Why yes, this did make me a wee bit cranky. Why do you ask? *g*

Mornin’, Christy.

Unfettered capitalism at its finest. It must infuriate those who scream about socialism that their arch enemy Karl Marx was right about the consequences.

And, honestly, to be fair — the companies do have a legal obligation to shareholders to maximize profits at all costs, and a threat of shareholder suits if they dont do just that. The NYTimes article describes it well, actually. And lines out the long-term potential for gain by modification versus the short-term higher profit road that leads to problems for the public — and why it looks so tempting for corporate bottom lines:

“Legal experts say the opportunities for additional revenue in delinquency are considerable, confronting mortgage companies with a conflict between their own financial interest in collecting fees and their responsibility to recoup money for investors who own most mortgages.

“The rules by which servicers are reimbursed for expenses may provide a perverse incentive to foreclose rather than modify,” concluded a recent paper published by the Federal Reserve Bank of Boston.

Under the Obama administration’s foreclosure program, a servicer that modifies a loan for a homeowner collects $1,000 from the government, followed by $1,000 a year for each of the next three years. A senior Treasury adviser, Seth Wheeler, said these payments amounted to “meaningful incentives to servicers to help overcome the challenges and competing demands they face in considering and completing loan modifications.” He added that mortgage companies “are contractually obligated to the terms of this program, which require them to offer modifications to qualified borrowers.”

But experts say the administration’s incentives are often outweighed by the benefits of collecting fees from delinquency, and then more fees through the sale of homes in foreclosure.”

Somehow being able to say “we told you so” doesn’t seem like a real good consolation prize as society crumbles.

It sucks rocks. SIGH

The sad thing even from a business perspective is that we are squandering long-term stability for short term balance book gain with this. Morons.

the companies do have a legal obligation to shareholders to maximize profits at all costs

Which explains why the planet is dying.

A little something for crankiness. Buzzard Dance. A FL folk song. Chief Jim Billie is Seminole.

Mornin’

But these companies wouldn’t jack up delinquency proceedings against good ole Americans just to collect more and more of these fees instead of renegotiating terms, now would they?

said companies wouldn’t array their goons around the Senate chamber to enforce a favorable vote would they ???

Well, don’t even get me started on the need for a revamp of corporate governance rules and regs. We can’t even get common sense regulations back in place on any number of financial institutions, let alone have a real conversation about corporate responsibility as a concommitent balance to pure profit motives.

It was an attempt to do something to help and it’s not working. Is there the will to fix it?

And of course no one seems to note that under the loan agreements, the banks are already making the profits they agreed to, unless they did the wink wink knowing that the real way to add to the bottom line is to be unforgiving.

Give ‘em the 5.25% Chuck, and first time they miss their payment even by one day, we’ll throw the book at ‘em.

The news (I use the term loosely) is reporting that the largest number of mortgage bankruptcies are due to job losses, not bad loans.

That is the big question — thus far, the answer has been no. But a huge surge of push from constituents over the August recess might begin to turn that tide. It needs to happen.

Off to swim in the great capitalist cesspool.

US KIA Irak: 4328

US KIA Afghanistan: 756

Be good to yourselves, and all other living things.

Namaste

That’s the current wave of delinquencies and foreclosures. We’ve moved on from the wave of horrid subprime loan foreclosures and delinquencies to middle and upper class folks who are now losing their homes because of job losses, cutbacks and small business crashes.

It isn’t getting better any time soon on that front, because it ends up being a cascade.

FL’s unemployment rate is over 10%. Foreclosures are up proportionately, particularly in the counties just south of Hillsborough (Tampa).

It’s like the air keeps getting sucked out of me.
who said that asking for good behavior from CEOs is like asking a cat not to jump on the table? I resent the comparison a little because I am a cat lover, but oh whatever.So maybe there should be a Hugh-type list which lists all industries the pres. simply asked for good behavior from.
I remember there was some talk of reform for student loans. What happened? I was completely horrified watching this pbs documentary. Student loan sinkhole. And who doesn’t have friends or acquaintances that got sunk ?

Can’t argue with that.

It pretty obvious that what we have in this country is a government which is not of, for and by the people , but corporate interests which boil down to unfettered marketplace with high profits. Corporations don’t care about the environment, health or the “pursuit of happiness” – they care about one thing – the bottom line.

We have allowed… our representatives have allowed corporations to become the constituency of our goverment. We have mock elections and then the lobbyists come in and are the REAL constituents.

This has not sunk in yet as many still believe they can get their representatives to act in the interests of the voters (not their corporate constituency.).

NOTHING will change unless the MONEY interests are not the constituents of congress.

What is the most effective means to get there?

Voting in elections? Hardly because money and incumbency makes this well nigh impossible. We are simply not presented with choices and when we are they don’t get an airing in the media?

Election reform? Ain’t happening. Money is free speech and we will not see private money out of elections in the foreseeable future because it would level the playing field and the power brokers would be signing their own “death” certificates. The FEC is feckless and worthless as the SEC was for the finance sector.

Passing Term limits MIGHT get rid of the many many many nasty critters on the hill. It would also remove some good guys, but I suspect MORE good guys would enter the game if the playing field were level. And the good guys can move on to OTHER government posts taking their experience and wisdom with them.

Protest? Unless it stops the machine, protests are simply ignored.

Boycott? Mass boycotts might get some attention, but I don’t see how that would change government as much as hurt X corporation(s) which isn’t a bad thing. But we’ve witnessed how the government takes YOUR money and gives it to corporate interests constantly in “appropriations”, privatization, and lately in “bailouts”. Since the gov’s constituents ARE the corporations saving THEM is their prime agenda.

Insurrection? This is radical and most likely will need to more fascism and a tightening of the national security state and would justify all their nonsense paranoia about domestic terrorism.

Obama may understand that this huge momentum is sending this nation to hell. But changing course of such a vast apparatus cannot be done quickly or easily. His approach may be to make very small incremental changes, trying to work WITH the power structure then pit himself against it over all the issues where things have gone wrong. The power structure is not going away, their making our real well and things have only gotten BETTER for THEM over the past few decades and at an INCREASING rate. Bush and Obama sent the financial sector a life line when their partying threatened to topple the entire world economy. But the underlying problem is still there and none of the fundamentals which have cause the problems have changed (for the better). It’s more like, let return to the old track – running on credit which is drawn from thin air and sold by the financial sector to the economy at huge mark ups. Nice job if you can get it.. eh?

The health care battle is a microcosm of the larger issue of citizen vs corporate interests (profits). Since profits are as american as apple pie – even now the definition of American – the place where you can create wealth and keep it, it’s not going to change.

We need a new America. We need to start over. This experiment has run its course, has too many flaws and it’s time for a more perfect union.

I don’t think a charismatic leader will arise, because (s)he will be assassinated if it looks like they WILL change the status quo. Obama sold the people on change but sent all the right signals to the power elite and so he’s protected. He may be smart enough to outsmart his handlers, but the Gates matter showed how he backed down when they told him to. He noted police power abuse and hinted at racism as a continuing problem. That was unsuccessful. He had to walk back and smooze it over with a white house beer summit. An example of who runs the show and you don’t step on their toes.

Sallie Mae adjusts its rates each July. The rates are linked to the prime rate. My loan payment went down $3.82 for the next 12 months. Six months after that I’m done. I can’t wait.

But how long have you been paying?

Now I’m really outta here. *g*

Namaste

10 year loan, so 8 1/2 years. I was 53 when I quit the VA in 96. Went back to school, got a computer science degree, got a job with a startup dot com, then the programming jobs went to Russia, then India. Now I’m a bookkeeper. No money, no stress, suits me fine.

Peace!

I know I could not have afforded to attend college or grad school without loans because my parents certainly weren’t wealthy. But I’ve watched college tuition prices jack up enormously since my years there, partly on the backs of student loan “because we can” monetary interests.

We’ve been planning already for The Peanut’s college expenses. And it’s incredible how much money we think our only child will require just to pay for tuition, room and board depending on where she decides to attend later on. It’s insane.

It’s a serious problem, and one that does need addressing.

Does WV have a pre-paid plan for children like FL?

We do. And there are also independent school pre-pay programs that allow tuition savings to be paid to any number of schools around the country as well.

We’ve looked at a lot of different options for The Peanut and have been saving for her for a while. Most of our peer group at Mr. ReddHedd’s firm and around town have kids already college age — we got such a late start with our daughter because of fertility issues, so we’re getting all of the tuition horror stories first hand these days. It’s crazy!

Facing my 18th year of paying tuition for my children, tell me about it.

For students in the arts and humanities, it can really suck. I had a very talented coworker who got cornered by mom and other family member who got fed up with screening calls. They asked her why she bothered to go to school if there was no guarantee that she could find a job high paying enough to pay off the loans. That’s a little hard on a person who was 17-18 when she took on the financial responsibility. Not to mention she had real talent in the graphic arts.

Nice one, Christy. When I hear the conservatives linking of an unrestratined free market and patriotism, it always makes me think of Peter Benchley’s discription, in Jaws, of the shark as a killing machine, which has to stay constantly, remorselessly on the move, eating to stay alive. What do they think a corporation is? When is the last time anyone ever interviewed for a private interprise job where they were asked if they were willing to sacrifice the company’s interests for the good of the country? How long would shareholders back a CEO who did that?

They always liken business to the goose who laid the golden egg. I like to mention that, in the story, neither Jack nor the giant advocated letting the goose run free.

I really can spell, just shoddy typing.

Oooh, I love that Jack and the Beanstalk analogy. I may have to use that one. *G*

Welcome to tyops aer su.

BTW. Has anyone’s health insurance company announced a “new partnership,” one that will keep your insurance the same for 12 months and then there will be a review? I feel somewhat nauseated when I think of it. Maybe I am just overworried?

Of course, but please type carefully.

For anyone who thinking about starting a business read Creating A World Without Poverty by Professor Yunnis. It presents a social business model that offers a different view on capitalism by running the business in a socially responsible way, and turning the profits into social benefits, not share holder returns.

well, if it’s working, I am very happy for you. (seriously and with new snark). I just have a whole lot of malaise these days.

It absolutely can — I was a double major in American Studies and Government, initially with the thought that I wanted to get my Ph.D. and teach at the college level or perhaps work for the UN. But after seeing what my professors were dealing with in terms of income and frustration levels, I decided to switch over to a legal practice instead thinking it would give me a little more freedom to pursue justice on a local level rather than on an analytical one.

Looks like I ended up back in analysis, just doing a whole different thing from what I thought. *g*

But the loan payments continue for me. No matter what, you don’t get away from those, however you end up using the education. For me, they were worth it for the education’s sake — but that isn’t always true, especially in families who really struggle and where arts aren’t so valued. And that’s a real shame, given what that sort of education really gives back to the community as a whole. Like I say a lot, we do things so bass-ackward in this country in terms of what we value and where we put our efforts and energy. SIGH

That sounds good if it could work.
But I can see that turning fast into paternalism.

But that “late” Peanut is so wanted….huh. We have the same late stage picture in my family. It is such a different perspective. Sure makes me a senior Citizen granny. The college outlook is amazing, isn’t it? Maybe another one of those things that will draw some corrective action. In my area, the community colleges are promoted alot, cheaper, etc. as a chance for the 1st 2 years for kids to grow up at a lower tuition cost.

Worrisome. I think artists are so important in so many ways.

I once knew of a guy who took a job with some screwed up think tank for the salary, just because he was sick of the family hand wringing. And that was sad because he was also very talented in the humanities (won’t say which dept.)

How so? I’m fascinated by this concept of social business and would love to hear your thoughts.

Back in the day, when I attended college with Flintstone and Rubble, a person could work a good summer job and have enough for tution, board and room and a little romancing over pizza and beer.

I’ve been very fortunate with regards to my education. I got a full scholarship for my undergrad through the VA. Now, I work for a company that really values higher education. They’re paying for me to get my Masters – I graduate in December. It’s been 4 years already.

I’m watching the trends in education costs, though, for my kids (now 3 1/2 and almost 1), and I get depressed. My dad has set up an education fund for them, and we’ve been able to put a little in to that, but if nothing is done to stem the rise in costs, I’m really worried that my kids will have to be indebted to the loan companies.

Some big servicing companies are owned by banks. Bank of America owns the Countrywide servicing company, and Citigroup owns CitiMortgage servicing. Their conflict is perfectly obvious: those banks need the revenue however they can get it.

I want to give it some serious thought before I answer, less my current malaise affect my judgment.

This is completly OT and trivial, but I’ve occasionally wondered if the attorney’s who advertise on television dream up their own nicnames. We’ve been subjected to “the Hammer,” and “the Strong Arm,” for years.

I know that feeling of malaise and hope that it passes for you soon.

Recently noticed that UT (the institution that fired me when I tried to organized clerical workers years ago) put up a little plaque near the tower that says:

“Core Purpose: To Transform Lives For the Benefit of Society.”

Guess it sounds better than “Money Talks.”

Thank you. I feel unqualified to put my two cents into arguments about health care at this point because every time I hear of some new development the air just keeps sucking right out of me. I didn’t have that problem during the Chimp administration. So it’s partly me/partly something else. malaise.

Money talks, everything else walks?

For the Benefit of Society.”

Which is defined as making money for the corporation.

Education should be free. California had a terrific higher education set up until Ronald Reagan came along. The state college systems when I went to college in 1961 were much less expensive than the privates. That good system has been under attack from the right wing ever since so now there is not so much difference. The powers do not want an educated populace. Somehow the idea that a well educated people have so much more to offer has been lost. It is very sad for our country.

I’m with you regarding community colleges. I haven’t yet heard what Obama said the other day about a plan to boost them. They offer a far less expensive way to either obtain production skills or to continue in academic fields. Since most 4-year colleges only require that the last 30 semester hours be on campus, it allows a means of obtaining a degree from one of them without paying for four years worth of room and board/tuition.

Community colleges are also good for smart kids/people who have had disrupted lives and educations. The major universities in CT used to accept a certain number of students who had completed a certain number of years at the local community colleges.

We’re of the same vintage. I went to a state university here in Texas for $75 per semester tuition and $75 per month room/board. It wasn’t quite so easy as it sounds, in that a skilled worker earned about $400 per month in those days. But I remember my dad saying that, if we lived in California, I could go to college for nothing.

Sh*t Christy, didn’t realize this was frontpaged.

I can’t remember what my tuition in a NJ state school cost but it was easily affordable. Ronald Reagan started this country down a terrible path. I often wonder where we would be if he had never been elected. Unfortunately most people believe the propaganda about him and have no idea the damage that he caused.

The community college system is around 40 or so years old. I don’t remember exactly when it began but not long after I got out of college in 1965. It is one of the smartest things done educationally in this country. I don’t remember exactly but want to think Jimmy Carter had something to do with it but am too lazy to google. I have lots of friends who taught with me who also taught in that system a few nights a week. The kids got the benefit of some excellent teachers.

There’s one problem that hasn’t been mentioned here. Even when lenders do modify mortgages of homeowners the homeowner default rate after the modification (the Re-default rate) is over 40% in just six months…close to 60% after a year. That means from a lenders standpoint why bother. They are just wasting their time.
And what do you do when a homeowner re-defaults? Do you modify over and over again? I think not.
The problems are (1) lots of people don’t have jobs and (2) home values continue to drop making it more attractive to just stop paying the mortgage payment.
In the end we have to realize a lot of people are going to have to leave their homes so the market can reabsorb them at today’s prices. This actually works. We can’t bail out every homeowner unfortunately.
My source for the above percentages can be found at OCC and OTS Mortgage Metrics Report, Fourth Qtr. 2008.

Here is the site for my earlier post:
http://files.ots.treas.gov/4820362.pdf
The graph is on page 5.

I agree. However, one thing which should be mentioned regarding attendance of college then and now, is that college loans and Pell Grants were not availiable. I applied for athe only kind of loan available, National Defense Student Loan (resulting from Sputnik) in my sophomore year, and learned that my dad made too much money. He was a printer and made the approximately $400 per month as I mentioned earlier.

I agree fully about Reagan, but think his influence was more on prevailing philosophy than actual changes in government. A whole generaltion grew up believing that the government was the enemy and couldn’t accomplish anything worthwhile, despite all of the evidence of FDR and other adminsitrations. But, the real changes didn’t seem to me to start taking place until the Gingrich Revolution in 1994 and then, in full disasterous bloom, during the G.W. Bush Administration.

Hey Christy — I think I see a squeeze play in progress.

Maybe the “stern talking to” by the POTUS is only part of the play.

I have my fingers crossed that this effort is as effect as Sen. Levin’s work last year on legislation increasing margin on trades…

Folks, Sen. Dorgan has a post up for us on FDL on the KBR/DOD IG report. Thought you’d want a heads up…if you could drop over and say howdy and ask a question, that would be great!

I sure hope so. Because self-regulation on this isn’t a complete answer.

Late as usual; interesting Christy brings this up today. There was a discussion among economists on Diane Rehm’s show that included considerable attention to the success or failure of the mortgage modification. Much of what they said, I knew, but there was an appalling call from a woman who lost her job and promptly applied for loan modification with her servicer.
Of course, she was put off constantly, told it would take 12 weeks, etc., etc., until finally after 15 weeks trying, she was told that her loan holder “doesn’t do modifications” so she couldn’t get one. She asked who the loan holder was – and here’s the most amazing part — she was told that the servicer could not/ would not tell her the name of the mortgage holder!
None of the economists was sure whether or not there is a legal right for the mortgagor to even know the name of the company that owns her mortgage! Amazing.

All of this is way out of control. And I don’t know what we can do about it, either.
The economists said that there is not a lot of popular pressure on the banks to take modification seriously because the average citizen asked “if he wanted the govt to help out Joe down the street” goes ballistic. This, of course, is because they think people are defaulting because of their own bad judgment, not because of circumstances beyond their control.

Ah ha. I’m not the only who gets caught in that. But, you’re fine, mui1.
It’s like you’re having coffee with a few friends in the kitchen. Just hanging out and talking about some personal hygiene problem, and then you turn around and the entire neighborhood is crowded in the door way listening. *g*

This is a HUGE story which has not yet been cracked open by the mainstream media.

I know of cases where there are rampant violations of federal law requiring specific kinds of performance in mortgage processing, but which has not been stopped because there’s no teeth in the legislation. At best, firms get a slap on the hands not to do it again.

The mortgage servicing companies are also frequently donors to Republican PACs, incumbents and candidates, many of which are on key committees for banking and financial services; any legislation to correct the situation has been bottlenecked by these people.

Another problem nobody is addressing is that these mortgage firms not only make more money on a foreclosure rather than a renegotiation is that they often own or are in bed with realty firms which buy up the foreclosed properties on a short sale and turn around and resell them at a profit.

The size of the fraud perpetuated on this country is massive; I still can’t wrap my head around it. Just wish I’d had a better chance at reporting this, stymied by lack of sources willing to go on the record because they were terrified.

Somewhat off topic, but perhaps not entirely. Banks are jacking up every fee they can invent. I recently completed a small analysis project for a local attorney in an civil lawsuit. He paid me promptly by a check drawn on Wells Fargo Bank. Knowing how these things operate, I called my Credit Union and asked them about it. I was told, “There is a five day hold on the funds, unless we can verify the check.” I told them the check was drawn on Wells Fargo, the CU told me that Wells Fargo won’t verify for them.

So, I went to Wells Fargo to cash the check. I was asked to take a seat in a holding pen to await the availability of a personal banker. (Oooh-la-la, I do feel important having a personal banker. While I was there, I heard bits and pieces of conversations from cubicles with customers and their personal bankers. Oddly, every discussion was about some fee or another that had been assessed on an allegedly free account. The customers were not happy with their personal bankers.

Finally, my turn came. Finally is absolutely the right word, I had been left in the holding pen for over 20 minutes. My personal banker examined my Driver’s License and University ID, verified that the attorney’s account had sufficient funds to cover the check and then dropped the bombshell. “There will be a $5 charge to cash this check,” said my personal banker.

“I beg your pardon,” said I.

“I’m sorry sir, but there will be a $5 charge to cash this check,” he said.

“That’s outrageous!”

“It’s bank policy, sir.”

“That doesn’t make it any less outrageous,” I said.

I picked the check up off the counter and went to my Credit Union. So it will be three more business days before I have access to that money. I’m not terribly happy about the hold from the Credit Union, because the check undoubtedly cleared locally the evening I deposited it.

I called the attorney who’d hired me and let him know about my experience with Wells Fargo. He sighed, and apologized and then told me some more horror stories about Wells Fargo. I frankly don’t know why he continues to bank with them, but that’s his problem.

This whole thing is a real mess with no easy solution. Modifying loans does little good if a home owner has no money (due to no job) to make the modified payments.
A lot of mistakes were made like Barney Frank and company coming up with zero down home purchases and the Fed keeping interest rates too low for too long. Then add in the greedmeisters (mortgage companies) and you have a mess that will be with us a very long time.

Barney Frank invented the no-money-down mortgage?

Did he invent the negative amortization payment plan too?

Nope, that was the mortgage companies.
I remember when I bought my first property in CA in the year 2000. I wanted a 15 year loan. The mortgage was a variable rate (they wouldn’t offer a fixed on this particular property) that started out at 7%…the going rate at the time.
But then the lender said, “Oh no!!!! You don’t have to make regular payments.” “You don’t even have to pay interest only.” “You can just pay 3% annually…and we’ll tack the rest onto the principal.”
I know when I stuck to my guns and demanded a 15 year loan they thought I was just some rube. Many people feel into their trap.
And yes, good ole Barney and his friends put the screws to the lenders to make zero down loans. After a while at least some of our elected officials noticed the zero down loans had a default rate 40% higher than any other category.
The sad truth is Barney is bad for America.

What an amazing load of crap.

You believe and spread a myth made up by repub smear merchants.

I had horror stories about Bank of America when I was doing stuff for her; the account was only there due to a history of several other bank owners. But I heard a big fee story this week on TV….a charge to close a credit card account!! Whoaaaa.

The “her” was my elderly mother…..some key board trouble here;))

Nope, I’m totally an independent thinker. That’s something Progressives gave up long ago.

Credit card companies are actually worse than the mortgage companies but of course they deal with smaller dollar amounts. I’ve seen interest at 32%.

This is all political kabuki for the rubes. Obama has done nothing for homeowners. Cramdowns, which would help them, are of course off the table. Both of the programs which Geithner announced for homeowners were noteworthy in how small they were and how their main emphasis was on propping up the value of assets on bank books. In other words, they were never about help for homeowners. This is what makes Obama’s jawboning such a sham. It is meant to distract attention away from a crummy program by taking to task one small part of it.

I agree. The programs some of the states started long before Obama was talking about it have done more but still not all that much.
Since we know with certainty that many modified loans will just default again we need to get a group of concerned individuals (who owe nothing to the lending industry) together and work out a final solution.
One idea is to have a grace period of no payments for homeowners. For it to work it has to be binding on both sides. It should only be offered to people serious about keeping their home.

Even better: When these poor schlubs go under due to the jacked up fees, charges, and penalties and the vastly inflated balance is finally declared uncollectable, guess what happens?

They get to write it off against their corporate taxes! It’s win-win-win-win… For them.

The mortgage companies used to (probably still do) advertise you could refinance with no closing costs. That was always a lie. There were always some fees to be paid. I’m an accountant and I’ve seen it all.
I think the worst thing I saw was the prepayment penalties. When we bought our current home we bought it from an estate since the woman who had lived in the house had died. Her two children were handling the sale. At closing the children were shocked and surprised to find that the company the mother had refinanced with had a penalty in the fine print that imposed a 10% early payment penalty. That was nothing short of criminal.
The good thing is most of those companies have folded up but they’ll come back if there’s money to be made.