There is a world of hurt out there --- and everyone is looking for villians -- was it the banks, was it government regulation, was it Wall Street? The answer is yes, yes and more yes.
Most of my work at the moment is for an American legal news website. I have interviewed dozens of lawyers who are currently filing lawsuits on behalf of Americans who have had their life savings wiped out by a financial debacle that never should have happened.
Here are some FACTS.
The Banks -- A verdict of 1.5 million dollars was recently leveled against the Wells Fargo bank after a woman was suckered into a mortgage she couldn't afford. Banking employees worked on COMMISSION -- They received $2000 for every mortgage someone signed. The mortgage salesperson inflated the woman's salary, savings and mislead her about the actual mortgage lending rate. No lawyers are required to participate in real estate deals in the US. The woman objected, saying the information was incorrect. "Don't worry, we can fix that later," Wells Fargo said. The woman never moved into the house because she knew she couldn't afford it. She ended up selling it a year later for 90,000 less than she paid for it. The bank didn't care if she defaulted because it was repackaging mortgages and selling them to other financial institutions, that then in turn sold them as Mortgage Backed Securities to other unsuspecting Americans.
What can we learn from this -- Bank employees should not work on Commission -- Lawyers should be involved in all US real estate transactions.
-- If you're the lender -- then you have to hold the mortgage, they can't be resold.
Wall Street--Yup. Their finger prints have been found on the gun. Your financial investment advisor has a legal responsibility to advise you properly. Instead, many sold high-risk investments to older Americans and told them they were as good as money the bank. A Florida lawyer recently described the case of an elderly woman whose nestegg has been so depleted she will be forced to move out of a very comfortable nursing home to a state nursing home.
Government -- I hear right wing commentators screaming that communists are
taking over the government. Oh my. Yes, it is true that the Clinton administration and the Bush administration encouraged home ownership. Nothing wrong with that, it is a sign of a healthy society. The problem is there was no regulation -- and they left the door open to unscrupulous lenders to qualify anyone for a mortgage. New government regulations are needed.
People -- An Arizona lawyer who specializes in bankruptcies (he is very busy) talked to me about his clients. Very, very few know the difference between a variable rate mortgage, a fixed rate mortgage or an interest only mortgage. There is no lawyer required to look over a mortgage before someone signs and as a result many people had no idea what they were doing.
Culture -- There is a strange notion that we all ought to have more than our parents had. We have forgotten how hard they worked to get where they are. So folks think that those stainless steel appliances and granite countertops are some kind of birth right. Many, many people simply reached beyond their means because they think it there for the taking. Wrong.
Greed -- We worship at the feet of the Gods of Consumerism. Enough is never all you need. We seem to want more and more --- and are willing to use credit to get it -- at any cost. What a price we are paying.
Most of my work at the moment is for an American legal news website. I have interviewed dozens of lawyers who are currently filing lawsuits on behalf of Americans who have had their life savings wiped out by a financial debacle that never should have happened.
Here are some FACTS.
The Banks -- A verdict of 1.5 million dollars was recently leveled against the Wells Fargo bank after a woman was suckered into a mortgage she couldn't afford. Banking employees worked on COMMISSION -- They received $2000 for every mortgage someone signed. The mortgage salesperson inflated the woman's salary, savings and mislead her about the actual mortgage lending rate. No lawyers are required to participate in real estate deals in the US. The woman objected, saying the information was incorrect. "Don't worry, we can fix that later," Wells Fargo said. The woman never moved into the house because she knew she couldn't afford it. She ended up selling it a year later for 90,000 less than she paid for it. The bank didn't care if she defaulted because it was repackaging mortgages and selling them to other financial institutions, that then in turn sold them as Mortgage Backed Securities to other unsuspecting Americans.
What can we learn from this -- Bank employees should not work on Commission -- Lawyers should be involved in all US real estate transactions.
-- If you're the lender -- then you have to hold the mortgage, they can't be resold.
Wall Street--Yup. Their finger prints have been found on the gun. Your financial investment advisor has a legal responsibility to advise you properly. Instead, many sold high-risk investments to older Americans and told them they were as good as money the bank. A Florida lawyer recently described the case of an elderly woman whose nestegg has been so depleted she will be forced to move out of a very comfortable nursing home to a state nursing home.
Government -- I hear right wing commentators screaming that communists are
taking over the government. Oh my. Yes, it is true that the Clinton administration and the Bush administration encouraged home ownership. Nothing wrong with that, it is a sign of a healthy society. The problem is there was no regulation -- and they left the door open to unscrupulous lenders to qualify anyone for a mortgage. New government regulations are needed.
People -- An Arizona lawyer who specializes in bankruptcies (he is very busy) talked to me about his clients. Very, very few know the difference between a variable rate mortgage, a fixed rate mortgage or an interest only mortgage. There is no lawyer required to look over a mortgage before someone signs and as a result many people had no idea what they were doing.
Culture -- There is a strange notion that we all ought to have more than our parents had. We have forgotten how hard they worked to get where they are. So folks think that those stainless steel appliances and granite countertops are some kind of birth right. Many, many people simply reached beyond their means because they think it there for the taking. Wrong.
Greed -- We worship at the feet of the Gods of Consumerism. Enough is never all you need. We seem to want more and more --- and are willing to use credit to get it -- at any cost. What a price we are paying.
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