Remember the school bully who robbed the little kid of his lunch money?
Well, there are bullies out there who have effectively robbed a generation of middle class older workers of their life earnings.
A former neighbor in Nevada was a gentleman in his 80s who worked as a supervisor for a large American corporation for decades. He and his wife bought their modest middle-class home for the whopping price of $345,000 when that was the going price for a modest middle class home in Nevada. With time, he began having difficulty walking up a flight of stairs and the upkeep became too much for them. They had to sell. After a couple of years on the market, they finally sold the house for about $200,000 and they had to finance the buyer.
Two other friends, both single women, one a widow, used the money they inherited from a deceased parent to buy new homes during the boom. Both are in a position today where they cannot find decent full-time employment because of the dire economy (Nevada has the highest unemployment rate in the nation.) and rampant unchecked age discrimination. They are having trouble making mortgage payments and fear foreclosure.
One of these women, who has suffered some health problems, is considering renting the house and getting a cheap apartment so she can pay the mortgage.
The other sought to refinance. She was aghast to learn from the bank that she has no equity left in her home because it has declined so much in value, and that the bank owns whatever equity remains!
This is a common story in Nevada, where, I can assure you, everyone is not reckless , greedy or stupid. A lot of people and institutions created and profited from an artificial housing bubble that allowed them walk away with the life savings of many smart, decent and unsuspecting consumers. And it seems that they have gotten away with the “crime.” There have been few, if any, criminal prosecutions.
This week, Nevada’s Attorney General Catherine Cortez Masto charged Bank of America with foreclosing on homes it had no authority to foreclose on.
The allegations were made in an amended complaint in a lawsuit initially filed in December charging the banking giant had harmed struggling Nevada consumers by failing to help them modify their mortgages and had deceived some by leading them to believe their loans would be modified — but then foreclosed on them anyway.
The amended complaint charges that even after the Bank of America was sued in December, it continued to harm consumers.
Masto is seeking to revoke a 2009 settlement she reached with Bank of America over loan abuses involving its Countrywide Financial Corp. unit, charging the bank has breached the settlement terms.
“The state alleges that defendants’ deceptive practices have resulted in an explosion of delinquencies and unauthorized and unnecessary foreclosures in the state of Nevada, stripping homeowners of their assets (including those who do not have loans originated or serviced by defendants, but whose property values have fallen dramatically), dislocating families, blighting neighborhoods and deeply disrupting the state’s housing market,” according to a statement from the Attorney General’s Office.
The amended complaint begins with a charge titled “Bank of America’s deceptions with regard to its authority to collect and foreclose.”
The complaint says Bank of America increased Countrywide consumers’ interest rates and monthly payments, even though the earlier settlement allows only modifications that decrease consumers’ interest rates.
The state also claims the bank required Countrywide borrowers to provide extensive documentation — including pay stubs, tax returns and sworn affidavits — to qualify for modifications, when a streamlined process was supposed to have been in place.
Bank of America on Tuesday denied allegations that it had violated the settlement, called a consent decree.
If the settlement is terminated, the state would continue with its initial Countrywide lawsuit charging predatory lending and fraud in originating, marketing and servicing mortgage loans.
Of course, that’s too little, too late, for my former elderly neighbors, who are now living in a one-story rental house, worrying that the people who purchased their house will default.