Since the local housing market peaked in March 2006, more than 700 homes have been foreclosed on in Humboldt County. That’s about 25 foreclosures for every 1,000 single-family detached homes. Their owners almost invariably paid way too much, thanks to a real estate market that was speeding toward a cliff without seat-belts. Wall Street gimmicks like mortgage-backed securities and credit default swaps gave lenders a green light to issue blatantly irresponsible mortgages because the risk wasn’t their problem. They immediately offloaded the hot-potato mortgages en masse to Wall Street investors. Home buyers, meanwhile, were assured by pundits and agents that housing prices almost never go down for long. They were encouraged — even coerced — into sub-prime mortgages by lenders so desperate for customers that many stopped asking for credit reports, or even checking for a pulse.
And when it all collapsed, everyone came out fine except the homeowners. Wall Street got its bailouts. Mortgage brokers got to keep the money they’d made. Ratings agencies and regulators who’d been asleep at the wheel got off with some mild public criticism. Lenders continued to demand every penny of the inflated home loans. But millions of homeowners lost their homes, and the foreclosure crisis is far from over.
Until about the middle of 2007, Humboldt County averaged just one or two foreclosures per month, according to information provided by DataQuick, a real estate information service. The foreclosure numbers have been climbing steadily ever since, reaching 10 per month in 2008, nearly 14 per month in 2010, and almost 22 per month during the first three quarters of 2011. Even today, the county’s foreclosure rate isn’t bad compared to the state average of 95 per 1,000 homes. On the other hand, Humboldt County wasn’t exactly a hotbed of speculative investing; most of the foreclosed houses here had owners living in them.
And foreclosures only tell part of the story. Countless other homeowners owe more than their homes are worth, but continue paying their mortgage because they’re afraid of the shame and guilt associated with foreclosure.
Eighty-one percent of homeowners believe it is immoral to “strategically” default on a mortgage, according to a 2009 survey by the National Bureau of Economic Research. It’s an attitude they’re encouraged to maintain. “The predominate message of political, social and economic institutions in the United States has functioned to cultivate fear, shame, and guilt in those who might contemplate foreclosure,” Brent White, a law professor at University of Arizona, writes in his 2009 paper “Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis.”
For businesses, the rules are different. Typically, their only goal is to maximize profit. If they can’t pay their bills, they’re not burdened by guilt. Nor do they face the same consequences as individuals. Last year, American Airlines filed for bankruptcy despite having $4 billion in the bank. It did so simply because its board decided it made good financial sense, and as James Surowiecki pointed out in The New Yorker, analysts agreed, calling it a “very smart” move.
Businesses can also structure themselves in ways that give them distinct advantages — by incorporating in states with business-friendly laws, for example, or dividing their assets among their own sub-companies. That way, when creditors come calling, businesses have an array of protective mechanisms in place, and usually armies of lawyers to defend their wealth. Too often, in the American financial system, justice is afforded only to those who can afford it.
In Humboldt, this divide plays out on scales both intimate and grand, from one
Fortuna family to one of the biggest businesses in the county.
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In the summer of 2006, Fortuna natives Julie and Stephen Nally were ready for the last two basic ingredients of the American Dream — homeownership and parenthood. The young couple had married two years earlier, and that August they found a cute little two-bedroom, one-bath house on Summer Street. It was barely 1,000 square feet, but it had a nice backyard and was in a good location, near the hospital, Safeway and Stephen’s job.
“It was our picture-perfect little house,” Stephen Nally recalled in a recent interview. The real estate market had been on an unprecedented four-year tear, but it had dipped in recent months and their agent suggested it was a good time to buy. Later — too late — they’d see that the dip was the start of a nosedive. They offered $235,500 — more than $10,000 below the house’s appraised value at the time — and it was accepted.
With no money for a down payment, the Nallys needed two mortgages to finance the house. The first, for $188,400, was an adjustable-rate loan through Countrywide, starting with interest-only payments at just over 7 percent. The second, a $47,100 loan through a company called GreenPoint Mortgage Funding, had a fixed rate of 11.54 percent. Their monthly house payment came to about $1,500, which was doable. Stephen had a good job at Les Schwab Tire Center and Julie was a property manager at a local real estate office.
But less than a year after they moved in, tragedy struck. Julie had a miscarriage in her 24th week of pregnancy. Suddenly the house, which they’d been lovingly preparing for their new baby boy, was no longer a source of joy.
“We had, like, the crib in there. The room was painted. The baby clothes were ready. And then it wasn’t there anymore,” Stephen said. “We’d come home and … we just didn’t want to be there.”
Julie agreed, so a month and a half later they moved in with Stephen’s mom. Some friends agreed to rent the house for $1,200 a month, which meant that the Nallys were losing $300 each month. But they couldn’t really ask for more money. Fair-market rent for a house that size was nowhere near their monthly mortgage payments. Even $1,200 was pushing it.
A few months later, Stephen got offered an assistant manager position at a new Les Schwab in Stockton. He remembers thinking, “Am I gonna stay around here and remember the stuff with our son, or am I gonna get the heck out of here and try to do something with our lives?” In February of 2008 they moved to a two-bedroom apartment in Elk Grove, where rent ran them another $1,100 a month. Still, they managed to make their house payments like clockwork — until November. That’s when their friends/tenants called to say they’d found a cheaper rental. They moved out with less than two weeks’ notice.
The Nallys’ apartment lease expired around the same time, and they moved to a house in Stockton, where rent was $1,500. Suddenly the Nallys had two $1,500 payments due every month, and no tenants to help pay the bills. They listed their house as an $1,100 rental, figuring that with that much coming in they could still make their house payments, barely. But no one in Fortuna was willing to pay that much. The Nallys were in trouble.
“We were living from paycheck to paycheck, trying to make it work, but it wasn’t working,” Julie said.
They stopped paying their mortgage and tried to negotiate with their lenders, which now included Bank of America (BofA acquired Countrywide in 2008). Stephen asked if they could lower the interest rates or maybe add payments onto the back end of the loan to allow time to find new renters.
“Bank of America wouldn’t even give us the time of day,” Julie said. Their other lender, GreenPoint, accused them of secretly renting out their house and pocketing the rent rather than making their loan payments, she said. “We’re not backstabbing, dishonest people. We’re trying to make a living. It was just crazy.”
Over the next nine months they got three short-sale offers, meaning the amount offered was less than what the Nallys owed. All three were rejected by the lenders. When asked why, a spokesperson for Bank of America told the Journal that the offers were deemed too low. (The highest was $130,000.) GreenPoint couldn’t be reached because it’s no longer in business. (A lawsuit pending in Florida accuses the company of selling mortgage-backed securities that were supported by defective home loans.)
The lenders foreclosed on the Nallys’ house in September 2009. Three months later it was sold at auction for $155,900. The Nallys have since moved back to Fortuna, where they pay $1,250 for a rental that they share with their three sons, aged 3, 2 and 10 months. Their finances, Stephen said, are “in the toilet.”
The Nallys’ story is not unusual. Rosie Wentworth, program development director at Consumer Credit Counseling Service of the North Coast, sees lots of people in similar situations. In 2009 her company started a foreclosure prevention counseling program, and Wenworth, the program’s only counselor, sees as many as 10 to 15 new clients every month. “We could probably do more if we had more counselors,” she said.
The Nallys’ interactions with their lenders were pretty typical, Wentworth said. Loan modifications are notoriously difficult to get because, “Quite bluntly? The [lenders] make more on foreclosing on a house than they do on modifying the loan.” And short sales are not only difficult to get approved, they also can leave the sellers liable for the remaining debt. “They’re just not a good thing,” Wentworth said.
California is one of 11 so-called “non-recourse” states, meaning banks can’t hold borrowers liable for their mortgage debt if the house goes into foreclosure. But the foreclosure will stay on the Nallys’ credit report for seven years. Wentworth said families that immediately start rebuilding their credit can potentially be approved for another home loan in two to three years. But the biggest impact she sees from foreclosures is not financial. “It’s emotionally upsetting,” she said. “It’s traumatizing in many cases.”
A few days before Christmas, Stephen and Julie Nally sat in their rented Fortuna living room while their boys crawled on the furniture and watched TV. Their fuzzy red stockings were tacked to the drywall beneath the breakfast bar, and an illuminated Christmas tree stood next to the gas fireplace. They said they’d like to buy a home again — this very one, in fact — but there’s no way they could qualify for a loan. Now $20,000 in debt, they’re seriously considering bankruptcy.
Sitting on his couch with two of his three sons, Stephen reminisced about being a homeowner. “It’s like, ‘This is it. This is life,’ you know? What you see on TV all the time. It just didn’t happen the way we wanted it to.”
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Security National’s money troubles are far more complex, but then so is Security National. The privately held Security National Master Holding Co., headquartered on Fifth Street in Eureka, is parent to more than 130 distinct business entities, mostly “limited liability companies,” or LLCs. Collectively these companies specialize in real estate management, loan acquisitions and loan servicing.
Why so many? Brian Mitchell, Security National’s vice president of accounting and real estate, said it’s common to set up a new LLC every time a new group of properties is acquired. This so-called “ring fencing” serves to wall off investments from one another. That way, if one LLC (or a group of them) falls behind on its debt payments, its creditors can’t go after the assets of another LLC. In non-recourse states, home loans work in a similar fashion. If a homeowner defaults on her mortgage, the bank can take her house, but it can’t go after her savings account or her car.
On Oct. 17, 2011, a group of 10 Security National LLCs filed Chapter 11 bankruptcy in Delaware. Together, these 10 companies own 33 commercial properties in 15 states — mostly office buildings and shopping centers, plus two trailer parks, one in Wyoming, the other in Alaska.
These 10 LLCs make money by acquiring “underperforming commercial assets,” then making them profitable through “aggressive leasing and cost-cutting measures,” according to documents filed in bankruptcy court. This is Rob Arkley’s specialty. The president and CEO of Security National started his company in 1987 when he bought a mortgage loan portfolio from a failed Alaska bank. The company then acquired “distressed assets” from government entities, according to Security National’s website.
A “distressed” or “underperforming” asset is one that’s not generating as much money as it’s supposed to. In the case of mortgage loans that means the borrower isn’t making his payments — not on time, anyway. Most lenders view distressed assets as a hassle, but Arkley has made his fortune by seeking them out and making them pay.
In the chaotic aftermath of the economic crisis, however, the tables turned. Several Arkley companies under Security National Properties, a subsidiary started in 1996, found themselves saddled with debt and unable to make their loan payments on time. Before long, these companies had become underperforming debtors in somebody else’s loan portfolio. And those lenders were threatening to foreclose.
Here are the facts as told by John Piland, Security National’s chief financial officer, in a court declaration:
In October 2006 — the same year the Nallys bought their house in Fortuna — a number of Security National companies got a revolving line of credit for $200 million. There were multiple creditors, but Bank of America acted as the administrative agent.
Unlike the Nallys, Security National managed to get the terms of its loan modified on several occasions. The seventh amendment to the credit agreement, executed in April 2010, postponed the due date a full two years — from January 2010 to January 2012. But there were conditions: Just like a home mortgage, payments had to come in on a set schedule: $8,050,000 by November 2010; another $12 million by February 2011; $10 million more by October 2011.
In order to make those payments, Security National needed to sell some of its commercial properties, and at the time of the seventh amendment it had a contract to sell the Northway Mall, a dated indoor shopping mall next to an airport in Anchorage, Alaska, for $34 million. But after the amendment was signed, Security National ran into the same problem faced by countless homeowners at the time: From a seller’s perspective, the market sucked. Not only were values in the toilet but credit was tight.
The Northway Mall deal fell through. The buyer couldn’t secure the closing funds. Security National had eight other properties listed for sale. Of those, it managed to sell two and make the first payment of $8,050,000 on time. But Security National officials weren’t exactly happy with the state of the commercial real estate market. “Investors with cash were price gouging sellers that had no choice but to sell,” Piland complained in his court declaration.
Bank of America suspected that Security National wouldn’t make its second payment, and at a March 2011 meeting, bank officials told the company to sell every last piece of real property and pay the loan amount in full. This was the equivalent of foreclosing on a home loan. Security National officials argued that even if they did manage to sell all those properties, the price they’d get in the current market “could produce insufficient proceeds to repay the principle balance.” In other words, they were underwater, just like the Nallys had been.
Bank of America won’t comment, saying it wants to protect customer confidentiality. What’s clear is that there’s no love lost between BofA and Rob Arkley. In 2010 the bank sued Arkley and his wife personally for $50 million after Security National repeatedly defaulted on a group of so-called warehouse loans (“Arkley’s Word,” May 6, 2010). Without giving a reason, Bank of America dismissed that suit shortly after it was filed.
But now Arkley and his companies were in another standoff with BofA. Over the next several months, BofA and Security National worked to develop yet another loan restructuring agreement, but those negotiations came to an end on Oct. 7, 2011, when BofA informed Security National that it was gathering bids to sell its now underperforming loan “in the very short term.” Six days later, the 10 Security National companies declared Chapter 11 bankruptcy, preventing Bank of America — at least temporarily — from selling the loan out from under them. Going into bankruptcy, Security National owed just under $160 million.
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The 10 companies involved are merely business structures designed to protect assets. So these LLCs have no offices or employees of their own. (The parent company’s properties division has 81 employees, 24 of whom are local.) Their headquarters are considered the Eureka offices of Security National, yet on paper, nine of the 10 companies are Alaska-based LLCs (though their mailing addresses are in Baton Rouge, La.). The one exception, confusingly, is Security National Properties-Alaska, LLC, which is based in Delaware.
This virtual map-hopping is deliberate. “Each individual state offers a different balance of tax, legal and accounting advantages, and we have professionals to advise us on where to incorporate,” Security National VP of Accounting and Real Estate Brian Mitchell explained in a recent interview.
For any company looking to protect its assets (and name one that’s not), Alaska is considered the best place to incorporate, according to Lee McCullough, a Utah-based asset-protection attorney. The laws there make it harder for creditors to foreclose on business assets, he said. Delaware, meanwhile, is widely considered the best place to file bankruptcy. Partly this is due to precedent: With a long history of bankruptcy filings, Delaware’s bankruptcy laws are firmly established and therefore predictable. But bankruptcy courts there also have a reputation for being business-friendly. More than 60 percent of Fortune 500 companies are incorporated in Delaware. And since one of the 10 Security National LLCs is located there (on paper, anyway), the whole group can legally file bankruptcy in Delaware.
Again, these businesses make money through “aggressive leasing and cost-cutting measures.” This rigorously thrifty approach has affected the residents of Aspen Park, a bleak trailer court on the dusty plains outside Casper, Wyo. Nearly 200 corrugated metal trailers are arranged like piano keys around the elbows and cul-de-sacs of the park, which sits on a triangle of land between two freeways and a reservoir.
Though the residents themselves were unaware of it, many of them are listed among the creditors in Security National’s bankruptcy case. Tenants must pay a $550 security deposit when they move in, and since companies must list every single creditor in bankruptcy filings, the names of Aspen Park residents ended up on court documents next to retailers, insurance agencies, construction companies and various state and municipal tax collectors.
Ralph Caughie and his wife Jackie pay $550 a month to live in “The Aspens,” as locals call the park. In a phone interview last month, Caughie called the place a “rip-off” and a “slum court.”
“My wife was sitting on the toilet when it fell through the floor,” he said. Management eventually rebuilt the rotted floor, he said, but “I had to get on ’em three or four times before they got the right toilet.” Before being contacted by the Journal, Caughie and other residents had never heard of Security National. They said they walk their rent money down to the manager’s trailer once a month, and they were surprised to learn that their names were on court papers in a Delaware bankruptcy court.
Asked about the trailer park, Mitchell said employment is booming in and around Casper thanks to a natural gas boom (a boom fueled by hydraulic fracturing, or “fracking,” which has caused groundwater contamination in the area, according to a December report from the Environmental Protection Agency). Mitchell said he hadn’t heard about Caughie’s wife falling through the floor while on the toilet, and he didn’t agree with the characterization of the park as a slum court. “Is it the nicest place in town? Absolutely not. But I’ve been there. We provide the most affordable housing in the greater Casper area.” It is, he said, housing for the “working class.”
Mitchell said he anticipates that the company’s creditors, including the tenants of Aspen Park, “will be paid 100 percent of what they’re owed after this is resolved.”
That’s a tough thing to guarantee, according to Stanford Law Professor G. Marcus Cole. The goal in a Chapter 11 bankruptcy case is to give the debtor a fresh start, after submitting to a plan of reorganization. Security National would like that reorganization to be simply another extension on its loan agreement, but that is up to the judge. Fewer than 10 percent of Chapter 11 filings result in a confirmed plan of reorganization, Cole said.
Among the many requirements for such a confirmed plan, the judge has to believe that the business is viable — that it will eventually turn a profit and repay its debts. The largest unsecured creditor in this case is an Omaha contracting/architectural products company called AOI Corp., which is owed more than a million dollars. Could they and the roughly 1,400 other creditors to these 10 Security National companies wind up shortchanged, or even empty-handed? Could the working-class people in Aspen Park lose their security deposits?
Cole hasn’t reviewed the specifics of the Security National case. But in general, he said, who gets how much after a bankruptcy “really depends on the asset pool.” Secured creditors — those whose investments are tied to real property — get priority. Real estate security deposits are included in that category. So is the line of credit that BofA wanted to sell. But other debts must be paid even earlier, including the administrative fees for the bankruptcy case, unsecured taxes and employee wages. For the people in Aspen Park, Cole said, “There’s always the possibility that they won’t get anything.”
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As punishment for getting into debt they did not repay, the Nallys have been cast into a sort of financial purgatory. The blow to their credit will affect their ability to get new loans at reasonable rates; the issuers of their credit cards can jack up interest rates because they’re now considered a greater risk; and they may encounter the social stigma attributed to people who walk away from their home loans. It will take them years to recover.
Security National doesn’t have those problems. If bankruptcy proceeds the way company officials insist that it will, the companies involved will emerge not with a blow to their financial position but with another loan extension, and all of their assets intact. In the meantime, as the parent company confidently declared in the press release about the bankruptcy filing, “All day-to-day operations and business of all the Company’s properties will continue as usual.”
This article appears in The Debt Divide.
Brian Mitchell at SN might be the biggest slimeball in Humboldt County
That young couple made lots of bad decisions. That’s how things work when you are an adult; you have to act like one and deal with your problems instead of running from them and hoping everything will turn out alright.
Lots of bad choices, I hope that they have learned from their experience and don’t make such foolish decisions in the future.
Martha, I don’t think you got the message in the story. Why do the Arkley’s get to have their debt taken care of by the tax payers and this young couple doesn’t? Both made poor choices, but the richer party gets taken care of.
This is a truly excellent article; brave, as well.
The only improvement would have been to let people with underwater mortgages know there is no shame whatsoever in walking away.
If you have a personal relationship with the mortgage holder, and you know you’d reciprocally help one another, that’s one thing. If you got your mortgage from banksters, they are ripping you off by suggesting you have an “ethical obligation” to do anything more than the law requires. If such an obligation existed, California would not be a non-recourse state.
The Wall Street Journal, of all places, points this out quite well: http://online.wsj.com/article/SB10001424052748703795004575087843144657512.html
Typical. A couple that can barely afford to live thought it would be a good idea to pump out 3 children.
Brilliant.
The point is, look at what that friendly little local international financial conglomerate is doing to “communities” and how the people who run that friendly little local international financial conglomerate are pushing to do the same thing to Humboldt. It’s how the people who own that friendly little international conglomerate make money. They aren’t going to anybody’s door saying “sorry, we suckered you but that’s because you’re a sucker.” They’re playing nice…right here in Humboldt while trying to take us all for suckers.
Tired, what debt are the tax payers taking care of? In this ch 11 reorg ALL the creditors will be paid. On the other hand, the Nally’s made a dumb investment decision and cost their creditor about $80K. Sounds to me like the poor little family cost the tax payers more than the big ole corporation. AND they are contemplating filing BK due to the $20K they are in debt. That would be a ch7 and NO ONE gets paid. Why do all the libs/commies insist on trying to tear down one of the few employers left in this county? Please report on something newsworthy next time. Very poor reporting.
I always assumed Security National employed a few hundred people locally, not 24 as this article references
Well done Ryan.
This is a huge local/national story that merits front page coverage repeatedly since 2009, as thousands of Americans faced foreclosure day after day, year after year, frequently due to health care issues, just like the Nally’s.
Arkley Jr. took daddy’s $1 million and invested in the bargains available from the collapse of the 1980’s housing bubble in Alaska.
Then, he made a bundle leading up to the 2008 collapse redux.
Where media courage is desperately needed is in the critical coverage of these same local/national speculators fighting furiously downtown every day, packing public hearings and dominating political contributions, to retain favorable development regulations and begin the next housing bubble.
For those who know how to profit big from housing bubbles, it’s the best game in town since our industries left. Every savvy Realtor in town is suddenly doubling as a rental agency.
Young employed families, desperate to own their own home, face a community saturated in homes too big and too costly for 75% of local incomes. The infrastructure that belongs to everyone is being harvested by greedheads to build homes most local Families can’t afford.
Ubiquitous media self-censorship of this story is one reason half of America abstains from voting.
Despite the fact that Arkley made his fortune off of other people’s misfortune, I think his supporter above makes some reasoned arguments. (Well, if you take out the “libs/commies” comment).
I see the Nally’s issues, but they did make the decision to walk away from their home. That doesn’t come without a price. They took a risk and it didn’t pay off. It could have been worse. They still have their family, but they are broke and will have to rebuild. In the future, they will likely be more careful about those types of decisions. I’m just glad I live in a country where bankruptcy/foreclosure is an option. I’m also glad it’s a painful one. I should know. I’ve went through a bankruptcy as a sole proprietor after my business went under. I too made some poor decisions and paid the price. I still had my family, and that was what was important to me. I’ve recovered and recently purchased a home eight years later. If the Nally’s work hard, make some sacrafices and create a new life for themselves — they will be able to do the same thing. There really isn’t a villian here, but there is an opportunity to set aside all this acrimony and the blaming of banks, government and businesses and accept personal responsibility. No amount of blame will ease the economy out of recession or move the burden off the middle class. I hope the Nally’s find some peace and are able to move on.
Never said we could not afford to have 3 children, we don’t depend on any state or government assistance to live so I think we do pretty well for ourselves. Say all you want about our “poor decisions” but don’t bash me for having children. Thanks for doing this article Ryan 🙂
“There really isn’t a villian here, but there is an opportunity to set aside all this acrimony and the blaming of banks, government and businesses and accept personal responsibility”.
Dozens more people were arrested at the Occupy Eureka protest than for the tricks and traps used by Realtors, brokers and financiers leading to a worldwide economic collapse.
People need to drop their acrimony and get mad as hell.
Banks and mortgage lenders, during the bubble, assured borrowers that next year houses would be even less affordable, and that buying right now would create equity for the borrower within months. Meanwhile, they were bundling these “top-rated” assets for sale on international financial markets to hapless investors.
There’s plenty of blame to go around, but mortgage borrowers are not as culpable as lending institutions.
Thank you, “sigh”. You’ve summed things up perfectly in one crystalline sentence. Our collective insanity can’t be expressed more clearly than this:
“Dozens more people were arrested at the Occupy Eureka protest than for the tricks and traps used by Realtors, brokers and financiers leading to a worldwide economic collapse.”
“Never said we could not afford to have 3 children, we don’t depend on any state or government assistance to live so I think we do pretty well for ourselves. Say all you want about our “poor decisions” but don’t bash me for having children. Thanks for doing this article Ryan :)”
Wow, way to prove how ignorant you are. Obviously you cannot afford 3 children or you would have PAID YOUR MORTGAGE!!!!! That whole article is about how you BAILED ON YOUR RESPONSIBILITIES!!! Instead of adding to your debt load how about paying the debt you already have before taking on more responsibility??
Those of you in America who wonder why things are in the toilet, it is this sort of attitude that has put it there.
Lisa-
How can you be so rude? I mean honestly. It is easy to have an opinion when you really don’t know what my family and I have been through. Have you delivered a baby knowing he was dead? Have you had to walk away from a house that you loved? Life happens and if we had a crystal ball that would be great, wouldn’t it?
Do you know the balance of my bank accounts? So how can you say that I can’t afford 3 children? My boys have everything they need, want or desire. Keep in mind that this whole mortgage garbage happened 6 years ago, before we had children. I am a responsible person who has had a rough life, but I don’t let that rough life define who I am. I would NEVER bring a child into this world if I knew I wouldn’t be able to provide. So until you have walked in my shoes and seen what I have seen in my life, I propose you keep your comments about my children to yourself. Talk all you want about how you think we screwed up with the house, but leave my boys alone.
Lisa must be winded after spewing forth all of that righteousness, but Julie and Stephen did the smart thing by bailing on their upside down house. Their responsibility is to themselves and their children, not to Bank of America.
“Wow, way to prove how ignorant you are. Obviously you cannot afford 3 children or you would have PAID YOUR MORTGAGE!!!!! That whole article is about how you BAILED ON YOUR RESPONSIBILITIES!!! Instead of adding to your debt load how about paying the debt you already have before taking on more responsibility??
Those of you in America who wonder why things are in the toilet, it is this sort of attitude that has put it there.”
Why doesn’t this same rugged individualistic ethos apply to corporations?
Why are taxpayers expected to bail out the bankers and financial terrorists when they fail?
You’re looking in the wrong direction, Lisa.
Amen, Herp, but people like Lisa get all of their information from news programs that are produced by giant corporations. She probably blows a gasket when she sees someone on food stamps include donuts in their groceries, but it’s business as usual when bank CEOs reward themselves and their staffs with giant bonuses after the taxpayers bail them out.
No judgment passed on the family who walked away from their home; they are one of the many who has to face that decision with the economy crisis. My question here is, what does Security National have to do with them? They didn’t service this mortgage, did they? Nor originate it (nor does Security National originate any Mortgages to my knowledge)? I’m just wondering why this article chose to tie in a local business and bash them as if it’s their fault that the Nally’s had the misfortunes they did? Is it just me, or is it not crystal clear that Security National is barely making it by themselves; currently in Bankruptcy, multiple layoffs being reported over the years? Exactly who is bailing them out? I think the Nally’s story is like many others in America and is unfortunate regardless of who is to blame, but I think pointing fingers at Security National was just a way to ignorantly point a finger when they don’t seem to even have any relevance or facts straight.
So you all are thanking Obama for bailing out the banks? Or pissed off at him?
Nicely said 3:31…
What the article clearly implies is that there are avenues that evil kazillionares like the Arkley to avoid sinking into total financial ruin while good folks like the couple in the article have no escape.
Reading the article disproves the NCJ’s supposition – basically the article claims individuals will not file for bankruptcy protection due to the social conditioning we have all been subjected to, while big bad bogeymen like RA are impervious to this and have no qualms about using bankruptcy protection.
The NCJ is not blameless here either, with THEIR articles during the housing boom bemoaning the idea that nobody would be able to afford a house with the rising prices, perpetuating the myth that folks better buy before it was impossible to.
I wish the Nally’s nothing but the best and hope they are able to dig themselves out and succeed…and yes, they were sold a bill of goods by a mortgage industry that sold them a house they couldn’t afford.
“…what does Security National have to do with them?”
Security National is more like part of the cleanup crew. The investment banks and the mortgage lenders were the most culpable in milking the bubble. Somebody has to buy up all of those foreclosed properties, and it’s a risk. Hard to know what a “bargain” is while prices are still on the wane.
Sec Ntl and big lenders in the mortgage industry are not individual people risking their life savings – they are layered corporate enterprises free of personal risk and guilt. That’s what L(imited) L(iability) C(corporations) do – protect individuals from personal financial ruin. They then operate (as most businesses do) to maximize their profit – and do so at the expense of the “other” 99 percent. For the most part corporations have no soul or responsibility. Although exceptions exist (including the Arkley family on occasion), the whole idea is to turn a profit on you and me. Fair enough then – don’t do business with corporations – shop local small businesses.
There are tens of millions more Americans like Julie and her family. Few, with as much courage, and fewer-still in the media willing to reach out.
Thank you.
Despite the best intentions, no one can be sure their children will be secure in their family.
That’s why every industrialized nation on Earth provides universal health care, education, housing, job training and job placement for those willing to learn and to work.
Except in the U.S..
For a generation, America has been transferring its public wealth to the elites while divesting from its people to the drumbeat of traitors.
Well sigh please feel free to move to there then.
This article added much needed depth to my understanding of our current economic problems. All the comments were relevant and most brilliantly expressed. Sink,swim,surf or float, we are all in it together.
Thank you Ryan and thank you readers/writer for your comments.
Everyone is entitled to their opinion, file bankruptcy and heaven forbid, verbally bash a company.
The Nally’s are good people, (i know them personally) they were misled like others and they learned their lesson. If they file bankruptcy then that’s fine…will the taxpayers bail them out? No, they’ll be he responsible for their action by the courts. End of story and stop bashing the way they raise their kids.
SN and Archley can do whatever they want…file BK, file for divorce…they can even file their nails!
Mitchell can be a slimeball, goofball or even a Gay 1 ball! I’m not bashing him because of his preference ok…my brother is gay and my cousins a lesbian (once again I’m entitled to my own opinion).
They’ve all made mistakes, we all have. We need to stop looking at the negative and look at the positive things in these individuals. The Archleys might’ve done something positive, the Nally’s might’ve helped a neighbor, Mitchell could’ve even helped that lady get out of her toilet.
Stay positive and stay the course.
I’m happy to hear that Arkley has an openly gay man working for him in a management position
Tapping into a variety of sources, this very understandable and well-written article made sense of complex issues regarding loans and foreclosures, laws and regulations, bankruptcy, and the inherent disparity between individuals and LLC corporations. Well done. Thank you, Mr. Burns.
I completely agree with Skippy. The article cleared my hangover yesterday morning as I had partied with people whose idea of discussion was grunting incoherently and calling the US President a puppet.
Upon reading the article of the Neeley Family, it is true that they, along with hundreds of families face the same issues each year in America. However, with that being said, whatever happened to making a deal and sticking to it? Whatever happened to standing up to your commitments and responsibilities – no matter what it takes – not just simply walking away from them? They stated that they weren’t able to pay a mortgage of $1500. per month, however they were able to go onto having and raising 3 children (with an average cost of over $200,000 to raise each child until their 18 years old,) but yet they couldn’t -or wouldn’t – pay a 30 year mortgage that was much less then that? Really?? And now to top it off, they are contemplating on filing Bankruptcy to get out of the $20,000 they owe?! Yet when corporations like SN Properties files for bankruptcy protection, in the court of public opinion, this is a criminal offense? Something doesn’t add up here.
Sick of Arkley,
How is trying to turn a profit the same thing as trying to survive?
You’re suggesting that corporations have the right to profit, but human citizens have no right to provide themselves with basic needs?
No wonder the US is going down the shitter….you people are sick.
Actually, in the “court of public opinion” no one seems to care when a company files bankruptcy. It’s actually considered a sound and acceptable business practice for companies to file bankruptcy to restructure. The question is why is it considered shameful and not “standing up to your commitments” for individuals to do the same?
This is an excellent and much needed article about how corporations and citizens are subject to different protections and advantages. I want to thank Julie and Stephen Nally for allowing their story to be told. As I read the comments I was shocked by the harsh and ill-informed comments blaming and attacking them. There are many others in situations exactly like theirs, young families who bought at the wrong time and were subject to illegal lending schemes.
Serious crimes have been and continue to be committed by Wall Street and the banking industry. They need to be addressed, prosecuted and stopped.
“Griftopia” by Matt Taibbi is a great book if you’re interested in understanding what the “financial crisis” is really all about.
All of this “ranting” on here but are we solving anything?
Every major social evolution in this nation’s history began with the language of change… that became a chorus.
Protect your freedoms by exercising them.
Even our small-town blogs expose that our media-emperors wear no clothes.
Wait a minute! This couple wanted the “American Dream” and they said they wanted it NOW..and yet didn’t have a PENNY to put forward to buying their house, right? So the banks loaned them ALL the money for their happy dream. Then they have a sadness…20% of all pregnancies end this way, it is sad, It also happened to me…but they WALKED AWAY from the dream they wanted immediately. (“get out of here and change our lives, isnt that what he said?) Like many others here they ultimately did not respect their responsibility, did not act like adults, did not honor their debts and brought it all on themselves..
Dragging in a completely different story [to bash Arkley] and mashing it to theirs was ridiculous reporting. ALL the entitlement whiners have more “gimme” ammunition against the evil business world which GAVE THEM ALL THE MONEY in the first place. , “See ! the juvenile adults say.. they “didn’t get taken care of!” Fortunately 81% of American do think they should honor contracts. Nobody tricked this couple. Is there a problem in the loan and lending institutions? yes, and for many more complicated reasons than this story covered.
Thank you Thisle for you comments. I too suffered a terrible miscarriage years ago, but did not walk away from my financial obligations. It never even occurred to me to do so. Lenders are bound by confidentiality laws and cannot disclose the details of a loan. It’s unfortunate that we are unable to hear both sides of the story. I am employed by the Arkleys and have been for 15 years. I couldn’t ask for a better employer. I am also very lucky to be a homeowner BECAUSE of the Arkleys.
The poor, poor, mortgage lenders! Meanwhile, they get the federal bailouts and then point the finger at borrowers, discouraging “moral hazard.”
Luckily for the banks, they have lawyers, lobbyists, and a voluntary moral-constabulary (evidenced by the two comments above) to keep the lowly in check.