The role of FDIC in mitigating foreclosure blues is under wraps – there is no transparency. FDIC has been auctioning off difficult loans, mainly commercial, at rock bottom prices. It is suffering financial losses but is avoiding the onus of directly confronting borrowers and realizing unpaid dues.
Matthew Anderson of Foresight Analytics, California has been studying the pattern of FDIC sales. He came to the conclusion that the purchasers of these loans target profits amounting to 25% to 35% per annum. It is a high return rate and can be achieved only by purchasing high risk loans.
The bullying tactics of collecting loans have spread fast across the country keeping pace with the collapse of the banks.
Michael Bauer is in his early 50s. He is an electrician and owns a vending machine enterprise for the last 15 years. He has never fallen back on his payments but might have to file bankruptcy because a body named SMS Financial XVII has filed a legal suit against him. This entity purchased loans from FDIC following the collapse of First National Bank of Nevada. Michael Bauer said, “I owe the money. I know that, and I am prepared to repay my loan over time,” he said. “But to be strong-armed like this, at the moment when you are the most vulnerable, it just does not seem right.”
The same drama is being played out in Northwest Arkansas the home of Wal Mart and Tyson Foods. The region can hardly be considered the right place for such theatrics but after the collapse of ANB Financial things got going in rather an unpleasant way for the borrowers.
In the fall of 2008 the first auctions of FDIC kicked off. At that time of the staff of the agency tried to warn the small entrepreneurs in Fayetteville to quickly clear past dues to avoid grave consequences. Marsha Dunbar who operated as a FDIC contractor said, “They said it out loud and quite clearly. Settle up these debts now, or it is not going to be pleasant.”
Rick Williamson made his move when he noticed the first signs of recession about a year ago. He was once a soybean farmer and then became a banker. He gave up his bank job to set up his own debt collecting business. In his mid fifties Williamson is not shy about confronting debtors. He contemptuously refers to the federal governments as nannies trying to protect the defaulting debtors to the detriment of the general economy.