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Mortgage crisis hits home

As the country’s mortgage crisis spirals out of control and thousands upon thousands of homeowners walk away from their under water home, I can’t help but wonder if secretly the 600,000 stockbrokers are quietly smiling inside as the rest of America gets a taste of what its like to be a broker.  Everyone is being affected by this lack of contractual integrity and Banks are not the only ones being hit by this.  Home owner associations, municipalities, insurers and more are all feeling the effect of home abandonment.  Many of the foreclosures occurring are not because the mortgage holder cannot make their monthly payment but rather they are being urged by, whom else, lawyers to walk away from their undervalued home.  A couple that owes 25 years and $200,000 on a home that is now only worth $145,000 is being told that its better to walk away from the investment instead of paying for 25 years as their contract called for.  This is all so eerily familiar to brokers who constantly have to deal with buyer’s remorse on trades that did not work out as expected.  Each year millions dollars worth of trades for clients end up in the compliance department as “complaints” because the stock missed earnings and is now not worth what they expected.  Unfortunately in most cases the broker is often forced to eat the loss while the client walks away unscathed and lives to prey on another.  I can recall listening on one of my recorded lines to a customer complain to his broker that his Internet stock he bought at $90.00 per share was now trading at 60.00 per share.  I’ll never forget his words to the broker about the trade: “If I had known it was going to go down I would have never purchased it”


That one statement seems to sum up the entire mortgage mess we are facing.  Americans want to only buy investments that will go up in value and if they don’t it has to be somebody else’s fault.  One of the reasons home loans are 30 years long is to allow a home owner to have minimal payment over a long period of time while allowing them to live the American dream and raise their family in a suitable dwelling.  Somewhere along the way people started viewing home ownership the same way they viewed owning AOL or Google.  If the price increases from where you purchased it they love the broker but if it goes down it must be the Brokers fault and they want all their money back or to be made whole again.  There has been talk in Washington of holding these home owners accountable who are just walking away and that is a good start but we believe that they should also start cracking down on the clowns who buy stock and then don’t want it anymore because its down in price.  They hold too much leverage over brokers by declaring that “they were misled or the trade from 9 months ago was unauthorized”.  Too many firms choose to reverse trades and hit the broker with a loss instead of facing costly litigation.  This happens daily to the brokers across America and now the rest of the country is getting to walk a mile in broker’s shoes as tens of thousands of home owners just walk away from their home because “if they had known it would go down I would have never purchased it”




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November 15th, 2011


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