op-ed

Banks are the new movie bad guys

Rebecca Cusey Contributor
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In the wake of the real estate meltdown, Hollywood has created a new bad guy: cold-hearted bankers bent on foreclosure.

The Tom Hanks, Julia Roberts flop “Larry Crowne” stars Hanks as a Los Angeles man facing foreclosure after being laid off from his sales job. Larry served in the Navy for 20 years and presumably has a pension, but that’s no help with his mortgage upside down.

In “Warrior,” opening September 9, a high school teacher and his wife work three jobs between them but still face foreclosure after pulling money out to pay medical bills for their stricken daughter.

Even the otherwise compelling “Machine Gun Preacher” (opening November 18) portrays a loan officer callously refusing to give a preacher another second mortgage, money intended to support an orphanage in the Sudan.

The big, bad heartless banks just won’t listen to reason.

Reality is much different, according to Mark Perry, an economics professor and scholar at the American Enterprise Institute. “The average homeowner facing foreclosure stays in their house without making a payment for 587 days,” he said via email. That number comes from a report from Lender Processing Services, a Florida company that tracks real estate trends.

Banks do not necessarily want foreclosed properties, Perry says: “Once the bank takes back the property, they have a net set of problems and expenses: upkeep, maintenance, property taxes, utilities, security. Empty houses are targets for theft and vandals, stealing copper, etc.” All this makes banks willing to work with homeowners to find a way to keep them in the house.

But in the movies, they’re eager to foreclose. After all, 587 days is a long time to show onscreen.

The movie trend reflects America’s anger at banks, and also some of the illogic. The bank scene in “Warrior,” an otherwise excellent but violent Rocky-esque film about Mixed Martial Arts, is particularly confusing. Brendan Conlon (Joel Edgerton) argues with the bank about his county assessment, although banks have no control over county assessments nor do assessments change the terms of the mortgage. They could affect taxes, in which case the argument would be with the county and not the bank. One wonders if the screenwriter has any knowledge of mortgages at all or if the foreclosure threat was just a convenient plot device.

The bottom line? Brendan has taken all the value out of his house and now expects the bank to bail him out. Good thing he knows how to throw a punch in the Ultimate Fighting Championship, which offers big prize money.

Although both Brendan and the Machine Gun Preacher have pure motives, to take care of a sick child or to help victims of horrible war in Sudan, both fundamentally misunderstand the nature of real estate loans. They see the home as an endless source of cash and the loan repayment as optional if they have a good excuse. By extrapolation, the writers and directors of the movies could use a crash course in real estate economics.

Larry Crowne takes more responsibility for his actions, in a way. He rolls up his sleeves, trading in a SUV for a scooter, finding a fry-cook job and enrolling in college. He also performs a sort of self-foreclosure, moving out of his house and delivering the title and keys back to the bank. He walks away from the loan, the money he knowingly borrowed from the bank, leaving the bank to take the loss. In the film, this is a win, not a morally dubious choice. Larry has beaten the bank.

Who pays when people walk away? We know who they are: Those who had bank stocks in their retirement portfolios and now are punished for their planning by losing money that would have allowed them to stay in their houses in their old age. Or the taxpayer is left holding the bag, which means those who sacrifice to make their mortgage are paying part of the mortgage for someone else who bought a house bigger than they could afford.

Where’s George Bailey when you need him? At least in “It’s a Wonderful Life,” we understood that banks aren’t a bottomless well of funds and that money had to come in for money to go out.

Rebecca Cusey is a movie critic and entertainment reporter.