The big plan to change mortgage terms so people can remain in their homes is not working.

Anyone who has been out here in the jungle working with and against the big lenders could have seen that coming pretty easily. The news reports that 75 billion has been put into the program. That is a lot of money, at least where I shop anyway. It is also pretty easy to see why these modifications are ineffective. We need only to look to history. Some might suggest that the following is inaccurate or simplistic, and some might be correct, but mortgage modifications fail for reasons which are pretty well engrained in our society.

Housing is the foundation of all community. Somewhere, a couple thousand years ago, people figured out it was better to sleep, eat, relax and watch TV in a nice dry warm place with a roof and walls. They called them “huts”. While caves had been popular up until that time, bears, snakes and mountain lions also liked to call them home. No home can be at peace if ferocious beasts are snacking on family members while you are trying to watch the playoffs.

The discovery of the hut led not only to nicer and better huts, known as “houses”, and eventually to the idea that these houses belonged to whoever took the time and trouble to build them. This innovation leads to many more advances, including utility bills, real estate taxes (mailed by the “People in Charge of Things”) and the “mortgage”.

It also lead to the notion that the hut owner, who paid all the bills, could kick out anybody he felt like, including his brother in law freeloading on his couch.

This was not a problem, really, as some industrious tribe members saw the chance to make a few extra bucks by building extra huts, leading to the invention of renters.

Now, there is nothing wrong with renting, in and of itself. Remember, the whole idea was to have your own hut. It did not always have to be a palace. In some places, renting came to be the normal way of obtaining a hut.

So they coexisted, relatively happily, for several millennia, these renters and owners until, about 35 years ago, when the People in Charge of Things decided that home ownership was too valuable to be limited to only those who had the initiative, money or simple good fortune to go get their own hut. All those renters needed to be homeowners too, the People in Charge reasoned, but the renters did not have the money to buy them.

So instead of working to create a better economy so that the renters could get better jobs, make more money, and buy their own hut, the People in Charge told the banks simply to give the renters mortgages so they could buy houses. It did not matter if they could afford them. It did not matter if they even knew what a mortgage was. The mortgage terms could be tweaked so that the loan could be paid for at least the first few years. The renters could refinance a few years down the road. Now everyone would have a chance to own a home and everyone was once again happy, but not for long.

Well, renters are not used to shoveling snow or putting new roofs on houses or paying a mortgage and many did not have much money to begin with, so they naturally had a hard time keeping up with all this stuff. It was not their fault, really, it’s just that they might have been better off renting than owning, but the People in Charge thought otherwise.

When the renters fell behind on their bills, the whole lending industry shut down the chance to refinance. The People in Charge told the Bankers to change the loan terms to help them, and paid them to do so.

Now the Bankers, from far away tribes with a lot of money who went to Harvard and Yale, took the government’s money but faced a quandary. They were completely unfamiliar with the both the average homeowner or the average renter. They did not know how they lived, where they worked, what kind of people they hung out with. Remember, housing is the foundation of community and if you don’t know the community, how can you make decisions affecting people’s housing?

That did not bother them too much though. The Bankers lived in mansions (really, really big huts) and summered at the Cape or the Outer Banks (very often with the People in Charge) spending more on a round of golf that all the ordinary families spent on food in a week. They ran really big banks with thousands of underlings who did not make much money. The Bankers issued a proclamation to their underlings…

“Since the government is giving us more free money to fix the bad loans we made, you underlings must pretend to set up a program to modify the loans. Don’t really do anything, just go through the motions and we’ll get some checks. Above all, do not go to where their huts are. The less we have to deal with those tribes the better. Send us a note to let us know how it’s going. We’ll be parasailing in Morocco.”

That pretty much brings us up to the present point in history.

If, instead of giving them money to go through the motions, the People in Charge made the Bankers come and spend some time in the communities which are being devastated by the fact that families are losing their homes, maybe things might improve a bit. Maybe they could discuss this over a round of golf. What would it hurt?

Unfortunately, it is not happening. About 436,000 of the people enrolled in Mortgage Modification have dropped out of the Program, more than a third.

“The foreclosure-prevention program has had minimal impact,” said John Taylor, chief executive of the National Community Reinvestment Coalition, a consumer group. “It’s sad that they didn’t put the same amount of resources into helping families avoid foreclosure as they did helping banks.”

Not surprisingly, in view of history, the Average Homeowner Tribe is on their own.

Money problems invariably lead to shame, distress and humiliation. Embarrassment alone may be the most important single factor which prevents people from getting help and formulating a financial game plan. I am continually amazed at how tremendously self-conscious ordinary people are about money trouble.

It is too bad more Americans at all levels do not share this sentiment
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Major airlines file successive Chapter 11 cases whenever they see fit. Headlines don’t seem to bother them as they fly the friendly skies, presumably with no money for fuel and repairs.

We see news stories that Harrisburg, our State Capital, is considering bankruptcy. California and New York are not far off, it seems.

Likewise Donald Trump is always filing, or threatening his lenders with, reorganization under the Bankruptcy Code.

Martha Stewart not only had tax trouble but did jail time for insider trading. She’s still on TV ( who would watch her?) Nicholas Cage lost his house to foreclosure. I guess the residuals from Con Air, second only to Die Hard in cable T.V. replays, were not enough to keep a multi-million dollar mansion going.

So why are everyday people so shamed about finances, especially at a time when everyone seems broke?

Mainly, for people I have spoken to over the years, pride drives them to keep their money trouble under wraps.

The truth of the matter is that most money problems are a very private affair. No one needs to know you are in trouble. In fact, other than perhaps those closest to you, no one really cares. The problem with keeping things to yourself is that by the time something happens which makes it compulsory to seek help, it may be too late. Acting early can prevent a financial disaster. Knowing the basic principles of insolvency alone can relieve the shame and distress.

*Thanks to John Milton for the title of this article.

There is no one more vulnerable than someone who is in serious financial trouble.

When money grows tight, it is hard not to panic. Fear takes over. What is going to happen? Can they take my house? My car? What does a judgement mean? Can they take my furniture?

Can I go to jail?

Most people make poor decisions when they are under terrible pressure. Fear dominates their thinking.

With increasing frequency commercials are airing on television and on the radio. “Eliminate your Debt”…”Pay off your Mortgage”…”Restore your Credit”…

Letters designed to look like official correspondence marked Personal and Confidential titled “2010- DEBT RELIEF ADVISORY” advise that “you have been pre-selected…reduce monthly payments by half. We have helped thousands of people like you.”

The ads and letters throw out time frames of three to six months and promise debt reductions of up to 80 per cent. The letters are poorly written, the grammar selection invariably incorrect.

Who is sending out all this stuff? A quick Google search of the name pulls up a litany of complaints. What kind of people, who know nothing about credit and collection, would possibly spend the time and marketing money to hold themselves out as experts in a fairly complicated field, just to grab a thousand bucks from a whole bunch of people, then fold?

I have had client after client tell me, with complete disbelief in their voices, that for a up to a year, they sent monthly payments, their hard earned money, to a debt settlement service in Nashville or Los Angeles or Baltimore. They kept sending the money until the debt settlement company stopped answering its phones. They later found out that the company never settled anything, that nothing was done to reduce debt or prevent lawsuits. The company simply vanished. Now the creditors who were to be treated in the “program” are filing lawsuits.

Clients always ask “How can they get away with that?”

The sad answer is, they just did.

At a time when they can least afford to waste money and time, when every dollar becomes more important than it has ever been, these poor people have just been ripped and quite viciously. Did you ever get beat out of money? Ripped off, and you are in a position where there is absolutely nothing you can do about it? Having money stolen ranks up there with the worst of experiences. How much worse because the poor soul sent it freely?

Can the company be sued? Of course, but suing some fly by night operation a thousand miles away, which existed only to run a big national ad campaign and then disappear, is a very questionable proposition. It takes time and money, both of which are in short supply.

Oddly, the theories espoused by some of these companies are good. Disciplined savings and professional negotiation, together with the passage of time, ought to yield a reduction in overall debt and an improved financial picture. It might take 3 or 4 years, but done correctly it is a good solution.

The theories however remain theoretical, as these companies steal your money in a very tangible fashion, booking the payments as fees and then collapsing behind a corporate shell.

It is best to stay local. The problem then arises is who can handle this work competently and honestly? The answer is that there are very few experienced lawyers who can really negotiate and can litigate. If you go to a bankruptcy lawyer, you’ll get a bankruptcy. Our country needs workout professionals who can apply basic insolvency tenets to the situations of everyday small business and people.

Do business with people you can physically meet, not some website or an “800″ number.

Maybe there are good debt settlement companies out there, but I have never seen one.

The Gas Companies are going to drill under the river.

They want, and will likely get, eminent domain power.

Blithe headlines from the oblivious local paper.

The only difference between now and 150 years ago was that back then, the coal and rail barons did not even make any pretense of having concern for the environment or the people of this region. Then, many slaves worked for few masters. As a result we live today in a giant black desert, the banks of the Susquehanna are the color of rusted steel, and each January anyone who pays attention can attend the remembrance ceremonies for the miners who died underground in the frozen waters of the Knox Mine.

The state assures us…

“The state Department of Environmental Protection says that under-river gas exploration poses no more risk than any of the 1,400 other wells drilled into the Marcellus formation, which is a mile below the surface.”

Sounds real official. Well that solves that. We should probably just keep our heads down and and ignore the pending further destruction of our area.

Now don’t get me wrong. While I do love the Pennsylvania mountains, no better place to live, I do not oppose getting the gas to market. Truthfully, I do not even oppose wrecking the whole place. We know all too well, its not the end of the world. From my window I can see two landfills which, as I write, are floating carcinogens through the spring air.

But if it is going to happen, let’s get paid for it, and not in eminent domain dollars. Let’s get paid for a house in North Carolina, or a new start somewhere else. If they want this region that bad, they can have it, but let us in on the profit.

We’ve been fighting West Virginia for dominance in the financial basement of this country for a century. Its time to let the Mountaineers and their leader, John Rockefeller (by the way, his family’ fortune was also made from Pennsylvania’s natural resources) finally win.