The banks, including Bank of America adopted these reckless and foolish lending habits in the mid 2000s. Their practices were predatory and they made home loans to people that could not afford the payments. They doled out bonuses to their employees and executives for creating these loans. Huge Bonuses. Bonuses that incentivized more destructive financial behavior. During this time derivatives became very popular. A derivative is a type of securities or financial instrument which derives its value from the value of underlying entities such as an asset, index, or interest rate—it has no intrinsic value in itself. In addition, Bank of America gambled retirement funds on the derivatives of these faulty loans. Retirement funds are only allowed to be invested into AAA rated bonds. AAA means that the creditworthiness of the bond is exceptional and that a default on the bond is highly unlikely. The three top credit agencies -- Moody's, Standard & Poor's and Fitch -- fraudulently granted AAA ratings on these sub-prime mortgages.
These ratings and the easy lending caused house prices to continue to rise. Because of the rising prices of homes, people took out money against their mortgages to make more investments. People were told "You can't lose."
To top it all off, AIG (American International Group) which was the largest insurance company in America was insuring the mortgage loans and also insuring the derivatives. If the bottom fell out, AIG would have to pay out twice on the loss.
The bubble burst in September of 2008. Fannie Mae & Freddie Mac were about to go bankrupt. The US government stepped in and placed them under a conservatorship. A week later, the investment bank Lehman Brothers filed for bankruptcy and created a domino effect with the rest of the financial community following suit. AIG was bailed out by US taxpayers. It was determined that if AIG was not bailed out the whole economy would crumble. Bank of America purchased Merrill Lynch with bailout funds. Many other banks were bought by larger institutions with bailout money.
In addition, millions of Americans lost their homes and their retirement funds. Banks began foreclosing on homes around America at a rapid rate -- foreclosures caused by their faulty lending practices. This left homes all around America empty. In my neighborhood we have 6 houses within a 3 block radius that are occupied by squatters. Let me be clear that these are NOT the kind of people anyone would want living next to them. They have extensive criminal records. They have broke into my car, my neighbor's car and created a HUGE sense of uneasiness in our simple, quiet neighborhood.
The old owners were kicked out of the house by Bank of America in December of 2011. In late 2012 Bank of America put a notice on the house saying it would be up for auction by Bank of America in October of 2012. This never happened. The house has been empty and they have not even put a for sale sign in front. The squatters moved into the house the first weekend of August 2013. It was easy for my neighbors and I to realize that they were squatters. They told all of us that they were renters, but they cleaned the whole house themselves. Who cleans a house that they are renting?
My neighbors and I have been calling Bank of America on a regular basis to try to get them to remove the squatters. At first, they seemed like they were going to be very helpful. They verbally confirmed that the house belongs to them. When I saw no action on the part of the bank, I started to get upset. I was no longer polite and complacent. Now when I ask Bank of America for help, they tell me there is nothing they can do. The homes do not belong to them and I cannot prove that they do. I have a number for a company that safeguards the homes for Bank of America. They have told me that they have put in work orders to Bank of America, but they cancelled the one by my house recently.
I have been working with law enforcement to get them removed, but their hands are tied as well until Bank of America tells them to kick the people out. I have contacted my local new agencies, the newspaper and the mayor. No one can help.
This is how I see it: The banks have caused this huge issue. They tricked people into buying homes they could not afford. When the bottom fell out, they took money from us to stay in business. Instead of the money going to the homeowners, to pay off their loans (which would have eventually made its way back to the banks) they gave it to the banks who kicked people out of their homes. Now they don't want to help. They have yet again figured out a way to work the system by not taking responsibility for these empty homes.
Ridiculous.
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