KeyBank, which owned the second mortgage, foreclosed on the woman anyway, despite the fact that it would lose far more money than if it had just walked away. Cox runs the numbers:
After spending over $4,000 on foreclosure costs and legal fees, it purchased my client’s interest in the property at its foreclosure sale (there were no other bidders for this worthless second interest) and it did evict this woman from her home at the beginning of October. She is now living in the basement of her daughter’s house. Since the interest in this home that it purchased was still subject to the outstanding first mortgage, it then paid $50,000 to the first mortgage holder so that it could own full title to the property as it made plans to re-sell it. Thus, at this point it had over $54,000 invested in gaining full title to this property. Last week, KeyBank listed this property for sale for $44,000. It will surely net no more than $40,000, if it can sell it at all. This will leave the bank with a real cash loss of over $14,000, a woman living in her daughter’s basement who was willing to pay at least some level on her second mortgage, her community with an empty and devalued property in its midst, and a very sour taste for all of us who try to help these people.
This, to put it kindly, is idiotic. You’d think Key Corp.’s shareholders might have something to say about that. Oh, who am I kidding?
Read Cox’s whole piece, which is one of the better op-eds I’ve read in a while. Here’s hoping we see more from him.
— The bottom 99 percent are doing poorly in the wake of this finance-led recession. The top 1 percent are doing just fine—and that includes many (most?) of our elected representatives.
Jesse’s Cafe Americain has the chart of the day on that, using Open Secrets numbers.
I almost don’t need to say this, but you think there might be a connection between that and the lack of urgency on the unemployment front?
Obviously, taking the median net worth of 500 people you are going to get a lot more noise and fluctuation than you do with 300 million people. Still, it's interesting, though the presentation is unhelpful and inflammatory without a thorough analysis to go along with the graphics. You can clearly see the housing bubble there in the net worth of the population -- overinflated housing values constitute most of that rise and the busting of the bubble, the fall. The unemployment rate shows there where the net worth in 2009 drops just below that in 2005.
Given that many of our elected officials are wealthy, and have been wealthy, it would have been helpful to compare the median net worth of the top 1% along with these two graphs. I think we know that it would look much like the one for the Congress, since they are among the wealthy few. To do otherwise kind of leaves the implication hanging out there that members of Congress are making themselves rich by doing something illegal, and that isn't the case in most instances. So I'm not a fan of the graph; it's misleading and inflammatory producing heat through innuendo without much light.
It's kind of egregious that the caption on this graph was "Congress' Median Household Net Worth: One Picture Is Worth 1000 Words" when it needed about 1000 words to explain the graphs. But he didn't bother to do that. The OpenSecrets blog did a better job there.
#1 Posted by James, CJR on Wed 24 Nov 2010 at 03:36 AM
@ James
>> To do otherwise kind of leaves the implication hanging out there that members of Congress are making themselves rich by doing something illegal, and that isn't the case in most instances.
I don't see illegality in the graph. Instead I see the average net worth of members of congress approaching nearly a million bucks. Politicians aren't exactly known for their empathy. And I think it's generally true that the richer the politician - the lower the level of empathy.
#2 Posted by F. Murray Rumpelstiltskin, CJR on Wed 24 Nov 2010 at 04:46 AM
Why do you think this turns into an "empty and devalued property"?
If I bought that house for 44k, my family and I would live in it, fix it up if that was needed, and we'd pay our property taxes, insurance, and the like. If my sister bought it, she'd probably rent it out to some young military family. KeyBank's loss is someone's opportunity for gain.
And the original owner? She'll probably tire of living in her daughter's basement soon and will now be able to search nationwide for a job that pays a living wage because her house slavery has ended. By getting out of town like her previous employer did, her odds of finding something increases a lot (think like Iowa or the Dakotas). Free at last!
#3 Posted by puttheloadrightonme, CJR on Wed 24 Nov 2010 at 10:31 AM
FMR: The chart, Jesse, and Ryun make no suggestion of illegality, so the only reason I can imagine for you bringing it up is projection (or suspicion...). Which is an interesting data point.
That said, no, Congress doesn't need to do anything illegal. It's not illegal to collect rent from lawbreakers, after all.
#4 Posted by lambert strether, CJR on Wed 24 Nov 2010 at 10:38 AM
Jesse's chart is just showing that the stock market bounced in early 2009 but house prices are still sinking. Were the hedge funds held by our Congress-folks long GS and short LEH?
#5 Posted by puttheloadrightonme, CJR on Wed 24 Nov 2010 at 10:48 AM
Congress trully believes the United States is Too Big To Fail, that is why Business As Usual Will Continue until Total Economic Collapse Hits and not a second before.
#6 Posted by Opinionated Bloviator, CJR on Wed 24 Nov 2010 at 09:04 PM