There's no place like home for the holidays. But this year, Phil and Barb Kubes and their three children will have to settle for memories of Christmas past.
Last month, the Omaha, Neb., family was forced out of their home of 12 years after falling drastically behind on mortgage payments. Having failed to reach a workable solution with Litton Loan Servicing, the Houston-based company that collects their mortgage debt, the Kubes were foreclosed upon and told to vacate.
They ended up renting a house across town.
"It's comfortable," Barb Kubes said. "But it's not home."
Litton is by no stretch the largest loan servicing company -- essentially the mortgage industry's version of a collection agency -- but it is among the ones coming under the most heavy fire in the wake of a housing crisis that continues to roil the country.
Litton, unfairly or not, has drawn the wrath of legions of homeowners, homeowner advocacy groups, lawmakers, labor unions and class action attorneys alike. One glaring reason Litton has attracted so much of the scorn directed at loan servicing in general: It is owned by Goldman Sachs, proverbial poster child for Wall Street's excess and its percieved indifference to the plight of average Americans.
"Upset," Barb Kubes said, choking back emotion, when she was asked how she felt when she found out Litton was owned by massively profitable Goldman Sachs.
It didn't help that her hometown hero, Warren Buffett, the so-called Oracle of Omaha, invested $5 billion in Goldman shares during the height of the crisis last year.
"I'm surprised Warren Buffett would have anything to do with them," she said.
With the exception of maybe AIG, no firm has come to symbolize Main Street's disgust with Wall Street practices more than Goldman. In a move that caused a global backlash, Goldman has said it expects to set aside more than $20 billion for bonuses and other forms of employee compensation and benefits at the end of the year.
Critics of Goldman's compensation practices say the firm has no business handing out billions to bankers and traders after having been the beneficiary of numerous forms of federal assistance, including TARP money (that Goldman has since paid back) as well as billions in FDIC-guaranteed loans and another $13 billion in taxpayer money given to AIG that was ultimately paid to Goldman.
Though it will derive only a tiny fraction of the billions it expects to earn this year from revenues produced by Litton, Goldman nevertheless finds itself, albeit indirectly, connected to a highly controversial issue at the crux of the housing crisis: Widespread failure by banks to allow homeowners to modify their loans.
A recent study by the Federal Reserve Bank of Boston showed banks have little incentive to modify loans to help homeowners avoid foreclosure because of one simple reason that at this time of year perhaps only Ebenezer Scrooge could appreciate: Loan modification is not profitable for lenders.
Because mortgages are typically sold off to third party investors, the entities that service the loans, such as Litton, do not have a vested interest in avoiding foreclosure, according to Julia Gordon, senior policy counsel at the Washington, D.C.-based Center for Responsible Lending.