Over the weekend Chris Adams who writes for the McClatchy Newspapers had 2 powerful articles named Help with mortgages is difficult to come by and Some firms with spotty pasts get tax dollars. In these articles he exposes how firms like Bank of America, Citigroup and Morgan Stanley; firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.
In one case Ronnie Fruia was about to lose his home when he and his mother and son were all in the hospital. He was in the hospital recovering from a stroke, couldn't even talk but CitiFinancial sent a guy to his room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.
In another case, Countrywide a subsidiary of Bank of America, put a woman in default while she was being treated for breast cancer. Her church had raised money to keep her mortgage out of default but Countrywide refused to take a payment from the church.
Saxon Mortgage Services, a unit of Morgan Stanley, was sued by the attorney general of Missouri when he found that Saxon failed to properly credit loan payments to accounts even after the borrowers had proved that the payments had cleared their bank accounts. They even charged late fees though the mortgages were current.
The Government Accountability Office - GAO - in July found that the Treasury was short staffed and had hired only half of the employees necessary to monitor the loan modification program.
Taxpayer dollars bailed out the banks from bankruptcy, now they're back on track to pay out big bonuses while at the same time they are foreclosing on the very taxpayers who bailed them out. They have only worked with 12% of the mortgage holders that qualify for the Treasury's mortgage modification program.
Isn't it ironic that the bailout money goes to the very firms that invented these adjustable loans that got borrowers into this mess and now they turn their backs on the borrowers who were trapped in their predatory lending schemes?
Jim Van Meerten is an investor who shares his opinions on financial matters on Financial Tides, MSN Top Stock Blogs and Seeking Alpha. Please leave your comments below or email FinancialTides@gmail.com.
Disclosure: I hold no positions in the companies mentioned in this blog.
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