I am having a tough time dealing with news that the former president of Countrywide Financial, the mortgage company that did so much to dig the hole in which we all now reside, is making a killing buying up delinquent mortgage loans from the government at bargain basement rates.
“It’s like Jeffrey Dahmer selling body parts to a clinic,” sniped one of my friends.
As Eric Lipton reported in The Times, Stanford Kurland, who was president of Countrywide during the years when it was selling mortgages with temporary low “teaser” rates that later turned into permanent unaffordable ones, now leads Private National Mortgage Acceptance Company, known to its friends as PennyMac.
In what one company official said was “off-the-charts good” business, PennyMac buys troubled mortgages from the government (which got them from failed banks) at rates like 38 cents on the dollar. Then it offers the beleaguered homeowners a chance to refinance at far more favorable terms. PennyMac makes money, the homeowner gets an affordable mortgage and the government gets a share of the profit.
Everybody’s happy! Except, of course, those of us who helped come up with the other 62 cents on the dollar.
From the NY Times magazine piece on the impact of the foreclosure crisis in Cleveland:
As early as 2000, a handful of public officials led by the county treasurer, Jim Rokakis, went to the Federal Reserve Bank of Cleveland and pleaded with it to take some action. In 2002, the city passed an ordinance meant to discourage predatory lending by, among other things, requiring prospective borrowers to get premortgage counseling. In response, the banking industry threatened to stop making loans in the city and then lobbied state legislators to prohibit cities in Ohio from imposing local antipredatory lending laws.
From the opening scene of the first episode of the Wire:
Suspect: I’m sayin’, every Friday night in an alley behind the Cut Rate, we rollin’ bones, you know? I mean all them boys, we roll til late.
McNulty: Alley crap game, right?
Suspect: Like every time, Snot, he’d fade a few shooters, play it out til the pot’s deep. Snatch and run.
McNulty: What, every time?
Suspect: Couldn’t help hisself.
McNulty: Let me understand. Every Friday night, you and your boys are shootin’ craps, right? And every Friday night, your pal Snot Boogie… he’d wait til there’s cash on the ground and he’d grab it and run away? You let him do that?
Suspect: We’d catch him and beat his ass but ain’t nobody ever go past that.
McNulty: I’ve gotta ask you: if every time Snot Boogie would grab the money and run away… why’d you even let him in the game?
McNulty: Well, if every time, Snot Boogie stole the money, why’d you let him play?
Suspect: Got to. It’s America, man.
Snot Boogie was eventually shot and killed, so I guess, technically, the market does regulate itself. There is a lesson to be learned here.