tagged w/ foreclosure-gate
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Banks foreclosing on US churches in record numbers
By Tim Reid
LOS ANGELES, March 9 (Reuters) - Banks are foreclosing on America's churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data.
The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance.
Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group.
In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.
The church foreclosures have hit all denominations across America, black and white, but with small to medium size houses of worship the worst. Most of these institutions have ended up being purchased by other churches.
The highest percentage have occurred in some of the states hardest hit by the home foreclosure crisis: California, Georgia, Florida and Michigan.
"Churches are among the final institutions to get foreclosed upon because banks have not wanted to look like they are being heavy handed with the churches," said Scott Rolfs, managing director of Religious and Education finance at the investment bank Ziegler.
Church defaults differ from residential foreclosures. Most of the loans in question are not 30-year mortgages but rather commercial loans that typically mature after just five years when the full balance becomes due immediately.
Its common practice for banks to refinance such loans when they come due. But banks have become increasingly reluctant to do that because of pressure from regulators to clean up their balance sheets, said Rolfs.
"A lot of these loans were given when the properties were evaluated at a certain level in 2005 or 2006," Rolfs said. "Banks have had to reappraise the value of these properties, whether it's a church or a commercial office building. Values have gone down, so the loans cannot continue in the same form."
The factors leading to the boom in church foreclosures will sound familiar to many private homeowners evicted from their properties in recent years.
During the property boom, many churches took out additional loans to refurbish or enlarge, often with major lenders or with the Evangelical Christian Credit Union, which was particularly aggressive in lending to religious institutions.
Then after the financial crash, many churchgoers lost their jobs, donations plunged, and often, so did the value of the church building.
CONGREGATIONS IN TROUBLEBanks foreclosing on US churches in record numbers
By Tim Reid
LOS... more
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By CRAIG E. POLLACK and JULIA F. LYNCH
AFTER slowing down in the first half of the year, the rate of homes entering foreclosure is rising again. First-time default notices were served on 78,000 homes in August, a 33 percent increase from July. A $1 billion federal program to help jobless and underemployed homeowners ended Friday. Foreclosure notices were filed against a record 2.9 million properties last year, and an additional 1.2 million in the first half of this year.
Related
Foreclosure is not just a metaphorical epidemic, but a bona fide public health crisis. When breadwinners become ill, they miss work, lose their jobs, face daunting medical bills — and have trouble making mortgage payments as a result.
But that is only part of the story. A growing body of research shows that foreclosure itself harms the health of families and communities. In our 2008 survey of 250 people undergoing foreclosure in the Philadelphia area, 32 percent reported missing doctor’s appointments and 48 percent said they let prescriptions go unfilled, significantly higher rates than others in their community. A paper released last month by the National Bureau of Economic Research found that people living in high-foreclosure areas in New Jersey, Arizona, California and Florida were significantly more likely than those in less hard-hit neighborhoods to be hospitalized for conditions like diabetes, high blood pressure and heart failure.
More than one-third of homeowners in our study had symptoms of major depression. The N.B.E.R. study found significantly more suicide attempts in high-foreclosure neighborhoods. For every 100 foreclosures, it found a 12 percent increase in anxiety-related emergency-room visits and hospitalizations by adults under 50. Losing a home disrupts social ties to neighbors, schools, jobs and health care providers — ties that under better circumstances promote good health. Neighborhoods suffer, not just homeowners.
Most programs to stem the tide of foreclosures rely on mortgage counselors at nonprofit groups supported by federal grants, who work closely with homeowners and banks to try to find a financial resolution.By CRAIG E. POLLACK and JULIA F. LYNCH
AFTER slowing down in the first half of... more
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JP Morgan is Foreclosing on the US Treasury
I am not making this up. Hat tip reader Deontos.
Here is the high level story: JP Morgan Chase and Northwest Trust foreclosed on a property in Hillsboro, Oregon. Treasury (more accurately, the IRS) has a tax lien on the property. So this is pretty cheeky. The plaintiffs didn’t notify the IRS, who they claim was an existing junior lien holder, of the “sale”. Query what the IRS’s status is given the failure to give notice. So does JP Morgan want to own up to its error and pay the lien? Noooooo. THEY WANT TO FORECLOSE ON THE US GOVERNMENT. They are asking for the IRS to act in 30 days or go bye bye.
The compliant is silent on how the tax lien came about, but I thought as a general rule that tax liens were senior to mortgages. Reader input welcome.(the affidavit is at site)
J.P. Morgan what maroon';s LOL foreclosure-gate takes out the US govt. this is classic ...JP Morgan is Foreclosing on the US Treasury
I am not making this up. Hat tip reader... more
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By Scarecrow and Jane Hamsher. Cross posted from FireDogLake
The Politico headline says it all: U.S. credit downgrade worries Obama, Congress more than default
It’s not the default that strikes the most fear in the White House and Congress these days. It’s the downgrade
As Robert Reich notes, Standard and Poors is the “biggest driver in the deficit battle.” Why would anyone care what the corrupt and disgraced organizations who quite nearly brought down the world economy think about anything at this point? And yet, that is where elite opinion is focused right now:
[W]hat really haunts the administration is the very real prospect, stoked two weeks ago by Standard & Poor’s, that Barack Obama could go down in history as the president who presided over his country’s loss of its gold-plated, triple-A bond rating.
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Financial analysts say such a move would hit Americans with more than $100 billion a year in higher borrowing costs, but it’s not just that. It would be a psychic blow to a nation that already looks over its shoulder at rising economic powers like China and wonders, what’s gone wrong? And it would give the president’s Republican rivals a ready-made line of attack that he’s dragging the country in the wrong direction.
This rumbling has been coming from Capitol Hill for a while, which made us start asking questions about what was really going on with Standard and Poors. It felt like there’s a story-behind-the-story driving S&P’s actions in the debt ceiling debate, which appear inexplicable at face value and go way beyond what Moody’s or Fitch have done. And the more we looked at the timeline of events, the more we wondered how the intertwining dramas of a) S&P downgrade threats, b) the liability that the ratings agencies may have for their role in the 2008 financial meltdown, and c) the GOP’s attempts to insulate the ratings agencies from b) are all impacting each other.
Timeline of Events
On July 21, 2010 President Obama signs Dodd-Frank into law. Prior to Dodd-Frank, the courts found that credit ratings are expressions of opinion that were protected under the first amendment, subject to a demonstration of actual malice:
The Dodd-Frank Financial Reform Act stripped away those protections, so that CRA’s were now subject to the same expert liability as an auditor or securities analyst, and required only a “knowing” or “reckless” state of mind for liability, rather than proof of scienter. It also repealed Section 436 of the Securities Act of 1933, which granted “safe harbor” for ratings, which were part of a prospectus.
Which, for obvious reasons, made the ratings agencies extremely nervous.
In October 2010 S&P issued its first threat to downgrade US debt: “If the U.S. government maintains its current policies for the next 40 years in the face of rising health care and pension spending pressure, it is unlikely that Standard & Poor’s Ratings Services would maintain its ‘AAA’ rating on the U.S.” The report paints a target on the back of Social Security and Medicare, says nothing about the wars, the Bush tax cuts, private health care costs or the absurdity of 40 year projections.
Ratings agencies are supposed to be reactive and analyze only what they see. They are not supposed to explicitly or implicitly give ”assurance or guarantee of a particular rating prior to a rating assessment.” By prescribing not only an austerity package for the United States, but stating that “in the long term, the U.S. AAA rating relies on reforms” of Social Security and Medicare, they most assuredly broke that rule.
S&P put forth no legitimate basis for their downgrade threat. As every reputable economist keeps reminding us (James K. Galbraith, Joe Stiglitz, FT’s Martin Wolf, Peter Radford, Bruce Bartlett, Krugman), the US is not Greece and does not face its risk of default. Unlike Greece(more at link and petition for S.E.C.) https://secure.firedoglake.com/page/s/investigate-sp?source=email&subsource=v1By Scarecrow and Jane Hamsher. Cross posted from FireDogLake
The Politico headline... more
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Foreclosure-gate -
(this is good news for the people facing foreclosure & those falsely closed upon in foreclosure's by big banks and Mers and could have far reaching implications )
Yves Smith-US Bank Halts Evictions in Oregon After Judge Reverses Foreclosure
Oregon judges have delivered a series of setbacks to servicers and securitization trusts. A recent decision, Hooker v. Northwest Trustee Services, ruled that assignments of the beneficial interest (as in, transfers of the note) needed to be recorded. That makes any foreclosure in the name of the mortgage registry MERS a non-starter, since MERS was never and could never be the holder of the beneficial interest. This will have little impact going forward, since MERS has instructed servicers to stop foreclosing in its name, but there are plenty of foreclosures in the pipeline that were initiated in the name of MERS.
The latest move is that Judge Grand reversed a foreclosure sale due to the failure of the parties representing the lender to satisfy the requirements of Oregon’s recording statute. To put it mildly, foreclosure actions are seldom reversed. The decision is terse but it has wideranging ramifications. The Oregonian provided a good write-up of the case. Key extracts:
A Columbia County judge has blocked U.S. Bank from evicting a Vernonia woman whose home it purchased in foreclosure, concluding in a case with far-reaching implications that her lenders had not properly recorded mortgage documents.
Last week’s action appears to be the first in which an Oregon judge has halted an eviction and declared a foreclosure sale void after the fact. The ruling, if it stands, raises questions about the validity of other recent foreclosures in the state and could create serious problems for lenders and title companies, as well as for buyers of such properties…
A U.S. Bank spokeswoman said the bank would cease further eviction action and assess its “appropriate next steps.”
Nearly all foreclosures in the state occur without a judge’s involvement under so-called nonjudicial proceedings. But this ruling, legal observers say, could potentially divert more foreclosure actions into courtrooms, a more time-consuming and costly proposition that could exacerbate the state’s housing slump.
“This will certainly be problematic for lenders,” said David Ambrose, a Portland real-estate attorney.
It also casts doubt on the validity of already completed foreclosure sales in which lenders resold mortgages without recording the sales in county recorder offices. Many of those questionable transactions, including Flynn’s, involve the Mortgage Electronic Recording System….
The path will remain muddled for the mortgage industry until a definitive case reaches the Oregon Supreme Court or lenders decide to take a different strategy and negotiate settlements with distressed homeowners, real estate attorneys say.
The article has the background of the case and makes clear that this is a qualified win for the borrower, since it is unclear who has title to her condo. She bought it 20 years ago (and therefore has equity in the property) but fell behind on payments after she quit her job and her new business proceeds plus other sources of income weren’t enough for her to stay current.Foreclosure-gate -
(this is good news for the people facing foreclosure & those... more
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Florida continues to show a rather disconcerting willingness to throw its citizens’ rights under the bus to help the banks. The state created special foreclosure courts to clear up a substantial backlog, which might not have been such a bad idea if they had been properly implemented. However, they were staffed with retired judges, many of whom seemed to put speed over due process. There have been numerous reports of judges refusing to hear motions or evidence presented by borrowers, to the point where the ACLU contested the procedures used as violations of due process.
To some degree, this has become moot since these kangaroo courts are expected to be shuttered (they required an extension of funding to continue). Moreover, new foreclosure filings have slowed in Florida as a result of the robo-signing scandal. The revelation of widespread abuses by banks has led some judges to dismiss cases with dubious documentation; judges are also complaining that banks are seldom coming to hearings on foreclosure cases.
Never fear, with government bought and paid for in America, someone was certain to try a fix. The Florida governor has, in effect, suggested that if banks can’t meet the existing requirements for foreclosure, then the solution obviously is to lower them. From a Daily Business Review article on a speech Florida governor Rick Scott made to the state bar association (hat tip Lisa Epstein):
The governor called on judges and lawyers to look for ways to cut court costs, improve efficiency and clear up the foreclosure backlog “as quickly as possible.” The clogging of the courts by foreclosure cases is discouraging businesses interested in moving to Florida, Scott’s main priority, he said.
“It scares people … and is clearly having an impact on the economy,” he said. “I’m looking for The Bar to come forward with suggestions on how to clear this up. Maybe we should consider nonjudicial foreclosures.”
Scott encouraged judges to carefully review verdicts to look for “meritless” cases.
“If we have a huge verdict that seems ridiculous, that adversely impacts companies who want to come to this state,” he said.
The connection between a foreclosure overhang and companies’ willingness to move to Florida seems pretty strained (and who are these business champing to relocate to Florida, anyhow? The idea that this is a meaningful number of entities in a weak economy sounds like wishful thinking). Scott presumably subscribes to the widely-discredited Mellonite logic that foreclosing rather than trying to do deep principal mods for borrowers that have viable incomes and flooding the market with foreclosure sales would somehow be an economic plus.
And look how he would like to square the circle: by turning Florida from a judicial foreclosure state (where the foreclosure has to be approved by the courts) to a non-judicial foreclosure stat (where the lender merely has to advertise the pending foreclosure and can then foreclose if the owner does not go to court to oppose the action). The good news is I am pretty sure this is easier said than done (lawyers please pipe up).more at link and sourcesFlorida continues to show a rather disconcerting willingness to throw its... more
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Oregon's topsy-turvy foreclosure ride has taken a few more rolls in recent weeks as one large lender filed a flurry of new foreclosure starts, bucking a national trend.
Nationally, newly launched foreclosure actions dropped 14 percent in April, according to Realty Trac Inc.
Not in Oregon, where they've jumped 236 percent, from 1,100 to 3,700, according to another foreclosure data tracker, ForeclosureRadar.com. Realty Trac recorded a similarly high number: 3,200.
The surge in "notices of default" comes from one loan servicer -- Bank of America Corp.'s foreclosure arm, ReconTrust Co.
And it follows a jump in cancelled foreclosures filed by ReconTrust in late February and March. Those followed rulings by federal judges halting out-of-court foreclosures in Oregon, saying lenders failed to follow state recording law.
Bank of America spokesperson Jumana Bauwens said the withdrawals and new filings resulted from a review late last year of its foreclosure process when it halted sales in all 50 states.
"We wanted to provide our customers with every opportunity for home retention as well as ensure all foreclosure filing were completed with our improved process," Bauwens said in an email last week. "As we entered April, we began initiating filings with that improved process. The filings in April may or may not be those held back in February and/or March."
But outside real-estate experts say little changed with the new filings. Federal judges in Oregon have halted foreclosures by ReconTrust and other lenders because documents showing the successive chain of mortgage ownership had not been publicly filed in county recorders' offices, as required by Oregon law.
Phil Querin, a real-estate attorney and critic of the finance industry's handling of foreclosures, say ReconTrust's new foreclosure starts are no different.
"They're doing the same thing they were before," Querin said. "They've not recorded successive assignments."
The bank also might have been running up against a legal deadline that limits postponed foreclosures to six months, he said.
"We don't really know too much because the banks aren't talking," Querin said.
Last month, the rate of new foreclosure starts slowed but remained higher than in February, according to recorders' offices in two Portland-area counties.
In Clackamas County, new foreclosure filings totaled 151 in March, with only 17 from ReconTrust. In April, filings spiked to 560, with 432 filed by ReconTrust. In May, they totaled 305, about half of which were from ReconTrust.
The trend was similar in Washington County, where new foreclosure starts jumped from 208 in March to 656 in April and 308 in May. Nearly 700 in the past two months were filed by ReconTrust, said Rich Hobernicht, director of the Washington County Department of Assessment and Taxation.
What comes next literally is anyone's guess, experts say. An attempt by the finance industry to retroactively change state recording law failed in a House committee last week after a public outcry against the move. Attorneys say it's not clear when Oregon judges will rule definitively on the legality of mortgage recordings, many of which involve the Mortgage Electronic Registration System, or MERS.
Title insurance attorneys have suggested that lenders might start foreclosing in court, but other real-estate attorneys speculate that lenders don't want to spend that much money and will face a formidable fight from borrowers. (sounds like more Robo-fraud to me...)Oregon's topsy-turvy foreclosure ride has taken a few more rolls in recent weeks... more
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New Homeowner Scam: Mortgage Securitization Audits
Yves Smith/NakedCapitalism-
Con artists who prey on people who are already in financial hot water deserve their own circle of hell. The latest sighting comes via April Charney: “mortgage securitization audits” which charge thousands of dollars for dumping public information into binders. From Brian Canupp’s website:
http://canupplaw.com/2011/05/homeowners-now-being-cheated-by-mortgage-auditors/
While millions of Americans are in the middle of the foreclosure storm a cottage industry of companies and individuals providing Mortgage Audits are now attempting to capitalize on the fear and desperation gripping many homeowners….
In the last 6 weeks I have met with three families that had paid up to $2,100.00 for an audit. All three of these “audits” were three ring binders filled with documents from the Securities and Exchange Commission Home page and articles from the newspaper detailing successful mortgage defense decisions. These products are problematic for a number of reasons:
The documents from the SEC are free and available to the public.
The newspaper stories, while informative, cannot be used as precedent to a judge.
The analysis does nothing to breakdown what has happened with your payments after they were received by the Mortgage Company.
The “expert” who is rendering the opinion would never be accepted by a court to testify in an expert capacity.
The analytical process supporting the audit conclusion is flawed and that leads to an impossible opinion.
None of the analysis brought to me by clients have included a review of the money paid by the homeowner.
(More and more scams and unreliable services are popping up nationwide see also the story about Military families in foreclosure yes Foreclosure-gate folks is far from over -figg)New Homeowner Scam: Mortgage Securitization Audits
Yves Smith/NakedCapitalism-... more
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abc News Florida
* By: Alan Cohn
TAMPA - While they are fighting for our nation overseas, some military personnel are losing their houses to foreclosure here at home.
In the thick of battle, in the heat of the fight, it's the last thing a GI should have to worry about. While Coast Guardsman Keith Johnson was fighting for our country overseas, he was losing a battle here at home, for his home.
A battle, he claims, he had no idea was being waged until the moment he got back and spoke to his wife.
"It just boggled my mind. I got back and she said 'the house is basically foreclosed' and I was like 'What do you mean?'" Johnson says.
At the same time, Johnson and his wife Alysia were negotiating with their lender, Wells Fargo, to modify the mortgage on their Clearwater home, the bank's lawyers were foreclosing on the property, getting a summary judgment, and auctioning it off.
That happens fairly often. Banks negotiate loan modifications at the same time they move to foreclose. The difference here is that Johnson says no one ever informed him the bank was foreclosing.
If that's true, it would be an apparent violation of a federal law specifically designed to protect active duty military personnel.
The Servicemember Civil Relief Act requires active duty soldiers be informed of civil actions like foreclosure, and allows them to delay the process until they are home to defend themselves.
Attorney John Odom is a nationally known expert on the act, and says it also protects soldiers against default judgments because, "Active duty personnel are not free to come and go as they might need to defend themselves," Odom tells us.
The I-Team has uncovered case after case in the Tampa area, around Florida, and the nation where banks have foreclosed on the homes of active duty military personnel.
In Johnson's case, Tampa Attorney Jay Passer was appointed by the court to track him down and protect his rights. He said he went to neither their home nor the base to find Johnson.
If Passer had only contacted Johnson’s unit at Air Station Clearwater or used the Coast Guard's world-wide personnel locator, Johnson said, "my command would have informed me immediately -- immediately."
Instead, Passer sent a letter to the Pentagon. He never received an answer from them. "It was not known to me. It was never explained to me, and I never received a response to any of that," Passer said.abc News Florida
* By: Alan Cohn
TAMPA - While they are fighting for our... more
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Michael Collins -
The surface scandal is about fraudulent business practices and a systematic assault on homeowners by lenders, servicers, and the legal system. A much broader picture must be viewed in order to understand the utter contempt that the ruling elite has toward citizens and the depraved tactics used to express that contempt, all to serve endless desire to accumulate more money and power.
The set up began when we heard about the ownership society in the 2004 presidential election. President Bush defined ownership as taking the government out of our lives so more people could own homes and control their destinies. The foundation was home ownership. As Bush said on the campaign trail, "We're creating a home -- an ownership society in this country, where more Americans than ever will be able to open up their door where they live and say, welcome to my house, welcome to my piece of property" October 2, 2004"
The Chairman of the Federal Reserve and the president ratified the real estate bubble, already underway at the time, as political and financial doctrine. The advice was clear. Get an ARM, own your piece of the American Dream and spend that equity. Housing prices never go down, right?
Freddie Mack, Fannie Mae, Wall Street and the big banks provided the back room. Mortgage Backed Securities (MBS) derivatives were vastly expanded. This made it easy for more homebuyers to qualify for mortgages they might not otherwise get, credit standards dropped. Those with good credit saw an array of tantalizing zero interest loans and other mortgage products to maximize available cash and feed the stock market.
It was all good until it wasn't.
The real scandal is the unfathomable loss of wealth and opportunities by the vast majority of citizens and the vicious attack on the most vulnerable citizens as a part that process. The attack continues and is worthy of review.
Before Congress passed the 2005 bankruptcy reform act, homeowners could avert foreclosure in many states by filing for bankruptcy. Not just anyone could qualify. The process of qualifying was difficult and, oftentimes humiliating. But homes were saved and families were preserved with a chance to start over.. The alleged abuse of the system became the excuse for a major overhaul of bankruptcy law. The legislation passed the Senate with 74 yes votes and soon became law.
The changes since the 2005 legislation provide substantial benefits to creditors. Morgan et al summarized the direct benefits to creditors in a forthcoming publication in the New York Fed's Economic Policy Review. Before bankruptcy reform, the filer of a bankruptcy claim used to determine Chapter 7 or 13 filing status. That makes a difference in the amount and type of debt relief. The legislation imposes means test that determines precisely which chapter (7 or 13) filers must use. Significantly, chapter 13 filers retain more debt from medical and other unsecured credit.
Legal costs ranged from $600 to $1500 before bankruptcy reform. Legal fees now range between $2800 and $3700. Previously, there was no requirement for credit counseling prior to filing.
Under the old law, only bankruptcy trustees appointed by the federal court could file claims of abuse by the filer. Under the new legislation, anyone can file a claim of bankruptcy abuse, which can lead to a dismissal of the cause. This is a huge benefit to lenders who wanted to keep citizens from realizing debt relief.
The new law makes it harder to file a claim, doubles costs, and gives the creditors a say in claiming fraud on the part of those who file claims. Significant delays in filing for bankruptcy became the norm.
Time is money for loan servicers. A long delay before a bankruptcy filing, allows servicers the opportunity to add on special fees, many of which the borrower can't comprehend.The majority of filers made between ten and forty thousand dollars a year before reform. That has remained virtually unchanged. The big spending abusers were and remain a mythical construct; the centerpiece of a diversion strategy to keep attention away from this never-ending gift to creditors.
These newly empowered creditors were the same creditors who hired debt collectors to try and frighten people out of their filings. A major study found that 24% of filers reported that debt collectors told deliberate lies to avoid bankruptcy. They herd that filing for bankruptcy would lead to jail, job loss, or an IRS audit. Some were told that it was illegal to file for bankruptcy.
The deck was stacked early against citizens and protection from creditors disappeared under the new law. The creditors, who so recklessly precipitated the economic collapse, came out on top. They were free to profit in any way they could from their new market,
What Causes Bankruptcy - Financial Shocks from Medical Expenses
Prior to the new law, the major cause of bankruptcy stemmed from medical care expenses and the resulting disruptions to families. Rather than the mythical big spender contrived by Congress, for nearly half of filers, major medical expenses, family tragedies, were the tipping point to a loss of financial viability.
The Consumer Bankruptcy Project audited a representative sample of bankruptcy filers in 2001. The audit found that 46% cited a "major medical cause" for bankruptcy. This includes the direct cost of uncovered medical bills for major illness or injury, lost work due to the same, and the need to mortgage the family home to cover medical costs.
Did Congress review this data? Were they intent on making it harder to file bankruptcy as a result of illness? When bankruptcy is delayed or simply not attainable, less money is available for needed medical care. Were the members supporting bankruptcy reform indifferent to the suffering compounded by their thoughtless legislation?
The situation is worse now. A comprehensive survey of those who filed bankruptcy in 2007 showed the increasing desperation of those faced with medical problems. When individuals or family members are in dire need of medical care, do they just sit home and suffer?
Nearly two thirds of bankruptcies result from medical care that people can't afford or losses in income from medically required leave. Where are the big spending cheats?
Nihilists at the Helm
The big banks, Wall Street, the politicians they own, and the Federal Reserve Board created the real estate bubble in bad faith.
What did the nihilists of the financial elite and their hit men walking the halls of power do with all this knowledge? They went ahead with the real estate bubble, fostered it, deregulated meaningful controls on the financial industry, and crafted a new bankruptcy law to stick it to filers. They knew or should have known that data from 2001 showed a very high rate of filings due to the financial stress of medical care. Did they care? Do they care now? Has anything been done to correct this injustice?
While citizens suffer in financial distress, often due to illness, at the behest of influential bankers and investors, the Department of Justice crafts a settlement with lenders and their representatives to relieve them of the stern justice due for their specific crimes and the larger horrors they visit upon citizens, all in the name of short term profit.
We are most emphatically not a nation of laws. We are a nation where the law is used by a very few for their own purposes, without regard for the well being of the nation or its citizens. We are a lawless nation...(links sources and more at figrd)Michael Collins -
The surface scandal is about fraudulent business practices and a... more
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Wow, the Obama administration has openly negotiated against itself on behalf of the banks. I don’t think I’ve ever seen anything so craven heretofore.
As readers may recall, we weren’t terribly impressed with the so-called mortgage settlement talks. It started out as a 50 state action in the wake of the robosigning scandal, and was problematic from the outset. Some state AGs who were philosophically opposed to the entire exercise joined at the last minute, presumably to undermine it. Not that they needed to expend much effort in that direction, since plenty of Quislings have signed up for the job.
The supposed leader of the effort, Tom MIller of Iowa, promised criminal prosecutions, then promptly reneged. His next move was to get cozy with the Treasury, presumably out of his interest in heading the Consumer Financial Protection Bureau. Federal regulators, such as the OCC and the Fed, who do not like being upstaged by states, were similarly keen to exert “leadership”, which really meant “lead a hasty retreat from anything that might inconvenience the banks.” So Miller, who was supposed to be representing the interests of the states, was instead working with the Treasury et al. to beat the state AGs into line (and separately, since the state and Federal legal issues are very different, the idea of having a joint effort was questionable from the outset). Not only have some Republicans (predictably) rebelled, but so to have the more aggressive Democrats, such as Eric Schneiderman of New York, Lisa Madigan of Illinois, and Catherine Masto of Nevada.
The first sighting of what this group might come up with was a bizarre 27 page proposal. It was bizarre because it represented an incomplete set of demands. You never do that in a negotiating context, you make a complete offer and see what other side’s counter.
The proposal was incomplete because it failed to describe the sort of release the banks would get (would they be released from claims by the state AGs on robosigning, or broader areas of liability?) and there was no section for penalties, despite press rumors and Congressional tooth gnashing about $20 billion and up sanctions. We dissed it not only for those reasons but also because it was largely a recitation of existing law, with only two new provisions: one was the end of dual track (in which servicers keep the foreclosure process moving ahead even as mod evaluation and approvals are also in progress) and single point of contact, in which the borrower has a dedicated person to deal with on his case. We deemed single point of contact to be undoable and unnecessary (as in if servicers straightened out their procedures and trained their staff adequately, they wouldn’t have the screw-ups that led to demands for single point of contact). Yet despite the obvious shortcomings of this deal, the bank lobbyist masquerading as a bank regulator known as the Office of the Comptroller of the Currency has absented itself from this effort in an apparent show of pique.
Given how underwhelming the 27 page leaked proposal was, it was predictable that the banks’ counteroffer verged on being a joke. As we noted last week:
It should really be no surprise that the banksters have the temerity to take a weak mortgage fraud settlement proposal, advanced by the 50 state attorneys general and various Federal agencies, and water it down to drivel. Since March 2009, when the Obama administration cast its lot with them, major financial firms have become increasingly intransigent. And this has proven to be a winning strategy, since Obama’s pattern over his entire political career has been to offer proposals that don’t live up to their billing, then eagerly trade away what little substance was there in the interest of having bragging rights for yet another “achievement”….
What’s striking is the utter lack of any teeth or any procedural requirements. The banks’ position is that they are to be trusted after having demonstrated again and again that they’ll take anything that is not nailed down. It is drafted wherever possible to make current practices fall within the “settlement”, which means the “settlement” is a total whitewash.
We then had wild card enter the picture. American Banker reported that “federal regulators” were about to issue cease and desist orders to force the servicers to take the negotiations seriously. Normally, that would be a potent threat. But the leaked version that American Banker posted didn’t even qualify as a slap on the wrist. As Adam Levitin explained:
The C&D order basically tells banks to set up lots of internal procedures and controls within the next few months and then to tell their regulators what they have done…. The result, I suspect, is that in a few months the bank regulators will declare that everything is fine.
(Even if the regulators think the internal controls are inadequate, it’s not clear what the consequence would be. My guess is that it just results in the bank regulator telling the bank to revise and resubmit.)…
(I was struck in some places by the linguistic similarities between the proposed C&D order and the banks’ counterproposal to the AGs. It’s impossible to know who was cribbing from whom, but the similar language is revealing.)
So here’s what’s going down. The bank regulators are going to provide cover for the banks by pretending to discipline them very hard, but not really doing anything. The public will see a stern C&D order, but there won’t be any action beyond that. It’s as if the regulators are saying so all the neighbors can hear, “Banky, you’ve been a bad boy! Come inside the house right now because I’m going to give you a spanking!” And then once the door to the house closes, the instead of a spanking, there’s a snuggle. But the neighbors are none the wiser. The result will be to make it look like the real cops (the AGs and CFPB) are engaged in an overzealous vendetta if they pursue further action.
Tonight, a story in the New York Times lends credence to the American Banker account:
The nation’s top mortgage servicers are expected to sign legal agreements by the end of this week compelling them to change their foreclosure procedures, regulatory officials said Tuesday.
The servicers, which violated state and local laws and regulations governing foreclosures, are agreeing to improve their methods in numerous ways. They will be required to have more layers of oversight and proper training of their foreclosure staff. The oversight will extend to third party groups, including the law firms that do much of the actual work of eviction.
The New York Times, however, seems to be buying bank/Adminisration PR hook, line and sinker. For instance:
Under the new rules, every homeowner in default will have a single point of contact with the servicer.
“Single point of contact” does NOT mean a dedicated person. A phone number with a live person answering it would do. This is basically the same level of service as provided with credit cards, minus the prompts to, say, get to the “lost or stolen card” person versus the “balance transfer” person. So it’s better than what servicers provide now, but it is an Orwellian defining down of what “single point of contact” originally meant.
Another Times misconstruction:
One of the most significant measures in the consent agreement will require servicers to hire an independent consultant to review foreclosures done over the last two years. If owners were improperly foreclosed on or paid excessive fees, they will be compensated.
If you read the consent decree the review is NOT comprehensive, as the Times erroneously implies(more pepper in your wheaties at link and sources and so on and on and on tired,? sick? petrified yet?! you should be i 'm only partially thru my inbox )-figgWow, the Obama administration has openly negotiated against itself on behalf of the... more
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Washington AG Investigates New Foreclosure Abuse Front: Trustee Non-Compliance
Posted: 07 Apr 2011 11:25 AM PDT
LoanSafe reports that the Washington state attorney general, Rob McKenna, has uncovered a likely widespread violation of state law, that foreclosure trustees lack a physical presence as required and a means for borrowers to contact or visit them to submit last minute payments or present documentation. McKenna’s interest appears to result from the fact as with servicers, the foreclosure trustees are not accessible to borrowers and not responsive when there may be legitimate reasons to halt or delay a foreclosure. Note that Washington is a deed of trust state, and the foreclosure trustee handles certain tasks relative to the actual foreclosure. This is a different role than that of the securitization trustee, who is the agent of the securitization trust, the legal entity that holds the loans in the securitization.
From LoanSafe:
Six months into its investigation into unlawful business practices by foreclosure trustees, the Washington Attorney General’s Office announced that it has uncovered an additional widespread problem that jeopardizes homeowners’ chances of stopping a foreclosure….
“Washington law requires that foreclosure trustees maintain actual offices in our state and local phone numbers for this reason,” he [McKenna] continued. “But our investigation shows that some of the largest trustees are not in compliance and borrowers who have a legitimate reason to stop a foreclosure are having trouble reaching trustees.”….
Washington is a “non-judicial foreclosure” state, which means that a lender can proceed directly to selling a home at public auction without first filing a lawsuit. This process was created by the state Legislature. Although lenders may foreclose in court in Washington, they almost always choose non-judicial foreclosures.
If a trustee is unwilling to stop a foreclosure, then the homeowner must file a lawsuit under the Deed of Trust Act and obtain a court order before the sale.
(McKenna’s office sent a letter to 52 trustees yesterday. If you are a Washington state resident and would like to file a complaint about your inability to reach a trustee, an online form is here at link and source links ...(If your state has a Foreclosure-Gate mess and I know it does Lets let them know we know whats going on its the worst fluffing Ive evr seen)-figgdimension
we need to paste all this into cohesive easily understood guidelines for our friends and families Ive found their HOLE!)This is wide spread state to state corruption come'on and AG's w/an agenda not a solution)
via:NakedCapitalism/Yves SmithWashington AG Investigates New Foreclosure Abuse Front: Trustee Non-Compliance... more
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We’ll analyze a proposal to fix the foreclosure mess put out by a DC think tank known as Third Way. Normally this blog steers clear of delving into random policy documents. In this case, though, it is likely that Third Way is speaking for the administration.
Third Way is an influential think tank whose board is composed of a special Wall Street-type – the Rubin Democrat. These people sit at the nexus of politics and finance, and are conduits for big bank friendly information flow into the administration and Congress. The President of the think tank, Jonathan Cowan, was the Chief of Staff for Andrew Cuomo at HUD in the 1990s, and Third Way is well known in policy circles for delivering ‘politically safe’ and well-packaged conventional wisdom. Oh, and one more thing – the new White House Chief of Staff Bill Daley, who just left the most senior operating committee of JP Morgan, was on their Board of Directors.
So by looking at this proposal, we are looking at the state of play among high level policy makers in DC, particularly of the New Dem bent. This is how the administration will probably try to play foreclosure-gate.
Their proposal, not surprisingly, is yet another bailout.
The big difference between the original and the new, improved version of the bailout model is that the payouts to the banks were at least in part visible the first time around. This is an effort yet again to spare the banks any pain, not only at the cost of the rule of law but also of investor rights.
This proposal guts state control of their own real estate law when the Supreme Court has repeatedly found that “dirt law” is not a Federal matter. It strips homeowners of their right to their day in court to preserve their contractual rights, namely, that only the proven mortgagee, and not a gangster, or in this case, bankster, can take possession of their home. more at linkWe’ll analyze a proposal to fix the foreclosure mess put out by a DC think tank... more
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Monique Sykes et al., Plaintiffs v. Mel Harris
and Associates, LLC, et al., Defendants, 09 Civ. 8486 (DC)
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A Lawsuit That Dirty Debt Collectors Should Be Worried About
By ABIGAIL FIELD
Federal Circuit Court Judge Denny Chin just issued an opinion in a consumer class action case that should send chills down the spines of debt collectors, perhaps including foreclosure-mill law firms and their process servers, nationwide.
Judge Chin decided that plaintiffs alleged enough information about the debt collectors in this case — a law firm, a process-serving company and a debt-buying company — to sue them for being a criminal enterprise under the Racketeer Influenced Corrupt Organization (RICO) law. Judge Chin also allowed claims under the Fair Debt Collection Practices Act.
Why should other companies in and related to the debt-collection business be so nervous?
Well, Monique Sykes and the other plaintiffs claim that the defendants’ business model is as follows:
* Buy debt with little documentation that the debt is accurate.
* File lawsuits claiming personal knowledge of the debt but using robo-signed affidavits instead.
* Deliberately fail to tell the “debtor” that the lawsuit is pending (a practice called “sewer service“).
* Get a “default” judgment against the debtor when she fails to show up in court to defend herself.
* Enforce the judgment, including by freezing the debtor’s bank account.
See full articleMonique Sykes et al., Plaintiffs v. Mel Harris
and Associates, LLC, et al.,... more
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Even though banks piously insist that every one of their foreclosure actions is fully justified, evidence in the court system continues to prove that claim to be false. We pointed out this sorry development in October, that of banks entering and changing the locks on homes they had not foreclosed upon. Per a report from the Sarasota Herald Tribune:
The process of banks hiring people to break into homes, even when occupied, is just the latest oddity of the messy foreclosure crisis in Florida.
Some property owners are reporting the break-ins to law enforcement as burglaries. Yet investigators consider the disputes a civil matter because the contractors do not display criminal intent.
That essentially leaves the property owners without recourse…
“It is vastly underreported; it is happening in counties all across the state,” said St. Petersburg foreclosure defense attorney Matt Weidner. “The more this occurs, the more prevalent it’s going to become.”
The lack of willingness of the local police to deem destroying property and unauthorized entry as criminal acts leaves wronged parties with litigation as their only recourse. And some are filing suits.
Note that these suits likely represent only a small fraction of the actual cases of bank miscreance, since few of the victims are likely to have the financial wherewithall and intestinal fortitude to sue a bank. Per the New York Times:
When Mimi Ash arrived at her mountain chalet here for a weekend ski trip, she discovered that someone had broken into the home and changed the locks.
When she finally got into the house, it was empty. All of her possessions were gone: furniture, her son’s ski medals, winter clothes and family photos. Also missing was a wooden box, its top inscribed with the words “Together Forever,” that contained the ashes of her late husband, Robert.
The culprit, Ms. Ash soon learned, was not a burglar but her bank. According to a federal lawsuit filed in October by Ms. Ash, Bank of America had wrongfully foreclosed on her house and thrown out her belongings, without alerting Ms. Ash beforehand….
Identifying the number of homeowners who were locked out illegally is difficult. But banks and their representatives insist that situations like Ms. Ash’s represent just a tiny percentage of foreclosures.
This, as the British would say, is bollocks. The traditional procedures around the transfer of title made the old system virtually fail-safe. Any number above zero is unacceptably high. And “a tiny percentage” across the huge numbers of foreclosures happening across the US adds up to meaningful numbers in real terms.
The examples in the NY Times story are all from middle to upper income homeowners. For someone of lesser means, the consequences of wrongful action can be devastating. If possessions are removed, or worse, put out on the street, the losses can be significant.
This is the banks’ excuse:
A clause in most mortgages allows banks that service the loan to enter a home and secure it if it is in default, meaning if the mortgage payment is 45 to 60 days late, and if the house has been abandoned, authorities said.
First, some of the homes broken into have been current on payments. Second, “abandoned” seems to be interpreted as “no one at home when the contractor showed up” which would be true during the business day for most working families.
This pattern again proves what we know all two well, namely, that we have a two-tier system of law in the US: one for the banks, one for the rest of us.
http://figrd.blogspot.com for more infoEven though banks piously insist that every one of their foreclosure actions is fully... more
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