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Y! MyWebTuesday, September 30, 2008
"Nobody bailed me out," a rueful Bob Babal said of his difficulties in paying a mortgage with an 11 percent interest rate. The Jefferson Twp. mechanic, who filed Chapter 13 bankruptcy to keep his house, has mixed feelings about the proposed $700 billion bailout voted down Monday. "It bothers me a lot that the lenders wouldn't do anything to help me, yet now they're trying to help me to bail them out. If I didn't see the big picture, I'd say 'let them swing — it's their own fault.' But too many people would suffer, and the wrong people would suffer."
When faced with foreclosure, Babal and his wife Tracy sought help from the Miami Valley Fair Housing Center, whose president and CEO, Jim McCarthy, said the bailout proposal failed to address the real problem: the foreclosure crisis.
"For eight years, folks like me and economists who are much smarter than me have done everything we can — producing reports and running to Capitol Hill to make our legislators aware that the folks on Wall Street were running wild and risking our homes and neighborhoods with convoluted financial products that have no value. We were smugly brushed off as Chicken Little screaming that the sky is falling," he said.
In 2004, Miami Valley Fair Housing officials made a presentation to Rep. Michael Oxley, R-Findlay, House Financial Services Committee chairman. "We showed him these loan products were toxic, and we said this is not sustainable," McCarthy said, "and we said the market will not adjust or correct when the market is being manipulated."
McCarthy endorses the position of the National Community Reinvestment Coalition, which opposes any bailout plan that doesn't contain anti-predatory lending provisions, increased regulation for lenders as well as bankruptcy reform that would allow judges to modify the terms of primary mortgages, as they can with investment properties.
"We've got to give judges the ability to undo toxic loans, and to have debt restructured by court of law, in order to keep people in their homes," McCarthy said. "We ought to include measures like that to make sure taxpayers get a return on $700 billion investment."
For years, McCarthy and his staff at Miami Valley Fair Housing have worked with homeowners in crisis like Bob Babal. "Our legislators have been immobilized to do anything for the people until Wall Street fell on its knees, now the government is looking to the people to bail out Wall Street," he said.
Babal isn't opposed to a bailout plan, but finds it highly ironic that the lenders are looking to him for relief.
"A bunch of greedy people came up with a not so ethical system," he said. "Their gamble didn't work out in the long run. Instead of their taking the hit for it, they want us to take the hit for it."
Comments
By Randy
September 30, 2008 5:24 PM | Link to this
The large number of people I see as an attorney going into foreclosure are there because they lost their jobs, had medical problems, or were scammed by unscrupulous brokers and lenders. These scammed victims were often not told that taxes and insurance weren’t included in their payments,told that they would be able to refinance in a few months at a lower rate if they kept their payments current. The majority of these people want to pay their debts but the debt needs to be reasonable!
By bobby
September 30, 2008 11:52 AM | Link to this
The fact Mr. Babal’s best interest rate was eleven percent might be that he was not credit worthy,or had no verification of income and assets. Did he make a down payment? How much consideration did he give to his ability to repay the loan before he signed the note?…. The predatory Boogyman is not behind most of these foreclosures.
By Paul
September 30, 2008 11:18 AM | Link to this
Have you looked at what banks pay you on your savings account? Over 30 years ago I bought my first home with almost 20% down and still had to pay 10+% interest on a 20 year mortgage. But the banks paid 5% on savings and even higher on long term CDs. Today the banks don’t want to raise money by paying the little saver for it. Instead they make loans with money that is not theirs, sell the mortgage and do it again. And we are supposed to bail them out.
By Dennis Kelly
September 30, 2008 10:17 AM | Link to this
My wife does up to 10 repo appraisals a week for local banks - most of these homes go to Sheriff’s sale eventually at 70% or less of their value, dragging down all our home values at a rate faster than they ever went up in the first place! I don’t blame average folks for getting into a mortgage with payments lower than the rent they paid and upgrading their lifestyles at the same time, but no one looked at the long range accounting and now the proverbial chickens have come home to roost!
By Wordell
September 30, 2008 10:13 AM | Link to this
Democrats (with Republican help) force mortgage companies in the late 90’s/early 2000’s to loan money to millions of unqualified people for home loans, threaten laws to enforce it. They allow unemployment/food stamps/ADC to be counted as “income”! They force a lower loan criteria. Why do you wonder why this has happened?! Can’t do the math, savant?? You expect the same idiots who caused it to straighten it out?! I want a Porsche (“Por-Sha”). Buy me one, can’t pay you back..O.K?
By Eric
September 30, 2008 9:56 AM | Link to this
This whole mess is about the government ( do good’er libs) encouraging banks to loan money to people who didn’t qualify for mortgages. That put more buyers in the market. More buyers in the market cause prices to go up. Buyer didnt pay morts and then prices fell. Pretty simple. Fannie and Freddie said they would buy the morts. I was a banker and the govt said they would buy every mort made. I made so many loans it would make your head spin. The govt lowered the standards on the paper and I gave them what they wanted. I got the job done. The govt asked me to do this. In nornmal times most of those mort would have never been written. I saw opportuniity and took it. I knew most of these losers wuold not repay, but this is what the government (libs) wanted. Dont blame Wall Street. Capitalism works if you get rid of the social enginnering.
By EJ
September 30, 2008 9:41 AM | Link to this
Did someone hold a gun to Babal’s head and force him to sign a mortgage with 11% interest? His failure and the failure of hundreds of thousands like him to live within his means and pay his debts is what caused this mess. 95% of Americans pay their mortgages. Since the top 20% of taxpayers shoulder 84% of the tax burden, it is doubtful that Babal’s share of the bailout will be proportionate to the impact of his failed mortgage on the system.
By Joanie
September 30, 2008 8:48 AM | Link to this
I agree that we need to have measures against predatory lenders, but I don’t feel I should have to pay for people who bought houses beyond their means. We live in a somewhat modest home, though we could afford a much more expensive one with our income. Why should our hard-earned money be used to keep people in McMansions they can’t afford? The sub-prime lending scheme was a bad idea. We need more regulations on lending.
By LMAO
September 30, 2008 8:40 AM | Link to this
speaking of morons and their role in this mess, don’t forget Clinton repealing the Glass-Steagall Act and instituting the Community Reinvestment Act… which to clarify for the Clintonians amongst us, 1) gave way to the institutional chaos in the financial industry, and 2) ensured that people with little-to-no chance to pay back loans would be able to qualify for them anyway!
By Smith
September 30, 2008 8:19 AM | Link to this
Its morons like Bob Babal that are contributing to this mess. Don’t take out a loan that you cant pay back. Why do you think all these banks are failing? Because people aren’t paying back their loans.
Don’t bite off more than you can chew!!!