Posted on 10/09/2010 6:30:19 PM PDT by dennisw
The Coming Middle-Class Anarchy
True story: A retired couple I know, Brian and Ilsa, own a home in the Southwest. Its a pretty house, right on the manicured golf course of their gated community (theyre crazy about golf).
The only problem is, they bought the house near the top of the market in 2005, and now find themselves underwater.
Theyve never missed a mortgage paymentBrian and Ilsa are the kind upright, not to say uptight 60-ish white semi-upper-middle-class couple who follow every rule, fill out every form, comply with every norm. In short, they are the backbone of America.
Even after the Global Financial Crisis had seriously hurt their retirement nest eggand therefore their monthly incomeand even fully aware that they would probably not live to see their house regain the value it has lost since they bought it, they kept up the mortgage payments. The idea of them strategically defaulting is as absurd as them sprouting wings.
When HAMPthe Home Affordable Modification Programwas unveiled, they applied, because they qualified: Every single one of the conditions applied to them, so there was no question that they would be approvedat least in theory.
Applying for HAMP was quite a struggle: Go here, go there, talk to this person, that person, et cetera, et cetera, et cetera. Its like they didnt want us to qualify, Ilsa told me, as she recounted their mind-numbing travails.
It was a months-long strugglebut finally, they were approved for HAMP: Their mortgage period was extended, and the interest rate was lowered. Even though their home was still underwater, and even though they still owed the same principal to their bank, Brian and Ilsa were very happy: Their mortgage payments had gone down by 40%. This was equivalent to about 15% of their retirement income. So of course they were happy.
However, three months later, out of the blue, they got a letter from their bank, Wells Fargo: It said that, after further review, Brian and Ilsa had in fact not qualified for HAMP. Therefore, their mortgage would go back to the old rate. Not only that, they now owed the difference for the three months when they had paid the lowered mortgageand to add insult to injury, they were assessed a penalty for non-payment.
Brian and Ilsa were furiousa fury which soon turned to dour depression: They tried contacting Wells Fargo, to straighten this out. Of course, they were given the run-around once again.
They kept insisting that they qualifiedthey qualified! But of course, that didnt help at alllike a football, they were punted around the inner working of the Mortgage Mess, with no answers and no accountability.
Finally, exhausted, Brian and Ilsa sat down, looked at the last letterwhich had no signature, and no contact name or numberand wondered what to do.
On television, the news was talking about robo-signatures and foreclosure mills, and rank illegalitiesillegalities which it seemed everyone was getting away with. To top it off, foreclosures have been suspended by the largest of the banks for 90 dayswhich to Brian and Ilsa meant that people who werent paying their mortgages got to live rent free for another quarter, while they were being squeezed out of a stimulus program that had been designedtailor madeprecisely for them.
Brian and Ilsa are salt-of-the-earth people: They put four kids through college, they always paid their taxes. The last time Brian broke the law was in 1998: An illegal U-turn on a suburban street.
Weve done everything right, weve always paid on time, and this program is supposed to help us, said Brian. We follow the rulesbut people who bought homes they couldnt afford get to squat in those McMansions rent free. It would have been smarter if wed been crooks.
Now, up to this point, this is just another sob story of the Mortgage Messand as sob stories go, up to this point, its no big deal.
But heres where the story gets ominousheres where the Jaws soundtrack kicks in:
Brian and Ilsathe nice upper-middle-class retired couple, who always follow the rules, and never ever break the lawwho dont even cheat on their golf scoreseven when theyre playing alone (Because if you cheat at golf, youre only cheating yourself)have decided to give their bank the middle finger.
They have essentially said, f***it.
They havent defaultednot yet. Theyre paying the lower mortgage rate. That theyre making payments is because of Brian: He is insisting that they pay somethingIlsa is of the opinion that they should forget about paying the mortgage at all.
We follow the rules, and look where thats gotten us? she says, furious and depressed. Nowhere. They run us around, like lab rats in a cage. This HAMP business was supposed to help us. I bet the bank went along with the program for three months, so that they could tell the government that they had compliedand when the government got off their backs, they turned around and raised the mortgage back up again!
And charged us a penalty, Brian chimes in. The non-payment penalty was only $84but it might as well been $84 million, for all the outrage they feel. A penalty for non-payment!
Nevertheless, Brian is insisting that they continue paying the mortgagealbeit the lower monthly paymentbecause hes still under the atavistic sway of his law-abiding-ness.
But Ilsa is quietly, constantly insisting that they stop paying the mortgage altogether: Everybody else is doing itso why shouldnt we?
A terrible sentence, when a law-abiding citizen speaks it: Everybody else is doing itso why dont we?
Im like Wayne Gretsky: I dont concern myself with where the puck has beenI look for where the puck is going to be.
Right now, people are having a little hissy-fit over the robo-signing scandal, and the double-booking scandal (where the same mortgage was signed over to two different bonds), and the little fights between junior tranches and senior tranches and the servicer, in the MBS mess.
But none of that shit is important.
Whats really important is Brian and Ilsa: Whats really important is that law-abiding middle-class citizens are deciding that playing by the rules is nothing but a suckers game.
Just like the poker player whos been fleeced by all the other players, and gets one mean attitude once he finally wakes up to the con? Im betting that more and more of the solid American middle-class will begin saying what Brian and Ilsa said: f***it.
f*** the rules. f*** playing the game the banksters want you to play. f*** being the good citizen. f*** filling out every form, f*** paying every tax. f*** the government, f*** the banks who own them. f*** the free-loaders, living rent-free while we pay. f*** the legal process, a game which only works if youve got the money to pay for the parasite lawyers. f*** being a chump. f*** being a stooge. f*** trying to do the right thingwhat good does that get you? What good is coming your way?
f***it.
When the backbone of a country starts thinking that laws and rules are not worth following, its just a hop, skip and a jump to anarchy.
TV has given us the illusion that anarchy is people rioting in the streets, smashing car windows and looting every store in sight. But theres also the polite, quiet, far deadlier anarchy of the core citizenrythe upright citizenrythrowing in the towel and deciding its just not worth it anymore.
If a big enough proportion of the populacenot even a majority, just a largish chunkdecides that its just not worth following the rules anymore, then that societys days are numbered: Not even a police-state with an armed Marine at every corner with Shoot-to-Kill orders can stop such middle-class anarchy.
Brian and Ilsa are such anarchistsgrey-haired, well-dressed, golf-loving, well-to-do, exceedingly polite anarchists: But anarchists nevertheless. They are not important, or powerful, or influential: They are averagethats why theyre so deadly: Their numbers are millions. And they are slowly, painfully coming to the conclusion that its just not worth it anymore.
Once enough of these J. Crew Anarchists decide they no longer give a f***, its over for Americabecause they are America.
Update I:
The Center for Public Integrity has a story, written by Michael Hudson this past August 6, that shines a light on the issue of perverse incentives of the HAMP program. These perverse incentives came to light because of a whistleblower, a former employee of Fannie Mae, filing a lawsuit. Fannie Mae was so keen on being perceived as a money-maker, after the Federal government bailout, that the aid programs passed by the Congress and signed by the President were turned into profit centers.
The former executive, Caroline Herron, recounts:
It appeared that Fannie Mae officers were focused on maximizing incentive payments available to Fannie Mae under various federal programs even if this meant wasting taxpayer money and delaying the implementation of high-priority Treasury programs, she claims in the lawsuit.
Herron alleges that Fannie Mae officials terminated her $200-an-hour consulting work in January because she raised questions about how it was administering the federal governments push to help homeowners avoid foreclosure, known as the Home Affordable Modification Program, or HAMP.
Herron further alleged that trial mods were implemented regardless of eligibility of applicants, so that Fannie Mae would be eligible for Federal government bonuses.
Ms. Herrons testimony in fact proves Ilsas suspicion that there was a scam at bottom. As Mr. Hudson writes, Herron charges that Fannie Mae continued in headlong pursuit of trial mods even though it knew that many had little chance of becoming permanent. [. . .] Fannie preferred doing trials, Herron alleges, because it was eligible to receive incentive payments from the Treasury Department.
So in the pursuit of these perverse incentives, people who did not qualify for HAMP were enrolled in the program. And when their trial mods were up after 90 days, they would be notified that they didnt qualifyregardless of whether they in fact did qualify, as in the case of Brian and Ilsa.
All so as to be perceived as a profitable operation, worth having been bailed out. All so as to be perceived as returning Americas money.
As of February, 2010, of the over one million homeowners mortgages under HAMP auspices, 83% were trial mods. One would assume that those 850,000 homeowners would also be assessed an $84 penalty for non-payment.
$84 times over 850,000? You do the math.
shuddup
“Looks like middle America is thinking going Galt is a better and better idea...”
For different reasons, but in the same manner, the Soviet Union ceased to exist. When the USSR imploded economically, the people decided it was over - and it was.
Read it. Starts slowly, but it was worth sticking the first few chapters out.
I know of at least two people locally had this same exact scenario take place and there has been multiple stories on the Phoenix news — same thing. Something clearly stinks. When I heard it the first time I thought the person was fudging something in their story.... now...... I need a clothespin.
>>I dont care how nice these people are, I dont want to pay for their HAMP-whatever so they can live in a nice home on a golf course.<<
False; just like tax cuts “cost” the government. They borrowed money from a bank that the bank was willing to gamble on. They repay the bank plus interest. Whether they do it for 30 years $7% of 40 years @ 3% makes no difference.
The only person on the hook is the person borrowing and the bank. Sure, one may make the argument that the bank is lending deposits from other people, but we as a nation save very little.
Nope - it is Unintended Consequences - I dug out my copy and looked it up.
RE: Your tagline ... “and 500 rounds for each rifle”.
Totally agree with you, every program the government comes up with is 90% scam to get someone elected. Why people can't figure this out is mind-boggling.
RE: Your tagline ... and 500 rounds for each rifle.
Make that 10,000 rounds per rifle.
You’re one of the few who recognize this.
I remember that day, watching the live reports come in.
Struck me that the real reason was government could not issue paychecks for lack of funds. No pay, no workers, no bureaucrats, no government.
This disgusting treasonous govt is intentionally crashing the system.
Exactly!!! That is the bottom line, and “We The People”, damn well know it.
playing by the rules is nothing but a sucker's game.Just so.
Much of the problem we are suffering from is that the younger crowd went out and voted for Obama.
You can also thank your friends for this.
Its not just the younger crowd, its the yuppies, the guilt ridden whites, the govt employees, racist blacks who vote 95% dem no matter what, etc etc.
Death is highly under rated as a motivator. Looter death will solve the problems
At that time, we had a large satellite dish. Much live news was on unscrambled pool feeds with no sound or captions. By total accident, we surfed onto the feed for for the USSR.
We saw large, burly men in their 50s methodically building barricades out of broken concrete and small cars. Several of them would surround a car and lift it into place along a pile of rubble and assorted machinery odds and ends. In every back pocket and sometimes in every hand, were clear glass bottles filled with yellowish liquid that had rags stuck in them. These were being taken somewhere and stashed, because we would see the same men passing again in front of the camera, first empty-handed and then with more bottles. No one was smiling. Everyone seemed to know exactly what they were doing. Had this been America, I would have identified these men as union thugs.
It was fascinating and educational.
Then why is the fed/gov involved?
This HAMP program is cosing taxpayers money!
At 10,000 rounds per rifle, you need to have a couple of spare barrels, too.
Fannie Mae whistleblower: Incentives ruined HAMP mortgage-mod program
That's how Liberals behave at G-20 gatherings, and will behave 100x worse in the coming months.
Prepared Patriots will be waiting for their rioting hordes outside the urban war zones, and they won't get far.
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