Remembering the Nightmare of the Housing Crisis
The story of the economic crisis that hit the country in 2007-2008 is often told in terms of legalities and politics. But a recent online article recalls the more in-depth story of a part of the crisis that often did not get enough attention: the human stories; what people lost in the crisis, how some reinvented themselves, and how some never recovered.
Knowing the Victims
For many foreclosure defense attorneys, the human stories aren’t new; we lived it through our clients who came in to our offices, telling of their own hardship. We heard about the people who were once financially well off whose economic fortunes crumbled with the economy, or how people put their life savings as a down payment to a home that had since plummeted in value, or who were just getting by until their mortgage payment drastically changed.
Many were innocent victims. Some, for example, who made their living in the construction industry, found themselves out of work suddenly. Others found themselves strapped with unexpected medical debt or credit card debt when they were laid off work, and used equity in the home they were told would increase in value to pay it.
Deception Was Common
Still others were deceived at the time they took out their loans, a common practice at the time. Small banks and fly-by-night lenders loaned to anybody, with any financial qualifications, because bigger banks would buy those loans and roll them up to sell to investors in the form of mortgage backed securities.
If a small bank knows a big bank is paying them for the loan sometimes immediately after closing, what’s the incentive to make sure the buyer is qualified? There is none. They won’t have any losses when the borrower defaults.
So they created bizarre loan packages—interest only, adjustable rate loans, and other products designed to make sure everybody qualifies.
By the time the mortgage payment adjusted to the normal payment and the loan went into default, it wasn’t that small bank’s problem anymore. So they sold to anyone and everyone, often specifically targeting minorities, lower income people, people desperate to own a home, or people they could deceive into taking out huge loans.
Most everybody who went through the crisis and was involved in a foreclosure used the same word to describe it: nightmare. They looked to courts for help. They looked to their banks for help. They looked to mortgage relief scammers for help. Often, all they found was more deception.
Although the economy has since recovered, many of the protections put into place to help borrowers during the crisis provided negligible help, at best. The Dodd-Frank laws put into place to make sure lenders verify a borrower’s ability to repay loans given to them in the future have since been repealed by President Trump.
Millions in settlement money was put aside to help those aggrieved by unscrupulous bank practices. Many people received pennies on the dollar for their losses. Adding insult to injury, some of the money actually went to clerks of the courts to help them process foreclosure cases faster.
Contact an Attorney for Help
If you are behind on your mortgage, discuss your options with an experienced foreclosure defense lawyer in Miami. At Jacobs Legal, we have years of experience fighting foreclosures and negotiating modifications. Contact us to schedule your free initial consultation.