Monday, June 17, 2013

Banking Schemes Preyed On Homeowners


On Friday, June 14th, 2013 Reuters News Service reported that some former employees of Bank Of America alleged that they received bonuses and other perks to make sure a number of homeowners did not get 'loan modifications' even if they qualified for them.

This comes as no surprise to me. Here's why. Already way back in October of 2010 I posted about banks needlessly foreclosing on properties.


My post was based on a news story published at the Huffington Post on October 14, 2010 entitled "Wells Fargo WON'T Halt Foreclosures Despite Evidence That Servicers Didn't Read Paperwork". I've scrubbed and reworked this blog since that time so that post is no longer here.

Let's take a look back over the last three or four years and what's happened since. Banks allowed extremely risky mortgages. Some have argued buyers were at fault for the entire mess. My counter argument then was and still is that bankers are supposed to be professionally educated on financial matters, unlike many of the borrowers. This being the case why did banks continue to loan money so irresponsibly to them?

CON #1: The short answer is because they knew they weren't going to get screwed. Over the last 4 years we've come to learn banks bundled their bad mortgages and got rid of them by selling them rather deceitfully into and as part of 'structured investment vehicles'. As we all know the crap hit the fan when the bottom fell out after investors in them were left holding the bag. Then the government (that's you & I) came along and bailed them out to the tune of $700 billion under TARP.

CON #2: Since that time, as you can see above, many (if not most) of the homeowners were either denied or conned from getting modified mortgage relief causing them to lose their homes to foreclosure allowing these money sharks to acquire them almost up to this very day.

CON #3: Hundreds of thousands of properties are now owned by these mortgage lenders all across the United States. What good does foreclosing so they can get a hold of them do? I'm glad you asked. Here are a few headlines explaining how investor groups (bankers) are hoping to turn them in cash cows. Some investment groups are snatching them up by the 1,000's in hopes of either renting them or flipping the properties.

So what's wrong with that? Again, I'm glad you asked. According to the Washington Times they are creating a whole new housing bubble crises . Let's take Miami as just one example where it's estimated this has artificially driven home prices up 35%.


THE OVERALL PICTURE
Over the last four or five years wages remain stagnant. If the reality market was left on it's own (w/o investor groups buying them up) prices would now become affordable for people once again. Much of the current crises would therefore begin to go away. But that's not what is being allowed to happen. A false housing market is once again being created.

A few years ago banks started out inflating the market by loaning money to anyone who didn't assume room temperature. Now those private investment groups are pawning them off once again at inflated prices sending us down this same road in almost an identical manner to which we are still trying to recover.

What do you think is going to happen to these private investors if they can't flip or rent the properties to generate enough returns after over inflating their values? The more that investment groups buy, the more inflated (fake) the values become just like the first time where all this started out. Meanwhile money sharks who are talking people into pooling their earnings and savings into buying these risky houses for investment are collecting fees, commissions and bonuses off these suckers. It's a disaster just waiting to happen.

As if all this weren't bad enough cities are still continuing to struggle with bank owned blighted properties. Properties who's lawns aren't getting mowed. Homes that are going into further disrepair while city property taxes continue to accumulate and remain unpaid.

I should mention one more side business banks are in.. homeowners insurance.



According to the 'Wall Street Journal' it wasn't until March of this year (2013) the feds cracked down on this ploy. The way it worked was if a homeowner lost his or her homeowner insurance the bank would assign one to the mortgage holder. These typically cost twice as much and in some cases as high as ten times what they were paying. See if you can guess who the insurance companies are a subsidiary of. In some other cases the mortgage holder would receive a commission in the neighborhood of 10% according to the article.

Loan sharks are constantly dreaming up ways to get their hands on others' money. Inflating home market values worked for them once. Why wouldn't it again with a little retweaking?

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