Life

Calls for Accountability Lost in Emotion

Editor’s Note: The email alert for the story I cite from Huffington Post carried the headline “Terrified Homeowner Faces $200,000 Bill At Age 100.” The story itself, however, now carries a very different headline: “Few Homeowners See Benefit From National Mortgage Settlement, Three Months Later.” A headline should get you into a story, but the facts presented within the story shouldn’t be ignored in a cloud of melodrama.

The scenario is enough to make anyone upset and ready to take action: a poor, 100-year-old woman facing a bill for nearly $200,000 to stay in her home. Until you know a few more details.

The woman isn’t 100. At the moment, she’s nowhere near 100. She’s almost a quarter-century away from centenarian status.  But as Huffington Post reports, if she lives to celebrate that magical birthday, she can count on a bill for $199,052 from JPMorgan Chase.

Ah, yes. Another critical ingredient: a big bank to cast as the villain. Now we’re set for a perfect conspiracy theory.

The victim, a 76-year-old Florida woman, was behind on her mortgage payments, as the story goes, and accepted a “modification plan” that allowed her to stay put with more affordable payments. Of course, when a creditor agrees to accept less for a longer term, the difference is going to have to be made up somewhere and at some time.

That, friends, is common sense.

In her case, the difference will be alleviated by a balloon payment of nearly $200,000 due in 24 years. And if she can’t stay current on a mortgage at 76, there’s likely no chance at all that she’ll be able to handle a balloon payment at 100.

While many homeowners are waiting for their chance at loan forgiveness, a provision of the national mortgage settlement that required that five major banks — Chase is one of them — to shell out at least $10 billion in relief, few have actually received it, yet.

The other option, reports Huffington is the principal forbearance plan, which moves the payment of the majority of the debt to the end of the loan. In the form of a balloon payment that in some cases would be virtually insurmountable.

Two Key Questions
But before you get too deep into a sea of predictable outrage, let’s consider one important point: did she read what she signed, and did what she signed spell out this balloon payment?

Those are two critical questions that should determine how outraged you get. Indeed, the answers should determine whether you get outraged at all, or at whom.

If the bank pulled something shady, changing the terms after her signature was committed to paper, which is unlikely, then the bank is at fault and doesn’t deserve another red cent from her because of the stress they’re causing her about her future. If the bank never disclosed, anywhere along the way, how much of a payment would be due, which also seems unlikely, they likewise ought to do the honorable thing and make the loan more workable.

But then there’s the other side: if she knew the terms and still signed, then there’s something very different that’s wrong with this picture.

Don’t get me wrong: I feel sorry for this lady and think it’s a horrendous predicament for anyone to be in at a time when they should be enjoying a carefree life of golden years. But if she knew what she was in for and signed, anyway, you have to wonder if foreclosure might not have been better. Or, whether she might have done better holding out for a different plan.

But if she agreed to this arrangement, as the old saying goes, she made her bed…and we all know what comes next.

The article at Huffington Post goes into more detail about the agreement those five banks made to forgive all those billions and seeks to begin holding them accountable to living up to that agreement.  Why does that accountability seem to only loom on one side of the equation? Why are the “evil” banks supposed to be sure to stick to what they agreed to do while the “good” citizen shouldn’t have to?

Student Loan “Victims” Complain, Too
I see the same kind of “good vs. evil” scenario played out among college graduates who complain about student loans.  But they accepted them. It’s not the financial institution’s fault that they now don’t want to pay the debt they agreed to pay.

In the interest of full disclosure, I was very fortunate: I had no student loans. My parents were smart enough to start buying savings bonds on a monthly basis from the time I was about six months old. (Granted, I didn’t select a major that kept me in college for a longer time nor did I have any interest in going to a college so expensive that it would have required student loans.)

But I look at my friends who were stuck with them. And they’ve busted their butts in getting them paid off, even when they couldn’t afford it, even when they had struggles finding the “perfect” job they hoped their college investment would land them.

The point is, they paid off their loans.  They did what they said they’d do, what they committed themselves to doing, when they signed on the dotted line.

At some point, we have to hold ourselves accountable before we start pointing the finger at corporations who are only trying to do the same thing.

9 Comments

  1. Absolutely, Patrick. I’m fortunate enough to be graduating from a private college in a year, and I won’t have any loans. My parents were smart about putting away money, and my grandparents have paid for half of my education. It’s incredible, and as I get older and realize exactly what this is costing my family, I’m more and more thankful for my family’s dedication and involvement in my education. Without them, I don’t know where I’d be. I have plenty of friends who are blindly applying to graduate schools because their loans will have to be paid off immediately if they don’t go straight into more school…which means, of course, that they’re just piling more debt on themselves for later. It’s a horrible situation. I’m so thankful I don’t have to go through it.

  2. Absolutely, Patrick. I’m fortunate enough to be graduating from a private college in a year, and I won’t have any loans. My parents were smart about putting away money, and my grandparents have paid for half of my education. It’s incredible, and as I get older and realize exactly what this is costing my family, I’m more and more thankful for my family’s dedication and involvement in my education. Without them, I don’t know where I’d be. I have plenty of friends who are blindly applying to graduate schools because their loans will have to be paid off immediately if they don’t go straight into more school…which means, of course, that they’re just piling more debt on themselves for later. It’s a horrible situation. I’m so thankful I don’t have to go through it.

    1.  @annedreshfield Yes, Anne…the whole “stay in school to prolong the payments” is an even more ridiculous situation; in this economy, there’s probably LESS of a chance they’ll make more money just because of that advanced degree, which means they’ll owe more without additional income to offset. It’s making a bad situation much worse!

      1.  @patricksplace Absolutely. You have to face the loans either way, and in my mind I’d rather face them sooner and not let them accumulate (with interest!). It’s hard either way, though, especially if you’re worried you won’t get a job with just a bachelor’s degree.

        1.  @annedreshfield Yes, and even though I was very fortunate to have found a job in my field before I graduated, I can still relate to that very real fear. But I don’t know that most people who choose to delay the payments truly think out how much more they MIGHT make versus how much more they WILL owe.

    2.  @annedreshfield Yes, Anne…the whole “stay in school to prolong the payments” is an even more ridiculous situation; in this economy, there’s probably LESS of a chance they’ll make more money just because of that advanced degree, which means they’ll owe more without additional income to offset. It’s making a bad situation much worse!

  3. You are preaching to the choir with me. The sensationalism in headlines (with next to nothing to back it up in the articles) is rampant. Also, I don’t understand why they chose to villainize the bank, when what the organization was offering was a completely legal product for which the woman signed. As you said, if the paperwork indicated the balloon payment, the bank did nothing wrong.
     
    What happened to personal responsibility? If you do something and it turns out to be a bad decision, don’t look to the government to bail you out or talk about how horrible the institutions were. Suck it up and accept the consequences for your actions in our free society!
     
    (Stepping down from soap box.)

    1.  @TammyL I don’t mind you being on the soapbox, and I completely understand.  I think there are some who are so determined to make everyone else the “bad” guy that personal responsibility is just the latest useful trait that is trying to be corrupted into a tool of blame.

    2.  @TammyL I don’t mind you being on the soapbox, and I completely understand.  I think there are some who are so determined to make everyone else the “bad” guy that personal responsibility is just the latest useful trait that is trying to be corrupted into a tool of blame.

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Patrick is a Christian with more than 28 years experience in professional writing, producing and marketing. His professional background also includes social media, reporting for broadcast television and the web, directing, videography and photography. He enjoys getting to know people over coffee and spending time with his dog.