Well, when they write the obituary for the sub-prime lending crisis, I vote for the story about the foreclosed home with the dead body in it as a must for inclusion.
Of course, this particular story was not just about sub-prime lending, but about out and out crime in that not only were the loans sketchy, but there had been considerable flim-flam with respect to the titles.
(This story was reported by Susan Chandler a week of so back in The Chicago Tribune.)
The most recent transaction involving the house in question was a purchase at a foreclosure auction. When the new owners came to check out their new digs - a rundown house in a rundown South Side Chicago neighborhood - they discovered:
...a human skeleton in a red tracksuit. Next to him lay a dead dog. Neighbors told police the corpse was almost certainly Randy Johnson, a middle-age man who lived alone in the North Kenwood house.
Now, set aside the pathetic element that someone was so bereft of family and friends that no one would notice that they hadn't heard from him in a while - a difficult set aside, I'll admit.
And set aside the fact that some neighbors did notice that they hadn't seen Randy around, and that firefighters came by, busted down the front door, took a look around but somehow missed the human and canine remains. Again, a difficult set aside
And set aside that this one involved not just misjudgments and sleazy, bordering on immoral tactics, but actual, bona fide crime - stolen titles, illegal "notarizations."
What we have a story that becomes an apt metaphor for the overall real-estate crisis, which has at its root some fairly careless and casual lending practices.
No surprise the lender that's involved:
Left holding the bag is Countrywide Home Loans, the nation's largest mortgage lender and a company whose practices are being scrutinized by the Illinois attorney general's office. Countrywide made mortgages of $450,000 on the property. Now it is likely to lose it all because it financed the sale of a home whose rightful owner was in no condition to sell.
Left holding a $450K bag? Serves them right.
Apparently Countrywide, and a lot of other lenders, are so eager to bad properties off their books that they'll just dump them out on foreclosure sales.
Lenders duped into making loans have every incentive to unload the properties, and almost none to blow the whistle on wrongdoers. If borrowers or government watchdogs fail to cry foul, the same home can change hands again and again before anyone is the wiser.
You might think you're buying clean property at that foreclosure sale, but it could be that no one has ever bothered to straighten out the title.
Talk about caveat emptor.
As noted, this story is not just about slipshod lending, but about fraud. Someone in the way back forged the signature of Johnson's mother. Someone other than a curious neighbor noticed that Johnson had gone missing. One thing led to another, and the charmers who'd forged the title set up a straw buyer for the house - and not for cheap, either. That $450K price tag was covered by a loan from Countrywide for the full amount. Why bother to put anything down when you're planning on disappearing shortly, anyway? The fraud artists get to pocket the $450K (minus whatever chump change they have to throw the straw buyer's way).
Fast forward to Countrywide's attempt to recoup some of their losses by unloading the property for what was more or less a steal: $93K.
Or at least the buyer's thought it was a steal until they made there way over to the house and found that it was already occupied.
The court has vacated the sale, so Countrywide won't get it's $93K, after all, and will have to eat the full $450K, which represents, of course, just a drop in the loss bucket.
Obviously, all foreclosures don't involve fraud, let alone dead bodies. But this sordid episode is absolutely symbolic of the overall crisis.
It's easy to be nostalgic for the good old days when Banker Bob knew just who and what he was setting up a mortgage for. Those days, of course, will not return. The world is way too complex for that.
But when there are mortgages getting granted where no one even bothers to investigate whether the title is legitimate and clear, whether the owner is dead or alive, and whether the dead or alive owner is in residence...well, I guess you can say we've got a problem.
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