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Sub-prime mortgages continue to wreak havoc in the USA


Summary of story from NYTimes, October 1, 2011

A woman forced out of her home and left bankrupt has told a tale of sub-prime mortgages and the homelessness that continues to devastate the USA.

When Wanda Carter bought a house on the south side of Chicago the bank lent her $142,000 to cover the sale price and loan fees and $20,000 to fix it up.

Her mortgage was agreed with Washington Mutual which years later was accused by a United States Senate investigative committee of igniting a ‘mortgage time bomb’ by making thousands of sub-prime loans that were destined to go bad.

Ms Carter said at the time she bought the home she thought it was a good deal – and she did not hire a home inspector.

Ms Carter soon realised the work needed on her home totalled far more than $20,000.

Her husband was then diagnosed with late-stage cancer, their income dropped, and she fell behind on her mortgage payments.

She then tried to get her payments lowered but the bank increased them instead. When she then had her property re-valued it was only worth $95,000.

Washington Mutual sold her debt to a company that employed GreenTree Mortgage to service the loan. It said it would release her of all her obligations if she moved out.

So she did, but the company left the building empty and its condition deteriorated further as criminals ripped out its interior.

Her husband died and Ms Carter was left with over $142,000 in debt.

Greentree then told her that Washington Mutual held a second mortgage on the property and would not agree to the plan for her to unload the house.

The first mortgage was sold on to another finance company, REO Properties. And a sign on the building indicates that information about it is available from Chase Home Finance.

The home-lending unit of banking giant JPMorgan Chase had picked up the second mortgage in September 2008 after the federal government ordered WaMu closed for its predatory lending practices.

Today the house, like thousands of foreclosed properties in Chicago, sits vacant. Who is responsible for the upkeep of the property remains unclear and it stands empty and derelict.

“I’m sure the house is worth even less now. It was a shell to begin with, and now it’s even more of a shell,” said Ms Carter, who intends to declare herself bankrupt.

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