Tag: foreclosure

Third Way Comments on Foreclosure Fraud Policy in the Post-Ibanez Landscape (via Rortybomb)

On By southwerkIn business ethics4 Comments

Once again another policy recommendation that would free the banks and their mortgage foreclosure lackeys for any responsibility for their acts. It never stops. It never will. A citizen would be found in contempt and thrown in jail for what they have done. A citizen would have been tried in court for selling property they did not own and covicted of fraud. And if a citizen went to court and said we don’t need any legal documents from the court house, we have a computer system, they would be laughed to scorn.

Read Rortybomb and get the full scope of these apologists’ recommendations.

James Pilant

You can tell that the landscape is changing.  Third Way has just released a memo titled Fixing “Foreclosure-gate” which details out a policy solution to the current foreclosure fraud crisis. That the post-Ibenez landscape is so drastically different that groups are mobilizing in a policy way should tell us that things may move in Congress, and we need to be ready. There’s been some fantastic writing on the memo that I’ll point you to – Yves Smith … Read More

via Rortybomb

Banks Suffer Major Setback

On By southwerkIn business ethics1 Comment

When foreclosing on mortgages the banks have been skipping the rule of law. They have not followed the rules for the transfer of property preferring to pretend that their electronic records are a viable substitute. I never believed the courts would go along with that and the Massachusetts court did not. Here’s the story from that excellent blog, Rortybomb.

From Rortybomb – Big Week in Foreclosure News –

The biggest news is the decision in Massachusetts’ “Ibanez case”, where the Massachusetts Supreme Court voided the seizures of two homes by Wells Fargo and US Bank based on their inability to show that they owned the mortgages at the time of foreclosure. Tracy Alloway walks you through the case, David Dayen has more including the PDF of the decision, and analysis from Yves Smith and Felix Salmon.

From the opinion: “Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.”

They ruled through Massachusetts law instead of New York law, so no answers on looming New York trust law. Bank stocks are down. This is likely to have major implications down the road. We’ll have more on this opinion later.

I do not believe the ruling will stand. Congress will ride to the rescue of the banks legalizing their reckless disregard for state law and afflicting the suffering homeowners with even more pain. Congress will enact it. Obama will sign it. He will then explain it as a major legislative victory. Everything he does merits a press release and a couple of morning show appearances demonstrating his successful legislative record.

I wish there was someone somewhere who was as concerned with the rights and privileges of the American middle class and less concerned with the welfare of the banks.

James Pilant

Bank Of America Pays Two Billion Dollars To Settle Claims

On By southwerkIn business ethics1 Comment

First, let’s be clear. This two billion dollars is a buyback of loans that were sold to other firms as good investments when in fact they were missing paperwork or had more serious problems. This case settles a small portion of the “handful,” the “tiny proportion” of loans in which there were mistakes that everybody was assuring us was the case six months ago. Well, there are hundreds of thousands of these loans. They border on or are loans based on deception and fraud.

This payout doesn’t make much sense. Bank of American shares actually went up after the agreement was announced. So, we have to figure they were expecting it to be much worse or suffered anxiety over the uncertainty.

What really surprises me was that Wikileaks is supposed to dump a ton of Bank of America files on the web and the opposition negotiators didn’t wait for it. I would have thought that the release of the documents would have put Bank of America in a poorer negotiating position while quite possibly providing new insights into the loans themselves.

I hate it when public financial events don’t make any sense. I hate it because it doesn’t make sense only because I don’t know some of the players or the deals. In a year or two, I’ll probably have some insight into what happened but by then it will make no difference in what has become “ancient” history.

James Pilant

From CBS Money Watch –

Bank of America Corp. will take an approximately $2 billion charge in its fourth quarter as it settles buyback claims on home loans sold to Fannie Mae and Freddie Mac.

The bank said Monday that it also expects to take a provision of about $3 billion in the quarter related to repurchase obligations on the home loans.

Bank of America shares jumped 4.4 percent in premarket trading on the news.

On Friday Bank of America, which is based in Charlotte, N.C., paid Fannie Mae $1.34 billion and Freddie Mac $1.28 billion as part of the settlements.

The deals with Fannie Mae and Freddie Mac are tied to Countrywide Financial Corp. residential mortgage loans. Bank of America bought Countrywide in July 2008.

Foreclosure Speed Made Loan Modifications Impossible

On By southwerkIn Philosophy of Business1 Comment

Why would a bank modify a loan rather than foreclosing? Loan modification is usually more profitable.

Let me explain. Take a typical home mortgage that has run into trouble. The purchaser owns a home that he bought at a price of 350,000 dollars in early 2006. He has fallen behind on the mortgage. He can pay each month but not as much as the mortgage is worth. However and it is a big however, the real estate boom has collapsed. The home valued now is worth only 270,000 dollars. His mortgage payments, his salary and the other facts point to him being able to pay a mortgage of that size. So, the bank would accept a loss on the mortgage reducing it to 270,000 in value. The bank now has a workable agreement with the homeowner. He can now pay on the loan regularly.

There is a 80,000 dollar loss for the bank. That would be a big deal if the bank had any way of getting it. If they foreclose on the house, they will be attempting to resell quickly a home now valued at 270k, and at the additional expense of the time and money of the foreclosure process. That 80,000 is not recoverable. Why not renegotiate a lower mortgage with the current owner who is already making payments?

This key questions here are, “How much is this property worth?” and “Can I get as much by foreclosure as I can by modifying the mortgage?”

Everyone watching the process of foreclosures over the last few years has been struck by one fact – there have been very few loan modifications. Almost every homeowner was foreclosed on. It did not seem to matter whether a modification was profitable or not.

As a society, we had never seen that before. People had been foreclosed on before in every kind of economic crisis. But in all these situations if the banks profited more by modifying the mortgage, the mortgage got modified. Now, it doesn’t matter if the bank profits from a loan modification or not. It’s easier and quicker to foreclose.

Also, it was easier to measure success by foreclosure rather than by re-negotiations. You could count the scalps on the wall. Negotiations that resulted in greater profits over longer periods of time didn’t count well.

The system is tilted against homeowners. The speed and number of foreclosures made it impossible for lenders to renegotiate.

From the Washington Post –

The financial incentives show that the problems plaguing the foreclosure process extend well beyond a few, low-ranking document processors who forged documents or failed to review foreclosure files even as they signed off on them. In fact, virtually everyone involved – loan servicers, law firms, document processing companies and others – made more money as they evicted more borrowers from their homes, creating a system that was vulnerable to error and difficult for homeowners to challenge.

“This was a systemic problem. It’s not like a few renegade employees made mistakes,” said lawyer Peter Ticktin, who defends Florida homeowners facing foreclosure. “It was industry-wide and pervasive, and everyone knew about it.”

The need for speed neutralized any attempt at judgment. No human intelligence could be allowed to interfere with number and speed, a total victory of the abstract over the concrete and real. Loan modifications are better for long term profits but they are not fast.

Understand this. In any long term profit making analysis, you have to apply human judgment, and from that you can maximise profit. The foreclosure system we have now does only one thing well – foreclose quickly. Everything else is does badly.

James Pilant

“Foreclosure Fiasco”

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, White Collar Crime

I borrowed my title from an article series on CBS Moneywatch. I can’t improve on it. It covers eloquently and briefly the situation.

Here’s the lead paragraphs from the article –

After three years of terrible news about the housing market, you’d think it couldn’t get much worse. But over the past week, a whole new can of awful has opened up. It turns out that the banks who lent money with reckless abandon during the real estate bubble were just as incompetent on the way down as they had been on the way up. Big lenders and mortgage servicers have been forced to acknowledge that, as they rushed to foreclose on hundreds of thousands of properties, they didn’t always check to make sure that they actually held the mortgages.

In one case, a Florida man who had paid cash for house was foreclosed upon for defaulting on a loan he never took out. In other cases, mortgage documents have been forged. So-called “robo-signers” have been churning out affidavits without checking to see if they are true. In response, foreclosures are all but frozen in 23 states, House Speaker Nancy Pelosi has called for a federal investigation, and attorneys general around the country are seeking to halt foreclosures. One major title insurer has announced it won’t insure homes foreclosed upon by J.P. Morgan Chase. That may sound like a technicality, but if the trend spreads, it could send the housing market into a tailspin.

CBS provides a slide show to give you a quick overview of the crisis. I recommend it.

Do not read the comments on the CBS web site! Trust me. Life is too short for that kind of reading.

The CBS report is a seven parter. If you are interested in how this came about and what is likely to happen, it is the best thing at the moment. I’m sure as time goes by, we’re going to get some better stuff because we’ll have more information, but CBS was first and it’s a good job.

James Pilant

Foreclosure Moratorium – Let’s Not Do Anything Rash?

On By southwerkIn business ethics, Capitalism, Government Failure, Philosophy of Business

Well, it’s begun. Editorialists, columnists, bloggers, all explaining why we must not have a moratorium. They further explain that most foreclosures were done correctly. Most of these homeowners had defaulted on their loans.

Now, poor stupid me, can’t help but wonder where you get your statistics on who should have been removed from the their home and was it justified. Those numbers aren’t public and since the mortgage companies didn’t look at these foreclosure records, they don’t know either. No one knows. But we are repeatedly assured the vast majority of home foreclosures were done properly.

I want to see some proof. I want some numbers. Taking the word of the mortgage companies on this issue doesn’t strike me as a particularly smart move.

We have been lied to, manipulated and played. I don’t like it.

Mortgage companies only had to assert to the courts that they had reviewed the necessary document. They did not have to proof knowledge in court because it was assumed that they knew the basic fast of the case. The lawyers for these firms affirmed that this was the case. They were lying. We don’t know if they owned the property. We don’t know if their numbers bear any passing resemblance to reality.

But the thing I’m curious about is that old Watergate question. Do you remember? Howard Baker asked it during the Watergate hearings. “What did the President know and when did he know it?”

Okay, I want to know. “What did the CEO’s and directors of the mortgage companies know and when did the know it?”

You can add. “Why didn’t they stop it.”

You see, the mortgage companies conduct is not legal. It is reckless behavior and unconscionable. You can get sued for this and put in jail for criminal acts associated with it. (Taking people’s homes when you don’t own them sounds remarkably like grand larceny, doesn’t it?)

Let’s get some justice!

James Pilant

Jon Stewart’s Take On The Mortgage Foreclosure Crisis – WARNING, Strong Language

On By southwerkIn business ethics, Capitalism, Economic measurement, ethics, Philosophy of Business, White Collar Crime1 Comment

Jon Stewart sums up the crisis brilliantly in a little more than seven minutes.

I am submitting to you the link. This is to an article talking about the Jon Stewart show. I cannot show a clip from Comedy Central and expect it to be up on my site for more than thirty seconds. You have to scroll down to the Stewart video in You Tube format.

This is the link.

Have fun and see how pointed humor can be.

James Pilant

Banks Foreclosures In August The Highest Monthly Total EVER!

On By southwerkIn business ethics, Capitalism, Government Failure, Philosophy of Business, White Collar Crime2 Comments

From an article by William Alden –

August saw more Americans lose their homes to foreclosure than any other month on record, RealtyTrac reported today. Banks repossessed a total of 95,364 properties in August, a 25 percent increase from the same period in 2009 and a 2 percent increase over this May’s previous record. Foreclosure filings of all types, including default notices, scheduled auctions and bank repossessions (the three major stages of the foreclosure process), increased to 338,836 in the month, a 4 percent jump from July.

Can there be any better evidence of robo – signing (the practice of mortgage companies simply have attorneys sign off on mortgages as if they had examined the paperwork for accuracy and legality [like whether or not the bank actually owned the property]) than these enormous numbers of foreclosures?

Foreclosing on people’s homes without doing the most minimal required legal work is “highly unethical.” (I don’t really want to use that phrase, but children might be reading my blog.)

Robo signing is profitable. You can see from the numbers just how streamlined the process can be if you avoid following the law.

But isn’t that the current philosophy in the “real” world? Isn’t the money the only thing that matters? And who are these homeowners anyway, just a bunch of dead beats. Why should they have any rights? They signed the note, didn’t they?

Yeah, do you know what note they signed? The actual amount of what they owed? Whether or not the home was actually the property of the foreclosing bank? Whether or not they were even in default?

I guess I’m just a strange person. I think you shouldn’t take people’s home casually. I think it is a very serious matter. Perhaps I don’t live in the real world. Maybe I’m one of those utopian thinkers who have expectations all out of accord with reality.

Or maybe, just maybe, justice is still important in this nation.

James Pilant

Ohio Attorney General Sues GMAC Mortgage Division – Texas Attorney General Halts Foreclosures!

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, White Collar Crime1 Comment

It has begun, there will be lawsuits filed across the country to punish the foreclosure industry for their violations of state laws. Can they stop these crimes? What is the Attorney General in our state going to do?

The Ohio Attorney General is filing suit and the Massachusetts Attorney General is considering doing the same.

From Huffington Post –

Attorney General Richard Cordray said Wednesday the alleged fraud could involve hundreds of foreclosures in the state. The lawsuit claims the company’s employees signed and filed false affidavits to mislead courts. Cordray called the alleged fraud the “tip of an iceberg of industrywide abuse of the foreclosure process.

The Texas Attorney General’s Office is halting foreclosures across the state – From CBS7 – West Texas –

The Texas Attorney General has called for a halt on all home foreclosures, this includes all sales of property that were previously foreclosed upon and all evictions of people living in previously foreclosed properties.

State Attorney General, Greg Abbott, has sent a letter to thirty loan service companies freezing foreclosures in the state as they begin an investigation into foreclosure practices in the state.

“Evicting someone out of their home is very serious, and it needs to be done in the proper manner,” said Western National Bank Financial Advisor Mickey Cargile.

Will there be any justice?

Stay with my blog, I’m not letting this subject go until we get to the end of it.

James Pilant

Homeowners Betrayed

On 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