The impossible loan: The murky path to a couple’s dream home
David and Jerri Bauman, a mentally challenged couple who have scraped through life, wanted a home. It was supposed to be 22 Fairview Ave. in West View — a place sold to them amid a flurry of confusing paperwork they couldn’t read, a pair of unexplained bank transactions and at least three sales documents that contradict reality.
Twenty months after they put shaky signatures on a mortgage they couldn’t afford and a settlement statement they didn’t understand, the Baumans are preparing to leave. David Bauman can’t read. His wife reads slightly, but with minimal comprehension. The lawyer who handled the transaction, according to Mrs. Bauman, told her it would take too long if they read everything.
Here’s the new bedrock of our economy:
The sale of 22 Fairview Ave. and the financial twists and turns are felt in ways large and small.
Small: A learning-challenged couple find themselves signing documents they can’t read, accumulating debt they can’t pay and, finally, being ejected from a house they shouldn’t have been sold.
Large: The stock market falls by more than 500 points in three days after massive sell-offs fueled in part by fears over souring investments in the very kind of high-risk loan the Baumans took.
Emphasis added by me.
Dig it. You can’t get more Suit than this:
Where the loan went
Less than three months after the Baumans took out a mortgage they had no way of paying, Bear Stearns, the investment firm that had accumulated a fortune by bundling thousands of mortgages to underwrite Wall Street bonds, bought the value of the Bauman mortgage.
The deal was complex, and the Bauman mortgage with Encore was almost invisible in the multimillion dollar deal. It worked this way: Bear Stearns used bundled mortgages, their value bought en masse from mortgage lenders such as Encore, and created a fund in which investors could draw interest from the subsequent payoff of the loans.
Bear Stearns became the major player in this kind of investment, with more than $16 billion of the market in the riskiest kind of mortgages.
These were sub-prime loans — meaning loans that drew a higher interest payment because the borrowers were considered risky. The bet was that the majority of borrowers would meet their payments or that any subsequent foreclosures would get back the value of the debt when the house was sold.
It didn’t work.
Last week, over a two-day period, the stock market tumbled by hundreds of points after Bear Stearns acknowledged that two of its funds were essentially worthless as families such as the Baumans defaulted on mortgages they couldn’t pay.
On Tuesday, the market, shaken by the collapse of the Bear Stearns funds, fell 226 points. On Thursday it dropped another 311.
Emphasis added by me.
You strut around in your pinstripes lecturing the population about honesty and hard work — and you’re a pack of fucking thieves!
Shit like this wouldn’t happen if I was in charge.
Previously in this blog:
On The Internet, Telling The Truth Becomes Imaginary
Fasten Your Seatbelts. Then Pray.
America: Collapse Watch
America: The Endgame
The Suits Will Bleed Anyone Dry! Especially You.
Hey, VISA Card USA! I Accuse You Of Running A Bait-And-Switch Scam!
The Answer Is Yes
When An Economy Crashes, Baby, There Are No Airbags!
And Then Google’s Stock Finally Thank You Jesus Crashes And Takes The Entire Global Economy Down The Toilet, Thank You Science!
The Road to Great Depression 2.0