Wednesday, January 23, 2008

Americans Raped By Banking Industry

The Banking Industry, through exorbitant fees, appraised value manipulation and unabashed greed have reduced the worlds greatest banking system to a pauper like caricature wandering the globe looking for handouts while driving America's once great economy into the abyss. The banks will get their bailout but the cost to this countries working men and women will be years of loss in full blown economic depression.

The worst housing financial crisis in decades is only going to get worse, a Merrill Lynch report said Wednesday.

The investment bank forecasted a 15 percent drop in housing prices in 2008 and a further 10 percent drop in 2009, with even more depreciation likely in 2010.
Think about that, if you bought your house in 2006 you have already lost 10 percent of the value. Add an additional 15 percent in 2008, another 10 percent in 2009 and assuming it does not drop more in 2010, you have a 35 percent decrease in the value of your home in three years. This means that your $300,000 home is actually worth at most $200,000. But you are still paying for a $300,000 mortgage. Difference is a $1800 monthly payment compared to a $1200 monthly payment on a 6 percent 30 year mortgage.

How could the appraisers possibly have overvalued the housing market by such a tremendous amount. Who do the appraisers work for and who stands to benefit the most. The banks that's who, the same bank who have made it virtually impossible for you to declare bankruptcy, have sold you a home loan overvalued by at least a third.

The WaMu lawsuit and other inquiries are shedding light on how many big-bank loan officers during the housing boom got around a long-standing check on making ill-advised or fraudulent loans.

Mortgage investors generally require that banks get an appraisal before they make a loan. Appraisals are supposed to insure that banks don't lend more than a house is worth. A borrower who defaults because of inflated numbers could mean losses for the lender and mortgage investors who buy the loans in mortgage-backed securities.

But appraisers are often hired by mortgage-loan officers whose pay is based on the number and size of loans they get approved. When housing prices decline, lenders may resort to pressure in order to get the highest property appraisals possible.

"It's not just Washington Mutual. Appraisal pressure is an industry-wide epidemic," says John Taylor, president of the National Community Reinvestment Coalition, which has studied the problem. "And it is one of the major contributors to the current foreclosure crisis."

"This case is just another good example of one of the biggest dirty little secrets of the whole mortgage industry," says Pamela Crowley, who runs industry watchdog, "The housing market is falling apart, and foreclosures are soaring because the properties that these banks made mortgages on are not worth what they said they were worth," she says.

Crowley, an appraiser herself, says she is unable to get work from banks because she is unwilling to push values. "There is no doubt in my mind that the lenders knew exactly what there were doing."

Americans are nesters, and home ownership is the dream we all strive for. We are told owning a home is the best investment you can make in your lifetime. Given the unprecedented opportunity to realize this dream many lower income citizens jumped, at the urging of the lenders, into mortgages they could not afford and into homes overvalued by a third. Now that they have the home, the banking industry knows that they will do everything within their power to keep the family in the home, especially with the stigma of eviction hanging over them. Predatory lending drove banking profits through the roof...this same careless greed is now collapsing the house.

The banking industry never thought that the citizens would actually have the audacity to just walk away from their homes…walk away from the criminal mortgages they were conned into…walk away from the astronomical monthly payments that have them choosing between house and food. But with their options stripped away by the Bankruptcy Reform Act of 2005 this is exactly what home owners are doing…walking away.

The banking industry does not like this. They were expecting to gorge themselves forever on the bloated monthly payments flowing like blood from the peasants trapped in their predatory grasps. Now, like a tick plucked from a fat woman’s neck, they beg the Fed to reattach them to the vital life source that keeps their Rolex wound and their Mercedes full of gas. Lower the interest rate…keep the money flowing.

But cutting interest rates causes inflation. Apparently, it does not matter to the banking industry if inflation goes through the roof, that only affects the poor, we need to maintain our profits. So not only did the loan institutions implode on their own greed, now they want to bring the rest of us down with them. America is in a recession, jobs are flowing out of the country like water and now the banking industry want citizens to pay more for the food and gas they consume just to maintain the banking industries profits.

It was not the small homeowner trying to fulfill a dream that got us into this mess. The greedy capitalist whores running the lending institutions are the culprits. They, and they alone, are responsible for the largest fraud every perpetrated against the American people. Now they want us to go further into the hole to bail them out! Just Walk Away


theotherryan said...

The reason the loan industry got out of hand is that banks stopped holding morgages and getting their profit from the interest paid over time. This practice made it essential to know the property was worth the amount borrowed and the loan taker had the ability to pay them back. As banks moved towards getting their profits from fees and repackaging the loans into incomprehensible securities they no longer needed to make sure of property value and often had strong incentive not to. Also they did not need to check on peoples ability to repay the loan because they got theirs up front. That is a fairly simplistic way of explaining why this whole mess happened.
I very respectfully disagree with your premace that only the bankers are to blame. Like any transaction there is a buyer and a seller, in this case a home buyer and a banker. Bankers were greedy and ultimately stupid while home buyers (who got adjustable rate loans they could not afford on overpriced homes) were just stupid. Both of these parties need to reep what they have sewn. What really bothers me is the premace that we need to bail out both parties of this foolish bussiness. The bankers who made too many foolish loans should go under and people who bought overpriced houses they can not afford should either grin and figure out a way to make enormous payments or "jingle mail" their loan holders.

Anonymous said...

One of the best rants I've read in years, sir. Very well done, and sadly, all too true.