Mar
How the housing crisis will be resolved
Kind of a snarky article at the NY Times about Countrywide executives being involved with the purchase of distressed loans from the government. The “bad” loans, or toxic assets as some call them are a significant part of the problem with the financial industry in the United States. There really is only one way to clear up that problem, and that’s to get rid of the assets at a price that makes sense for the purchaser, not the value most banks seem to feel the assets are worth.
The “fire sale” prices are what’s necessary to attract private capital to the product, and that private capital is certainly going to be more efficient than a government bureaucracy at turning that product into either a producing loan or selling the underlying home at it’s true current market value.
So why does the Times seem to feel it’s problematic to have major lending executives in charge? The tone seems to be the executives made money through greed on the market’s way up, and now they’re trying to make more greedy money on the way down. Who else is going to have the experience to run that kind of an operation? Reality dictates the need for experienced executives who can quickly determine which loans are salvagable and which properties need to be taken back. There aren’t years available for on-the-job training on how to do this, it’s got to be done quickly and accurately.
I never thought I’d be defending lending executives, but I think the Times has it wrong in this case.
Lawsuit filed to save disabled Chicoan’s home
By LARRY MITCHELL – Staff Writer
Posted: 03/14/2009 12:00:00 AM PDT
CHICO — To prevent a Chico woman from losing her home, several lawyers filed suit against three firms they accused of engaging in a “predatory lending scheme.”
“We’re hoping this is going to help this woman out. She certainly deserves it after what she’s been through,” said Evanne O’Donnell, managing attorney of Legal Services of Northern California.
Jan Poythress, 53, was within days of being evicted from her northeast Chico home last month when the attorneys intervened.
The eviction was put on hold, and Poythress remains in the house while a new trial is scheduled to decide the legality of requiring her to move.
In a separate case, the lawyers, on March 5, sued Instant Mortgage Lending Corp. of San Diego, ForeclosureLink of Fair Oaks and Expedia Home Loan of San Diego, demanding, among other things, that Poythress’ loan and the foreclosure on her home be canceled.
“When you read this complaint, you see how sinister this is,” O’Donnell said in a phone interview.
The lawsuit states that Poythress, who is disabled, lived in her home, with her parents, most of her adult life. Before her parents died, several years ago, they looked after her finances.
After their deaths, Poythress was lonely and vulnerable, the suit says. It wasn’t long before a salesman convinced her he was her friend and talked her into letting him and his girlfriend move in with her. The suit says they didn’t pay rent and persuaded her to buy them luxury items, including a car. Then
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they disappeared.
Poythress, who then had a large credit-card debt, was contacted by a telephone salesman representing Expedia. He called her two or three times a week until she agreed to take a loan against her house to pay off her debts.
Although her home was worth quite a lot, Poythress has a very low income — less than $1,000 a month from Social Security. With that income, she could not make the payments and within a year defaulted on the loan.
In October, the suit says, Instant Mortgage Lending proceeded with the foreclosure sale of Poythress’ home and became the owner of the property. An eviction action followed.
The lawsuit defines illegal “predatory lending” as aggressive, misleading sales tactics; lending without regard for a borrower’s ability to repay; imposing excessive prepayment penalties; falsifying loan documents; and targeting low-income, elderly or minority borrowers.”
Expedia and Instant Mortgage “engaged in many of these tactics toward Poythress,” the suit states, and in essence, “conspired to steal her residence.”
Poythress believed she had obtained an affordable loan that was in her best interest and that she was borrowing $100,000 to pay off her debts and get $20,000 back in cash, the suit said. But in fact, the loan was for $195,000, the entire balance of the loan was to be repaid in a “balloon” payment after one year, and Poythress’ monthly payments were to be about $2,356.
The suit states Poythress has suffered intensely because of what happened to her, especially considering she and her three dogs and two cats would have nowhere to go if she lost her house.
O’Donnell said she was grateful for the help of several attorneys — experts on foreclosures and evictions — who donated their time free of charge. They include Doug Jacobs of Chico, Wayne Silver of Sunnyvale and Maeve Elise Brown of Oakland.
Officials at Instant Mortgage Lending said they would have no comment now on the case. Expedia officials could not be reached. Marsha Townsend, vice president of ForeclosureLink in Fair Oaks, said her firm was only indirectly involved in recording foreclosure documents.
Staff writer Larry Mitchell can be reached at 896-7759 or lmitchell@chicoer.com.
March 20th, 2009 at 9:19 pmThis company has the same pattern throughout U.S. They lend money to people who can’t afford the payments only to foreclose soon after.
April 8th, 2009 at 8:01 pmThere are so many people out there that are interested in taking advantage of homeowners who are in a hard financial situation. We lack some basic laws and legislation to address these criminals. Homeowners should be wary of companies that pose a solution that sounds a bit too complex or a bit too simple. I myself negotiate loan modifications and short sales for homeowners but I believe in being very ethical in my practices.
April 30th, 2009 at 11:44 am