Time To Prosecute Bank Of America - Detroit's No.1 Loan Shark

[ridgeabilly]

Former BoA employees testify they were ordered to delay mortgage modifications and “lose” paperwork to drive up late fees. BoA can profit on foreclosure when the government’s Fannie Mae takes the loss at taxpayer expense, but abandoned homes devastate our tax base, forcing the city further into debt.

**Time To Prosecute

The #1 Loan Shark Bankrupting Detroit:

BANK OF AMERICA, Foreclosing Our Homes, Our City**

**Monday, August 19, High Noon**

We'll gather and march from Detroit's Labor Landmark

Hart Plaza, Jefferson Ave. & Woodward, Detroit

Filing for bankruptcy is a declaration of war on retirees, workers &
communities!

We'll Put BoA on Trial

[Bham1982]

Maybe the evil banks should all redline Detroit.

Then the poor homeowners will be spared the indignities of actualy being obligated to pay for their agreed to and massively subsidized mortgages, courtesy of the chump taxpayers.

[iheartthed]

Maybe the evil banks should all redline Detroit.

Then the poor homeowners will be spared the indignities of actualy being obligated to pay for their agreed to and massively subsidized mortgages, courtesy of the chump taxpayers.

You're implying that they haven't already redlined Detroit.

[Honky Tonk]

Maybe Gibert will step up to the plate and refinance everyone's mortgage?

[4V4DMD]

Maybe the evil banks should all redline Detroit.

Then the poor homeowners will be spared the indignities of actualy being obligated to pay for their agreed to and massively subsidized mortgages, courtesy of the chump taxpayers.

Ah like the poor banks who were bailed out. Bailout for the people? Why they agreed to that mortage?! Bailout for the banks? We have to help them, its a crisis.

[Det_ard]

With the new stricter mortgage regulations via Dodd-Frank, SAFE Act and the CFPB there will be a lot fewer people qualifying for mortgages in Detroit and therefore a lot more renters. Which is ironic, because the lack of homeownership has been shown to be a large cause of the discrepancy in wealth between whites and minorities.

Currently, with interest rates so low, it's cheaper to own than rent. Of course, there are long-term expenses involved in being a homeowner but there can also be long-term price appreciation. With real estate in Detroit as cheap as it's ever been, how ironic that regulations that supposedly protect the consumer from being victimized are actually keeping people from being able to buy now, save money every month vs. renting, and perhaps profit as values increase.

And while the payment on a 30-year fixed rate mortgage won't go up, Detroit rents will. Miss a mortgage payment, you can get caught up and keep your house. Miss a rent payment, you're evicted and that eviction on your record keeps other landlords from renting to you.

Thank the anti-corporate "do-gooders" for that.

BTW, if you can't get a bank loan and want to buy a house on land contract, that's a lot tougher to do now too with the new regs. There's a permanent class of renters being created. Doesn't sound too progressive to me.

[Detroitnerd]

Thank the anti-corporate "do-gooders" for that.

What a bunch of hogwash. The banks are already working to eviscerate the very modest requirements that were instituted for getting a mortgage. They were predatory and steered minorities to shitty products. They were basically a cartel of criminal cocksuckers who leveraged themselves 33 to 1, crashed the economy, threw millions out of their homes, then got sweetheart bailout deals and paid themselves huge bonuses, took sweet vacations when they should have been clapped in irons, and you have the TEMERITY to say that the real problem is those who'd rein in the banks? Go soak your head.

[belleislerunner]

I think now is a good time for an Accounting 101 lesson for those who think banks are out to make bad loans/evil.

Let's use for this example, a mortgage on a house in Sherwood - that for $225K at the height of the market. Current value is $72K.

You enter a bank and take out a loan for $225K. That loan is an asset for the bank which they record on their balance sheet. Each quarter they are required to set up a reserve [[in essence think of saving for a rainy day) for what percentage of those loans they think will be charged off [[i.e. written down to collateral value) within approximately the next year. So even if you paid your loan every month on time - maybe 1% of the outstanding balance would be held back by the bank in reserve.

Let's suppose the bank "knew you could never afford the loan" but wanted to sell it to you anyway - what would the purpose of that be? Let's ignore for a second - the option of a mortgage originator selling your loan immediatley to someone else, I'll answer that later.

So Homeowner can't afford his payments after the interest only loan resets in 5 years. The bank tracks that loan as it goes from 30+ days past due, 60 days, 90 days, 120 days, 150 days to 180. Banking regulations require that the bank charge off the 250K loan down to the collateral value once a borrower is 180 days past due. So in our example, the bank had to recognize six months after the guy stopped making payments a 153K chargeoff [[difference between the 225 mortgage and the current appraised value of 72K).

Which meant as housing values plummeted in Detroit, they actually hit banks just as hard - because the amount of their "write down" was based off the value of the collateral. Having higher chargeoffs, leads to increased reserves in the future, which leads to banks having to raise more capital or merge just to stay afloat.

So the bank definitely does not "Win" on making a loan to someone who shouldn't be in it.

Who wins? Realtors win because the get commision immediately so couldn't care less if you default in 2 years. Brokers who sell your loans to someone else [[to immediatley monetize the asset) win.

However, many of these "sellers" [[i.e. someone who made a bad loan and immedialtey sold it) have been hit with hundreds of millions of mortgage repurchases by those to whom they sold the mortgages [[e.g. FNMA, GNMA, Freddie Mac) because of violations of representation and warranties of what they purported to be selling. In other words, they told the buyer that they verified the income of the guy in Sherwood. They did not. They told the buyer the LTV ratio was a certain percent. It was not. So imagine it being 2013 and Fannie Mae [[a secondary buyer) requiring you [[the shady seller) to buy back all the junk you sold them in 2007/2008. Look at any Bank's SEC filings - it's still happening today. The mortgage folks who didn't have deep pockets, couldn't pay so they folded.

The only ones left are banks and the GSE's [[buyers of the crappy loans) and both are just watching the clock turn hoping each quarter it gets a little better. A Company like Fannie or Freddie were publicly traded companies that got delisted/under conservatorship [[i.e. bankrupt) because of the mortgages. Banks went under because of the loans being charged off and not having funds to repurchase from Fannie/Freddie.

Homeowners go their credit wrecked and will take years to recoup. Everyone was to share in the blame, everyone got equally burned.

[iheartthed]

With the new stricter mortgage regulations via Dodd-Frank, SAFE Act and the CFPB there will be a lot fewer people qualifying for mortgages in Detroit and therefore a lot more renters. Which is ironic, because the lack of homeownership has been shown to be a large cause of the discrepancy in wealth between whites and minorities.

High home ownership rates also correlate with depressed urban areas. No surprise that Detroit has had and continues to have among the highest home ownership rates of any central city in the country.

[Detroitnerd]

Homeowners go their credit wrecked and will take years to recoup. Everyone was to share in the blame, everyone got equally burned.

Horseshit. America's homebuyers, especially minority homebuyers who were led down the garden path, were given tough love and left hanging in the breeze. The banks, through bailouts and quantitative easing, have gotten TRILLIONS OF DOLLARS. I'd love to be burned like that.

Only somebody completely brainwashed would say that, as Americans are increasingly unemployed, underemployed, homeless and deep in debt -- while banks get free trillions, no prosecution and the stock market surges to new highs -- everyone got equally burned.

[iheartthed]

Horseshit. America's homebuyers, especially minority homebuyers who were led down the garden path, were given tough love and left hanging in the breeze. The banks, through bailouts and quantitative easing, have gotten TRILLIONS OF DOLLARS. I'd love to be burned like that.

Only somebody completely brainwashed would say that, as Americans are increasingly unemployed, underemployed, homeless and deep in debt -- while banks get free trillions, no prosecution and the stock market surges to new highs -- everyone got equally burned.

The pain also wasn't equally spread amongst different demographics of homeowners, which also explains a bit of the disconnect. People who owned homes in predominantly minority areas [[like Detroit), even if they did not carry a shoddy subprime mortgage themselves, lost an enormous amount of wealth because of what was going on around them.

[belleislerunner]

I'll agree the effects of it have hit Detroit hard [[i.e. miles of abandoned/demolished homes/vacant land) but, yes, it hit nationwide, across the board.

For example, it might [[or might not surprise you) that Atlanta is actually the worst in the country for underwater homes. Still in 2013. This was no ploy to "get Detroit." Are we saying the people in Detroit are more gullible/stupid than the people in Atlanta? i think not.

"In an arc that stretches from Cartersville to McDonough to Winder, dozens of metro Atlanta neighborhoods are drowning. There’s not another metro area in the United States with as many concentrated pockets of mortgage holders who are underwater on their loans. No place else comes close." http://www.myajc.com/news/business/e...nderwat/nXJ3N/

[Detroitnerd]

http://www.youtube.com/watch?v=r-S6rZ18KKk

[iheartthed]

I'll agree the effects of it have hit Detroit hard [[i.e. miles of abandoned/demolished homes/vacant land) but, yes, it hit nationwide, across the board.

For example, it might [[or might not surprise you) that Atlanta is actually the worst in the country for underwater homes. Still in 2013. This was no ploy to "get Detroit." Are we saying the people in Detroit are more gullible/stupid than the people in Atlanta? i think not.

"In an arc that stretches from Cartersville to McDonough to Winder, dozens of metro Atlanta neighborhoods are drowning. There’s not another metro area in the United States with as many concentrated pockets of mortgage holders who are underwater on their loans. No place else comes close." http://www.myajc.com/news/business/e...nderwat/nXJ3N/

I wouldn't characterize what happened as "gullible/stupid". It was systemic. I'm no expert on Atlanta demographics but I'd be willing to bet that those areas have significant minority populations.

[belleislerunner]

Atlanta, the Detroit of the South =)

[Gistok]

High home ownership rates also correlate with depressed urban areas. No surprise that Detroit has had and continues to have among the highest home ownership rates of any central city in the country.

What on earth are you talking about? High home ownership has everything to do with the fact that Detroit is a low density city with few apartments. High ownership rates was and is a healthy sign... just as it is in the suburbs.

We dumped my late mother's house in the Balduck Park area because the neighborhood was going mostly rental... with absentee landlords. That showed in the lack of lawn maintenance and home care that started showing the downward slide of the neighborhood. Renters don't maintain properties as well as homeowners do...

[JBMcB]

To keep things in perspective, here are some other factors:

1. The federal reserve had been keeping prime interest rates very low for a LOOONG time, which slashed the profit margins on traditional loans, as those are tied to the prime rate.

2. The banks had been lambasted by the senate [[most significantly and somewhat ironically by Barney Frank) for not giving out more loans to under-qualified/sub-prime borrowers.

3. There had been an implicit guarantee that banks could make all the marginal loans they wanted, and they would be backed up by Fannie May and Freddie Mac. This was mentioned explicitly in the hearings from #2 IIRC.

The one rule that would have, more than likely, prevent the meltdown from happening again is Glass-Stengal, which kept investment and "regular" banks separate. The Frank-Dodd bill did not re-institute the rule. It cracked down on payday lenders, credit card fees, and loads of other crap, but DIDN'T FIX THE UNDERLYING PROBLEM.

[Det_ard]

What a bunch of hogwash. The banks are already working to eviscerate the very modest requirements that were instituted for getting a mortgage. They were predatory and steered minorities to shitty products. They were basically a cartel of criminal cocksuckers who leveraged themselves 33 to 1, crashed the economy, threw millions out of their homes, then got sweetheart bailout deals and paid themselves huge bonuses, took sweet vacations when they should have been clapped in irons, and you have the TEMERITY to say that the real problem is those who'd rein in the banks? Go soak your head.

Guess what? I share some of your outrage at what the banks did. I would have preferred that they'd not been bailed out, if that could have been done without a catastrophic global economic event. They should have failed, their execs should have been fired and sued, their shareholders should have been wiped out, and their bond holders should have had to fight over the scraps.

That doesn't make what the naive do-gooders have done any better. People who think like you throw the baby out with the bathwater in your ignorance of finance and your knee-jerk dislike of big business, capitalism and free markets.

Are you happy now that loans are so hard to come by if you're not A+ credit? Do you love that many otherwise solid potential homeowners who want and could afford a home of their own are now forced to live in more costly rental housing for years? Do you care that rental neighborhoods are less stable than owner-occupied neighborhoods, because that's on you, and those who think like you. But to hell with actual people, you're busy getting your rocks off on "fighting the man". That's pretty self-centered.

[Detroitnerd]

Guess what? I share some of your outrage at what the banks did. I would have preferred that they'd not been bailed out, if that could have been done without a catastrophic global economic event. They should have failed, their execs should have been fired and sued, their shareholders should have been wiped out, and their bond holders should have had to fight over the scraps.

Shoulda, coulda, woulda. And yet those criminal cocksuckers are riding high in the saddle, and are likely going to crash the system again. All while you're busy wagging your finger at ... a mirage, basically. There is no huge group fighting the banks. Dodd? Those people are paid by the banks to write the rules the way they want them. And any tough rules are really just posturing. The banks will get what they want in the end, mostly because people who ought to know better are busy looking the other way.

That doesn't make what the naive do-gooders have done any better. People who think like you throw the baby out with the bathwater in your ignorance of finance and your knee-jerk dislike of big business, capitalism and free markets.

That's another tub of horseshit. You are now taking people who want tough laws on white collar crime and want them enforced and lumping them in with enemies of big business, capitalism and free enterprise. What a load of commie-baiting bullshit. If the banks behaved by the rules, I wouldn't be railing against them and we wouldn't be in this goddamn mess. The complaint is that the banks were criminal, that they bought the rules and enforcement they wanted in Washington, and that they're getting socialism for the rich when we're all busy cutting socialism for the poor. Let me tell you, if capitalism and free enterprise means one set of laws for the rich and another for the poor, I guess I'm red all over. But I really don't think that's the case.

Are you happy now that loans are so hard to come by if you're not A+ credit? Do you love that many otherwise solid potential homeowners who want and could afford a home of their own are now forced to live in more costly rental housing for years? Do you care that rental neighborhoods are less stable than owner-occupied neighborhoods, because that's on you, and those who think like you. But to hell with actual people, you're busy getting your rocks off on "fighting the man". That's pretty self-centered.

No, that's not on me. I don't have any fucking political power, so HOW THE FUCK IS THAT ON ME? I got my mortgage last year. It took many months, but I'd rather have to supply paper and explain things and allay a borrower's concerns than to expect to get as much money as I can borrow on a signature and a promise. Gave me more time to study the terms too. Wound up with a pretty good deal on a 15-year mortgage. I'm not crying about it. That's how it works: Lenders should be taking a good long look at you and deciding if you're worth the risk. In what Rainbow Candyland am I just entitled as a borrower to lots and lots of money?

Am I mad over the situation with the banks? Yes, I'm mad as hell about it. They were crooked and they committed crimes and they should be in jail. The banks should have been purchased by the government for pennies on the dollar instead of lavishly rewarded. And the fact that you use this as an opportunity to rub your forefinger at me for shame because I'm in favor of -- holy shit! -- regulating the banks and enforcing the rules, well, that shows me how much credence to give you.

But the fact that you have leaped beyond that mere absurdity and are accusing me of, basically, being a foaming-at-the-mouth commie, bent on the destruction of Western Civilization, shows me you are something much more ridiculous than that.

[Detroitnerd]

If anybody is curious about how the banks are getting away with murder, Mike Whitney is a good read.

"The banks don’t want to act like banks anymore. They don’t want to hold capital against the loans they issue, they don’t want to keep loans on their books, and they don’t want to pay the losses when the loans blow up. The just want to keep printing private money [[credit), booking profits on that money [[loans), and then dumping the red ink on Uncle Sam. That’s how the whole thing works."

http://www.counterpunch.org/2013/01/...n-the-horizon/

[iheartthed]

What on earth are you talking about? High home ownership has everything to do with the fact that Detroit is a low density city with few apartments. High ownership rates was and is a healthy sign... just as it is in the suburbs.

Uh, yeah, sure...

English economist Andrew Oswald has shown that across European countries, and across U.S. states, high levels of home ownership are correlated with high levels of unemployment. More conventional factors such as generous welfare benefits or high levels of unionization don't explain unemployment nearly as well as the tendency to own houses.

http://www.slate.com/articles/arts/t...manifesto.html

Homeownership is a religion in America, but the fanatics of Detroit are without peer: 85 percent of Detroit housing consists of single-family homes. In that sense, Detroit is reflecting Michigan's traditional ardor for the single family dwelling. In 1900, Michigan's home-ownership rate was 16 percentage points higher above the national average. In 2000, it was 7 points above. The gap had shrunk, but, overall, Michigan still had the third highest home ownership rate in the country.

...

Detroit is the only city in the country where more African-Americans own homes than rent. Only in Detroit does the African-American homeownership rate [[53 percent) approach the national white homeownership rate [[56 percent.)

http://www.theatlantic.com/national/archive/2011/03/detroit-was-like-cheers-everyone-knew-your-name/72226/

My colleagues and I tracked homeownership levels across U.S. cities and regions to see how they correlate to other measurable demographic and economic factors. As we expected, the rates of homeownership are greatest where housing prices are lowest. But cities with high levels of homeownership—in the range of 75%, like Detroit, St. Louis and Pittsburgh—had on average considerably lower levels of
economic activity and much lower wages and incomes.

...

The cities and regions with the lowest levels of homeownership—in the range of 55% to
60% like L.A., N.Y., San Francisco and Boulder—had healthier economies and higher incomes.

http://www.creativeclass.com/rfcgdb/...0overrated.pdf

The bottom line? A state's homeownership rate may be a powerful precursor to "eventual sharp rises in unemployment in that state." The authors find that a doubling of a state's rate of homeownership "is followed in the long-run by more than a doubling of the later unemployment rate."


Higher rates of homeownership lead to higher rates of unemployment, according to the authors, in three key ways: by restricting labor mobility, generating longer commutes, and by lowering rates of new business formation.

http://www.theatlanticcities.com/job...ployment/5520/

[Gistok]

Ah.... I see how you're using those statistics....

Lets just wait and see how having Detroit home ownership drop to below 50% helps make all the people more affluent...

Now that the 48224 Area Code on the far east side is getting to be mostly rental properties... lets see how that helps lower the unemployment rate, and improve the neighborhood....

I hope it helps them more than it has the Morningside area [[just west of EEV).... where switching to rental properties has meant that every 10th home is now an empty lot...

[maverick1]

If anybody is curious about how the banks are getting away with murder, Mike Whitney is a good read.

"The banks don’t want to act like banks anymore. They don’t want to hold capital against the loans they issue, they don’t want to keep loans on their books, and they don’t want to pay the losses when the loans blow up. The just want to keep printing private money [[credit), booking profits on that money [[loans), and then dumping the red ink on Uncle Sam. That’s how the whole thing works."

http://www.counterpunch.org/2013/01/...n-the-horizon/

I was going post the same thing. Banks make money if you foreclose or not. You foreclose? They keep the house, the money from the government, and put the house back on the market. They don't own the loan anymore so it's not on their books. They can't lose.

[iheartthed]

Ah.... I see how you're using those statistics....

Lets just wait and see how having Detroit home ownership drop to below 50% helps make all the people more affluent...

Now that the 48224 Area Code on the far east side is getting to be mostly rental properties... lets see how that helps lower the unemployment rate, and improve the neighborhood....

I hope it helps them more than it has the Morningside area [[just west of EEV).... where switching to rental properties has meant that every 10th home is now an empty lot...

I think you missed the point.

[belleislerunner]

"I was going post the same thing. Banks make money if you foreclose or not. You foreclose? They keep the house, the money from the government, and put the house back on the market. They don't own the loan anymore so it's not on their books. They can't lose."

Explain that with real numbers in an example. It doesn't make sense.

A bank can't foreclose on your house if it doesn't own it [[i.e. have title). If the bank sells the loan to Fannie or Freddie [[Fannie or Freddie are the new "bank" who bought your loan and have it on their books).

And the part that you seem to be forgetting is the bank made a loan [[i.e. they gave up their cash to you) for 250K. That's really money out the door. So if you foreclose, and they put the house back on the market, they're trying to get as much of that back as they can [[e.g. 50K) is better than losing 250K. In that example, the bank put the house on the market and still LOST 200K.