Another crazy week for me. It’s after 11 PM Sunday and I’m just getting this done. (Though I made a big goof earlier. I started working on it 12 hours ago and when I had to leave to go run errands with my wife I hit publish instead of save draft. So this post was up with about three sentences a little earlier today. I took it down when I discovered it but because I had a bunch of stuff to do around the house and family coming over for dinner, I didn’t get to finish it until now. So, here it is.
Bankruptcy and Marriage – Should You Marry Someone Who Went Bankrupt? on fivecentnickel.com struck a chord with me and not in a good way. I’m sorry, marriage is not a business decision. If you love someone enough to get married you take them as they are – warts, bad credit and all.
Five Ways to Find Money (Sometimes Lots!) in Less Than an Hour gives some resources you can use to find money that might belong to you but is being held by the government.
The main thing I want to talk about his this video: http://www.youtube.com/watch?v=ssl5yb7FewA
They talk about One West Bank in the video but what they’re describing isn’t unique to One West Bank. Does anyone think that Chase didn’t get a similar deal when they gobbled up failed Washington Mutual? What about Wells Fargo’s purchase of Wachovia when it failed? Bank of America swallowing up Countrywide? They all got a similar deal. They can’t lose money no matter what happens with the mortgages they acquired in those purchases. If the mortgages perform, those guys make money. If the loans default, the FDIC pays and those guys make money. Now before we all get our knickers in a wad, ask yourself this question: if you were in charge of any of the banks that ended up buying one of those failed companies, would you do it if there was a chance it would kill your company? Hell no. You wouldn’t. The only way those deals occurred was because of the backing and money from the Federal Government in the form of the FDIC. The alternative would have been the FDIC taking over the those banks, which might have caused bigger problems.
I don’t have a problem with the FDIC stepping in and making up the difference on actual losses considering the 11th hour deal making that got done with some of these mergers. Let’s the big fish paid $75,000 for a mortgage with a face value of $250,000. Then they have to accept a short sale on the property for $150,000. Well, the bank just made $75,000 on that loan. What I have a problem with is anyone, whether it’s bank executives, the FDIC or anyone else saying that the bank lost money on that transaction. No they didn’t get the $250,000 that the borrower owed, but they made money. That being the case they would not be entitled to government money. Now if they paid $75,000 for a loan and the property later sold for $70,000, then they lost money and I don’t really have a huge issue with the FDIC stepping in and covering the loss under the circumstances.
I don’t wonder why it’s so difficult for people who need loan modifications to get them. It may be that modifying the loan is the last profitable thing for them to do with a delinquent mortgage. I definitely think this is a distinct possibility when the loan in question is one that was acquired as part of acquiring a failing bank.