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Foreclosure Crisis: The Story So Far

Systemic failures at the country's banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

In order to ram foreclosures through the courts, many mortgage servicers – companies that handle mortgage payments and that are often subsidiaries of banks – resorted to robo-signing. In thousands of cases, employees falsely swore that they’d personally examined each homeowner’s file. They also routinely submitted false documents in support of their claims to foreclose on homes. ProPublica revealed how employees of one of the nation’s largest servicers, GMAC, effectively posed as employees of a company that was no longer in business, signing documents on behalf of that defunct firm to push borrowers out of their homes. GMAC lacked the legal authority to act on this company’s behalf.

In 2009, the Obama administration created Making Home Affordable, a $75 billion foreclosure prevention program. The centerpiece of that program – HAMP, short for Home Affordable Modification Program – focused on modifying loans to reduce the monthly mortgage payments of struggling homeowners. But, as ProPublica has reported in dozens of stories over the past couple years, extreme delays, errors, lost documents, and frustration have been the norm for homeowners. In many cases, banks simply ignored hard-won loan modifications and kept reporting borrowers as delinquent, damaging their credit, and sometimes even threatening foreclosure.

The program’s architects assumed that in return for modest incentives, servicers would develop the capacity to fairly and efficiently help homeowners modify their mortgages. But servicers don’t own the loans, so they don’t bear the loss from foreclosure. In fact, investing in the necessary staff and systems to effectively handle modification requests hits the servicers’ bottom lines, and modifications have remained relatively rare.

Despite the fact that the big banks and servicers that participate in the program have regularly broken its rules, the government has handed down only a few weak penalties. Instead, the program has been characterized largely by lax enforcement and deference to servicers. Indeed, government audit reports obtained by ProPublica under the Freedom of Information Act showed that the government’s supervision of the program ranged from non-existent to weak. The audits covered GMAC, the fifth largest servicer, and the company itself said it hadn’t reversed a single foreclosure as a result of a government audit.

Recently, federal banking regulators stepped in with a new program to compensate homeowners for “harm” they may have suffered at the hands of banks and mortgage servicers. But the most central question — how compensation will be calculated — has not been determined, regulators said. It’s even unclear what type of compensation borrowers would get, cash or a non-monetary remedy, and many elements of the program have been kept secret, including the specific bank errors or abuses that would merit compensation.

ProPublica will be tracking the foreclosure review process as it progresses. Homeowners going through the process should read our FAQ, fill out our foreclosure questionnaire if they haven’t already, and let us know what’s happening.

Ask your “pretender” lender or “servicer” these questions….where is the original mortgage note? Who possesses the original mortgage note? Where, anywhere in the U. S. can you see the original Mortgage note? Who is the beneficial owner of the note? You MUST answer your foreclosure complaint hopefully with an attorney. Use the above questions if you really want to see what is going on!

Ludwig Stilling

Dec. 13, 2011, 2:01 p.m.

From not too far afar I would like to pose some questions.
Why are the realtively new mortgage and finacial regulations so full of loopholes?
Who are the lobbyers that that promoted and pushed for these leaky loopholed financial laws ?
Who, from behind the scenes actually wrote these laws.
If the devil is in the details, then who are the devils behind these develish details.

Perhaps when these question are investigated in earnest then perhaps the confusion, the fog, smoke and mirrors will lift and clear so we will very clearly see who instigated this unprecedent historic world wide disaster.

Once the image does emerge the purpetrators must be dealt with starting from the very pinnacle then down. Similar to the post WWII Nurnberg trials in early post WWII Germany.

Time for push back, push back now, one tiny step at the time !!!!

The current mess started with the ideas of someone in the RE industry who wanted to streamline things.  It would take far too long to engage each of the states in a common procedure, much less the counties, whose real ox was being totally gored, so—create a procedure run independently of the governments involved and “catch me is you can said the Ginger Bread Man”.  Plus, if they got caught, it was a slap on the hand and “a cost of doing business”.  The shere arrogance of the RE industry was and is appalling.  They set up procedures they knew would not be caught for a long time (IBGYBG-I’ll be gone, you’ll be gone) and charged on with no care except to generate more and excessive fees, and cut out the cost of maintaining the clear chain of property title at the local level. 

Now, someone has to clean up.  So, these bastards now want to settle fo less than pennies on the dollar, get a prior and after “get out of jail” card each for their frauds and continue to do business the same way.  Oh, and by the way, there is the robo-signing post hoc fraud to be dealt with.

FIGHT THE BANKSTERS, START WITH BANK OF AMERICA THE CROOKS THAT STEAL HOMES ALL OVER THE USA BY WAY OF FRAUD WITH HELP OF JUDGES THAT RUBBER STAMP THIS FRAUD IN COURT FOR THE BANKSTERS AND REFUES TO GIVE PEOPLE DUE PROCESS OF LAW OR FORCE THE BANK TO PROVE THAT THEY EVEN OWN THE LOANS.

Excuse me gentlemen, but the real culprit here is the devil that took the interest rate way to low back in 2000-01-02. Yes, that is the FED. And, yes I am talking about that jackass Mr. Greenspan. The artificial dropping of the interest rate, caused interest rate sensitive entities (your pension funds) to push for yield, or become underfunded. Wall street simply provided a triple A rated security for them to park your retirement money in. The pension funds were considered the “smart money”, - yup they were smart alright, as they did NOT do the due diligence they are supposed to do. This they off-loaded onto wall street. Loan modifications, can’t be done, without the pension funds loosing even more money. Presently they are really underfunded as it is. And while I am ripping people new holes, I want to ask: Where were all the county clerks that are supposed to by law record all the real property transactions? Sleeping on the job? And what about the state AG’s, they were sleeping on the job also. It seems to me that any one working in the clerks office should have been able to figure out that something was wrong, especially after they bought a house and it’s registration never crossed their desk. And congress, your voted for representatives, are they really representing you? Or, are they representing the banksters at Freddie, Fanny and the FED? Oh silly me, you all voted for this, I guess you all really wanted it this way, including the loss of your house and your pensions. In essence you voted to keep on working until your 85! You have no one but yourselves to blame. Enjoy.

Kinda funny reading all the comments so far.

You can blame all the Banks you want, bottom line was, if the THEN Republican House, Republican Senate and Clinton, didnt repeal the Glass-Steagall Act, more than likely we wouldnt be in this mess for starters.

Greed on both the banks and consumers, lets face it, 90% of all americans believed, and probably still do, that owning a house was your entitlement and not a priviledge, so with good credit or crap credit you were going to do anything in your power to own a home(s). I remember all i heard over the watercooler, media, among friends of how much your house was appreciating in a 6mos time frame. Being in the mortgage business, i knew it wasnt sustainable.

The Banks, right or wrong, provided that means to many of americans, especially those who had no business buying multiple homes or even one home.

So the banks made a truck load and consumers got their homes win-win for both.

Concerning the robo signers, although i dont condone filing false court docs or anything of such that they did do, but i would bet dollars to doughnuts, that 99.9% of those that were foreclosed by those means STILL didnt pay their mortgages… so you tell me, should they really be allow to stay in their home?

Peace out!

The fact of the matter is that five years into this mess there is still no resolution.  Going around in circles as who is to blame for what happened does not get us anywhere. Ii is imperative to find solutions so that we move on, and to avoid something like happening again. At the end of the day that should be the focus of the discussions in regard to the Foreclosure crisis.

Easy…. implement the Glass-Steagall Act and stop giving Tarp Funds and Secret Loans to banks. Let them Fail, so we can start the recovery process.

come on Mike D.; do a little research! many of the people who were foreclosed on DID pay their mortgages (as myself). payments were handled like a shell game, moved from account (escrow, partial payment, suspension etc.) at the whim of the banks. There were even instances of mortgages that were paid in full by homeowners being foreclosed on because the servicers did not pay the origional note!

And…please do a grammar check. It is allowed to stay, not allow to stay.

Im in the lending side of the world, i live this every day, and yes, you are correct, many have lost and are losing their homes due to things in their life that are beyond their control. i get it. What I was referring to was the market run up. Created by the largest banks that gave the means for many to purchase homes when they, the consumer knew they couldn’t afford and banks knowly provided these odd ball loans to those whom didn’t deserve those homes which in turn, created a higher demand thus values sky rocketed. Most homes now are being foreclosed on are due to strategic reasons rather affordability.

It is a VERY small percentage of those whom lost their homes due to error in paper work, it does happen, i grant you that, when those whom had No liens, lost payments yada yada yada. I know, and it drives me nuts that the MEDIA loves to blow these type of instances out of the water, making it sound like it happens all the time and because of the ROBO signers (LPS the main company under the microscope) they are the reasons for foreclosures, these instances so rare. 99.9% of all homes going under are for legitimate reasons to be foreclosed on and that is for non-payment.

I dont expect you to know the in-depth ins and outs of my world, i feel bad that so many people, such as yourself, have lost their home, my father even lost his home. But take it as information that you wont get while watching FOX, CNN, or MSNBC.

BTW… i got my degree in finance, sorry about my grammar.

Im in the lending side of the world, i live this every day, and yes, you are correct, many have lost and are losing their homes due to things in their life that are beyond their control. i get it. What I was referring to was the market run up. Created by the largest banks that gave the means for many to purchase homes when they, the consumer knew they couldn’t afford and banks knowly provided these odd ball loans to those whom didn’t deserve those homes which in turn, created a higher demand thus values sky rocketed. Most homes now are being foreclosed on are due to strategic reasons rather affordability.

It is a VERY small percentage of those whom lost their homes due to error in paper work, it does happen, i grant you that, when those whom had No liens, lost payments yada yada yada. I know, and it drives me nuts that the MEDIA loves to blow these type of instances out of the water, the myth it happens all the time and because of the ROBO signers (LPS the main company under the microscope) they are the reasons for foreclosures, these instances so rare. 99.9% of all homes going under are for legitimate reasons to be foreclosed on and that is for non-payment.

I dont expect you to know the in-depth ins and outs of my world, i feel bad that so many people, such as yourself, have lost their home, my father even lost his home. But take it as information that you wont get while watching FOX, CNN, or MSNBC.

BTW… i got my degrees in finance, business admin and not in English, sorry about my grammar.

please do not insult my intelligence: i have not lost my home yet, but will soon do to the pattern of fraud perpetuated by my mortgage servicer. this is NOT a small percentage! educate yourself! read the hundreds of consumer complaints on-line. you do not say which bank you work for, but lets assume bank of america: look up BOA mortgage fraud to see the pattern of illegal tactics they are using to foreclose on homes that very often, can be afforded by the homeowner. i myself have made my payments on a regular basis, but boa has played fast and loose with not crediting the payments properly while charging outrageous late fees, hiding payments in suspension accounts etc.  if the banks are so blameless, why is boa (and others) being investigated by the fbi, sues by several state attorneys general and currently being charged with racketeering? i would expect an employee who my be afraid for his job or prosecution for wrongdoing to side with the angelic bank over the evil little old lady on social security who is taking advantage of them while being thrown out of her home (your grandmother?)

I stand correct on that first sentence of yours. I do feel bad for those whom are being foreclosed on whom have paid their mortgage, i wouldn’t wish that on anyone.

I dont work for a major bank or any bank for that matter. You are NOT actually reading what I am saying. Never would I even remotely say the banks are blameless. B of A/Countrywide, JPMorgan Chase, CITI, HSBC (i can go on and on) and the major investment banks (Goldman Sux, Lehman Bros., yada yada yada) created the products (sub-prime/alt a) that fueled the run up in the market in 05, 06, and 07. Many consumers during this period, weren’t deserving on being a homeowner, many, not most, weren’t credit worthy nor have the income to purchase and yet these large institutions made a product for them. Most of us homeowners got screwed because it was a snowball effect. Once those homes started to go down, it brought property values down with it. So here we are, there are so many foreclosure, people whom do have the income and credit are walking because it doesn’t make financial sense to stay in the properties, because they bought a 280k home now that is worth 120k. I don’t blame people for walking away because that house even in 30 yrs will not be worth what they bought it for.

Also concerning the banks and them falsely foreclosed on individuals it is a VERY small percentage of all mortgages. The last i read there are roughly 33 million mortgages outstanding in the US and of those 4-5 million that are being or have been already foreclosed on and of the 4-5 million that im going to go out on a limb and say probably a couple thousand people are being wrongfully foreclosed on and that is probably on the really high side. Naturally B of A has the greatest number of complaints number wise because they are the largest servicer in the country.

One last thing… i do believe that OUR government should not had given the banks Tarp Funds nor the secret bailout by our government (http://abcnews.go.com/blogs/business/2011/11/fed-gave-banks-trillions-in-bailout-bloomberg-reports/). I believe it is irresponsible of this administration, and previous, to reward those banks for their misdeeds and i fully believe they should all go down, so we can actually start the recovery process, they are a lousy ran institutions that wouldnt survived without the help of the american taxpayer. All we are doing is wasting taxpayer monies and kicking the can down the street.

So remember this, and ill jump off my soup box, if you like what you are seeing with the state of the economy, then re-elect Obama and the rest of the jokers in office, all the new regulations that have been put in place the last 4 years has done nothing but hurt you, the consumer. Banking, buying a home, Credit Interest rates have shot up, just to name a few things, all occurred because the idiot regulations that this Administration passed early on. Have a Fantastic day!

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

More »

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