Note: "Although housing prices rise, the housing ownership rate reaches 69.2%, the highest level in history. People shout industry slogans in a word. The music keeps ringing, and no one wants this carousel to stop."
In the United States, the carousel slowly stopped in the 2008 financial crisis.
Between 2002 and 2007, housing prices in the United States soared, setting off a wave of people buying houses. At that time, few people thought that housing prices would have a risk of falling. During this period, lending institutions reduced mortgage review requirements and lent large amounts of loans to home buyers who did not have enough economic strength.
However, the booming bubble began to shatter in 2007 and evolved into a full-scale financial crisis in 2008. During the bubble burst, countless borrowers were unable to continue repaying their loans and were forced to default on their housing mortgage loans. In order to recover the losses of bad debts, banks and other lending institutions applied to the court for seizure and freeze procedures, and even hired special personnel to forge documents that the lender signed a document that agreed to waive the house's redemption rights. This led to the lender falling into the dual dilemma of people bankruptcy and houses being sealed and auctioned, which triggered a serious foreclosure crisis. At least 6 million people were taken away from their housing in this crisis, lost their bank credit , and fell to the bottom of society.
Houses are the biggest property of most ordinary people, and they also carry self-worth and hope for the future. People make commitments to marriage and family in the house, attract relatives and neighbors, raise children, and take away a family's house as they take away their dreams.
The book "House Slave" focuses on the foreclosure crisis in the United States, investigates the systemic mortgage fraud behind foreclosures, and also tracks people trying to confront the unjust system in the tide of real estate collapse. Interface Culture (ID: booksandfun) excerpts the clips for readers. We found that not everyone is equal under the crisis. Losing a house is the biggest victim of excessive expansion and lack of supervision in the real estate and financial industry, and it is also the last group that the government thinks about when implementing relief measures. As the author David Dayen said in the postscript:
"If an ordinary person is caught stealing soda or smoking marijuana, he will probably not be able to return to normal life for a long time. However, if it is a systemic crime - packaging millions of fraudulent mortgages into securities, failing to implement the securitization process, engaging in fraudulent services, and using forged foreclosure documents to drive away house owners, you will not have to bear any responsibility. Many people want to understand why banks can destroy the real estate market so recklessly in order to make more money? The result shows that there is only one answer, that is, they know that they do not need to bear serious consequences. We lack a fair system for fair convictions, regardless of wealth or poor. This ensures that the rich and powerful can continue to commit crimes."
"Foreclosure Knock" (excerpt)
article | [US] David Dane Translation | Ye Shuo
For house owners, the news of foreclosure is like a broken ball, breaking open their door. Taking away a family's house is equivalent to taking away their spirits, like a candle being snatched out of the flames, and the bright light disappears instantly. Millions of Americans think they have gained a foothold among the middle class, and are ahead of them a prosperous road to wealth and economic security. However, a devastating mistake on Wall Street caused them fatal damage.
In the evening of that day, the destination of the clerk was No. 607 Gaseta Road. This is an independent area near West Palm Beach, a typical post-prosperity residential area with small houses and large areas. Built in 2006, this house is a single-story home with three bedrooms and two bathrooms, with clay tiles on the roof and yellow exterior panels sandwiched between a large area of painted buildings. Builders seem to think that yellow is the best color to convince buyers to take action. Inside the house, the Epstein and family did not notice the upcoming uninvited guests at all.
Lisa Epstein sat on the windowsill of the master guard and applied nursing scrub to his knees. His daughter Jenna was in the bathtub, leaning against a tilted baby seat and staying upright.Lisa tied her brown hair with a branded colorful turban that was common in the 1970s and most likely appeared in Lodda or Bob Newhart’s talk show. Her eyes were blue, her facial features were soft, and her smile was so loud that she could overwhelm all the noises in the room. Whenever she gets excited, her voice becomes very loud. At this moment, she was fully focused on her daughter in the bathtub.
Lisa is forty-three years old, a nurse, a wife, and a new mother. She only lived in this house for two years. Her life is about to be changed forever.
"Tu tuk!"
She didn't hesitate for a moment. "It must be about the house, Allen!" she shouted to her husband, "It's the bank's people here, this is not good news!"
In early 2007, Lisa and Allen began to find new residences. The real estate market at this time is very different from what Lisa thought of when she bought an apartment. The real estate boom swept Florida . Turn on the radio or TV, pass by the bus stop, all kinds of information are bombing you: "New Home!" "Great opportunity!" "Let's take action now!" One day, Lisa drove past a group of people and found them living in a row of tents, queuing in front of trailers on the open space. These are people who are preparing to buy a house. They sleep here for two or three days just to pick their favorite location on a new building site. During the real estate bubble, every day in Florida was Black Friday.
However, when Lisa and Allen started looking for houses, the real estate boom cooled down slightly. The billboard that once emphasized urgency (“Don’t miss it!”), now emphasizes the discount (“Original price is 400,000, now price is 350,000!”). Professionals claimed that this was the time to buy at the bottom of , "a great time to buy a house!" Lisa doubted whether there was a bad opportunity in their eyes.
In fact, the long recession of the real estate bubble has begun. Browse the back cover of a business magazine and you will find some signs. In mid-2006, Ameriquest, the largest mortgage company in the United States, suddenly closed all branches. In the summer of the same year, another giant, "New Century Financial Company", began to face huge cash shortages and went bankrupt the following spring.
House owners also felt the pressure; within three years, the foreclosure rate doubled. However, for most ordinary Americans, and even for potential home buyers, these red flags are distant background sounds. Economic Analysis optimists are still there. In early 2007, the chairman of the Federal Reserve claimed to the Joint Economic Commission: "The problems in the sub-loan market have limited impact on the greater economic and financial markets." In other words, there will only be one foreclosure wave, washing out those who have bought too many houses and borrowed too many payments, rather than twice. Young families with stable incomes—like Lisa and Allen—have no need to worry at all.
However, although Ben Bernanke did not foresee the crisis, Florida real estate developers knew that the machine that had maintained high profits for decades had begun to fail. They have to dump the remaining houses before the market crashes. The residential community has suddenly put all the houses on the sale list. The developers hired designers to quickly lay the streets with asphalt . They lower prices, attract buyers, and quickly clear inventory. Those home buyers thought they were smart enough to buy at low prices, but they didn't know that they were actually the last group of people who were unsuspectedly lured into the real estate bubble. Lisa didn't pay much attention. She is still working full-time while pregnant and has limited energy.
On a day, Allen asked Lisa to visit a community on Gaseta Road, a brand new enclosed community built by Holden, the largest developer in the United States. She went to the development area, located next to a wide, infinitely spreading road in South Florida. The residential buildings inside the community gate are tall and full of tall buildings, which make the newly planted palm trees short and small. On the left is the standard configuration of Florida residential community: a huge so-called artificial lake, a fountain sprays water into the sky.Lisa called Allen and asked if he was sure the house was really on Gaseta Road. "These houses are like college dormitories, not like home at all!" Allen confirmed to her that the location was correct.
They plan to buy the house and sell the apartment. Lisa has paid back her fifteen-year mortgage for eight years, because she sometimes pays back some more capital, and she only owes about $25,000 at this time. Moreover, the price of that apartment has soared. They calculated that the apartment could be sold for at least $250,000, and using the money to buy a new house, only a small part of the mortgage loan was left. This idea is not a rash, and people have adopted this strategy for decades when family members increase and need to buy larger houses. The price increase in the bubble era is theoretically beneficial for them to sell apartments.
However, in order to lock the house, they must sign an agreement as soon as possible. So, on February 23, 2007, Lisa and Allen came to DHI Mortgage Company (the financial subsidiary of Holden Company) to sign the agreement document. To buy the house on Gaseta Road, they paid a down payment of $17,000, and the remaining $313,000 was applied for a mortgage. Because Allen's revenue in mobile phone sales business was unstable, the couple decided to use Lisa's excellent credit history (at the time it was 803 points) to hang the loan in her name. Lisa, who was eight months pregnant at the time, told the loan handler that she would read every page of the mortgage contract before signing, which surprised the handler.
The problem is that she has to go to the toilet and frequently.
So, the transaction agent, real estate sales and Allen had to wait for Lisa to carefully read the mortgage contract, and wait for her to keep going between the toilet and the signature desk. Before leaving the seat, she can read about five pages.
Lisa's only mortgage loan experience is a private loan with her neighbors. It was a simple fifteen-year fixed interest rate deal, and this time it was much more complicated. Despite her flawless credit history, DHI mortgage company gave Lisa subprime loans, not loans to quality borrowers. In order to ensure a low down payment, the repayments for the first ten years are all composed of interest. In the next twenty years, not only will the principal and unamored monthly repayments increase, but the loan interest rate will also be raised. You have to pay hundreds or even thousands of dollars more each month. It can be said that this is a financial time bomb that will be detonated ten years later, and by then DHI will make a big profit. The terms of
5% down payment and repayment offset only interest will mean that the couple will not be able to accumulate net asset value within ten years. Once the agreement costs are included, they will suffer as long as the house value drops slightly, which may be as long as 3%. Once they encounter any financial crisis, they will face extremely dangerous situations. When this mortgage product was first launched in 2001, outstanding financial analyst Josh Rosner pointed out: "A house without net worth, just a debt rental." But Lisa did not realize these disadvantages. Reading a mortgage agreement carefully is more of a form, a responsible expression. She has no knowledge background and can't understand the whole content, and she feels there is another way out: Lisa plans to sell her apartment and use the money to pay most of her mortgage. So, no matter what is said in these documents, it will not take effect. When she turned to the last page of the mortgage contract, she signed her name.
It was not until later that Lisa and Allen realized their mistakes. They couldn't sell the apartment at all, and the price of the apartment eventually plummeted by more than 60%. Lisa calls the agency every week and hears the same reply every week: No one bids. Every month, Lisa would stuff her mortgage into the crack in the door of her neighbor's house in Royal Saxon Community, and then she would come back and write a check to repay the loan for her new house. They have enough savings to support the mortgage payments for two houses, but not forever.
htmlJenna was born in March. Lisa felt that with this child, all the suffering she suffered was worth it. When Jenner was eighteen months old, the new pediatrician found a birth defect in the lower part of her spine, which the doctor had thought was irrelevant and ignored.The new doctor asked her to do MRI , and the diagnosis was spina bifida. Her vertebrae was attached to the base of the spinal cord and pulled tightly like a rubber band. If treatment is not performed, the pulling will worsen over time. Frequent examinations and medical treatment forced Lisa to take leave frequently. Jenner's doctors recommend surgical treatment, and Lisa and Allen are raising thousands of dollars in medical expenses for surgery and postoperative care. Meanwhile, with the bursting of the real estate bubble, businesses across Florida went bankrupt, including the mobile phone dealer. Allen is out of work.Financial crisis and emotional pressure overwhelmed the young couple, and the relationship was also damaging by the mountain of debt. What's even more terrifying is that Lisa and Allen are shy to tell their relatives and friends about their financial difficulties. In Florida in 2007, anyone would notice a foreclosure crisis with a little attention—trucks were driving in the driveway, with packed boxes piled up with bold signs “free”—but few people talked about it publicly. Neighbors who lost their homes have caused house prices to fall, causing more foreclosures and more severe declines in house prices. So people have enough reason to keep secrets and try to solve problems themselves, so as not to be considered the culprit of the decline in community housing prices. As a result, the foreclosure wave swept through Florida silently.
In January 2008, Lisa did some calculations and concluded that she could continue to pay nine months of mortgages for her new home and apartment. After that, she had to need financial support, which was the first time in her life. She called the mortgage company, hoping that they could adjust the monthly payment amount or think of some solutions. Although Lisa's loan comes from DHI mortgage companies, they have been asking her to send monthly payments to JPMorgan Chase Family Financial Services, a branch of JPMorgan Chase Bank, the largest bank in the United States. The whole thing looks a bit suspicious. However, the status of JPMorgan made Lisa believe she could get help. The company has been boasting that its balance sheet is "very stable". In March 2008, when investment bank Bear Stearns went bankrupt, the government invited JPMorgan to acquire it. Lisa saw other banks going bankrupt one by one in the newspaper, but JPMorgan seemed to be rock solid. So, there will definitely be some smart people there who can solve this problem.
She spoke with a staff member of JPMorgan Chase Family Financial Services. "I have nine months to solve this problem," she said. "We have enough time, I have a perfect credit history, and my monthly payment has never been overdue. What can we do?" The staff asked her to fax the financial documents and said she would reply to her later. Lisa did as she did, but there was no reply. She called again next week. Week after week, it just passed like this.
The people who talk to Lisa are always changing, and Lisa has to tell her story from scratch over and over again. They always let her fax a copy of the new document over, claiming that the previous ones were not found. Copying and fax alone cost Lisa a lot of money. However, the documents she sent were always like a rock sinking into the sea. There seems to be no communication between Chase staff. Some people told Lisa that it would take a long time to get approval, while the next one said that there was no record of her application and that she had to start over. This painful experience took a lot of time and energy and became her second job.
Lisa struggled to deal with her financial difficulties. At the same time, at the Cancer Center, Lisa became more and more aware that the patients around her were also deeply trapped in the financial difficulties. As usual, patients will ask their doctor to sign the diagnosis so that they can present it to creditors for financial assistance. However, patients will come to Lisa repeatedly and ask for a doctor's certificate, one by one. Mortgage companies always seem to lose their documents. Lisa knew what was going on, but she kept her mouth shut about the secrets of her financial difficulties. Patients will even ask Lisa to call their mortgage company to prove their medical condition. However, this only puts her in the same bad institutions as she has encountered.During the day, Lisa negotiated with other people's mortgage companies, and at night, she was entangled with herself, which made her feel frustrated.
Once, a JPMorgan staff member said to Lisa: "Well, you call us now, but we have to listen to this kind of loan Wells Fargo , because they refuse to adjust." Lisa has never been to Wells Fargo, nor has she dealt with them in any way. What does her mortgage have to do with them? She called Wells Fargo and asked why they refused to adjust her loan, but people there said there was no record of Lisa Epstein. Since JPMorgan staff say differently every day, she thinks Wells Fargo people are likely to be the same. She added their names to the weekly call list. However, Wells Fargo people did not even regard her as their own client.
These excuses have exhausted Lisa's savings. In January, she was able to act cautiously, but after wasting months of calling, fax and begging, she was already in despair by September. Eventually, a JPMorgan staff member gave her a suggestion. It is already troublesome enough for banks to deal with those defaulting borrowers, and they won't be able to find trouble to pay attention to a borrower who is still repaying. Although the people at Chase did not explicitly say, "The bank will only pay attention to you when you haven't paid the loan several times", the hint is already clear: Lisa should stop repaying the loan for 90 days, and the bank will call her if she formally defaults. Only then will JPMorgan help.
In Lisa's life, she has never had an overdue experience - whether it is house mortgage , car loan, water and electricity bill, anything. In her heart, she thought that breach of contract was shameful and wrong, and a betrayal of the responsibility she cherished. "I'm a good person because I have a good credit history." She would tell herself. But like the millions of Americans suffering in the collapsed real estate market, she was desperate. Her marriage is on the verge of breakdown, her daughter needs treatment, and her savings are exhausted. If she does not pay the mortgage monthly payment, she can get out of this chaos. Even if she violates all the creeds in her heart, she will never hesitate.
On October 2008 , JPMorgan and other banks received hundreds of billions of dollars in government rescue funds. At the end of the same month, Lisa Epstein did not repay her monthly payment. From this day on, she became an overdue house owner. She started vomiting. This was almost every day for the next three months. Lisa would look through the calendar on the wall every day, and after three months, she lost 20 pounds. Not because of fear of losing the house—after all, she didn't like the behemoth. It is more because of losing self-worth and losing the value of measuring her achievements. The numbers on that page measure whether you are a contribution or a burden to society.
During this period, Lisa had a dream. It was one night, in a big house, and it was raining heavily outside the window. Amid the noise of the rain, Lisa held her daughter to comfort her. The walls are filled with water, and the water fluctuates faintly, hitting the furniture, constantly expanding and expanding. Finally, the wall exploded and water gushed out, flooding the entire home. Lisa grabbed her daughter, rushed out of the house, ran to the street, left the flooded home, and left the house that was about to devour her and her family. Even if she didn't go to the psychologist, she understood the meaning of this dream.
90 days have arrived, and Lisa called Chase. "Okay, it's been three months," Lisa said. The staff said that Chase would send her something and just wait, so don't worry.
Two weeks later, someone came to knock on the door. She had known it a long time ago.
"It's a banker, this is not good news!"
Allen walked into the bathroom with a bundle of files and handed it to Lisa. She calmed herself down and tore open the envelope.
In Florida, lenders must file a lawsuit if they want to cancel a borrower's foreclosure. So, here is a copy of a complaint from Florida Overdue Legal Group, a well-known home foreclosure that they accused Lisa of violating the terms of the mortgage, accompanied by a court summons and a stack of lawsuit notices.She has twenty days to reply in writing.
Among these subpoenas, she made an extremely unexpected discovery. The name of JPMorgan Chase’s Family Financial Services Company did not appear. There is no Wells Fargo either. Lisa's fingers flashed through the paragraph with the plaintiff's name written: "Bank of America - the trustee of JPMorgan Mortgage Trust 2007S2."
Lisa is already confused about how Wells Fargo could be related to her mortgage. Now another American bank emerged—not like a real bank at all, but like the bank in the movie—became the chief plaintiff in this foreclosure case. Also, what is the trustee? What is a trust?
What does all this mean?
The excerpt of this article is excerpted from "House Slave", which is abridged from the original text and is authorized by the publisher.
