Fed Regulators Ride To The Rescue?

Three years ago, the states began to get concerned about mortgage fraud. So they asked the banks about it.

From the Washington Post

As foreclosures began to mount across the country three years ago, a group of state bank regulators suspected that some borrowers might be losing their homes unnecessarily. So the state officials asked the biggest national banks for details about their foreclosure operations.

Guess what! Some banks didn’t cooperate.

When two banks – J.P. Morgan Chase and Wells Fargo – declined to cooperate, the state officials asked the banks’ federal regulator for help, according to a letter they sent. But the Office of the Comptroller of the Currency, which oversees national banks, denied the states’ request, saying the firms should answer only to inquiries from federal officials. In a response to state officials, John Dugan, comptroller at the time, wrote that his agency was already planning to collect foreclosure information and that any additional monitoring risked “confusing matters.”

You see it’s a “federal” matter. If the states stepped in, it would “confuse matters.”

From further down in the article –

But even as it closed the door on state oversight, the OCC chose itself not to scrutinize the foreclosure operations of the largest national banks, forgoing any examination of their procedures and paperwork. Instead, the agency relied on the banks’ in-house assessments. These provided no hint of the problems to come until they had tripped the nation’s housing market, agency officials later acknowledged.

Basically, the foolish states get in the way when they investigate things, you know, “confusing matters.” This is especially true when you, the feds, are not under any circumstances whatever going to investigate the banks yourselves.

From further down in the article –

“Based on what we were seeing and what we were concerned about, it felt like a chronic underreaction at the federal level,” said John Ryan, a senior official with the Conference of State Bank Supervisors.

What John Ryan means is, “We could have cracked this case, but you made sure we couldn’t by using federal preemption to keep us out. Why don’t you explain that?”

I want to hear that too.

Further in the article –

Even when the mortgage industry itself identified possible flaws in foreclosure paperwork, the agency was slow to act. In September, Ally Financial suspended foreclosures after discovering problems with tens of thousands of cases. But even then, the OCC did not begin to examine the operations of other major banks. Instead, the agency asked them to undertake internal reviews and told them it would conduct its own examination later, an OCC official said.

So, after waiting three years and only after the mortgage industry admits problems, do the feds leap into action. Our valiant defenders armed with certain knowledge that something is wrong put the full weight of the federal government on the problem.

They ask the banks to do internal reviews.

Two weeks ago, for the first time, the OCC began sending its staff into the banks to examine their foreclosure operations, interview bank employees and review paperwork.

Three years. What’s the big deal? A few (well, we don’t actually have any concept of how many) actual citizens thrown from the homes that the banks didn’t own. Giant financial institutions are held in no way accountable because the federal government refused to act and made sure the states could not. What’s the big deal?

Tell me, which is worse? 1) Breaking the law or 2) Refusing to enforce the law.

Tell me, are any bankers going to jail, any homeowners going to get their houses back or is anybody at any of these helping services, whoops, I mean regulatory agencies, going to get fired, at least reprimanded?

None of these things are going to happen.

Don’t be mistaken, this no low level official making the call. This is the direct policy of the Obama Presidency.

Nothing else is possible.

Let’s ask the questions. Sit in the chair with our esteemed President. Three years ago, the states begin suspect widespread fraud in the foreclosure industry. They tell the feds.

What do you do? Well, you’d probably say, “We’d better ask some questions. Show us what you got. We’ll follow up.” Isn’t that about right.

Okay, what did happen. The feds used preemption to stop the state investigations and then conducted no investigations of their own.

Three years later, the banks admit that there are serious problems. Let’s sit you in the President’s chair again. The banks have admitted that they have used fraudulent affidavits in hundreds of thousands of cases and that their paper trail of ownership may have problems. I bet you would want to get some people down there to find out what’s going in. I suspect you would probably consider a criminal investigation.

What happened? The feds asked the banks to do an internal review.

Next, the fifty states attorney generals launch a joint investigative action against the mortgage companies. The media, national and international, are jam packed with stories of scandalous repossessions, like foreclosing on paid for homes.

Now after patiently waiting until two weeks ago, the President and you have the same opinion. “We’re going to investigate.”

That’s how you make decisions, isn’t it?

James Pilant

Robo-Signing Foreclosure Freeze Update (via Foreclosureblues)

The guys at Foreclosureblues are hard workers and well informed. They have dubbed the current crisis, Robo-gate. I like it!

This is their update on the situation. It’s thoroughly excellent. It’s a good summary. It is worthy of your time.

James Pilant

Robo-Signing Foreclosure Freeze Update Robo-Signing Foreclosure Freeze Update Today, November 05, 2010, 7 hours ago | Sean O'Toole Here’s a quick update on the impacts we are seeing from “Robo-Gate”. For those that missed this major foreclosure news item, robo-gate refers to the foreclosure freezes implemented by various lenders after revelations that foreclosure filings were being attested to in a robotic fashion that may not have met legal requirements. In the beginning the freezes … Read More

via Foreclosureblues

White House Should Stop Protecting Banks

Simon Johnson writes in the web site, the Baseline Scenario, about the Obama Administration’s protection of banks and failure to hold the mega financial institutions to standard of law and justice.

From the article –

The premise – and central mistake – of the Obama administration in 2009-10 can be summed up in what the president said to leading bankers on that fateful day, March 27, 2009: “My administration is the only thing between you and the pitchforks”.

The organizing notion then, provided by Larry Summers and presumably Tim Geithner, was that the “responsible” administration would protect global megabanks from “dangerous” populists, in return for cooperation and better behavior.  This kid gloves strategy turned out to be a very bad bet – not only is it far from best practice with regard to handling failed financial systems (there must be consequences for executives and shareholders, at the very least), but it also allowed banks and their close allies to bounce back to profitability and use that cash (underwritten by the taxpayer) to oppose the administration on financial reform and, according to credible public reports, to funnel large amounts of money into various “populist” anti-administration midterm campaigns.

The article calls for White House support for Elizabeth Warren and the new agency to protect consumers from the depredations of financial predators. I strongly support that.

I want you to understand that I come to criticize the Obama Administration reluctantly but their actions make a mockery of ethics, of doing the right thing, and of carrying out their obligations to the law.

James Pilant

Do EVERYTHING You Are Supposed To AND Still Lose Your Home?

This is an AP report about one woman’s struggle to stay in her home.

Next time someone says, “They knew what they were signing!” – Ask them, “Should the banks should have to abide by their agreements?” Because what we are seeing across this country over and over and over again are banks renegotiating the loans, making a deal, and then foreclosing anyway.

Where do we go to find the bank’s personal responsibility?

James Pilant

Judge Started Shutting Down Foreclosures TWO YEARS Ago For Bad Paperwork!

Brooklyn State Supreme Court Judge Arthur Schack discusses his decision to turn down bank foreclosures for bad paperwork.

(Beware, this has a commercial.)

It’s 4:27 long.

The New York judiciary has gotten tough on the Mortgage industry.

James Pilant

Are Our Homes Just Monopoly Board Houses?

From The Mail Online –

Standing as a monument to the credit crunch, this life-sized Monopoly house was created as an ironic statement on the global financial crisis.

Created by Canadian artist An Te Liu, 44, the 36ft by 44ft work called ‘Title Deed’ was built in Willowdale, in the Canadian province of Ontario.

Art is a political statement. The artist wants to let us know that what we find to be important in our lives, something we hold in affection and dear in our memories is now just a toy for financiers. First a chip in the global securities market, then a bailout bad debt to get money from the government, then a cash cow to be mortgaged not refinanced because while refinancing makes sense, the numbers on paper are more important. In brief, the homeowner gets it in the shorts, every time, with any possible exception.

Seeing property as a home, a loan, a debt, an investment and something that is more monetised than we realise, the artist wanted to use the iconic board game as a metaphor.

‘Just as the sub prime mortgage crisis hit America and was caused by traders and bankers playing their games in Wall Street, so the common man was squeezed because of that,’ he said.

‘Our homes are not necessarily what we think they are. They are property just like in Monopoly to be remortgaged and used as collateral.

I admire the sentiment and I like the artist’s willingness to send a message. Surely, we need more messages, more senders and less compliance with a state of mind that allows mind boggling evasion and contempt for the law.

James Pilant

Cordray: Refiling Affidavits is an Insult to the Justice System

I don’t usually print press releases, but I REALLY like this one!

From the Ohio Attorney General Web Site –

COLUMBUS, Ohio) — In response to Wells Fargo’s statement acknowledging that it “made mistakes” and that affidavits in 55,000 foreclosures filed by the bank did not “adhere” to the law, Ohio Attorney General Richard Cordray offers the following statement:

“The big mortgage servicers and financial firms continue to demonstrate their belief that they do not need to play by the same rules as everyone else who uses our court system. The suggestion by Wells Fargo and its colleagues at several other national firms that they can cure fraudulent testimony by simply refiling new affidavits and continuing to proceed toward foreclosures shows they do not recognize the seriousness of the problem they have created. There is no simple ‘do-over’ for false testimony that will be likely to avoid sanctions and penalties imposed by the courts. Their brazen efforts to minimize their financial exposure by sweeping these problems under the rug are an insult to the justice system in this country. These disclosures by Wells Fargo will now become the focus for a new prong of our on-going investigation.”

Earlier this month, Cordray filed a lawsuit against GMAC for issuing false affidavits in many Ohio foreclosure cases. He has taken a hard-line approach with national loan servicers operating in Ohio in the wake of the foreclosure crisis. In July 2009, Ohio was the first state to file a lawsuit against a loan servicer for violating the state’s consumer laws. Since then, two other cases have been filed in addition to the case against GMAC.

Okay, guys, there it is. I’ve been talking about it for weeks. This is fraud. It’s not mishandled paperwork. It’s not routine. It’s not something that “wouldn’t have changed the outcome in the vast majority of cases.” It’s illegal. It’s lying to the court. It’s telling Judges what you know to be untrue on oath.

The Ohio Attorney General has the guts to get out there and say it. The President won’t. The Wall Street Journal won’t. The Treasury department won’t.

But I have almost from the beginning.

It’s time for a foreclosure freeze, a moratorium until the industry gets its house in order. It’s time for action not just in Ohio but all over the fifty AND the federal government.

The American people have a right to believe that there is one type of law for all people be they in the banking industry or other citizens.

Let us go forward as a nation not just Ohio and punish these criminal acts.

James Pilant

Robo Signing Began With Debt Buyers

From the St. Louis Dispatch –

When Michael Gazzarato took a job that required him to sign hundreds of affidavits in a single day, he had one demand for his employer: a much better pen.

“They tried to get me to do it with a Bic, and I wasn’t going – I wasn’t having it,” he said. “It was bad when I had to use the plastic Papermate-type pen. It was a nightmare.”

The complaint could have come from any of the autograph marathoners in the recent mortgage foreclosure mess. But Gazzarato was speaking at a deposition in a 2007 lawsuit against Asset Acceptance, a company that buys consumer debts and then tries to collect.

His job was to sign affidavits, swearing that he had personally reviewed and verified the records of debtors – a time-consuming task when done correctly.

Sound familiar?

That’s right. This brilliant idea was thought up by debt collection agencies, the ones that buy up debts for pennies on the dollar and then sell them back and forth trying to make a buck.

Now, all we have to do is figure out what incredible genius thought you could use the same practice with mortgages.

Mortgages are a different ball park. In the United States property cannot change hands without a written contract. Further, land is surrounded by laws and guarantees dating back centuries. Robo signing on unsecured debts like credit cards is probably pretty stupid but robo signing on mortgages is just asking for hard core exciting trouble and they are getting it.

Hold on to your hats, this scandal just keeps getting better by the day!

James Pilant

Bank Agrees To Modify Your Mortgage – Then Kicks You Out – Standard Practice!

From the Washington Post

Across the country, struggling homeowners are increasingly tripped up by mortgage lenders that press ahead with foreclosures regardless of any effort they make to provide borrowers with relief on unaffordable mortgages.

Amid the worst housing crisis since the Great Depression, mortgage companies have established a dual-track approach toward troubled homeowners, negotiating with them over loan modifications while trying to seize their homes.

Top government officials have been urging lenders to redouble their efforts at modifying burdensome loans and have barred lenders from foreclosing on homeowners who are seeking to rework their mortgages under a federal program. Mortgage companies, however, have continued to pursue this two-track strategy, with a widening toll especially on those homeowners who have been trying to resolve their mortgage difficulties before they snowball, according to federal and state officials and consumer advocates.

During the last month, several major lenders have temporarily halted thousands of foreclosure cases amid reports that fraudulent court documents and improper procedures have been used to evict people from their homes. But disarray within the mortgage industry goes much further. And the foreclosure pause has done little to address the common industry practice of taking homes from people who’d been led to believe they could save them.

“It’s still happening everywhere,” said Arizona Attorney General Terry Goddard, who has tried to bar the dual-track process in his state, one of the hardest hit by the foreclosure crisis. “It’s one of the largest complaints I get. . . . The lenders need to make a choice. What do they want: a foreclosure or a loan modification?”

The banks are playing it both ways. They foreclose on you when you are delinquent on payments and they foreclose on you when you get your payments modified with them since you’re not paying the full amount. Confused? Think how you would feel after reaching an agreement with the bank to lower your payments and your house is auctioned!

Take a look at the case of Mr. Roberts.

In Centreville, Woodrow Roberts III said he enrolled last October in a loan modification program with Bank of America. At the time, he was still current on his $3,000-a-month payments but wanted some relief until he could find a second job. The bank agreed to trim the monthly payment by $600 for a three-month trial period and consider Roberts for a permanent modification, he recalled.

After three months, he said, he heard nothing from the bank. “I called in every week to see the status of my loan,” Roberts said. “After a year of phone calls and no real information, I received a letter in the mail.” It said he had been rejected for a modification and that he owed more than $8,800 – the total he’d thought his payments had been reduced over the course of the year plus fees. If he didn’t pay, the letter warned, his home would be sold at a foreclosure auction Nov. 12.

“If I knew this type of program could risk everything, I would have never entered into this program,” Roberts said. He explained he can’t afford to pay the sum demanded all at once and hasn’t been allowed to spread it out over time.

In response to a reporter’s question about the case, Bank of America spokeswoman Jumana Bauwens said Roberts was turned down for a permanent loan modification under the federal program because his income was too high to qualify. But she said the bank is now reviewing whether he is eligible for alternative relief.

Sounds like he had a deal to me. But he didn’t. The deals only work one way. If the bank wants to go with the deal, it’s fine. If they don’t, your home is auctioned and they don’t feel obligated to talk to you about it.

Here’s some more –

The Mortgage Bankers Association said lenders often file initial foreclosure paperwork as they work to modify a loan. John Mechem, an MBA spokesman, said they want to make sure that if the modification effort fails, they can promptly move forward with the foreclosure, which can take up to three years to complete depending on the state. Fannie Mae, Freddie Mac and the Federal Housing Administration impose deadlines for filings on loans these agencies guarantee or own, he said.

But Phillip Robinson, a lawyer at the nonprofit law firm Civil Justice Inc. in Baltimore said, “Attorneys and housing counselors here and all over the country complain every day about this kind of thing.”

I don’t understand. I thought if you called and talked to someone at a bank, a loan office, etc., and they said they would take the payment late, they would take a buyout, they would accept a lower payment over a longer time, etc, etc, that we had a deal.

Apparently not. If you’re negotiating a mortgage with a bank, and they agree to modify it, you need to get it in writing. What’s the catch? I don’t see why they should let you have any such evidence of their intent. When they can decide to foreclose or not regardless of the arrangements they have made with you, why should they put anything on paper?

If you have a mortgage, and you have made arrangements with a bank, have a backup plan in case foreclosure is pushed through anyway.

James Pilant