I was forwarded an article about a local woman whose bank, Bank of America, foreclosed on the house she and her family lived in only three months after her husband drowned in the river adjoining the property.
Meanwhile, in other parts of Bank of America, foreclosures are being halted all over the country to make sure that documentation related to foreclosures was filled out properly.
So is Bank of America being schizophrenic in its foreclosure dealings? Not at all. It's completely self-consistent. Here's why.
In the case of the local man who drowned, there was virtually nothing else for them to do except foreclose, as his wife could not afford the payments herself. Waterfront property has location going for it, so it would likely go more easily than other properties. It was in the bank's best interest to sell that property. It stood out amongst competing properties.
On the other hand, the foreclosures of many other properties have been halted because there may be serious problems – criminal ones, even – with the paperwork. Since these problems have been brought to light, doing nothing to verify the correctness of the paperwork would be negligent. So, it was in the bank's best interest not to sell these properties.
Even with our own foreclosure purchase we saw the lender dealing with us as it benefited them. We were jerked around from the moment we made a verbal offer to within a half-hour of closing. They were already taking a hit on the property we were buying, so they put as much of the burden on us as possible to reduce their loss. Again, in their best interest.
It's of course horrible for a mother and three (soon to be four) children to lose her husband suddenly. I'm sure there's substantial support for this family in this time of grief. But the bank's foreclosure of the house, and her eviction from it, have nothing to do with the circumstances from which they arose. Banks cannot take their customers' problems into account when the rubber meets the road. Everyone who gets behind on their mortgage payments got there as a consequence of some problem, whether within their control or not. Banks would lose their shirt if they capitulated with every customer problem.
It appears unfair how this woman was treated, as compared with how the people with “postponed foreclosures” are being treated. The average time a delinquent Bank of America borrower has been in default is not three months, but eighteen months. That's the average, so some of their borrowers have been delinquent even longer than that. So how can this possibly be fair? It is fair, since the decision when to foreclose – even if to foreclose – is the bank's, not the borrower's. Borrowers are bound to the terms of their mortgage note, and this gives broad discretion to the lender as to how they handle the situation when payments on the note stop.
Is there anything that Needs To Be Done About This to make things better? No. I'd much rather have businesses – banks included – to have the leeway to exercise contracts as markets will bear and as how they see fit. Restrictions, even if they appear to benefit consumers, will hurt everyone eventually.
“It is fair, since the decision when to foreclose – even if to foreclose – is the bank’s, not the borrower’s.” That’s really the bottom line in all of this. People who don’t hold up to their end of the contract have no right to complain about how the bank treats others, who haven’t kept their word!
One thing’s for sure. Bank transact or deal with the client because of business and when they say business they really mean it. Here regardless of how desperate or down you are when it’s due already they probably take some actions. Although this scenario is really sad still there is a process on it.