Annals of unncessary foreclosure fees, Harlem edition
Three cheers for Justice Emily Jane Goodman, who threw out a ridiculous foreclosure case that was brought by Washington Mutual against Imar Hutchins, a man who made repeated attempts to make his mortgage payments, all of them rejected by the bank, which then served a foreclosure notice on one of his renters.
It’s unclear why Hutchins had this particular mortgage in the first place: he took it out the $470,000 loan in May 2006, and then in May 2008 missed a single mortgage payment of $3,730. He had a lot of positive equity in the building: the price was $675,000, which means that his downpayment of over $200,000 was more than 30% of the purchase price. Yet even then, within two years of getting the mortgage, his mortgage rate was already at about 9%.
But the fact that WaMu insisted on initiating foreclosure proceedings after a single missed payment is still revealing. Hutchins, with his $200,000 of positive equity, was no deadbeat jingle-mailer. But the fees that a servicer gets from foreclosure proceedings are high, and the costs fall overwhelmingly on the homeowner. Maybe the fact that he had such a high-interest-rate mortgage served as some kind of signal to the bank that they should try to rip him off even more by tacking on unnecessary foreclosure fees.
A mortgage isn’t a credit card: you shouldn’t be slapped with fees and lawsuits just for missing a single payment. But maybe, for mortgages taken out at the height of the boom in mid-2006, that’s exactly where banks like WaMu thought they were going to make their money. If true, that’s utterly depressing.