BOB HERBERT: Lost in a Flood of Debt

Lost in a Flood of Debt


By BOB HERBERT
Published: November 24, 2007


I’ve been visiting some of the people who have been most affected by the subprime mortgage debacle. It’s a largely bewildered, frightened group that includes people like Dorothy Levey, a 79-year-old widow who sits alone inside the small house she has lived in for 41 years, afraid to answer the telephone or the door.

She has every reason to be worried. The monthly note on her house in the city of Markham, just outside Chicago, is approximately 100 percent of her meager monthly income. Broke and behind in her payments, Ms. Levey expects a foreclosure notice to show up any day, followed by a visit from “the sheriff, or whoever they send to tell you to get out of your own home.”

While the media coverage has focused on the high rollers who created the subprime frenzy (“If you can breathe, we’ll give you a loan”), the hapless victims have remained in the shadows, condemned to economic ruin.

After faithfully making mortgage payments for decades, Ms. Levey and her husband, Dan, were persuaded to take out a new loan, ostensibly for debt consolidation, in 2002. It was like plunging into quicksand. Dan was seriously ill at the time and he died two years later.

To this day Ms. Levey does not understand what she and her husband of more than half a century had agreed to. The terms might as well have been written in Sanskrit.

But she kept trying to meet her obligation. She exhausted her savings. She lost her car. She stopped buying clothes and cut back on food. But there was no way to keep up with the payments.

more...

http://www.nytimes.com/2007/11/24/opinion/24herbert.html?_r=2&ref=opinion&oref=slogin&oref=slogin

I don't know if we will ever recover from the viciousness of this administration's relentless quest to take from the poor and give to the rich. I get so mad I could spit. Even when W. slinks off to suck off Rush, we will still be left with the carnage and the vultures after this woman's home and many others will still have to be dealt with.

There are bad apples in any industry, but the overwhelming percentage of brokers are decent, moral people who look out for their clients best interests.
Looking at the example of the elderly lady, we can only speculate as to how she landed in this terrible situation. How do you know that a mortgage broker got her into this jam? The article doesn't mention mortgage broker involvement. It says 'lender' which implies retail, not wholesale lending. Life is messy and shit happens. She may have lost income when her spouse died, had disability benefits denied, had a renter/boarder move out, a family business may have failed, she may have been screwed out of her pension by a recently bankrupt former employer, etc.
Mortgage brokers perform a valuable service and can use wholesale 'backchannels' to get a less expensive, more suitable loan than most local banks.
The internet lenders such as Lending Tree, Ditech, and the rest can be beaten on price/fee by any experienced mortgage broker.
Mortgage brokers increase a borrowers options and provide much needed liquidity in the market.

If you're looking to blame someone for the current spike in foreclosures and the present liquidity crisis, I suggest you look at-
The Federal Reserve...for lax monitary policy (in hopes of having the housing sector spur the economy)
Wall Street...for their greed in greenlighting a mindbending expansion of exotic products (esp. in subprime and Alt-A)
Bond Rating Firms...who were asleep at the switch and consistently mis-rated CDO's and MBS's as 'investment grade'
Lenders...for responding to Wall Streets open floodgate by reducing underwriting standards to a cursory overview
Investors...for using the lenders easy money to play a risky game of specualtion in real estate
Borrowers...many buyers lied about their income, job history, and intent to occupy the property (Lenders turned a blind eye to this as well)

As a mortgage broker, I specialize in mortgage planning and go beyond the loan application to find out what the borrowers short and long term goals are.
Try getting solid mortgage planning advice and a competitive rate from the industry newby $25K/year loan clerk at the bank.

amount of time, it is fair to say that that "occupation" attracted a large amount of slimy, want-to-get-rich-without-working people. The disaster in this industry fits in perfectly with the W Residency.

(no problem with that) not help consumers land their "dream home." In fact I blame gullible (and often greedy) and ill-informed consumers just as much as disreputable mort brokers.

If something seems to good to be true it probably is.

Kick and Nom, Welcome to W's America.

How much does she owe? Can we find out and help? I am willing to chip in and can get others to as well; please recommend if you can.

Please feel free to PM me if you find out anything.