The Twelve-Year Mistake Part 7: The Unicorn

By Shamus Posted Monday Jun 24, 2013

Filed under: Personal 169 comments

It’s 2012. Early in the year we go to PAX and I get to meet my friend Josh face-to-face for the first time. We do the PAX thing and generally have a lot of fun. It’s nice to get away from the house for a few days and stop worrying about the mortgage and instead worry about the expenses and logistics of travel.

I’m always conflicted about travel. I love visiting new places but I really hate the act of travel. This is like enjoying food but hating eating. You really can’t have one without the other. I develop some really strange OCD behaviors when I travel. Where are my keys? Do I have my wallet? What happens if the car breaks down? Where are my keys? What if the GPS stops working? Do I have my wallet? Do I have my medicine? What if I get sick? What if my asthma gets bad? What if I get one of my headaches? What if I make a fool of myself at one of my public appearances? Do I have my wallet? What if I’m allergic to the hotel room because everyone on this wretched planet owns a friggin’ pet? Do I have my medicine?

Part of the problem is that I’m incredibly absent-minded, and the only way I can mitigate this is by keeping rituals. I think nothing of going for three weeks eating the same meal three times a day, drinking the same tea, playing the same games, making the same jokes. The rhythm keeps me on track and lets me manage complexity. But travel shatters all rituals and I start to freak out.

Day two of PAX East 2012. I’m sore, tired, and waiting for the tea to kick in before we set off for the convention center.
Day two of PAX East 2012. I’m sore, tired, and waiting for the tea to kick in before we set off for the convention center.

My book is out now, and it’s a fine success by the standards of first-time authors. It brings in a nice chunk of money. When sales finally drop off, I’ll gross about a third of my old salary at Activeworlds. It took me a year to write it, but I didn’t work on it full time. In fact, I spent a lot less than one third of my work hours on it.

This makes it kind of hard to appraise the viability of writing more books. Going strictly by a per-hour basis, writing books seems to be a great way to bring in income, even better than my old job. On the other hand, I can’t make a living at it. Barring some explosive growth in my popularity, I’m never going to bring in enough income to pay all the bills by writing just one book a year. And I don’t think I can manage more than one book a year, no matter how much time I dump into it. I could easily quadruple the time I put into writing books, but I don’t think I could quadruple my output. I just don’t have the creative bandwidth to produce material at that rate.

So my book was a great supplement to our income, but it wasn’t the magical cash cow that I knew it wouldn’t be. And yes I typed that sentence like that on purpose. Have another go at it if you need to.

In any case, we continue to have enough money to pay the bills but not enough to pay the mortgage. Which means we really need to sell this house. It’s been over a year since we made a mortgage payment. I’m feeling really uncomfortable about living here.

For “fun”, I run the numbers. It looks like if you added up all the checks I’ve mailed them over the years, it should almost add up to what I borrowed. Now, some of that was absorbed on their end in insurance and property taxes, but it is kind of shocking when I see the number written down like this. Like, if I somehow didn’t need to pay for housing for the last decade, I would have made enough to buy a house with cash. Of course, if we were in that position we wouldn’t need to buy a house. So… I should stop thinking about this because it’s silly.

All we need to do is sell this house. I really wish they would lower the price. The fact that after all these months we haven’t even gotten any offers makes it pretty clear that the price is way too high. People are seeing the price tag and concluding that the house isn’t even within haggling distance of what they’re willing to pay.

Let’s Make a Deal

Here I am working on <a href="?page_id=16458" title="Programming Projects">Project Octant</a>, which was my big project while all of this was happening.
Here I am working on Project Octant, which was my big project while all of this was happening.

Hope comes in the summer of 2012. After six months of showing the property and enduring a weekly wedgie-by-phone, we get a buyer. Better than a buyer. He's an investor. He’s some sort of fellow who snaps up houses, and then probably flips them. He's a cash buyer, which means nobody has to wait for any loan approval process on his end. In the world of real estate, finding a cash buyer is like finding a unicorn. Given this house and this housing market, this offer is an amazing stoke of luck.

A man dying of thirst in the desert has suddenly stumbled across a unicorn giving away free lemonade.

His offer is short of the bank’s asking price. Now, I fully admit that I’m a screw-up, but his offered price strikes me as being about as high as you could reasonably hope to get for this house in this market. There’s just too much crap for sale and too few buyers. The bank might wish they were getting more, but this offer is WAY better than just unloading the house at auction.

Perplexingly, the bank does not reply to his offer with “OMG YES SIGN HERE QUICK BEFORE YOU CHANGE YOUR MIND!!!” Instead, his offer sits there for a few days. After this deal-threatening awkward pause, they respond that they don't want to sell to “X Incorporated.” Apparently this guy is approaching them as a company and not an individual.

The buyer doesn't storm off and take his money to one of the many, many other properties for sale. Instead he pays the legal paperwork to make his Inc. into an LLC. (Or whatever. I haven't been this far out of my financial depth since the dot-com days.) He makes the offer again.

It takes the bank a little while to respond, but eventually they request proof that the buyer actually has the money. Are they afraid he's going to show up with a suitcase full of undies and STEAL THE HOUSE?!? This isn't a drug deal, guys.

But whatever. The paperwork is filled out and faxed over.

When it’s time to show the house, we clear out and go to <a href="https://www.facebook.com/pages/Mazzantis-Beans-Cream/84252601845">Mazzanti’s Beans & Cream</a>.
When it’s time to show the house, we clear out and go to Mazzanti’s Beans & Cream.

The bank then goes very quiet for some time. There's a time limit on how long this offer can stand, and the clock runs on for a couple of weeks while they ignore the buyer. If time runs out, then the deal falls through and the buyer walks.

On the very last day, at noon, the bank calls ME, and tells me that the buyer provided their proof-of-money-having in a wrong or unacceptable way. The proper documentation must be provided in [format] by 4pm today or the deal is off.

I can't contact the buyer directly. The buyer can't contact the bank directly. I have to call the realtor, who calls the buyer, who gets the paperwork from HIS bank and sends it to the realtor, who sends it to MY bank. Given that we're all busy people who don't hover over the fax machine all day, four hours is a ridiculous window in which to accomplish this.

We make the call and everyone jumps though the requested hoops. It's the most bizarre thing possible. The party with the most to lose here is the bank, and they're acting like they're doing everyone a favor by entertaining the offer. All they have to do is say yes and they can stop the flood of red ink on their ledger, Heather and I can be spared the trouble and stigma of a foreclosure, the buyer will get a property he wants, and the real estate agent will get a return on the time she’s spent showing and selling this house all these months.

The thirsty man is looking at the unicorn's lemonade and asking if the cup is made of fair trade post-consumer recycled cardboard.

The bank goes quiet again. The phone calls stop.

Doing the Right Thing

Left is Rachel, my energetic talkative outgoing go-getter. On the right is Esther, my quiet introspective reader.
Left is Rachel, my energetic talkative outgoing go-getter. On the right is Esther, my quiet introspective reader.

Heather and I have been slowly packing over the past couple of months, tucking things away and cleaning out what we don’t need. We need to be ready to move out if this sale goes through.

It’s almost December when they get around to calling me. After we finish with the verbal calisthenics they ask me what's happening with the property. This is a hell of a question, since everyone has been waiting for them to accept or refuse this offer. I remind them of this.

The guy on the phone checks the computer and finds a note that the buyer “Did not qualify”. It doesn't say if the fax didn't arrive in time, or didn't have the needed information, or they just didn't like his stupid dumb face, or why they wouldn't sell this house to a willing cash buyer. And rather than just picking up a phone and giving an answer, they blew him off.

The dying man, upon learning that the lemonade is served in a Styrofoam cup, has left the unicorn in the desert and stormed off in search of something better.

I have realized something. I have realized that the bank never wanted to sell this house in the first place. Their dealings with the hapless buyer look less like ineptitude and more like sabotage. Even their pricing seems to be an effort to scare people off. This doesn’t make sense. If they wanted to foreclose, they could have done so a year ago. If they wanted to sell… well, why didn’t they? I can only speculate.

People have offered lots of plausible and interesting theories about why the bank would or wouldn’t want to foreclose, or refinance, or why they would be so inept. Check the comment threads of previous entries. The one thing I’m taking away from these discussions is that banks are at their most deeply dysfunctional during foreclosure, and the housing bust has turned them into madhouses. Mortgage lenders are now acting like a person who burns money to keep warm because they can’t afford to pay the heating bill.

Maybe they just plan to collect the mortgage insurance? Maybe there is some government program or tax shenanigans that makes it better for them to string this process out? I've heard all sorts of theories. It doesn’t matter. We’ve all been wasting our time.

I feel really bad for the realtor, who worked for so long on this doomed property, and for this buyer who was jerked around for so many months. I’m the deadbeat here so I deserved it, but these are just honest folks trying to do some business and make a living, and the bank wasted a great deal their time. Like, if we were talking about billable hours the bank would be on the hook for thousands of dollars.

What am I supposed to do now? If the bank doesn’t want to sell, then I can’t make them. Do I stay here and keep up the charade? I mean, I can live here for free until they boot us out as long as we all pretend we’re trying to sell the house. That would actually be really good for us financially. Maybe we could pay off Heather’s student loans while we’re getting free housing.

No. No no no. This isn’t right. I have no idea what the bank wants or what they’re trying to do. Maybe they want me to play along and maybe they don’t know or care. I have no way of knowing. But I made a promise to pay back this loan. I failed. The fact that they’re idiots (or worse) doesn’t absolve me of the promise I made.

More importantly, our current realtor has walked away, understandably outraged at having so many hours of her time wasted trying to sell a house only to have the seller sabotage the deal. I’m not willing to involve another realtor and have the same thing happen to them. I was never going to make any money here, but we did everything we could to try and help the bank reduce their losses. Maybe there’s some other dimension to this that I don’t understand, but from where I sit this bank just screwed everyone that was trying to help them. I can’t take part in this any more, whatever this is.

It’s time to move out.

This series will conclude next week.

 


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169 thoughts on “The Twelve-Year Mistake Part 7: The Unicorn

  1. rodyle says:

    Shamus, you are a better person than I would’ve been in that situation. I would’ve concluded that the bank is actually insane and doesn’t want my money our something.

    1. Kavonde says:

      Amen to that. I have a deep respect for Shamus’ sense of honor, here, but man. In the face of such overwhelming, inscrutable incompetence, my sense of pragmatism would have won out over my sense of fair play. Kudos, Shamus, and congratulations on getting to write “Lawful Good” on your character sheet in ink.

      1. daemon23 says:

        Just because it looked like an opportunity to take advantage of doesn’t mean it is, though. While from what I’ve gathered the consequences so far of effectively squatting in a home the bank won’t foreclose on have been negligible, it’s possible they could come up with some exotic legal argument that since you knew you couldn’t pay it no longer counts as a mortgage but as rent, and therefore you owe them back payment for it which doesn’t count as part of your mortgage plus fees for late payment. Ending the relationship with them sooner than later reduces the likelihood of them trying to play legal games.

      2. Steve C says:

        I’m going to hope that installment #8 is all about how moving out closed a chapter in your life and opened a much better chapter in your new home. I’m hoping that because if in retrospect living in the house rent free was a better option… I will want to berate you.

        I’m a big believer in honor and justice. Those affect my day to day decisions. Honor is something that only comes into play with interactions between people, not things. The bank isn’t a person, or even a collection of people. It’s a collection of assets with policies. Did you act in good faith?; Yes. Therefore honor is served. To feel it’s wrong to live in that house is like feeling bad throwing away a stuffed animal. It’s not alive. You owe it no emotional consideration at all.

        I’m reminded of this Hogfather scene (spoilers!). Concepts like justice, mercy, and honor are deeply important and define us as humans but only when applied to living things. They are meaningless to atoms, molecules or assets made up of atoms and molecules.

        1. thebigJ_A says:

          This. So much this. There would have been literally nothing unethical, immoral, or even dishonest about staying in that house.

          1. wererogue says:

            Except for screwing retailer after retailer, since he was legally obliged to be actively trying to sell the house.

            I guess you could try to cut a deal with some friendly retailer to just send an email every so often saying “yeah, there’s nobody buying at that price.”

        2. Raka says:

          Even if his morals could have been stretched to encompass it, that’s a hell of a tenuous situation to live your life in. Not knowing if this month is going to be the month that Big Things start happening with just as little communication or control as the nothing that’s been dragging on so far. Not being able to make any significant plans more than a month or two in the future. If I was 20 and could toss all my worldly possessions in and on my rusty hatchback, then sure, it’s totally worth that for free rent. The man has a family and a grown-up life. I respect his decision to not put them all through that.

          Would respect it on the moral grounds, too. Most grounds, frankly. It’s his life and his decision.

          1. Steve C says:

            I totally agree. If you are unhappy and stuck in a rut then moving is a great idea. If nothing else it’s a change and has more potential to open new doors. However the moral grounds are a completely separate issue, and I reject their even existence in this case.

            To me it’s like taking a moral stance against plaid. Ok you don’t like plaid. Don’t wear plaid then. It’s your decision and you like what you like. If it’s an unflattering color on you, all the best. I’m not going to applaud that decision on moral grounds because none exist.

        3. Gregory Thomas Bogosian says:

          Banks are not so much collections of assets as they are collections of people. The bank could lose all of its assets, and still have owners. It can’t have no owners, and still exist. Even if the management and employees of the bank have no interest in selling the house, the bank still has shareholders and creditors who would prefer it if the bank minimized its losses on this deal. If you think that honor applies to any other group of people acting through a corporation or other legal fiction, then its very hard to argue that it doesn’t apply to banks.

  2. Akri says:

    Wow, that is impressively stupid. And it’s a sign of what a good person you are that you still didn’t feel right staying in the house for free, even after the bank made it clear that they don’t actually care about recouping their losses.

    1. Retsam says:

      This is a combination of pedantry and genuine confusion, but I had to read this post a few times before I realized that “that” and “it” in the first two sentences probably referred to different things, as it seemed strange that you’d call something stupid, and then turn around and say that it’s a sign of being a good person. (Unless you were channeling Jack Sparrow or Lord Vetinari)

      1. Akri says:

        Yeah, I realized that was ambiguous about 30 seconds after getting in the car to leave for work. Just to be clear, the “that” in the first sentence refers to the bank’s actions, while the “it” in the second sentence refers to Shamus.

        Pronoun agreement is hard at 7am.

  3. Lalaland says:

    And people wonder why houses get trashed after foreclosure, remember there’s gold in them thar’ copper pipes…. (Note your obvious honesty precludes this but still ;) )

    Financial institutions seem to have decided that authority is not a thing worth sharing outside of corp hq so they take forever and a day to make the wrong choice. My own father is trying to arrange finance at the moment, despite having >€500k equity in his home he can’t raise a loan anywhere at the moment

  4. swenson says:

    Even before the worst of the financial crisis, banks were pretty stupid about selling houses. My parents bought a couple of cheap foreclosed houses, fixed them up, and resold them, but in all honesty, the only reason they were in such bad shape (and they were both in pretty bad shape) was because the bank let them sit for years and years while they very slowly inched the price down until it was actually reasonable.

    I suppose it doesn’t cost the bank much to have a foreclosed property (aside from mowing the lawn), so maybe it really is worthwhile for them to sit on houses until they sell for too much money, but you’d think they’d want to get rid of them faster.

    1. In many municipalities the city mows the lawn on these semi-abandoned properties. They are supposed to charge the owner for it, but I seriously doubt that fee ever gets paid by a bank that can’t even manage to keep track of its assets or handle them in some kind of coherent manner.

      Heck, I called on my defaulted car loan to get it resolved last week and it took them six transfers to even get me in the vicinity of the correct department–at every one of which I had to repeat my full identification info. What the hell. They should be able to type my name and birthdate in and get a full listing of *exactly* what needs to be done with my account and which agent to send me to. This is what a computer system is FOR–to keep track of all this stuff because humans don’t have the capacity for it. They might as well still be using paper as efficient as they are.

      1. Jace911 says:

        “They may as well still be using paper” has got to be up there for “phrases that make me feel ancient”.

        And I’m twenty.

        1. Syal says:

          Coincidentally, “And I’m twenty” is one of those phrases that make me feel ancient.

        2. Aldowyn says:

          I’m 19 and don’t remember NOT having several computers in the house.

          This may be because both my mom and my stepdad (of .. 13, 14 years? Something like that) are programmers, but still.

          1. MadTinkerer says:

            I can’t remember not having several computers in the house, but the earliest ones I do remember are the Apple II later passed down to me and a couple of the very earliest IBM compatibles, one of which I think may have actually been manufactured by IBM!

            I remember having a life-changing moment when I was about three years old. Thanks to my father being one of the earliest adopters of VHS, I was one of the very first to take that for granted. What’s so special about taking a camera and pointing it at something and having the image show up on TV? That’s just how TV works!

            And then there’s this other crazy magical thing where you wiggle a “joystick” to CONTROL A TRIANGLE ON THE SCREEN WHICH SHOOTS DOTS AT POLYGONS. Television was just something that showed you what was going on somewhere else. Computers let you CONTROL what was happening on-screen. With television you can rewind and fast-forward, but it doesn’t change the sequence of what happens. With computers YOU ARE LIKE UNTO GOD HIMSELF.

            Why did God lock away the fruit of eternal life and not the secret of computers? Or perhaps the secret of how to make computers was imbedded in the fruit of knowledge of good and evil, it just took a few thousand years to figure out. In any case, there is something unmistakably divine about computers. (Criticize Peter Molyneux all you want, but he recognizes it.)

            So let’s make all the computers into closed systems just like our “smartphones” with all the details of how they actually work obscured from the consumers so no one has any idea how computers work. That way we can split the population into the ignorant consumer base addicted to our proprietary systems and the elite widget-making priesthood to which all money goes and from which all blessings flow. But that’s a separate rant.

            1. Deoxy says:

              So let's make all the computers into closed systems just like our “smartphones” with all the details of how they actually work obscured from the consumers so no one has any idea how computers work. That way we can split the population into the ignorant consumer base addicted to our proprietary systems and the elite widget-making priesthood to which all money goes and from which all blessings flow.

              You have the causes and effects screwed up, there.

              I’m a programmer, and I try to get people to use computers. I try to get them to use stuff specially designed to easily do the specific tasks they are to do as part of their job.

              It’s too hard for them (so they say – and some of them actually believe it, too).

              The problem is not that the priesthood is trying to make it this way, the problem is that people WANT it to be as ridiculously brainlessly easy as possible. The vast majority of people WANT priests.

              Just like I don’t want to know much more about cars than “Gas here, oil here, check fluids here and here.”

  5. krellen says:

    A theory I don’t think I’ve seen floated before, and that just occurred to me, is that perhaps the bank was hoping you’d apply for some form of Federal debt relief. It’s entirely possible that this would be the best choice for them – the government would pay back the loan in full so they would recoup the entire cost – but the law forbids them from suggesting the option, so they needed to wait for you to discover it on your own.

    It’s the only rational explanation I can come up with. Everything else requires the bank to be criminally incompetent.

    1. Ciennas says:

      Huh. That’s a neat theory. But don’t forget Krellen, that ineptitude and failure are always an option.

      (Not that I think I have to tell you. Just making conversation.)

      If they’re not allowed to tell people all the options, wouldn’t that get them boondoggled legally for not being as helpful as possible or something?

      I’d think that at the very least, a passive aggressive approach would work best here;

      ‘oops! I just dropped a pamphlet on federal debt relief on the floor! Near your face! in arms reach! With all the appropriate boxes checked!’

      (Okay, not legal, but christ I wish we could cut through beauracracy so easily. It shouldn’t be this difficult to kill red tape.)

      1. Klay F. says:

        I’m far from an expert on these matters but this would essentially amount to the bank going behind the lendee’s back and directly asking the government to pay off this loan on his behalf. I don’t know if that’s illegal or not, but it kinda smells of hijinks.

        EDIT: Changed the wording around to make what I’m talking about clearer.

        1. Austin Middleton says:

          I'm far from an expert on these matters but this would essentially amount to [Goldman Sachs] going behind [AIG]'s back and directly asking the government to pay off [Bear Sterns] loan [to AIG, who owes GS] on their behalf. I don't know if that's illegal or not, but it kinda smells of hijinks.

          Fixed it for you. ;-)

    2. daemon23 says:

      Only problem I can think of is that at least Bank of America was actively encouraging its employees to play games to deny mortgage adjustments and even paid bonuses for pushing customers into foreclosure:

      http://www.nakedcapitalism.com/2013/06/administration-keeps-up-propaganda-that-mortgage-servicing-has-been-fixed-despite-allegations-otherwise-by-whistleblowers.html

    3. This is almost assuredly correct. See previous entries for Shamus’ well documented aversion to government funded programs.

      As for why they didn’t take the offer….chances are they weren’t allowed too accept it. There are pretty strict rules about when and how a bank can sell a house out from under the original mortgage borrower.

      These rules are meant to protect Borrowers from lender shenanigans such as selling a house to their brother for pennies on the dollar after the borrower misses one payment. Or even a hundred payments. But in this case they do more harm than good.

  6. silver Harloe says:

    So the lesson I’m taking away from this is: do not buy a house unless I can afford it outright or am confident I will actually have jobs for 30 years. Neither of these things are possible, therefore: do not buy a house. Which is fine: it’s something I should have done 20 years ago, anyway, since I’m 42 and my health makes me periodically question whether I’ll make it to 50. On the other hand, it’s kind of sad that the economy is like this. I feel like my grandparents would be pretty confident about “have jobs for 30 years” thing.

    1. Ciennas says:

      Culture changed.

      It used to be that way, but now it’s expected that a person will wear a lot of hats through their working years.

      sometimes literally, like if you have a brief stint as a hat model or other hat themed profession.

      1. MichaelG says:

        I have a family history, and there’s a letter in there from one of my sort-of-ancestors. They were shopping for a house (paying cash, I think, since 80% mortgages were rare then), and between the time they saw it and when they bought it, the price had doubled. It was some crazy real estate boom and the letter says something like “I thought I’d never have to live through another one of these!”

        The more things change…

      2. BeardedDork says:

        There was a point in my military career when I had 11 completely different and distinct pieces of uniform headgear, the U.S. Army is hat obsessed. Our packing list for things often had somewhat facetiously listed, “bag of hats”.

        1. So wait, does this mean Team Fortress 2 is actually an accurate military simulation?

          1. BeardedDork says:

            In that it has a number of troop types with different weapon systems and responsibilities, and an unreasonable number of hats, an argument could be made.

            1. Dave B. says:

              “Arguably an accurate military simulation”
              — BeardedDork

              They should put that on the Steam store page.

    2. MReed says:

      As someone who very reluctantly has just purchased my first house that I really don’t need in my mid-40s, I think this is unduly pessimistic. Keep in mind that you can:

      * Put down more than 20%, which both reduces the payments /and/ helps ensure that you can sell the house for enough to cover the mortgage should you lose your job
      * Don’t have to take a 30-year note — mortgages are available for periods of time as short as 10 years, and you get a (small) break on the interest rate if you take a 10 or 15 year note. This also helps insure that you aren’t underwater if you need to sell (shorter note means that you start paying large amounts of principal early in the process).
      * If your primary worry is death, you can take out a life insurance policy sized to pay of the mortgage, although how feasible this is depends on how serious your condition is.

      The takeaway should be “If you don’t really need a house, it is OK to buy one /as long as you go out of your way to ensure that you aren’t underwater/”.

  7. I smell financial fraud. The bank had/has something fishy in their financials, and a sale at this point would have revealed said financials to the buyer or the government.
    If the bank is using stalling tactics this means there are bigger money at play than the “value” of the house.

    Now, if this hypothesis is wrong, then the bank has just a bunch morons working for them (or maybe it’s both).

    Shamus, I sincerely hope you per today’s date are no longer using that bank.

    1. brashieel says:

      The most likely explanation is that they’re overstating the value of their assets (houses) to regulators or investors. Revealing what the assets are actually worth by accepting a market value offer for them would give the game away, and show how shaky their finances actually are.

      Or, as you said, they might just be dumb in a more conventional way.

      1. Never attribute to malice what can be adequately explained by stupidity. You may not be correct, but it’ll be easier for you to put it behind you and sleep at night.

        1. This line is overused. There’s a lot of malice out there, and people end up giving it way too little credit because of this.
          What’s worse is that it so often gets applied, as in this case, to situations where what is alleged is not malice but the profit motive–i.e. the principle on which our economy is supposed to run.

          So what you’re saying is “In the decisions of a for-profit firm, never attribute to the profit motive what can be adequately explained by stupidity”. That doesn’t seem like a reasonable maxim.

          The problem is that the profit motive often causes collateral damage; that’s not malice it’s just the way it is. People don’t like facing that because our society’s ideas are based around it not happening.

          1. Raygereio says:

            This line is overused. There's a lot of malice out there, and people end up giving it way too little credit because of this.

            I've been involved in a lot of audits and process optimizations over the last few years and I can safely say with asolute certainty that there's a metric assload of stupid out there.
            Sure, there's certainly some malice as well. But most of that malice is actually nothing more then more stupid that's masquerading as malice.

            1. Mephane says:

              I think the two points do not exclude each other. There is a lot of stupidity combined with the pursuit of maximum profit, creating lots of everyone-loses situations.

            2. Disc says:

              Laziness and general apathy are also not that uncommon.

              1. Fleaman says:

                I bet that up to half of this whole debacle was entirely caused by people going home early on Fridays.

          2. Tomas says:

            It is not overused with the addendum “You may not be correct, but it'll be easier for you to put it behind you and sleep at night.”

            Entertaining the hope (be it small) that you’re a victim of bad luck or incompetence rather than ill intent makes it a little easier to cope with.

    2. daemon23 says:

      One thing I think very possible in retrospect is avoiding unwinding a CDO.

      When the big mortgage-backed CDO market was in full swing, banks would put together a few hundred mortgages into a single instrument, then sell the shares off. They made a bunch of money, but then the CDOs underperformed. The banks don’t really lose anything in this case–they already got their money out of the deal. So long as the CDOs continue to trundle along, they’re in the clear.

      However, the terms of the CDOs vary, and it is possible that foreclosure on one (or more) of the properties could result in the CDO unwinding–the banks would have to buy back all the shares of the CDO, pull the foreclosed house out, and then repackage and resell the CDO… to a market that wants nothing to do with mortgage-backed CDOs. Uh oh. That could result in huge losses for them… so they just fiddle around and don’t foreclose on the house.

  8. MichaelG says:

    Interesting decision! Aside from the moral aspect, it’s hard to see how moving out would do you any good. It’s not like you can go buy another house. I suppose moving before a foreclosure hits your record would help get through the rental process at a condo or apartment though.

    Most people would wait to be kicked out, I think. I have had family members do exactly that.

    And as far as the moral dimension goes, I sort of feel like the deal was always “the bank loans me money with the house as security. If I don’t pay, they get the house.” So it’s sort of their fault if you don’t pay, and they do nothing but sit around looking stunned.

    1. Hitchmeister says:

      From earlier installments, the house was much larger and more expensive than they actually needed. Getting into a different property that’s a better fit for his family would result in affordable payments. He wanted to sell the house partially to avoid the foreclosure and make it easy to move someplace else and also because even selling at less than the bank was valuing the property would result in the bank getting a lot more money back than the foreclosure.

      1. Jock says:

        Yes, but by staying in the house his payments would be essentially zero. In fact, remember that bit at the top about ‘if I somehow didn't need to pay for housing for the last decade, I would have made enough to buy a house with cash’? Well, living in a house that the bank doesn’t want to foreclose on is certainly one way to achieve that, at least if you can ignore that nagging conscience.

        1. Staying in the house meant keeping the heat/AC on, keeping the water- which leaked in every room with a faucet, on, and so on and so forth. Utilities alone were equal to the mortgage (thus the either/or with paying bills).

          Also, keep in mind that we had to find a place with no pets ever. Hard to find in Hickville, PA. EVERYONE has pets.

  9. Mephane says:

    I say the bank is run by Vogons.

    1. MichaelG says:

      Ah! So those unreadable mortgage contracts are actually poetry?

    2. Primogenitor says:

      No, EA is run by Vogons, and EULA’s are “poetry”.

  10. Cybron says:

    Man you look pretty shellshocked in that PAX picture. I usually don’t get that look until I’ve worked a couple 12 hour days in a row.

    1. Aldowyn says:

      An introvert at PAX, one of the biggest consumer video game conventions in the world? Yeah, even just one day would take a LOT of me, unless I managed to distract myself from SO MANY PEOPLE with enough video gamez (and probably then too I just wouldn’t notice until I left)

      1. Also, the walking….all the walking…

  11. Chris says:

    A friend of mine went through foreclosure that took nearly 2.5 years before completing, he had moved out but his brother lived there not paying rent or mortgage. The bank was fine with a known squatter rather than an abandoned house that could have had damage done to it in the meantime, they found that out when the people came to kick his brother out when it went up for auction. Also the bank had so many foreclosures that they hoped that he would be able renegotiate rather than go through a sale. Massive institutions are fairly inept and stupid with the left hand rarely knowing about the the existence of the right hand.

  12. Hoffenbachager says:

    Shamus, I actually find this to be a heartbreakingly sad story, due to how much of a good guy you are being, and how stupid (or worse) the bank is being. The fact that you are constantly trying to be honest is almost painful, in view of how that bank is acting.

    1. Paul Spooner says:

      Well, in defense of a balanced narrative, this is Shamus telling the story of Shamus from the perspective of Shamus on the site of Shamus. Sure, we all want to believe it’s true, but we’re completely missing the other side of the story here. I’m not saying he’s lying, or that the bank has good reasons, but keep in mind that this is a personal account (by an self-admitted eccentric) and not an authoritative investigation. Calling an entire organization “stupid (or worse)” on the basis of a single account seems a bit premature.

      1. I appreciate this cautionary note.
        At the same time, it’s not really “on the basis of a single account”. Rather, many are accepting this anecdote at face value and drawing conclusions about the nature of the place because they already have a wealth of background about banks, how they’ve been behaving lately, what their objectives seem to be and so on. And this background information for most of us resonates pretty well with Shamus’ account, and had already predisposed us to cynicism about banks.

        Shamus meanwhile, despite or perhaps partly because of any eccentricity, is accepted by most of us as a pretty reliable narrator based on his track record and our feelings about the internal consistency of much of what he’s said in the past and a certain self-deprecation in his style, which seems in much of his writing to understate our understanding of his talents and merits. So it’s not that surprising if we take much of what he says at face value.

        1. Paul Spooner says:

          Well, sure, lots of people think that “they already have a wealth of background about banks” but I have yet to hear a reasonable statement from the banks on the topic. My suspicion is that they are regulated by the government into compromising actions. Whatever the cause, I’m just saying this is only one side of the story and that things are probably just as frustrating from the bank’s perspective, if we were to hear from them.

          Truth be told, part of my uneasiness stems from my perception that, for a series prefaced by, “I am NOT telling this story to try and generate pity…” there seems to be a lot of loose pity flying around.

          1. Hoffenbachager says:

            I’ve been reading Twentysided for several years, and I’ve personally played games with and spoken to Shamus. I’m gonna take him at face value on this. And while he isn’t writing it to generate pity, it doesn’t mean we can’t feel bad for him when he goes through hard times.

            1. Paul Spooner says:

              I totally agree. We can certainly feel for his hardship… of not having the resources to fulfill his obligations. I’m sure it wasn’t any more fun for Shamus, and I wouldn’t want to be there myself, but this situation is ultimately not the fault of “the bank” as Shamus so helpfully continues to point out.

              I felt as bad or worse for the managers who lost their jobs back in Part 34. As for this story, It’s hard for me to feel real pity for any of the characters. Lots of risks, none of them pan out, bad luck I guess?

              I feel for him in his hard times as well. I’d just prefer we not immediately blame “the bank” for it, especially when they have (up to this point in the story) done nothing worse than waste some time. They took a risk on Shamus, and it didn’t pan out. They are totally within their rights to foreclose, but don’t. That seems pretty generous to me, considering the alternatives. The Realtor didn’t have to take the job, it was a risk that didn’t pan out. The Unicorn didn’t have to make the offer, it was a risk that didn’t pan out. Shamus didn’t have to try going freelance, it was a risk that didn’t pan out. Missed opportunities and disappointments happen all the time. Spilt milk and all that.

              So, yes, feel bad for Shamus (I do too!), but not because of “how that bank is acting.”

              Unless I’m really missing something here?

              1. Well . . .
                It’s true that it’s nice they didn’t foreclose on him. I’ve made some suggestions in posts earlier in the series as to why this practice exists; it has nothing to do with the welfare of homeowners.
                What they’ve done seems to boil down to three things:
                1. They, whether through sloppiness and incompetence or as part of a general practice associated with the somewhat fraudulent reselling of debt, seem to have encouraged him to take out a larger mortgage than he could realistically afford, which is why he was behind the eight ball in the first place. Had they encouraged him to take a smaller mortgage, he would have been able to continue paying it (well, perhaps not after he was laid off).
                2. They seem to have gone out of their way to cost him as much time as possible while going through charades designed to make it look as if they were pursuing some kind of activity designed to yield resolution to the situation, while in fact it’s very likely they had no such intention.
                3. Their actions with respect to the offered purchase, the “unicorn”, seem tantamount to negligence.
                4. Much more indirectly, in aggregate the banks’ actions led to a predictable, and predicted (I knew about it at least a year before it happened, having read numerous articles describing the problems and what they were likely to lead to), economic crash which inevitably led to many people becoming and staying jobless. There was no way of knowing that Shamus would be among them, but certainly many customers necessarily would be.

                I happen to be reading right now about the practices of banks. It’s not directly about what has been leading them not to foreclose lately (the need to keep prices from dropping further), but it might give some insight into weird practices with documentation and resetting of situations:
                http://www.salon.com/2013/06/18/bank_of_america_whistleblowers_bombshell_we_were_told_to_lie/

                ‘Employees, many of whom allege they were given no basic training on how to even use HAMP, were instructed to tell borrowers that documents were incomplete or missing when they were not, or that the file was “under review” when it hadn't been accessed in months. Former loan-level representative Simone Gordon says flat-out in her affidavit that “we were told to lie to customers” about the receipt of documents and trial payments. She added that the bank would hold financial documents borrowers submitted for review for at least 30 days. “Once thirty days passed, Bank of America would consider many of these documents to be “˜stale' and the homeowner would have to re-apply for a modification,” Gordon writes . . .
                Bank of America would simply throw out documents on a consistent basis. Former case management supervisor William Wilson alleged that, during bimonthly sessions called the “blitz,” case managers and underwriters would simply deny any file with financial documents that were more than 60 days old . . . “I personally reviewed hundreds of files in which the computer systems showed that the homeowner had fulfilled a Trial Period Plan and was entitled to a permanent loan modification, but was nevertheless declined for a permanent modification during a blitz.” Employees were then instructed to make up a reason for the denial to submit to the Treasury Department, which monitored the program. Others say that bank employees falsified records in the computer system and removed documents from homeowner files to make it look like the borrower did not qualify for a permanent modification.’

                1. Deoxy says:

                  I disagree that the banks caused this (they are among the most regulated industries in the world – the regulator is to blame for the majority of their behaviour in the majority of situations, including the vast majority of the current mess), but they certainly DID misbehave in the HAMP mess.

                  How do I know to blame them for that, when I don’t really blame them (much) for the rest? Easy: the government is actually complaining about their HAMP shenanigans. When they do something that the REGULATOR considers wrong, they get in trouble.

                  What kind of trouble have the gotten in for the rest of it? Exactly.

                  They largely followed the rules. The rules were very specific. And they were very specifically AWFUL, leading directly to where we ended up.

                  Predictably and predicted.

          2. Alan says:

            Any sympathy for the banks is ill placed. They’ve repeatedly shown that they are a special combination of incompetance and
            outright malice. They have earned absolutely no sympathy, no benefit of the doubt. If there was some perfectly good reason why they jerked Shamus around, they were absolutely free to apologize and tell him, they were absolutely free to help him with technical problems.

            1. Paul Spooner says:

              I fail to see how, in response to him not paying his mortgage for over a year, the bank not foreclosing and letting him stay at the house for free in exchange for politely cooperating counts as “jerked Shamus around” in any sense of the phrase. Perhaps you can explain how Shamus qualifies for sympathy here? I mean, not having money and not being able to pay your debts sucks and is totally not something I’d want to go through… but up to this point in the story the bank seems more mysteriously benevolent than sinister. Certainly, they are “absolutely free to apologize” but for what? Setting the price too high and having inscrutable bureaucracy? These hurt themselves more than they hurt Shamus. Making annoying phone calls? That’s hardly worth notice, let alone pity. What then? Where is the grave offense that “the banks” with their “combination of incompetance and outright malice” have offered in this narrative? I’m just not seeing it.

              1. Elmonster says:

                Yeah, honestly the bank hasn’t really done anything much to Shamus. They annoyed him a bit while allowing him to live rent free? Gee, I wish I could be in his shoes!

                There is a bit of dissonance between “I’m the deadbeat” and earlier comments about how the phone calls are just unacceptably annoying- even if its stupid, its still fundamentally Shamus’s fault they are happening- and if calculated on an hourly rate vs amount he saved living rent free, its probably generous.

                All they really did was not allow Shamus to exit in a way that is in keeping with his unusual preferences and views on honour. Well, Shamus is of course entitled to hold all of those views and desires, but I really don’t see how the bank he defaulted on have any obligation to care, or even know (they probably were holding out for Shamus taking federal relief, as mentioned above).

                And to be clear- in the UK, Shamus would be bankrupt, because the bank can take your house and then hold you personally liable for the shortfall in the loan. What Shamus experienced was an extremely generous arrangement. It sucks not to be able to pay the bills and I bet it was stressful but as sad stories go this one is not high on the pile.

                Edit: To be extra clear, these stories have been good and many elements have been obviously difficult. Its soley the banks obstinance which is nothing more than annoying, in that it produced few consequences for Shamus, and others involved made their choices themselves.

          3. The banks have an awful lot of money. They have access to the same PR people as any other corporation. If they had a reasonable explanation there is nothing stopping them from giving it. Either they don’t have one, or they are sufficiently arrogant that they really don’t care what their customers think. Whichever the case, it doesn’t give me a marvelous impression of them.
            (In fact the banks have spent lots of money on lots of messaging, but it’s more directed towards the business press and the elected representatives themselves, not so much towards us little people)

            1. Deoxy says:

              In most highly regulated areas of law, what you can say about what is going on is also highly regulated (and highly constrained and/or controlled in unofficial-but-even-stronger ways).

              For instance, the theory about them hoping he gets some kind of federal bailout. If one exists, the bank almost certainly can NOT tell him about it, as that would be self-serving and possibly fraudulent in one of several ways (or serve to benefit fraudulent activities, more likely).

              The most annoying elements of the story (the potential buyer and especially the realtor, for instance, both get seriously jerked around) are also likely due to this sort of ridiculous, regulation-required theatre: the bank has no intention of selling (for some combination of MANY possible reasons, good, bad, stupid, selfish, and incompetent), but they must keep up the act (without telling any of the actors, as it would then become fraudulent again) or something WORSE than selling happens (housing prices crater from too many foreclosures, CDOs unravel, whatever).

              In short, the stuff that would probably do the bank the most good in terms of PR is largely stuff they either legally aren’t allowed to say or would take tremendous financial penalties if they said (or both).

  13. Daemian Lucifer says:

    I really dont get how the world works.Today Ive learned of a similar scheme in another place,that was supposed to make some money for some corrupt businessmen.But the thing is,the scheme was so inept that the amount made could easily be doubled with barely any extra effort.And now you tell me that this happens worldwide.And it looks like these people somehow keep making money by being professionally stupid.It boggles the mind.

    1. Tom says:

      The key to understanding the modern world is this: nobody ever sat down one day and carefully designed any of this stuff. What we have now isn’t a system; it’s what arises when there is no system but everyone just assumes there must be one.

      1. Austin Middleton says:

        Corollary:

        When someone does try to sit down and carefully figure out a system, the results are worse.

        [That being said, the Federal Reserve system is very much an attempt at carefully figuring out a solution to the monetary problems of the 19th C., which pushed a stock devaluation into a depression by contracting the money supply and making illiquid companies insolvent. Don’t be too romantic about designed systems.]

        1. Atarlost says:

          I’d be happy with protecting emergent systems.

          Seriously, did no one with regulatory authority realize that divorcing liability from decision making authority completely breaks the feedback loop that makes capitalism work?

          The guy who sold the Youngs an oversized loan should have lost his job when the bank hit rocky waters because of uncollectable debts. The bank should have gone under with all hands when they sat on bleeding mortgages instead of doing everything in their power to short sell or at worst foreclose on them. The blithering morons who bought the mortgage backed securities should never have been allowed to exist.

          When your entire civilization relies on an emergent system you don’t add untested complications. If you must experiment localize things for at least a business cycle and preferably a generation and be ready to pull the plug if things go sour. All economic experimentation is human experimentation and should be treated as such. Except more so. There’s virtually no chance of a disfunctional cancer treatment starting a world war. Economic disasters have been known to do so.

          1. Tom says:

            “When your entire civilization relies on an emergent system you don't add untested complications. If you must experiment localize things for at least a business cycle and preferably a generation and be ready to pull the plug if things go sour. All economic experimentation is human experimentation and should be treated as such. Except more so. There's virtually no chance of a disfunctional cancer treatment starting a world war. Economic disasters have been known to do so.”

            THIS.

      2. Deoxy says:

        No, it arises when there is no system and politicians act like they can control it.

        The market makes mistakes, and people get screwed. It also does great things, and the whole world benefits.

        Politicians make mistakes, and the whole world gets screwed. They also do stuff that isn’t as bad a mistake, and they personally benefit.

        It’s easy to see why people don’t like politicians, eh?

  14. Brandon says:

    I think it’s amazing how throughout all of this you’ve managed to continue to be productive.. writing and publishing your book, working on Project Octant.. I find when I’m under a lot of stress and pressure my creative energies just shut right off and I can’t accomplish anything, which just adds to my stress.

    It’s amazing to see people who are able to keep being creative and productive when there is so much awful stuff going on in their lives.

    Thanks for sharing your story, Shamus.

    1. Hitchmeister says:

      I prefer to give Shamus too much credit and imagine that Octant, Frontier, and Pixel City would have all been developed into fully fledged games and he would have finished at least two other books that he started in the meantime if he hadn’t constantly been distracted by financial problems and the bank’s ineptitude.

      1. Tizzy says:

        What really impresses me is that Shamus managed to sit on this story and not go off on house-related rants while all of this was happening. Instead, we are tated to this very thoughtful analysis after the fact, with the benefit of hindsight.

        I really appreciate the value in the cautionary tale, so clearly told; I also appreciate having been spared the unbearable suspense as things were unfolding. Even with one episode still left to go, I’m fairly confident that we’re headed towards a reasonably happy ending; better than having to fret over a period of months about the author of my favorite blog.

    2. Daimbert says:

      Not to take anything away from Shamus, but he strikes me as the sort of person who, when he’s under stress, wants to dive into those other creative projects just to regain some sanity after having to deal with all of that.

      Sort of a “Now, after dealing with the incomprehensible world of finance, let me escape with something simple, like detailed graphics programming or intense plot analysis or building an entire story world”.

      1. Tizzy says:

        Much easier to work with a programming language than with a bank, for sure!

      2. As his wife I can say, honestly, when he starts to get stressed he sleeps or plays video games- not creative stuff. :)

        1. Aldowyn says:

          that sounds familiar, for sure…

          1. Daimbert says:

            I’d say that resembles me as well except that in my latest run of about 6 months of insane work pressures I stopped playing video games for long stretches of it. But I did manage to watch the entire original Dark Shadows soap opera, so I guess I replaced the video game part with watching DVDs, which I can combine with sleeping and reading.

  15. Factoid says:

    When looking at the bank’s motivations in this it’s important to understand their typical outlook on these transactions. They haven’t actually LOST any money until they sell the property at a loss. They are losing interest revenue, but that’s just being marked as deferred interest on their books until the moment they sell the property.

    Also keep in mind that the bank is operated by people. It’s not strictly a massive bureaucracy, it’s real people under the hood doing this work. Someone in charge of managing these foreclosures is evaluated on his or her performance in reaching desireable outcomes. So they may be taking a bet that the housing market may improve, resulting in better sale prices, or perhaps that your financial situation will improve and you’ll be able to repay the loan.

    Never forget that on the bank’s end there’s someone trying to cover their own ass. Nobody wants to be the one who puts a loss on the books because it makes THEM look bad.

  16. Klay F. says:

    Now that you’ve linked back to that PAX post, I just remembered: What the hell happened to Children of Liberty? Last I heard from it was early this year, then nothing.

    1. Aldowyn says:

      Apparently there was a trailer in March at PAX East, so that was only 3 months ago. Can’t find a release date though

      1. Klay F. says:

        Ah, thats why. Its only on one of the few digital distribution services I don’t use. :/

  17. ThaneofFife says:

    Shamus,
    I think you tried to do the honorable thing in a difficult situation here, but I don’t think the bank deserved it. While you were trying to do the right thing, the bank acted only in its own interest. Specifically, I echo the statements several others made above–the house isn’t counted as a loss for the bank until it’s sold. If you had stayed in the house rent-free until the foreclosure proceedings started (at which time you could either fight, or get out of Dodge), you could have either paid off other debt, or saved up the down payment on a house that you could afford.

    On the other hand, if you wanted to move out for whatever reason, you could use the house as a short-term rental property (just make sure you tell your renters what’s going on) until foreclosure starts. Though, a person might want to check local rental laws before doing that one, because it is a bad idea in some jurisdictions.

    Anyway, I hope the story has a happy ending.

    1. I very much agree. I’m amazed by Shamus’ capacity to keep to the process when it’s so unbelievably absurd, not to mention the weird economic fact that they created wholly new money upon Shamus’ promise to pay.

      The miracles of the money as debt system.

  18. Well, two things.
    One, I agree with many others here that Shamus is a sweet saint-like person. I consider myself a man of my word as a rule, but there are limits. And those limits are somewhere in the neighbourhood of worrying about the financial status of Ginormous Bank Inc., that bought the bank that bought the bank that I originally made the deal with. Especially when one stipulates that any money I give GBI will go straight to the already-multi-million bonuses of the top executives and the profits of the investors big enough to be insiders, the ones whose decisions ultimately result in the madness I’m dealing with, while none whatsoever will go to any of those poor sods I’m dealing with ad nauseam on the phone, because they have no bargaining power. And far more especially if rather than being a person alone I have a family for whom I am responsible–I have no trouble keeping my word if it’s a problem for me, but the balance between my pristine honour and my family’s wellbeing is a far more tricky one.
    If I were in that situation and the bank really insisted on all the stuff they’ve insisted on in Shamus’ case, I’d stay in that house for free for as long as they felt like spinning that charade out, and see if I really could save enough to buy a house outright with. Make sure to stash that money some way, though, like give it to a relative as a gift or something, so when the plug finally pulls they can’t have it.
    But I still respect Shamus’ stance. I get the impression that for him, it’s not about the bank. It’s about his personal honour, and his word being good. A man whose word is iron is a treasure in our modern world, and my hat is off to him.
    (No, literally, I just doffed my hat)

    Second thing: People, any time somebody tells you markets are efficient and the private sector is disciplined to efficiency by the magic of competition and the profit motive, think back to this series. Then imagine what it would be like if your local public library was run like this bank. Seriously.

    1. Colin says:

      Banking is hardly a good example of free markets at work. Along with healthcare and the military industrial complex it’s among the sectors most heavily involved with and influenced by the state.

      I could just as easily take how the DMV in the States operates and apply it to your library example, which shows the speciousness of extrapolating the nature of an entire system based on one point of data within it.

      1. It would take rather a long time to catalogue every market and government entity in search of the free market advantage. Not sure I’ve got space in this conversation where I should, in any case, be trying harder not to talk politics.
        But banks are far from the only private entity where Dilbert appears to be life.

        1. Syal says:

          Big things become complicated, and complicated things break down. It doesn’t matter who’s in charge of it.

      2. Paul Spooner says:

        Agreed. And actually!
        …urk…
        Must… not… discuss… politics…

    2. Deoxy says:

      People, any time somebody tells you markets are efficient and the private sector is disciplined to efficiency by the magic of competition and the profit motive, think back to this series.

      Since I lay the vast majority of this mess squarely at the feet of government intervention (banks can’t wipe their own collective rear without approval from the government), this doesn’t reflect on the “free market” at all.

      But, more on point, OF COURSE even the free market makes mistakes, chews people up, screws some people over when the acted in good faith, etc. Welcome to humanity.

      I’ve never seen it claimed that it absolutely WON’T happen, only that is happens less often and less badly in the free market than any other system.

      And I’ve seen plenty of evidence of that.

  19. Drifter says:

    Thanks again for honest sharing of your saga. For those of us who managed to miss this debacle by sheer luck, this is riveting and humbling. And for those who have similar stories I’m sure this helps a little.

  20. guy says:

    It seems like either the person responsible for managing your mortgage got paid based on how many outstanding mortgages they’re managing, regardless of pay, or the entire process of trying to sell it was some twisted psychological experiment in measuring responses to futility. I can concieve of no viable reason for an offer to purchase the house in cash to take longer than deciding whether they’re willing to sell at that price plus 24 hours to process the electronic transfer/cash the check. I mean, self-evidently if the guy pays the whole value up front he has enough money to buy the house.

    1. Peter H. Coffin says:

      It kind of comes back to that whole “prove you have the money” thing that stoppered the deal when the guy mvoe from Inc to LLC. In fact, that very change from Inc to LLC probably didn’t help the circumstance because then you’ve got a whole new legal entity suddenly having enough money to buy a house from no apparent source other than this other company owned by the same guy giving it over, for no consideration, and it all happening OUTSIDE of the auspices and overview of the banks legal department. I don’t think I could make up a scenario that looks more like “money laundering” which probably means “drug money” which leads to “authorities seizing both money and house” and bank maybe getting house back sometime in the next decade.

      Even showing up with a briefcase full of $100 bills would involve “prove that this is really yours”, probably by depositing the money in the bank in question for 90 days or something.

  21. Mechakisc says:

    “Never attribute to malice what can be adequately explained by stupidity.”

    I’m all over that one.

    “Follow the money.” – my stepdad.

    That one is pretty relevant at times too.

    1. Eric J. says:

      But the problem is, the money is just sitting there. If it would move, we could follow it.

      1. Steve C says:

        In this case the money was cash in the potential buyer’s pocket. It did move… it set itself next to the bank until the bank decided it wasn’t the right color and then it walked away..

  22. Paul Spooner says:

    Thanks again for sharing this. It’s interesting to see how things were unfolding at the time.

    And, somehow, I expected this series to have twelve entries. Ahh well. Errors of perception all over the place!

  23. Aldowyn says:

    It’s kind of weird thinking that, hey, this stuff was going on while we were all just following the blog as if nothing was the matter. I certainly had no idea that you’d had financial trouble THIS recently. It’s remarkable that you managed to hide it so well.

    On the other hand, perhaps writing stuff for the blog is part of what kept you sane throughout the whole process. In any case, as always, thanks for sharing Shamus :)

    1. krellen says:

      I knew, but I follow Heather as well and I think she was a bit more open about what was going on than Shamus was at the time.

  24. It looks like if you added up all the checks I've mailed them over the years, it should almost add up to what I borrowed.

    I find it hard to understand how this can be true, and at the same time you’re underwater. How much value can one house possibly lose? I mean, I understand that you’re paying interest, and when you’re in the early years most of your payment is interest, sure – but still, you should be making some kind of dent in the principal. Am I just missing the Awesome Power of Compound Interest here, only it’s screwing you over instead of helping you? :confused:

    1. To quote Einstein, “Compound interest is the most powerful force in the universe.”

      You can easily end up paying nearly twice the base cost of the house in order to pay off the debt. In reality, Shamus has only gotten about half way there, and that’s not even including the missed payments, the fees for those payments, and the debt that has been (ostensibly) accumulating since he stopped making payments to deal with the issue directly.

      A lot of folks are lucky to avoid this issue as long as Shamus did.

      1. Adeon says:

        Yep. I know when I bought my house one of the documents provided to me basically said “this is how much money you’re borrowing and this is how much you’ll pay us over 30 years”. The second number was about twice the first one.

        On the lump sum option, I did the math once and making a single extra payment per year (so 13 payments instead of 12) cut something like 8 years off the mortgage (number might be off, I’m going by memory here) which reduces the total amount you’re paying by about 20%.

    2. meyerkev says:

      1st: Loans are insanely back-loaded especially on the longer terms. On a 30-year loan at 4% interest, your initial payments are something like 75% interest and 10 years into the loan, you’ve paid off something like 20% of the principal while paying 60% of the house value in payments.

      2nd:History of house sales in my parent’s neighborhood near Detroit (rich white suburbs, so this isn’t the $1 house neighborhoods)

      1991 – Mom and Dad buy the place for $108K.
      2006 – Next-door neighbors sell their place for $190K.
      2010 – Other next-door neighbors sell for $108K
      2013 – Mom sells for $150K.

      If Shamus’s neighborhood did something similar, then I could totally see Shamus being underwater, especially if a lot of those house payments were also property taxes, assessments, fees, etc.

    3. Short answer: Yup.

      On modern long term mortgages, people really don’t grasp just how little of their early payments go to principal. It’s tiny. With just a smidge smaller payments, they’d simply be making interest payments with nothing going on principal at all. And since the reduction of principal is so small in early payments, the reduction of the interest burden is tiny, so the increase in how much principal comes off is very very slow. It’s an accelerating process–by the end, of course, payment is nearly all principal because there’s so little left to charge interest on.
      (Incidentally, this is why a lump sum payment in the early years can make a huge difference down the road–a relatively small chunk can represent years of principal repayment, reducing the interest by that much and meaning all your payments for ever after are paying off more principal)

      Meanwhile, in many areas home prices went down drastically in the financial meltdown. So, say Shamus had paid off 10% of his house by the time he realized he couldn’t keep all the balls in the air any more (I wouldn’t be surprised if it was less). And say it had dropped in apparent value by 30%(I wouldn’t be surprised if it was more)–from, say, $600,000 down to $420,000. That’s a 20% difference. Rather than having home equity of $60,000 instead he could sell the place off for the expected price and he’d now have nothing, but still owe the bank $120,000 (plus fees) after having already paid them most of the initial value of the house in interest.

      None of this would necessarily be a huge issue if he could make the payments. If he figured the house was worth having and could afford it, he could just keep on paying and eventually he wouldn’t be “under water” any more. The problem is more that they successfully convinced him to take too big of a mortgage, and anyway he got laid off and with the crisis the banks caused there were no bleedin’ jobs.

    4. Alan says:

      I like graphs! (I also like spreadsheets. Perhaps too much.)

      Here is what a $100,000 30-year mortgage at 4% interest looks like:

      https://docs.google.com/spreadsheet/ccc?key=0Am0Q_H66Sjr3dFJodEtPUjViRWR5VnR6Z2dqY1VmS1E#gid=2

      Assuming Shamus’s terms were in the area of 4% and and 30-years, the curve will be about correct. (The original loan value is irrelevant. So is how much you put down up front; that just lowers the original value. What matters is the interest rate. The lower the interest rate, the closer the curve is to a straight line.)

      4% is a carefully researched number pulled out of my ass, but is probably good enough for the sake of argument. After 12 years, he’ll have paid off about a quarter of the loan. Assuming he was in a place hard hit by the bubble bursting, it’s entirely possible that the house lost more than 25% of it’s value. And with a 12-year-old loan, it’s likely that he’s paying more than 4%, which means he’s worse off.

      (Assuming I did it right, you can copy the spreadsheet and monkey with the numbers to see how it changes things.)

      1. > So is how much you put down up front; that just lowers the original value.

        I don’t see how that can be true; your down payment becomes instant equity. Perhaps you are saying that it doesn’t matter for how fast you pay down the principal? That’s true, but it matters a lot for whether you’re underwater or not!

        Thanks for the spreadsheet! Compound interest is one of those things where you just _cannot_ trust your brain even if you work with math a lot; at least this is true over periods like 30 years.

        1. Peter H. Coffin says:

          yes, the down-payment is “instant equity” but it only exists against the value at the instant the deal is done. Ten minutes later, when the house value (as determined by what it can be sold for), that equity may be gone, because the *equity* is what goes away or grows when the house value changes, not the loan. And equity doesn’t actually materialize until the house is, in fact, sold and funds change hands.

  25. This has been an inspiring read for me, but not for the reason that most people are citing. Yeah, the story is an incredible lesson in finance, but it’s your family that’s been a real inspiration for me.

    I’m a 20-something who just moved to a new town and currently has no job, and who has never had a job that’s paid anywhere near enough to support a partner, much less a family. I’m about the age where I’ve wanted long-term relationships, but because I don’t have any steady income I’ve felt that I couldn’t honestly put myself out on the market, so to speak. I’ve been intentionally avoiding anything more serious than a casual chat for several years now, intent on avoiding anything remotely serious on account of my poor prospects. It’s been pretty damn depressing.

    The fact that Jennifer stuck with you through this whole situation, practically throwing the cultural expectations of ‘job = everything’ and ‘financial trouble = divorce’ out of the window is amazing. The fact that she was also supportive of your creative aspirations is pretty indicative of the relationship you two have. I’m sure it didn’t hurt that your creativity at least kept your family fed at a time when a job was unrealistic, but being a small time author/Internet celebrity definitely isn’t the six figure dream job most folks dream of their spouse having.

    Your story’s brought me to the realization that my job isn’t the whole of what I am, nor should it determine whether or not I’m ready for a serious relationship. Yeah, I probably shouldn’t have any kids or make any promises I can’t keep, but the fact that the possibility of meeting someone who can look past the whole low income thing and still love me has really changed my perspective on whether or not I’m ‘ready’ for a relationship. I’ve been ready, I just didn’t know until you and your family pointed it out for me.

    Thanks for that.

    1. Jarenth says:

      Jennifer? Shamus, what does this guy know that we don’t?

      1. Bryan says:

        I assume he meant Heather. But, yeah, that is an assumption. Hmm…

        1. Oh crap. Whoops.

          I was thinking Heather, then I uncorrected myself to Jennifer. Not sure how I managed that one.

    2. Daimbert says:

      It’s Heather, not Jennifer … just a small correction [grin].

      The only small caveat I’d make here is that if you think that having low prospects is a problem for you, it will be for the person you end up in a relationship with eventually. It sounds like you’re settling that for yourself and declaring yourself ready based on that, and if that’s the case then that’s good.

      Of course, this advice is from a long-time and likely life-long bachelor, so take it with a grain of salt.

      1. That’s the conclusion that I’ve come to. Your partner won’t think it’s a big issue if you don’t make it one.

        Hopefully, at least.

        1. I think it is more a matter of making sure that you start the relationship on the right basis. Be yourself and don’t settle for someone who doesn’t value who you are from the start. I recently wrote up a post about this in part for a young man who emailed us about looking for a partner. In that case he was a young Christian and was looking for our advice from that front as well as from the geek perspective but I think a lot of what we came up with still applies: http://untraditionalhome.com/?p=3290.

          1. Mephane says:

            Be yourself and don't settle for someone who doesn't value who you are from the start.

            This. Either the partner loves and accepts you for what you are, not what you possess, or it won’t end happy, and often sooner than later. This does not only apply to romantic partnership, but friendship as well.

  26. Jarenth says:

    I think what keeps striking me the most about this story is how close it is, in temporal terms. 2012 post-dates the first Josh And Jarenth Dick Around On New Year’s Eve stream, and I remember your PAX posts pretty well.

    It makes me feel a little bad about belly-aching about my ultimately inconsequential job issues to a man who’s in the middle of supporting a family on borrowed time and borrowed money.

    1. Mephane says:

      On the other hand, 2013 is almost half over already. I have to remind myself constantly of this; for some reason even many months into a year I still feel like it has just started, and suddenly it is the middle of autumn and omgwinteriscoming.

      1. Jarenth says:

        Fair point. I usually start getting the ‘the year’s more over than not’ sense after my (August) birthday, and that hasn’t happened yet.

  27. Dr_Fred says:

    Hi, I’ve been lurking around TS for a while, and I wasn’t expecting my first comment to be about a “dangerous” topic such as money and/or politics but… I have a question.

    Apparently, everyone here seems clueless about why the bank behaved this way. The first thought I had was… could it be that they were doing this simply because they were trying to be nice ?

    I don’t live in the US so I have no idea but, from what I understood of the situation, I know that : if I had been an employee at this bank, knowing that people in a difficult financial situation were getting housing for free as long as no deal was made, and I had even the slightest control over the sale, I may have been tempted to stall for as long as possible, not doing anything illegal per se, but taking every opportunity to use administration to my advantage so the deal wouldn’t be made, hoping that it would give more time to a family to get things back on track, at the expense of… pretty much nothing, since the bank will only technically register a loss when the deal is made.

    Is there something I’m missing, or could this be a plausible theory ?

    1. Ariadnethread says:

      Uh…
      Purposefully keeping a family in possession of a crippling debt that will ultimately result in the big black mark of foreclosure just so they get an unknown extra amount of time of ‘free’ housing isn’t exactly a behavior I would call nice? A lot of these cases aren’t matters of families fallen on hard times and just need the space to get their act together, it’s families that, for whatever reason, have ended up with a debt beyond their ability to repay even when at the top of their game.

      1. Daimbert says:

        Hmmm. The thing here though is that while the house was under water, the bank didn’t particularly want it to be sold because they’d take a loss. Reasoning that the housing market would eventually recover, with reasonable people staying in the house, then the bank could avoid taking the loss and the homeowners could take some time to recover by using the money they would be paying for housing to pay down other debts — like, in this case, Heather’s student loans — and so everyone would end up winning. Adding in that there might be a lot of other cases where they would simply have no choice but to foreclose, and it’s an attractive option. You might, then, end up with the story from the other side being the loan officers complaining that Shamus was so stupid to not keep milking this.

        I wonder how much face-to-face contact they had with the bank. When I got my mortgage, I pretty much met with them in person all of the time to get it all arranged, with only a few things over the phone. Things like this could be explained under the table in person that you can’t get on those recorded phone calls and E-mail messages.

        1. daemon23 says:

          The only catch I can think of with this idea is that it’s actually unlikely that the bank actually would lose anything by foreclosure by itself, as it’s probable from the timeline that his loan was wrapped into a CDO and therefore no longer on the bank’s books, but some other sucker’s problem. However, foreclosure could trigger that CDO to unwind, which would be far, far worse than just the loss on the one house.

    2. Syal says:

      He mentioned dealing with lots of people over a long length of time. The odds of an employee going out of their way (and potentially costing their employers money) trying to help a stranger – low enough to start with – decreases massively when you start switching them all around.

      Also if they were trying to be nice they should have stopped calling. Constant reminders you have a problem that can only be solved by people who won’t solve it are not nice, they’re borderline evil.

  28. Jeff R. says:

    I have to say that, at least from the facts given, I can’t completely exclude the theory that the Unicorn was actually a drug dealer/grower/manufacturer or other character of sufficiently shadiness that the bank could have been doing the right thing here…

    1. Daimbert says:

      Yeah, an actual company wanting to pay cash is always a bit suspicious. It’d be bad enough if it was just a person, but something like this looks a bit odd.

      1. krellen says:

        “Cash”, in this case, is unlikely to mean a briefcase full of bills, but rather some form of electronic transfer payment that covers the cost in full without need for some sort of loan structure. That’s not terribly uncommon for real estate investors, especially “flippers”.

        1. guy says:

          Yeah, it’s a lot less hassle to just pay up front in full and not have to deal with, well, the phone-tag that Shamus had to deal with. It’s fairly rare for individuals to be able to gather up enough money to do that, but not unheard-of, and I imagine that under present conditions investors would want to avoid dealing with convincing understandably gun-shy banks to give them loans. Plus, it’d take a year or so to flip the house and meanwhile they’d have to deal with paying interest.

          Also, since this guy wasn’t taking a loan from the bank, it’s not really their problem where the money came from. Absent some incredibly elaborate money-laundering scheme in collusion with a bank employee, they would not be in any legal trouble no matter what happened with the purchaser.

    2. Alan says:

      If the bank had reasonable cause to believe they wouldn’t get their money (or might have the money seized after the fact), certainly.

      If they’re making moral decisions, they’re not qualified to do so. Report suspicious behavior to law enforcement and otherwise carry on. Individual companies playing at being police tends to hurt innocent people (in this case, Shamus). Playing moral guardians is even worse.

      1. guy says:

        I’m pretty sure that if the buyer did get his assets seized, the police would take the house he bought with the money and auction it off like they do with cars and boats.

        1. Alan says:

          I’d worry about some bullshit, “Well, this was stolen money, and you should have known, so now it counts as laundered, so we’re taking it back.” Civil forfeiture is insane.

          1. Deoxy says:

            It’s actually worse than that. In many places in this country, having more than a certain amount of cash on you, without a very specific reason, opens you up to forfeiture, and you have to go prove to the court that the money was yours.

            All without any criminal charge against you AT ALL. Not even hinted at.

            You have more than $7k on you (or whatever the number is)? Hand it over – you’ve just forfeited it.

            Yeah, it’s beyond insane.

    3. Steve C says:

      It may be odd or suspicious but this isn’t a loan. There’s no risk to the bank here. The bank wouldn’t care if the guy was planning to or had already done something illegal. The bank wouldn’t care because it’s a thing and incapable of thought. The bank was just incompetent. (Unless there is a whole lot more the bank knew about this guy that was never disclosed.)

      1. In this case it was a friend of the realtor who was a house flipper and dealt in cash. They sent in the wrong form of evidence of cash in hand- bank wanted months of info and they sent one month.

        1. guy says:

          They sent in the wrong form of evidence of cash in hand- bank wanted months of info and they sent one month.

          This part confuses me. The guy was offering to simply purchase the property outright. Therefore, the only evidence regarding his finances that should be necessary is him providing the amount of cash he is offering to pay.

          1. Paul Spooner says:

            Well, it’s not like walking into a taco bell and buying a burrito with cash. All of these big transactions take place via Escrow. If the bank gets everything lined up, goes into Escrow, and then it turns out, “Hey, all that money is somewhere else now!” then everyone gets red faced and professional relationships are strained and the suits have to leave the room to take their ulcer medication. On top of that, if all that money was stolen somehow (embezzlement for instance) that can take several months to come to light. If the bank sells the house to a criminal and then the government cracks down… red faces, strain, ulcers, etc.

            When dealing with large amounts of money, evidence that you’ve had the resources on hand for a few months is absolutely a reasonable thing to request.

            1. Steve C says:

              It still doesn’t make sense and escrow doesn’t explain it at all. Escrow applies when the delivery and payment of goods do not line up on the same time line. In this case he has money *now* and the bank has property *now*. Everything is immediately available to both parties.

              Buyer: “I have the cash. Who do I make the check out to and what’s the address I mail it to.”

              Bank: “Umm.”

              Buyer: “Ok if you don’t want my check (since apparently you’re a bank with no idea how to deal with checks) I could wire it electronically to a specific account. Give me the account # and you will have the money today.”

              Bank: “We’ll get back to you on that. We prefer Nuka-Cola caps.”

              There’s no need to prove he has the money or a 3rd party to hold onto it in escrow. The bank merely needs to accept his money. That’s it.

              1. Paul Spooner says:

                You don’t understand how Escrow works. It’s basically a neutral third party that makes sure that if the right things happen money changes hands. Kickstarter is a form of Escrow by the way. Anyhow, no one (besides close family and friends… or criminals) is going to conduct large transactions (sell or buy a house, etc) outside of Escrow, because then you have the “you go first” problem, and then someone runs off with the goods, and then no one trusts anyone else, and then nothing gets done.

                In your example, the buyer isn’t going to mail the bank a check, because then the bank might not sign over the deed. The bank isn’t going to sign over the deed because “the check is in the mail” because then they might not get their money. So they put the check, the deed, and whatever else into Escrow and then sign a bunch of stuff, and Escrow makes sure that everything is correct, and then the transaction happens all at once. That way no one can rip anyone off.

                Why don’t we do all transactions this way? Because the paperwork is too much hassle. But, as previously stated, Kickstarter is a form of escrow, and I suspect we’ll be seeing more and more of it as computers are taught how to properly handle the paperwork.

                1. Steve C says:

                  I know exactly how escrow works. That’s why I know it doesn’t apply in the case of a direct real estate purchase. I have a fair amount of experience with cash transactions for real estate. For example, a family member of mine purchased a house off a stranger yesterday with cash. They made the offer weeks ago and didn’t have the cash 2 days ago. Transaction is complete now and everything was fine. No escrow was involved. Running off with the deed isn’t important* because you can’t run off with the house.

                  * Deeds are only really important in movies. A deed can be falsified, a deed can be lost, a deed can be destroyed in a fire, etc. A deed is just one part of the paperwork.

    4. How likely is it that this would matter to the bank if their money was good?

  29. D_West says:

    >Gong strictly by a per-hour basis….

    I think you meant “Going.” That’s all.

    1. Timelady says:

      Your statement rings true.

  30. 6b64 says:

    I can only echo others: Shamus, your sense of right is exceptional. I respected and liked you a lot even before for being the Only Sane Man on the Internet, but the honesty you seem to possess in real life is amazing.
    And probably you heard this too many times, but I have to say it because it’s true: you look damn Young.

  31. kernly says:

    To be honest, I think the lesson is don’t be weird. If you act in a way that a person or organization does not expect you to act, then even if your actions are intended to help them you might just be inconveniencing both parties. For example, if I were to stand and wait for a car to pass by in an area where the practice is for cars to stop for pedestrians, my well intentioned self sacrifice will just waste everyone’s time as the driver waits impatiently for me to go. I heard from someone who went to Japan that he left a tip, and as he was walking down the street the server ran down after him and returned the money. This seems to me like another such case. It’s not your place to look after the bank, whether you think it is or not does not change the norm. If you want to help, be normal.

  32. guy says:

    Come to think of it, by the time you were actually in default and subject to foreclosure, the foreclosure underwriting scandal might have broken. A couple years back, a bunch of people involved in foreclosure paperwork admitted in court that they signed stuff without actually reading it, invalidating a huge number of foreclosures in progress and forcing the banks to start over. The bank might simply have been stalling until their team could work through the mountain of paperwork and start foreclosure proceedings. Now, they could have saved everyone a lot of time and hassle by just not trying to follow up on any of the alternative proceedures and letting the loan sit unpaid, but if word got out other people might have decided to stop desperately trying to tread water keeping up with their mortgages. Or they might have been legally obligated to make a show of trying to seek alternatives to foreclosure.

    That fails to explain why they’d pass up an offer for a short-sale at better than foreclosure pricing, but alternately they may have been seriously planning to sell the house at their asking price some point in the future when the market recovered and gone through this whole ridiculous dance to keep other people from opting to default and squat until then.

  33. Bruno M. Torres says:

    Day two of PAX East 2012. I'm sore, tired, and waiting for the tea to kick in before we set off for the convention center.

    You also look ready to kill someone. The Mass Effect 3 team, maybe? ;-)

  34. McGurker says:

    “And yes I typed that sentence like that on purpose. Have another go at it if you need to.”

    Come on now. No need to be a jerk about it just because you were clever. Remember, your audience is particularly *smart*, right?

    1. Shamus says:

      Sorry. I was trying to make fun of the sentence, not the audience.

      1. tenteddy says:

        Just like the linux post :P ?

        Your story Shamus really is more proof that there needs to be proper financial education in schools. You have people not understanding how to do their taxes (extremely simple), not realising their obligations and rights in terms of record-keeping, not realising that banks are not the safest investment for your money (bonds are), not realising how the share market works, not realising how to budget effectively, not realising how borrowing money works, and the rest.

        It’s all very simple stuff that is extremely important to a young person, yet no one ever stops and teaches it to anyone.

        All I can think is thank god you didn’t lose the house due to the GFC like I hear a lot of Americans did. Over here in Australia land we barely had a recession, and our banks still give 4-5% interest rates on a regular savings account, whereas I hear in the US they usually don’t even match inflation.

        Then you also have the Mortgaged Backed Securities (regular people creating mortgages for others regulated by banks) shenanigans going on and it’s no surprise how stupidly dodgy they would be in Shamus’s scenario.

      2. Cuthalion says:

        I laughed when I read it. :)

  35. In the same situation, I got very lucky. It took four months from listing to closing. I am so sorry your short sale was so hard.

  36. Neko says:

    The entire system of debt and mortgages and passing around negative amounts of money to pay off other future negative money just enrages me sometimes.

  37. The Rocketeer says:

    I’ve really been enjoying this series, and despite the well-deserved praise folks have been giving Shamus for his steadfastness, a huge part of me is keeping its fingers crossed for the last entry to be a no-holds barred account of the inevitable ludicrous crime spree, with Shamus and co. taking down every bank, museum and jewelry store in the area, then letting all the zoo animals out to escape in the chaos.

    The big hook is that the whole series was all written from his paid-for beachside manse in a country that doesn’t know what ‘extradite’ means!

    I’d buy the movie rights.

  38. Jack V says:

    Oh dear, now I’m on tenterhooks. Since you’re writing it now, I hope it turned out ok, but I don’t know that at all. But I (metaphorically) pray that it does.

  39. Akri says:

    Is anybody else seeing the background “jump” when they scroll down far enough?

  40. Grag says:

    Am I the only one that thinks Shamus-without-glasses looks like an action movie villain?

    Sort of the seasoned, deadly intellectual badguy type. Very cool.

    Having been on the other side of a short sale a couple years ago, I share your frustration with the banking process. We waited months on end, and had to threaten to walk away from the deal before the bank started to put things in motion. Unfortunately they had managed to lose a lot of our paperwork and I had to dig old tax forms and bills out of boxes we had already packed so I could scan them. It was a serious pain in the neck, and we were not really spending a low amount on the house.

  41. Suburbanbanshee says:

    Re: ebooks, it’s not really a 1 = 1 market. The more existing fiction ebooks you have to sell (your “backlist”), the more likely people are to find and like one of them, and then buy all of them. So if you had 3 or 4 books, your sales would probably not be Booksales x 3 or 4; but Booksales x 9 or 16.

    So yeah, don’t spend all your time on writing, but more short stories or novels might be worth a little bit more cash than what you’re thinking.

  42. Ravens Cry says:

    You know, reading the last couple of this series is a little eerie.
    This was time I have been reading your blog. Now I feel kind of bad for wanting more content, now that I know you were going through so much darn crap.

  43. Steve C says:

    I have theory for the bank’s inscrutable insane actions. The bank’s actions actually make sense if they had sold the mortgage to a 3rd party.

    If so then they were only acting as a 3rd party collection agency. They wouldn’t have a legal right to foreclose, nor would they have a legal right to sell. All they would have is authority to make annoying phonecalls trying to collect outstanding debt. The more I think about it, the more I think this is what must have happened on the bank’s side. Refusing the Unicorn’s cash makes zero sense otherwise.

  44. Amarsir says:

    The reason these actions don’t make sense is that we’re expecting rational action from a collective body that doesn’t have a collective thought process. We say “the bank decided” or “the government decided” but there is no such decision. What’s happening is the net result of may individual decisions, none of which agree.

    The best explanation ever made for this was in Office Space. There are so many rules and so many bosses that there’s no room for logic. Each employee is just trying to put covers on their TPS reports and get through the day. This is bad enough when we were just talking about some of the largest banks in the world. But now on top of that they’re following rules that were passed by people who didn’t understand (and quite possibly didn’t read) them.

    There is ZERO room left for any person to rationally approve a sale. Not only would doing so put the bank at risk of tipping crucial accounting ratios, but then they could get sued for missing 1 of the required 83 notifications they were required to send. We should wish they were motivated by profit. They’re doing all they can to avoid criminal violations. (And still failing because we’re talking about a million cases!)

    Beyond all that, let me remind you that in 2012 there were 51 bank failures. (And 13 so far in 2013.) The Labor Force participation rate (share of the US that works) is at its lowest since the 1970s. (That’s right, it’s been going down the last 4 years, not recovering.) Housing prices are rebounding nicely, but helped largely by rates that probably won’t be sustainable much longer.

    In short, our solution for too much bureaucracy has been to add more bureaucracy. Unless someone invents a new internet very soon for us to boom off of, this is not something we’re going to pull out of. So you were wise to get out, Shamus.

  45. Deoxy says:

    I don’t know the ending, but actually staying in the home (even though you couldn’t pay) might well have been the best way to help the bank – seriously.

    There are several different theories and/or situations that lead to this:

    -too many houses on the market/foreclosure list in your area, and yours is least likely to sell. Better to have someone stay in it (and keep the maintenance up) than leave it sitting vacant. Can’t tell you that (or people with less desirable homes than yours might well stop paying, knowing what’s going on)

    -Too many houses waiting for foreclosure in your area, such that adding more would drop the prices on the whole area, so it costs them less to let a few people stay for free for a while (maybe even a long while) than lose even more money as the whole areas prices go to pot. Don’t want that decision getting out, so can’t tell you.

    -Can’t actually legally foreclose (fallout from the robo-signing fiasco, which lands squarely at the feet of the banks, not the government). If they don’t tell you, you might eventually refinance or otherwise “reset” the situation, making everything better again (this one seems VERY unlikely in your case)

    -Hoping for government action to save you and/or them. Most such actions would be unavailable if they were trying to get you to take them, so they can’t tell you.

    Etc. In a situation like that, simply playing the game is probably the best thing for you to do, honestly, both for you (obviously – free rent) AND for the bank.

    Of course, several of the possible theories are made much less likely by turning down the cash buyer, but not all of them, and only a few of them are actually ruled out with certainty.

  46. SteveDJ says:

    You’ve mentioned not having paid the mortgage for several months at this point. But does that mean the property taxes were also not being paid? I’m guessing it would’ve come from an escrow account, and perhaps that account was still making the tax payments (putting that account into the red, as well?)

    Because if not, then I would certainly *hope* that a bank would fear losing their collateral (the house) to a city/county/state property seizure to pay back taxes??

  47. AlecW says:

    Hilarious Irony: Banner ad for this page?
    RAMS Home Loans, special rates.

    Don’t think that bank is getting their money’s worth having that on this particular article… :D

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I'm reading about <a href="http://en.wikipedia.org/wiki/Darth_Vader">Darth Vader</a> on Wikipedia!

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Darth Vader said <blockquote>Luke, I am your father.</blockquote>

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