Banks randomly shutting down Equity Lines: homeowners sue
We’ve been hearing about banks shutting down HELOCs (Home Equity Line of Credit) without just cause. But the practice seems to be not so random but purposefully calculated using more computer models rather than actual appraisals to cut off people who are otherwise, not candidates for such measures. But, as described in the article, homeowners who were doing the right things are now suddenly finding themselves being cut off (sound familiar?): i.e. being fraudulently turned off. Just when homeowners who have built up equity and may need to tap in during some financial difficulty, they are being told their lines are suspended for unknown reasons.
These supposed fraudulent practices have occurred so frequently, there is, as described in the article, a class action lawsuit developing in the wings involving the major banks like Wells Fargo, Chase and other banks. Yes, there are people whose lines of credit should be turned off if they are not doing the right thing and trying to play games with the system. But remember, these individuals were are discussing are not that category; these are people who are paying on time and not necessarily over-extending themselves. These are the people who are and have been doing the right things. It seems the little people who have been pushed down and trampled on have had enough and are now willing to fight back for their rights. Good for them!
Local tax collectors are permitting large banks to foreclose on homeowners.
As people still struggle with unemployment and the financial distress associated with such hardship, the prime beneficiaries of TARP (bank bailout program) continue to benefit and even thrive at the expense of tax payers who help fund the program to help them out of their difficult situation in the first place. As a San Jose Short Sale Agent, I see how lending institutions deal with its customers on a daily basis, yet I am continually amazed at the means by which these gargantuan lending instituations have benefitted during their time of need, yet when the individual home owner are struggling, rather than help, they pounce right on them and go for the jugular…..
Here is a ridiculous illustration of that point. During this economic morass we are all enduring, city and county governments also suffer as a result of the individual home owner not being able to pay their property taxes. Because we are treading on unchartered territories and local government is in desperate need of cash flow, some of them are now selling their delinquent tax bills to third party companies for cash. [By the way, this is what these large banks are doing with their HELOC (home equity line of credit) and why they are now starting to play hard ball and refusing to sign off on short sales unless they are given the right to settle said deficiency after the closing. They write off their loss, turn around and sell the right to collect to a collection agency for additional cash and walk away to let the collection agency deal with collecting the deficiency. It’s a win-win for the banks because they are squeezing as much as they can out of the borrower at the first bite level and letting someone else get a second bite at the borrower in exchange for a fee.]
These tax lien purchasing companies are not affiliated with, nor have any interest in the local communities, so they are pushing the local homeowners quicker into foreclosure by adding additional penalties and obscene interest rates, which the homeowners cannot afford, then forcing them into foreclosure to collect their debt from the proceeds of the sale. All of this suffering and devastation over a very small percentage of the value of the property.
Think about this: it is not the lender that is owed the mortgage, nor even the lender which owns the line of credit, it is the third party entity that bought the rights to the delinquent tax bills that is forcing a homeowner into foreclosure over a few thousand dollars, which was inflated due to their horrendous interest and penalty charges…… What’s wrong with that picture??!!
The largest of these entities which buys and sells property tax liens, the one which is devastating Lucas County, Ohio and the one discussed in the New York Times article is called Plymouth Park Tax Services. Guess who is the parent company of this little known company? JP Morgan Chase – perhaps the biggest beneficiary of TARP!
Thank God, Santa Clara County is not selling its tax liens to these companies.
