Banks and their “Feel Good” Commercial Blitz
Has anyone else noticed that the four big banks JP Morgan/Chase, Bank of America, Citibank and Wells Fargo have commenced a public relations blitz? They have all started broadcasting the “feel good” commercials; you know those where they say they are here to help you, they are part of your life and part of your family; they support you and so on.
The commercials show all these people doing nice warm fuzzy family things. Yet, try to go and get a real estate loan. Then the obstacle course comes and out, and beyond making you jump through hoops, it feels like you must also jump over flaming pools of oil. They talk about restructuring mortgages and what they are doing to keep people in homes, and make their statistical presentations to governmental representatives who simply do not have the resources to dig deeply and question the presentations.
From my perspective I find these commercials insulting, particularly as these same banks raise fees, reduce credit lines, restrict lending, arbitrarily and unilaterally changing due dates (this triggers late fees and increased interest rates) and influencing appraisals ( to the downside) all while using taxpayer funds to keep them selves solvent and salaries of top executives (the same ones who steered their organizations into the need for taxpayer money) at high levels.
As a real estate professional, I hear anecdote after anecdote about how the lending institutors are doing anything but helping. I have also worked on loan modifications with different individuals, and so also have first hand experience. Rather, I hear about strong arm and delaying tactics, such as better pay or we won’t modify your loan. Over 9% of the loans on residences in this country are delinquent, and another 4% or so are in default. That means that over 13% of all loans are some from of difficulty. This has so far and will continue to significantly impact not only those individuals in this situation but their neighbors and communities.
What if there was a tax policy shift that said for the next 10 years all mortgage interest over 4% was to be taxed at 150% (10 year notes are at about 3.5% as of this writing, and banks are paying essentially 0% to borrow money from the government). This might certainly influence lending institutions to modify their loans. I would bet that within 3 months, there would be stability in housing prices and a balance between demand and supply, and within 6 months, the additional savings in mortgage interest payments would be flowing back through the economy and showing increased savings; both very positive things.
