There are no paid advertisements on this web site but sometimes I post a Codes matrix in gratitude for a service rendered that I feel is exemplary. This article is begins with what I consider the best of real estate advice and assistance that I've ever been given, though sadly it was required to deal with the some of the worst deceit that I've ever encountered. The Title Company of Florida at www.myfloridaclosing.com is the company first commended here. On the matrix below, the axis term is FLORIDA. CLOSING is at skip +1. The name of the owner, Michael SCHNEIDER is at an ELS. HONEST is at the same skip as FLORIDA, and I included transliterations of the names of three terrific and hard workers there, LISA, LUANNE, and BECKY. All company personnel exhibited the highest professional abilities, but Becky went far beyond all reasonable expectations in keeping me informed at all stages of the complex experience encountered. The knowledge she voluntarily supplied was critical in allowing me to successfully navigate the pitfalls of a very difficult process. If you're looking for something more exciting to read about, hang on - this article goes on to discuss the Ark of the Covenant, the Holocaust and our family, mortgage fraud, and even how to fix the U.S. home mortgage negative equity crisis.
BROKEN PROMISES AT CLOSING ON THE FLORIDA HOME. One major concern that I had about buying the Florida home was about whether the mortgage was assumable, the way a VA mortgage was that I had on an earlier home. I was informed that it was, but only after three years. I was also concerned about the interest rate on my new first and second mortgages. Before flying to Florida on August 15, 2005 on a two-day pass from my active duty site in Alameda, California, I was promised that the first mortgage was at 5.75% and the second mortgage was at 5.115%. At closing on August 16, 2005, I learned that the first mortgage with a company named SCME was at 5.875%, and the second mortgage (with BB&T) was only fixed for 6 months. SCME later collapsed, but not before my mortgage was bundled and sold off to Countrywide, who also collapsed but not before bundling my mortgage and selling it again. There was confusion about who bought it. I saw correspondence from America's Servicing Company (ASC) and Wells Fargo, but (as will be discussed below) they were just servicing the loan for Deutsche Bank of Germany.
On my first monthly statement from BB&T I was informed that as of September 21, 2005 my rate had been increased from 5.115% to 5.35%. On the next monthly statement it increased again to 5.61%. The excuse for this rate hike was the wording on the Discounted Tax Advantage Credit Line Agreement & Initial Disclosure Statement, Form 1640FL (0503). Dated 08/16/2005, it read, "The initial Discounted ANNUAL PERCENTAGE RATE (index + margin) is 5.115%." Note the much smaller font used for index + margin. Two lines later the document read, "The initial Discounted Annual Percentage Rate is in effect from the date of the Agreement through February 16, 2006." The use of the word "margin" is supposedly what allowed BB&T to bypass the stated 6 month delay before raising my rate. By December 2005 BB&T offered me a bait and switch rate of 6.49% on a balloon loan for three years with a promise to not raise the rate further for those three years. The higher rate amounted to an extra $100 per month in loan payments.
REASONABLE REQUEST REBUFFED, HARDBALL REQUIRED. When I first moved into the Florida home, I liked it and the neighborhood. The Jewish community (accessible via a 1.6 mile walk on the Sabbath and holidays) was friendly too; we often had members visit our home and dine with us on those days. The house seemed to fit our needs, even though we were disturbed to find that the many home improvements we made were always met with an ever increasing drop in home value due to the shenanigans of corrupt politicians and bankers selling sub-prime mortgages with predatory lending practices and credit default swaps. Newt Gingrich called for Barney Frank and Chris Dodd to go to jail, but Gingrich lost my support and eventually that of the Republican Party too when we learned how he made $1,600,000 from Freddie Mack mortgages that were a major factor in the collapse of home values. By 2009 we had accumulated over $72,000 in negative equity in our home. By 2012 that figure grew to $145,000. The house was only worth about half of the mortgage amounts. We might have continued to ride out the real estate storm but two events began to overstress the situation. Neither had anything to do with the market. The first event was that our rabbi had declared his belief that the deceased Rabbi Menachem Mendel Schneerson (who died on June 12, 1994) was the Messiah. The way I saw it, there already was a religion that believed a deceased rabbi was the Messiah - Christianity. I saw no need to mimic that great faith.
My split with the community was painful, and the fact that Chabad had taken over most southern "Orthodox" synagogues only increased that pain. It meant that it would be extremely difficult to find a home outside of Israel with an Orthodox community in a climate/setting that I liked. We would have to pray at home, without a minyan, the quorum of 10 men required to say many of the prayers in an Orthodox service. However, it was the second event that was the real stimulus for us to ask the banks about a way out of the house. Our then 16-year old son was accepted to Embry-Riddle Aeronautical University in Daytona Beach, Florida. He was too young to send off to college on his own, he had no driving skills (or, with vision problems, any desire to learn), and he could not access enough kosher food to survive without our constant help. We needed to move.
Could we get out of our negative equity home by trading homes with someone in a similar situation in the Daytona area? I had been told at closing in 2005 that our mortgage was assumable after three years, and that time had now more than passed. I called Wells Fargo and asked about it. Again they said that it was indeed assumable, and that they would send me the paperwork to start to make it happen. They lied. As an extract of their "paperwork" shows on Figure 4 below, according to the investor, all I had to do for someone to assume my loan was to divorce my wife, drop dead, have a non-existent co-borrower assume the loan, or have my (then 17-year old, unemployed) son assume it. In reality this basically made the loan unassumable. Learning this was much like discovering that we were on a sinking ship, and that all our lifeboats (and everyone else's lifeboats) had large holes in them. So all through our son's undergraduate education, we rented out our Satellite Beach home at a loss of about $1,000 per month while we in turn rented out a beachfront condo (also at a huge loss for its owner) about 5 miles from our son's university.
Despite my many controversial articles, it's not every day of the week that I receive a letter asking me to divorce my beloved wife of 29 years, or to drop dead. So I naturally wondered about who the investor was on this resold and rebundled mortgage. I thought that perhaps I could reason with them, but the mortgage servicer didn't want to reveal their identity. After I called enough times about it I eventually found someone who was either a novice, or who was honest. The Investor (and it turns out also the Trustee), was Deutsche Bank. At Wikipedia I learned that this company (1) financed the Auschwitz Death Camp, (2) financed I.G. Farben, who made the poison gas used there, and (3) paid part of a $5.2 billion settlement to Holocaust survivors in 1999, when many previous survivors were already dead. It took nearly a year for me to get the mortgage servicer to confirm the Investor's identity on paper, but when I had that in hand I felt that with it and the document shown on Figure 5 below, the death certificate from a Roffman murdered in the Holocaust, I could proceed. Manuel Roffman was born in Moscow. He moved to Paris where at the age of 37 he was arrested by Nazis, shipped through the Drancy Detainment Camp in northeast Paris to Majdanek Concentration Camp near Lublin, Poland, and then on to the Sobibor Extermination Camp. So the Investor who had sent me a letter basically asking me to die had been the same company that murdered millions of fellow Jews. A weak point in my case on the family issue was that Deutsche Bank financed Auschwitz, but I don't know if the same was true for Sobibor. Further, I.G. Farben was involved in the manufacture of Zyklon B poison, but the death of Manuel Roffman was by carbon monoxide, and I don't have a direct link to Deutsche Bank for this particular murder mechanism. However, most of the Roffmans killed by the Nazis were probably from the town of my grandfather - Tiraspol in Moldava of the former Soviet Union. In 1926 (before World War 2) there were 6,398 Jews living there (29.1% of the town). Wikipedia states that between 1941 and 1944 "Most of the Jewish population was deported to concentration camps and killed." Now, in fairness to Deutsche Bank, I can tell you that the letter I received was a poorly worded (insensitive) summary of American mortgage law, namely 12 CFR Chapter 5 (591.5(b)(v)(A to C). However, this fact did not change how I felt about sending payments in to a foreign company that was involved in killing millions of my people and others too. My initial action was to ask if Deutsche Bank could sell my mortgage to an American mortgage company (who I would then continue to pay), but they said this wasn't possible. Wells Fargo and Deutsche Bank, well aware of my concerns, quickly let me know that they would not oppose a short sale of the Florida home. At first I opposed the idea. In fact, I was curious about why Wells Fargo would even suggest it as a solution. When I bought the house I expected to pay (an American company) for the mortgage over 30 years. I had always paid my bills in full, and I had outstanding credit. A short sale ran against my principles, and I knew that it would damage my credit for at least 2 years. Wells Fargo, however, let me know that they would be reimbursed for their losses by an insurance policy and by the U.S. Government. Therefore - they actually encouraged the short sale. Indeed, they were even helpful in assuring that the sale would qualify under a Home Affordable Foreclosure Alternative Program (HAFA) that would even pay me $3,000 toward my moving expenses. Note: We had to move back into the house to qualify because the HAFA program only works if the home is a primary residence. We made our (temporary) move back to our house about an hour after our son took his last final exam at Embry-Riddle on December 15, 2011.
Throughout the long process of filling out an almost never ending amount of paperwork, with tremendous help from the Title Company (Myfloridaclosing.com), I made all monthly payments to ASC/Wells Fargo/Deutsche Bank on time up until the month we moved out of the Satellite Beach house again. Deutsche Bank apparently understands that it was wrong in its Holocaust behavior, although like many American banks, it was also accused of mortgage fraud.
A GREEDY SECOND MORTGAGE COMPANY REFUSES AN OFFER THAT WAS TOO GOOD TO BE REFUSED. In the summer of 2011, the second of two 3-year contracts with the second mortgage company (BB&T) was approaching its required end (on October 22, 2011). As I was not yet in favor of a short sale, I requested that they drop its high 6.49% interest rate for 3-year only contracts, and that they finally honor the originally promised 5.115% rate for a 4-year contract. Indeed, for new customers walking in off the street, they were charging only 3.24%! We had not only never missed a payment with them in 6 years, but we were even a few months early in making them. I thought that surely we had earned the right to have our rate lowered. However, BB&T not only refused to do so, but they actually wanted to raise our rate to 7% just because (thanks to banking policies) the property had acquired negative equity.
I soon found that I had a revolutionary war on my hands, one that reminded me of Boston's British Tea party. After a month of arguing, BB&T offered to continue the 6.49% for another three years; but we let them know that we wouldn't sign such an agreement. We offered to pay the 6.49%, but would do so only without signing anything new. They wouldn't accept that, and said that if we didn't sign another 3-year contract, then the balance due - almost $57,000, would be payable in full on October 22, 2011. They sent us the contract on their terms; but we crossed out the 6.49% on it, wrote in 5.115%, crossed out the three years and wrote in four years. We had our signatures notarized at a Wells Fargo bank, and sent it back to BB&T via certified mail. This was at a time that banks in this country could not only borrow money from the U.S. Government for 0% interest, but the banks were even lending the same money back to our insane (Obama Administration) Government at 3% interest! I told BB&T that I consider myself to be a member of the Tea Party, and that (via a short sale) I would dump their high interest loan the way British tea was dumped into Boston Harbor. In general, second mortgage companies received only pennies on the dollar when a short sale goes through.
Apparently BB&T thought I was bluffing. They refused to budge, and the battle was on. An amusing side note is that in December we received a note from them (obviously computer generated) congratulating us for reaching our final payment - which, of course, was not the usual $389... it was $57,000 (a good bit more than the funds we had available).
THE BOTTOM LINE. Wells Fargo/ASC/Deutsche Bank were cooperative, BB&T was not. I had a poor attorney who never returned my phone calls and who wrote a letter to BB&T threatening them with me filing bankrupcy and also threatening them with me trashing the house. As I had made abundantly clear from the beginning, nothing could be further from the truth, so I had to override him. Then I told BB&T what they needed to know to approve the shortsale - and this information is what many who are looking for a way out of a situation like mine may find to be golden. We had remained on time with our payments to Wells Fargo/ASC/Deutsche Bank. However, when BB&T refused to accept our signed contract at 5.115% we stopped paying them. While BB&T threatened us with foreclosure, we knew it was a bluff. Why? Because to foreclose on us meant that they had to pay off the primary mortgage in full. They would get nothing from us of the $57,000 we owed them, but they would have to pay Wells Fargo/ASC/Deutsche Bank $247,200. More, because BB&T was calling their loan an equity loan rather than a mortgage, if we waited 5 years without paying anything on it, we could clear the credit reports of this problem - still leaving them with nothing. More, it was illegal for them to touch my pensions.
While I have no love for BB&T, I didn't want to see them get nothing. The house that we had bought 6 years earlier for $312,000 we sold for $160,000. Of this, although the Wells Fargo HAFA deal called for BB&T to get up to $6,000, the Title Company only allowed for $3,600. To that we added $10,000 cash, so BB&T actually received $13,600 - enough to release us from further liability (which was also true with the first mortgage). After real estate broker commissons, my lawyer fees (that I wrote into the sales agreement), Title Company fees, etc., Wells Fargo/ASC/Deutsche Bank received about $132,000 of the sales proceeds. Wells Fargo had an appraiser come to our house during the HAFA process. He found our house to be in great condition with no defect at all. But Wells Fargo, knowing that, only asked for $130,900 from any sales proceeds, although the mortgage they held was for $247,200. Obviously, if they had not asked for such a low payment, they could have forced our buyer to pay more. But they did not ask more and this is indicative of why home values are so low.
Normally I would feel terrible about paying back less than the original amount agreed to when I bought the house. But in this case, it was the banks who destroyed the value of our home, not us. My wife and I had put about $20,000 of improvements into the house. When my wife installed new flooring, she inhaled enough dust to cost her the right middle lobe of her lungs - an operation that was extremely painful, and one that she has far from recovered from 6 years later.
Our Government, American banks, and even the Bank of our World War 2 enemy have destroyed (often) half the values of American homes in such manner as to be the equivalent of them physically bombing our homes, destroying half the rooms in them. If this is not cause for American consumers and homeowners to fight back through actions like the one I have taken, then I don't know what is.
THE ULTIMATE SOLUTION TO THE MORTGAGE NEGATIVE-EQUITY CRISIS. The solution here is for banks (voluntarily or by force of law) to establish data bases that facilitate responsible, on-time homeowners to trade negative-equity homes with each other. A data base for trading negative-equity homes is the only way out of the housing crisis. Depleting the inventories in this way not only is in the interest of homeowners, banks, and investors everywhere – but it will also allow the new home construction industry to surge again. Specifically, this solution will:
1. Keep homes from going into foreclosure or short sale.
2. Protect credit rating of buyers who need to move.
3. Allow homeowners who lose their jobs to move to areas where jobs are available.
4. Help people with security clearances (like at the Kennedy Space Center) to take jobs elsewhere without losing their security clearances – something that happens to them now if they lose their homes through foreclosure or short sale.
5. Diminish the excessive home inventories that prevent responsible homeowners from selling their homes because homeowners cannot compete with Bank foreclosure and short sale prices.
6. Increase property values for homeowners and for banks who already hold foreclosed properties. It will prevent further bank failures and investor losses that the high rate of foreclosure now causes.
Epilogue. The short sale went through on April 19, 2012. Wells Fargo never listed it with credit agencies. BB&T, we found out 22 months later, falsely listed it as a foreclosure. I threatened to sue them for defamation of character and criminal action. They corrected the report within a week. This occurred while I was applying for a VA mortgage for a terrific condo that my wife and I were renting for two years on the beach in Cape Canaveral. The agents at http://www.vahomeloancenters.org/ worked hard to help us procure the new loan. It was approved in less than two months, with very little money down. We closed on our new home on May 6, 2014. Initially the mortgage was with Primelending. However, before the first monthly payment was due they sold the loan. And who do we pay now??? Well, that would be Wells Fargo again (apparently there are not too any mortgage banks left). But there will be no complaints from us this time!