March 11, 2018

It Is Still Very Easy To Borrow Money

A weeked topic starting with two reports from the Greenfield Recorder in Masschusetts. “Standing at the intersection of bad luck and what a seniors advocated says is a public policy failure, an elderly man who has been called a ‘Robin Hood of builders’ will face foreclosure Tuesday and an inevitable eviction. Bob McCollum, 73, first faced this fate in late July, when his Shaw Road log cabin and mortgage were in the hands of big banks in New York. Following public pressure, including an article in the Greenfield Recorder, the foreclosure was canceled.”

“‘He’s managed to stay living with his dog and cat for seven months because of the action we took back in August,’ lifelong friend and elder care advocate Al Norman said, ahead of the March 6 foreclosure date. But since then, Norman and McCollum could not find a way to finance the longtime carpenter’s way out of a mortgage gone wrong.”

“Living off Social Security and with no local family to assist him, McCollum is back at the mercy of the banks, between debt collector Shellpoint and Bank of New York Mellon — as they get ready to take his home from him because of a failure to pay off a $153,000 loan he had taken out at an adjustable interest rate in 2003. McCollum’s luck started to go south when he was no longer able to do his lifelong work as a handyman around Franklin County; he battled a few bouts of cancer, lymphoma and lung, and later on spinal stenosis.”

“‘What’s happened to Bob McCollum is a public policy failure,’ Norman said. ‘If we had better public policy in place, he wouldn’t have gotten into this deep hole and the bank wouldn’t be breathing down his neck.’”

“Norman said state Rep. Paul Mark, D-Peru, could be a good person to sponsor a bill that would call for mandatory counseling for elderly people who seek to borrow and take out a large loan like this. A Springfield mortgage counseling group did try to provide McCollum with assistance, but the counseling came too late in the game. ‘When these things become out-of-control, they become unsolvable,’ Norman said.”

“There are regrets over taking that adjustable loan in 2003, when McCollum was in his early 60s and still lively in his career. That loan set him down a path to a point where he will likely face eviction and the risk of being homeless, Norman says. ‘This is the fate that happens to people when they fall behind on their payments,’ Norman said. ‘I think we’ve delayed this as long as we possibly can.’”

“It’s almost Dickensian in its pathos: Senior citizen borrows against his home, gets sick and cannot work, falls behind on loan payments, loses home to out-of-town bank. That is the tragedy of 73-year-old Bob McCollum of Bernardston, a self-employed carpenter. As the auction gavel fell on his long-time home, now owned by the Bank of New York Mellon, McCollum said to the Greenfield Recorder from his hospital bed at Baystate Franklin Medical Center on Tuesday, ‘I feel embarrassed and ashamed. This is the worst tragedy of my life.’”

“The reality is that it is (still) very easy to borrow money, especially when home equity exists to back the loan up, and often times not nearly as easy to pay it back. In the best of all possible worlds, the borrower will make money, get a raise, receive an inheritance or sell the home at a profit and pay back the loan. When, conversely, the stars don’t align, the borrower gets sick, has to turn down jobs, loses his business or job and goes into default, triggering a long, sad process of foreclosure and eventual eviction.”

From Brink Wire on Australia. “The pace of construction is evident in Mitchell Creek Green, where developed houses stand next to vacant land earmarked for sale and streets are lined with construction sites. To Linda Hyland, buying into the estate seemed like a good investment. She made a plan to make back some of the money she would spend on the land and building costs by renting out a spare room. The new development, in the Palmerston suburb of Zuccoli, was sold as an affordable suburban housing option connected to nearby conservation corridors and the surrounding natural environment.”

“‘I’m not snobbish or anything but it was advertised as being prestigious, with lovely lakes and parks,’ Ms Hyland said. ‘When I asked about the park when I purchased the land originally in June or July last year … they said, ‘Oh, it’s happening, it’s happening in August’.”

“Ms Hyland paid more for the parkside land and moved in about three months ago, only to find the view from the spare room was different to what she was sold. The Perth-based contractor appointed to carry out civil infrastructure work in the estate, Brierty, went into voluntary administration in September and was liquidated last month.”

“‘When I look out all I can see is wire fences, bricks and things that have been dumped by builders and residents. I can’t get anybody who is willing to move into the front building because this beautiful view is now of junk,’ Ms Hyland said. ‘Then I also couldn’t get some answers about other things when I rang council or I rang somewhere else, and then I started reading and hearing from other people about a few comments. That’s when I started to think: What have I done?’”

“A homeowner who wished only to be known as Matt said a Facebook page setup for people who bought into the community was full of concerns. The tone of the page, he said, was ‘very, very negative,’ with residents claiming they’d been sold a lie, until he noticed critical posts were being deleted. His family lives on the other side of the park and paid more for land sharing a perimeter with the space. Matt said it was difficult to get information about the future of the site and was concerned the value of the land he’d paid a premium for had started to drop.”

“According to Matt, it soon appeared that that land was being sold to new buyers at discounted rates. ‘One of my mates was trying to buy a block of land in the new estate and it was about $50,000, $60,000, $70,000 cheaper than what we paid,’ he said.”

“The estate’s residents learned Brierty was the parent company of Bellamack, which was still solvent, but that it was relying on land sales made through Bellamack to stay afloat. ‘It’s not disputed that the Bellamack project was a profitable project for Brierty, and indeed when sales of those lots were sold, the money was distributed up by way of loan account to the parent,’ KPMG administrator Matthew Woods said. Unfortunately, those lot sales stalled in the first half of the last calendar year and that certainly impacted the liquidity of Brierty.’”

“To make up for the slump in the property market, the NT Department of Infrastructure, Planning and Logistics (DIPL) agreed to let Bellamack discount land by 9 per cent to remain competitive. Then, after the administrators were appointed, a further 9 per cent discount was agreed to. Mr Williams said he was unsure what would happen if no-one bought the development.”

“It couldn’t come soon enough for Ms Hyland, who said the ordeal had caused her mental health issues to resurface and significant financial stress. ‘I think for me this has affected my health,’ she said. ‘I’m living on my own, now with a dog, and I don’t really have a lot of people to talk to about it. I try and put things in perspective, but I’ve had time off work and now I can only work part-time which means I’m not sure what my future holds financially, living here.’”