Tag: moratorium

Sheldon Whitehouse Weighs In On The Foreclosure Crisis

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, Philosophy of Business2 Comments

There is deep concern in Washington over the damage the foreclosure crisis might do to banks and the “recovery” in the marbled halls of our elected representatives, their expensive lobbyists and the beltway media.

They worry about the banks. I don’t waste a moment on them. The poor banks. God, I’d hate to get up in the morning and be as friendless, attorneyless and helpless as a major financial institution.

Here what I would like to hear more of. From the Huffington Post –

I have heard from constituents being ignored and abused in the foreclosure process: documents repeatedly lost, inconsistent advice, hours trapped on the phone, and common sense turned on its head to reject fair modifications in favor of foreclosure. I have heard from mayors about the terrible collateral cost to communities from foreclosure. I have watched the big loan servicers drag their feet in the Obama Administration’s well-intentioned mortgage modification program. And most recently, we have all learned that these companies have been playing fast and loose in their foreclosure process, carrying out foreclosures in the cheapest manner possible, often outsourcing the process to a “foreclosure mill” document processing company.

Trapped in administrative purgatory, real families suffer when the big banks and their servicers force foreclosures. Children pack up their rooms; parents struggle to find a temporary roof. We owe these families a fair chance to stay in their homes, and a humane, logical and orderly foreclosure process if all else fails.

That’s what I want to hear.

James Alan Pilant

Due Process

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

When someone takes your house, you have a right to be heard. Okay, not really. You’re just supposed to.

The courts have held to a presumption that the banks acted responsibly when they sought a foreclosure. This is because for decades the banks had acted as reliable, responsible members of the community. Only 23 states require a judicial proceeding to take someone’s home.

Unfortunately in those states, the hearing was the merest formality, because once again, there was a presumption in favor on the banks. The banks did not have to produce the documents and prove their case, they only had to provide an affidavit that they had looked at the documents and the facts were as stated.

The banks are no longer stable, reliable members of the community. I’m sure some still are. Nevertheless, piracy is more a correct synonym for modern financial practices than the word, banking.

No one who has watched the financial casino betting of the last decade can have the kind of trust in banks that used to be the norm.

It’s time to change the rules.

If you steal a car or shoplift a $4.95 toy from a store, you are entitled to due process. You have to be arraigned and told what the charges are. The state is required to produce evidence to convict in open court. The defendant is able to produce evidence of his own and call his own witnesses.

But a bank can take a half million dollar home based on the affidavit of former supermarket checker with no knowledge of the mortgage process at all (who didn’t look at the documents anyway). The bank does not have to provide supporting documents, and many judges are uninterested in hearing the problems of “dead beat” homeowner.

Now I recognize the difference between a criminal and a civil matter. However, that a criminal has far more rights than a law abiding homeowner should be a matter of concern.

It is time for banks to bring the documents to court. It is time for a full hearing of the homeowners claims.

No more “sworn” affidavits. Since the foreclosure industry has lied in these affidavits hundreds of thousands of times, I find them valueless.

Now, you might say, “James, just because these people lied on their affidavits doesn’t mean that we should change the system. After all most people who swear out an affidavit are telling the truth.”

I would say, “Okay, if you want to keep affidavits, you have to make them believable.”

You would respond, “How would we do that?”

“You jail or fine those who have filed false affidavits. Only then will the system have the necessary integrity.”

That’s what I want. Penalties for those that deliberate lie to the court for the financial gain of their employer and I want penalties for the banks that engaged in these practices.

Can you tell me that these companies had hundreds of thousands of these affidavits signed over two years and didn’t notice it? What definition of the word, affidavit, is a mystery to the attorneys of the banking industry?

As ridiculous as it may sound, I want justice.

James Pilant

Foreclosure Freeze (via Lesslie Giacobbi’s Blog)

On By southwerkIn business ethics, ethics, Government Failure

Few writers have mentioned the dangers of the title insurers deciding to sit this dispute out. She does. I’d pay attention if I were you, particularly if you are thinking of buying a house.

James Pilant

What’s going to happen with the foreclosure freeze and should I wait to buy? Gary P. Hi Gary, There are several things to consider, and here are just a few. Right now, with the freeze, there may be a little less inventory to choose from. Some experts have even thought that we’ll have a little upward blip in pricing because there will be fewer houses to choose from and fewer distress sales on the market. Most people think that if this fiasco takes … Read More

via Lesslie Giacobbi's Blog

Katherine Porter to Senate: No Non-Judicial Sales While System Is In Doubt (via Livinglies’s Weblog)

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

I found this site about foreclosures. It has case law and a great deal of useful information for those in foreclosure. I recommend you give it a look.
On the other hand, if you are an attorney, it’s a good place to start your hunt for the case law on this issue. And I promise you the case law is developing very rapidly in this area.
James Pilant

10.27.2010 KATHERINE PORTER SENATE testimony-102710-porter see also 10.27.10 OHIO AG ROBO AMICUS BRIEF ParmaForeclosureBrief Katherine Porter is a visiting law professor at Harvard. Her 2007 study was the seminal work on mortgage and foreclosure irregularities. She found that 40% of the notes had been "lost" or destroyed. The following is an excerpt from her testimony today before a Senate Committee. The entire transcript is in the link above. Du … Read More

via Livinglies's Weblog

More Evidence That Foreclosures Were Done Incorrectly – 55,000 Times!

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

Remember everybody including the White House says there is no systematic problem with the mortgage industry. Wells Fargo is apparently not cooperating with the narrative

From MSNBC Real Estate –

Wells Fargo admitted Wednesday it made mistakes in the paperwork for thousands of foreclosure cases and promised to fix them.

The San Francisco-based bank said it plans to refile documents in 55,000 of the cases by mid-November. The company said not all those cases included errors but didn’t say how many thousands did.

Wells Fargo described the mistakes as technical and said it has no plans to halt the foreclosure process, though filing new paperwork will cause some delays.

“We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” said Teri Schrettenbrunner, a Wells Fargo spokeswoman. The documents are being refiled in the 23 states where a judge’s approval is needed to complete a foreclosure.

I guess there isn’t any real problem. Oh! and they think so too – (from further down in the article) –

On a conference call with investors this month, Stumpf said the bank is “confident that our practices, procedures and documentation” are accurate.

Well, that’s reassuring. Except for those, well, 55,000 mistakes, they’re accurate.

I teach. By their standards, not only did all my students pass with A’s, they passed and got full credit for all the classes meeting nearby. They may have passed courses in other dimensions and forms of reality.

I hate to tell them this, but 55,000 mistakes is a lot of mistakes! Further, it doesn’t make claims that A) “We don’t believe that there are instances in which the foreclosures would not have occurred otherwise,” and B) “the bank is confident that our practices, procedures and documentation are accurate,” sound very convincing.

It’s kind of like a married man being caught with another woman. He didn’t really cheat except for those 55,000 times. Both he and Wells Fargo want you to know that it isn’t that big a deal.

James Pilant

Confessions Of A Robosigner

On By southwerkIn business ethics

He Spent So Many Hours Writing His Name That His Signature Morphed Into A Series Of Four Circles Overlapping One Another.

From CNN Money.com –

The paperwork he robo-signed most often were the notices to delinquent borrowers that the servicer was proceeding to foreclosure. By signing that document, he was affirming that the bank had reviewed the loan and it didn’t qualify for a modification. But, he said, the reality was he had no idea whether Bank of America had really tried to save the borrower’s home.

“We had no knowledge of whether the foreclosure could proceed or couldn’t, but regardless, we signed the documents to get these foreclosures out of the way,” he said, noting that he assumed another department had checked that the review was done.

In his final weeks on the job, a notary routinely left him stacks of 20-page files, each one with a tab indicating where he needed to sign or initial. He had no idea what those documents were.

He spent so many hours writing his name that his signature morphed into a series of four circles overlapping one another. He said that he and his co-workers joked that they got so used to the rapid-fire signatures that they started signing personal paperwork that way.

There was no examination of whether or not the homeowner qualified for a modification. That was not fair. The bank failed in its duty to its customers and stockholders. Stockholders? Yes, the banks would make more over time with modifications.

When we talk about a mortgage holder qualifying for a modification, we’re not talking about whether or not the holder is a good person or a bad one, the criteria are designed to tell the bank that they make more money renegotiating than not.

We are not talking about the bank doing a homeowner a favor. We are talking about a bank ignoring its own procedures and its own profits.

From further down in the article –

Now that he’s not in the thick of the foreclosure process, Doan said he has had time to reflect on what his actions meant. Each signature likely led to a borrower losing his or her home. While he got numb to that fact while he was on the job, he now feels guilty.

“I shudder to think how many foreclosure documents have my name on it,” he said.

It was needlessly cruel to deny borrowers the opportunity to renegotiate. It was a failure of ethical judgment and of the principles of basic fairness.

James Pilant

Banks Muscle Up For Fight With States’ Attorney Generals!

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

Bank of America is loading up big guns for the coming battle over its mortgage practices. It has picked up former Virginia Attorney General Richard Cullen and Brian Boyle, formerly of the Justice Department.

From the Reuters article –

Richard Cullen, chairman of the McGuireWoods law firm and Virginia attorney general from 1997-1998, is one of the lawyers representing the nation’s largest mortgage servicer. Cullen has already been communicating with the offices of various state attorneys general, according to a source familiar with the investigation.

Here’s more from further down in the same article –

Cullen served on President George W. Bush’s legal team during the Florida vote recount after the 2000 presidential election. He also represented Republican Tom DeLay in a recent federal probe that did not result in any charges being filed against the former U.S. House of Representatives majority leader.

Through a spokesman Cullen declined to comment on Bank of America. The company also did not answer questions on Wednesday.

Bank of America has also turned to a former top Justice Department lawyer in the George W. Bush administration to represent it in dealings with state attorneys general.

Brian Boyle, formerly principal deputy assistant U.S. attorney general, participated in a conference call between the bank and representatives from the Florida attorney general’s office, a spokeswoman for the office said.

It’s a pity that the Americans who were the victims of these practices will have to fight without picking up this kind of firepower.

But there is such a thing as justice and if these practices are as nefarious as they appear to me.

Justice will come.

James Pilant

The Vast Majority Of Foreclosures Were Done Correctly?

On By southwerkIn business ethics, Capitalism, ethics, Government Failure, White Collar Crime3 Comments

We have been told over and over again during the last few weeks that the vast majority of foreclosures were done correctly. The White House and the various cabinet departments have echoed this claim.

This is all very odd. Since, the foreclosure documents were in hundreds of thousands of cases not even looked at, how would the banks or the Obama Administration know how many were done correctly?

They can’t. It’s impossible for them to have such knowledge.

Why would they say so? I suppose it’s a matter of faith, a belief that these huge institutions are run by competent, moral people. Faith is not a good substitute for factual data.

Well, new information is coming in. I have predicted that this kind of data would be coming in and here is the first.

From the New York Daily News –

Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.

Banks have suspended some 4,450 foreclosures in all five boroughs because of paperwork problems like missing and inaccurate documents, dubious signatures and banks trying to foreclose on mortgages they don’t even own.

So, 4,450 botched mortgage foreclosures have been found in five boroughs. That hardly squares with the idea that virtually all foreclosures were done correctly.

Here’s what one of the judges said, (again from the article) – Schack told The News he expects to see more paperwork snafus. “It’s like an onion we keep peeling,” he said. “It seems to be layers and layers of problems.”

Do you believe that the vast majority of foreclosures were done correctly?

I expect much more data to come out and it will not be to the foreclosure industry’s benefit. Nor will the Obama administration escape blame for its ridiculous unsupported claims about the crisis.

James Pilant

HAMP (Home Affordability Modification Program) Disastrous!

On By southwerkIn business ethics, Capitalism, Corporate Social Responsibility, ethics, Government Failure, Philosophy of Business, White Collar Crime3 Comments

What a shock!

The Administration’s signature program to help homeowners is not working.

The banks get a 700 billion dollar bailout with no questions asked and the homeowner goes through mountains of paperwork and winds up getting nailed for late payments and fees they didn’t even incur!

From the article –

The Obama administration’s signature anti-foreclosure effort, unveiled in 2009 with the promise of helping three to four million homeowners modify their mortgages, is such a failure that it now risks “generating public anger and mistrust,” according to a federal audit released Monday.

Far from helping at-risk homeowners, the Home Affordable Modification Program has actually made some homeowners worse off, according to the Special Inspector General for the Troubled Asset Relief Program — also known as the Wall Street bailout. The Treasury Department set aside $50 billion from TARP, plus another $25 billion from taxpayer-owned Fannie Mae and Freddie Mac, to give mortgage servicers thousand-dollar incentives to reduce monthly mortgage payments by modifying eligible homeowners’ loans. But more people have been bounced from the program than have been helped by it.

People who apply for modifications via HAMP sometimes “end up unnecessarily depleting their dwindling savings in an ultimately futile effort to obtain the sustainable relief promised by the program guidelines,” the report notes, putting the imprimatur of the federal government on a claim long made by housing experts and homeowner advocates. “Others, who may have somehow found ways to continue to make their mortgage payments, have been drawn into failed trial modifications that have left them with more principal outstanding on their loans, less home equity (or a position further ‘underwater’), and worse credit scores.

“Perhaps worst of all,” it continues, “even in circumstances where they never missed a payment, they may face back payments, penalties, and even late fees that suddenly become due on their ‘modified’ mortgages and that they are unable to pay, thus resulting in the very loss of their homes that HAMP is meant to prevent.”

But don’t worry. The administration has a defense.

Treasury officials are adamant that not only is the program helping those homeowners who remain in it, but it also has helped those homeowners who have been bounced. In fact, those homeowners who ultimately fell out of the program benefited from the equivalent of a “free tax cut” while they were in the program because over that period, they were paying less on their mortgage than was otherwise required. And, officials say, this came without cost to the taxpayer.

That’s right. Even if it didn’t work out for you and we threw you out of the program like yesterday’s garbage (You still lose your home.), you got a “free tax cut.” That makes it all better.

Let’s be clear. There is no amount of evidence, no lack of effectiveness or intelligence, that the current administration does not believe cannot be washed away by good public relations.

I don’t get it. Why even bother to create this program? It’s about ten percent of what the banks got. So, already you knew immediately, average Americans are at best an afterthought.

I supposed it’s better to demonstrate over time you generally loath the American people, than to tell them immediately?

“Oh, you say,” James, “You’re overreacting, the President is constrained from helping these people. It’s the political system.”

No, it’s not. These people are the real victims of an orgy of speculation and they only thing they’ve been getting for two years, is a continuous, mile thick, wall of lectures on personal responsibility.

The President has within in his authority, dozens, hundreds of actions he could take to help these people out, and those things are not being done. At the very least, the mortgage industry could have been held to the simple legal procedures necessary for a proper foreclosure and this administration was not only unable to do that, they see no crisis now.

Where are out political choices?

James Pilant

Toxic Mortgages – Will The Banks Have To Buy Them Back?

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

If you read my last post, you may recall my emphasis on the word, putback. Strangely enough, it took about five minutes after I put that post up that the phrase once again became important.

Read this (from a CBS Moneywatch posting called, “The Foreclosure Mess: The Start of Another Bank Bailout?” –

The foreclosure mess suddenly turned messier yesterday when a group of heavyweight investors, including the Federal Reserve Bank of New York, demanded that Bank of America buy back toxic mortgages that a subsidiary had sold them during the housing bubble. BlackRock, the world’s largest investment company, and Pimco, the world’s largest bond manager, joined the New York Fed in arguing that shoddy record keeping and other missteps by Bank of America subsidiary Countrywide Financial amount to a breach of their contract. Such a breach would allow the investors to sell the mortgages back to the bank at full price. The investors’ claims, which became public yesterday, probably marks the opening shot in a long legal battle that could cost B of A billions and possibly push it into insolvency.

Wow, the unfortunate entities (like pension funds) who bought these toxic assets have come back for a fight. They are saying that the numerous, continuous and often illegal acts (false affidavits presented to the court system – not a matter of opinion or just sloppy paperwork – crimes), have breached their contract. So, in the vernacular, the want their money back and they want it now! (That’s a putback by the way.)

Okay, let’s read a little more from the article –

That adds a new dimension to the foreclosure mess, which the banks had been hoping to put behind them. Banks and others had argued that maybe some i’s weren’t dotted and a few T’s might have misplaced crosses on mortgage documents, but those were just technicalities. The bottom line is that people didn’t pay their mortgages and foreclosures should be allowed to proceed. The Wall Street Journal editorial page recently declared: “We’re not aware of a single case so far of a substantive error.” But now some of the world’s savviest investors are joining defaulting homeowners in claiming that too many T’s are missing crosses. Unlike defaulting homeowners, most of whom will eventually lose their homes to foreclosure, the investors may succeed in winning concessions from the banks. And if the courts agree that Bank of America must make the investors whole, it could be more than the bank’s fragile finances could bear.

So, if the banks through their very own wretched incompetence lose ten of billions of dollars, they may turn to the taxpayers for a little more money!

Have you noticed a common thread that runs through every single story about these banking adventures? No one ever seems to go to jail. No one every seems to really get in any trouble at all, except of one group, a little bitty one.

The taxpayers always seem to be riding to the rescue of their fellow citizens, whoops, I mean the banks, whether they want to or not.

Tell me, does that get old after a while?

James Pilant