Wednesday, April 30, 2008

Predatory borrowing, and recidivism

(Housing Wire) We’re probably not going to make a lot of friends on the consumer side with this, but more than a few analysts have asked us here at HW when we’re going to take up the issue of “predatory borrowing,” since the cards have pretty much been dealt on predatory servicing and predatory lending.

How about now?

An earlier story Tuesday on HW covered an upcoming Senate Judiciary subcommittee hearing on foreclosures and bankruptcy, and cited a story in the New York Times. It was penned by Gretchen Morgenson, and we chose to ignore the more — ahem, how shall we put it — misguided portions of her story. We wanted to focus on the news itself.

But those misguided portions that we ignored? They drove Calculated Risk’s Tanta off of a ledge, in a way that only Gretchen seems to have a way of doing as of late. The result is well worth anyone’s time to read, especially if you are in the camp that says all servicers are out to screw borrowers utterly and completely — what you learn just might conflict with your world view.

Tanta went ahead and researched the entire Atchley case history, or at least as much of it was publicly available — the case is the center of the U.S. Trustee’s case against Countrywide — and what she finds is another case of a classic borrower filing bankruptcy to stave off foreclosure and then struggling to make a mortgage payments post-petition, not to mention a lender who managed to screw up on filing Proofs of Claim with the court.

Not exactly the sordid tale of Countrywide and its attorneys quashing a blameless borrower, is it?

Yet somehow, we have a feeling that on May 6, Robin Atchley will be there in front of a nodding Senator from New York named Chuck Schumer — and, oh, did we mention that Diane Feinstein is on the Judiciary subcommittee too? — telling the whole world how wronged she was by that evil, bad and uncaring lender named Countrywide and their nefarious lawyering types.

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