dailyforeclosure's Open Salon Blog

Foreclosure: Banks & Investors Onboard or Overboard?

Mon, 29 Mar 2010 11:03:39 -0400

Just before the government stepped in and stole the show with the news of a program to help troubled homeowners, a few of the big banks like Bank of America and Citigroup had announced their own plans to work with troubled borrowers. Nobody wants the appearance of being strong-armed by the government to do the right thing. The banks knew this was coming from the Obama administration in advance and one of two things is true:

1) The banks planned a preemptive PR strike that would make them smell like roses or...

2) The Obama administration worked with the banks on the plan and suggested they announce their own programs ahead of the government’s so the mass portion of the uninformed public whose gut reaction to everything these days is to cry “bailout!” wouldn’t do so.

Here’s a blurb from the New York Times article on Bank of America’s announcement:

Bank of America officials said the maximum reduction would be 30 percent of the value of the loan. They said the program would work this way: A borrower might owe, say, $250,000 on a house whose value has fallen to $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, $10,000 in the special account would be forgiven each year until either the balance was zero or the housing market had recovered and the borrower once again had positive equity.

The average amount of time Americans spend living in their home before moving is 6.6 years. Does this mean we can expect another housing crisis when the members of this statistic decide it’s time to move out of their house? Will the bank come after them for the remaining amount? Will the government? Somebody needs to ask the banks these questions and the banks need to answer them.

Bank of America and the other large banks’ proposed plan isn’t about goodwill; it’s about the transposing of one mathematical formula for another. If you reduce the principal owed on a home by 30% this is roughly equivalent to cutting the homeowner’s mortgage interest rate in half. Something tells me the banks would rather call it a Reduction of Principal Plan than a Refinance to Lower Interest Rate Plan.

The article goes on to say,

Bank of America said it would be offering principal reduction for several types of exotic loans.

Are exotic loans different from endangered loans? Do I have one of these mysteriously monikered loans? I hope so. Just to be safe I’m going to spray-paint my cat to look like an ocelot because according to Bank of America this is a “by invitation only” program. It’s not the first time a bank has had an “invitation only” soiree. You can read about an infamous bank bash at a repo'd mansion here.

The bank developed the program partly because of “pressure from everyone,” Mr. Schakett said. Even the investors who owned the loans were saying, “maybe we should be doing more,” he said.

I love these investors’ lackadaisical approach this crisis. It’s as though they’re deciding on what to order for lunch. “Maybe I should have the Stewed Pygmy Marmoset Brains or maybe I should have the grilled cheese sandwich with a side of fried Mwanza Flat Headed Agama lizard feet. Hmmm… both sound good. What are you having, Bob?”

On a national scale, such a program risks a political firestorm if the banks are unable to finance all the losses themselves. Regulators like the comptroller of the currency and the Federal Reserve have been focused on maintaining the banks’ capital levels, which could be hurt by large-scale debt forgiveness.

Here’s a solution: Let’s have troubled borrowers pair up with organizations like PETA for assistance a la Octomom by placing signs in their front yard in return for paying their mortgage. I would like to request the National Brain Transplant Center put up a sign in my front yard. If they could throw in a free brain transplant to boot I’d like that too. I know there might be few risks involved like constantly smelling burning feathers or memory loss but nothing would please me more than to have no recollection of this foreclosure fiasco.

Given the track record of the big banks making good on their promises and the fact that as corporations their board of directors must concern themselves with profits first and goodwill last, the federal government are the only ones who can pull this off. Call me a socialist if you like-- no, seriously, call me a socialist. I used to drive a Mercedes, then a Volvo and then a Saab before downgrading to a scooter that’s made in a country with similar equal access to healthcare for all… such a dirty, dirty concept these days. All three contraptions are some of the best I’ve ever owned (code word for leased). Come to think of it, most of my favorite products come from-- wait for it… socialist countries. Oh, the horror! For a word with no concrete definition people sure love to pigeonhole the concept of community as evil according to political trends of the day and decade. Okay, now you can call me a communist if you want but for the record my cat is orange, not red.

Foreclosure: Obama Muscles in on PETA to Help Octomom

Fri, 26 Mar 2010 10:03:48 -0400

Just when I thought the hottest news item of the day from the foreclosure crisis consisted of PETA and/or Vivid Entertainment bailing out Octomom from foreclosure, the news outlets (what few are left) are abuzz with news of large banks reducing mortgage balances for troubled borrowers. Hmmm… I don’t know. I just don’t trust ‘em. I can’t. I’ve become so accustomed to feeling troubled in every way over my impending foreclosure I’m not certain change is a good thing. Change is for other people, not me. Trouble and misery is where I feel most comfortable lately. The mere mention of the word “solution” gives me goosebumps. But wait-- this just in from the New York Times:

“The government will buy loans from investors at the current value of the house in an effort to stabilize the market, people briefed on the plan said. The government will also increase incentive payments to lenders that cut the principal of borrowers in modification programs. And it will require lenders to cut the monthly payments of unemployed borrowers for a minimum of three months.”

Say what you will about the decisions being made in Washington but one thing is certain: Things are getting done... for once. Whew. I was just about to reach the point of political apathy wherein passing legislation putting ivy, dandelions and garden variety weeds on the endangered species list would have made me happy. The Obama administration must be working around the clock juggling health care reform, student loan reform, Middle East mishegas with Netanyahu and Yemen, the repeal of “don’t ask, don’t tell” and now this latest program to stem the tide of the foreclosure crisis. I just have one concern: if the administration opted for the “unlimited talk, text and web” plan with their mobiles we could be facing another government bailout... of Sprint Nextel.

I never thought I’d say this in a million years but I’m actually looking forward to speaking with the feds (as long as it’s in regards to my mortgage and not tax returns). No matter how much bureaucracy there might be in this proposed plan of action by our government it will pale in comparison to the past year I spent navigating my way through Bank of America’s maddening and senseless system of “loan modification” which has proved to be a cornucopia of broken promises every painful step of the way. I have been on the brink of foreclosure for what is the equivalent to an eternity… for a mosquito. For a human it’s merely the equivalent of insanity. But who’s counting? I am. Every day that passes without a foreclosure notice slapped upon my front door is a good day.

Already the blogosphere is teeming with opposition for this latest plan to aid underwater homeowners with complaints lobbed left and right from the left and the right for bailing out those who “gamed” the system. Mostly these grievances are aimed at real estate speculators, house flippers, Sea Doo buyers with home equity loans and other absurd unquantifiable entities. We hate it when there’s not enough for everyone. It’s scary. It’s also scarcity mentality. Here’s the cure: the next time your neighbor needs a hand carrying in the groceries or cutting the lawn suspect them of taking advantage of your good nature and simply refuse to lend a hand. If that doesn’t work, a carefully placed expletive in your refusal to help should do the trick. They won’t ask again and you won’t have to knock on their door for a cup of sugar for that chocolate soufflé you’re on the brink of perfecting. The world has become such a big place and if it turns out they really needed the help, no worries, Medicaid or Medicare will step in to cover their slipped disc surgery. You can then take the matter up with the IRS on your next tax return. And if battling it out with Uncle Sam’s tax enforcer is too daunting a task then simply ask yourself, “What would Octomom do?”

[ If you're interested in reading about the big banks' recent and preempted proposal to aid troubled borrowers you can go here.]

Outrunning Foreclosure While Out Running For Closure

Mon, 22 Mar 2010 13:03:37 -0400

YESTERDAY MORNING AT 4:30AM I WROTE THE FOLLOWING:

The past few years have been… um… interesting. Some might call them disastrous. Others chaotic. Less sympathetic folk might even label those years as pathetic. And yet I prefer to use the term interesting because who wouldn’t want their life described that way? Sure, my marriage fell apart, my cat died (I still have another), I lost all of my money and then some in the stock market, my house is in foreclosure and my career has been stuck on the tarmac because the fog from all of this makes it very hard for me to see which way I need to go to get what I want, BUT it’s all been very very interesting. And now in the twilight of the chaos my knee feels a little sore. In my illogical approach to life decisions that means it’s time to run 26.2 miles. It’s time to run the LA Marathon.

The only clarity and constant for me in the past few years of chaos has been distance running. I had always exercised but when the sh-t really hit the fan a few years ago I found myself running more and more each day. Running helped keep me from running from life’s challenges. Running is the one place in my life I feel comfortable and confident taking risks. It’s the only thing in my life that I get 100% back what I put into it (and oftentimes more). It’s amazing what you can pull out of yourself when digging deep for those last few miles. It’s also amazing the amount of liquid you pull out of yourself when distance running. Not to be gross (but to be gross) oftentimes my sweat carries just the slightest scent of whatever I’ve ingested in the hours prior to running. I downed an entire bottle of cologne this morning in anticipation of being surrounded by 24,999 other sweaty, smelly bodies and now I have a stomachache. That’s what I get for drinking the cheap stuff.

The only time anything remotely related to running let me down was when my lender, Bank of America, sponsored the 2008 Chicago Marathon. It didn’t bother me at the time because I wasn’t in foreclosure. Plus I had my cat there as my coxswain to call out my mile splits.

The L.A. Marathon is sponsored by K-Swiss this year and that suits me just fine. I hear the word “Swiss” and I think of neutrality or the Von Trap family. Almost makes me want to skip the race so I can sit at the top of my staircase and sing “Doe, a deer… a female deer… Ray, a drop of--“ Oh crap, I just remembered I can’t sing.

Last night while prepping my gear for the marathon I spilled Everlast Recovery drink powder all over the countertop. Some of it got on my wallet. I wonder if that means gobs of money will suddenly appear in my bank account on Monday. Upon realizing the potential of this berry-flavored powder that I’m certain is either repackaged pixie sticks or re-labeled Lick-a-Maid I may or may not have deliberately spilled some on my unemployment paperwork. I expect the phone to ring off the hook with all kinds of offers on Monday. I’ll tell you what’s off-the-hook, that Fundip stuff.

Today’s 26.2 mile run offers closure that will bookend the odyssey of years past for me, one that started with a marathon in Death Valley. I can’t find the words to explain why this feels like a turning point and I’m not sure I even know for myself but somehow, after running this race, a chapter in my life will be finished. I think I’ll run as fast as I can today and give it more than what I think I’ve got. I discovered last night that I miscalculated my splits for my target time during the past several months of training. I don’t usually feel like someone who sucks at math but this foreclosure and my recent bank statements are beginning to make me think otherwise. Now I have to run faster than I ever have before which means I’ll either blow the doors off my goal time and set a PR or crash and burn in fantastic fashion by the 20-mile mark. Either way it’s going to be… interesting which is all I’ve ever asked for in my life. Like the saying goes, be careful what you wish for.

THIS MORNING I WROTE THE FOLLOWING:

Yesterday I did unspeakable things to my body... and I am proud of those things. I went for bust, nearly crashed and burned and then dug deeper inside myself than ever before in my life. The effort put out and the pain endured once again produced a net gain. When the chip times are sorted out and race results officialized I will have come in 305th place overall in a field of 26,000 runners. I beat my PR by over 13 minutes. I accomplished a life dream I only set for myself 3 years ago: qualifying for the Boston Marathon before age 40. Less than 1% of runners ever get to claim that. Am I bragging here? You're damn right I am. I've had a difficult time in the past few months finding pride in my life. Today I found pride. Once again I got out what I put in. In fact, I got more. It's been a long time since I've made such a wise investment.

Google Bombing My Way Through Foreclosure

Fri, 19 Mar 2010 11:03:20 -0400

It’s March 19^th, 2010 and I’m still in the house. At some point in the near or far future my lender, Bank of America, is going to foreclose on me and there's little if anything I can do about it. I've been rummaging through solutions for over a year and finally ran out of ideas several weeks ago. That’s when I expected the lender to foreclose on the house and kick my cat and me to the curb. They didn’t and it’s beginning to annoy the feline. He’s tired of all the false alarms. Me, I’m too busy Google bombing my favorite ignominious phrases of yesteryear “axis of evil” and “evil doers” to link back to Bank of America and the other big banks that don’t like playing nice. If executed properly it should keep them distracted from my foreclosure for at least a month as they foolishly try to rid the SEO stratosphere of all their negative references.

Once that’s all squared away I intend to turn my sights on the loan modification firms who prey upon the desperate, uninformed masses of delinquent borrowers facing foreclosure. I’m thinking the appropriate phrase for that Google bomb should be “a Prius with functioning brakes”. Their creatively catchy slogans like “Save Your Home!” or “Eliminate Foreclosure Now!” or “Cut Your Mortgage Payment In Half!” inspire me to get off my lazy butt and be proactive about my foreclosure situation. I usually start by fixing myself a ham sandwich, wandering out to the backyard where I’ll spend an hour or two slowly munching on it and contemplating the miracle in Miracle Whip while watching the UV rays of the sun destroy the chlorine in the pool at the rate of .00543 ppm per hour. After that I’m usually too tuckered out to do anything else.

If you take a gander at the ads to the right and left of this column and you’ll see what I’m talking about. In full disclosure I should mention I made $0.16 off of people clicking on those ads and subsequently gambled it all away by purchasing 16 shares of a worthless penny stock. Don’t worry; unless someone beats me to it I’m Google bombing myself as soon as I come up with the appropriate deprecating phrase. Unfortunately “total jackass” has been used too many times.

Now that loan modification is widely accepted as the most ineffectual way to avoid foreclosure (even according to the Federal Government) a new business model has come along to take its place. A friend recently told me about a guy he knows who knows a guy who knows another guy that is paying a firm $500 per month to delay his foreclosure so he can stay in his house. This is not exactly what I would call a solution to foreclosure but it the idea behind it makes fiscal sense when you consider the cost of rent. In a city like Los Angeles I can expect to pay in the neighborhood of $1,500 a month in rent for a modest one-bedroom apartment (and that feels like a bargain when compared to where rents were during the housing bubble) so paying someone $500 a month to delay my foreclosure sounds awfully tempting. That is until I ask myself the question, “Am I really going to pay someone to keep this albatross of a house hanging over my head?” No thank you. I’ve got a better idea: I call it the “Ham Sandwich” approach and it doesn’t cost a dime. Waste no more time and energy battling with the lender. Simply make yourself a ham sandwich, head out to the pool and float listlessly on an inner tube and trust that everything will work itself out. And then, after all of the chlorine has evaporated from the pool get the heck out before the bank comes along and pees in it.

How Foreclosure Feels in Less Than 500 Words

Fri, 12 Mar 2010 11:03:48 -0500

I am not certain how many days I have left until foreclosure. I am not certain where I will move. I am not certain how the final moments in my house will feel, whether I will cry tears of relief or tears of sadness. Either way there’s a 9 in 10 chance a grown man will be crying when he walks out his front door for the last time. I am not certain what the neighbors will think when they see me carting my things from the house. I am not certain what they will surmise led to the foreclosure in the weeks following. I am not certain if they will think about it at all. I am not certain they will care. My life is filled with uncertainties and it’s driving me crazy. The only thing I am certain of is that I will lose my house and there is nothing I can do about it. That makes me feel SCARED most days… and not in a “wet your pants” sort of way.

Most days I don’t enjoy talking about my foreclosure. Most days I don’t feel like seeing or talking to anyone. Most days my life feels like it’s going down in flames and I don’t want to face the world. I don’t show up for parties, return phone calls or emails and will drop off the map at the drop of a hat. Most days I walk out the front door and wonder if the neighbors across the street who just sold their house know I’m in foreclosure. They must. Any realtor worth a 6% commission would pull the records from the surrounding neighborhood these days. Foreclosures bring down values of neighboring houses. Oh gawd, they must know. I cannot meet their eyes. It’s too much. It’s too hard. Instead I look downward at my shoes and silently ask myself, “Do these sneakers belie my age in a good way or bad way?” The answer doesn’t really matter. Most days I’m going to feel EMBARRASSED no matter what I wear. At least I’ve got Lady Gaga to keep me company in that category. I’d feel sorry for the poor, little creature if she wasn’t rich and famous. If ever the opportunity arises I intend to explain to her that true humiliation is when you live in a house you can no longer pay the mortgage on… for over a year.

I have the worst kind of guilt: Catholic guilt without the Catholicism. I'm really good at beating myself up over my mistakes but terrible at tending to the bruises afterwards. A financial meltdown can do this to a person. You torture yourself until you can barely function but thank your lucky stars that you still posses a modicum of emotional stability. It is this tiny shred of sanity that allows me to retrieve the mail from the mailbox at the bottom of the front stairs by the curb. It is this tiny shred of sanity that reminds me to feed the cat and empty his litter box. It is this tiny shred of sanity that allows me to see the absurdity in a 37-year-old single man that treats his cat more like a partner in crime than a pet. It is this tiny shred of sanity that explains to my brain the connection between taking a shower and smelling like an acceptable human being. It is this tiny shred of sanity that gets me through to the end of the day until my head can rest gently on my pillow... so that a few, short hours later it can start all over again. Damn that shred of sanity. What it cannot offer is a sense of joy because sanity is a survival mechanism meant to keep things slow and steady so the boat doesn’t tip over and throw you into the ocean without your water wings. The only time this isn’t the case is when a large, man-eating nightshade vegetable like a tomato is chasing you. That’s when all bets are off and survival requires turning into the craziest bat out of hell imaginable so you can then run like one. Oftentimes I wish I were facing a killer tomato instead of foreclosure. The monotony of slogging through this situation feeling scared and embarrassed makes me feel... DEPRESSED.

That was about 200 words too many which proves why describing what foreclosure feels like in less than 500 words is impossible. The experience of living through losing your home is literally and figuratively complicated. The same could be said for unemployment, bankruptcy or poverty. When someone offers me the usual anecdote, “You’re not alone, a lot of people are facing foreclosure,” I desperately want to reply, “Oh good. I hope it stays that way. The more miserable, struggling people there are in this world the better.” These types of anecdotes are why clichés like “misery loves company” enjoy such enduring careers in the modern English language. People like myself going through tough economic times prefer empathy to sympathy. I would rather someone say, “You’re going to get through this and you’re going to be okay. I’m here. I care about you.”

Okay, that’s a total lie. I’d prefer a friend say something like, “Here’s a duffel bag full of one hundred dollar bills… unmarked. Consider it my gift to you.” If you’re not one of the 1,011 billionaires on the 2010 Forbes Rich List or don’t have that kind of money then I’m not sure we should be friends.