Comments on: How The New York Times Sold Homeowners Down The River

By: David Baker

David Baker — Sat, 05 Jun 2010 07:46:02 +0000

I'm relieved that we are on the same page. I agree that the picture painted by the article is overblown and not typical at all of most borrowers. My point was that I don't think it's necessarily wrong for borrowers to enjoy life when their mortgagee won't be rational; if the lender refuses to take the borrower's money, then the borrower is entitled to use it in some other fashion. Note I said “rational”, not “reasonable”. The executives you speak of are fiddling while Rome burns, and they don't care that Rome is burning. It's just not rational, IMHO. Given that the big sub-prime lenders (like Ameriquest, New Century and Option One) are history now, one would think that the others would learn something. But NOOOOO. Oh well.

By: JayFleischman

JayFleischman — Sat, 05 Jun 2010 07:33:27 +0000

David, I'm not disagreeing at all with you. In fact, we're on the same
wavelength. My point was that the piece painted a picture of the American
consumer as a free-wheeling spender with a boat and a penchant for
frittering away money. The reality is that Americans are going into
foreclosure because they can't get the banks to stop playing a shell game
with their loans, and are frustrated at the lack of real solutions.

Sure, corporations file for bankruptcy all the time while their executives
continue their lavish lifestyles. The stories in the mainstream media about
these things are accurate and should be met with public outrage (and often
are). The problem is that when someone reads the Times article and reacts
negatively, they are not seeing the truth as it currently exists in this
country.

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By: Foreclosure: Should You Embrace It? | Chapter 13 Bankruptcy Information

Foreclosure: Should You Embrace It? | Chapter 13 Bankruptcy Information — Thu, 03 Jun 2010 00:05:38 +0000

[...] There’s been a lot of discussion about the foreclosure option in the media lately. Recently, The New York Times published an article entitled, “Owners Stop Paying Mortgages, and Stop Fretting.” According to the article, some Florida homeowners used foreclosure to allow themselves to go to the steakhouse, “take their gas-guzzling airboat out for the weekend,” and “visit the Hard Rock Casino.” This has some people crying foul, and it has my friend and colleague Jay Fleischman, a New York City bankruptcy lawyer, a bit peeved at The Times. [...]

By: David Baker

David Baker — Wed, 02 Jun 2010 08:08:30 +0000

While I hesitate to disagree with a friend and one of the smartest bankruptcy lawyers I know (and Jay Fleischman is both), I think Jay has it wrong when he sides, in this posting, with mortgage lenders in the foreclosure mess. The lenders created the problems by making loans that should not have been made, and were made only because they deceived borrowers in to believing that they could refinance in a couple of years, among other other bad acts. Borrowers do bear some responsibility, of course, but the ultimate reality is that they were sold a bill of goods by lenders and mortgage brokers. Congress didn't help, of course, when it amended the bankruptcy code in 2005 because it didn't permit bankruptcy judges to allow modification of single family homes, but continued to allow investment properties to be modified. It makes no sense, to me.

I'm also a bit perplexed by why it is unfair to refrain from paying mortgages while it's apparently ok to refrain from paying credit cards. Bankruptcy can discharge nearly all debts – secured and unsecured – and people used their credit cards in fundamentally the same way they used money from refinancing. Given that credit cards are way more expensive than mortgages, and that mortgagees have the option of foreclosure, I fail to see what is wrong that the sort of non-judicial bankruptcy/rough justice that these people are practicing. No doubt they will eventually be foreclosed and evicted, but I seen nothing wrong with making the mortgage lenders suffer losses in the same way that homeowners are suffering loses also. What's good for the goose is good for the gander.

What Jay overlooks is that the lenders are flipping borrowers the bird by sticking their heads in the sand and refusing to work with borrowers who want to make it right – and I agree that most borrowers want to do so; it is what I strongly urge my clients to do. But if the lender decides to stonewall and be uncooperative, then as far as I'm concerned, it's a two-way street, and the lenders deserve what they get, especially if it's nothing but a piece of real estate that it can't sell and is expensive to own because after foreclosure, the lender is stuck with maintenance and taxes.