What is the worth of your honor? In 2010 mortgages are honor-bound assets as Stephen Colbert so eloquently puts (See content below, full credit to Stephen) - Today's article is all about mortgages and devalued assets (your home) and exactly who is being held accountable for the financial crisis and believe it or not, some people dare to say it is the borrower's fault!
In Jan 12,2010 4 Bank CEO's were summoned to Capitol Hill in order to be questioned about the causes of the current financial crisis and the role they played however these greedy bastards were gutsy enough to try to pull a fast one on everyone by saying and I quote:
Somehow we just missed, you know, that home prices don't go up forever - James Dimon, JPMorgan CEO
Lloyd Blankfein then compliments this thought by saying:
Whatever we did, whatever the standards were at the time were, it didn't work out well - Lloyd Blankfein, Goldman Sachs CEO
Oh Really? So their answer to the question "How did this crisis happen?" was "Somehow" - You would expect a lot more from the two CEO's of the most prominent financial institutions in the US but all they could come up with were ludicrous excuses and stories such as the one James Dimon was ballsy enough to tell:
My daughter calls me from school one day and said "Daddy what's the financial crisis?" and without trying to be funny I said "is the type of thing that happens every 5 to 7 years" - James Dimon, JPMorgan CEOEvery 5 to 7 years OMFG are you kidding me? OK I must admit this is the type of stories you would tell your kid to get him (or her in this case) to shut up but is he serious when he tells this story to an adult, educated audience in Capitol Hill? Seriously, if the US would face a housing/mortgage crisis every 5-7 years such as the one we are facing right now this country would not exist and the capitalist system would have failed a long time ago. It is incredible to hear the stories they come up with so that the American people and the Capitol Hill audience would sympathize with them - Tell these stories to those hard working people who now have to choose between food or shelter and see what happens, who by the way are now 1 in 10 of the population and the numbers keep getting closer to 20% (2:10)
In 2008, the number of residential foreclosures fillings were of 3.1 Million as reported by CNN, in 2009 the number of foreclosures was 2.8 million and it doesn't seem that there is any relief on sight for 2010 as the projected number of foreclosures is of 2.4 Million. Even though the number of foreclosed homes keeps decreasing year after year, the numbers are still staggering! This comes to show how many home owners have not being able to refinance their home loans because of the situation most of them were put in and right now about 25% of all US home owners owe more on their houses than those houses are actually worth which is what people within the industry call underwater properties. This number has been decreasing since 2006 which is when the number of houses that were underwater peaked according to studies done by Zillow.
Having a property that is underwater is one of the reasons why many people are unable to refinance their mortgage because there isn't any equity left to work with, that being the case many home owners have been forced to walk away from their mortgage, not because they want but because there is nothing else they can do about it, a decision which is highly criticized by bankers and "financial analysts" who call these home owners irresponsible people who are perpetrating a travesty of justice and send a clear message to their family and friends. However what these bankers and analysts don't realize is that those friends and family are in the same financial situation! (To learn more read our content piece on Subprime Mortgage refinancing)
So what's the bank's position in this whole debacle? Simple, they love passing the blame onto the home owner because they assumed the home owner's honor was worth something so they gave mortgages based on honor and as Stephen Colbert so adequately puts:
NO, they are not responsible for the now worthless mortgages that they sold you. It is the home owners responsibility to keep making payments on a rapidly depreciating house even if it means losing your Savings, your car and eventually the house. - Stephen C.
Truer yet ironic words have never been spoken and in a world were mortgages are approved based on the assumption that home values will continue to increase indefinitely we can surely blame the home owner who is now unable to refinance their mortgage because of stupid assumptions by the top American financial institutions.
Credits to Stephen Colbert Honor-Bound Mortgages (The Word, segment):
