I hate banks...yeah, I said it!

In 2006, I began working for a community development corporation, specializing in affordable housing development in East Los Angeles. At the time I was hired on as Housing Counselor, providing the typical information any first time homebuyer should use when purchasing their first home. For about a year I provided the typical budget counseling, reviewed and made recommendations on credit scores and helping families identify ways to prepare for the purchase of their first home. Mind you, I was working for a non-profit organization, which provided this counseling for free and about 98% of our clientèle was low to moderate income levels, furthermore...it was in 2005, the height of the housing market.

In East LA, you could easily find a 2bd/2ba home for $500k...easy. The problem though, which I encountered time and time again, was the constant self-defeating feeling I'd get each time I had to tell the family across the table from me that they were in absolutely no position financially to purchase a home. Now, usually this isn't a huge deal right? Most people can take advice and say, "oh well! better luck next time!" But for the families that I worked with, many of whom were incredibly hard working, had saved for so many years, who had decided to wait for the perfect moment, were being told that under the current market, it was almost impossible for them to buy.

This was part of my job for the entire year of 2006. But right before it ended, I was met with some unexpected events, that would change my professional career upside down. Around the holidays of that same year, I had a walk-in come by. It was a young family, monolingual...who were interested in having me read over their loan documents. Now, at this point my only real experience with loan documents were 30yr fixes, low interest rates...the usual decent loan. This young family however came in with a completely different document that I hadn't ever seen. They were loan documents from Bank of America, and to be frank, they were rather obscene. Yes, I'm an educated woman...I have a graduate degree with lots of work experience, however what I was seeing in front of me were documents that even your most skilled attorney would have trouble reading. Furthermore, I'm trying to explain these loan documents to this monolingual family, and while I did my best...I could tell that they were drawing a complete...blank. The loan documents in front of me were for the home they had purchased three years prior. What they did not understand however is that in just a few months, their current interest rate (which hovered at around 5%) was about to jump to close to 9%. In addition to this, they also had a 2nd...ok? Just trying to explain it right now is giving me a headache. The bottomline is that this family had no idea that for the last 3 years they had been paying on a loan which was not only "not fixed for 30 years" but that they were also paying on an additional loan, the 1st which covered 80% of the purchase price, fixed for three years and then adjustable thereafter, while the 2nd, was the down payment, a small payment at 10% for 15 yrs, amortized as a balloon payment.

You're confused right? Right?

Basically, this family at origination was told that they were locking in this 5% interest rate for 30 years, not knowing that it was only fixed for 3 years and that the reason they didn't have to put a down payment down was because they were sold a 2nd at a higher interest rate, which would have to be paid in full at the end of 15 years. Let's just say that it was soon after this meeting that I was introduced to adjustable rates and balloon loans, both of which had prepayment penalties attached to them.

I was officially introduced to the foreclosure/mortgage crisis. An issue I have unfortunately become an expert on, but also a staunch advocate, publicly opposing the lies of financial institutions and their inability to own up to this crisis and defending the rights of families facing foreclosure in Los Angeles.

My reasons for posting about this tonight is because after watching The Rachel Maddow Show tonight, and sitting through her interview with Elizabeth Warren, I got to thinking. Almost every question Rachel asked tonight was the same questions I, and countless other advocates all over the country, have asked time and time again for the last four years. The greatest question tonight being, "why can't we force the banks to work with families facing foreclosure?" Right Rachel?!? Right?!?

But no...

The numbers Elizabeth Warren provided tonight were both informative, yet discouraging. I recently left Los Angeles to pursue other opportunities, so I'm no longer on the front lines of the foreclosure crisis, but when I left I felt that I had done all I could for my community in Los Angeles and that things might improve. However, tonight showed a different perspective.

Why Banks Suck and Foreclosures are Never ENDING!

The financial institutions began to have their financial problems in the fall of 2008. At this time, the Treasury Department, under Paulson (remember his one pager?haha)recommended that we bail out the financial institutions and provide them with enough funds to prevent any meltdown, primarily in the housing market. So in the fall of 2008, the federal government approved TARP, Troubled Asset Relief Program. Under this program financial institutions would be provided with enough funds to stay afloat with the caveat of continuing business as usual. They were expected to continue lending to families who were interested in investing in small businesses or a home. Let me just be frank and say that this never happened. Through the end of 2008 and all of 2009, until my last day in Los Angeles, there was no financial institution interested in lending any money out. Not to any of our clients, and surely not to anyone else in LA County. That is the truth. Furthermore, financial institutions have and still make it impossible to find any solution for families facing foreclosure. While modifications are to be considered, they are not.

When President Obama took office in January of 2009, within months he introduced the Making Home Affordable Program, which would be implemented that Spring and financial institutions who received funds through TARP were expected to participate. I'll be frank...once again (My apologies for always being frank), and say that while this was a sigh of relief to many of us advocates, we soon realized that it was not going to work. You see, when the banks were failing and were going broke because of all the bad investments they made, you know? Like selling really bad loans like the ones I talked about in previous paragraphs? It was going to be a national...No! GLOBAL catastrophe! Something had to be done immediately in order to save our financial system right? Well, we did that. We gave you guys the money you needed to survive. But what you also did was pay obscene amounts of bonuses to your executives, and forgot (or dare say, didn't give a crap) about Juan and Maria, who are living around the corner and about to lose their home because you refuse to answer your phone and accept a modification packet that will not only help the family, but will help YOU TOO!!

I'm a huge fan of President Obama. I'm a huge fan of Elizabeth Warren. I'm also a very huge fan of others in the federal government try to do what is right to help families stay in their homes, but I have to be honest. I'm so tired of hearing some of the solutions, when in fact they are not working and are only recommendations made by those in the banking business. With Making Home Affordable for example, banks were incentivized if and when they worked with a family to get a loan modification, however this participation was "optional." The federal government was not mandating that they participate. So the numbers Elizabeth Warren provided tonight on Rachel Maddow should be indicative of how irresponsible financial institutions have been all along and how advocates like myself and others, have not been fully utilized to provide the solutions necessary to prevent a continual up tick in the foreclosure crisis.

To hear Elizabeth Warren tonight, talk about how only about 150,000 families have been helped by the Making Home Affordable Program, while on average of 200,000 families are being foreclosed on per month, that tells you something. It also tells you something when Bank of America and Citi are both sitting in front of lawmakers today, explaining how they are apologetic about what has occurred but that they are unable to do what is necessary to help families. If this isn't infuriating enough to people, I don't know what is. The banks can put the blame on the families, stating that they bought "too much" house, but at the end of the day, the banks should be held accountable for this travesty of a financial meltdown. It is obvious to every single American that they have done nothing but squander our tax payer money, and for the federal government to not hold them accountable and mandate that they do help families remain in their home is indecent.

For years I have been requesting that advocates like myself be included in discussions being held at the national level. We have the solutions, we just haven't been asked. But when will we finally be invited? We are the people on the front lines working with families directly, one on one, every single day for the last 5 years, so shouldn't we be the one's helping to make the decisions on how to move forward? Shouldn't we be the experts in identifying what the best remedy is for this foreclosure crisis?

So thank you Rachel Maddow! You finally asked the one question we all have been dying to ask. It's just a matter of time now in which advocates like myself will be called upon to meet with the President. So I'm here, waiting...we're ready... waiting for that call.