Daily Archives: September 10, 2012

Federal government needs to get out of the securitization business altogether

As we should have learned from the 2008 financial crisis, the mass production of securitized credit enables reckless borrowing, shortchanges productive businesses and destabilizes banks. It has been nourished by regulation, not its inherent economic advantages. Yet officials in Washingtoncontinue to favor this top-down misdirection of credit.

To end this bias before it does any more damage, the federal government needs to get out of the securitization business altogether.

The infatuation with securitization goes back 25 years. In 1987, Lowell Bryan, a McKinsey & Co. director, argued that securitized credit would transform banking fundamentals that hadn’t changed since medieval times. Since then, many cheerleaders in academia and the financial industry have extolled the virtues of securitization, arguing that by combining advances in financial and computing know-how, it slashes the costs of lending, improves the evaluation and distribution of risks, makes credit decisions more transparent, increases liquidity, and so on.

Read on.

Gov. Christie robbing N.J. homeowners to give to the rich

Gov. Chris Christie is taking $75 million earmarked for New Jersey homeowners and diverting it to offset tax breaks for the state’s wealthiest residents.

This scheme to take from working people and give to the rich will hurt efforts to improve our state’s job market. It will weaken small businesses and undermine attempts to restore home values. And it will mean that many New Jersey families will be needlessly put out on the street, when we already have the second-highest foreclosure rate in the country.

We understand firsthand the need for these funds — part of the federal mortgage fraud settlement reached in February — to be used to help fix the housing market mess. Two years ago, we were one day late on a payment to our mortgage servicer, IndyMac (a division of OneWest Bank). The bank refused to accept that payment and subsequent ones.

In July this year, IndyMac put us on a trial modification that forces us to pay more per month than with our previous arrangement. Keeping up has proved impossible; we have fallen behind and are living in fear of foreclosure.

Read on.

Woman sues JPMorgan Chase Bank for predatory lending

CHARLESTON — A woman is suing JPMorgan Chase Bank, N.A. after she claims it failed to provide her a statement of her account and inflated the cost of her home when it was appraised.

Judy B. Carr purchased her current home in 1984 for $40,000 and refinanced the home loan over the years at various times, according to a complaint filed Aug. 15 in Kanawha Circuit Court.

Carr claims in spring 2007, the defendant solicited her to refinance her first mortgage and her credit line and falsely appraised her home at approximately $140,000, when the actual value of her home was approximately $112,900.

In 2011, Carr was struggling with her payments and sought assistance from Chase, but was denied and on June 21, she requested a statement of her account and informed the defendant she was being represented by counsel, according to the suit.

Carr claims Chase failed to provide her with a statement of her account.

The loan contains several substantively unfair terms that came as a surprise to Carr, including the fact that the loan far exceeded the market value of her home, according to the suit.

Carr claims the defendant has a pattern of intentionally inflating the market value of homes to support predatory loans that exceed the market value of the borrowers’ homes.

The loan issued to Carr was unconscionable and therefore was unenforceable, according to the suit.

Read on.