The Great Foreclosure Scandal

The other day The Wall Street Journal introduced me to a new word. From German, it is fremdschämen, meaning “a feeling of cringing embarrassment for the actions of others.” If only to discuss reality TV shows, English really needs to adopt this one. We can spell it without the umlauts. It is pronounced something like FREM-shame-in.

I bring this up because there is a minor scandal brewing that has just inspired fremdschamen in me. The Consumerist has taken to calling it the Foreclosure Fracas. Wednesday’s update on it in The New York Times began:

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

Read more »

Follow-Up Round-Up

Time to follow up on a few topics I have written about in the past and mention a few more tidbits not worthy of entire posts.

Bad Books

On Friday, the Consumer Product Safety Commission recalled another half million electrical DIY books to add to the million or so recalled from the same publisher in January. Some of the books were originally published in the 1950s. No explanation of why this batch was overlooked nine months ago. Also still no word on what, exactly, is wrong with them.

I had some fun with this in January, but darker thoughts are now creeping into my head. Is it just me, or is anybody else uncomfortable with the idea of a government agency recalling “dangerous” books?

Read more »

Why Your Mortgage Has Not Been Modified

Last year I wrung several good posts from the Obama Administration’s doomed-from-go scheme to get banks to modify mortgages. It was good material for me. I got to mock both those few who were clueless enough to think it might work and the great many people who were too polite or too loyal to the White House to admit that they understood that the program’s outlook was grim.

After a while, I got bored of beating that particular dead horse. So many other things to mock.

But I realized recently I never really addressed the basic conceptual flaw in the Home Affordable Modification Program. This came to me as I was reading a recent guest post at Smart Spending, a blog that carries many thoughtful guest posts.

Read more »

Cosigning Surprises

The article is ominously entitled When Student Loans Live On After Death. And it begins, dramatically, thusly:

In July 2006, 25-year-old Christopher Bryski died.

His private student loans didn’t. Mr. Bryski’s family in Marlton, N.J., continues to make monthly payments on his loans—the result of a potentially costly loophole in the rules governing student lending.

And what, you may ask, is the nature of this hitherto obscure loophole that The Wall Street Journal heroically exposed this weekend? Turns out, if a loan has a cosigner, and the borrower dies, that cosigner is considered liable for the debt. This was a surprise to both Mr. Bryski’s father, who cosigned his student loans, and Mary Pilon, who wrote the article.

Are you freakin’ kidding me?

Read more »

Millionaires on the Dole

On Friday WalletPop broke the news that IRS data shows that some millionaires claimed unemployment benefits in 2008. Using the increasingly rare definition of millionaire as a person or household with more than a million dollars in income, rather than net worth, it disclosed that according to IRS data (found here on table 1.4) 2,840 returns showing more than a million in adjusted gross income reported some unemployment compensation.

So the secret is out. I certainly did not qualify as a millionaire under the income test in 2008, but, as I have previously confessed, using the commonplace net worth criteria I do clear the (lower) bar. And, if you must know, I drew unemployment benefits for pretty much the whole of 2008. Oh, the shame!

I realize that few of you readers are part of my elite economic strata. So let me share some of my world with you.  Not only do we fat cats draw unemployment when unemployed, when old we get Social Security and Medicare. Some of us even send our kids to public school. We drive our luxury automobiles on public roads and when our mansions catch on fire we call the municipal fire department to put it out.

Shocking, I know.

Read more »