Obama Outlines Fresh Mortgage Refinancing Plan

In the above NPR audio, they cover a new plan from Obama. These stories always pique my interest, but then as I fall back on personal experience, I realize yet again that it is nothing but hot air.

I have found we have to work with much more personal and community based resources than wait on/for the ineffective “managers” to flap about policy that leads to nothing.

What happened was criminal. Until that is addressed, they rest will have no affect.

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In some of my prior posts (especially “Trapped”), I voiced a significant amount of disillusionment and had all but given up, reluctantly giving into the financial power of Bank of America. I was at the point of accepting a life dealing with such a horrible corporation, but one weekend, we decided to put up a tent and camp on my mom’s property – six acres of beautifully-wooded New Smyrna.

I woke from a fitful and frozen night’s sleep (you can never have too many blankets) and took a before-sunrise walk around the property. The birds had yet to begin their songs, and in this moment of peaceful solitude and quiet, I looked at the property and at my mom’s house and had a frantic notion, an idea that felt logical, an idea that was once practiced all over the country, an act of family cohesion and support.

You see, my mom’s house is paid off and, even in this economic downturn, is worth considerably more than our home. My thought was to take out a mortgage on her property as if it was a standard refinance of our own. I let the thought bounce around for a while and applied it to all the research I had conducted, and I couldn’t think of any reason why it wouldn’t work. For many families, trust would be a major factor in such a transaction, but I have always had an honest and respectful relationship with my mom, I have a solid career, and I have never balked on a rental payment or a mortgage payment (aside from our feeble attempt at strategic default) in my life.

I ran the idea by my mom, and after some thought on her part, she, as well, could not think of any reason why it would not work. And at this point, we were all thinking that the change would take financial pressure off of us and positively affect the entire family. A win / win situation. Not to mention, I was working under the assumption that even if we did not save much money, we would still get rid of the corrupt empire of Bank of America. How could we lose?

We took the plunge, and the following is the outcome:

Bank of America / Old Numbers:
Total Loan = $181,000.00
APR = 6.5%
Principle and Interest = $1153.13
Escrow = $274.76
PMI = $54.12
Total = $1,482.01

New York Community Bank / New Numbers:
Total Loan = $184,000.00
APR = 5.00%
Principle and Interest – $987.75
No Escrow – We have to plan for taxes and insurance ourselves, which is no big deal (we are adults).
No PMI
$987.75 (mortgage) + $88.00 (insurance) + $102.71(taxes) = $1178.46

$303.55 less per month

Narrative Update:
I talked with a lawyer who specializes in mortgage default and foreclosure issues. I explained everything honestly, and he basically said that if we were to take our situation all the way to court and/or mitigation, we could hope for gaining a percentage point at most.

I thought about this for a day and realized that I’m overworked and tired, my wife is in graduate school working on her MA, and we have two small children (one year old and three years old), so our time and resources are spread too thin. This means that I have had no other option than to give up. As a small family with very limited resources, we just don’t possess the leverage needed to go after those who control everything. The banks have the resources, and as far as I can tell, they will not negotiate, especially with a family like ours. We are not the squeaky wheel. We are not the indigents. I guess in hindsight, we made too good of a decision. If we would have really screwed up, we would get some help with a modification, but since we made reasonable decisions, we are trapped and are going to lose this game.

So we are trapped, as are thousands like us. We don’t have the financial leverage to affect any sort of change. The deck is stacked against us. Though we have relatively no equity and could walk away, we live in Florida, so they can come after us for retribution, and we have PMI, which means the insurance company can come after us as well (even though I can’t find an literature about our PMI – I have searched – It may not exist).

And today’s news indicates that foreclosures have hit their all time high. The banks are beginning to move more rapidly, and it seems that the romantic qualities of strategic default are wearing off. The sleeves are getting rolled up, and homeowners are going to lose; this is especially evident in Florida.

Reflections:
In his preface to You Are Not a Gadget, Jaron Lanier writes, “The vast fanning out of the fates of these words will take place almost entirely in the lifeless world of pure information. Real human eyes will read these words in only a tiny minority of the cases.” Though he is discussing the digital ramifications of the writer’s plight in today’s internet culture, this is what has happened around the world in many different environments. The bankers don’t see humans. They see numbers.

As a family of individuals – who all have a part in our group and unique characteristics – we have to send our hard-earned money to a faceless corporation that we hate working against (we tried with but that did not work). I would be happy to send the money to Frank or Miguel or Sally or whomever. If I knew where it was going and what it was supporting, that would be fine, especially if it was helping our local economy. But the money we send, in combination with hundreds of thousands of others, all fuels a system that is build on corruption and crooked bankers and banking practices. And they are so far removed from the human elements of the transaction, they can justify treating people like bits of information. The people at Bank of America never met anyone in my family or in the families of the many others whose mortgages were bought from the open market as a commodity.

A little later in his book, Lanier addresses “an antihuman way of thinking,” but he argues the digital realm doesn’t need to be faceless and suggests a “campaign should be taking place now, influencing engineers, designers, businesspeople, and everyone else to support humanistic alternatives whenever possible. Unfortunately, however, the opposite seems to be happening (22). Again, this applies to finance as well because so many financial transactions are taking place online. Too often, this provides people with the justification to treat others in the same manner they treat information. The problem is that people are not just information; they are much more.

Conclusion:
We, as a family and as homeowners, have no leverage. Again, we are trapped. The only action we could have taken would have been to gather forces with thousands of others for collective action (like a class-action suit). We are in a similar situation as the colonial empires of the 19th and 20th centuries. This time it is financial or modern colonialism. Those in power are controlling the people with credit and access to credit. The credit is sold as a great idea, but then it leads to economic bondage, as all the cards are stacked against the citizen (pun not intended). The banks can do just about anything, aside from helping the customer. They are in control, they know and they are exploiting the people for all they can get before someone ends their party.

I would love to say let’s end it. Let all of us in the same situation gather together and wage our own war against financial colonialism. The only way the bank will listen is if we take the reins through a class-action style revolt – a nonviolent protest. We don’t pay until our demands are met. We could act like a union and force renegotiation or an all out shut down. They are banking on our funds coming in. If they don’t one hundred thousand payments, what could they do? The answer is simple: they would have to finally listen to us. But, as I reflect back, it is now too late for this; it would have had to happen long ago.

We have plenty of normal folks to blame for this as well. The world’s addiction to credit is one of the major issues. People keep leveraging up and hoping they are going to win the lottery or something (others banked on housing going up – a logical impossibility – woops). It is not cheap credit or expensive credit. They will take what they can get to keep up with the Jones and their own product addictions. This is a clear problem with WANT versus NEED. Alexander Pushin’s “The Queen of Spades” and countless others have advocated for curbing greed and dealing with our wants and our needs, but, as history has illustrated so often, people just don’t listen. Sandburg’s “Grass” covers memories quickly and devastating cycles of greed wash over the lives of people, especially the middle class and lower-middle class.

And combined with bad government interference, we find policies like the following:

“There is no more crucial building block for a strong community and a promising future than a solid home. ‘The Clinton Administration is dedicated to making the dream of homeownership a reality for all Americans. In 1995, the Administration, in partnership with 50 key public and private sector organizations, formed a National Homeownership Strategy with the goal of helping more Americans become homeowners.’”

Or as Peter Coy, one of the editors for Business Week, writes in the article “Bill Clinton’s drive to increase homeownership went way too far”:

“Add President Clinton to the long list of people who deserve a share of the blame for the housing bubble and bust. A recently re-exposed document shows that his administration went to ridiculous lengths to increase the national homeownership rate. It promoted paper-thin downpayments and pushed for ways to get lenders to give mortgage loans to first-time buyers with shaky financing and incomes. It’s clear now that the erosion of lending standards pushed prices up by increasing demand, and later led to waves of defaults by people who never should have bought a home in the first place.”

I don’t write this as a political critique of Clinton; I post it to show that the problems run much deeper than most of the fingers pointing lead us to believe. It is systemic and the fingers should be pointed in almost every direction, including toward ourselves for buying into such advice.

Impact on My Family:
Total negative cost of this banking experiment: 1) $120.00 2) time 3) frustration and 4) my faith in the US financial system.

What I gained or kept: 1) my physical freedom (still in financial bondage); 2) knowledge of how the system really works 3) a true understanding of what leverage means 4) a realization that the game is rigged 4) a desire to do everything possible to reverse how I have been mentally colonized / programmed my whole life to live a lie.

Experiences outside the US:
A number of years ago, I spent about three years traveling. I worked only when I needed to fund my next adventure. My travels took me all over the world and throughout the US.

I remember leaving Bali after my month-long stay in Indonesia. At this point, I’d spent everything I had earned, but my trip was not over. I ended up using credit. The only option I had to finish my trip. Great security. By the time I left Bali, I had incurred about three thousand dollars in debt. I returned to Australia, picked up some things near Sydney and headed back to LA. While in Southern California, I began thinking about how people acted toward me in less-developed countries like Indonesia, Mexico, the Philippines, among others. In general, people asked me for things. They wanted money for nothing or for some plastic trinket or gum. I always declined because all I had was debt. I had no money. This led me to ask: Who is better off? To them, I was an American; thus, I had money. But if we look directly at how much money each of us had. I would be the one on the bottom because I had negative money. I had less than nothing. I was in debt. The only thing I had worth anything was my memory and some stuff (good bye George Carlin). Do these people understand the US credit market? No. They don’t have the same system, and they also don’t have the same problems. Our problems are different, and much of the problems I see are caused by Americans’ dependence on cheap credit, not-so-cheap credit, and all-out illegal criminal credit and/or black-market credit. So, since I have access (the beauty of developed nations), it means I am rich. This, to me, is a significant social problem. The market has become so entrenched in our lives, people no longer question and/or challenge it. We have become a giant dysfunctional family and the dysfunction is lost by acclimating to the dysfunction, which clouds eyes from problems and such dysfunction becomes normal.

Implications/Consequences:
What would happen if this knowledge was unleashed? What would happen if we gathered our collective force and staged a financial revolt? Would it be enough leverage or would it lead to civil war and/or Marshall Law?

“Grass” by Carl Sandburg

Pile the bodies high at Austerlitz and Waterloo.
Shovel them under and let me work –
I am the grass; I cover all.

And pile them high at Gettysburg
And pile them high at Ypres and Verdun.
Shovel them under and let me work.
Two years, ten years, and passengers ask the conductor:
What place is this?
Where are we now?
I am the grass.
Let me work.

I would like to add the following line: And pile them high on Wall Street.

Though he is speaking about war, death, and memory, we can apply Carl Sandburg’s ideas to the economy as well. Look at the banks. We are still swirling from their greed and malicious intent; yet, they are back to their normal practices. Those in power would love it if the grass is able to cover this up. We must remember, and we must hold those in power accountable for their actions.

How long will it take for the financial crisis / recession to become yet another great life lesson that is swept under the rug and buried under Sandburg’s “Grass?”

The memory of their mistakes is already getting covered by the “grass” that Sandburg addresses. I wonder how long it will take for the Gulf oil spill to find its way to the historic graveyard of lost memories.

So what does this all mean to my family? It means we are trapped. We are out of reasonable options.

And the real problem is that for us, and the many thousands who did their part as well, we are tired of the ones who brought on the problems to be rewarded. People who were criminal with their intent are getting help from the banks and the government. And those of us who made sound decisions are getting the brunt of the financial problems. We are getting punished for being able to pay. What is wrong with this picture?

Our Best (if not our only) Bet:
We have to find a way to pay off the loan as soon as possible. If we can pay off our mortgage way ahead of time, it will cost the bank tons of cash, and, in a way, it would drastically reduce our interest – not the percent but the total cost over time. I think this is the only stipulation we have that does not come with some sort of financial penalty. And if we pay it off really fast, it could actually lead to an overall loss for the bank.

I called the bank on 26 April. I tried the new number (888-325-3120) for Default Prevention, which was given to me by the Home Retention Department. Home Retention said Default Prevention would have more options, but when I called, Default Prevention said Home Retention would have more options. I was transferred back. Round and round we go in the circular waste of corporate banking.

Speaking of waste, we keep getting the same mailers from the bank. They are from the USPS and from FedEx. I would assume they cost money. But the problem is that the mailers are the same, and we don’t qualify for what they offer anyway. Double waste. Where does our money go? Answer = Waste.

Back to the call:

I found out that we can’t qualify for Making Home Affordable since we are past due over 29 days. But our income to mortgage percentage take us out of the program anyway. Why keep offering it to us? Answer is above.

Let’s get back to the corporate phone call and back to the same process outlined in their training manual. I update our financials (conservatively) again. The numbers indicate clearly that we have more expenses than income. The BofA employee informs me that modification depends not just on financials but also on whether or not the investors would approve. Interesting that he admitted it this time. Even in our current national situation, they are still trying to hang onto the fraudulent practices that warranted so much profit. Why can’t they reduce profit and help their customers?

Short answer – We are not their customers. Our mortgage was purchased off the open market (I assume somewhat illegally, but that is not up to me to decide.). So, in essence, we are not people to the corporation or to their stockholders. We are numbers. And anytime people are reduced to numbers, horrible acts can be committed with no guilt (historically accurate and disillusioning). And the main problem here is that we hate Bank of America. We always have. From charging my wife to talk to a bank teller to other aspects of their horrible service, we don’t want to do business with them. We never have. But we are trapped by the system. Bank of America bought our loan (mainly our interest payment) without out our consent. Actually, without our knowledge. We found out after the fact.  Is this fair? No. But we have to keep sending them our money or we are the ones “breaking the law.” THIS IS RIDICULOUS.

After I finished everything I could with this particular BofA call-center employee, he told me that the bank has no programs to offer. The only option for us is to liquidate. Translation – short sale, deed in lieu, or foreclosure.

This week we finally received a certified letter (it was at the post office for over a week). It is a “Notice of Intent to Accelerate.” This means that if we do not pay “good funds” of about $3,000.00 (the amount we haven’t paid), “the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time.”

The main problem here is that we live in Florida. The notice states, “If your property is foreclosed upon, the Noteholder may pursue a deficinency judgement against you to collect the balanace of your loan, if permitted by law.” In Florida, it is permitted. We also have PMI, so the bank will most likely come after us and then when they are done, the insurance company holding the PMI will send their lawyers after us as well. As of this time, I can’t find any PMI policy or specific information. It is all general and vague. I’m not sure why.

I am now going to seek council…

On a brief preview of services in the area, I found that lawyers’ websites have some helpful information. Information that comes from the other side of the discourse. It is rhetoric intended to inspire homeowners to fight (and, of course, to pay for the services):

Jeffrey A. Klein
Parker and DuFresne

With the mortgage industry still reeling from the recession, current mortgage rates look very tempting. I get emails from many different companies that want our mortgage (our interest really – though they don’t know our situation).  The following is an example of one that came via email:

On 19 April 2010, I took this screen shot of ING rates. The image is hyperlinked to the original webpage.

With an offer such as this one, it would reduce our interest and our payment. We would consider this immediately. BUT… offers such as this one, and all the others I’ve seen so far, are not for us. They are for homes loans of 80 percent of the value of the home or less. We are up-side-down, so we are TRAPPED. And our option is, once again, to try and find a way, any way, to renegotiate with our current mortgage company (Bank of America). If mortgage companies have programs such as these, why not offer them to people like us? If the bank would reduce our interest rate and/or reduce some of the principle, we will gladly start paying again. This is already happening through refinancing (which is busy industry right now), but for so many, it is out of reach. When people are trapped, they are not left with adequate nor, many times, logical options.

In his famous “Letter from Birmingham Jail,” Martin Luther King begins to dig into some serious issues about race, but, more importantly, he digs into the behavior of the collective population that indirectly contributes to and perpetuates unethical treatment of others. He states:

You [the clergy] speak of our activity in Birmingham as extreme. At first I was rather disappointed that fellow clergymen would see my nonviolent efforts as those of an extremist. I began thinking about the fact that I stand in the middle of two opposing forces in the Negro community. One is a force of complacency, made up in part of Negroes who, as a result of long years of oppression, are so drained of self respect and a sense of ‘somebodiness’ that they have adjusted to segregation; and in part of a few middle-class Negroes who, because of a degree of academic and economic security and because in some ways they profit by segregation, have become insensitive to the problems of the masses. The other force is one of bitterness and hatred, and it comes perilously close to advocating violence. It is expressed in the various black nationalist groups that are springing up across the nation, the largest and best known being Elijah Muhammad’s Muslim movement. Nourished by the Negro’s frustration over the continued existence of racial discrimination, this movement is made up of people who have lost faith in America, who have absolutely repudiated Christianity, and who have concluded that the white man is an incorrigible ‘devil.’

In this section, King identifies two main behaviors that undermine change. He points to the complacent. And he points to the reactive. The complacent have always been a problem, and in the case of the mortgage situation, they need to stand up and not allow the system to take advantage of them and their families. The reactive are worse. They want to incite violence to elicit change. This does not work either. There needs to be much more foresight to make the system better. So we need to work together in non-violent, proactive ways. But the problem here lies with the banks. They don’t want to enter a dialog, so we can’t even get the conversation started. The only act left to us is to stop paying. This is not reactionary because there is no other way. They have already said a collective ‘”no” to the population, so why continue to ask? We must change the situation.

King continues, “I have tried to stand between these two forces, saying that we need to emulate neither the ‘do nothingism’ of the complacent nor the hatred and despair of the black nationalist. For there is the more excellent way of love and nonviolent protest.” But today is different from 1963; we have the Internet and the collective weight of millions of families. Why don’t we use them? United we stand against the oppressor. We can communicate efficiently, and there is no way they can deal with us all at once. Isn’t this one of the basic principles of non-violent protest? We could collectively back up the court system so far that they would have to stop the process. It would become too expensive for them to continue. Let’s use their economic theory against them. So many times in the corporate world, choices have to be made concerning profit. Is it more economical to pay off the families of the car accident victims or is it more economical to recall the faulty cars? Is it more economical for the banks to renegotiate or is in more economical to take us all to court? When you consider they aren’t getting any money from us, the answer is simple. They will have to renegotiate or the court system will bankrupt the corporations. Ugly isn’t it. Corporations have been making these decisions for years. Why don’t we use their model against them?

Again, let’s return to King’s letter:

Oppressed people cannot remain oppressed forever. The yearning for freedom eventually manifests itself, and that is what has happened to the American Negro. Something within has reminded him of his birthright of freedom, and something without has reminded him that it can be gained. Consciously or unconsciously, he has been caught up by the Zeitgeist, and with his black brothers of Africa and his brown and yellow brothers of Asia, South America and the Caribbean, the United States Negro is moving with a sense of great urgency toward the promised land of racial justice. If one recognizes this vital urge that has engulfed the Negro community, one should readily understand why public demonstrations are taking place. The Negro has many pent up resentments and latent frustrations, and he must release them. So let him march; let him make prayer pilgrimages to the city hall; let him go on freedom rides -and try to understand why he must do so. If his repressed emotions are not released in nonviolent ways, they will seek expression through violence; this is not a threat but a fact of history. So I have not said to my people: ‘Get rid of your discontent.’ Rather, I have tried to say that this normal and healthy discontent can be channeled into the creative outlet of nonviolent direct action. And now this approach is being termed extremist. But though I was initially disappointed at being categorized as an extremist, as I continued to think about the matter I gradually gained a measure of satisfaction from the label. Was not Jesus an extremist for love: ‘Love your enemies, bless them that curse you, do good to them that hate you, and pray for them which despitefully use you, and persecute you.’ Was not Amos an extremist for justice: ‘Let justice roll down like waters and righteousness like an ever flowing stream.’ Was not Paul an extremist for the Christian gospel: ‘I bear in my body the marks of the Lord Jesus.’ Was not Martin Luther an extremist: ‘Here I stand; I cannot do otherwise, so help me God.’ And John Bunyan: ‘I will stay in jail to the end of my days before I make a butchery of my conscience.’ And Abraham Lincoln: ‘This nation cannot survive half slave and half free.’ And Thomas Jefferson: ‘We hold these truths to be self evident, that all men are created equal . . .’ So the question is not whether we will be extremists, but what kind of extremists we will be. Will we be extremists for hate or for love? Will we be extremists for the preservation of injustice or for the extension of justice? In that dramatic scene on Calvary’s hill three men were crucified. We must never forget that all three were crucified for the same crime–the crime of extremism. Two were extremists for immorality, and thus fell below their environment. The other, Jesus Christ, was an extremist for love, truth and goodness, and thereby rose above his environment. Perhaps the South, the nation and the world are in dire need of creative extremists” (my emphasis).

To me, “pent up resentments and latent frustrations” is a major understatement, and it applies to scores of situations where those in power abuse their role and take advantage of those with less or, in many cases, no power. Though MLK uses many religious examples, this isn’t religious, this isn’t racial, this isn’t cultural. It is all of the above and much more. And significantly, it is clear illustration of misguided human greed.

To some (if anyone reads my words), my connections may seem like a stretch, but I see it as a battle between the powerful and the powerless. The age-old problem of oppression. In a sense, I could even draw a parallel between the banking system in the US and colonialism. Power and powerlessness. When those who don’t have power are manipulated by those who have power, we have a similar situation. Whether one draws such power from racial, cultural, ethnic or economic divides, it is the same. It is a person purposely and maliciously manipulating the situation for private gain. Sound familiar. MLK saw it. All the people in countries occupied by outside forces saw/see it (American Indians included – we in the US are not innocent). And I see it with the outright fraudulent manipulation of the housing market. So we need to stand together (as blacks did when the Constitutional Amendment was not upheld, as the Igbo people did when the British invaded with their government and their religion). We need to stand together to take an “unjust” system and create a “just” system. Because I don’t care what my neighbors think, and I don’t care what kind of ethical or moral guilt the bank wants its followers to place on my mind. None of this matters. What matters is that the product I was sold was based on fraudulent practices, and those responsible should be held accountable.

Before closing, let’s take another quick example from a great American classic, – one that was banned in the US for quite some time – The Adventures of Huckleberry Finn. In one section of the novel, the characters The Duke and the King are grifters, conmen if you need a synonym (sounds familiar doesn’t it). They take peoples’ money any way they can, but their past eventually catches up to them, and they are tarred and feathered for their treachery. Rightful punishment for their misdeeds. Twain is on the right track; he is holding characters accountable for such behavior.

I think we need some “creative extremists” to symbolically tar and feather the entire banking system. It is time to stand up and let our voices be heard. We can then sit back and watch the bankers responsible run away, just as the Duke and the King do and as so many complacent people (black and white) and white supremacists did when the civil rights movement showed that certain laws and cultural assumptions about race were “unjust,” unethical, and immoral.

I took a few minutes and conducted some informal research into current rental prices in New Smyrna Beach, FL. I found a variety of options of equal or greater square footage. We currently have a single-family 3 bedroom / 2 bathroom home (about 1,200 square feet) and would/could never settle for less; we are a family of four. I searched a couple rental agency websites around town and also looked on our local Craig’s List. Prices for long-term monthly rentals ranged from as low as $662 (interesting price) to $1,000 and up. The places I saw that were less than $1,000 would work just as well as our current house – some better. The amenities varied as well, but we have all of our needed items, and we can move them easily.