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Monday, August 15, 2011

Homeowners are just collateral damage in this fight...

The Sunday Detroit News had a front page story in the Sunday paper with the headline Homeowners Forced Out While Seeking Relief, with the sub-headline – Fannie Mae Pressures Banks To Foreclose, Contrary To Promises To Keep Families In Homes, Preserve Neighborhoods. The story took up three pages inside the paper, including lots of back story information about Fannie Mae and Freddie Mac and FHA and all of the other government organizations with fingers in this pot.

Newspapers love to take potshots at large government organizations, even if they are easy targets. There is usually enough ineptitude to flesh out the story. Throw in an All-America family with a hard luck story and you have the makings of what passes for journalism these days.

The gist of the story was that this local family fell on hard times and got a year behind on their mortgage. They were in the process of negotiating a HAMP loan modification when the bank foreclosed on their home, supposedly under pressure to do so by Fannie Mae. There’s a lot of fuzziness in the story and everyone who might have had really good first hand information refused to be interviewed for the story. One telling comment that was captured in the story was made by a Fannie Mae official who said that Fannie Mae needs to keep pressure on the banks to speed up their HAMP processing, so they push for foreclosures to motivate the banks. Notice that no mention was made of the families who are in those homes.

The truth is that all of these bureaucrats, whether with the banks or the GSE’s or other government organizations, just see these cases in the abstract. These are assets to them, not people’s homes. They have rules that need to be blindly followed, not individual situations that need to be evaluated on a case-by-case basis. I’m absolutely sure that the bureaucrat who made the decision to foreclosed on the home that was featured had (and has) no idea about the family that lives there, what they when through to get into that situation and what they were trying to do to make things right.

The bureaucrat at Fannie Mae doesn’t care. It’s not their job. They just know that the bank had requested yet another extension to the foreclosure process - one too many in their estimation – so, it was time to show the bank who’s boss and force the foreclosure. Nor did the guy or gal at the bank care. To them, it was just another asset that went into foreclosure. After all those people out there (whoever they are) would have probably just defaulted on the new loan, too.

So, “those people” out here sued. They sued the bank. They sued Fannie Mae. They sued anyone that they thought might be part of the giant conspiracy to throw them out of their home. And they made noise locally, which the local newspaper picked up on and decided would make a good story.

Will they get to keep their home? Will the bank, Fannie Mae, Freddie Mac and others be held accountable for actually following the rules of HAMP? Will pigs fly? We’ll probably never know. The story has run and the paper is on to tomorrow’s headlines.

The bureaucrats involved are used to shrugging off pesky people and lawsuits like this. After all the Federal Government can’t really be sued no mater how stupidly or egregiously it behaves. And, the bank is too big to fail and has pockets that are too deep to really try to win a lawsuit against. So we have the Don Quixote homeowners tilting against the bureaucratic windmill. Little do they realize that they are but collateral damage in the real fight between the Washington bureaucrats and the bank bureaucrats. That fight is not about the homeowners anyway – they are just assets to both sides – it’s about power, who has it and who can make whom blink.

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