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Thursday, April 15, 2010

In Cold Blood (w/ apologies to Truman Capote and the Clutter Family)

True crime can take many forms. It can be about serial murder, terrorism, rape, kidnappings. Yet, somehow, either through honest, innocent omission or perhaps by design, white collar crime such as the kind we’ve been seeing on Wall Street, especially in the last several years, never gets included in the annals of true crime. In fact, white collar executive crime hasn’t even been assigned a genre.

Truman Capote’s latter day classic “In Cold Blood”, arguably his best book, was about a mass murder that took place in Kansas when a pair of thrill-seekers named Dick Hickock and Perry Smith senselessly slaughtered the Clutter family in 1959. Is the comparison between this story of white collar crime and Capote’s classic about the Clutter family’s murder unnecessarily dramatizing the situation? Perhaps.

But how is losing your house to foreclosure, even after making your bloated mortgage payments in the wake of a predatory loan, not dramatic? What makes it even more dramatic is that the victim, in this case, is one of our own, Alicia Morgan of Last Left Turn B4 Hooterville.

Not too long ago, Alicia had written and published a too-neglected book entitled, “The Price of Right,” one of the most searing and methodical indictments of how the neocon wing of the Republican Party has led Middle America down the not so merry primrose path to economic, political and social hell. So in a cruelly poetic way, as with the nurse or doctor who finally succumbs to the illness they treat in their patients, Alicia and her family have now become the victim of the same predatory lending and harvesting practices that have become so common they’ve inspired a website called Shame the Banks. It’s a community of people who have horror stories to tell about their experiences with mortgages and Alicia has her own page here.

Long story short, our sister in arms has been living in the same house in Sherman Oaks, CA for nearly 20 years. It’s a house that was first bought by her husband in 1983. Well, some time ago, her husband took out a loan on the house to the tune of $400,000 (far more than the house has ever been appraised).

The deal was, you pay back the loan by making obscenely high mortgage payments for a year and a half ($3500 a month), every month without fail, and we’ll modify your loan and renegotiate your mortgage. To paraphrase Alicia, they pulled the money out of their asses even when they didn’t have it and didn’t miss a payment.

Then a strange thing happened on the way to the Promised Land. Suddenly their lender, which used to be IndyMac but was bought by a consortium called OneWest, didn’t want to negotiate with the Morgans or even their broker. Time after time, they’ve sent out requests to OneWest for RESPA documents through certified mail and have received no documents. What’s RESPA and why does OneWest not want the Morgans to have them?

Well, according to HSH Associates’ website, The Real Estate Settlement Procedures Act is simply defined thusly:
The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. One of its purposes is to help consumers become better shoppers for settlement services. Another purpose is to eliminate kickbacks and referral fees that increase unnecessarily the costs of certain settlement services. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.

RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting anything of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company.

Bottom line: Alicia, her husband and their three kids will be evicted in less than 12 days with nowhere to go because the bank is going to put the property up for sale on April 26th unless a miracle happens and, frankly, I don’t think its name will be Dianne Feinstein.

But what incentive does OneWest have to do the right thing and to allow homeowners like Alicia and her husband to stay in their houses? Absolutely none and you have the federal government to thank for that, according to the Sacramento Bee:
The FDIC, which seized IndyMac in July 2008, sold the failed institution to Pasadena-based OneWest in March 2009.

As part of the deal, the FDIC agreed to absorb some losses from the troubled loan portfolio. That's after OneWest absorbs the first $2.5 billion in losses, the FDIC said.

But Sacramento bankruptcy lawyer Peter Macaluso claims the shared-loss agreement will reward OneWest for foreclosing on homes. Here's how, he said: The company bought IndyMac's troubled portfolio at a 30 percent discount. It can count on the FDIC eventually reimbursing 80 percent or more of its losses – and also can keep proceeds from the foreclosure sales.

Got that? Uncle Sam isn’t making it worth their while to keep homeowners in their homes even after they successfully jump through one hoop of fire after another. Quite the contrary: The federal government, through the FDIC, is making it more profitable to evict even responsible homeowners like the Morgans. In other words, this responsible family who always paid their debts never had a chance. OneWest never intended to deal with them or their broker in good faith.

There’s something seriously wrong with that. There’s something evil, twisted and wicked about not only someone actually having the cajones to think up shit like that but what’s even more disturbing is that it’s all fucking legal, as legal as vulture funds.

And that’s what this is, essentially. The Morgans' heavily-mortgaged house is a nontoxic asset that’s been swapped and bundled along with thousands of others much in the same way that life insurance policies are bought up literally at hospice bedsides for pennies on the dollar then sold back for obscenely huge profits. In the life insurance scam, the sooner you die, the more money they make. By the same token, the same principle can be applied to every other aspect of business, including real estate. The sooner the Morgans get evicted, the sooner they can reap huge profits over this house that Alicia’s husband’s been paying off for 27 years.

People, we’ve got to get the word out about this. Those ten lawsuits alluded to in that Sacramento Bee article means the Morgans’ story isn’t unique. Far from it. In fact, 10,000 mortgages are getting foreclosed on every single day in this land grab sponsored by the US government. Alicia’s family is a mere recurring symptom of a disease that has not only criminalized insolvency and poverty, it’s also victimized those who have had the decks stacked against them, prevailed against almost impossible odds, only to have that stone on their backs shot with a big-ass lightning bolt so they have to scramble down and start over. It’s like the myth of Sisyphus on steroids.

And we can’t let these cocksuckers get away with this. Alicia’s the closest thing I’ve ever had to a sister. Like me, she’s played a rigged game under bullshit rules imposed on her by psychopaths and sociopaths, emerged victorious and still is the victim of every dirty trick in the book to keep from modifying their predatory, misleading loan. And she’s one of us.

Time’s running out. All the money in the world won’t save them. And we have to shame this bank into doing the right thing and let them renegotiate their loan and keep their house. They have nowhere to go, no one to whom they can turn except for us. If and when the Sheriff comes to evict them, Alicia will fight like hell to stay in that house and I told her to get a video camera and to keep it rolling if it comes to that. Remember the first reel of Capitalism: A Love Story?

Yeah, it’s kind of like that. And not only does it hit too close to home, by the time the Dick Hickocks and Perry Smiths of IndyMac/OneWest are done, home will no longer even exist.
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Blogger Jayhawk said...
Alicia’s husband took out a loan, on a home he’d owned for more than 25 years, for far more than any appraisal than the house had ever earned. He was part of the con game, and when the scam fell apart he happened to be the one holding the bag. But it wasn’t an empty bag; Alicia and her family got $400,000, paid back $63,000 and are are walking away $337,000 to the good.

Anonymous mandt said...
opps! It burned to the ground....an act of god. Asshes to asses. Damn these banks.

Blogger SeDress said...
I have to ask: why did they feel the need to take out a loan for more than their house was worth?
What was so important that they signed themselves up for those horrific early payments and the chance that they would be able to renegotiate later?

Blogger jurassicpork said...
You'd have to ask them. But it's not as simple as it would seem. First off, I was in error by saying the loan was larger than what the house had been appraised. It was the other way around.

Secondly, let's keep in mind they honored the stipulations of the loan agreement and paid the higher mortgage on time and every month for a year and a half.

This is a land grab, plain and simple, and it's obvious that OneWest never had the slightest intention of dealing with the Morgans in good faith. They've requested RESPA documents through registered mail and they've yet to get them.