The Horror! The Depravity! The...stupidity.
Like all B-movies, the villain is nothing more than a man in a suit painted by another man. Well, the suit we are looking at was painted by the Banking industry and not just anyone in the banking industry but a Panel hosted by the Mortgage Bankers Association (MBA) at their annual servicing conference in Texas. The panel was discussing whether banks should pursue a deficiency judgment against strategic defaulters.
One panelist, Jim Davis, Executive VP of American Home Mortgage, was caught ranting about the beastly strategic defaulters, "Servicers should push back and hold those borrowers accountable. I think it is time for us to do that. There seems to be this entitlement by borrowers [to default because of a bad economy]." Mr. Davis was paraphrased as disagreeing with the right to default because the homeowner made the decision to buy the property and the lender shouldn't be expected to bear the brunt of the loss.
I want to switch gears a little bit and have you watch the following video:
| The Daily Show With Jon Stewart | Mon - Thurs 11p / 10c | |||
| Mortgage Bankers Association Strategic Default | ||||
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You will note in this satirical news reporting that a vast truth was just unleashed, the MBA, which is hosting the panel on the beastly Strategic Defaulter, defaulted on a $79 million dollar loan. I juxtapose these two stories for a couple of reasons: One, its funny; two, the banking industry is filled with hypocrites; and three, the banks don't really know who a strategic defaulter is over someone who simply can't pay.
In 2004, only 4% of defaults were strategic, a professor from the University of Chicago, using both survey and data based methods estimates the number of defaults in the current year between 25% and 35%. I hope that I in some small part have helped increase that number this year.
The MBA would like nothing less than to be able to attach a deficiency to every loan that goes bad when the borrower had the wherewithal to pay for the note. The problem that I have with that, is that the rules, i.e. the Deed of Trust Act in Washington, were written by bankers for bankers and now that the rules don't fit their reality the banks are out to make the homeowners into Frankenstein's monster.
You will note in some previous posts that I believe in the existence of the heavy influence of the banking lobby. It has impacted good legislation that would help out homeowners for the worse. We have to be better educated about the process and realize that the bankers are speaking out of both sides of their face. Now if something that can grab a pitchfork, influence legislation, and speak out of two sides of its head isn't a B-Movie monster, then I don't know what is.
Fixed the link, it appears that the Daily Show went down for a couple of hours this morning so the import wasn't working on the video.
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All the best!