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Zombie Housing Apocalypse Arrives

English: U.S. Household Property Foreclosure C...

English: U.S. Household Property Foreclosure Chart 2007 (Photo credit: Wikipedia)

Zombie Housing Apocalypse Arrives

Foreclosed ‘Zombie’ Homes Exceed 300,000 Properties: Study

A national survey found 301,874 “zombie” properties dotting the U.S. landscape in which homeowners in foreclosure have moved out, leaving vacant property susceptible to vandalism and degradation.
Florida tops the list of zombie properties with 90,556 vacant homes in foreclosure, according to a foreclosure inventory released on Thursday by RealtyTrac, a real estate information company in Irvine, California.
Illinois and California ranked a distant second and third with 31,668 and 28,821 zombie properties respectively on the list.
The number of homes overall in foreclosure or bank-owned rose by 9 percent to 1.5 million properties nationally in the first quarter of 2013 compared to a year ago, according to RealtyTrac.
Another 10.9 million homeowners nationwide remain at risk because they owe more than their property is worth, according to company vice president Daren Blomquist.
RealtyTrac for the first time analyzed data on zombie properties after a Reuters’ special report in January examined the special problem of zombie titles, Blomquist said.
Reuters revealed the plight of people who walked away from their homes not realizing that their names remained on the deed and that they were financially liable for taxes and other bills related to the abandoned property.

Foreclosed ‘Zombie’ Homes Exceed 300,000 Properties: Study

 

The zombie apocalypse has arrived but it’s not people risen from the dead, it’s houses. Our broken, ill administered foreclosure system has produced this mess. But don’t worry, Congress will quickly and simply fix the problem. Whoops! I forgot who I was talking about, the greatest band of malingerers since George III sent appointees to run the colonies.

Vital housing that could be used to shelter the nation’s homeless and unfortunate is decaying into wreckage while the homeowners – a colloquial phrase for those driven from their homes by a mortgage industry as calculating, cold and inhuman as the Martians in H.G. Wells, War of the Worlds.

See if I am mistaken: (From the opening paragraph of the book.)

“No one would have believed in the last years of the nineteenth century that this world was being watched keenly and closely by intelligences greater than man’s and yet as mortal as his own; that as men busied themselves about their various concerns they were scrutinised and studied, perhaps almost as narrowly as a man with a microscope might scrutinise the transient creatures that swarm and multiply in a drop of water. With infinite complacency men went to and fro over this globe about their little affairs, serene in their assurance of their empire over matter. It is possible that the infusoria under the microscope do the same.”

The law has not kept up in this relationship between predator and prey, and we all suffer for it. Foreclosure should pass the duty of care to the banks and not compound the misery of losing one’s home with an avalanche of fees to shatter any remnant of security and pride.

James Pilant

From around the web:

From the web site, Foreclosure Defense Group:

GG has been successfully fighting the banksters since 2008 and continues that battle today. She is still in her happy home, but the capitalist onslaught is relentless. On February 14th (although a judge had promised her personally that it wouldn’t happen), the court sent an eviction order to the Alameda County Sheriff to evict her, her roommate and all furniture and personal belongings.

From the web site, The Foreclosure Detonator:

Values declined not because of the market, they declined because those very same banks who oppose these write downs created this mess by providing mortgages to almost anyone creating a housing boom that was destined to crash.  Yes, they know what they were doing but greed took control of corporate governance and patriotic spirit.  The attitude of  let’s rake in as much cash as we can then when it all fails we can take back all those homes and rake in even more cash for homes we have no investment in.

And from the web site, Foreclosure Testimony /:

What is a Wrongful Foreclosure Action?

A wrongful foreclosure action is an action filed in superior court by the borrower against the servicer, the holder of the note, and usually the
foreclosing trustee. The complaint usually alleges that there was an “illegal, fraudulent or willfully oppressive sale of property under a power of sale contained in a mortgage or deed of trust.” Munger v. Moore (1970) 11 CA.App.3d. 1. The wrongful foreclosure action is often brought prior to the non-judicial foreclosure sale in order to delay the sale, but the action may also be brought after the non-judicial foreclosure sale. …

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.

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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Another White House Sell Out on the Big Banks

Another White House Sell Out on the Big Banks

Shouldn’t bankers be held to the same laws the rest of Americans have to obey? This is a no-brainer except in the Washington beltway where banks are considered the basis of the Republic rather than the modern equivalent of train robbing Western desperados. I don’t understand. Why is no one being prosecuted? I once lied to a judge. I didn’t know it was a lie until later. When I found out, I called him up (I was working for the state and dealt with the judge regularly) and explained and apologized. He reminded me that I could have gone to jail for that. I told I was well aware of it. And yet here, banks who lied to the judge, to the courts of the United States, are simply walking away. Unlike me, they knew they weren’t telling truth and unlike me, they were making enormous sums of money by lying, and they are not apologizing. Do you see anywhere in the agreement that they have to say, “I’m sorry.” I don’t see it.

There is a dual system of justice in this country, one for me and you, and one for the 1%. It’s very sad. We have been told that we live in a nation of laws, not of men. But the fact is we live in a nation of men, where one class is better than another in the eyes of the law.

James Pilant

Robo-Signing Bank Settlement is a Criminal Sell Out | Better Markets

“Let me help a few victims I created by ripping them off and illegally throwing them out of their homes by false court filings that I swore were true.”  That’s what the so-called mortgage settlement talks are really all about:  fraud, perjury and crimes.  That’s what these banks did and that’s what they are trying to buy their way out of.

The settlement discussions are the same: eliminate all or almost all liability for the bank and, most importantly, all bank officers and employees in exchange for a loan forgiveness or modification program.  Think about this:  the banks engaged in a years-long pattern and practice of what can only be described as fraudulent if not criminal conduct that would put anyone else in prison for years if not decades, yet banks get to buy off the cops with some money to help the victims they created.

Robo-Signing Bank Settlement is a Criminal Sell Out | Better Markets

Mortgage Settlement Is Great – For Big Banks

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When Banks Break the Law, Families Suffer

Half million dollar house in Salinas, Californ...

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We can see from the full article excerpted below that  the banks’ evasion of State recording statutes and poor internal bookkeeping has led many families to disaster.

I have read some bloggers who talk about deadbeat buyers but where are they now when it is obvious that widespread fraud and incompetence were common in the industry for years?

The decision of a family to buy a home is almost always the single most important financial decision of their lives.

Beginning in 2000, that investment became a chip in a Wall Street game of financial speculation. But the industry found that those chips were heavily regulated by law. Not like modern regulations but regulations older than this nation itself. The rules were that property ownership had to carefully recorded, geographically correct and a chain of ownership clearly established. Owning property was considered a critical part in an individual’s life and was protected by the law from injustice.

But this inhibited trading, so the industry created their own system of property transfer (MERS) and we know from the many lawsuits in sloppy or virtually non-existent records keeping to accelerate the process. Today, those injustices have come back to haunt middle class homeowners.

Please read the attached article and get a fell for what economic injustice feels like when the affliction has human face.

James Pilant

Foreclosure From Old Mortgages ‘Most Egregious Manifestation’ Of Broken Housing Market

Diane Thompson, an attorney with the National Consumer Law Center, says she has defended hundreds of foreclosure cases, and in nearly all of them, the homeowner was not in default. “The record-keeping on the part of the mortgage servicers is not to be trusted.”
The problems grew from a lot of sloppy recordkeeping that began during the housing boom, when Wall Street built a quick-and-dirty back-office operation to process mortgages quickly so lenders could sell as many loans as possible. As the loans were later sold to investors, and then resold around the world, the back office system sidestepped crucial legal procedures.
Now it’s becoming clear just how dysfunctional and, according to several state attorneys general, how fraudulent the whole system was.
Depositions from “affidavit slaves” depict a surreal, assembly-line world in which the banks and their partner firms hired hair stylists, fast-food kids and Wal-Mart floor workers, paying them $10 a day, to pose as bank vice presidents, assistant secretaries and corporate attorneys.

Foreclosure From Old Mortgages ‘Most Egregious Manifestation’ Of Broken Housing Market

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President Claims to be Concerned with the Mortgage Crisis

The following article title and brief selection is by Zandar from the web site, Zandar Versus the Stupid.

I very much want you to visit the site and read the article in full. If at all possible explore the web site and look at other essays.

My commentary is below the article excerpt.

Turn On The Lights, Watch The Roaches Scatter Part 84

A White House official said Obama has taken the housing crisis seriously since the start of his term and will look to augment the effort in the months ahead.

“From day one the President has worked to stabilize the housing market and help responsible homeowners stay in their homes, including through refinancing efforts, foreclosure prevention programs and programs directed at the hardest hit states,” said White House spokeswoman Amy Brundage.

“The President will continue to expand on these efforts and look at new ways to help homeowners, just as he has over the past few months with new programs to help underwater homeowners and expanding forbearance so more unemployed homeowners can stay in their homes,” she said.

I wish that were true. I wish the mortgage crisis had been an important concern for the White House but it has not been a concern and is unlikely to become one.

When the President was first elected he had large majorities in both the House and Senate. He could have made mortgage foreclosures a priority instead he created TARP, a plan which did not allow for mortgages to be reduced in line with reduced home values but only extended the time for payment. The banks used this program as a club to expedite foreclosure. They told clients to skip payments for three months to qualify for the program, then foreclosed on them telling them they had decided they were ineligible. The government didn’t even keep records of what the program was doing for the first year.

When the robo-signing scandals began, the federal government did nothing. When the scandal expanded to impugn the record keeping and practices of several large banks, the federal government did nothing.

And now the federal government attempts to cut a sweetheart deal with the industry so that they can evade any legal responsibility for their acts while, in theory, bringing some minimal aid to homeowners.

This administration has always been far more a servant of the banks than a servant of the people. I want as many State Attorney Generals as possible to no longer cooperate with the administration and pursue their own negotiations with the financial industry. That will mean that justice at least has a chance of being served.

James Pilant

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Looking Back at One Media Story about the Foreclosure Crisis

You wake up in the morning hoping and praying that some justice will be meted out to the giant foreclosure industry for the crimes they have committed. In that hope is mixed the great sorrow for all the people who have suffered the loss of their homes in this foreclosure crisis.

Now, let’s go back a little in time and see how the crisis was treated by the public’s stalwart defenders in the press. Obviously, once the stories of owned foreclosed, shabby procedures and busted paperwork trail, the press was eager to fight for the public.

Not exactly, more of a yawn and a condemnation of the homeowners who owed too much.

In mid 2010, the beltway press knew it was all overblown. It has become a bit overblown in some tellings.“ You see, “there’s little evidence that this has resulted in improper foreclosures..” You see, “Anectdotally, these things do seem to have happened…” At that time we had only heard the occasional, once in a while, sort of, story about some poor schmuck losing his property.

This is from the Atlantic Monthly, an article called – The Real Scandal of the Foreclosure Mess – October 8th, 2010 – by Megan McCardle –

The story on the foreclosure mess has become a bit overblown in some tellings. It’s clear that banks have been taking some shortcuts in preparing their foreclosure documents. The banks are obviously overwhelmed with the volume of foreclosures, and the (apparently) many instances in which sloppy securitization has resulted in lost paper trails, obscuring who, exactly has a right to foreclose. Rather than seeking legislative or judicial clarification, they’ve resorted to dubious practices that seem (to my non-legally-trained eye) illegal.

That is bad. But as Arnold Kling points out, there’s little evidence that this has resulted in improper foreclosures: evicting people who’ve paid, or who never had a mortgage with your company. Anectdotally, these things do seem to have happened, but there’s no evidence that they’re frequent, or that they are connected to the procedural irregularities that we’re now discovering with foreclosure documents.

Arnold says that the real scandal is our antiquated title system:

The real scandal is that the process of recording property title is so antiquated, and there are so many interest groups that resist modernizing it. The MERS mortgage database shows what a modern system could look like. But all of the counties that charge fees for title recording, the title “insurance” companies that shake down home buyers to buy “protection” from getting sued to prove that they own their property–these interest groups want to keep the title recording system as expensive and unreliable as possible.

. . . and that it’s taking so long to get people out of homes they can’t afford.

These are my comments on the Atlantic web site –

What!? You don’t see much but “anectdotal” evidence? What were you going to see? No one knew to look until now. You can’t have statistical evidence until you know there is a problem and can look at the numbers.
Anecdotal evidence is the beginning of discovery. Sometimes it turns out that the stories lead nowhere. This time they scored big. And now, and only now, can we find out how big the problem is.
“Only anecdotal evidence” Oh, PLEASE!

And then, about five minutes later, when I got even more angry –

The saddest thing about this article is that in two years after this disaster, this legal catastrophe, when the facts and the numbers are available, no one is going to pull this article out of their Windows’ recycle bin, and wonder what in the hell possessed the author to write it.

According to the article, the “real” scandal of the mortgage crisis is 1) our antiquated title system and 2) “. . . and that it’s taking so long to get people out of homes they can’t afford.” Now, Ms. McArdle is all in agreement with Arnold Kling on the the title system being the real scandal but on the second statement (getting the people out of homes…) she disagrees. I give her full credit for disagreeing with the second statement and therefore my scorn for her writing is only for the first statement.

What?!, the antiquated title system is the real scandal? I cannot generate enough invective for this statement. The world is too short of obscenities for me to throw at it. Let’s just go to the next one.

“… and that it’s taking so long to get people out of homes they can’t afford.”

Let me tell you a story… About ten years ago, housing prices began to go up but strangely the ease of buying them multiplied. Banks began to demand less and less evidence of credit history and salary down to the point where they eventually just filled in the blanks. This lack of oversight was because the great financial institutions of this nation were packaging mortgages as securities and using them as chips in the great game of casino capitalism. It was a strange time, in which the Internet was utterly blanketed by ads calling upon you to refinance your credit card debts – mortgage your home or to refinance your home for a lower rate. By about 2005, that something was terribly wrong was becoming clear. But the the regulatory agencies, the Congress, the Presidency, the financial press or the “Fed” did nothing about it. The selling if anything became more frenzied. Banks hired celebrities to participate in sales meetings in the black communities. Phone banks and mailings to those who rented and those who owned their own homes or even to those who were about to finish paying their mortgages proliferated. The messages was always the same, re-mortgage for lower rates, re-mortgage to pay off debts and the best one, buying a home is cheaper than rent. Many of the ads were carefully aimed at first time home buyers counting on their lack of financial sophistication to smooth the process. In 2006, the boom was pretty much exhausted, but the great financial institutions nursed it along for the next year by trading securities based on mortgages to the foolish as good investments and to each other simply to keep the market going. And then it all fell down.

“… and that it’s taking so long to get people out of homes they can’t afford.”

Simple statement. Factually correct.

They signed the contract, didn’t they? They’re adults. They got in too deep. They have to pay the price.

That is what it looks like if you live in a skycastle. “Skycastles,” that’s where people live so high and so far above the common herd, that they and only they can see what’s real, where the air is clear and the thoughts razor sharp.

From there they watch the little people like bacteria on a petri dish and wonder why God made so many, unless their cold hard intellects have freed them from religious delusions.

I’m down here with the other inconsequential. I say that these people were victimized and deserve mercy. These people did what the government, the media, and the financial industry told them was the intelligent, the correct and the best decision. These people were generally misled, lied to directly and were often the victims of fraud.

But I don’t live in a skycastle.

James Pilant

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Sign a Petition; Stop a Foreclosure

Scrooge and Bob Cratchit illustrated by John L...

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Sign a Petition; Stop a Foreclosure

 

Lauren Bloom writing in her blog is asking her readers to help a disabled woman keep her home. I join in this effort and ask you to sign a petition in the woman’s behalf.

Note to First Mortgage – don’t be a Grinch!

Ms. Chappell has posted a petition on Change.org asking First Mortgage Corporation to do the decent thing and let Ms. Bourchard pay off some of her mortgage through the Hardest Hit State Fund. It’s not as though First Mortgage Corporation wouldn’t get paid, folks – it just means that the company would have to do a little more paperwork. HUD currently has First Mortgage Corporation on hold while everyone works to find a more compassionate solution. Come on, First Mortgage! It’s Christmas, for pity’s sake – have a heart and don’t evict a disabled schoolteacher from her home. Even Ebenezer Scrooge would know better.

If you agree with me that Ms. Bouchard deserves the opportunity to stay in her home, you can sign the petition by clicking here.

Note to First Mortgage – don’t be a Grinch! | The Business Ethics Blog

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California breaks from 50-state probe into mortgage lenders – via Los Angeles Times

This is very good news. The five major banks had been negotiating for a very broad immunity from their crimes during these last years of foreclosure. As I have pointed out many times before – here, here and here, signing false affidavits is a crime not a mistake. The banks were falsely swearing before a judge that the documents had been examined and everything was in order so that the cases could go forward. But by simply having a nobody sign a document they insured that people who owned their own homes and people that were up on the payments would be thrown out as well as those in default. That’s the idea behind affidavits, that we avoid injustice. The banks want immunity for having done these things.

The Obama Administration wants a quick settlement and no doubt is looking for “look forward, not back” scenario. I am too. I am looking forward to the day when I look back on the Obama years as an American aberration like the pet rock craze or maybe cabbage patch dolls.

The California Attorney General refuses to go along with the broad immunity agreement and wants more for the citizens of California so cruelly stolen from by these mortgage holders.  Justice has a small victory today.

James Pilant

From the Los Angeles Times

California breaks from 50-state probe into mortgage lenders

California Atty. Gen. Kamala Harris will no longer take part in a national foreclosure probe of some of the nation’s biggest banks, which are accused of pervasive misconduct in dealing with troubled homeowners.

Harris removed herself from talks by a coalition of state attorneys general and federal agencies investigating abusive foreclosure practices because the nation’s five largest mortgage servicers were not offering California homeowners relief commensurate to what people in the state had suffered, Harris told The Times on Friday.

The big banks were also demanding to be granted overly broad immunity from legal claims that could potentially derail further investigations into Wall Street’s role in the mortgage meltdown, Harris said.

“It has been  a process of negotiating and sitting at a table in good faith, but ultimately I have decided that we have to go our own course and take an independent path. And that decision is because we need to bring relief to Californians that is equal to the pain California experienced, and what is being negotiated now is insufficient,” Harris told The Times in an interview.

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Banks can work with borrowers, help them avoid foreclosure and remain profitable!

The title above is actually a sentence from a post on another website. The following section of the post is from Bankrate.com – please read.

That’s a lesson large lenders should learn from Webster Financial Corp., a  regional bank based in Waterbury, Conn. The bank, which services $8 billion in mortgages and home-equity  loans, has been able to prevent foreclosures, for the most part, by helping  borrowers and providing them with good customer service.

According to a story published in The Wall Street Journal this week, the  lender has taken a proactive approach to loan modifications and has profited  from doing so.

The lender offers struggling borrowers a chance to extend loan terms and  reduce interest on mortgages that are owned by the bank, the article reports.  While restructuring the loan, the bank waives late fees, penalties and unpaid  interest. Most servicers simply add those costs to the balance of the loan.  About 80 percent of the modifications started by Webster are approved. Big banks  have long been criticized for putting borrowers on trial modification plans,  requiring them to make payments for several months and later telling the  borrowers they don’t qualify for a permanent modification.

Read more: A bank against foreclosures | Bankrate.com http://www.bankrate.com/financing/mortgages/a-bank-against-foreclosures/#ixzz1XVCsza1F

The post goes on to talk about how the bank is doing this successfully. It’s very strange, isn’t it? Here you are reading about a bank doing what banks normally did for most of the last century.

They made money by loaning money and collecting interests, and when those loans had problems they didn’t casually foreclose, they attempted to work something out to the benefit of all. They helped people, their clients avoid foreclosure and acted as responsible members of the community.

That’s not how business is done anymore. Banks make money from default not renegotiation. They charge fees for late payments. Once a homeowner is in difficulty they stall when asked for help, compromise or renegotiation knowing that more late payments generate more income for the bank. Banks have told their clients to stop paying for three months so that they would qualify for the federal HAMP program. Then the bank denied them admission to the program and foreclosed. That’s how business is done now.

But you can see that it doesn’t have to be this way.

James Pilant

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