Okay, I’m a 46 year old attorney who has reached some conclusions after twenty-two (22) years of representing individuals (and companies in my first four years). My views and opinions have changed over time, but after having three (3) children and experiencing life, some issues have become very apparent to me.
Recently, after fighting with JP Morgan Chase and Citibank in two mortgage cases, I became fed up. All I do is fight insurance companies, banks, and corporations who care very little about human beings and a lot more about money even though all of these entities are composed of individuals. This is no revelation, but the total lack of compassion and greed is alarming and becomes more alarming over time given their lobbying structure and political power.
Let’s start with the first case where I had to file a response brief to their attempts to take my clients’ home. But first, let’s go back to 2007-2008, when the mortgage industry and economy collapsed. What happened? Well, the banking industry had become like the used car industry. There were mortgage brokers and mortgage bankers everywhere who were getting people into mortgages they couldn’t afford (the subprime mortgage industry). These huge banks, such as JP Morgan Chase and Citibank, backed these deals, bought the mortgages, securitized them into various trusts with tax and investment advantages and sold them on the open markets.
The mortgage brokers and bankers didn’t care if an individual could afford a loan. They found out what payment the INDIVIDUAL WANTED and figured out a way to give it to them whether they could really afford it or not. The mortgage brokers and bankers didn’t care because they wouldn’t service the loan. They brokered it or issued the mortgage, sold it and made their $3,000, $4,000 or $5,000 per loan. Do 100 of those in a year, and you do the math. Now, the consumers bear some of the responsibility for buying homes they couldn’t afford, but the industry knows the proper debt to income ratios, and they marketed to these individuals that they could be in their own home or get a lower rate. Very few people have the wherewithal to resist that prospect.
Read The Big Short by Michael Lewis (no relation), and you will see that various New York analysts perceived this as a house of cards and figured out a way to sell them short. When the economy collapsed, they made billions of dollars. YES, BILLIONS! Read this NY Times Review.
So, America got involved. Instead of these banks failing, we bailed a lot out with OUR TAXPAYER DOLLARS. Remember SouthTrust Bank in Birmingham? It became Wachovia. Remember Wachovia? It is now Wells Fargo. All these mortgage brokers and bankers went bust. We forced these banks to settle with the State Attorney Generals (The National Mortgage Settlement). Fortunately for us in Alabama, we are in a red State, so Luther Strange, our great Attorney General didn’t see anymortgage problem (yes, that was sarcasm).
Once the banks got through paying these Millions and Billions in settlements, they decided they could now go after these properties and take a hard line.
Oh, I forgot about the Home Affordable Modification Program (HAMP). There were so many of these loans out there that the banks employed numerous people to work with individuals to “do EVERYTHING they could to keep them in their home and lower their payments.” Yeah right! These lower level employees would encourage people to default for three months before they could apply for modification. The bank employees would ask individuals to send in documentation packets of finances on multiple occasions because the bank would lose them or not find them. Then, the bank would find the individuals ineligible for modification and throw them into foreclosure.
That brings me back to my case. I represent a nice couple who have been married for 24 years. The husband was in the car industry for thirty years and self-employed. When the economy collapsed in 2008, he lost his job and had to work odd jobs. His wife is a medical assistant who has worked for the same employer for 28 years. They were struggling, and their oldest daughter had a medical issue. They called JP Morgan Chase (Chase) because they were falling behind on their mortgage. Chase sent numerous letters which stated, “We will do EVERYTHING to help keep you in your home” and “We will see if you qualify for a modification, and if so, we will lower your monthly payments”.
Well, they qualified for a modification, and their payment went from $693 to $876/month. Yes, upward. They couldn’t do that so the process continued, and Chase foreclosed. They came to me. I was able to convince Chase to rescind the foreclosure and see if my clients would qualify for a modification. Once again, they did, and it went UP AGAIN to $893.00. Now, Chase is foreclosing again. And, guess what? My client got another job, and he can afford his original mortgage of $693. That’s all he’s asking. Reinstate my mortgage, extend it a few years, and let me pay you.
Chase has done this in other cases. Chase promised a LOWER payment, and he and his wife don’t even want a lower payment. They just want their same payment. But, Chase wants their home. In addition, their interest rate is 8.825%. Current rates are half that amount, and on their loan, if they refinanced (which they can’t because of the foreclosure), their payment would be approximately $544/month at a 5% rate. Chase would be doing well to get the $693/month, and they would be helping a hard working couple stay in their home, but instead, Chase shows ABSOLUTELY NO COMPASSION.
Forget legalities. It’s all about the money with Chase. And, isn’t that a problem with America? We are all more concerned about the mighty dollar rather than helping our fellow man. In reality, what is Chase? It is a company composed of individuals. If one of their family members had this problem, what do you think they would do? The CEO of JP Morgan Chase is Jamie Dimon. His compensation package in 2011: $23.1 million. The poor man had to cut his package in half by $11.5 million last year while the company paid about $20 billion in penalties to federal authorities, and now, he’s getting a raise to about $20 million again (a base salary of $1.5 million).
Mr. Dimon could pay my clients’ mortgage personally and not miss a beat. Or, better yet, he could help these poor individuals restructure their debt, and the bank would still make money (I know there are investors to consider and Fannie Mae, etc.). And, here’s the crazy part. JP Morgan Chase paid about $20 BILLION in penalties and fines – where did that money go? Why can’t my clients benefit from some of those penalties? Why can’t companies do the right thing?
It’s fine to make a profit and a living, but when it is done through fraud and greed at the expense of social responsibility, it’s wrong!
It’s a messed up system. Stay tuned . . .
For an interesting critique of Jamie Dimon and JP Morgan Chase, watch this 16 minute video: