I received a notice recently about refinancing my mortgage. I get these all the time, but this one was a little different. It suggested that if I could come up with some $80,000 to lower my loan amount, I could get the rest down to a 2 percent interest rate for 30 years, well below market rates, and save a boatload.
I called. Well, yes, the eager broker told me, my mortgage servicer, Bank of America, would help me if I could show financial hardship, negative equity and loss of a job or income. Oh, and by the way, if I qualified, it’s Bank of America that would come up with the 80K or so, not me. Seriously. He said the program could be a “golden ticket” for me, but there is one catch: It’s imperative I miss some mortgage payments to get it.
The notice I received said this was all part of the 2009 Home Owner Affordability and Stability Plan.
But strictly speaking, that’s not quite right. David John, a banking-regulation expert at the Heritage Foundation in Washington, explained it to me. Thousands of notices like the one I received have been mailed out in the last several weeks. I’m one of the “lucky” ones. My mortgage servicer is one of several banks that have agreed to a settlement with the federal government and various state attorneys general: In order to be protected from civil suits against them for “bad business practices,” they agreed to proactively offer mortgage reductions to homeowners who “qualify.”
Lawyers and brokers are eagerly seeking (creating?) “qualified” applicants because, of course, they make fees in the process. Hence, the notice I received.
Whatever some of these banks have done when it comes to sloppy — or worse — handling of mortgages in the past, this sure sounds like a shakedown to me. Of course, the banks will at least try to jack up fees or tighten loans to make up for it elsewhere. Bank of America is not just going to say, “Gee, too bad about that 80K we ate in Mrs. Hart’s loan. Boy, we sure had that coming!”
In any event, the message was clear: If I behave irresponsibly and don’t pay my mortgage on time, I could win a big prize here. But if I pay my mortgage responsibly, no chance.
Ethically, I feel I can’t deliberately miss a mortgage payment I can afford to pay. But personally, I’m an idiot to not take advantage of this no matter what those late payments do to my credit rating.
Our society is so screwed up.
Look, my heart goes out to people who might have to leave a home they love but which they can no longer afford. Oh, wait — been there, done that myself. In the wake of the divorce I didn’t want, it was clear that my kids and I could no longer afford to stay in our then-home. Leaving it was hard, but it was also life. My children and I landed in a more affordable, much smaller and still lovely house that we’ve come to cherish just as much as — or more than — the other one.
But this is not about people who genuinely find themselves unable to afford the homes they are in, in which case scheming to keep them in places they can’t manage doesn’t make sense anyway. This is about a culture, a legal system and a government encouraging people to behave in an utterly unethical and irresponsible way.
I don’t even blame the banks offering the program. I suppose they are just trying to keep the government and the trial lawyers from going after them in a way that might shut them down entirely.
So what am I going to do? I admit it: I’m just going to be an idiot and keep paying my mortgage on time.
Betsy Hart is the author of the new ebook, “From The Hart: A Collection of Favorite Columns on Love, Loss, Marriage (and Other Extreme Sports).” Reach her through [email protected]