Tuesday, October 26, 2004

OK, so it aint the NY Times, but

Some time ago this Honorable Court, as in I, warned the media that I would be none-too-soft on reporters who help keep the public misinformed about what is going on with the creditoris squaliformes order.

Now while Gulfport Mississippi isn't exactly the journalism capitol of the world, this fellow exemplifies just how effective the myth-makers have been and still are (at least for the time being) at keeping the focus away from the predators.

So, comes before this court, one Mr. Patrick Peterson, of the SunHerald.com who publishes an article on October 22, 2004, said article in its entirety which the Clerk will now read into the record:

Investors snap up repo'd homes


GULFPORT - Some of the best real estate bargains on the Coast are homes lost to a rising wave of foreclosures.

The apparent trend in the booming real estate market of South Mississippi has been caused, in part, by a rush to re-finance and take advantage of low interest rates.

"We're seeing a lot of re-financing, where they're taking the equity out to pay off their credit cards and they can't pay off the note," said Realtor Debra Scairono, manager of foreclosures for Coldwell Banker.

No industry-wide figures are available, but, by Scairono's estimates, up to 30 houses a month could be lost to foreclosure each month in South Mississippi.

"We're just seeing a lot of the newer homes coming back on the market as foreclosures," she said. "They walk away from it because they can't afford it."

A decade ago, Scairono handled only one or two foreclosures per month. Now she handles five to 10 a month, which she estimates is about a third of the total. An average of 40 foreclosures regularly appear in the company listings.

South Mississippi's real estate market, which offers bargains compared to the rest of the country, has been discovered by investors from Florida to the Midwest to California. The repossessed homes, usually listed at bargain prices because they need repairs, sell quickly.

"We've got lots of investors out there who have money to spend," said Scairono. "Most of them are either renting or reselling (the repossessed homes) after the repairs."

Other Realtors confirm the trend.

"Within the last three years, (foreclosures) have doubled or maybe more than that," said Dyann Lentz, a Realtor with Danette Shaw and Co. in Gulfport.

The Federal Housing Administration showed a strong increase in repossessions in Hancock, Harrison and Jackson counties from 2002 to 2003, with the number rising from 92 to 118, but the number seems on track to fall in 2004.

Why the foreclosures

Low interest rates make second mortgages and home equity loans seem attractive. However, many borrowers apparently don't change their spending habits after they borrow against the equity in their homes. Some of them lose their homes.

"A big problem is putting second mortgages on their homes, and that overextends them immediately," said Lentz. "Many people walk off and leave everything in their homes. This happens more than you would think."

Bankruptcy attorney David Lord of Gulfport said U.S. banks and credit card companies, which make huge profits from late fees and charges for missed payments, encourage customers to increase their debt, with foreclosures and bankruptcies sometimes a result.

"Credit is a temptress, but so is marketing," Lord said.

Credit card companies often raise credit limits and send applications to folks who are struggling to pay their bills on time. A few consumers fall to the temptation of additional credit, which apparently is a greater vice than gambling.

"I attribute it very little to the casinos," said Lord. "I attribute it to the credit card departments. If you pay the debt in a timely manner, they increase your limit."

Shoppers often leave stores with more merchandise than they intended to buy. Similarly, many credit card holders find they have purchased more than they can afford.

"It is not unusual for an individual to have one or two cards with a $10,000 credit limit," Lord said. "Very soon you find yourself rather deeply in dept."

A home equity loan or second mortgage often is the quickest way to pick up a crushing burden of debt.

"They failed to do to what they should do, which is cut up the credit cards."

And now, Mr. Peterson, while the Court recognizes the inclusion of at least one bankruptcy attorney's very valid opinion that the credit card squaliformes are perhaps deliberately contributing to the problem, the Court asks you:

One, why didn't you do just a tiny bit more research into the burgeoning predatory lending and servicing problem? A simple google search would have introduced you and hopefully your readers to at least a small dose of reality.

Second, did you even bother to consider the possibility that some of these situations might have involved companies abusing their unmitigated power over consumers in sub-prime loan situations? And if that thought crossed your mind, did you look into what servicing companies were involved in the foreclosures? It's a matter of public record and could have easily been looked into and reported on. Chances are there are only a handful of mortgage servicers involved.

Third, do you realize that your article serves to reinforce the myth of the consumer always being at fault in a foreclosure or bankruptcy?

This kind of "tsk, tsk, isn't it too bad people just can't handle credit cards" stuff is getting way too old for this Court. I've put enough bullet holes in that leaky boat that it should have gone down long ago with the reporters still on it but for some reason they keep bailing and bailing.

Problem is other Judges read this kind of stuff and go on figuring anyone fighting a foreclosure in their Court is a deadbeat. And people who get bit by a squaliforme mortgage lender or servicer can't convince their family or close friends that it actually happened.

In due consideration of the fact that you didn't put out the lender's usual "we lose money when we foreclose/we don't want to take people's homes" bushwah, it is the judgment of this Court that you be fined a pound of gunpowder, a side of bacon, a pound of coffee, two hens and four sacks of flour.

A word of warning though, Mr. Peterson, if it happens again you may want to recall there's a cattle prod here.

Make arrangements with the Bailiff on your way out. And don't dawdle. I want the chickens for supper.

The Honorable Judge Roy Bean.

1 comment:

An Admirer said...

"We're seeing a lot of re-financing, where they're taking the equity out to pay off their credit cards and they can't pay off the note," said Realtor Debra Scairono, manager of foreclosures for Coldwell Banker.

There is that old "turn unsecured debt into secured debt" scam that gets so many into trouble.

This "ocean" is becoming very real and very alive to me. I can almost feel the warmth of the water and see the horrific creatures in the depths.

If only this were science fiction and not real life, how much better the world would be!