Quote of the Day - Any time three New Yorkers get into a cab without an argument, a bank has just been robbed.
Our firm is dealing with the subprime mortgage crisis one case at a time. Bear Stearns is dealing with the crisis with the support of the federal government and J.P. Morgan. It's important to the larger economy for the fed to bail out a company that can cause a giant ripple in the fabric of banking, lending and funding.
The federal government as also adopted a mediation program to allow individuals and mortgage lenders to talk with one another to work out a solution to the issue of defaults on mortgages that should have never occurred in the first place.
But what of the real villains here?
You know, the mortgage brokers who took big commissions on refinanced mortgages? The individuals who refinanced their homes and took money out from the refinancing?
There's at least one immediate punishment for the individuals who refinanced in California. They lose the protection of the anti-deficiency statutes. In other words, once you refinance your home, you no longer have the protection of "purchase money" if you default on your loan. In that instance, the bank can not only foreclose on your house, but it can also pursue you for the unpaid balance owing on your mortgage, just because you elected to refinance.
If you had not refinanced your home, then all that the bank could do is foreclose. It could not pursue you for the difference between the unpaid mortgage and the funds it received from the sale of your house.
But where did those big commissions the mortgage brokers go? I don't know yet, but once I find out I'll let you know. We're going after the mortgage brokers in our cases, and I'm very interested to know because the money went somewhere, not just lost through decreased property values. Real money went into real pockets. Now we have to find out who has it.