New Orleans No matter how many billions banks pay to try to whitewash their devastatingly destructive behavior in milking home owner mortgages and turning homeowners every way but loose, they can’t make the mess go away. The stains and scandals are indelible and their refusal to change their culture or their standard operating practices guarantees that no matter how much they run, the stench – and headlines – will surely follow.
Here are yet more recent examples.
· A judge has refused to allow Wells Fargo to offload $49 billion worth of home mortgage servicing to Ocwen Financial of Florida, because the judge is not convinced that Ocwen will not make a mess of it.
· A nonprofit, public interest group called Better Markets, Inc. sued the Department of Justice claiming that the $13 billion with JP Morgan Chase, just doesn’t get it. Better Markets argues that there should have been criminal charges and the bill of particulars should have been presented in court where everyone could view the full range of conduct.
But, my favorite is the action being taken by New York’s Attorney General, Eric Schneiderman, who has signaled that he is going after banks for their failure to take responsibilities for what the industry affectionately calls “zombies.” So what are zombies in this modern banking nightmare of the walking dead? After banks foreclose and push a family out of their homes or a family just realizes there is no hope and abandons the property, the banks don’t do what it takes to maintain the property, thereby extending the damage past the affected family to the entire community. Numerous studies have found that an abandoned house can lower the property values in an entire neighborhood from 1 to 2% if such a house is located within blocks of your home up to a half-mile away.
The response from bank spokespeople? The long whine! They claim they do their best. They claim that they keep boarding up, but it is those damn vandals. But, who believes this? It is well established that the maintenance and security of a property can cost a bank $50,000 or more, and in negotiating with banks about modifications, we were always careful to remind them that pushing a family out of their home was not a free ticket to ride. They know there are costs, but here’s rooting for New York, and then all of the rest of states to make them pay.
The real reason we have zombie properties rather than homes where families live, is because we still have ghost banks protecting the inflated values of their supposed assets on home values before the recession rather the reality of the market now. But in the land of the walking dead, where ghosts and zombies are now part of American communities, banks need to learn that there is no running from them or themselves, until they finally, simply do right.