taking on these unsustainable mortgage commitments.

They are the ones now initiating the foreclosure proceedings. However, some of them have run into a roadblock in the form of Federal Judge Christopher Boyko, who last month dismissed a handful of foreclosure lawsuits. Judge Boyko rightfully sent a message to nefarious lenders that if they intend to throw people out of their homes and take ownership, they are going to have to comply with the law.

In a nutshell, the lenders brought suit before getting all of their paperwork in order to prove that they owned the property. The judge threw out the suits because they couldn't legally prove they had proper title to their properties.

What has been happening is that the lenders have been creating confusion about who holds mortgages of houses in foreclosure so that they can keep on collecting interest on default judgments while not having to take responsibility for maintaining vacant houses. They rush to have people evicted but then delay recording deeds, leaving municipalities (i.e. taxpayers) to board houses up and keep grass and weeds cut.

That stinks.

Plus, in many of the subprime loans, the loans were pooled and repackaged into junk bonds and hedge funds in order for the lender to drive up profits and escape the financial risk associated with the shaky loan. They got sloppy and it's likely that many won't even be able to prove they are entitled to property ownership. That's too bad for them, but in most cases is no more than they deserve for their predatory practices.

As we said, there's a lot of responsibility associated with homeownership, but it's a two-way street of responsibility. Lenders, just like borrowers, who failed to act responsibly, deserve whatever happens to them. We're glad at least one court is going to hold everyone to the letter of the law and we hope others follow suit.

Comments

AlterEgo (Anonymous)

Let me start by saying that no lender goes into a mortgage with the hopes that will get to foreclose on a property. It costs a lot of money for the lender to utilize the foreclosure process, and usually results in a huge loss for the lender. That is why lender will bend over backwards if you get behind in your mortgage to help you get current. They stand to make a lot more money if you keep paying your mortgage for the whole 30 years. There are however, mortgage broker who are pushing these subprime loans onto their clients and these are the real culprits. These brokers, who basically just handle the paperwork between you and a lender, get a commision on the sale at time of close and then they are no longer involved. They truly don't care whether or not you can pay your mortgage next month, let alone next year. Another inaccuracy in this story is that lenders evict the owners, then drag their feet on transferring the titles. This can not happen since until the deed is actually transfered they cannot legally evict anyone from the property. It can take as much as a year from the time someone stops paying a mortgage before they are actually evicted and the Sherrif shows up at the door with the eviction notice