To understand where our mortgage is requires an economics degree. Our mortgage rate was handled by First Savings Mortgage. Through them we negotiated the interest rate, worked with a person we could actually get on the phone, and felt pretty content that if there was ever a problem, we knew who to call.
A week after the house purchase, First Savings Mortgage sold our mortgage to Wells Fargo. You may wonder how Wells Fargo could afford to purchase our mortgage, considering they still owed the government $25 billion dollars in TARP money (to be paid back this month, they are the last big bank to do so).
We now write our checks to Wells Fargo. We know no one at Wells Fargo. We have never banked there. The only indication of this was a letter in the mail, that offered us the ability to set up automatic payments on Wells Fargo website, where the only payment option was "pay full amount first day after due date". I still don't know what that means.
So, today, I opened up another letter, this one from Freddie Mac. I don't know who the fuck Freddie Mac is, but he's the guy that now owns my mortgage. I don't pay him, I still pay Wells Fargo, but apparently Wells sold Freddie my mortgage. All I know about Freddie and his girlfriend Fannie is that they were behind the recent recession (along with Wells Fargo), and frankly I'm miffed that nothing has changed.
I understand banks need liquidity. I understand credit is essential to a healthy market. But does it not stand to reason that First Savings Mortgage should be inheriting all the risk? It's a localized bank, meaning that if it went under, only Alexandria residents would be in the tank. They are the 'closest to the ground' and did all the assessments to determine if I was good for the loan they gave me.
Wells Fargo and Freddie don't know anything about me. All they know is that First Savings said I'm a good bet, and that they should bet on me, too, thus freeing up First Saving's capital to make another loan. Why not sell straight to Freddie? Why have an intermediary? Why disassociate the risk on a national level where we as a collective whole are putting our eggs in one national basket? Pardon moi, but does that not seem like a dumbfuck thing to do?
States and counties stand to gain the most from a healthy real estate economy, not the federal government. It's states who impose property taxes, and as such, it's local governments that should be moderating how their lands are bought and sold. Similarly, it's local banks that should be inheriting the risk. Credit can still be bought and swapped at a more localized level without jeopardizing the entire system. Yes, the profit margins won't be as high, but it will also deny banks the ability to corral so much credit and capital that they become "too big to fail."
So First Savings Mortgage, take my mortgage back. I'm good for it. If you had kept my mortgage I'd be paying you a sweet penny every month. Instead you blew your wad and went for the lump sum by selling it to Wells Fargo, a too-big-to-fail behemoth that fucked us all in the first place. And instead, now I'm paying Wells Fargo who I'd really prefer not to. You've taken the customer out of the equation, which is pretty impressive, but you've managed to take logic out of it, too. Here's to another go around!
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Comments
Congratulation. a great E.P.
You surely will learn 'stuff'
IF you lose your investment
And, I Hope you don't Lose
Move to a` Buttercup Lane.
If in a deep sleep post-wed,
your new wife says in sleep,
"I want a divorce!" Oh, hell,
huh?
hells gates open wide Open!"
It happens on honeymoons?
Newlyweds in mortgage scam,
may whisper in deep deep sleep,
I WANT A DIVORCE. I hope not.
Thee editors picked a good E.P.
IF Ya in poorhouse, rename St.?
Name the street`
Paradise Fraud.
You fair well.
Take care.
Hope.
There are some annoyances (federal law limits you to 6 money transfers from your main account per month), but I have financed nearly everything through them for nearly 10 years. I LOVE my credit union. They never sell any of their loans. Mine even has ATMs everywhere and neighborhood offices in most neighborhoods in the Seattle area.
And, welcome to Alexandria.
Selling off your receivables is sometimes a smart business decision if you need cash. You can generally get the cash at a better rate than a straight bank loan and there are often favorable tax benefits depending how the deal is structured.
Where it goes off the rail is when your mortgage is packed with thousands more, carved into pieces (tranches), then repackaged with other tranches from other sources, and repackaged and resold several times over.
After a while, no one really knows what they really own or who they ulltimately owe. Duff mortgages get packaged with other duff mortages and someone gets the theory that they really can't all go bad so by a type of bell-curve process, some get forced up into appearing relatively good. When you bring derivatives and CDOs into the mix, it has the effect of creating whopping amounts of notional money into being. It's a dazzling house of cards but boy, one little tremor and there's stuff to get picked up all over.
@CharlesBartley: I've heard Credit-Unions are the way to go. I think with the next go around I'll be looking into them. I'll sacrifice ATM convenience if I can talk with the person that's actually holding my money.
@Blue in TX, Upstate, Bonnie, and Sparking: I'm with you! I hope our next president (or this one) turns out to be a trust-busting mofo. Nothing should ever be too big to fail but our ambitions.
@Joe Cantwell: Thanks, Joe! Love it down here! You from these parts?
@Abrawang: Thanks for the insights. There is definitely plenty to the process that I don't understand. If the banks could make money some other way, I'm sure they'd do it. I doubt their loyal to this strategy it's just the one that pays the most bucks. I really don't blame the banks. For the most part they've survived and will continue to profit. It's really the regulators that vex me. It seems the only thing more slippery than paper money is electronic money, and because of that, new markets and CDOs need careful monitoring.
Then you have to find the phone number, located in teensy-tiny print on your bill to call them, since you registered with their website but refused to allow you to pay one payment,insisting instead that you pay two although you've only missed one.
Once you find the phone number, you call eighteen times and get a busy signal.
Four attempts later, your call is answered by the automated system, who refers you to the website and hangs up on you after you tell it that you want to make a payment.
You discover three tries later (and a bunch of busy-beeping) that this is working as intended, and that you need to be sneaky to accomplish your goal.
After six busy signals and three recorded messages advising you of high call volume and to call back later, you reach the automated system again and punch the number to speak to a representative. You then wait two solid hours on hold before being transferred to someone's voicemail.
You listen to the "greeting", which tells you that you should leave a message and they will get back to you with 24 hours, and prepare your message as you wait for the beep, only to be advised that "mailbox two thousand six hundred and 19 is full. Please try again later."
When all is said and done, you've spent a full 40-hour workweek over the course of a month trying to make the stupid payment.
And guess what? You're now a day late for the following month, because they refuse to change your payment date.
This is what middle-class families are facing every day. Half a month's net pay from a decent job barely covers the mortgage, mortgage companies aren't willing to bend much--if at all--and Obama's wonderful plan to help homeowners isn't helping, because the mortgage companies could not seem to care less about ensuring that homeowners can make their payments on time.
A friend of mine with a good county job recently fell a month behind on his mortgage and became eligible for one of the stimulus homeowner mortgage help plans (you must be at least 30 days behind--which is kind of stupid, considering that the point is to prevent people from falling behind--hoops galore, and the mortgage company decides whether or not you are eligible, not the government). He missed the next payment by one day (due to paycheck schedule), and went through the above.
Less than a week after he paid the payment one day late, he received a rather nastily worded letter advising him that he was 2 months behind.
The week after that, despite the fact that he had paid the payment, the mortgage company sent someone out to appraise the house (he was gone, they left him a note)!
Never, ever had he been so grateful to have kids that frequently fail to pick up after themselves, that the only part of the house visible to the appraiser was the kitchen (which is getting a slow floor refinish as time and money allow, and is so plastered with kids' art and awards that you literally can't see the walls), that the sink is from the 40's and badly in need of replacement, that the ceiling has stains that look like water damage (but in fact are the result of a kids' practical joke involving shaken soda cans).
I advised him to call the attorney general regarding the extreme difficulty reaching the mortgage company. I also know people who have lost their homes because they could not reach the company to get an "amount due" letter prior to foreclosure.
Sorry for the long post, just wanted you to know that there are others in the same (and in leakier) boats as you. Good luck to you.
If companies are so large that their failure could wreak havoc on not only the U.S. economy but the global economy, it seems to me that there's a simple solution: don't allow the companies to grow to that point.
If we are a capitalist system, then let's be capitalist all the way. Companies succeed or fail on their own merits, and the taxpayer isn't forced to shoulder the financial burden of their ultra-risky, "creative" financial practices, stupidity and greed.
Enacting sensible regulations to keep companies "small enough to fail" doesn't interfere with capitalism. It merely ends the Big Business welfare gravy train. Which should make the wealthy happy, right? Since their voices seem to be the loudest of those who complain about shouldering the "burden" of universal healthcare.
There still are banks that advertise that they hold and service their own mortgages. Interestingly, one factor of the real estate collapse has been more small-town banks in our area doing that, partly because they no longer need the liquidity because no one is borrowing, and partly because they, too, have been caught in the middle of a system so complicated that no one can figure it out.