A Different Kind of Bank Robbery

When my wife and I were laid off in April, we took many steps to control cost, including requesting a loan modification from our bank. For sake of anonymity, let’s just call them “Big Fucking Bank”, or BFB for short. One of the nation’s primary lenders, they are among the ‘best of the worst’ for processing loan modification requests; in other words, they approve more than the 6% to 8% granted by other large financial institutions.

For those of you fortunate enough to be employed or own your house outright, perhaps I should explain a bit about loan modifications first. When your financial situation undergoes a dramatic change (such as the loss of two incomes), you can request a hardship loan modification with your mortgage lender. Effectively, you’re stating that you WANT to keep paying your mortgage, but need some relief to reduce your monthly expenditure. Banks can agree to lower the interest rate of your loan, or (I believe) extend the terms. Certain criteria must be met (you can’t request a loan modification on a jumbo mortgage, for example) and you must provide a wealth of information including bank records and tax statements for several years.

Mortgage lenders are especially willing to engage in dialogue when you’ve missed or delayed mortgage payments. This, of course, has an immediate impact on your credit rating, which is used to determine everything from loan eligibility to insurance cost to employability. In short, a bad credit rating is to be avoided at all costs.

Fast forward to my situation. Having put as much into savings as possible over the past few years, my wife and I had a buffer to offset our loss of income. In July, we finally completed and submitted the necessary paperwork to request a loan modification from our lender. We were advised that, due to a large volume of requests, processing would take thirty to sixty days. We waited patiently for sixty days, calling only for the occasional update that typically ended with, “Yes, your paperwork is in our system but hasn’t been reviewed yet.”

And now the games have begun. Per our lender, our release of information is out of date, as are our bank statements. It should be an easy matter of pulling a new form down from the website and filling in our information, right? Sorry, wrong answer. BFB no longer hosts the form on their website, but you can request one be mailed to you.

We tried, without success, to fax the revised package to BFB last night. Guess what? You can only do so between the hours of 7 and 7. Presumably, this is done to prevent borrower’s personal information from sitting around on an untended fax machine. The cynic in me thinks it’s just one more obstacle presented by BFB in hopes you’ll give up on your efforts.

We were also advised by an agent of BFB that, “the reviewers typically don’t approve a loan modification if the borrower is eligible for unemployment”. We were told to document our loss of income, comparing our previous salaries to unemployment.

So much for BFB being customer-centric and attentive to our needs. Let’s do some math:

1) We were approved for a mortgage with a combined income of X. Fortunately, we have modest taste in housing and bought much “less” house than we qualified for.

2) On unemployment, our income was below 20% of our former earnings. Even my wife’s new job doesn’t bring us to 30% of our former income, as she took a substantial pay cut to get the position. In this economy, ANY job is better than no job.

While we’re smart enough to avoid credit card debt, we do have a car loan, and the lights need to stay on, and high-speed internet is more of a requirement than a luxury these days. Even cutting back on gas and groceries, there is a limit to how much you can economize.

So, if we’re currently making less than 30% of what we used to, is it reasonable to assume that we can continue paying the mortgage as if nothing has changed? Sure, it’s likely that I’ll eventually get a job, but who can predict when and at what dollar amount? It’s not likely that I’ll land a white-collar management salary in a market used to blue collar (or illegal alien) wages.

Here’s what I don’t understand: given the huge (and growing) number of mortgage defaults, does any bank REALLY want to take back another property? Wouldn’t it make more sense to keep homeowners with a spotless credit history in the property as long as possible, even if this means you make a little less on the loan each month?

Unfortunately, the days of banks having a personal relationship with their customers are long gone. I’m simply a number on a spreadsheet, and the bank has actuarial tables to indicate what risk I REALLY pose. Hell, they can probably tell me the exact hour I’ll finally decide to put the house on the market. I’m sure they know when I’ll start holding garage sales and selling everything I can just to keep food on the table.

It’s really no wonder why so many people have just mailed their keys back to their respective mortgage companies. In a lot of ways it makes more sense that playing Sisyphus in dealing with the bank’s indifferent customer service.

Their Best Isn't Good Enough

A few years back I had the opportunity to work with a couple of mechanical engineers who’d spent the bulk of their careers with a Fortune 500 company. We were tasked with reviewing a high tech product from a start-up company, to determine if acquisition of the business was in our best financial interests. I’m not an engineer (nor do I play one on TV), but a visit to the company provided us with the following information:

- The product was built in-house, in a very crude manufacturing facility

- All electronic components were off-the-shelf, and we were unable to identify anything proprietary

- Software was written in house or based on off-the-shelf products

Our company was far larger, with a vast product development budget. From a business perspective, I could see no reason not to pursue the purchase. The question fell to the engineers: could they reverse-engineer the product and put it into production in a reasonable timeframe?

After some careful deliberation, the engineers replied with, “No, we can’t”, without providing any additional information or explanation.

I was stunned, as we clearly had more resources than the company that was manufacturing the product already. There was no doubt in my mind, none at all, that we could have pulled it off within the stated time frame.

It was only later that someone explained the logic of these engineers to me. In their former corporate environment, saying no was not only accepted, but encouraged. It limited the amount of exposure for your department, who were not rewarded for pushing the envelope (but were certainly penalized for missing milestones). The biggest development sin for this company was saying yes, unless you were absolutely certain that you could deliver on time and at budget.

I was educated in a different manner. When senior management came to me with a project or a problem, “No I cannot accomplish this” was never an acceptable answer. Step one was always to figure out how to meet their request in a reasonable timeframe at or near budget. Sometimes I delivered on time, sometimes I delivered at budget and sometimes I delivered both; in any event, I always delivered something.

Larry Summers, the president’s Chief Economic Advisor, appears to be another student of the School of Mediocrity. In an interview last Friday, Summers was quoted as saying, “The level of unemployment is unacceptably high and will, by all forecasts, remain unacceptably high for a number of years.”

Thank you, Captain Obvious, but I don’t need you to tell me how things will be without change. As an economic advisor, I want you to tell me how to fix the problem, and not just report on it. Something is broken; if you can’t fix it, it’s time we found someone who can.

Even the president, the very man who should be setting the benchmarks, has stated a goal of creating or saving 3.5 million jobs by the end of the economic stimulus plan in 2010. This sounds like a good thing, until you realize that 6.9 million jobs have been lost in the past 12 months. And this number isn’t going down month on month; today, creation of 3.5 million jobs would drop the unemployment rate by 50% (not actual numbers, of course, but used for the sake of argument). If we continue to shed 200k jobs per month over the next year, then the 3.5 million jobs created will be offset by 8.1 million jobs lost.

And how about those whose jobs weren’t cut, but whose salaries were? Those numbers aren’t reflected in the 6.9 million above, even though these employees could be in the same dire financial straits as someone who is unemployed.

I’ve said it before and I’ll say it again: unemployment is the single biggest problem facing the country today. Why?

- Unemployment drives crime

- Unemployed people don’t spend money, perpetuating the cycle of business failure and economic collapse

- Unemployed people don’t buy houses, pay mortgages, take loans, etc.

We are faced with a crisis the likes of which we haven’t seen since the Great Depression. Desperate times call for strong leadership, yet I’m seeing none of this from Washington. We cannot continue to accept or embrace mediocrity, since (quite frankly) we don’t have all that much time left.

September 11

“Are you watching TV right now?” It was my wife on the phone, just before 9:00 on the morning of September 11, 2001.

“No, I’m working on some paperwork for the Census Bureau, then I’m off to the city.” In fact, I should have been on a ferry into NYC by this time, but I’d procrastinated completing a Census Bureau survey on small business until the last possible moment.

“Turn on the news. A plane just hit the World Trade Center.”

I grabbed the remote and asked my wife “What kind of plane?” At this point, I assumed it was a private plane, and that the pilot experienced a medical emergency in flight.

“I don’t know. They’re speculating that it was an airliner.”

I turned on the news just in time to see the second plane hit the south tower. A chill went up my spine, and it was immediately clear that the events were no accident. If we weren’t prepared for what had already happened, was the worst yet to come? I remember asking my wife to get out of work as soon as she could, and even offered to drive down and get her.

“The company wants us to stay put until we know more of what’s going on. I’ll be home when I can.” Lincoln Park, NJ, wasn’t exactly a high profile target for terrorists, but I still wanted her home.

The rest of that day is a blur of memories. Phone calls from loved ones, who were lucky enough to get a connection instead of a busy signal. News reports from Washington and from Shanksville, PA. Endless looped video of the towers falling.

By nightfall, the damage was done. In one twelve hour period, we had gone from a nation of proud, confident citizens to a nation of terrified victims. What was next, we wondered. Who were the bad guys, how many of them were there and what other targets would be hit? No one knew, and we all held our breath.

The remains of the World Trade Center smoldered for two weeks, and I remember seeing the plumes of gray smoke on the horizon as I drove to the ferry. The sound of fighter jets circling overhead became routine, even reassuring. Navy and Coast Guard patrols ran up and down the Hudson and East rivers, and you could feel the increased police presence. New York was a city on edge.

I remember high-fiving a friend when we went into Afghanistan on October 7, 2001 in Operation Enduring Freedom. Surely, I thought, we’d soon have Bin Laden dead or alive, and life would begin a gradual return to normalcy. I couldn’t have been more wrong.

In the eight years since the attacks of September 11, we’ve given up many things previously taken for granted. Long security screening lines at airports are now just another cost of doing business. Free speech is still possible, but God help you if your idea of free speech doesn’t correspond with the government’s. From an international perspective, America has gone from a nation almost universally respected to one that is reviled, even by former allies. We’ve become the schoolyard bully, and it’s hard to portray us as the cowboy in the white hat anymore.

The invasion of Iraq was totally unnecessary and wholly unrelated to the search for Osama Bin Laden. We continue to pour money we don’t have into the action in Iraq, all to bring democracy to a populace that, for the most part, neither understands nor wants it. What happens when we finally pull out? How long before Iraq erupts in civil war? Weeks? Months? You cannot undo centuries of internal hatred with a hastily elected government, nor can you enforce laws when the loyalty of your military and police is tied to tribal or religious affiliations.

By now, we should have learned that imposing our will and values on other cultures simply does not work. The British have learned this lesson, as have the Russians and the Japanese. Our cost to take and hold Iraq and Afghanistan, both in monetary terms and in the number of ongoing casualties, is simply too high.

The damage done that September morning eight years ago continues to wreak havoc on our country. We’ve become a nation divided among political lines, and the fringe element on both the left and the right continues to grow in size. Our economy is in ruins and the unemployment ranks continue to grow month on month. Families are losing homes at rates never before seen, and our government has done little to stop the bleeding.

I’m no expert, but I believe we can fix what’s gone wrong. Here’s how:

1) Devise a clear, concise plan to pull out of Iraq and Afghanistan within six months. Yes, Iraq will erupt into civil war and will quite possibly be invaded by Iran. Yes, this means we abandon the search for Osama Bin Laden; if we haven’t had any luck in eight years, what’s going to change in the future? Quite frankly, we’ve got bigger concerns on our own soil that need to be addressed.

2) Shelve the healthcare debate for the time being. Yes, it’s a tragedy that 15% of Americans lack healthcare coverage. It’s a bigger tragedy that roughly 20% of Americans are either unemployed or grossly underemployed.

3) Draft a new, comprehensive stimulus plan aimed at small business. The only way to reduce unemployment is to grow small business. How? Tax free government loans, subsidized start up costs and pressure on states and municipalities to provide additional support. Further incentivize small businesses that focus on manufacturing goods.

4) Fund infrastructure renewal projects. Our interstate highways and national parks are crumbling, yet funding seems to decline year on year.

Ultimately, the goal of the Islamic extremists who struck our country on that September morning was to weaken our country and impact our way of life. Eight years later, from where I sit, they’ve done a good job of this. The ball is in our court, so I’ll ask the question: what are we going to do to reverse this?

The Most Important Site on the Internet

Imagine this scenario: you’ve been told to prepare for a natural disaster, so you stock up on canned goods, bottled water, candles and batteries for your weather radio. Maybe you even go so far as to purchase a portable generator, just to run the refrigerator and a few lights. If you’re like me and always prepare for the worst, you buy a few extra boxes of shells for the shotgun, just in case.

Fast forward to the storm hitting. Your power is out, your telephone is dead, water is beginning to pour in your front door and you see smoke coming from a neighbor’s house. You call 911 from your cell phone, and no one answers; for the first time in your life, you are utterly stranded. No one is coming to rescue you, and whether you (and your family) live or die is entirely in your hands.

Hours turn to days and your situation worsens. No one has come to check on your neighborhood, your house is flooded to the second floor and you’ve burned through all of your food. Your last remaining drinking water is carefully hidden, since you watched your neighbor get his water stolen at gunpoint by two men in an inflatable raft. Currency is worthless in this new economy; the only things of value are food, water, and shelter. How long, you wonder, will it be before a passing helicopter notices the NEED HELP! sign on your roof. Are you better off risking the floodwaters, poisonous snakes, downed wires (where there’s still electricity) and armed posses to get help?

If you think this couldn’t happen in America, here’s a reminder that it already has. On August 29, 2005, Hurricane Katrina delivered a direct blow to New Orleans and the surrounding area. For those of us watching from a distance, the initial reports didn’t look too bad; and then the levees that held back Lake Pontchartrain were breached by the storm. The city of New Orleans became a lake, and thousands of people were trapped by the floodwaters. Communication broke down, order broke down and anarchy ensued. Today, four years later, New Orleans is still recovering from this disaster; many residents never returned and entire neighborhoods have been abandoned. We no longer see much coverage on the news, because New Orleans’ fifteen minutes of fame have come and gone. The rebuilding of this great city is not one of America’s finest hours.

A gentleman named Shane was there for Katrina, front row, center seat. He lived through his experience and was kind enough to document it for the rest of us. His website, Listening to Katrina, can be found here:

http://www.theplacewithnoname.com/blogs/klessons/index.html

Shane’s site is free, although donations are welcomed. In my opinion, this is the single most important site on the internet, and here’s why:

1) Shane is one of us, an everyman. He’s not a retired Navy SEAL, he’s not a survival expert and he’s not a professional adventurer. He was just an ordinary guy, caught in extraordinary circumstances, who took the time and effort to document his lessons learned.

2) He doesn’t preach politics or religion; instead, his site is organized in a very readable manner. It tells you what to do in advance and gives you an idea of the mindset you’ll need to get through your own ordeal.

3) The site illustrates that we don’t always live in an organized, protected and safe world. Someone once said that we’re three missed meals away from anarchy, and Shane’s site gives step-by-step documentation on this descent.

Take from the site what you will. For me, this was preparation of a “bug out bag” (BOB), to be grabbed in the event of a forced (and hasty) evacuation. Shane provides a checklist of what should or shouldn’t be in it. My own BOB varies from Shane’s list, so here are my thoughts on the matter.

First, you need to decide on a method of travel. For me, I’ll be heading out before an area floods; my primary method of travel will be a four-wheel-drive truck with plenty of ground clearance. My BOB is designed for travel by vehicle, but is light enough to carry on my back if circumstances require it. The bag itself is a military canvas duffel bag, equipped with shoulder straps and a lockable top. Not what I’d choose to hike the Appalachian Trail, but it’s cheap, sturdy and good enough to get you from Point A to Point B.

The bag holds a sleeping bag (fiberfill, not down, since wet down gives little insulation), an inflatable sleeping pad, six MREs (meals ready to eat, or ‘meals rejected by Ethiopians’ as they’re commonly referred to), six Clif bars, a UV water purifier, iodine water purification tablets, a quart sized water bottle, flint and steel, a Leatherman multi-tool, a Jetboil stove and extra fuel cans, a GPS and compass, spare batteries for the electronics and a two person tent. My single luxury item is a coffee press for the Jetboil; disaster is a poor excuse for missing a properly brewed cup of coffee.

Remember that the human body can go about two weeks without food, but only 48 hours or so without water. In a natural disaster, fresh water will be a rare commodity, and you simply cannot carry enough with you (remember that water weighs 8 pounds per gallon). Having multiple methods to purify water gives you flexibility and gives you a prolonged source of drinkable water.

Is that is? Not exactly. At the last minute, I’d throw in my laptop, a portable hard drive with a system back-up, my passport (and copies) and any other significant document or paperwork I have (Social Security card, will, other IDs, etc.). As for clothes, pack light. You don’t need more than two pairs of pants, a couple of shirts (think layers, especially in cold climates) and a change of underwear, socks and a waterproof shell. Wear comfortable and sturdy shoes – you may be walking in them for quite a while.

If you take meds daily, include them with your clothes and documents. Don’t forget to have “road cash” ready in advance, since you may not be able to get cash from ATMs (or even use credit cards for the foreseeable future).

A simple BOB can be assembled for under $100, and may save your life in the event of a natural disaster. If you can get through Shane’s site and NOT be compelled to construct a BOB at your earliest opportunity, you’re a braver man than I. Or crazier.