The subprime meltdown is at its hottest in southeast Michigan. Pigass stupid borrowing/criminally fraudulent lending was robust here even before the auto industry began its downsizing over the last 18 months. Tens of thousands have taken the money and many of them are trying to run, but find themselves tethered to their house in an area where for-sale signs sprout like dandelions on every block.
This isn’t news. I’m just trying to give you some background.
(Obligatory it’s-all-about-me note: As of last week I thought that if circumstances forced us to sell tomorrow, we’d take a $30K bath on what we paid two and a half years ago. Then I walked the dog past a lovely comparable house a block away that’s been on the market a while. “New pricing!” the sign said. I glanced at the sales flyer in the box, and revised our potential loss upward to $50K. It’s only a loss when you sell, I know. Still. Unnerving.)
Me ol’ pal Ron had a story in Saturday’s paper that should have surprised no one, but set in stone a grim truth: We’re number one! No. 1 in subprime lending in 2006, and No. 1 in foreclosures:
About 55 percent of mortgage loans made in 2006 in Metro Detroit were subprime loans, carrying interest rates at least three percentage points higher than that of prime loans—double the national average. Laredo, Texas, had the second-worst rate, at 52 percent. The news is even worse in Wayne County, where nearly two of three home loans were risky, high-cost loans.
One local-jargon note: “Metro Detroit” is the local-media term for “everybody in the area,” and includes the affluent suburbs. “Wayne County” is mostly occupied by Detroit, with a handful of better-off communities — Dearborn and the Pointes, to name but two. Two-thirds in Wayne County isn’t surprising; 55 percent in the metro area is.
So what you have is the regular subprime meltdown that the whole country is experiencing, along with the market losses you’d expect in an area losing thousands of jobs. If you live in the Sunbelt, go ahead and kiss that giant electric bill you got last month. It’s probably a lot less than $50K.
But as you go further into the story, interesting details emerge. There’s a quote from a mortgage executive:
The foreclosures caused by questionable loan practices are likely to continue for another year, as adjustable rate mortgages spike, Glanz said. “Were there abuses? Yes. Could they have gotten financing someplace else (at better rates)? Maybe. (But) people did sign up for those loans.”
In other words: Tough luck, but you asked for it. But note the next passage:
One such family is Jerome and Alice Wilder, who live in a tidy home on Waltham Street in Detroit. The couple and their 4-year-old son, Jahari, had a fixed-rate mortgage on the home they’ve lived in since 1999. A mortgage officer repeatedly called their home in 2004, saying he could lower their house payments and get them thousands of dollars in cash if they refinanced.
“He kept calling and calling,” Jerome Wilder said. “He said, ‘I know you can use the money—Christmas is coming up.’ “According to the truth-in-lending statement prepared by the mortgage officer, the Wilders’ home payment would be $504 a month at initiation, and would rise no higher than $569. Despite the broker’s reassurances, the family’s house payments reached $900 a month by 2006.”It’s the most elaborate con game you’ve ever seen,” Jerome Wilder said. “I feel like I was taken for a ride.”
The Wilders’ home was sold at a sheriff’s auction in March, and the family is scheduled to be evicted later this month.
Obviously, the Wilders were defrauded. It’s a truth-in-lending statement, after all, not lies-in-lending. Where is the eager prosecutor bird-dogging the scoundrels who led them into this? Second-to-last graf:
ACORN officials have asked the Michigan Attorney General’s Office to investigate mortgage fraud in Metro Detroit, and several bills have been introduced in the Legislature to clamp down on predatory lending.
Note: ACORN, or the Association of Community Organizations for Reform Now. I first became acquainted with this group as a young reporter, when they came to Columbus to agitate for the homeless (I think). You could call them the quintessential so-called outside agitators, sending reps from the national organization to town to set up a local chapter with local leaders, and then call the whole thing “grass-roots.” At the time they were easy for the power structure to ignore, and I don’t know if that’s changed at all. I’d feel a lot better if that sentence said, “The mayors and city councils of 23 separate communities have asked the Michigan Attorney General…” But I’ll take action wherever it comes from, even ACORN.
I know what some of you are thinking: The Wilders had it coming, somehow. They didn’t read their closing papers, or something. Well, I didn’t read my closing papers either; if I had, my real-estate closing would have taken three days instead of 45 minutes. I looked over what I could beforehand, and took the word of the people who handed us the papers and explained what each one was. I was vastly reassured that I was dealing with reputable people, and that I was agreeing to a boring old 30-year, fixed-rate loan, given to people with excellent credit scores, and not something we bought after a phone pitch. I had faith in good faith. Maybe I should dig them up and reread them.
I remember ads that ran on TV during the subprime boom. One featured a jolly black couple whose nice lender helped them get out from under all those credit-card bills, lowered their payments, and freed up enough cash to buy an above-ground pool. I wonder what apartment they’re living in now.
OK, Monday bummer over. On to the bloggage:
Here’s one for Ashley, who played to be heard when he was in a marching band:
The joke about black-college football games in the South is that the crowd patterns are the reverse of the norm. The fans talk, flirt and eat during the first two quarters, then return to their seats to scrutinize the marching bands through their eight-minute shows at halftime. …
In 1989 the Prairie View drumline introduced a new drums-only feature sequence, which usually includes a kind of circus gymnastics: throwing drums around, drummers carrying one another upside-down by the calves, walking and playing in pairs like a push-me-pull-you. And in 1994 the Box began rotating sections of its drumline during the routine, so that snare drummers weren’t always up in the front.
Amid the rampant trash-talking between supporters of different black college bands, Prairie View’s pioneering of this modern drumline feature seems to have become accepted history.
“If any other band tells you that they started that,” said Skip Wilson, an alumnus of the Box who now helps direct it, “I’ll eat a bug. And I’ll let you choose the bug.”
You mean they’re not in your ass? Your politics are all in your head:
Exploring the neurobiology of politics, scientists have found that liberals tolerate ambiguity and conflict better than conservatives because of how their brains work.
In a simple experiment being reported today in the journal Nature Neuroscience, scientists at New York University and UCLA show that political orientation is related to differences in how the brain processes information.
Previous psychological studies have found that conservatives tend to be more structured and persistent in their judgments whereas liberals are more open to new experiences. The latest study found those traits are not confined to political situations but also influence everyday decisions.
All I see are…shades of gray!
Well, it’s Monday. It’s fittin’.