It is going on five years since the financial crash and three years since President Obama signed the meager Dodd–Frank Wall Street Reform and Consumer Protection Act, and the big banks are still scamming and conning and ripping off their customers. What a huge surprise.
After the financial crash, we heard about a laundry list of abuses and frauds that ranged from small things, like hidden fees, to pushing minorities into subprime loans and then switching them into more expensive mortgages at signing time, to huge things like selling trillions of dollars in complicated CDO schemes and making bets on derivatives of derivatives without having the reserves to pay off what they owed when the bets went bad.
Of course, no one at the top was prosecuted and the banks were allowed to settle a host of charges (which meant that their shareholders, not the executives who made the decisions, paid the fines). The bad behavior gave these giants a competitive advantage, driving out what good companies there were. So the costly and destructive bad behavior, schemes, cons and scams continue.
1. Falsifying Paperwork, Blitzing, Lying About Payments to Force Homeowners Into Foreclosure
This week, ProPublica released a report detailing the shocking ways that Bank of America has been pushing homeowners into foreclosure. Employees lied about documentation and falsified paperwork to force families out of their homes when these customers thought they were getting a loan modification under the government’s Home Affordable Modification Program (HAMP). To make matters worse, the bank gave bonuses to employees who were able to reach monthly quotas of people they forced into foreclosure.
According to a lawsuit against Bank of America, the bank used “blitzing” twice a month to deny HAMP applications even when the homeowner had fully complied with the program’s requirements; it gave employees $500 bonuses each month they forced 10 or more homeowners into foreclosure; it intentionally ignored applications for 30 days, then declared them late and forced homeowners to reapply; it closed applications even when they knew the homeowner had met all criteria; and it canceled loan modifications because of “late payments” when the bank’s records shows that payments had been made on time.
Of course, as long as the government refuses to prosecute banks and bankers for violating laws, and instead negotiating “settlements” that require bank shareholders to pay fines, bankers will see no reason to stop this kind of activity.
A lawyer explains adverse possession laws, something so called ‘Sovereign Citizen” squatters are ignorantly attempting to use to claim foreclosed houses with.
Fannie Mae (FNMA) and Freddie Mac (FMCC) said Monday that they will suspend some foreclosures during the holidays.
From December 19 through Jan. 2, 2013, Fannie will halt evictions of homeowners in a single-family property and in apartments with up to four units that are financed by a mortgage from the government-sponsored enterprise. Freddie, the nation’s other main provider of government-backed housing loans, will stop foreclosures for the same the type of homes from December 17 through Jan. 2, 2013.
“We’re taking this step in support of families who have faced financial challenges and gone through a foreclosure,” said Terry Edwards, an executive vice president in Fannie Mae’s credit management division, in a statement. “The holidays are a chance to be with loved ones and we want to relieve some stress at this time of year.”
Edwards said borrowers who are struggling with their house payments should contact Fannie as soon as possible.
White Supremacist Shaun Winkler said he is not going to let foreclosure stop him from building a new Aryan Nation compound in Bonner County.
Winkler said he owes nearly $10,000 in back mortgage payments on his land in the Hoodoo Mountains. He purchased the 17 acres near Priest River in 2011, and the seller told KREM 2 News Winkler stopped paying his mortgage nearly a year ago.
The property is going into foreclosure and will be put up for auction January 14.
Winkler said he started running into financial problems last spring after running for Bonner County Sheriff. He said he lost his job because of his controversial beliefs
More from Bill Morlin at HATEWATCH
The very loans that are supposed to help seniors stay in their homes are in many cases pushing them out.
Reverse mortgages, which allow homeowners 62 and older to borrow money against the value of their homes and not pay it back until they move out or die, have long been fraught with problems. But federal and state regulators are documenting new instances of abuse as smaller mortgage brokers, including former subprime lenders, flood the market after the recent exit of big banks and as defaults on the loans hit record rates.
Some lenders are aggressively pitching loans to seniors who cannot afford the fees associated with them, not to mention the property taxes and maintenance. Others are wooing seniors with promises that the loans are free money that can be used to finance long-coveted cruises, without clearly explaining the risks. Some widows are facing eviction after they say they were pressured to keep their name off the deed without being told that they could be left facing foreclosure after their husbands died.
Now, as the vast baby boomer generation heads for retirement and more seniors grapple with dwindling savings, the newly minted Consumer Financial Protection Bureau is working on new rules that could mean better disclosure for consumers and stricter supervision of lenders. More than 775,000 of such loans are outstanding, according to the federal government.
Concerns about the multibillion-dollar reverse mortgage market echo those raised in the lead-up to the financial crisis when consumers were marketed loans — often carrying hidden risks — that they could not afford.
“There are many of the same red flags, including explosive growth and the fact that these loans are often peddled aggressively without regard to suitability,” said Lori Swanson, the Minnesota attorney general, who is working on reforming the reverse mortgage market.
At a meeting in Jackson Hole, Wyoming this week, Federal Reserve Chairman Ben Bernanke hinted that some stimulus action could be coming next month that could bring mortgage rates even more. With 1.5 million properties in foreclosure, two big banks rolled out test programs to keep people in their homes.
Artist and fashion designer Amber Knox was proud to buy a house in Phoenix with her sister. It was 2007 and she was 22.
“I felt like an adult,” she said. It was very exciting. We had a house warming party and invited all our friends.”
The party didn’t last long. Within two years, her sister got married and moved out. Knox struggled to pay the mortgage on her own, just as the housing market was crashing.
Her home lost more than half its value. Then in 2010, she lost her job and fell behind..
“I was scared,” she recalled. “I was scared I was going to lose everything. I didn’t know what to do.”
It has been six months since the big banks settled with state and federal officials over evidence of widespread foreclosure fraud, promising to provide $25 billion in mortgage relief in exchange for not being sued over past foreclosure abuses.
At the time, it looked like a sweet deal for the banks. The fines were paltry compared with the damage done to homeowners and the economy. And much of the relief the banks were obliged to provide could be met by continuing more or less with business as usual.
It still looks like a sweet deal.
The Office of Mortgage Settlement Oversight, the monitor of the settlement, released a preliminary report last week showing that 138,000 homeowners had received some form of relief from March 1 through June 30. That is roughly the number that would have been expected under various aid programs in effect before the settlement. Worse, with some three million borrowers now in or near foreclosure, according to Moody’s Analytics, it is nowhere near the level of relief needed to fix the housing market.
The type of relief provided — mostly short sales, in which a bank allows a homeowner to sell for less than is owed on the mortgage — had become increasingly common before the settlement.
Short sales are better than foreclosures, in part because they prevent vacancies that depress house values. But they are not punishment for wrongdoing in any meaningful sense; rather, they allow banks to get higher prices for underwater properties than they could have gotten in foreclosure sales.
A federal regulator is standing by its decision to bar Fannie Mae and Freddie Mac from reducing principal for borrowers at risk of foreclosure, resisting pressure from the Obama administration.
The Federal Housing Finance Agency announced the decision Tuesday after months of considering the option.
The timing the report lays out would mean both the iPhone and iOS 6 would arrive a bit earlier than expected.
The agency’s acting director, Edward DeMarco, has long opposed allowing Fannie and Freddie to offer principal reduction.
DeMarco said an extensive analysis by the FHFA found the potential benefit was too small compared with the costs and risks. The risks include as many as 19,000 borrowers strategically defaulting on their loans, according to the analysis.
About 1.4 million homeowners would be eligible for principal reductions from Fannie and Freddie.
The Obama administration immediately voiced its disappointment with the decision.
“I do not believe it is the best decision for the country,” Treasury Secretary Timothy Geithner said in a letter to DeMarco.
Geithner said allowing Fannie and Freddie to do “targeted” reductions of principal for troubled borrowers would provide much-needed help to a significant number of troubled homeowners. He said that would help repair the nation’s housing market and result in a net benefit to taxpayers.
This inland port on the San Joaquin River recently became the largest city in the country to declare bankruptcy, but evidence of its unraveling has been mounting for years.
It is visible in the rising domestic violence rates, booming private security businesses and a seemingly unstoppable stream of foreclosures. And it can be seen in smaller form too — at a struggling piñata shop, on the once-yellow fire hydrants faded to gray, in a case of stolen koi.
“The police don’t respond to anything unless there’s blood involved,” said Marlene Hinson, 51, who, after living here for 22 years without incident, was burglarized three times in four months, including the fish theft from her pond in a neighborhood of lush lawns and towering shade trees.
Even as some parts of the country are tentatively emerging from the worst downturn since the Great Depression, this city cannot seem to find solid ground.
While 50 miles to the north, in Sacramento, a bankruptcy judge and lawyers for Stockton and its 18 creditors have begun to sort out who owes what to whom, Stockton’s 292,000 residents have been left trying to hold together some semblance of order and respect for themselves.
The indignities have piled up and compounded in ways few could have imagined. After housing prices shot up in the early 2000s, when commuters from the San Francisco Bay area bought and built up homes here, the median home price plummeted by more than 60 percent in the last five years. In the first half of this year, the city had the highest foreclosure rate of any in the country, according to RealtyTrac, a company that collects foreclosure data. While it has come down a few points in recent months, for the last few years the unemployment rate hovered around 17 percent, nearly double the national average.
While Stockton’s bankruptcy troubles can be traced in part to the collapse of the housing market and the subsequent erosion of the city’s tax base, for years city leaders also mismanaged and overspent funds, pushing the city into financial peril, analysts and current city officials say. Stockton cannot afford the $417 million it owes for retiree health benefits, city officials say, and this year a bank repossessed city-owned parking garages and a $40 million building the city had bought with plans for an upgraded City Hall.
205,990 U.S. properties received foreclosures filings in May, down 4 percent from last year, according to RealtyTrac.
Foreclosure starts also increased for the first time in 27 months.
Many of these new starts are expected to end up as short or auction sales instead of being repossessed by banks.
And foreclosed and pre-foreclosure homes sell at sizable discounts to similar homes that aren’t foreclosed on and can provide a good buying opportunity.
We drew on RealtyTrac’s latest foreclosure report and picked the 10 states with the highest foreclosure savings rates in May.