Home buying on a Saturday

by Tim Hedden

So it’s easily the hottest September 25th of my lifetime, today. One more line in the Al Gore tally column.

Just wanted to post a few links and thought today. The residential mortgage collapse was sad for everyone involved, because the warning signs were so obvious. It seems the conclusion has been ‘the system failed’ therefore laying blame throughout the parties involved, from the ratings agencies to the banks to the homeowners themselves. Well, now it seems that the other system in place, the one designed to unwind the mortgages and properly foreclose on properties, is equally such a shitshow.

The other day I read a fairly enthusiastic Barry Ritholtz post entitled Man without Mortgage Loses Home in Foreclosure. Basically, the Florida court system is so in the groove of foreclosing on properties, they are just handing over whatever properties the banks (BofA, in this case) ask for without any independent diligence (BofA didn’t own the title to the property). His conclusion was that in addition to suing the pants off of BofA, there is something “fatally wrong with that court system”. Then The NY Times put out this gem today, how GMAC filed way more foreclosures than it could legally handle in the midst of getting $17 billion from the federal government. In most eastern and midwest States, foreclosures have to be approved by the courts. But so many foreclosures came flooding in, no one could handle the volume of work, but good olde GMAC kept ‘em coming to the tune of 10,000 foreclosures per manager per month.

Chalk one more argument up against big banks and lending companies. GMAC filed foreclosures on people they put absolutely zero effort into helping, at a rate far higher than they knew how to deal with, which only exacerbated the entire crisis we went through. It took a federally funded program to get banks to renegotiate underwater mortgages with the same people who were dragging the banks down in the first place. And instead of trying to help borrowers, GMAC (and I’m sure Countrywide, et al) decided just to file the paperwork. Well, now it turns out they broke the law and knew about it while they did it.

Can this get any more backwards? It seems though every single step that any bank or lending company took over the past 5 years has been for their own profit, completely ignorant of any law or moral compass. Being way overleveraged, on bad loans, so much so that the government steps in to bail them out and then they just keep screwing people over? Can we just start a national bank already (and maybe finally add entitlement costs to our “national debt”)?

<./rant>

Update: 7:06pm

Just happen to be looking at NPR, who purchased a ‘toxic asset’ orĀ mortgage-backed bond back in January 2010. It was created in 2006, at the height of the production-machine, but it died this month. An incredible graph on NPR charts its failings since its start in 2006, and is definitely worth checking out. And then I noticed an ad for Ally Financial on the right side of the screen. “The world needs a better bank. And we’re building it.” ALLY IS GMAC’S BANK HOLDING COMPANY-NAME.