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Have to warn my parents. But in reality, how do you even protect yourself from such a thing besides having a good lawyer?

I'm not condoning the clearly eggregious tactics of some financial houses nowadays... Places pulling shady stunts get no love from me.

But what the heck is with these commentators' attitudes about the borrowers? They talk like people with mortgages bear NO responsibility for keeping track of their accounts. Anyone 'surprised' by a raft of late fees on a mortgage has not checked their account ONCE in at least 2 months. I couldn't sleep nights if I wasn't double checking my account every week.

The banks are being slimy - no questions. But a simple 1-minute check on your account just ONCE a month stops this kind of crap. Are people such helpless, stupid, pathetic sheep now that they can't be expected to even do THAT?

These borrowers knowingly made bad loans to people who didn't understand the contract. In that case it is the lenders fault and the bank should be forced to restructure the loan and not allowed to go to foreclosure. People should never be put out in the street if the mortgage can be restructured.

While I think that if this happens to a single borrower, it's one too many, I found it very interesting how many contortions the expert went through to avoid talking about the extent of the problem. A simple number, either a percent or an estimate of the number of borrowers being screwed, would have clarified much. As it stands, she went out of her way to NOT give a number, which leads me to believe that it's quite small, and while a problem, not worthy of a 10 minute segment.

And while I do appreciate the "borrowers are totally to blame for not going over the fine print" sentiment, I'm really tired of the unspoken rule of business, which, if true, needs to be written into every contract ever signed, which is, "We will be utter cockbags, no matter what. Given a chance to be a cockbag, we will embrace our darkest impulses every fucking time." If that language is in there, there'd be a lot less problems from the borrowers in the long run.

These borrowers knowingly made bad loans to people who didn't understand the contract

In the early 90s the banks were arguing AGAINST repealing Glass-Stegall. Politicians partnered with some big finaincal houses like AIG and started accusing mid-size & small banks of racism ala "red-lining" to grease the political skids for a repeal. In most instances there was no racism of any kind. Banks simply did not give loans to people that couldn't afford them. But poor, urban areas had higher percentages of minority populations - and so out whips the race card...

I lived in the 70s and 80s. I know how hard it was to get even a 30-year loan in those days. But literally overnight banks had to start giving out loans to people who traditionally would not qualify. Instead of making money on the interest of the LOAN, banks were expected to make profit by bundling & selling the mortgage. The government promise was that if things went sour on the borrower end, Freddie Mac & Fannie Mae would paper it over. It worked fine for about a decade. But you can't sustain a market when your only customers are poor people in homes they can't afford and property flippers taking out 2+ extra mortgages more than they can realistically pay for.

The bank's job isn't to be your daddy, or to lecture you about whether you should or shouldn't get a loan. If a person walks into a bank, then as long as they qualify under the rules which are established by government then the bank doesn't have much choice. When people qualify, the bank issues the loan or they open themselves to discrimination lawsuits. It's a Catch-22.

Your outrage should more properly be targeted at the government. Have them re-institute Glass-Stegall. Force them to tighten up the requirements on who can/can't get a loan. Make it so people who shouldn't get loans CAN'T get them and that banks aren't allowed to do it. Join the rest of us racist, evil, red-lining conservatives who think loans should only be given to those who can actually afford to pay them off. But prepare yourself for a tongue-lashing from every neo-liberal leftist group under the sun, because clearly your bean-counting logic is pure neo-con white hatred, right? Oh - and especially prepare yourself to get excoriated by guys like Barney Frank who was one of the principle engineers of this whole "UFFOWDABLE HOWSEING!" mess.

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Misleading title!

The story focuses entirely on foreclosures being more profitable for accounts that HAVE missed payments!

The only even passing reference that could apply to people who never missed a payment is a passing mention of payments that get applied late by the bank/financier. That's a much, much, much smaller story, and one that almost half the people I know have a personal example of. That should normally lead to the customer going in and tearing a strip off the bank for failing to apply the payment that was given to them on time. For it to roll out to a point where the bank is better of foreclosing means late fees have been piling up for a ridiculously long time already.

>> ^Winstonfield_Pennypacker:
I'm not condoning the clearly eggregious tactics of some financial houses nowadays... Places pulling shady stunts get no love from me.
But what the heck is with these commentators' attitudes about the borrowers? They talk like people with mortgages bear NO responsibility for keeping track of their accounts. Anyone 'surprised' by a raft of late fees on a mortgage has not checked their account ONCE in at least 2 months. I couldn't sleep nights if I wasn't double checking my account every week.
The banks are being slimy - no questions. But a simple 1-minute check on your account just ONCE a month stops this kind of crap. Are people such helpless, stupid, pathetic sheep now that they can't be expected to even do THAT?


You forget, in America there is a two-way contractual system The bank agrees to loan, taking on all the risks associated with such load. The borrow does the same.

If the bank is shafted, it loses a lot of its investment. If the borrower defauls, he loses his credit score, his house and perhaps can have a default judgment set later...

So, in other words, borrowers say "I will pay, unless i do not, in which case you can penaize me per our contract." Either way, they follow the terms. So, even under default, they still obey the contract.

now, would you loan someone 500 dollars without knowing that person? You say the borrower should check his account, but that is barely his "job: whereas it is the job of the banks.

I was floored when I heard about the guy who was foreclosed on because he won a court settlement against a woman who ended up delinquent in HER mortgage.

>> ^Winstonfield_Pennypacker:
The bank's job isn't to be your daddy, or to lecture you about whether you should or shouldn't get a loan. If a person walks into a bank, then as long as they qualify under the rules which are established by government then the bank doesn't have much choice. When people qualify, the bank issues the loan or they open themselves to discrimination lawsuits. It's a Catch-22.


I'd be interested to hear your explanation for all the banks that are doing just fine because they didn't buy into the mortgage scheme. I've heard radio interviews where they simply say that they didn't lend to anyone who couldn't be reasonably expected to pay for it. How did they escape your Catch-22?

I have no doubt that there were politicians who pushed for easier mortgages to please their vocal minority constituents, but the people who stood most to gain were the wall street big money handlers. In your estimation, which of these groups tends to get their way in politics most readily? And therefor, which of these groups is more to blame?

There is a two-way contractual system The bank agrees to loan, taking on all the risks associated with such load. The borrow does the same. ... You say the borrower should check his account, but that is barely his job: whereas it is the job of the banks.

I'm having a tough time conjoining these two bits here. We both agree that the loan is a two-way contract where the bank agrees to lend, and the borrower agrees to borrow - and that both parties agree to the risks involved. And yet there is this second bit here where you say that it is 'barely the job' of the borrower to check his balance and manage his end of the contract. If someone agrees to a contract that carries the risk of bankruptcy, homelessness, or financial ruin then to say it is 'barely' thier job to check the account comes off to me as insanely negligent.

I'd be interested to hear your explanation for all the banks that are doing just fine because they didn't buy into the mortgage scheme. I've heard radio interviews where they simply say that they didn't lend to anyone who couldn't be reasonably expected to pay for it. How did they escape your Catch-22?

Depends on the bank. Peeling back the onion that is the banking industry is complex, but back in the 90s the ones that were really pushing for the repeal of Glass-Steagall were not 'banks' in the sense that most people think about them. They were large, multi-national financial institutions and insurance companies - AIG being the principle player. These kinds of big money houses saw a way to make profit on the buying & selling of mortgages as financial packages WITHIN the financial industry itself. Effectively, the customer getting the loan was utterly irrelevant to these big players. They were interested in the financial packaging - not the loans themselves.

So when the law was changed, it allowed them to throughput mortgages within their own organizations. Historically, Glass-Steagall made it illegal for a financial house like AIG to buy & sell mortgages from banks that it owned or partnered with. But after the change, they could pool all the loans together and market them as a product. They started putting pressure on the smaller players to churn out more debt. There were banks that didn't play the game, but it was tough becuase all through the late 90s and early 00s, people were making money hand over fist the sl-easy way.

I have no doubt that there were politicians who pushed for easier mortgages to please their vocal minority constituents, but the people who stood most to gain were the wall street big money handlers. In your estimation, which of these groups tends to get their way in politics most readily? And therefor, which of these groups is more to blame?

Your question is this... Who is more to blame - the person MAKING A BRIBE or the person TAKING THE BRIBE? My answer is that the person TAKING THE BRIBE bears the greater guilt. All the bribes in the world are worthless if the other guy doesn't TAKE it. Businesses have no power to pass laws. That power rests in Congress. They are the stewards. They are the gatekeepers. They are the ones that are given public trust to only pass good laws, and to guard against this kind of crap.

Sadly - this is what happens when you allow a strong, central government to exist. I remember VERY clearly in the 90s that when AIG, Barney Frank, and a bunch of other guys were strong-arming the repeal of Glass-Stegall they were VERY insistent and persuasive that they were doing a really GOOD thing. It was going to lower the cost of housing. It was going to get more poor people into homes. It was going to make a lot of money for the middle-class, and ease the burden of the poor. In fact, the "repeal Glass-Stegall" guys were vociferious in accusing those OPPOSING their plan of being evil, selfish, cruel, and racist. And until October of 2008, who could really argue with them?

Government should have known better. Glass-Steagall was made a law SPECIFICALLY to prevent housing market collapses like this. It was implemented as a direct result of similar shenanigans which caused the Great Depression and the crash of the 20s. But because government people were wanting votes and conduct 'social engineering', they changed the laws. AIG didn't change the laws. Government did. They bear the ultimate responsibility.

In no way does this absolve folks like AIG. Quite frankly, the federal bailout is a massive crime aginst the people. It dumped money into financial houses to shield them from the consequences of their stupidity. The banks should have been allowed to fail. When this kind of thing happens, you let the chips fall and then the system rebuilds itself. And it does so rather quickly when government isn't there screwing things up like they did in the 30s.