Lenders are Fooling Washington Again

March 19, 2009

By Angie Moreschi:

When exactly are we going to wake up?  Or perhaps more accurately, when are the, oh, so outraged lawmakers in Washington going to wake up?  With all due respect, we’ve been had, we know it, and we’re letting it happen again.

A lot of unscrupulous people have made a lot of money off of the foreclosure crisis we’re in today.  In particular, let’s take a look at the banks our lawmakers are working so hard to keep from failing.  Not only are they not failing now, they’re back on the gravy train.  But guess who’s still suffering?  Yes, it’s us.  The taxpayers, powerless to effect change, as we sit back and scream into the wind.

What Happened to all the Housing Rescue Help?

Here’s the real deal that President Obama and Congress don’t seem to want to pay attention to.  The banks are NOT helping like they said they would.  This, in the face of all the big gestures like President Obama’s Housing Rescue Plan, full page ads taken out by many of the banks professing they want to help homeowners and are beefing up their loan modification programs.

The reality home-owners face is a deaf ear and a cold shoulder when they call to ask for help.    And it’s coming from all the biggies who’ve taken billions in bailout dollars, from JP Morgan Chase to Wells Fargo to Citigroup.  Most of whom, happily reported they made money in the first quarter.  We’re happy for them.  Really.  But it’s time they return the favor.

Consider this.  CWN continues to receive phone calls and emails everyday from homeowners who tell us nothing has changed.  This was supposed to be a week of hope for homeowners facing foreclosure, as President Obama’s plan to help homeowners is put into action. But unfortunately, several homeowners who clearly should qualify under the housing help continue to get the blow off from their mortgage servicer.

Tampa homeowner Marlene Mendoza says her mortgage servicer, Century 21 PHH, owned by Wells Fargo, flat out told her, “Wells Fargo is not participating in President Obama’s stimulus plan.”

Pittsburgh area homeowner Mark Strohecker repeatedly called his servicer, EMC, owned by JP Morgan Chase, to ask about qualifying for help.  Ultimately, they made an offer, but not a very good one.  It’s what we call an unworkable work-out.

Essentially, they told him to pay them a big, lump sum fee to stop the foreclosure, then, make six monthly payments at a slightly reduced rate, and then after that, they’ll “consider” him for a loan modification.   Desperate to save his home, Mark is now considering it, but can’t get EMC to fax him the paperwork.

It’s a classic ruse used by lenders and servicers to get more money out of a desperate homeowner before they drop the ax and take the home anyway.

Lenders Gaming the System

So what happened to the President’s housing rescue plan?  What happened to those ads promising to do more loan modifications than ever?  Well, it is becoming clear these lenders are once again looking to game the system.

First, they were smack in the middle of creating the toxic loans that tanked the housing market.  Now, they’re using tax-payer bailout dollars to tread water and keep afloat through the hard times. And ultimately, they’ll cash in again on their inventory of foreclosed homes, when the market begins to recover.

That’s right, the predatory, subprime lenders and the companies who’ve since bought them up, profited on the front end, are profiting off of the taxpayer rescue and will profit again on the back end, by selling the properties they essentially stole for profit.

Toxic Assets & the AIG Pay-off

We’ve all heard about the toxic assets.  You know, all the loans going into default and foreclosure, which are on the books of all these banks, dragging down profits.  Well, enter good old AIG.  You know, the insurance company which has become the ultimate poster child for arrogance in the financial meltdown, after receiving of $180 billion in taxpayer dollars and then having the gall to give $165 million in bonuses to the very employees who destroyed its company.

In many cases, when a loan on the bank’s books goes back, it is cushioned by insurance that was bought from AIG.  So, with the help of our money, we learned this week that AIG has paid billions of the money it received to the likes of Wells Fargo, Citigroup and JP Morgan Chase, among others, for all those bad loans.

So, there is no incentive for these banks to work with homeowners to save their homes as everyone would like you to believe.  They’ve already been made whole by AIG.  Now, it’s a matter of sitting back and waiting for the market to turn, so they can sell your foreclosed home and profit even more.

Foreclosure Help Myth

In the meantime, if they can just keep the lawmakers THINKING they’re actually trying to help, it’ll be too late to go back and FORCE the banks to actually do it.  Sound familiar.  Just like all those hefty AIG bonuses.  Oops, sorry.  It’s too late.  We already sent them out. It’s not too late, yet.

We still have time. So, wake up Washington!  Don’t be fooled, anymore. Make the banks actually help homeowners to stay in their homes. Hold them accountable for the billions in taxpayer dollars they’ve received.  It’s the right thing to do.