By now, the full extent of damage from the so-called “liar loans” of the real estate boom have been almost completely felt. The reckless spending of ambitiously greedy consumers looking for their very own McMansion to inhabit when combined with devil-may-care banking underwriters and villainous real estate speculation combined fatally when the national housing market imploded on itself in 2008. Cutting corners to earn huge profits was the norm, and plenty of home loans went through with little to no documentation of crucial criteria like borrowers’ income or other credit obligations that might have an impact on their ability to repay. Meanwhile, homeowners happily ignored the ticking time bomb of ARMs and grossly inflated home values, banking on the slick promises and reassurances of the banking industry. In most places, these homeowners would be called stupid, and inevitable foreclosure looked at as the penalty for their lack of common sense. But one audacious Floridian is suing her bank, claiming that it’s their fault her personal finances were trashed as the result of a “dangerous” no-documentation mortgage.
According to the St. Petersburg Times, Linda Soronen has filed suit against Wachovia Bank for what she claims to be their responsibility in the matter of Soronen’s foreclosed home. The retired woman refers to her mortgage loan – an obvious case of a liar loan if I ever saw one – as a “defective product.” Soronen, whose husband is a lawyer who is filing the suit on her behalf, is seeking justice on what she perceived to be all the homeowners in Florida “victimized” by this kind of lending. The kind of loan that Soronen signed for in 2006 (which court records indicate was made in the amount of one hundred sixty-two thousand dollars) has drawn massive amounts of scrutiny for having required little if any of the normal paperwork that bankers use to determine whether consumers can reasonably be considered financially fit to receive a loan: pay stubs from their place of employment, federal tax returns for recent years, and accurate, proven bank balances. Soronen received her “liar loan” from World Savings Bank (now defunct and known to be notorious for handing out no-doc mortgages during the height of the housing boom), which has since been absorbed by Wachovia.
Soronen claims that, at the mortgage’s outset, she was a “partially disabled, unemployed fifty-seven year old nurse with no income.” Therefore, she asserts, World Savings Bank was irresponsible and reckless in lending to her, no matter what her own involvement was. Of course, the fact of the matter is that no-doc mortgage applications asked applicants to estimate their own income. It can be assumed that Soronen’s answer pleased the bank enough to lend to her, which makes one wonder if she did not falsify her application. To this charge, Soronen claims that the bank’s application was misleading. She says that the question of her “family income” led her to include her husband’s pay in the calculation, even though she was always going to be the sole party holding the loan.
Soronen seeks class-action designation for her lawsuit, and wants her home mortgage made retroactively void, theoretically to repair the damage that its collapse did to her credit score. She also virtuously claims the sum of ten million dollars in punitive damages, which she intends to donate to the state of Florida. Of course, the whole thing is ridiculous. The lending industry was inexcusably slimy during the earlier part of the last decade, it’s true. But that’s no excuse for completely irresponsible consumerism, which is what Soronen undoubtedly committed.
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