For a New Thrift: Confronting the Debt Culture

Op-Ed Columnist - David Brooks - The Great Seduction by Debt - Op-Ed - NYTimes.com -- David Brooks on Ben Franklin, and then the past 30 years--a "must read." Succinct. Concise. Well phrased.

Keywords & keyphrases: Benjamin Franklin, hard work, temperance, frugality, industrious, ambitions, living for the moment, decadent, moral guardians, debt culture, the lottery class, value shift, consequences.

Note the enumeration of the agents of destruction.

eejits

Eejit: Northern Ohio's idiot wind -- I've been reading Frank Delaney's Tipperary lately, and in it he talks of things Irish, things that have emigrated to this area as well, like Home Rule, blatant exploitation of one class by another, and eejits. I began to wonder about the residency issue, and began thinking that anybody who would lobby to give up residency in a city that not only has Home Rule but also controls all the water is a fool, and should be allowed to go seek his or her fortune elsewhere.

With the water issue, Lee Fisher came to mind, and how he, too, is part of the gale-force idiot wind blowing though here, trying to position himself as the arbiter of good sense and the broker of water rights for political and economic gain. As is his wont, he was heavy-handed again, and that works to our benefit. He's not different from all your other politicians; his impatience just gets the better of him quicker.

And now you also have an inkling of why our politicians allowed one class, the lenders, to exploit the American neighborhoods as they did: If they, and foreign investors, own the majority of the land, and we are their indentured servants, they can dispose of their water any way they please.

We've already been exploited on things that make our machines go, like oil, and we've paid for it and continue to pay for it dearly. Don't let them disenfranchise us on water, one of the things that make people go.

Remember: Oil makes our machines go, water makes people go (We'll have to work on rephrasing that a bit.). And remember: In the Great Lakes region, we are sitting on top of a lot of fresh-water assets. We are valuable now for the same reason we were valuable 100 and 200 years ago: our "natural" heritage, as in natural assets.

Our "built" heritage is something we need to conserve, as well, and that's what the lenders have been going after and what they now sit on top of and hold, letting it lie fallow because our governments allow it. Are you starting to see the connections?

Natural heritage. Built heritage. What makes us great. What makes us valuable.

again, they're getting set to talk the talk, to sing the sad foreclosure song; they know some of the words, but not the tune

I got this notice from CoolCleveland's weekly newsletter. I hope they, the "experts," will begin to address the real causes, instead of focusing merely on the subprime and the substandard markets. This is about more than just ministering to the poor and the downtrodden, and being paid to spout platitudes about something you know little about, something that happens to "those people"; it's about neglecting to challenge those who are hiding behind the law to plunder the American neighborhood, because they're your funders and financial contributors:

Foreclosure Crisis: Shaping the Consumer Response

Learn more about one of this region's hottest topics at this informative conference, held Fri 11/9 starting at 8:30AM at Trinity Cathedral, 2230 Euclid Ave. The conference will feature national and regional experts, presenting strategies to combat predatory lending and payday lending. Among the speakers will include Ohio Attorney General Marc Dann. An overview of Governor Strickland’s Foreclosure Task Force will be also presented. Free parking is available off the E. 22nd St and Prospect Ave. entrance to the church. The conference agenda and registration form can be found at http://www.organizeohio.org. For more information call 431-6070.

Gretchen Morgensen calls the beast by its name: predatory loan servicing

Borrowers Face Dubious Charges in Foreclosures - New York Times --This is what I've been waiting for. Justice is now about to be served. The plundering of the equity of the American neighborhood can now wind down.

Finally, here is the description of the crux of the foreclosure problem: predatory loan servicing. Gretchen Morgensen delivers just in time. The pacing and timing on this couldn't be better. Everything is coming into alignment. The problem is near solution. The true causes are beginning to be revealed.

The question is now, who will be the one who begins, and presides over, the Spitzerization of the lending/foreclosing industries, and the attorneys who serve them?

I have lots of other questions:

1. Could this be the reason why the majority of foreclosures happened?
2. Could it be the reason that so many could not escape the endless loop, even though they tried?
3. Are these fees able to take the same position as the primary mortgage, and do they take priority over other, junior liens that were already in place at the time the servicer, the lender, and the attorneys who run the mills initiated foreclosure proceedings?
4. What are the rules for handling the money?
5. What are the fiduciary responsibilities?
6. How can we get our money back?
7. How can we begin to quantify the damages, as well?
8. How can we recover damages?
9. Who gets paid back first?
10. How can we prevent this happening again, and who was asleep at the switch?

If you thought asbestos was big for the plaintiffs' bar, just stay tuned on this one.

Here are a few excerpts from Gretchen's article, but read the whole thing. This is huge. Seminal. Long overdue. Invigorating.

. . . Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures. . . .

. . . On Oct. 9, the Chapter 13 trustee in Pittsburgh asked the court to sanction Countrywide, the nation’s largest loan servicer, saying that the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. The trustee, Ronda J. Winnecour, said in court filings that she was concerned that even as Countrywide misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. . . .

lots of statistics, for the record

Mortgage Trouble Clouds Homeownership Dream - New York Times -- Now, nearly two years after we gave testimony for the Cuyahoga County commissioners and five years since Cleveland-Marshall law professor Kathleen Engel began writing her papers warning of the impending debacle, the numbers begin to appear in the popular press, and the evidence of greed is incontrovertible.

In the same edition, the NYT tells in "Buying With Help From Mom and Dad" about how the high price of residential real estate is spawning new specialties among lawyers, third-party administrators, psychiatrists, and counselors, as parents and children cope with the imbalanced behavior of committing more money to the children's housing than the children can afford. I wonder what the upshot of all this will be if ever the prices in the housing markets recede, and they find themselves in the uncomfortable condition called "upside down."

Finally, Gloria tells me that in the PD Friday, someone with insight into the mortgage and real-estate industries talked of "mortgages that are designed to strip wealth rather than allow homeowners to build up equity in their properties." It's good that all this is coming out now, while the huge intergenerational transfer of wealth from the post-WWI crowd to the post-WWII crowd is still under way.

Do you think that, if we paid cash for our housing and our cars, that the prices would moderate and approach true value?

we talked about this with Jim Rokakis

Lender Stops Accepting Mortgage Applications - New York Times--We talked about this subprime mortgage-lender meltdown situation with Jim Rokakis a few weeks ago in a MeetTheBloggers session at Gypsy Beans, and how our county and our state may proceed in the matter. Gloria tells me that our governor has little more sympathy than Rokakis for the people who have created this sloppy subprime mess. Here's an excerpt from the NYT March 9th article about this New Century, "at the center of the subprime storm:"

Like other subprime lenders, New Century’s problems can be traced to a sharp spike in defaults among mortgages written last year, when lending standards eased across the industry and companies sought to increase loan volume. More borrowers with extremely poor credit were given mortgages without being required to make down payments or to prove the income they stated on mortgage applications.

As more recent borrowers began falling behind on payments, New Century’s financial backers on Wall Street demanded the company buy back nonperforming loans under terms of its securitization agreement with the company. It appears that New Century compounded that problem by incorrectly accounting for loans that it had to buy back and by not setting aside adequate reserves to deal with the problem.

The company said yesterday that it had significantly tightened its lending standards in the last few months and was no longer allowing borrowers to take out loans without putting any money down. The new policies, it says, have reduced the number of borrowers who are defaulting on their first mortgage payment to 1.9 percent in February, from 2.5 percent in 2006.

if you get to talk about the money, you get to talk about everything

George has the podcast posted for the Jim Rokakis session last Wednesday, and Gloria, Jeff/Yellow Dog Sammy, and Wendell, and George, too, have already brought forth commentary to bear on the content and spirit of the talk we had. I think it's one of the better ones thus far, over the year and a half that MTB's been in play, but it can be argued that I'm biased, so you be the judge.

One of my favorite parts is where Jim recounts his running for county treasurer and getting comments from other politicians about why he'd ever want to have that job, where you only dealt with money. Jim's take is that, if you get to talk about the money, you get to talk about everything, and he does. Enjoy.

NCB wipes off the booger

Our friends over at CLEVELANDADA brought this to my attention:

CLEVELAND, Jan. 2 /PRNewswire-FirstCall/ -- National City Corporation(NYSE: NCC) has announced the completion of the sale of the First Franklin origination franchise and related servicing platform to Merrill Lynch & Co.(NYSE: MER), effective Dec. 30, 2006. First Franklin is a leading originator of non-prime residential mortgage loans through a nationwide wholesale network.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030428/NATIONALCITYLOGO)
Under terms of the agreement, Merrill Lynch paid a $1.3 billion purchase price for the San Jose, Calif.-based First Franklin, and affiliated business units, Pittsburgh-based National City Home Loan Services and NationPoint, headquartered in Lake Forest, Calif.
About National City National City Corporation (NYSE: NCC), headquartered in Cleveland,Ohio, is one of the nation's largest financial holding companies. The company operates through an extensive banking network primarily in Ohio, Florida, Illinois, Indiana, Kentucky, Michigan, Missouri and Pennsylvania,and also serves customers in selected markets nationally. Its core businesses include commercial and retail banking, mortgage financing and servicing, consumer finance and asset management. For more information about National City, visit the company's Web site at http://www.nationalcity.com.

SOURCE National City Corporation