Tuesday, June 01, 2010

Squatter Stimulus Program

I commented on this idea with friends, the squatter stimulus program, and this NY Times's article has taken the odd stance of this being an OK thing to spotlight and not portray in a poor manner. This is lightyears from the articles on subprime lower class 'losers' and scammers who used their home like an ATM and walked away with the copper piping and wiring, cackling at the banks. Every financial blog I read has commented or cited this article. I have noticed one common missing note: the failure to hold any large entity accountable has trickled down to common borrower behavior.

There is much in this article that will make a person vomit. People not paying a mortgage and using that money to take their airboat out, go to casinos, and to play games with the contract that they signed known to you and I as a mortgage. Seriously, a lawyer filed a motion to dismiss and it has delayed proceedings for a year. What can they dismiss? They haven't paid in 2 years??? The NY Times shows people using the money to get by, to help their business, and to spend on useless shit which is part of our problem in the first place. The running theme of quotes is to shift blame on the banks, even when the people involved used the house like a credit card, and say 'those dirty banksters are crooks, who cares'. Just because a bank is a crook does not make it right for you to do the same. Two wrongs do not make a right.

Yet, there is no fear, more and more borrowers will pull this act and stay rent free longer and longer. They can't be touched, after all, the big banks and AIG haven't been stopped. No one has been arrested. No one will be at AIG per recent releases. Why should they? One borrowers mentions the bank not lending per income ratios.... well why were you taking that loan to get a truck for a contest giveaway? You still applied for the loan. The bank didn't just factor in your income, they thought if you got in trouble you'd be able to sell your home (the asset) for an amount to cover that loan. They relied on the bubble asset pricing to cover your loan. If the home was still worth a high amount, your ass would be selling it to pay back the loan. This article, the 60 mins segment and the power of word of mouth will probably make this problem worse. This will crush loss reserves set aside as banks might not anticipate people who can pay but won't want to pay in their reserving and write offs.

The article does not portray these folks as 'bad'. The attitude and cultural norm has shifted. It isn't wrong. It is money-wise, the right thing to do for some people, but it is still 'wrong'. You are breaking a contract. When big criminals are not accountable, and are allowed to mark their loans to make believe, why should the little guy worry? Who is ever accountable? People are not allowed to fail and to deal with the consequences of failure anymore, BUT, if a wealthy person/organization/company is involved in an accident, you bet your ass they will be served with a lawsuit. Accountability is only for those who can pay. In the end, these banks that avoid criminal charges can pay. They pay in two ways: 1. campaign contributions and 2. in taxes through their profits. I do not view this squatting as the problem, but as the symptom of the bigger societal problem.

...extend unemployment for up to 99 weeks

...pretend the banks are solvent with accounting gimmicks

...delay foreclosures in the courts with no negative consequence for the borrower

...bailout foreign countries before they change their retirement rules and force citizens to retire at >gasp< 65

...bailout car companies, especially Chrysler which had just been bought by private equity funds only 18 months earlier, without revamping their union pay and benefit structures

...bailout Fannie and Freddie who were designed to help make housing affordable... as housing became unaffordable in proportions never seen before

It's a bailout nation for big boys, so why should the little guy not feel entitled to skipping out on payments?

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