Loan sharks have gone uptown.
While most folks are in an uproar over Bank of America’s decision to charge $5 per month to use a debit card, there is a much more disturbing banking trend emerging from the mega-financial institutions that those in Washington, D.C., who work over taxpayers like locust on the move have referred to as “too big to fail.”
The big guys who were bailed out with your money are now going after folks who have lost their homes to foreclosure for a “deficiency judgment.”
Simply put, they are starting to sue for the difference between what they were owed and what a home sold for either in a short sale or after it had been foreclosure. The average deficiency judgment is $100,000. Most states allow investors up to 20 years to reclaim what they are owed with interest rates approaching 8 percent.
For now, banks that are pursuing deficiency judgments are going after those who gamed the system by employing strategic defaults. They essentially walked away from homes not because they couldn’t afford the payments but because they owed more than the home was worth to buy a home with a significantly lower monthly payment.
In other words, they are borrowers who found a way to pass the buck just like the big guys did.
There is nothing from stopping banks in most states from going after those who got in over their heads thanks to loose lending standards inspired by a desire to make a quick buck.
In a way, the banks were just as guilty of reckless pursuit of greed just like those who wanted more house than they could afford. Both buyer and lender should have known better.
But the only folks who may never be left off the hook are the buyers. In the United States today, mega-banks are too big to fail while the Working Class and the endangered Middle Class are small enough to crush.
In states that allow deficiency judgments lenders have up to four years to decide to file. What is needed are enough congressmen who define “the people” as the working stiffs and not corporate fat cats to pass a law limiting deficiency judgments for federally backed mortgages to just those that employed strategic default.
It’s only fair considering taxpayers are on the hook for billions in what were essentially strategic defaults by reckless big banks.
That may go against your grain. After all, if someone loans you money then you have an ethical, moral, and legal obligation to pay it back. But a bank isn’t your co-worker or friend. They are supposed to play by sound financial rules. In essence, they were all operating like corner loan sharks playing fast and loose with money they loaned. They didn’t care whether people could afford to pay them back. They just wanted to get them on the hook so they could fatten their bottom line.
Coming to the defense of the little guy is the least Congress can do given they were the ones that practically pushed banks to take on cancerous loan portfolios. They are also the ones that helped bring you monthly debit card fees.
The reason banks were pushed into debt card fees was because Walmart and other mega-corporations of their ilk wanted to slash typical debit card transaction fees they are charged by half or about 20 cents per swipe. So they did what any other American mega-corporation does that wants to make a quick buck or get a financial leg up - they lobbied Congress. The move is saving giant businesses billions of dollars. Do you think they will be lowering their prices as a result of the indirect windfall courtesy of Congress?
It is just another assault on the Middle Class and the government decrees that are helping financially bomb the Working Class into poverty.
America today has become a place where those who govern the land play gore politics through regulations and taxes.
Simply put, they prey on the weakest in order to stay cozy with their buddies in major corporations who feed their egos and their re-election campaign chests.
It’s too bad that America doesn’t have capitalists like Henry Ford that political leaders listen to instead of Warren Buffet.
Ford understood what got America moving. It’s getting money spread around through private sector wealth. Buffet et al believe the solution is to use taxes that - once in the hands of Congress - feeds a reversal of what happened in Nottingham Woods as they steal from the poor to give to the rich.