Wells Fargo Is Stealing Me Blind! (or just blindly stealing?)
Given losses like these, Mr. White said he was perplexed that lenders and their representatives were resisting reducing principal when they modify loans. His data shows how rare it is for lenders to reduce principal. In June, for example, 3,135 loans — just 17.2 percent of the total modified — involved write-downs of principal, interest or fees. The total loss from these write-downs was just $45 million in June.
And yet, the losses incurred in foreclosure sales involving loans in the securitization trusts were a staggering $4.59 billion in June. “There is 100 times as much money lost in foreclosure sales as there was in writing down balances in modifications,” Mr. White said. “That is not rational economic behavior.”1
And there you have it: the mortage banks stealing from the middle class, claiming that this is just blind economic forces at work...or are they? I think it's only fair that the mortgage banks be forced to share in the economic pain of readjustment, and be given fair, transparent, national standard guidelines -- and be required by force of law to obey them -- by how to reduce principal balances on any mortgages purchased during this bubble in housing prices, until housing payments are brought back in line with income levels in this country.
I think this in only fair particularly since the mortgage banks were so complicit in creating this situation; but that's another story...
1Gretchen Morgenson, So Many Foreclosures, So Little Logic, New York Times, June 5, 2009, page BU 1.