Barton Eviction – Mortgage Crisis from Main Site

[wakeflood]

Hey Skeets and kgdlg, I was enjoying your particular sub-thread on the main page comments re: the mortgage crisis. I posted a late followup to it there. JoB, I saw you were throwing out some good thoughts too, as usual.

Seems like this family’s situation serves as a pretty functional rorschach of the mess that was the meltdown of 2007/8 and the resulting cluster-f that we’ll call the solution.

If anyone feels like continuing that part of the thread, or has more to say on the topic, I posted it here where we can track it more easily.

Just a thought.

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[skeeter]

I agree it was a mess. I shared my thoughts in the comments section of the stories. Great reporting by WSB.

Wake, I’d like to hear your thoughts on whether the Sheriff did his job properly and whether the Mayor did his job properly.

Wake, the 2007/8 mess was all about subprime lending, deceptive practices, relaxed documentation, a price bubble, etc, etc. I don’t think the Barton loan had much to do with that, though. The Bartons were borrowing against a house with no debt and $600k (plus) equity. Those types of loans are not unique to 2007-8. I’m pretty sure you could walk up to a lender today and get a similar loan. So long as the collateral is sufficient it’s pretty darn easy to get a loan because the bank is taking on little risk.

My lesson? I’m thankful that my house is being paid for with my hard-earned money instead of an inheritance. On one hand I’m jealous the Bartons got an inheritance far bigger than I’ll ever get. On the other hand I feel sorry for them that they seemingly didn’t understand how collateralized borrowing works.

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[skeeter]

Wake states: “What’s missing from your TARP note is that the Fed literally GAVE AWAY multiple TRILLIONS of dollars to both US and NON-US financial interests to prop up a rotted and farcical system. “

Can you explain that? It’s not that I don’t believe you. I just don’t understand. I thought all the money was paid back. Maybe I misunderstood.

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[kgdlg]

I really appreciate both wakeflood and skeeter contributions to the WSB. While there are often times I have to walk away from the heightened pitch of the forums, I find some contributions very thought provoking, no matter what side of aisle you are on. Myself, I often can see both sides, so most of the time I am just an observer. However, this foreclosure case has been so interesting – watching it deeply resonate with people in the comments on all of TR’s tremendous reporting. I don’t know how she keeps us all in line!?!?

Skeeter, your assessment seems correct, in that they seem to have consiously refinanced with the goal of pulling equity out to start a business. (However, we should probably reserve judgement since I have only seen this in comment threads, not in any story by TR). If this is true, they made a calculated decision and unfortunately, it didn’t work out the way they wanted and as a result, they lost the asset they collateralize d to start their business.

However, what I do think is interesting is that at some time the bank assessed that they could pay the new mortgage. What changed? If their income changed due to a sickness or the biz failed due to an illness or loss of job, were they offered a loan modification?

If the government decided that moral hazard with the banks didn’t matter and gave them all loans to save them anyway, why are not individuals who made poor decisions (if that is indeed what happened) afforded the same opportunity? I just feel compelled to point out that the concept of “moral hazard” i.e. rewarding bad behavior and thus encouraging it again, seems to have been applied differently in concept here.

But I am making a lot of assumptions. And I guess that will be hashed out in their court case!

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[JoB]

i hope that this topic has illuminated how little people know about how the mortgage industry now works.

i can’t speak to whether or not the Bartons were disclosed the full extent and timing of their balloon payment…

but i can relate our personal experience with differing disclosure laws.

about 15 years ago.. maybe a little longer, we were living in Vancouver, Wa and we bought a new house. We did business with a credit union in Portland, Or and went there to get our mortgage loan.

So.. we were getting a loan from an Oregon credit union which also had Washington offices for a house in Washington.. but the paperwork was signed in Oregon….. and the loan was handled by a loan officer who had just transferred to Portland from Seattle.

i know that seems like a lot of detail.. but in this case details matter.

the loan officer convinced my husband that we should sign a variable interest loan and after an hour in the office i agreed. We signed papers, including all disclosures and thought all was well until a year later when that proverbial balloon hit.

I went through the roof. I had no idea that there was a built in balloon on the set point interest rate in that loan… and i should have known because what i did for a living was help people arrange auto, boat and RV loans… in Oregon.

i went through my paperwork and could not find any point initialed in the disclosures that would indicate this balloon.

Long story short, what saved us was that the loan officer was not familiar with Oregon disclosure laws and had not pointed to that particular disclosure for initials… because truth be told i was so tired i probably would have simply signed away.

had we obtained an attorney, our credit union would have eaten the loan for not complying with Oregon disclosure laws.

as it was, we are ethical people as was our credit union and we renegotiated the loan with the credit union eating the fees.

I don’t know if the disclosure laws in Washington have changed. I haven’t had to know. We have chosen not to buy a house and didn’t finance the car.

but i do know that the process of procuring a loan is a stressful event at best and even educated borrowers rely a great deal on trust in the institutions they are doing business with.

What we have learned is that those institutions may not be trustworthy. It isn’t necessarily in either their best financial interests or the best financial interests of the broker handling the loan. The lending institution is more likely to sell the loan they granted to other institutions.. who may bundle them and sell them again.. not only relieving the originating institution of liability but profiting them as well… and relieving them of any real incentive to assist in loan modification processes.

Add to that the forged paperwork that has literally greased the foreclosure industry and it becomes problematic at best to guarantee the trust upon which the whole system is built.

i am not sure i could be convinced to negotiate a mortgage again without the counsel of a very good attorney…

the mortgage business in and of itself is not a bad business. But, the laws that safeguarded the process for both the banks and borrowers were forever altered when President Clinton signed laws gutting the Glass-Steagal act..

not his finest moment

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[wakeflood]

Re: Skeets request for the “Trillion Dollar Bailout”.

Here’s a quote from Forbes back after the audit was released:

“The audit of the Fed’s emergency lending programs was scarcely reported by mainstream media – albeit the results are undoubtedly newsworthy. It is the first audit of the Fed in United States history since its beginnings in 1913. The findings verify that over $16 trillion was allocated to corporations and banks internationally, purportedly for “financial assistance” during and after the 2008 fiscal crisis.”

Some/most of this assistance was described generically as “zero interest loans” but nobody, and I mean nobody has bothered to track the status of said loans that the public has access to, anyway. Not without some other required audit that won’t ever come. The Fed’s been asked and they won’t say squat because the answer is already known. The money’s gone and it wasn’t really intended to come back. It was money used to prop up a crumbling system.

Several trillion of it went to banks in Scotland and Korea and all over creation, which lends one to ask the question, why are American dollars being given away to prop up other nation’s banks? The answer to that leads you to a simple conclusion – To Big To Fail is universal and we’re just a piggy bank to be broken and raided when needed.

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[wakeflood]

And not to be overly conspiratorial or anything but this money would have fallen into one of the formerly published, trackable values for $ that the gov’t produced quarterly from way back until…around 2006 or so, if memory serves. Hmm…who was running the Treasury then, under what President??

I remember when it was announced that they would stop producing and reporting the data and thought, now why would they decide to do THAT all the sudden???

So, if they had been producing M3 during this period, it would have gone through the roof and the jig would have been up much earlier.

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[wakeflood]

JoB, you’ve highlighted just one aspect of the craziness that is the current mortgage industry. Here’s another one.

You know how many people have tried to arrange for short sales and have been put on infinite hold? Or someone trying to buy a foreclosed, abandoned and having the bank turn them down even with reasonable offers?

Turns out, and it doesn’t take much pondering to see why this is the case, but you know all those securitized mortgage instruments and credit default swaps that tanked the world? Well, as you remember those instruments were sliced, diced, repackaged, resold – sometimes multiple times – and every institution that owned a given mortgage in one of those packages theoretically still owns it. The problem being, it takes months of research AND THEN sometimes a court case to sort out the true Title Owner.

Try getting Title insurance when you have disputed ownership. Now try it when you have forged documents and missing paperwork.

So, the banks are slo…w…l…y teasing this out on a case by case basis but they’re ok taking their time. Why? They’ve already been made whole by the Fed so they’re going to extract the highest return they can on these assets and waiting to sort out who really gets to resell which property only means the value inches upward as the economy recovers. Time is on their side.

Meanwhile there’s a new wave of foreclosures happening. You know that right? It’s cuz the bank is seeing a recovery of prices and they’re ready to cash in again. So, while some folks have been living in limbo assuming they could use HARP to refi at some decent level are getting the boot so they can start the next round of cashing out.

Heads, they win, tails you lose.

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[wakeflood]

Talk about making lemonade out of lemons. Gotta’ admit, it’s a f*cking brilliant scheme. And I’d bet you a trillion $ that they knew this was how they’d play it the minute they saw that TBTF was going to live on. They literally can’t lose.

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[skeeter]

Hold on Wake – something is way, way off. No way did the U.S. somehow lose $16 trillion as a result of the 2008 fiscal crisis. The debt increased $3.5 trillion from 2008 to 2010. Our total U.S. debt is about 17 trillion right now. It’s increasing 1 to 2 trillion per year since 2007. There is no way that $16 trillion somehow ended up in corporate coffers. If it did then our debt would have spiked like crazy when it happened.

I really think that the banking “bail-out” had a net cost to taxpayers of zero.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

Sorry gotta run no more time for “research.”

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[wakeflood]

Skeets, you asked whether the mayor and sheriff did their jobs correctly?

If I answered that I don’t really want to educate myself on the specifics of this case enough to offer an opinion on that, would you hold it against me? ;-)

As you clearly have witnessed, I’m perfectly happy meting out (seemingly) defensible opinions on things that interest me enough to spend the time to really understand the issue. And this one hasn’t met the threshold.

If I have more time, I’ll look in more detail and see if I have any cogent thoughts.

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[wakeflood]

Skeets, they CREATED THE MONEY. It’s off the books. Dark money. And now it’s merely numbers buried on balance sheets of international financial entities. So you can correctly assume that it doesn’t require repayment but does that make it right or fair or what you want them to be doing without any oversight?

That’s why they used TARP. It was the publicly palatable (read small) version of the bailout that they could claim was paid back. And most of that was supposed to support lending back into the economy and it didn’t. It supported their balance sheets and went to bonuses.

So just because it didn’t get added to the debt doesn’t mean it didn’t happen.

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[waynster]

remember these days all ….lmao

http://www.gocomics.com/nonsequitur/2014/08/18#.U_VYRGPLasY

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[wakeflood]

Quote from Matt Taibbi who has spent more time looking at the finance system than you or I x10…

“But the national debt? Nobody understands it, and anyone who tells you he or she does is almost certainly lying. In fact the supreme irony of this endless controversy over spending and austerity is that it has pushed the Federal Reserve as well as major European and Asian central banks, especially recently, to bypass the ignorant arguing public and take dramatic interventionist action on their own, tinkering with the world money supply in ways that are highly experimental and have no parallel in modern times. By all rights, this should be stimulating a profound debate around the industrialized world about who controls the process of money creation and about the role of government/central banks in the economy, but here in the U.S., that is exactly the debate we’re mostly not having.

“

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[wakeflood]

Heres a fun link: http://www.rollingstone.com/politics/news/the-real-housewives-of-wall-street-look-whos-cashing-in-on-the-bailout-20110411

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[kgdlg]

Wow WF I just read that article and am really disturbed. Really. Disturbed.

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[wakeflood]

Yup. The general notion being there are two economies with two sets of rules. One has actions and consequences. The other…not so much. It’s more bizarro-economy.

Guess which one we belong to?

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[wakeflood]

JoB, to your point about how crazy it got with mortgages – I distinctly remember when I did a refi in the early aughts where I wanted to pull $20k out to do some home improvements. I had so many offers I could barely keep track of whose offer penciled the best. I ended up working with the same company I’d done my initial mortgage with almost ten years prior.

In this go-round, I literally never got the Good Faith Estimate I asked for – twice. The whole deal took just less than three weeks and two phone calls – one to book the closing. That’s it. The same very diligent company had gone from a 60 day closing with multiple workups of GFE’s and plenty of backup paperwork to what amounted to a drive-by refi.

I actually couldn’t get due diligence to happen at MY behest. Crazy.

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[wakeflood]

Skeets, to respond to your query about the Barton’s specifically, I’m torn. Here’s why.

I, like you, am a big fan of personal responsibility. And it appears (term used to denote my limited understanding of the facts/timing in this issue), that the Barton’s took a flyer and lost the bet. The consequences for that are you walk away and deal.

The reason I have any sympathy for them at all is based on the fact that the deck is stacked for the institutions and TBTF is real and the connection between the bizarro-economy and the real one is places like this situation. I can think of folks likely more deserving of sympathy and maybe a different/better outcome than the Barton’s will get but unlike the banks, they’ll suffer consequences and that strikes me as unfair on a lot of levels.

Frankly, I’m tired of two sets of rules – one for the Kings and one for the peasants. The Bartons may not be collateral damage in this instance but lots of others are.

And any situation that struggles to pull this issue out of the darkness and expose it for what it is – criminal activity disguised as protected financial creativity – is a good thing, IMHO.

The whole thing disgusts me and makes me less proud of who we are and what we represent to the world. I want to think we’re better than that but I can’t say we are.

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[JoB]

Wake.. like you i am unsure whether the Barton’s disclosure is just or not

i have sympathy for them because of the way they have been publicly attacked..

and because even if they hadn’t.. there is no real safety net for people like the Bartons who get hit with the one two punch of economic failure and illness.

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[miws]

wake, I started to read the linked article, but had to stop since it’s a little TL;dr for me this morning.

Just from what I’ve read of it so far, I have a hunch that later this afternoon/evening, there will be reports on the WSB Main Page of loud screams of profanity coming from the Highland Park/S. Delridge area…

Mike

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[wakeflood]

Yeah, sorry ’bout that, Mike. It really is depressing…

…and predictable…

…and anger-inducing.

Somewhere along the line, the music is gonna’ stop playing and there won’t be enough seats (panic rooms) for these self-proclaimed saviors of capitalism. Their time is coming, if we can muster the fortitude.

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[skeeter]

Hey Wake, thanks for your thoughts about the Bartons. If you go back and re-read my post – I’m actually more interested in your thoughts about the Sheriff and the Mayor. The interesting part of the story for me was not the Bartons. Their story has been told thousands of times across the country. It’s a sad story. I think we’ve all made a decision or two we wish we could undo.

What I found far more interesting was the Mayor’s decision to “stand down” and not remove the Bartons as trespassers after they broke into the house. The Sheriff then chose to step in and take care of enforcing the law that the Mayor was unwilling to enforce. If you go back and read the four or five articles and the comments posted it was an intriguing chain of events. By far the most interesting story I’ve ever read on the WSB.

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[wakeflood]

Sorry, Skeets, I must have missed some of that detail. All I got from my skim was that the mayor said stand down and then a short while later, the sheriff was given no choice from a legal standpoint but to execute the eviction.

Are mayors even in a clear hardline chain of command relative to the sheriff’s dept? If they are, then I can see this as an interesting dynamic. If they aren’t, then this is one of those fairly common processes where electeds take a back seat to the judicial system.

And I’d be somewhat surprised if the mayor didn’t spend a couple minutes in conversation with the city attorney discussing his (likely limited) options before both his initial intervention and his later, NON-intervetion.

Does this impact the relationship between the two entities? I’d guess not significantly. Electeds usually try to wear the white hats and leave the black hat stuff to the non-electeds. This dance isn’t new. (And yes, I realize that sheriffs are usually elected positions but they have much less visibility of their decisions which are generally dictated by law anyway.)

If you want a more extreme version of that dynamic, one only need to look across the nation toward Ferguson, MO.

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[skeeter]

Way more complicated Wake. The Sheriff did the first eviction a couple weeks ago. The Bartons broke back into the home after the Sheriff left. Triangle called the Sheriff. The Sheriff responded (correctly) his jurisdiction ends the minute the eviction is complete and the locks are changed. Sheriff tells Triangle that SPD must enforce trespassing laws if Bartons broke back into the home. Triangle calls SPD. SPD calls Mayor and asks what to do. Mayor says stand down. Triangle sues city says they need to enforce trespass laws. City says they decide what laws to enforce. Judge agrees with city. Sheriff decides to go in and enforce the trespass law even though it is SPD’s responsibility. Sheriff issues scathing press release blasting SPD for not enforcing laws. Fascinating story.

If you have time to read just one story and the comments I recommend this: https://westseattleblog.com/2014/08/sheriffs-deputies-say-they-have-evicted-the-bartons-again/

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