I’ve been reading about Ty Moore, who is running for Minneapolis city council in the Ninth Ward. Today, he posted a piece about Occupy Homes Minnesota – and how pleased he was that Occupy managed to prevent a sheriff’s eviction of a homeowner in his ward this morning. The homeowner, in a letter that she wrote to JP Morgan, said, “Had I not run into a predatory lender after my husband died, my house would have been fully paid off in August. I paid my mortgage for 28 years, in total around $425,000, and even after the predatory loan sent me spiraling to catch up--until I just couldn’t balance the bills any longer. Chase demanded $255,000 from me before auctioning my house off in a sheriff sale, when Chase bought it back at the current market value of $81,000!” Let’s break that down a bit: A $75,000 home purchase (which she noted earlier in her letter), payments totaling $425,000 over 28 years, and a mortgage balance of $255,000 at the end of that 28-year period. For that to happen (without the homeowner’s generous use of home equity loans), her average annual mortgage rate for 28 years would have to have been a stratospheric 20% (which, to put it kindly, is unlikely). Now, assuming she was paying at a high average annual mortgage rate of 12%, to make those numbers work she would have to have extracted over $200,000 in cash from the banks (using home equity loans). At a still-high 8% rate? She would have to have taken over $300,000 in cash from the banks. The Occupy group says this is entirely the fault of the banks. I don’t doubt for a moment that banks were irresponsible by giving many people money they couldn’t afford to repay. But, who forced this homeowner ask for money she couldn’t repay and what happened to all of that cash she extracted from the banks??
Posted on: Tue, 05 Nov 2013 17:52:03 +0000
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