Log In | Register
Americans have traditionally been taught and trained to keep their financial information, status, and dealings private. As a people, we just don't discuss our finances with ANYONE aside from our spouses or very close family members or significant others. And I can see that this peculiar practice has probably cost our people an immeasurable amount of personal wealth that has been lost over the last century and a half, due largely to the greed of dishonest and unscrupulous men who have ever sought to enrich themselves at the expense and misfortune of others. They can indiscriminately rob, steal, swindle and defraud with impunity, because no one talks. It's the perfect setup, and tailor made for con men of all persuasions. These are the scourge of mankind, and have never been so prevalent in any civilization as they are today. They align themselves with and seek to buy support from the elected government, which is then perverted from it's true purpose of serving it's constituents, to serving the all consuming greed of these wealthy and influential interests. And truly, "Experience has shown, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny." (Thomas Jefferson)
So I'm going to break the tradition of keeping my mouth shut, and just openly admit my financial failure, in the hope that some other and perhaps unwary (as I was) potential future victim might be spared the same financial costs as I have endured. The existing consumer credit and financial system is an extremely corrupt morass, designed in it's entirety to entrap, enslave, and extract exorbitant profits from every individual or family that seeks to utilize it. The credit reporting bureaus are engaged in a systematic practice of devaluing credit ratings in order to assure higher interest rates for lenders, lenders engage in what amounts to usury, and our very government assists them through the passage of laws which permit and even encourage these immoral and unethical practices. On the whole, I consider the consumer credit business to be an economic parasite that is threatening the financial health of the entire American economy.
Now I am certainly NOT the sharpest utensil in the drawer when it comes to financial management, and I do not consider my dealings to be particularly extreme or unusual in comparison to any working middle class American. My contention has always been that wisdom is what you gain when you apply the knowledge you have acquired during your life, and experience is what you get when you DON'T. As I write this today, I can safely say that I am as EXPERIENCED an example as you could ever hope to find. That being said, you may consider the following a cautionary tale:
My wife and I moved back to the Central Illinois area in late 1994. We had graduated from a northern Illinois College 5-1/2 years previously and had gradually moved further and further south until we finally settled just 20 minutes away from her parents, who were quite elderly and entering the assisted living phase of their lives. We found a very nice 3 bedroom platform frame ranch that was sitting on the eastern shore of the river and leased it for $600/month. the view was magnificent, the location perfect (7 minute drive to town) and the price was reasonable. we lived there for 3 years before the first flood. When it hit in '97 we got 16 inches of water in the basement (which was finished). I remember our landlord got very angry because I got down there right away when the water receded, and cleaned the carpets, floors and applied mildewcides and repaired the damage quickly. The problem was that when his insurance adjuster showed up and saw the mess cleaned up and the repairs made...well suffice it to say the landlord didn't get the kind of money he was wanting, and that's when our troubles really began.
He called me at work, angrily sputtering that he'd had enough, he was serving us notice to vacate because he was putting the house on the market to sell. I explained that the mess had been intolerable, and that we had paid him over $3000 in deposits and advance rent when we moved in. After about a week, he called me back and offered to sell us the house on a contract for deed. It was a great deal for him but not the best deal in the world for us. However the term of the buy was short (10 years) and the insurance and taxes were escrow-ed in as well (I hardly even knew what that meant back then) so we sat down and inked the contract. Our payments however, increased significantly. In retrospect I think that alone should have sent up a red flag to me, but it didn't. I just rationalized that the difference in money was the difference between renting and owning. Again, at that time I just didn't understand that there IS NO DIFFERENCE!
So the flood insurance money was applied as a down payment, as was our initial deposits (funny though how this sum never appeared ANYWHERE on ANY of the contracts), but the amounts were correct aside from this invisible and presumably nonexistent cash down payment. There had been $5000 worth of repair work done to the sea walls after the flood, which was split between the landlord and us, so the initial purchase price was $69,900. Pretty good price for a 3 bedroom ranch with vinyl siding and a riverfront lot and sand beach. In the summer of 2001, the house needed the roof replaced. I had a friend who had worked as a roofer and he assured me that given the pitch and the low number of squares required, that he could do that roof for about $800. The problem was that the landlord stepped in (he owns a lumber yard and construction company) and told me that we would be using HIS men and materials (He still had ownership on paper, not us), and so instead of paying $800 for a new roof, we paid $2000. and after the first big storm we found a bunch of shingles off our house laying in the road (after several repairs and shingle replacements, the roof leaks to this day). That's when I decided that I had had enough.
I started inquiring about refinancing, and it didn't take long at all for them to crawl out of the wood work. This outfit (Let's just call them "Up-yours Mortgage") got us hooked and reeled us in. As luck would have it, we initiated this refinance right about the time the attacks took place on 9/11. The Mortgage company kept stalling us and stalling us saying that they didn't have the contracts back, because they wanted our landlord to sign off on them BEFORE they paid him. Well that went over with him not well at all, And now we're not making the mortgage payments to him because the numbers and payoffs have all been set in stone and we're waiting. A month, then TWO! Finally they show up with the contracts in NOVEMBER and now my wife and I are within a few days of losing our house if we don't get this done, so we and the landlord all end up in some lawyers office downtown, and I don't even recognize the contract. This damned thing was 2-1/2 points, 12 % interest on a 15 year term no less, and they have two checks, one for $50,000 for the landlord, and one for $15,000 for us. NOTHING in the contract matched their "Good Faith Offering sheet" that we had worked off of from day one. Their only explanation: "Oh, well we couldn't get the interest rate we offered, and we were delayed because of Sept. 11th." And since they had stalled us and delayed us and basically lied to and entrapped us, we now had our backs against the wall. They left us only two options, they knew what they were doing, we didn't. And they had us right where they wanted us. We could either sign, and take the $15K that I didn't request in the original deal, or we could turn down the deal, anger our landlord further, and lose our house. I don't have to tell you the answer to this one, you already know.
This is when we first heard the term "Sub Prime Mortgage". We honestly didn't know what it meant or how our credit rating got so torn up that we landed in that category to begin with. We never really had any credit aside from a couple of student loans back when we were in college. We just remembered that the month when we got back from our honeymoon in the summer of '89 it seemed like all Hell broke loose. Creditors and utility companies and service providers had all jumped on us with both feet, and we had only been out of town for a month. But it was enough, and now we were facing down the barrel of a double digit interest rate on a long term debt obligation. Not good. What made matters even worse was that this fly by night Mortgage company had not even set up the proper escrow accounts for the taxes and insurance (the flood insurance being really critical since it must be paid lump sum annually). The flood insurance never got placed, and the taxes and insurance not escrow-ed leaving us with additional expenses besides the now quite sizable mortgage payments. By the end of 2002 we were starting to sink, behind on the taxes and with no flood insurance whatsoever. So I was shopping again, and this time right when I thought I had found the best deal I could get I made the worst mistake of all...I accepted the offer from Countrywide! Now in all fairness, at that time Countrywide had a reputation as the biggest and the best at home mortgage loans. It would not be until nearly 5 years later that they would be exposed as the dishonest, contract falsifying, predatory, mortgage swindler that was ultimately acquired by and now a part of Bank of America. And in the nearly two years since that acquisition, I can unequivocally state that very little has changed (other than the name shingles on the office doors) with this lender.
At this point I'd like to once again mention the so called "Good Faith Offer" sheet. I'm sure most anyone who has ever bought a home is familiar with them. Myself I refer to them as funny papers, because what appears on them is NOT reality. What they hand you is a "This is what we're going to try and get you" note. It means NOTHING...because it IS nothing. It's a sheet of paper designed to get you to do business with them, nothing more. Because they are NOT going to give you what's on that sheet, and they are NOT going to honor any verbal OR written promises given to you at this point. They have no reason to, you're going to have all that presented to you on the formal contracts, and THEN you'll find out what the real interest rate is going to be and what it's going to cost you out of your equity (for points and fees). If I had known this ten years ago, I could have saved ~$95,000.00 (Yeah I know, WOW). This time the carrot on the stick was 8-1/2% with no points, plus they were going to get me $7600 to put an elevated deck on the riverward side of the house off the living and dining rooms. This would have added a good $20-25K in value to the house since it was waterfront property, with the sand beach and all, but of course that never happened. What DID happen was nearly an EXACT repeat of our first refinance. We waited, and we waited, and we waited some more. These guys were absolutely the worst. Once they had us buried under about 3 months of back payments from waiting, THEN they sent some 3rd party schmuck out to get the contracts signed. I can't prove that it was deliberate but I truly believe that it was, because this jerk showed up with the contracts on the day of my wife's mother's funeral. Of course, my wife was distraught, beside herself with grief, and this inconsiderate ASS had the stones to inform us that if we didn't get it done that day we would have to begin the entire process all over again. And the terms? HAH! How about 9-1/2%, 1-1/2 points and $1100 cash for us (the other $6500 was POCKETED by Countrywide OUTRIGHT!), and this Slimeball claimed to only have ONE COPY of the contract, but assured us that he would promptly mail us a copy of it once it was filed. I told my wife there was NO WAY we should sign that liars agreement, because it was just the same old scam that we'd already seen. But the stress of it, and all the waiting, and we needed to be on time for the family, and it was just too much. Once again they had us, and against my wishes AND my better judgement, we once again signed a predatory and severely misrepresented contract. As of this date we have NEVER gotten a copy of the contract my wife signed that day.
And once again, the flood insurance DIDN'T get placed, so they placed their own LENDER insurance (great deal for them, WE had the premiums added to our mortgage payments, but the claims proceeds would be paid to THEM!) and man did they ever collect. Two flood events, one in Sept. of 2008 which put 21" of water into our basement, and March of 2009 which got up to 24". By then Countrywide had been exposed for what they were (Liar, Cheat, and Swindler), but it didn't matter because Bank of America took over and basically replaced Countrywide's school of sharks with their own. They collected about $20,000 in flood insurance proceeds on our house and they've still got it to this day. For our trouble we now have a notice from the county that our house has been substantially damaged by flood waters and we are therefor in noncompliance with their flood plain ordinance (the repairs have been made at our own expense but our lower level is 6-3/4' below the flood plain elevation), and so we must either be elevate, relocate, or demolish our house. It is ILLEGAL for us to occupy the property until it is brought into compliance, and the house is pending buyout from FEMA (Pending for about a year and a half now).Over the last 13 years, my wife and I have paid approximately $187,000.00 for a house that would have cost us $93,600.00 if we had just kept on renting it, and our mortgage balance today is $69,700.00 which represents a principle reduction of $200. That's it, in 13 years we've reduced our mortgage balance by just $200
This is a perfect representation of the business model that the big banks and mortgage lenders want. This is what they are fighting in congress with their lobbyists and their bribes and their campaign contributions to preserve. These contracts are lifetime debt deals, based on the so called "American Dream" that one day you can own your own home. The truth is, you can be OWNED sooner than you can ever own ANYTHING. If I had simply taken the extra $600 I paid because I actually BELIEVED that I would own my house someday, and saved it in an account earning just 4%, I'd have enough money today to buy a house that costs nearly TWICE what I paid for mine (ah...er...Bank of America's that is). I own...NOTHING! I've been duped into paying DOUBLE RENT for 13 years. And right now I run the risk of being left holding a mortgage payment for a house that I can't even live in, if FEMA doesn't buy it. The way the house is built it can NOT be elevated, it's too small to be worth moving (losing the lower level, and all the stationary and electrical service), so I'm left with the third option (demolition). I have however one small glimmer of hope. If FEMA does come through and buy the house, I can at least get the mortgage paid in full and maybe get back 10% of all the extra money I've paid over the years. That should be just about enough to attract yet ANOTHER shark with yet ANOTHER "Good Faith Offering".....
The real lesson here is that the "American Dream" isn't all that it's cracked up to be. It hasn't been for some time. For investment people, for wealthy landowners, builders, speculators, and derivatives traders, it's a con man's dream come true. For honest working middle class Americans however, it can be a Fast rail ticket to lifelong financial slavery. And to quote George Carlin: "You know why they call it the American Dream don't you? It's because you gotta be ASLEEP to believe it." Well believe this, I'll live on the street before I ever sign one of THOSE contracts again. So if you're wanting to buy a home, consider carefully. And if what they offer you isn't what they set in front of you to sign? Do yourself a real favor...just walk away.
