Has this ever happened in American history? That someone who was paying their mortgage was evicted because the bank had a sweetheart deal with someone? That's not how I understand mortgages to work.
- You buy your house from the company via a mortgage owned by the company bank.
- You start to build equity in your house.
- You talk on your lunchbreak with your coworker about whether a union would be a good idea.
- The company fires you for no particular reason.
- There are no other employers in commuting range, and your skill-set is not conducive to working from home. As a result:
- You fall behind on your mortgage. The company bank notes that you are delinquent and immediately starts foreclosure.
- The company real estate agency doesn't show your house to people. There are no other real estate agencies in this town.
- The company bank takes possession. You leave. The bank sells the house at auction. There is one bidder: the company-owned house leasing company. They bid less than the amount the bank is owed. The bank takes all of that money, as first creditor, and you get no money from the sale.
The company-owned house leasing company cleans it out and leases it or decides to sell it to another employee.
Fannie Mae just settled a foreclosure discrimination class action in which they where failing to maintain foreclosed properties in minority neighborhoods. This caused a chain reaction where nearby homes went underwater and were subsequently foreclosed upon.
Mortgage lenders have remarkable legal resources with which to make a homeowner’s life miserable. While they usually have a financial incentive not to, that doesn’t always pan out.
