I’m intrigued by the Orwellian phraseology that megabanking executives and the mortgage industry have coined to describe their work. They trade, for instance, in "distressed assets."
What’s a distressed asset? From what I understand, an asset, like a subprime mortgage, is distressed because it fails to churn out the revenue stream it was originally supposed to produce. But post-crash, with a nod to obfuscation, "distressed assets" have become "legacy assets."
It doesn’t take Umberto Eco to figure out the real meaning of these dehumanizing terms: for the millions of people whose assets – their homes – are underwater, it’s their lives that have become truly distressed.
There are quite a few people who fall into this category: 10 million to 11 million, by some estimates, comprising a “silent minority” of middle and upper middle class folks. They may be your next-door neighbors, friends whom you socialize with on a regular basis, perhaps with kids that play with yours. Their distress may be only evident to themselves or their families. They might be embarrassed to let their friends in on the secret.
The embarrassment is intertwined with the guilt over mortgage payments that haven’t been paid in months, perhaps years. A fair number may have tried and failed to make deals with servicers to no avail.
As victims of the financial downturn they struggle to keep up appearances, maintain the same lifestyle, go through the same motions. But behind closed doors they live in a constant state of fear, ducking calls from banking and servicing representatives, opening certified letters with shaking hands, simply waiting for the ball to drop.
That ball may come in the guise of a process server handing them foreclosure papers or a sheriff tacking a notice on the front door. It’s a scenario that plays out endlessly across the country, every day – even in Hollywood, as evidenced by a recent story in The New York Times, where the author recounts stories of her neighbors – screenwriters, directors and actors – forced out of their homes.
In the aftermath of the robo-signing scandal, courts have made foreclosures and evictions much more difficult. For the silent minority of homeowners this may have provided a false sense of security. But things can and do change on a dime.
It seems that Shaun Donovan, with his engineering of the robo-signing settlement, has done his best to emulate former President George W. Bush’s "mission accomplished" moment, trying to spin the deal as some sort of resolution. For the high-level execs in the megabanking industry, the settlement, along with consent agreements signed with the federal regulators, are the mea culpas necessary to restart the foreclosure pipeline.
In Florida (home of the get’em in, get’em out "rocket dockets," suspended for the moment), bankers, anticipating a glut of REOs, plan to push new legislation to speed up foreclosure times.
REOs? See, now they’ve got me talking in euphemisms. The acronym for "real estate owned" sounds like a delicious, cream-filled snack and makes us forget what we’re really talking about: seized homes.
While Donovan continues to make the media rounds (including The Daily Show) trumpeting the success of the settlement, he knows full well that it will do little to ameliorate the situation of the majority of the silent minority (only a sliver of these people are eligible for relief).