The return of warm weather brings increased social and maintenance obligations. If you’re not shoveling snow, you’re mowing grass!
Did we just enjoy four days off? Sometimes it’s hard to tell when you’re trying to squeeze in things that should have been done months ago…
I know, ‘excuses, excuses’ but hey, what can I do?
After yesterday’s ‘smoke monster’ scare (where the wind pattern blew smoke from Canadian wildfires into the region, making us wonder, ‘if it’s this bad here, it must really suck there!’) Something that becomes more frightening if you’ve read my first novel, where the first days of the ‘collapse’ are marked with thick smoke from local and some not so local wildfires.
To preface the ‘real deal’ there would also be a co-responding failure of the communications networks…so yesterday’s ‘smoke’ was just that…smoke. Although I don’t think the day when both things occur at once is too far off…but that’s just what I think.
There are some very disturbing signs out there if you’re paying attention and one of them is coming from Wall Street. Markets around the globe are ‘bleeding to death’ but not here in the Dream Factory! Every index around the whole globe is printing red ink but it’s not happening on Wall Street! If you look at the chart, Wall Street ‘opened’ in negative territory but climbed steadily upwards.
Does this make sense to you, good citizen? I read this morning that the 5 US States that border the Gulf of Mexico contribute 2.2 trillion dollars to nation’s economy. Those five states also represent the newest ‘frontier’ in the ever expanding ‘economic desert’ here in the US, a desert neither our politicians nor our Captains of Industry are lifting a finger to correct!
But enough of that, let us proceed with tonight’s offering where we take a peek at The New Normal
Owners Stop Paying Mortgages, and Stop Fretting
By DAVID STREITFELD
Published: May 31, 2010
ST. PETERSBURG, Fla. — For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of. [Um, for most people the ‘hole’ is too deep to EVER be filled in, that is the nature of the current ‘crisis’, one you could see coming from a mile away IF you knew what you were looking at…and most didn’t!]
Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino.
“Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.” [Understand what you’re seeing here good citizen, the entire ‘credit market’ is going up in smoke…this spells ‘certain doom’ for the financial sector as well as anyone who ‘thought’ their property was a ‘liquid asset’. Guess, what? This also screws anything you can’t pay for ‘out of pocket’. If you can’t pay ‘cash on the barrelhead’ you ain’t getting the sum bitch because the days of ‘trust me’ are finito!]
A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by. [Ironically, this is merely a ‘re-prioritizing’ where people shift the order of things they can’t do without…how sad is it that principal among these is wheels under the ass? Or the second largest single expense anyone takes on. Um, more disturbing is what this ‘drying up’ of credit means to an already crippled Auto Industry?]
This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads. [Ironically, the ‘snookering’ part comes from industry’s failure to keep up their end of the ‘Ponzi Scheme’, worker’s paychecks were ‘supposed to’ expand ahead of their expenses, not equal to them. No irony should be lost on the fact that the funds to pull of this magic act ran out around thirty years ago!]
“I tried to explain my situation to the lender, but they wouldn’t help,” said Mr. Pemberton’s mother, Wendy Pemberton, herself in foreclosure on a small house a few blocks away from her son’s. She stopped paying her mortgage two years ago after a bout with lung cancer. “They’re all crooks.” [That’s not how THEY see it Wendy…in fact, their courts would label YOU as the ‘crook’ (even though these were the same courts that didn’t lift a finger to stop ‘free trade agreements’ from turning the nation into a financial desert!) Which begs the question, are YOU guilty of a crime they failed to prosecute?]
Foreclosure procedures have been initiated against 1.7 million of the nation’s households. The pace of resolving these problem loans is slow and getting slower because of legal challenges, foreclosure moratoriums, government pressure to offer modifications and the inability of the lenders to cope with so many souring mortgages. [The ‘numbers’ are truly staggering good citizen. There is a ‘backlog’ of some 20 million unsold homes and as we stare out over the ‘scorched’ economic landscape there are nowhere near enough ‘qualified buyers’. Um, this has been going on for three years now so the 1.7 million figure is extremely ‘misleading’, the ‘true number’ of foreclosed homes is much higher!]
The average borrower in foreclosure has been delinquent for 438 days before actually being evicted, up from 251 days in January 2008, according to LPS Applied Analytics. [Understand what they are telling you good citizen, the ‘financial system’, as it stands, IS BANKRUPT, whether you ‘pay them’ or not!]
While there are no firm figures on how many households are following the Pemberton-Reboyras path of passive resistance, real estate agents and other experts say the number of overextended borrowers taking the “free rent” approach is on the rise. [Soon this ‘strategy’ will dominate…there’s nothing stronger than ‘monkey see, monkey do!’]
There is no question, though, that for some borrowers in default, foreclosure is only a theoretical threat for a long time. [Like ‘real estate’ itself, the key here is ‘location’ there is ‘safety in numbers’. Although they’re still asking for ‘stupid money’ for a home in this neck of the woods, I have a close friend who is part of that ‘two years’ in foreclosure dynamic…sadly, he also hasn’t worked in more than 24 months. Mathematically, his situation is ‘insoluble’.]
More than 650,000 households had not paid in 18 months, LPS calculated earlier this year. With 19 percent of those homes, the lender had not even begun to take action to repossess the property — double the rate of a year earlier.
In some states, including California and Texas, lenders can pursue foreclosures outside of the courts. With the lender in control, the pace can be brisk. But in Florida, New York and 19 other states, judicial foreclosure is the rule, which slows the process substantially. [Either California and Texas will ‘get with the program’ and put the brakes on the foreclosure process or they will suffer the ‘consequences’ of an outsized ‘homeless population’.]
In Pinellas and Pasco counties, which include St. Petersburg and the suburbs to the north, there are 34,000 open foreclosure cases, said J. Thomas McGrady, chief judge of the Pinellas-Pasco Circuit. Ten years ago, the average was about 4,000. “The volume is killing us,” Judge McGrady said. [Ironically, even conservatives can appreciate the ‘delicacy’ of the situation. I’d imagine the judges are in no rush to let foreclosed properties ‘go wild’ because the banks are in no position to maintain them!]
Mr. Pemberton and Ms. Reboyras decided to stop paying because their business, which restores attics that have been invaded by pests, was on the verge of failing. Scrambling to get by, their credit already shot, they had little to lose.
“We could pay the mortgage company way more than the house is worth and starve to death,” said Mr. Pemberton, 43. “Or we could pay ourselves so our business could sustain us and people who work for us over a long period of time. It may sound very horrible, but it comes down to a self-preservation thing.” [yet another ‘damning indictment’ of capitalism! Profits before people never has and never will ‘fly’!]
They used the $1,837 a month that they were not paying their lender to publicize A Plus Restorations, first with print ads, then local television. Word apparently got around, because the business is recovering. [One could only guess their ‘best customers’ are probably people like themselves, people who are ‘pocketing’ their mortgage money and using it to make life more managable.]
The couple owe $280,000 on the house, where they live with Ms. Reboyras’s two daughters, their two dogs and a very round pet raccoon named Roxanne. The house is worth less than half that amount — which they say would be their starting point in future negotiations with their lender.
“If they took the house from us, that’s all they would end up getting for it anyway,” said Ms. Reboyras, 46.
One reason the house is worth so much less than the debt is because of the real estate crash. But the couple also refinanced at the height of the market, taking out cash to buy a truck they used as a contest prize for their hired animal trappers.
It was a stupid move by their lender, according to Mr. Pemberton. “They went outside their own guidelines on debt to income,” he said. “And when they did, they put themselves in jeopardy.” [Um, alternately one might question the wisdom of ‘giving away’ a truck as a ‘prize’ to a trapper when something significantly cheaper would have achieved the same net result…]
His mother, Wendy Pemberton, who has been cutting hair at the same barber shop for 30 years, has been in default since spring 2008. Mrs. Pemberton, 68, refinanced several times during the boom but says she benefited only once, when she got enough money for a new roof. The other times, she said, unscrupulous salesmen promised her lower rates but simply charged her high fees. [There’s a knife that cuts both ways! It is also ‘proof positive’ of a badly broken financial system! One that CAN’T BE FIXED without hitting the ‘reset button’.]
Even without the burden of paying $938 a month for her decaying house, Mrs. Pemberton is having a tough time. Most of her customers are senior citizens who pay only $8 for a cut, and they are spacing out their visits. [Where the hell is that ‘economic recovery’ the papers are always talking about anyway?]
“The longer I’m in foreclosure, the better,” she said.
In Florida, the average property spends 518 days in foreclosure, second only to New York’s 561 days. Defense attorneys stress they can keep this number high.
Both generations of Pembertons have hired a local lawyer, Mark P. Stopa. He sends out letters — 1,700 in a recent week — to Floridians who have had a foreclosure suit filed against them by a lender.
Even if you have “no defenses,” the form letter says, “you may be able to keep living in your home for weeks, months or even years without paying your mortgage.”
About 10 new clients a week sign up, according to Mr. Stopa, who says he now has 350 clients in foreclosure, each of whom pays $1,500 a year for a maximum of six hours of attorney time. “I just do as much as needs to be done to force the bank to prove its case,” Mr. Stopa said.
Many mortgages were sold by the original lender, a circumstance that homeowners’ lawyers try to exploit by asking them to prove they own the loan. In Mrs. Pemberton’s case, Mr. Stopa filed a motion to dismiss on March 17, 2009, and the case has not moved since then. He filed a similar motion in her son’s case last December.
From the lenders’ standpoint, people who stay in their homes without paying the mortgage or actively trying to work out some other solution, like selling it, are “milking the process,” said Kyle Lundstedt, managing director of Lender Processing Service’s analytics group. LPS provides technology, services and data to the mortgage industry. [It also provide jobs for the ‘truly desperate’ who like working under an ‘alias’.]
These “free riders” are “the unintended and unfortunate consequence” of lenders struggling to work out a solution, Mr. Lundstedt said. “These people are playing a dangerous game. There are processes in many states to go after folks who have substantial assets post-foreclosure.” [Ironically, you’ll never see any of these processes utilized if say BP declares insolvency after destroying the Gulf of Mexico!]
But for borrowers like Jim Tsiogas, the benefits of not paying now outweigh any worries about the future.
“I stopped paying in August 2008,” said Mr. Tsiogas, who is in foreclosure on his house and two rental properties. “I told the lady at the bank, ‘I can’t afford $2,500. I can only afford $1,300.’ ” [Um, just how bad are we supposed to feel for ‘Flipper’? This is a ‘self-inflicted wound’ if you ever saw one! How much do you want to bet that the figure he’s ‘willing to pay’ coincides with how much he is collecting in rent?]
Mr. Tsiogas, who lives on the coast south of St. Petersburg, blames his lenders for being unwilling to help when the crash began and his properties needed shoring up.
Their attitude seems to have changed since he went into foreclosure. Now their letters say things like “we’re willing to work with you.” But Mr. Tsiogas feels little urge to respond.
“I need another year,” he said, “and I’m going to be pretty comfortable.”
Um, this article is ‘disturbing’ all by itself good citizen, nowhere do we see a ‘rebuke’ of either the, er, ‘irresponsible’ borrower or the ‘reckless’ lender!
Worse is the total absence of the ‘ramifications’ of this article. Has ‘investigative reporting’ sunk so low that editors won’t allow reporters to comment on the stories they write?
This is ‘the end’ of consumer credit…and nobody is even hinting at what this means to the rest of the damn economy!
Burn, burn, twist and turn baby! Things are going to get mighty uncomfortable awfully quick!
Will the general public welcome the iron fist of control once they have witnessed the wanton destruction unleashed by the slumbering giant?
The ‘bet’ says yes but I’m not quite so sanguine. They’ve pushed it too far. They are counting on people ‘forgetting’ what has gone before, but contrary to popular belief; the public has a longer ‘memory’ than you’ve been led to believe.
They ‘hope’ they can short circuit ‘retribution’ by installing themselves as the ‘arbiters of justice’ but the public already knows they are thieves! Once the ‘Claret’ starts to flow, putting the cork back in the bottle will prove to be devilishly difficult!
Long have we bemoaned the collapse of the 4th estate but this shit is getting ridiculous! There’s ‘real news’ here and the dunderheads just skip right over it!
Thanks for letting me inside your head,
Gegner
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