In reality, it is the borrower that was “used/abused” and taken advantage of by the banks. Please hear me out if you disagree. The banks were never the victims in the foreclosure bubble bursting. The whole scheme was based on Mortgage Backed Securities on Wall Street and selling these “Swaps”. Remember the movie, The Big Short? The banks have been made whole after the first 90 days of default with the insurance pay out of PMI… Private Mortgage Insurance. There are also more insurance pay outs to the lenders trusts called Credit Default Insurance/Credit Default “Swap” Insurance. Lastly, the bank resells the house at auction, short sale or an REO. The banks get made whole multiple times. Remember that this foreclosure crisis was engineered to happen by the banks and some Wall Street “gurus” years before the Boom and the Bust. This was designed and created for banks to cash in and make Billions. It is the “Insurance” companies that backed the loans that took the big hit financially. Lehman Brothers to Goldman Sachs… they no longer exist.
Again, the banks have been made whole multiple times just on one defaulted mortgage. CP doesn’t feel one bit sorry for the banks. First, PMI has been forced to pay by the homeowner but the borrower is not the beneficiary to the insurance policy that they paid for. Hello… this speaks volumes of smelling a dead rat right there. This means when the borrower defaults after 90 days, the bank gets to cash in on the PMI policy and got made whole for the most part. This is why banks won’t do a Loan Modification before 90 days but required the borrower to fall behind 91 days before the borrower could apply for a Loan Mod. Also, on each trust the note and mortgage gets placed into, the individual trusts have what is called “Credit Default Swap Insurance” on top of the banks PMI. This means the trust gets paid another insurance pay out and made whole again. Some notes and mortgages are wrapped up into multiple trusts. Each trust has its own “Insurance” policy. This means the bank gets made whole multiple times and paid off 3-5 times with PMI and multiple policies for each trust with Credit Default Swap Insurance. Now the icing on the cake is that the bank gets made whole multiple times with the insurance payouts and then an additional time when it sells the property and makes another profit on the short sale or auction or when it sells as an REO.
This is why the banks bundled these notes and mortgages on Wall Street and sold them as Insurance Backed Mortgages. They were “banking” on the borrower to default. The real tragedy here is that the borrower is forced to pay the PMI but the bank/lender is listed as the beneficiary to the insurance policy that the borrower is forced to pay. We are not taking advantage of the bank but rather we are empowering the homeowner to make the best of a bad situation and put some cash in their pockets.
Also… we are bettering the neighborhood by keeping a house occupied and maintained. We are helping the housing market for the neighborhood as well to keep values higher. Vacant abandoned houses pull the market value down in those neighborhoods. But most of all, we are helping a hurting homeowner that has lost his home and is not making a dime on his house. Now we are putting 100’s or even $1000’s of dollars in his/her pocket each month. We are helping them make a car payment, utilities payments, groceries to kids dance lessons.
Remember that it was Bank of America who was sued by AIG insurance for double and triple and quadruple dipping on insurance payouts. This was some major fraud. However, no BOA officer went to prison. How can this be? No one went to prison. BOA settled the first of many law suits for $22 Billion dollars. The first of many by BOA and many other big banks settled as well. Again, your question needs to be… Did the homeowner get taken advantage of by the banks in this pre-planned foreclosure boom? BOA didn’t go to trial. BOA settled out of court and AIG dropped the lawsuit. This was the first of many “multi-billion” dollar settlements BOA had and all the other big banks too. The real answer to your question, "Am I hurting or taking advantage of the banks"?? H, E, double hockey sticks No!!! Now, after you read this… you might just have a different perspective.