If you want to have an intelligent discussion about subprime loans, then …don’t look at me. I have tried to understand the whole issue. I’ve listened to countless NPR segments about it (which, granted, is not the same as doing in-depth reading, but frankly, there is only so much yawning I can stand myself), and I vaguely get the part about the mortgage meltdown and the collapse of Wall Street, all of which seem to be entertwined. There were credit default swaps and securitizations and all that kind of stuff, but there is an extent to which understanding it is like learning to speak Urdu. I would have needed to start way earlier, like when I was five.
Here is what I do know: I have a subprime loan, my very own personal self. And the question is…who owns it? And the answer is: No one knows. And there, you see, is Fakename’s definition of “securitization”. Little pieces of my house belong to entities all over the globe, and if they own a little piece, they don’t even know it.
Here’s my story. I bought my house in 2002, and the loan was granted by I Don’t Remember, because the loan was sold already by the time I got to closing to Ocwen Federal Bank. Doing business only in Florida and California. Then…Ocwen Federal Bank ceased to exist. Now I pay my money to Ocwen Loan Servicing, which, as the following article explains, is an “enforcer”. They collect the money for the Owners…um, the Investors…and that is an entirely amorphous group. I presume that if anyone ever decided to foreclose on my house, it would be Ocwen, and that I can rest assured that two guys from Nigeria and one from Saudi Arabia will not be knocking on my door. But who knows? In Florida, the courts are hammering out foreclosures as fast as they can, and if I’m not mistaken, it’s here that someone finally said…wait, who owns this property? Who has the actual right to foreclose?
While perusing Ocwen’s website today, I saw a link to this article from Time Magazine, which profiles Ocwen and its policies. The article is entitled Forestalling Foreclosure (clever title, huh?) I was pretty much impressed, because it seems that Ocwen agrees with the question I’ve been posing all along. Wouldn’t it be better to have SOME money coming in (by modifying a loan), than by foreclosing? Because by foreclosing, then you own a house (okay, Ocwen doesn’t, but someone does) that you then can’t sell to anyone else in the current economic environment?
In the interest of full disclosure, no one, either Ocwen or the two guys from Nigeria, has ever tried to foreclose on my house. But I have, for the last two years, hung on by the skin of my teeth, and I’ve had to have help to keep it going. My problem is that my income has been static but my expenses have all gone up. It’s that simple. And it’s the same for everyone I know.
So I really get the anger of people who are outraged by “bailouts”. It isn’t just Wall Street…it’s that you have to have defaulted on your mortgage to get help. We fall somewhere in the losing middle. We aren’t either rich enough to get tax breaks, nor poor enough to qualify for aid. That, I think, is the true meaning of “middle class”.
But what can you do? As Donald Rumsfeld famously said (which was his undoing, even though it was true), You go to war with the army you have, not the army you wish you had. And we live in a real world. Sad, but true.