Homeowners Betrayed

On October 6, 2010October 6, 2010 By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, Economic measurement, ethics, Government Failure, Philosophy of Business, White Collar Crime2 Comments

I have been accused of being shrill. Today is the day, I should tear the wallpaper off the walls in hot raging anger. The Senate passed a bill on the last day of the session by unanimous consent that essentially solves the banks’ mortgage foreclosure problems.

Have a read – (from Reuters)

The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.

The timing raised eyebrows, coming during a rising furor over improper affidavits and other filings in foreclosure actions by large mortgage processors such as GMAC, JPMorgan and Bank of America.

Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings.

The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.

Do we live in a nation where citizens matter? Hundreds of thousands of mortgages have been done without actual knowledge of the facts. This is not legal. But here comes Congress just when the crisis is beginning to develop. And Congress like the cavalry rides not to rescue the homeowners but to make it difficult or impossible for them to challenge inaccurate or false documents. It will also make it difficult or impossible to sue for redress by these simple Americans who lived their lives believing falsely they had a government that was concerned in some way about their rights.

It’s not law yet. It awaits that “stalwart defender” of the public, Barack Obama, to sign or veto. What do you bet?

This is incredible. The mortgage companies are caught committing essentially fraud on a massive scale at the very least lying to the court system not once but hundreds of thousands of times(probably several million times) and the government acts to legalize their acts just as the scandal is revealed.

I don’t know what to say. I am well aware that besides this frail web site, I have no influence. I want to go outside and scream. Doesn’t someone, anyone care about the homeowners who have been abused hundreds of thousands of times?

What do these huge accumulations of money have to do to get in trouble? Apparently there is nothing they can’t do. Apparently there is no line they can cross, that will cause our government to act against them.

Will there be any action taken? Will there be any outrage? Will there be any investigations and will they lead to any actual action?

Stay tuned. I’m not finished with this yet.

James Pilant

Let’s Have A Moratorium On Foreclosures!

On October 5, 2010October 5, 2010 By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, Economic measurement, ethics, Government Failure, Philosophy of Business

That’s right. Until we have evidence that the banks intend to follow established procedure when foreclosing homes instead of the hopeful, magic of the “our people don’t make errors” world.

No one has the right to take people’s home based on supposition or simply trusting companies who have proven by their behavior that they have no interest in justice and fair dealing.

Let’s stop it and use the time to do an across the board re examination of those mortgages foreclosed without proper procedure. It is obvious that homes have been taken and money charged without legal justification.

That’s not how we do things in the United States of America!

We are a nation of honor, where fair dealing and good faith are enshrined in the law. That’s right, they are on the books. They are part of the common law tradition in this country. They are still used to decide cases. This is one where they apply.

I’m not the only one who thinks a moratorium is a good idea. – (from Reuters)

An influential U.S. senator on Tuesday raised the prospect of an industry-wide moratorium on foreclosures as he pressed three banks accused of improperly kicking borrowers out of their homes to outline steps they are taking to fix their procedures.

“It is simply inexcusable that proper oversight proceedings were not in place, especially when dealing with matters as monumental as the seizure of a family’s home,” Senator Robert Menendez wrote to the heads of JPMorgan Chase and Co, Bank of America Corp and Ally Financial Inc, formerly known as GMAC and 56.3 percent-owned by taxpayers.

“At least one credit rating agency, Fitch, states that it believes this problem is widespread among banks and servicers, which raises the question of whether other banks should impose a moratorium until this lack of oversight is corrected,” wrote Menendez, the head of a Senate subcommittee on housing.

It’s a good idea. It’s something that should be done in the name of simple justice.

Simple justice may not be the fashion in dealing with the “self correcting” mechanism of the free market. But it’s still something I believe in.

James Pilant

Robo-Signers – Not R2D2!

On October 5, 2010October 5, 2010 By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business4 Comments

In an article featured in ProPublica by Marian Wang, the phenomenon of signing foreclosure document without knowledge of the contents is discussed –

Last week, we noted that the discovery of “robo-signers” — employees who signed off on thousands of foreclosure documents without much, if any, knowledge of their accuracy — had caused Ally Financial’s GMAC mortgage unit to freeze foreclosures in 23 states where foreclosures require a court order.

You’d think that all banks using the practice would be humiliated and chastened by a practice that misinforms the court as to their actual knowledge of the mortgage documents. You would be wrong, big time wrong.

From further down in the article –

The Associated Press reported late Sunday that a Wells Fargo executive acknowledged in a May deposition that he had signed hundreds of foreclosure documents each week without verifying any information aside from the date. The company, nonetheless, told AP it had no plans to halt foreclosures and was confident of the documents’ accuracy. (As we’ve noted, other banks — including those that have chosen to halt foreclosures — have also expressed confidence in the accuracy of their documents and played down the likelihood of mistaken foreclosures, despite the flawed paperwork.)

See, Wells Fargo, knows its documents are correct without even looking at them. Now, that’s a crack staff! Errors are discovered in mortgage filings all the time but they don’t have any.

The site, Complaints Board, catalogs Wells Fargo mortgage complaints. ConsumerAffairs.com also lists Wells Fargo complaints. But don’t worry, they only verified the dates but all the rest needs no examination!

This is a pretty high level of arrogance particularly when the court is being presented unverified documents. They taught us in law school to be scared of judges. Wells Fargo is apparently unaware of this basic rule. Telling judges you have verified data you have not could get them in the fining and contempt citation mood not even mentioning that throwing the case out of court thing.

Let’s see what happens next. I’m betting they can’t keep the practice of robo-signing up.

James Pilant

Andrew On Mortgage Foreclosure Lies

On October 5, 2010 By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business1 Comment

My friend, Andrew, once again displaying his usual knowledgeable approach adds to the discussion on my essay on the mortgage foreclosure crisis.

I live, and have a mortgage, in Georgia, which is a non-judicial foreclosure state. Here, the banks are required to register all mortgages in a computer system called MERS. I believe that stands for Mortgage Electronic Records Service or something along those lines. The bank has to input all information regarding all of its mortgages in Georgia into this system.

Whats scary is that if the MERS system sees a lapse in mortgage payments for an account, it can automatically initiate the foreclosure process. With Georgia being a non-judicial foreclosure state, its very hard to fight a foreclosure once it has begun.

Every now and then I hear about people here who make all of their payments on time, and the bank forgets to enter the payment information into MERS. MERS then initiates the foreclosure of the property, and the homeowners have to hire a lawyer to have the process stopped. Its scary to know that I can make all of my payments on time and do everything that I am suppose to, but if my account information happens to fall through the cracks due to a lack of diligence on the part of the bank, that I can be burned for it.

It is always good to have Andrew’s thoughts on a subject.

James Pilant

Mortgage Foreclosure Lies

On October 4, 2010October 4, 2010 By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business4 Comments

Telling judges across dozens of states that documents are accurate and have been reviewed when you don’t know and haven’t done it, is just a pack of lies. Running thousands of foreclosures through the court system without enough staff to actually do the work isn’t just cost cutting it’s stealing from homeowners who do not owe the sums reported or are trying to prove fraud in the process. The banks essentially said, “Our documents show you are just wrong, suck it up.” All this when they had little or no assurance that the documents were correct.

In an article written by Arthur Delaney, he writes –

The paperwork scandal that has prompted several banks to halt evictions and review their foreclosure procedures is reminiscent of the predatory lending scheme that inflated the housing bubble.

“It’s the same process, falsifying documents to make them look acceptable to someone,” said Tom Domonoske, a lawyer and consumer advocate in Virginia. “They’re falsifying foreclosure documents so judges will look at them and say, ‘Here’s an affidavit. It’s signed.'”

Now, get a load of this – (further down in the article)

The bogus loans and bad foreclosure paperwork are both the result of Wall Street’s massive appetite for mortgages during the housing bubble, experts say, as banks repackaged mortgages as asset-backed securities and sold them to investors. As mortgages repeatedly changed hands, servicers in many instances lost track of who owned them. In states where foreclosures need a court’s approval, servicers now find themselves unable to prove they have a legal right to foreclose.

That’s right, they’ve been foreclosing on homes they weren’t sure they owned. (By the way, the sentence explaining that when they need a court’s approval, they don’t get to foreclose if they can’t prove ownership is nonsense. It is only when you contest ownership, usually with a lawyer, can you stop the process. There is no doubt in my mind that thousands of homes were foreclosed on, with no small profit to the bank, that the bank had no ownership rights to.)

What are we going to do? Banks have had a good reputation in the past with foreclosures. It was unpleasant for the bank and for the customer. They did their process and the home shifted possession. Because of this good reputation the law accepted the bank’s statement as to ownership and money amounts without demanding proof.

It would have cost a lot of money for banks to have to prove the facts in dozens of what were largely routine cases. So, the legal system streamlined the process. The bank’s paperwork was accepted as accurate as long as an attorney signed that he had personally reviewed the documents.

What have we learned? First, we can learn that the processes under which we gave financial institutions the benefit of the doubt have to be modified so that these institutions have to prove their case. Yes, it will make mortgages more expensive to forclose. Yes, it will make the process more complex and longer. But what choice do we have when the banks have deliberately and calculating lied for years in tens of thousands of cases? At what point do you stop giving them the benefit of the doubt?

Now.

They have proven that they cannot be trusted. Anyone who says otherwise is ignoring the hard, cold, unpleasant, unyielding facts.

James Pilant

Mortgage Companies Flout The Law – 56,000 Foreclosures Suspended

On October 1, 2010 By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business

When you file a foreclosure the law favors the bank. All the bank has to prove is that they have personal knowledge of the case. This eliminates the need for proving each individual mortgage.

So all they had to do to meet their legal requirements was to have someone review the file. Guess what? In their hurry to foreclose on as many homes as possible (tens of thousands), they just didn’t do it. Since they didn’t do it, there is no way to know how many homes they took wrongly, or if the amounts were right, etc.

This isn’t just sloppy work, it’s a case where these large companies, in particular, GMAC and Chase, violated the law by asserting that they had fulfilled their legal requirements when they had not. But to them that wasn’t important only that they close the cases by thousands a month. Can you conceive of anything more contemptuous of the law?

I’d been reading reports of homeowners who owned their homes outright being foreclosed on by these companies and having to hire attorneys to get it stopped. I just thought they fouled up here and there. No, they didn’t even try to do what they were supposed to do and as long as the courts accepted that they had “personal” knowledge, the machinery of foreclosure went on whatever the actual circumstances were.

If you want to know why people have been unable to renegotiate their mortgages, look no further. The bank suffered little or no expense from a high speed unwitnessed foreclosure. Renegotiation would have required work, personal knowledge and a concern for the customers. Those three things were not about to happen and I believe will not happen.

From the New York Times article –

The missteps stemmed from the affidavits the lenders file as they seek a quick or summary judgment in thousands of foreclosure cases. The affidavits state certain facts about the case, including the amount owed, which the signer indicates he has personal knowledge of. Without the affidavit, the lender would have to prove the facts at trial.

In depositions taken by lawyers for homeowners, executives at GMAC and Chase said they or their teams signed 10,000 or more affidavits and related documents a month. That did not give them time to review the cases.

Defense lawyers say the disclosures are symptomatic of the carelessness, if not outright fraud, that lenders have been exhibiting for years in their rush to file cases. Many necessary documents have disappeared, with defense lawyers saying the lenders often do not even have standing to foreclose.

Callousness, cruelty, pure injustice, contempt for the law, an apparent total complete lack of concern for the hundreds of thousands of mortgage holders – this is all here.

Now, the big question, are they going to be penalized? And I don’t mean that they have to do the mortgages over again, I mean contempt citations, I mean state’s attorney generals filing lawsuits to recover the sums illegally taken from homeowners, I mean a forced reconsideration, re analysis of every single mortgage, these blackhearted villains did.

You say, James, calm down, they just messed up on their procedure. No, they took thousands of people to court based on NO knowledge of the case. They didn’t know what the people owed, the history of the loans or, in fact, whether they owned the home or not!

And get a load of this – their attorneys signed on to it, put their names on it. Let’s see a little action there. Let’s see what the state bar associations think about this.

There’s a lot more to say and I want to get this up, so more later. People have to know.

James Pilant

Net Neutrality – Where Is The President?

On September 30, 2010 By southwerkIn business ethics, Capitalism, ethics, Government Failure2 Comments

During the campaign two years ago, Obama repeatedly stated his support for net neutrality – Watch!

Did you hear that – “I will take a backseat to no one.” Backseat! He might as well be in the trunk for all the help he’s been.

“I am a strong supporter of net neutrality.” Okay, that’s good. How about NOW? Where is he?

“I’m a big believer in net neutrality.” Still nice, but how about saying something now?

“I remain firmly committed to net neutrality.” Is he still? I don’t have anyway to know.

Okay, guys, probably you’ve seen enough. I can find more clips. I’ve already seen them. The open internet is under attack right now at the FCC and in Congress. A bill was considered a few days ago, that would have essentially ratified the agreement between Google and Verizon dividing up the internet and giving broadband to corporations. The attacks are well funded and continuous. The President referred to the danger of large companies getting control in his many speeches.

Where is he now? Where is the President of the United States? Where are all his pretty words? If he doesn’t speak soon, he will only be commenting on the division of the web into corporate sectors after it’s done.

If there is no net neutrality, this web site may become so slow as not to be viable or simply not deemed worthy of band width. Under the new rules, the FCC cannot issue any regulations but can hear complaints. Thus, if I am treated wrongly I will be able to complain to the FCC and should they decide in my favor after months during which my audience has gone away to other sites approved by the great media companies, that will fix everything, right? I’ll be all whole and returned to where I was. Right?

There are tens of thousands of sites like mine. And these voices cry out for advocacy for the poor, or the environment, etc.., some cry out for political action, …., some broadcast every crazy theory you can imagine, … and some are people just crying out that they are there – they are significant – they are important – they plead for attention and recognition.

And soon, these voices will be silent, their bandwidth divied up for movie companies and media channels and, of course, the occasional lapse where they allow a semi-independent voice to speak.

Pretty words are not the same as action. Eloquence is not the same as standing up for your beliefs. Political expedience cannot be an excuse of inaction where action has been repeatedly promised.

Where is the President? Did he mean any of that stuff he said? Is there time left for him to do or say anything?

James Pilant

Deathbonds! Gambling On Death – Just The Elderly!

On September 28, 2010September 28, 2010 By southwerkIn Capitalism, Economic measurement, ethics, Government Failure, Philosophy of Business1 Comment

In a special report, Reuters tells a fascinating and horrifying story, a tale of intrigue, death and bizarre financial manipulation.

This story is about life settlement products. It’s a very comfortable sounding name for something far more sinister, the purchase of insurance policies statistically figured to pay off because of the death of the original owner.

From the article –

Life settlement products first appeared in the mid-1990s. Typically, the market is fed by elderly individuals with life expectancies of between 3 and 12 years. U.S. settlement companies buy these life insurance policies at a fraction of their face value, but above their cash surrender values, picking up the tab for insurance premiums and collecting on the death benefit — or policy maturity.

Industry proponents say that as long as the models used to predict the deaths of underlying policy holders are broadly correct, a suitably large portfolio should offer a healthy return, despite the industry’s often eyewatering commissions and fees — as much as 10 percent upfront — and the lack of generally agreed rules about how to value portfolios.

At what point, did we as a society arrive here? We are at a place where gambling on the time of death of the elderly is a legitimate way of making money. I’m not talking about life insurance. That’s a long term deal in which both parties benefit. I’m talking about buying out insurance policies for a fraction of their value and making a killing on the early deaths of the holders.

Well, let’s look at the rule of the business world’s favorite economist – “There is one and only one social responsibility of business–to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”

I would note that what counts as the “rules of the game” seems to be rather flexible, and if you can figure out why any businessman would engage in free and open competition, you’re one up on me. As for deception and fraud, on everything from bank fees to credit cards, making sure that knowledge is limited and initial offers inviting, has created whole industries based on oversell by obscuring the facts.

I would argue that the only part of that statement, that businesses in the United States heard, was the unconditional purpose of making money as the only, single rationale for business. This rule is not a fact, it is the beginning of an economic religion.

That’s how you get gambling on old dead people. It’s making money. It’s within the rules. There is competition. The deception or fraud does not directly violate law.

It takes an economic religion, a new set of sacred beliefs, to overrule the pangs of conscience, to disregard the duty of religion, to escape the burden of civilization and to be deaf to the pleas of the patriot.

That’s why we are here, a national moral vacuum.

James Pilant

Vice President Biden to Democratic Base: ‘Stop Whining’

On September 28, 2010February 7, 2011 By southwerkIn Government Failure

Every once in a while you hear something you find hard to believe. This is a good example.”Stop whining.”

Would the Vice-President be directing that insult at the people who gave money, worked door to door and voted for him and the President?

Now whether the Democrats or Republicans do well in the coming election does not concern me. They have failed in their duty to protect the public from predatory lending, credit card gamesmanship, borderline fraud in the mortgage industry and many other persistent evils. So, “a plague on both their houses.”

However, the phrase, “Stop whining,” caught my attention. My blessed readers, if a single one of you thinks this will motivate the base, I want you to tell me. Just make a comment, a short phrase – “Biden knows what he’s doing.” That’s all I want to hear.

Just tell me that to someone, somewhere this make sense.

If so, I will never bring it up again. In fact I may very well give up saying anything about Joe Biden. That may well be the wisest course.

James Pilant

Pilant's Business Ethics Blog

Category: Government Failure

Robo-Signers – Not R2D2!

Andrew On Mortgage Foreclosure Lies

Mortgage Foreclosure Lies

Net Neutrality – Where Is The President?

Deathbonds! Gambling On Death – Just The Elderly!

Vice President Biden to Democratic Base: ‘Stop Whining’

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