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Project documents Boston's foreclosure crisis, one victim at a time
By lex.galloway on Thu, 02/17/2011 - 9:25am
Taylor: Photo from We Shall Not Be Moved
The loan officer told Paula Taylor she could qualify for a $259,000 mortgage despite her $20,000 yearly salary. Eager to own a home, she signed up and bought a condo in Roxbury. Despite having her sister move in to help with expenses, she couldn't keep up with the mortgage payments and lost the house in just seven months - later finding out the loan company - Countrywide Financial had listed her salary at nearly $90,000 so she could get the mortgage, and it could get the fees.
The Taylor story is one of many being tracked by We Shall Not Be Moved, an on-going media project to tell the story of the grassroots movement that is working to keep Boston-area families in their homes after foreclosure. We Shall Not Be Moved holds an opening reception on Saturday, Feb. 19, from 4-7 p.m., at the Great Hall in Codman Square.
Kelly Creedon, a Boston-based documentary photographer and producer, works on the project in partnership with the Bank Tenant Association and City Life/Vida Urbana to tell the stories of families hit by foreclosure.
"I chose to pursue this project because I wanted to tell a different story about the foreclosure crisis, one that both reflected the human impact of the crisis on families and communities, and one that provided hope about how communities were banding together to support each other," she said.
Although some areas, such as parts of Dorchester, have been particularly hard hit, there have been foreclosures across the area. Associated Press and the Globe both recently reported foreclosure procedings in Massachusetts were up 32% this past year, t0 12,233 statewide - although the number of new filings did decline 14%.
City Life/Vida Urbana and Project No One Leaves has responded through direct action, when negotiations fail. They've organized strikes, pickets and vigils to keep families in their homes. And they work with local law students to help families living in foreclosed homes by providing legal advice and informing tenants and homeowners of their rights.
Marielle Macher, president of the No One Leaves Project, told Universal Hub the group is also working with Boston Community Capital on a buy-back program that helps former homeowners repurchase their former homes - at today's market values, rather than what they originally paid for them. "People have rights, they don't have to move, they have other options and we are there for them to fight back," she said.
Creedon said the foreclosure crisis is a complex, challenging crisis. "We're barraged daily with numbers and graphs and charts about the housing market that I think make us feel really overwhelmed and desensitized to the issue." It's not just a question of people being unable to meet their mortgates. Outright fraud has resulted in a number of arrests and convictions.
In Roxbury, the CLVU and the Bank Tenant Association held two eviction blockades for Taylor, but she still ended up being evicted. She is still part of the movement and hopes that her story can help others and prevent people from going through the same ordeal.
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Comments
Throw the corrupt finance
Throw the corrupt finance people in federal prison for life, liquidate the companies, and give honest mortgage holders reasonable a backout option (refund of all costs except for rent value for the period they were).
But don't essentially give homes to those who never should have been in the homes in the first place. That's what some people are asking for.
And don't tell me that everyone in a mortgage they never should have qualified for is in it honestly. It's unreasonable to think that none of them knew that shady things were going on.
Some of us rent because we couldn't honestly get a mortgage or didn't think it was an acceptable risk at the time. Don't hand out freebies to the dishonest and the foolish.
Everyone is responsible
So I have a spam folder of people all over the world who want to share a huge payout of some sort if I would just give them by account number. Would I bear no responsibility if I hand it over and get all of my funds withdrawn by a foreign hacker?
It seems like everyone shares blame in this case. Fraud by Countrywide and the loan offer as well as failure by the homeowner to understand her financial situation and realize if she could barely pay rent, she probably couldn't afford a mortgage. (I say barely pay rent because I make about that much while in school and its a stretch.)
Shared blame
Countrywide is evil, but come on. This woman was complicit in the scheme.
Countrywide and subprime, predatory lending
Lenders, especially Countrywide, during the bubble were looking for chumps where ever they could get them. They would offer 2/28 ARMs (2 years at a super low payment, then 28 years where the payment and interest rate were recalculated based on the remainder left to pay...which included all of the house price PLUS some of the initial interest still in some cases!). Not only that, but they'd make the 2 years pay only on the interest on the initial mortgage...which kept the payment even lower...but meant you weren't actually paying to own any of the house at all. They did this knowing that you'd never be able to afford the house itself and they'd just take it back. They suckered you into it when they'd show you that you could easily make the payments! (coughcoughfor2years)
So, if by "complicit", you mean "someone who they knew damn well couldn't do the math or understand all of the legalese to see how they were completely wrapping her up in red tape just ripe for a foreclosure in less than 48 months time"...then yeah, she was TOTALLY complicit.
Oh, and they claimed she made nearly FIVE times more than she actually made so that the ratings agencies wouldn't shit all over the CDO later when they wrapped her doomed mortgage up with the rest of them to resell and then take out insurance against it (knowing it was doomed to failure). But yeah, this one's partly on her too, I'm sure.
Damn all those defrauded poor and stupid people! Amirite?
Many people are "stupid" when buying their first house
including myself, but it is still up to you to make sure you are doing the right thing. I am/was fortunate enough to know some real estate lawyers which have always helped me look over rates and terms so that I knew what I was getting into. The problem with these cases is that many of them could not afford the help that someone like me had. That is something that needs to change.
But still, if you want to make a financial decision involving hundreds of thousands of dollars, you have to make sure the bottom line is there. Many of these cases involved people who should have seen the bottom line math with these decisions. Even a google look up "how much can I afford to pay for a house" can lead you to websites telling you how much you can afford and how you can figure that out. If you make 20K a year you simply cannot afford a 260K condo and who knows, this person may have taken this condo away from someone who made 75K a year but wanted to offer 245K? Does this person really deserve "her" house back because she was defrauded by the mortgage company? I say no. Give her back all of the intrest and the small slice of principal (which every mortgage is going to have in its first two years)
I feel bad that she lost her down payment and interest, but I don't feel bad that she lost "her" house.
We're on a lot of the same pages
I never said she should keep the house. However, I have every reason to believe she was basically given false confidence in her ability to pay for it by Countrywide. They pumped her up like a con man running a carnie booth knowing full well that they'd have to lie about her income just to approve it and that they'd be repossessing the house within the next 2 years to do it again to someone else. Their actions were as unethical as a Nigerian 419 scammer. Sure, blame the gullible simpleton who sends the scammer $1000 with the promise of getting $1,000,000 out of a Nigerian bank...but in this case, it wasn't some faceless e-mailer...it was an American corporation running the scam!
Google on the internet for help/info? In this city if you're only making $20k/yr? Probably not.
In the meantime, who cares what those websites said? The person in front of her seemed trustworthy and gave her numbers she could handle.
What if the seller told her that she could easily afford a $250k condo by paying $500/mo for 48 months, then she could refinance the remainder at that time and probably keep it all under $700/mo for the next 30 years! She could afford $500/mo since that's probably what her rent was. I imagine all of us figure we'll be making more in 48 months than we are now, so where's the problem?
I don't think she "deserves" the house at all. She should get all of her money back and the person who defrauded her should be up on charges.
It just seemed you were pointing fingers at people for
blaming "poor people" with your last sentence.
I agree as well that the person who forged her income should be personally responsible for most of this situation and should either be in jail or be sued and have every cent they own given to these people that were scammed.
And I used the website example to show that information on mortgages is out there. Go to a library, bookstore, etc and you can find help. Hell, check around with other mortgage companies and you should have found out that this was a scam.
And even if she did refinance after 2 years, there is no way in hell the mortgage would have been anywhere under 2K a year no matter what the rate is. They could have told here that sure, but there is no math in the world where a situation like that could happen, unless the person could save up for 50% of the down payment, which should have been clear that she could not have done after two years.
At 6%
she'd be paying $1,553 a month, or 90% of her income. And that doesn't include taxes and insurance. The idea that she should be given a mortgage is beyond ludicrous. As both you and Kaz have said, restore her sunk costs if she has any, and throw the book at the swindlers. But there is no scenario that allows her to stay in the house.
Yup, the house should have a
Yup, the house should have a lien put on it and sold to pay for the state to go after the crooks involved.
That's kind of the point,
That's kind of the point, ignorance isn't an excuse in law or life.
BUT. Countrywide knew full well what it was doing, and so did the loan sharks and realtors. The buyer, probably not.
And when you're talking about these sums of money, more fault rests on the people who are most likely to gain from bad business practices. Why did any bank approve such a dangerous loan, without any confirmation? Where are the CEO's and why aren't the shareholders PO'd?
If I took my clients money to some guy on the street offering a 25% return, but no questions asked, I'd think something was up.
You want deregulation and markets free to regulate themselves, and look what we get. Run away bubbles fueled by trying to not be the last one on the gravy train. And this last one almost took the whole country into the maelstrom.
As it is now, many of these bundled MBS can't even prove ownership of mortgages because paperwork is non-existent or missing. Bank's are trying to foreclose on houses they can't even lawfully prove they own the mortgage to.
OK Time out for a sec
Lemme get this straight - the woman makes $20k per year (under $1700 per month) and says in the tape that the mortgage was $2200 per month. Add in $1000 for taxes, $3000 for condo fees and say $1500 for insurance - and you are already over $30,000 per year. Even if her sister helps out with half there has to be some common sense that says you can't afford to live in Boston (food, clothes, transport, utilities etc.) on less than $5k per year - she knew that much going in.
This story is very fishy. I don't doubt the bank sold her a bill of goods (and may have broken several laws), but she bought it hook, line and sinker. Sounds like there is plenty of blame to go around on both sides.
Read her story
Yes, blame all around, but she was told that if she could only stick it out for a year, they'd refinance her two mortgages (at 8 and 11%, which was high even way back in 2006) at lower rates. That's why she brought her sister in. Maybe she should never have gotten a mortgage, but Countrywide should never have offered one, never mind lie about her income.
And that's the bottom
And that's the bottom line.
No matter how reckless it was for her to go along with it, she simply didn't have the numbers. Nor does she have the ability to forge them.
Someone, very specifically, files false reports and committed fraud to get this sale through.
Where are they now? Why aren't they being sued by both parties?
Hint: No paper trail
$90K
One thing I haven't determined: Did she or did she not put her signature on an application that stated her income at $90K per year?
If she did, then she committed fraud and ought to be prosecuted. If not, then the fraud was on the other side.
It was probably adjusted to
It was probably adjusted to $2200, after 24 months.
Before that it probably could have been as low as $600, paying interest only.
It's pretty easy to see a seller scam a sale on someone with very basic finical knowledge. I know people from low income areas that until very recently had not even the slightest idea of how credit cards worked, let alone how to use them correctly.
Balancing a checkbook and (now a days) basic financial knowledge should be taught in 8-12 grade curriculum. Civics and polsci needs to be brought back too.
Hell, even many of the people at banks are clueless to what they're working with. Much of these financial instruments have been created over the last 30 years, when regulation of the financial sector has been non existent. There's a reason banking has gone up from 7% to around 23% of GDP.
Stupid isn't against the law
She bought it hook, line, and sinker. Maybe she's stupid. But stupid isn't against the law.
Lying on the mortgage to say she makes 90K a year, that's against the law.
Of course it's fishy
The whole situation across the country was fishy! That's why it all came crashing down horrendously taking pretty much everything with it.
Welcome to a deregulated economy! Hope you enjoy the financial raping! Enjoy your stay!
In the meantime, buying fraud "hook, line, and sinker" usually makes you the victim. Way to blame the victim.
Like Kaz said, we are all on the same page here
The victims shouldn't get the brunt of the blame, but a lot of the conversation here has to do with the fact that it seems these people think they deserve their house back. I'm not saying Kaz or Adam thinks they do, but it seems that the people do.
but couldn't this have happened in regulated situation too? Aren't the banks supposed to check paystubs and your accounts to make sure you make what you say you make? I didn't think that was a new regulation.
Also, wouldn't she have had to sign something saying her income was 90k?
Most of these people are not victims
First - I agree with your point that these people don't deserve their houses back, even if defrauded - their gripe is with the originators who rarely still own the homes. Deregulated? This is all HIGHLY regulated (and I don't think you can blame Bush and the Republicans or even our own Dem congressional delegation for that one - I'm pretty sure mortgage originators are all/mostly licensed and regulated by the State - you'll have to call Beacon Hill and the Dems up there on that one - and we are better than most at this). The problem was that everyone up the food chain thought the guy before him was doing a good job. If the concrete guy pours a crappy batch of concrete, no matter how good the rest of the construction ( apparently the "building inspectors" weren't checking the concrete) the building will fall down. This thing blew up on a local level - granted there were a lot of people that "should have known" and we can spend the rest of our lives pointing fingers. Literally millions - including this woman and countrywide played a role in this.
Actually a lot of loans were "no verification" aka liar loans you didn't need proof of income - no surprise they were some of the the first to blow up. Then went the subprime and on up the credit food chain. As they point out - it's illegal to claim $90k in income - but the customer has to sign off on the income - the customer is then the one lying unless the bank changes the number after the signature (that happened too - not sure about this case - but if she signed off when the app said $90k she's the guilty party) You can write all the regulations you want - it won't stop people from forging documents - but you need controls in place - probably controls required by the regulators but that doesn't mean people comply.
Keep in mind that every financial professional is esentially a salesperson and has NO legal obligation to do what's in your best interest. The only two exceptions are registered investment advisors (my profession) and trustees. (Their responsibilities are similar to the appropriate relative advisory role of a doctor, lawyer or accountant).
Insurance reps, financial planners who don't even need a license, brokers, "financial consultants", people you meet at a bank - are simply licensed to sell you stuff (and a good part of my time is fixing what they have done to people). What's really scary is that many want to require mandatory across the board fiduciary obligations for financial professionals and the brain trust on both sides of the aisle in Washington keeps putting up road blocks to serve the financial interests of Wall Street.
PS - Lex - interesting post hope we can see more stuff like this.
Blaming the politicians too
Bush started a home ownership initiative that helped fuel the bubble. He ignored all of the warning signs of the bubble that he was continually briefed on. And there was a complete lack of financial regulation on the federal level to prevent the over-leverage of the credit default swaps and collateralized debt obligations being packaged in order to hide both completely fraudulent mortgages as well as just completely over-rated ones.
This isn't just about the originators. This is an entire system that was setup to let the wealthy and the corporations bet against themselves and win either way....with the only loser being the rest of us.
The only thing that's saved Boston's real estate more than most of the rest of the nation is that our prices are justifiably high to begin with due to demand and lack of supply.
Groups like the ones in this article fighting to help keep people in homes they can't afford are just trying to clean up the mess left by the powerful who have all moved on (some moving right back into the same financial objects that ruined all of us because regulations STILL aren't in place to keep them from doing it all over again!). My thought is that if a few people that don't deserve houses some how end up with them as a result of this, then who cares. Better the individuals who are bankrupted by all of this possibly benefit from the house than the morally bankrupt corporate crooks who financially bankrupted their companies but continue to be bailed out by our nation's current corporo-philiac fiscal and regulatory policies.
Regulation means nothing if
Regulation means nothing if the regulators are not funded.
And the banking and finance industry has both seen sweeping deregulation and cuts to regulation agencies; at the same time we've seen unprecedented concentration of power and money in the industry.
Then there's the problem of where the best workers go. With regulation knowledge, do you work as a public servant making 50-70K, or take your knowledge to Goldman Sacs and focus on the loopholes for 250K?
Some say that's an argument against regulation and government.
To me that's a symptom of the complete failure of government and our civil responsibilities, in the name of blind capitalism/consumerism.
Is she supplementing that
Is she supplementing that $20K with social safety net programs?
I've also wondered how many of the people who were "tricked" found it believable because they're so used to getting things from from some of the quite nice safety net programs, that they thought this was another program or another loophole.
American Dream?
The thing no one ever wants to talk about when looking at these cases or the mortgage crisis in general is: where is it written that we have a right to home ownership in this country? I am not saying that people shouldn't have aspirations, but sometimes it feels like we have convinced people that the end all be all of their existence in America is to own a home. Is that really true? So many people went into this thinking about if they could get into a home and not whether they should or why. Owning for the sake of owning doesn't make a whole lot of sense. But, we have sold people (and mostly poor ones at that) that owning a home should be their goal. If that is your starting point, once you add in the crooked mortgage brokers and banks, the end result was inevitable.
I'm not saying that this woman doesn't have to be accountable for her actions, she does, but we have set up so many people for failure. The idea that someone who makes 20K a year can own a home is ridiculous. Anyone being honest would be hard pressed to deny that statement.
Home Equity during the bubble
Home Equity during the bubble was the only thing propping up the spending habits of millions and millions of Americans.
It's the last shoe that dropped. People were taking out 100% of their equity to buy even more property, or expensive luxury cars.
There's a simple reason for the explosion of BMW's, Lexus's, and Mercedes in the burbs. And it's not because of huge jumps in wages.
home ownership
There have been a couple of really good comments in this discussion. During the midst of the whole housing bubble-build-up, I remember the general feeling that you got watching the news, reading the paper, talking to people in bars, family and co-worker discussions - you name it, the zeitgeist was home ownership. A sensible investment for some, a good way to get some cash from your existing property for others and for others a way to quickly turn around some serious cash by flipping these things.
It felt like you were an idiot if you weren't doing this. The President (Bush) is out there saying that everyone can own a home! Congress (Barney Frank among many others) was looking for ways that home ownership would be accessible to so many people who had been red-lined out of the process for generations. As soon as the traditionally excluded people were let into this process it should have been clear that something was up.
Whoever said it above, I agree that for many people there was the bewildering sense that everyone was doing this, I don't know how, but I'm not going to be left out of this thing that seems to be working for people like me. I don't understand medicare or social security, why should this be any different? And in they all jumped. Sociologically it's going to be a great study for years to come, but right now it still sucks. Definitely ignorance and irresponsibility is not an excuse. But try imagining your grandparents getting swindled and saying, "sorry Gramps if you couldn't figure out what the young man on the phone was selling you -- guess you're shit outta luck."
(Of course now everyone will post that their gramps is an investment banker or something.)
If Country Wide Financial's clients . . .
. . . were like Bernie Madoff's- rich and famous- they would be afraid. But no one is going to jail for ripping off these people.
See, apparently- when well connected rich and famous people get fleeced- they were not "stupid"- and they suspected nothing- despite getting unheard of returns on their portfolios year after year. But we are all supposed to gnash our teeth at old Bernie- and celebrate his long prison sentence and take morbid glee from the pain of his family- to the point where tabloids trade prison gossip about the man. But not a scammer of poor people like Country Wide. See- their clients had it coming to them- should have known what they were getting into. You know how poor people are- greedy and corrupt.
Kevin Bacon and some Park Ave mucky mucks lose their shirts? Crucify the guy who did it to them- never mind that "Broke" for most of Bernie's clients meant selling their 20 million dollar homes and moving into a 3.5 million dollar one.
But some black grand mom making 20 grand a year wants to move into a 250,000 Condo and some white shirt and tie tells her she can do it- lies to her face? Well- she should have read the 200 page document of legalese they gave to her first. Yeah- lets begrudge her for being "stupid".
Ughhh. So sickening. What next is going to outrage us? Orphans stealing an extra bowl of porridge at the group home? Oh- no- I forgot- welfare moms shopping for brand name underwear!
Kind of a different story
If a stockbroker or investment adviser asks you for a million dollars and says he can give you a 5%-10% return in 1-3 years, there is math there that can make sense for you. If that same stockborker or investment adviser asks for a million dollars and tells you he can give you 300k in interest every year then yea, you would be a sucker if you gave him that million dollars. Buying stock and investing with anyone is different because you really have no idea where your money is going.
If a mortgage company asks you for a 2K down payment on a 250K house and you make 20K a year....then no, the math will never add up. It has more to do with reading a 200 page document. The fraud/scam is the fault of the mortgage co and no one is doubting that. But this poor woman has the same case as those elderly that are scammed into paying someone to shovel their roof and driveway for 5K. The bottom line math is one of the main issues with this woman, not the refinancing part in two years part.
Also, if you look at these other stories, many of them are not as bad as the case we are all taking about.