Banks Fail Basic Business Ethics


wn15-27Banks Fail Basic Business Ethics

Freddie Mac Unaware Of Homeowner Complaints, Inspector General Concludes

For more than five years, many homeowners who complained about mortgage industry foreclosure abuses have wondered whether anyone with a financial stake in keeping them in their home was paying attention. On Thursday, with the release of a new report from a federal watchdog, they got their answer: No.

The report, by the inspector general of the Federal Housing Finance Agency, says banks and other companies that manage more than 10 million home loans for Freddie Mac “largely failed” to alert the mortgage giant to the most serious category of homeowner complaints, despite a requirement they do so. These “escalated complaints” often include the most serious allegations of misconduct, including improper fees, misapplied mortgage payments and a frustrating cycle of lost paperwork and unreturned calls. In some instances, the mismanagement has led to a wrongful foreclosure.

“The results are shocking on a number of different levels,” said Steve Linick, the FHFA inspector general, in an interview with The Huffington Post. “It is surprising that servicers were not reporting in such large numbers, that Freddie was not on top of this, and that [the FHFA] did not catch it in its exam.”

Four of the largest bank servicers — Bank of America, Wells Fargo, Citigroup and Provident — reported no escalated cases to Freddie Mac, despite handling more than 20,000 over a 14-month period, according to the report. Freddie Mac examiners did not notice that the mortgage companies were failing to disclose the complaints, nor did the FHFA, which relied on “incomplete” Fannie Mae examinations, the report concludes. The FHFA oversees the bailed out lenders Freddie Mac and Fannie Mae.

Freddie Mac Unaware Of Homeowner Complaints, Inspector General Concludes

 

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The Private Prison Problem


002thThe Private Prison Problem

New Hampshire Dems Stick It To Greedy GOP | Addicting Info

On Friday, the Democratic controlled New Hampshire House voted 197-136 to ban the privatization of the state’s prison system. Whether this passes the Republican held (13-11) Senate is debatable but considering that last year there was movement to hand the prison system over to for-profit corporations, the move is significant.

From further down in the article –

The problem with private prisons is that they have absolutely no incentive to rehabilitate or even release prisoners. Early parole is bad for business. Reducing recidivism is really bad for business. Even more disturbing is the amount of money and effort the private prison industry puts into creating more jailable offenses, lengthening sentences and introducing mandatory sentencing for crimes as small as having a half-smoked joint in your pocket. That the industry is a big supporter of the War on Drugs goes without saying.

Private prisons cost more, have terrible safety and health records and several have been implicated in scandals to bribe judges to hand down harsher sentences in order to keep the prisons filled. This reprehensible behavior has even extended to the juvenile justice system. The logic is clear: kids that go to juvie tend to become adult criminals. Get’em while they’re young and you’ll have a customer for life.

Another dark facet of the Prison Industrial Complex is the push for “immigration crack-downs.” The industry is a major force behind the “sudden” urge for Republican-controlled states to arrest every person with brown skin they can find. Arizona’s now-infamous SB1070 was specifically created to make money for prison corporations who would then “share” their good fortune with the state. If you thought parking tickets were a nuisance, imagine being locked up for the sole purpose of closing your state’s budget shortfall.

New Hampshire Dems Stick It To Greedy GOP | Addicting Info

“no incentive to rehabilitate or even release prisoners”  I remember more than a decade ago when I was reading about a legislative attempt to soften the drug laws in New York state, when the rural members strongly objected. They objected on the grounds they would lose jobs from the private prisons, the principal employers in their districts. I was shocked. I thought the discussion should be about justice and what was right. Instead the legislature wound up talking about jobs and economic development in depressed areas.

We are at a turning point in the history of American criminal justice. Imprisonment rates are dropping for the first time in decades. There is considerable reconsideration of the “war on drugs.” There is increasing controversy over standards on forensic testing. We are confronted on a regular basis by the innocent who have spend years (often decades) behind bars for crimes they did not commit. We are dealing with the issue of prosecutorial overreach and misconduct (the Swartz case).

Change is in the air.

But the kind of changes being considered are hobbled by the fact that private industry makes a profit every day they keep a person in a private prison. After Citizens United, we are beset with corporate money damaging the chances of having an intelligent discussion and lobbying for even more incarceration as a panacea for all criminal justice problems.

Citizens United endangers every form of intelligent policy perverting every discourse into a discussion of who profits. There are other values besides money. One of our more precious values is to not be imprisoned without good reason.

One of the intelligent changes we need is the abolition of private prisons across the board in this nation, everyone of them. The precious right to freedom cannot coexist with a profit in denying it. It is long standing principle in American justice that a monetary interest in finding someone guilty is wrong. That is why we don’t have organ donors from death row. It would make sentencing people to death a more attractive option.

Imprisonment is a public function not a private one. It is a common burden on society because of a joint shared decision to use confinement as a means of justice.

It constantly needs rethinking because of its critical importance as an issue.

James Pilant

From around the web –

From the web site, National Prison Divestment Campaign:

Over the past decade, Wells Fargo Bank has advertised to Latinos through community outreach, Spanish-language advertising and programs that allow immigrants, without U.S. identification, to open bank accounts.

However, Wells Fargo has also invested in the GEO Group, the nation’s second largest private prison company, which operates private prisons and immigration detention centers, reports Univision and Salon.com.

Mary Moreno, the communications director for the National People’s Action Campaign, told Univision: “They’re trying to win over all these Latino customers, but at the same time they’re promoting prisons for immigrants. Profits should never be a motive for incarcerating people.”

From the web site, Prison Pork:

In the wake of the announcement that Florida Atlantic University would name its football stadium after private prison corporation GEO Group for a hefty price, an executive at the company is disseminating false and misleading information about the firm’s practices and documented abuses at its facilities.

In both a statement to reporters and an op-ed, GEO Vice President for Corporate Relations Pablo Paez has falsely claimed that horrific abuses at a GEO juvenile detention facility in Mississippi described by the Department of Justice as “systematic, egregious, and dangerous practices exacerbated by a lack of accountability and controls” occurred before GEO took control of the prison, even though both DOJ and court documents clearly show otherwise.  …

From the web site, Capital Weekly:

In three years, a private-prison construction and management company, the Corrections Corporation of America, has seen the value of its contracts with the state soar from nearly $23 million in 2006 to about $700 million three months ago – all without competitive bidding. Even in a state accustomed to high-dollar contracts, the 31-fold increase over three years is dramatic.
During the same period, the company’s campaign donations rose exponentially, from $36,750 in 2006, of which $25,000 went to the state Republican Party, to $233,500 in 2007-08 and nearly $139,000 in 2009.  The donations have gone to Democrats, Republicans and ballot measures. The company’s largest single contribution, $100,000, went to an unsuccessful budget-reform package pushed last year by Gov. Schwarzenegger.

From the web site, Spikes Mind:

How would you describe an industry that wants to put more Americans in prison and keep them there longer so that it can make more money?  In America today, approximately 130,000 people are locked up in private prisons that are being run by for-profit companies, and that number is growing very rapidly.  Overall, the U.S. has approximately 25 percent of the entire global prison population even though it only has 5 percent of the total global population.  The United States has the highest incarceration rate on the entire globe by far, and no nation in the history of the world has ever locked up more of its own citizens than we have.  Are we really such a cesspool of filth and decay that we need to lock up so many of our own people?  Or are there some other factors at work?  Could part of the problem be that we have allowed companies to lock up men and women in cages for profit?  The two largest private prison companies combined to bring in close to $3,000,000,000 in revenue in 2010, and the largest private prison companies have spent tens of millions of dollars on lobbying and campaign contributions over the past decade.  Putting Americans behind bars has become very big business, and those companies have been given a perverse incentive to push for even more Americans to be locked up.  It is a system that is absolutely teeming with corruption, and it is going to get a lot worse unless someone does something about it.

From the web site, Friends of Justice:

In the wake of the Walnut Grove Youth Correctional facility scandal, the Mississippi Department of Corrections (MDOC) announced that GEO Group — one of the largest private prison corporations in the U.S. — will no longer operate three correctional facilities in the state.  By July 20, the corporation will no longer manage the Walnut Grove Youth Correctional, East Mississippi Correctional, or the Marshall County Correctional facilities.

In 2010, reports emerged of sexual abuse, improper medical care, extended prisoner isolation, and violence among inmates at the Walnut Grove facility.  These reports sparked a class-action lawsuit filed by the ACLU and the Southern Poverty Law Center.  The lawsuit resulted in the removal of youth from the Walnut Grove facility. According to the Associated Press, MDOC also had concerns about incidents that occurred at the other GEO Group facilities in the state.

And from the web site, Wickersham’s Conscience:

By determining that an Alaska prisoner doesn’t have the right to recover money from a private prison contractor, the court has cut off the best single way to get a private prison contractor’s attention: by nibbling at their bottom line. In effect, the court is deciding that all prisoner litigation is chaff.

The mistake the court makes, WC thinks, is in treating public prisons and private prisons the same. They are not. As WC has argued before, a public prison has no motivation to keep a prisoner any longer than necessary. A private prison, paid a fixed amount per prisoner per day, has every incentive to keep the private prison census high, because it maximizes revenue. A private prison, for example, might be inclined to impose more discipline on prisoners because, under the system for credit for “good behavior,” it means the prisoners stay longer. And the private prison gets more money.

If Perotti’s “segregation” for  ”investigation of possible possession of escape paraphernalia” results in Perotti serving more time, even if the “investigation” was baseless, CCA is a net winner. Perotti – and the State of Alaska, which is paying CCA – are net losers. By failing to take into account or even to acknowledge the different situation presented by a private prison contractor.

 

 

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Justice for Occupy Protesters


Justice for Occupy Protesters

Judge acquits Occupy Philadelphia protesters in bank sit-in – Philly.com

They were charged with “defiant trespass.”

But after a Common Pleas Court jury on Tuesday acquitted the 12 Occupy Philadelphia protesters arrested in a 2011 bank sit-in, the trial judge shook their hands and called them the “most affable group of defendants I’ve ever come across.”

“I think what this really shows is that when the people of Philadelphia make a decision, they want someone accountable,” said Aaron Troisi, a 26-year-old working toward a master’s degree in education at Temple University. “Accountability and justice is not what they experienced with banks like Wells Fargo.”

Troisi and 11 fellow Occupy demonstrators were acquitted of conspiracy and defiant trespass in the Nov. 18, 2011, sit-in inside a Wells Fargo Bank branch at 17th and Market Streets in Center City.

From further down in the article:

Last July, Wells Fargo, the nation’s largest mortgage lender, agreed to pay $175 million to settle allegations by the U.S. Justice Department that independent brokers originating its loans charged higher fees and rates to minority borrowers than they did to white borrowers with similar credit risks.

The verdict left the Occupy protesters with a sense of vindication.

“If this jury has found us innocent, then it must mean that Wells Fargo is guilty,” said 71-year-old Willard R. Johnson, one of the 12 on trial.

“We have proof of the importance of free speech in a democracy, especially taking on corporate power,” said defense attorney Paul Hetznecker, one of seven lawyers who represented the protesters without charge. “It’s about speaking truth to power and it’s part of a long-standing tradition in this country.”

Judge acquits Occupy Philadelphia protesters in bank sit-in – Philly.com

 

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Banks Poor Record Keeping Strikes Again


 

Debt collectors assisted by poor bank record keeping.
Debt collectors assisted by poor bank record keeping.

Banks Poor Record Keeping Strikes Again

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

The largest U.S. banks face a multi-state investigation into whether they helped debt collectors pursue faulty judgments against credit card customers, according to people familiar with the matter.
At issue is whether weak record-keeping by banks or a failure to pass accurate information to collection agencies harmed consumers.
The allegations against the banks echo those central to last year’s $25 billion federal-state mortgage settlement to resolve charges that the banks “robo-signed” documents and pursued foreclosures with faulty information.
This latest probe targets the same banks, including Bank of America, JPMorgan Chase, Citigroup and Wells Fargo, said the sources who spoke on condition of anonymity because the investigations are continuing.
As with the mortgage cases, the investigation focuses on the banks’ poor paperwork and their weak tracking of the debts.

Big Banks Face Investigation Into Whether They Helped Debt Collectors Pursue Faulty Judgments

Poor record keeping or phrasing it differently, a reckless indifference to the property rights of mortgage holders, is in the news again.  The banks originally used their record keeping to facilitate seizing properties they lacked proper title to. But that wasn’t the only damage being done. It would appear they sold to debt collectors, debts owed to them by the mortgage holders dependent on the very same records they misused for years. You would think they would have noticed there would be a problem but no, people don’t like to think about their mistakes and crimes. So, we have former bank clients who owe no money being hounded by debt collectors.

Has anything been done to discourage these practices? It seems the profit never ends and no one is penalized? Does that mean that the banks can preserve for use over the next decades? Are these going to become standard bank practices?

These practices of poor record keeping and lying affidavits are illegal but with scarcely any penalty imposed they are undeniably profitable.

Aren’t these what Milton Friedman referred to as the “rules of the game,” and if you play by those, isn’t everything okay, you know – free choice, freedom to choose?

I suppose the feds will follow the usual practice of fining the banks a pittance and then allowing them to choose who should receive monetary relief if anyone at all.

This may not discourage the banks from continuing these kinds of acts.

James Pilant

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Banks Manage their own Penalty


Banks Manage their own Penalty

Mortgage Settlement Report Finds Banks Reluctant To Reduce Principal, Despite Promises

The largest mortgage settlement in U.S. history was pitched by its creators as a deal that would offer quick aid to 1 million people in danger of losing their homes to foreclosure. But according to a report released Thursday by the court-appointed monitor of the settlement, in the first nine months after the $25 billion deal was struck, fewer than 50,000 people received the most coveted form of relief: reduction of principal owed on a first mortgage.

Meanwhile, more than three times as many borrowers — 169,000 — agreed to a short sale, which requires they leave the property, according to the report.

Banks still have time to meet their obligations under the settlement, which requires that 30 percent of total relief come in the form of first mortgage principal reduction. But housing advocates say the limited progress so far — just 14 percent of aid has gone to write down loan balances — suggests that banks are avoiding, or at least delaying, their obligation to provide meaningful relief as they promised under the deal.

Mortgage Settlement Report Finds Banks Reluctant To Reduce Principal, Despite Promises

Banking Honor?
Banking Honor?

What did the federal government think would happen when their vaunted, over-hyped 25 billion dollar settlement wound up in the hands of the banks themselves? A child could have made an accurate prediction. You reward criminality by avoiding any real penalties. You chock it up as an enormous victory for the government while the banks and people like me hold you in contempt for your incompetence and servile stance to corporate crime. The banks have to pay back some money to the people they stole from. Great. Except that they decide who gets the money and they have decided that most of the money will go to short sales. Isn’t that special. They’re maximizing their profit. Who would’ve thought?

James Pilant

 

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The Banks Evade Responsibility Again


The Banks Evade Responsibility Again

Banks thrive, while homeowners still suffer | The Great Debate

A year ago the federal government and 49 states completed a $25 billion agreement with the nation’s largest mortgage servicers to settle claims of “robo-signing” and unlawful foreclosure practices. President Barack Obama announced the creation of the federal-state mortgage securities working group in his 2012 State of the Union address. The nation seemed on the verge of transforming the way banks treat struggling homeowners ‑ particularly those with “underwater” mortgages, in which a homeowner owes more than the house is worth.

These promises, however, have yet to be fulfilled. The latest interim report on the national mortgage settlement is due out this week, and banks will likely again declare that it offers proof that they are fulfilling their obligations. But the communities hit hardest by the foreclosure crisis have yet to see any meaningful relief.

Time is running out to ensure that these communities receive their fair share under the settlement. But it is not too late to provide meaningful assistance. The settlement monitors need to demand greater transparency from banks, and they need to see that banks comply with the fair-lending requirements set out in the agreement. They also need to aggressively police the servicing reforms to ensure that all homeowners get a fair opportunity to save their homes.

Banks thrive, while homeowners still suffer | The Great Debate

And from further down in the article:

Unfortunately, there is little transparency about how the banks are using this money. They have not provided any loan-level data to show which borrowers are receiving assistance.

Moreover, mortgage servicers have complete discretion over who receives help. Advocates fear the banks have been cherry-picking expensive loans that are deeply underwater to meet their settlement obligations quickly. This provides an important service for the borrowers in that category but little systematic relief for low- and moderate-income communities suffering the most from the foreclosure crisis.

Simply immune to prosecution?
Simply immune to prosecution?

The mortgage holders committed fraud for years making billions of dollars taking homes they had little or no claim to. They used the HAMP program as a weapon against homeowners, telling them to skip three payments so as to be able to qualify, then rejecting their applications or not bothering to even process them (not that we’ll ever know in most cases, the HAMP program kept no records for the first two years) and then quickly foreclosing on their homes. I’ve had students in my classes who were victims of that scam.

Instead of holding the perpetrators of these crimes accountable they were “sort of” fined 25 billion dollars through a program they administer and report on without effective oversight. Let me repeat that – they, the banks, administer the program to give back some of the money and homes they stole. Oh, forgive me, they are not giving the homes back just some money should they feel in some way that they want to because if they don’t want to, they don’t have to.

That is what passes for justice in the current administration and the 49 states that the bankers negotiated this sweetheart deal with. Crime pays in the United States if you are a banker dealing mortgages.

They stole billions of dollars worth of homes. They in an epic display of arrogance created a parallel system of recording deeds without any legal justification purely to expedite trading of mortgages and to evade filing fees. They lied to judges all over the United States in countless jurisdictions filing tens of thousands of false affidavits saying that their paperwork, their proof of ownership was in order.

These are crimes, not mistakes, crimes.

If I stole through fraud the least home in the land, I would and should do prison time. No one has been sentenced for these crimes. Without prison time, fines, that are a fraction of the money made, are the only deterrent. Is that enough? Does that make sense?

Two systems of justice – one for the bankers and one for regular citizens, the “common” folk, the ones without political friends; the ones that don’t have the right memberships, the right bank accounts, the right lives lived in the adoration of business television and magazines.

We discussed in my class on business law and business ethics what it takes to build a good society. One of the thoughts was to reward virtue and penalize wrong doing. What kind of society does this build?

I think you know the answer.

James Pilant

From around the web –

From the web site, Diane’s Blog:

Kamala Harris is right: we need a Homeowners Bill of Rights, and the banks, like it or not and they don’t,  need good, strong regulations to control them. These two items are bare minimums.  As for giving the money to individual homeowners, if it does happen, the amounts will be small because the numbers involved are so large. Better to allocate some money to homeowners’ advocacy and education groups.

From the web site, On the Frontlines of Americans with Debt:

The  five mortgage companies who are part of the settlement are Bank of America, Wells Fargo, Chase, GMAC/Ally Financial, and Citibank.
While HUD estimates that 2 million homeowners could see their mortgage balances reduced, it will be up to the five banks to determine which homeowners will be included in the program.
In addition, payments of between $1500 and $2000 will be paid to people who lost a home to foreclosure between 2008 and 2011, so long as certain criteria are met. The factsheet does not explain the criteria necessary for those people to qualify.

And finally from the web site, Defend My Florida Home:

A major impediment to mortgage modifications is the bank practice of “dual tracking” mortgages.  When a mortgage is dual tracked the bank pursues foreclosure while at the same time allowing the home owner to pursue a modification.  The problem with this is that in spite of an eminent, or completed modification the bank will still sell a home at sale leaving the owner homeless.

 

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Mortgage Industry as the Wolf?


Mortgage Companies as Wolves
Mortgage Companies as Wolves
Mortgage Industry as the Wolf?

Foreclosure Review In New Settlement Leaves Homeowners In Banks’ Hands

For more than a year, housing advocates and their allies worried that a review of foreclosed loans managed by banking regulators was vulnerable to mortgage industry interference.

On Monday, the Office of the Comptroller of the Currency and the Federal Reserve Board — the two regulatory bodies that had taken the lead in making the nation’s largest banks accountable for rampant foreclosure fraud — announced that homeowners no longer need worry about the independence of the reviews. The regulators, essentially admitting that the reviews were too difficult to conduct, and that assigning appropriate compensation to those most harmed by the banks was no longer a priority, said the mortgage companies themselves will determine how to distribute $3.3 billion to more than 4 million homeowners forced into foreclosure in 2009 or 2010.

Housing advocates, while acknowledging that the foreclosure reviews were flawed, said they don’t understand how turning the process over to mortgage companies improves a system already insufficiently independent.

“The regulators have decided to replace the fox in the henhouse with the wolf,” said John Taylor, president of the National Community Reinvestment Coalition, a Washington-based housing nonprofit. “It is just incomprehensible to me that they could not find a third party that has the wherewithal and independence to fairly determine what the damage is to homeowners.”

Foreclosure Review In New Settlement Leaves Homeowners In Banks’ Hands

Is this good business ethics? Well, let’s look at it from the mortgage companies’ point of view. They made an enormous profit by misleading courts and mortgage holders as to who actually owned the property. In many cases, they told clients that they should skip payments, usually three payments, explaining to them that they would then qualify for government programs like HAMP. Once the home owner had skipped the payments, the bank immediately foreclosed. It terms of money, it was an incredible success.

Let’s analyze based on the Social Responsibility. Social responsibility rests on four pillars: economic, legal, philanthropic, ethical, and philanthropic.

Did the mortgage companies profit? Yes, but it depends on which stakeholders you look at. The shareholders did well. The employees did very well. The customers, at least as far as mortgage holders, were crushed. They are unlikely to ever be customers again. It is very difficult for families to buy a home in the first place. A second bite after foreclosure is not likely. The community was hurt badly by the thousands of empty homes, the collapse of the housing industry and the larger economic bust.

But let us have a special look at our last major shareholder, the regulatory agencies. They came, they saw, they said it was too difficult and gave it all back to the banks after extracting a promise that the banks will be good and give back 3.3 billion of the money they stole in the first place. It would appear the regulators are doing okay. They have shed their responsibilities to the public, which is always much easier than doing your job.

Was it legal? No. The banks violated the law thousands of times, perhaps hundreds of thousands. They lied routinely in official documents requiring affidavits and, for all intents and purposes, were in the business of stealing homes. They have, however, walked away unscathed.

Was it ethical? You have lying on a cosmic scale and theft of the property in the many billions of dollars. I don’t feel further analysis is required here.

And finally, was it philanthropic? Did they give back to the community? This is a pure case of negative philanthropy. The banks often had no concept of what to with the homes they took. They often didn’t care for them. Sometimes, they found it cheaper just to bulldoze them. They took value out of the community and replaced it with negative costs.

This is another sorry episode, which I will wonder if it is wise to mention to my business students? Should I tell them that stealing people’s homes will make you enormously rich while you with virtually no penalties? I am honest. I will. But I would rather not have negative business ethics taught so well by the mortgage companies. It makes what I do look foolish.

James Pilant

From the web site, The Support Center:

Major banks have once again agreed to a settlement, this time worth $8.5 billion, to compensate homeowners whose homes were fraudulently foreclosed upon in 2009 and 2010 through practices such as “robo-signing.” JP Morgan Chase, Bank of America, and and Wells Fargo will pay $3.3 billion to homeowners, and the remaining $5.3 billion will reduce mortgage bills and forgive principals on homes that were sold for less than what the owners owed on their mortgages. 3.8 million homeowners will be eligible to receive compensation ranging from a few hundred dollars to a maximum of $125,000.

In another settlement, Bank of America has agreed to pay the federal housing finance agency, Fannie Mae, $11 billion for selling the agency bad mortgages that defaulted, causing Fannie Mae to assume all the losses. $3.6 billion will be used to compensate for the bad mortgages, and $6.75 billion will be used to buy back mortgages.

Both of these agreements are part of a process to mitigate the impacts of the housing crisis and to hold the banks accountable for their role in both creating the housing bubble and in using questionable, if not fraudulent, methods in servicing their loans and processing foreclosures. Having faced significant losses, Bank of America continues to move out of the mortgage market, and in the deal with Fannie Mae, it agreed to sell the servicing and collection rights for 2 million loans, totaling $306 billion. Some economists and analysts are concerned that as the major banks shift away from mortgage lending, the industry is being consolidated into the hands of a few banks. However, though the housing market is recovering slowly, banks, such as Bank of America, might not be in a position to compete, given the losses they’ve already incurred and the problems they’ve had in servicing loans.

From the web site, Buzz Sourse:

Housing advocates, while acknowledging that the foreclosure reviews were flawed, said they don’t understand how turning the process over to mortgage companies improves a system already insufficiently independent.

“The regulators have decided to replace the fox in the henhouse with the wolf,” said John Taylor, president of the National Community Reinvestment Coalition, a Washington-based housing nonprofit. “It is just incomprehensible to me that they could not find a third party that has the wherewithal and independence to fairly determine what the damage is to homeowners.”

Regulators said the review process, which sought to determine if specific loans were unfairly foreclosed upon, was too costly and time-consuming. Under the new deal, 10 mortgage companies, including Bank of America, Wells Fargo and JPMorgan Chase, will pay $8.5 billion. Of that, $3.3 billion is earmarked for direct payments to “eligible borrowers” whose foreclosures were handled improperly. The remaining $5.2 billion will help struggling borrowers with programs such as loan modifications.

And finally, from the web site, 4Closure Fraud (reprinted from ProPublica):

The Independent Foreclosure Review was supposed to be a full and fair investigation of the big banks’ foreclosure abuses, and it was trumpeted as the government’s largest effort to compensate victimized homeowners. Federal regulators, who designed the review, forced banks to spend billions to carry it out. Millions of homeowners were eligible and hundreds of thousands submitted claims. But Monday morning, the very regulators who launched the program 18 months ago announced that it had all been a massive mistake and shut it down.

Instead, 10 banks have agreed to pay a total of $3.3 billion in cash to the 3.8 million borrowers who had been eligible for the review. That’s an average of around $870 per borrower. But typical of a process that’s been characterized by confusion, delays and secrecy, regulators said the details of how the money will be doled out were not yet available.

The headline number for the settlement is $8.5 billion, but that includes $5.2 billion in “credits” the banks will receive for actions they take to avoid foreclosures, such as providing loan modifications. That’s very similar to the separate $25 billion settlement reached last year between five banks, 49 states and the federal government. That settlement has been criticized for awarding credit to banks for things they were already doing.

 

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Bank of America’s Shifts Derivatives Risk to Taxpayers | The Charlotte Observer Newspaper


Bank of America’s Shifts Derivatives Risk to Taxpayers

Let’s make this simple. Derivatives are speculative instruments used to gamble on the success or failure of some monetary enterprise. Bank of America took these derivatives from one division (uninsured) to another (federally insured). They took a essentially a speculative gamble and moved it into a federally insured institution so that any losses will be born by the federal government.

Isn’t that just sweet?

– Well, it is if you are Bank of America

James Pilant

Lawmakers are criticizing Bank of America Corp. again, this time over the reported transfer of financial instruments from Merrill Lynch into the bank’s deposit-taking arm.

It’s a move the lawmakers say could put taxpayers on the hook for big losses – three years after the bank received billions in bailouts from the federal government.

Lawmakers criticize Bank of America’s transfers | CharlotteObserver.com & The Charlotte Observer Newspaper

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Just For Fun – Wells Fargo Repossesses Automobile They Don’t Own


This is a little film clip of Wells Fargo taking someone’s car that is actually paid for.

Watch and enjoy. Also, be sure and when someone remarks about how the great corporations function like finely tuned watches, that you giggle quietly and politely for one does not disturb the mind’s quiet repose.

James Pilant

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


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