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Q&A: Putting the Foreclosure Paperwork Scandal in Perspective

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A bank-owned sign is seen in front of a foreclosed home on July 29, 2010, in Miami, Fla. (Joe Raedle/Getty Images)

The scandal over flawed paperwork and sloppy practices by mortgage servicers continues to broaden. The issue is complicated, and "robo-signers" -- individuals working for servicers and signing off on thousands of foreclosure documents without much verification -- are only part of the picture. So we brought some of our questions about the broader foreclosure process to Geoff Walsh, an attorney with the National Consumer Law Center, a legal advocacy group for consumers.

Walsh helped fill in some context for us about how the foreclosure process was supposed to work, why it's not working, and why the recourse available to homeowners depends a great deal on where they live. We've edited the interview for length and clarity.

What should people make of this robo-signer scandal that just keeps getting bigger? It's getting so much attention, but isn't it just one of the many problems homeowners have experienced with mortgage servicers?

What's coming out now about the robo-signers in particular is the fact that just about all of the major loss mitigation initiatives, including the federal efforts by the Treasury with the [Home Affordable Modification Program], all rely completely on these same people, the mortgage servicers. To me what the robo-signer issue shows clearly is that the industry is on this path to foreclose as many cases as they can, as quickly as possible with as little work as possible.

There's no reason to be skirting the law and sending in fake documents to courts if you have any interest in taking good-faith measures to avoid a foreclosure and consider loan modifications like you're supposed to.

Do you think these problems were in any way inevitable, given the incredible volume of foreclosures these major servicers are handling, or is there some intent behind what we're seeing?

You have to infer some element of intent in not providing adequate staff to keep track of paperwork. Where you have the kind of very consistent pattern of losing paperwork and delaying making loan modifications permanent basically forever, there is a pattern there that I think shows intent not to comply with laws.

It seems like the amount of protection against wrongful foreclosures and the amount of recourse homeowners have is highly dependent on where they live.

Yes, it really is. There are certain states where foreclosures are carried on completely without any judicial supervision, and they can be carried out in two months, and other states [where] a foreclosure can take a year and half.

So if you're a homeowner and your state doesn't act, what recourse do you have if you're facing foreclosure in a non-judicial state?

It's difficult particularly in non-judicial foreclosure states, unless the states attorneys general take action or there are changes in legislation or homeowners are fortunate enough to get an attorney to represent them … It's extremely difficult to challenge them.

That's why these practices have become so commonplace, because you have to file a lawsuit in court to stop a foreclosure. It's a type of legal proceeding that's complicated -- it requires a motion for temporary restraining order or injunction, and it has to be prepared in a short time frame. It's expensive. There are very few challenges to foreclosures. In some states, there are very few attorneys that know how to do that.

[Several non-judicial states] have recently enacted statutes that said that before a servicer can complete a non-judicial foreclosure sale, they have to complete a certification saying they attempted to contact the homeowner and reviewed loss mitigation options.

What we may be seeing is in states like California [a non-judicial state], the attorney general in that state would have the authority, I think, to stay foreclosures and review whether major servicers have been compliant with that particular law. That would give a hook for them to conduct review.

In other non-judicial states there's typically a statutory requirement about who can conduct a foreclosure. It might say that to conduct a non-judicial foreclosure in Michigan, you need to be the owner of the note. So they could be subject to that.

My hope is that non-judicial foreclosure states would be setting up some sort of statutory requirement for these certifications in the future.

How's the foreclosure process supposed to work? There are so many stories about the process going wrong, it's almost hard to know what it was supposed to look like.

In judicial foreclosure states, there are requirements that certain legal papers be in order, like the party foreclosing has to possess an original note for the loan, and the mortgage has to be assigned to the party doing the foreclosure, and there ought to be a law firm that is dealing with actual, physical papers that they get.

In a proper functioning legal system, you'd have local law firm, say, in Pittsburgh, Pa., that is sent all the relevant loan documents, deals directly with someone who has authority to modify the loan, and makes critical decisions about loss mitigation issues. That was standard practice 20 years ago in mortgage foreclosures across country.

In non-judicial states, law firms conducting private sales are also supposed to be getting all of the proper loan documents themselves in their office. They would also be in contact with the people who own the note and mortgage and could make decisions about modifications.

But what you see now is the "foreclosure mill" [law] firms processing paperwork at a local level are often two or three levels down from even the major servicer. So say you have a major servicer like Wells Fargo, and Wells Fargo has contracts with different trusts that own mortgages. What Wells Fargo and other servicers typically do is when loans in their servicing portfolio fall into default, the information about those loans is transferred to other entities, like this Lender Processing Services, LPS, and what LPS does is manage data platforms. LPS has the authority to hire attorneys and firms throughout the country to foreclose on those Wells Fargo mortgages.

[Note: A subsidiary of LPS is currently the subject of a federal probe into how it handled foreclosure affidavits. LPS has acknowledged it once had problems, but says they were quickly addressed.]

So those robo-signed documents -- those are often not coming from major servicers but from default servicers. The servicer would just provide loan summary information to a robo-signer, and the robo-signer fills out lots and lots of information -- information like, "Yes, we own the loan and we have the right to foreclose; the homeowner owes X amount of money." That information is put on an affidavit that the robo-signers sign. They forward that to "foreclosure mill" law firms.

[Read: More on these "foreclosure mill" law firms, which handle the cases in court. Several of these law firms were being investigated by the Florida attorney general for their foreclosure practices, until a judge set back that investigation this week by striking down a state subpoena.]

… The problem is that if you base foreclosures on copies of notes or on unverified statements, it is possible that somebody who has the original copy of a note can enforce it later. Lenders are typically proceeding on copies of documents or notes that don't show that the original has been conveyed to them. Since most [foreclosures] aren't contested, they pass through the courts. Even in judicial foreclosure states, the overwhelming majority go through without being contested.

What's the most that homeowners can hope to recover if they've been subjected to a process that resulted in wrongful or premature foreclosure?

It depends on where they are in the process. In a lot of states there is a redemption period after a foreclosure sale took place, where a homeowner can stay in the house and still try to pay the mortgage off or take some action to set the sale aside.

In those states where there's a redemption period and the homeowner is still in it, they'd have some ways to challenge it whether they're in a non-judicial or judicial state -- particularly if the servicer bought property, which is more often than not what happens in these cases.

It's much more difficult after the redemption expired, and if a third party bought the property. But if you were injured by the sale, if you were harmed financially by the use of financial procedures, you ought to be able to sue for monetary damages for wrongful foreclosure.

This is a great story. However Ms Wang forgot to mention that there is a law passed in April 2010 way before the truth came out to protect and give PARDON to these Nazi banksters.

(I call them Nazis because in my lifetime I only saw Nazis moving people out of their homes without any compassion.)Also Chase in WWII denied many people to have excess to their deposit. Instead these people were shipped to the concentration camp. You can see the video on you tube. just type in Chase collaboration with the Nazis.)

HR 3808 is already sitting on the Presidents table and waiting for Mr. Obamas signature so all this Robosigner issue will be forgotten sooner than we think.

So the Banks can keep foreclosing and throwing Families and Children on the street.

I urge everybody to contact the White House and ask the President not to sign HR 3808
Tel. 202 456-1111   or email to the white house

I just found out HR 3808 was not Signed.

Thank you Mr. President and thank you all who contacted the White House.

A simple point not to be overlooked:
Such work is almost certainly piecework, e.g., you’re paid a certain amount of money to process each document, rather than you offer to handle all of MegaBank’s paperwork for a flat monthly fee.

If the processors are handling the paperwork for a flat monthly fee regardless of excessive volume, they themselves signed a moronic contract and should be out of business ... and probably out of a home.

If it’s piecework, the stuff should scale. If you have enough work for 10 people and you start getting enough work for 20 people, you can hire 10 more people and still make roughly the same profit. If you have 10 people and continue with 10 people while you’re handling work for 20 people, you’re probably overburdening your staff and creating a situation that will lead to shortcuts—intentionally or not—that will only create this kind of mess. In essence, as you’re handling 20 people’s work on 10 people’s pay, you’re doing subpar work but more than doubling your profits, because your overhead hasn’t substantially increased.

The standard during the boom was that the servicer recieved a flat fee per loan per month. Something like $15. When it was just a matter of cashing checks and sending an annual tax stataement it was immensely profitable. Servicing rights were considered the most valuible part of the loan.

Until things crashed. The fee structue and work structure were never set up to handle anything other than a nominal default rate. So it was a bad deal for them and the customer.

My house went into foreclosure because even though I had been hospitalized three times, twice because of Crohn’s Disease (last time major surgery) and once because of a work related accident.

I was out of work several months and Conseco didn’t care at all about my plight. I paid what I could but they weren’t satisfied with what I gave them. They piled interest rate upon interest rates.

I had to see my house that I lived in over 35 years at a great loss, and ended up with very little after conseco got their cut.

I’m not surprised at the corruption of these finance companies. They’re as evil as the old mafia.

To Gabor, you failed to mention why he didn’t sign H.R. 3808. It needed more work on it.

http://www.whitehouse.gov/blog/2010/10/07/why-president-obama-not-signing-hr-3808

The President was concerned about “the intended and unintended consequences of this bill on consumer protections, especially in light of the recent developments with mortgage processors.”

Apparently he saw some problems in that bill that could hurt more than heal.

To Gabor, you failed to mention why he didn’t sign H.R. 3808. It needed more work on it. See
  http://www.whitehouse.gov/blog/2010/10/07/why-president-obama-not-signing-hr-3808
  Apparently he saw some problems in that bill that could hurt more than heal.

To Gabor, you failed to mention why he didn’t sign H.R. 3808. It needed more work on it. See
  Apparently he saw some problems in that bill that could hurt more than heal.

Mike Stucka - your “Simple” point would be wonderful if it were based on a valid point. No servicer is compensated on a scale such as you described. Must be nice to pull stuff out of your….hat.

Unlike popular yet uneducated opinion such as Mr. Stucka’s, servicer employees are compensated by the hour. Servicers are compensated on a given set of parameters in the pooling and servicing agreements. They have mandates in their agreements, and have their compensation based on the mandate that they move the foreclosure to a status other than foreclosure….not that they foreclosure. If that status changes to REO, then so be it. If it reinstates, or gets modified, or whatever the status, as long as it moves from foreclsoure to something else, they get paid. They (The servicers) don’t get paid by the loan. The attorney’s get paid whether the loan forecloses or reinstates or gets postponed, put on hold, modifies, goes into Bankruptcy or whatever, they still get paid.

One thing people don’t know (Most people); Stalling and prolonging a foreclosure that inevitably happens, affects the borrower more than anyone else. Stall tactics like fake grant deeds of partial interest to someone else and subsequent BK simply accumulates fees to the attorney. Fannie and Freddie have caps that the attorneys can charge however, they simply request a fee approval “OTA” (Over the allowable) and voila…they generate more fees.

THAT part is a mill but don’t be naive to think the servicer gets paid by the document or by the foreclosure or anything ludicruous like that.

I am sorry.

As a non-home owner, I see all this from a different point of view. Absolutely, you are all correct: we all deserve due process. However, if you don’t pay you mortage, you ultimately get kicked out.

Renters don’t have a “loss mitigation” process to which they feel entitled. They don’t expect the government to step in at the last minute and save them from getting evicted.

Losing a home must be a tragic thing, but home ownership is not a basic right in this country (or else there would be no renters). One shouldn’t be under the impression that the banks’ procedural errors somehow entitles him/her to keep the house.

While many people are losing their homes for reasons out of their control, others are not. Consider (a) how many people did not save adequately - i.e., somehow they had enough for an iPhone, but not a cash cushion (b) How many people bought an expensive house they could only afford through creative financing because they thought prices would keep rising (c) How many of these houses are over 1800 square feet - no one’s entitled to a mansion (d) How inprudent buying inflated the price for the rest of us way above historical norms.

The consequences here are, no doubt, devastating for many people, Unfortunatley, if you don’t pay, you end up having to leave, and no one should be forced to stop this process or modify the terms of an established contract.

mortgage analyst

Oct. 8, 2010, 4:46 a.m.

Gabor -

Your comparison between banks and Nazis is ridiculous.  I consider myself a liberal democrat but this notion that homeowners’ should not have to pay their mortgages is defective thinking.  You don’t pay your mortgage and stay in the home, you are a thief.  Plain and simple.

Mortgage analyst

1.I never said homeowners should not pay their mortgage. The issue here is about banks not helping homeowners, instead kicking families out.

2. I wonder where were you when banks promised to the US government by signing the Participation Agreement to help homeowners modifying their mortgages. (Called Making Homes Affordable)

3. Many homeowners are making the modified payments to later find themselves in foreclosure and no record of their payments.

4. I think in this case the low life thief’s are the banks. After all it is not the homeowners who recently got caught forging documents to steal as many homes as possible. On top of that banks were receiving billions in bonuses after Bailed out by the people.

5. You should get your facts strait before you accusing anybody of thievery. I know it is hard for you banksters since you all living in lala land and never worked a day in your lives honestly. 

6. I recommend you a video, so you can educate yourself and your banker colleges why people feel this way about banks.

http://www.youtube.com/watch?v=QNYHkCatPFo

J.P. "MIK" MIKULAK

Oct. 8, 2010, 8:38 a.m.

Lending Institutions have forgotten that “WE” are their customers; they’re not ours. I’ve dealt with First Whoreizon in a modification situation for almost 2 years. Their incompetent staff has been solidified by inept management; I might add consistantly. These folks could not track an elephant in the snow with its throat cut. I have documented and recorded 8 conversations with 8 different “customer service reps”—customer-I don’t think so….service-Not even close…reps-derived from repeating the same garble they have been trained to do. Summary “No you don’t qualify for a modification” 3 times. Yes your paperwork is in the mail (one of the 3 biggest lies)-5 times. The Little Guy that was to be the beneficiary, at least in part, of the Bail Out doesn’t have a prayer. They will tell you anything, never confirm anything in writing, in order to extort funds prior to foreclosure. This is great ....after a recent phone call to my Mortgage Servicing Company….. as soon as I hung up the phone rang and it was a Buzzard Banker aka a attorney/mortgage broker. They HAD to get my number from the the fine folks at Whoreizon. No doubt they get a little piece of candy if the Buzzard Banker Sucks the loan up for them…..These are the kindest things I can muster. Put your money in and get your loans from a local credit union…When these folks get a home back that is held together by the termites holding hands and all the windows, plumbing, wiring, cabinets, and flooring are gone they have earned and deserved it. Don’t give them a nickel.

The majority of people fighting for their homes, are doing so - not to beat the banks, but to get a fair deal . The banks will not talk, modify or in anyway work with home owners . They make more doing a foreclosure, thus all the fraudulent documents .
To those not involved the banks and every entity from local R/E broker to Wall Street made money by giving mortgages to people who they knew could not pay them back (illegal) then they insured themselves (AIG) knowing they would fail . Millions who could pay them back suddenly lost their equity and or down payments .They won no matter what .

To put it into perspective foreclosures have gone from hundreds to millions, with many people now thinking of walking who never in their life time even dreamed of it . The foreclosure mills where processing 7-10 thousand a week in Florida, that’s per firm. Huge ! The lawyers doing defense had only old school cases to rely on . Thanks to those in Fl. and the home owners who stood up and challenged them . 3 million deadbeats did not get together and say we do not want to pay .The fundamental problem was mortgage fraud from the cradle to the grave . No market for these defective products by Wall Street could have stopped this in 04, 05 Once corrected our economy will again pick up.

What will eventually be discovered in this foreclosure debacle is that the banks have been deliberately stealing homes from people who were NOT behind on their mortgage and people who didn’t even HAVE a mortgage.  Stories abound, and it happened to me.

wendy misikin

Oct. 8, 2010, 11:28 a.m.

There are all kinds of circumstances that precede a person losinig their home. Many like myself have had to move out of state and leave their home in the hands of a real estate agent to sell the home. Our property was appraised at a much higher value than it was actually worth. We bought a fixer upper and remodeled it. The market went down and nobody could sell at the price they wanted. We installed new flooring, painted it inside and out , new stairs, kitchen island and counter, redid cupboards, new windows and it soarly needed landscape maintenance when we bought it. Also a new garage door. But even with lots of showings and a short sale it didn’t sell. We asked for a deed inleu of foreclosure and were turned down. They asked for tons of paperwork and we complied and they said we never sent it inspite of our keeping copies and signing and dating it. We had brutish phone calls from them,like thugs. SO we called for help from consumer HUd recieved no help because we didn’t have PMI insured loan. Which we had no knowledge of. We were railroaded but good. Wells fargo was our bank and our servicer I’d just soon forget because they were a nightmare in my life.
I told one of them I was disable with a stroke and a brain hemmorrage and to please not call at 6:30 in the morning because I was ill and it made no difference at all. Finally got tough and I called a lawyer and toldhim how I was harrassed.Hesaid you tell them you have a lawyer and they’d be hearing from him if they didn’t cease and I gave them his name. I never had a call early in the morning again. They stopped harrassing me after all that time. I wish I could have done it sooner but I was afraid of the cost. This man had been ill himself and volunteered to help me. The home was sold at sheriffs auction unfortunately for a bit less than what we paid for it,but actually not that much less.

Gabor, Keep up the good battle brother!!!! I both e-mailed and called hotline for President Obama concerning HR 3808. Thanks in some small part to you he “pocket vetoed”.

AK, From having read your post I believe you might be a woman…as there is a small amount of passion in your writing. Please understand that not all cases are the same…not all are looking to be forgiven their debts in full. Many like myself are only looking for terms we might be able to afford due to unforseen circumstances. In my case being laid off from employment for first time in my life (2800+ difference in income per month) and facing surgery in a few weeks. Even after all of this might turn around for me (i.e. HAMP mod) it will almost feel as if I’ll be renting as I hope to have terms extended and interest rate adjusted. Most likely I will not see any equity in my first and only home I have ever owned. So much for working all your life and saving only to have it all disappear because of the greed of others. By the way…I secured a 30 yr. conventional, 20% down payment for a 2 bed/2 bath 888 sq. ft. condo in 2007 for 269K…condo across the parking lot went for 115K last month!!!! Thank your lucky stars you are renting.

Mortgage Analyst, Sorry but I have to agree with Gabor…sort of scary the way things are now…especially when history does have a way of repeating itself.

May GOD Bless All!

@mortgage analyst…I suggest you read people’s comments and not put words in their mouths.  Give me a break.  You do not make a good debater. That’s the problem…you’re a liberal demo.  The liberals think they know it all.  I compare you to the “tea party”.  We need REAL demos.  Your argument fails…sorry.

NEWS ALERT…Gabor, I just came from 4closurefraud website. Article in there references President Obama’s “pocket veto” . Supposedly it could be stii made into law if he does not outright veto. Banksters (drunken) were said to have been bragging about possibility.Something has to be done before 10 day deadline…which would be Oct. 12th. Guess we are not done with this bill after all.HR 3808 “Interstate Recognition of Notarization Act” IRON is what I am referring to…we need to e-mail and call again to be sure President does the right thing. White House phone 202-456-1111.

AK, Sorry…in earlier post I meant “compassion”.

For those posting comments that express no sympathy for the millions of homeowners who are facing a David vs. Goliath battle with the big banks (BOA, Wells Fargo, Chase, etc.), it is not easy to accept your lack of compassion, but it is almost understandable. It may seem to you to be a simple matter of people refusing to leave and refusing to pay. But it’s not that simple at all.

The foreclosure crisis is a symptom of the havoc wreaked on the U.S. economy by the banks - they plotted & schemed and devised a plan to unimaginably enrich themselves, and it evil, heartless and unregulated by Congress (Congress can regulate every aspect of our lives and impose penalties, yet powerless to regulate banks). Goldman Sachs engineered the tsumani felt around the world for greed - trillions disappeared, millions of jobs lost, whole countries nearly swept away, including the U.S. This is not a “normal” ebb & flow financial tale of woe where John & Jane Doe lost jobs = losing home to foreclosure = financial ruin, but millions of lives ruined for profit. Greed caused the foreclosure crisis - so do people really believe it’s OK to point a finger at the people made to suffer while Wall Street destroyed their lives? The foreclosure crisis is enriching the very banks who caused the crisis in the first place via TARP. Treasury enacted provisions making 1.4 trillion available to the banks once they reach a foreclosure threshold.

The majority in this country just refuse to believe the very people smiling, smiling, smiling & rolling out their “Pledge to America” could be capable of cutting their throats - but they are, and relying on ignorance and bigotry to sweep them back into power- those well-dressed men & women promising the moon’s cheese. Rally, rally, rally and clap clap clap to the tune of “taking back the country” and all the while salivating with the banks and corporations and back to $6.00 gas (just how did prices go down immediately after the election in ‘08?). We are preyed on, manipulated and scourged and people are absolutely tired and are fighting back by refusing to let all they have left - their homes - be taken without a fight.

Not two weeks ago the GOP rolled out its “Pledge to America”, yet back-doored legislation to give banks the right to foreclose across state lines with forged affidavits and signatures and illegal documents.

We are in a fight for our very lives this November because greed is erasing democracy and taking away our humanity.

Amen Linda.

Now more than ever people need to help one another the best we can.

May GOD Bless All!

Reading these posts makes me ill.  Not just because of the horror stories about homes being taken illegally, or banks getting away with fraud.

It’s the bickering between the commenters that’s causing it.  You guys do realize as long as we stand divided on the little issues the bigger issues will go on unchecked? 

We all need to stand up, stop our petty bickering , look at each other and say, “enough is enough”.  As long as we’re pointing fingers at each other they don’t have to do anything but watch us idiots argue amongst ourselves about the problem and not concentrate on the problem. 

If its okay with you that banks are operating outside the law, stealing homes, ruining lives at the expense of families and hard earned dreams, then hey, keep bickering.  Think about this though: if you or I were stealing electricity from the power company (whom we all love so much), we’d go to jail in a flat second.  Why do we not expect the same from the crooked banks?

Linda - well said and right on target.  Thanks for voicing my opinion as well.

Roy - we all do need to help one another.  thanks.

George is correct.  Enough is enough.  Banks started the problem and are continuing it daily.  All for the sake of $$$.  They should not be allowed to operate outside the law.  Treasury is doing nothing to penalize banks or mortgage servicers or to help in any way.  Help Obama get rid of Sec. Geithner and put in someone who will work for the American people.

Nissim Sasson

Oct. 9, 2010, 3:31 p.m.

Hi I will try to explain who i believe the Banksters really are in our country:
First they went and lobby the Gov for deregulation so they can lend money, make money on lending and then make more money by selling the loan (note) 
So then they came out with a new Loan (stated assets) and a lot of people that did not qualify for a loan (because of lacks of assets) suddenly qualify, that created a demand for houses, and prices when up (Banksters kept selling the mortgages notes) then they came out with stated assets, stated income loans (meaning you didn’t have to show assets or income)  but they didnt care because they were selling your mortgage to sombody else, when houses became more expensive (thanks to the banksters) you could not afford the house anymore so they came up with a new type of loan “Interest only Loans” and also 2-3 year low interest loans then the interest went up after that (trap Loans)  and suddenly millions of people can qualify again created another false demand on housing and prices on houses went up more, so Banksters have to come up with something new in order to keep making money by lending and then selling the mortgage note to sombody else, so they came out with the “Pick Up Payment loan” where the first payment you could pick was not even the interest of the loan and the difference will go in to the principal, so when the Banksters run out of tricks they went and they bought insurance against all those mortgages (AIG) and when the Bomb Exploited they went to the government (Bush administration) and they ask for tax payer bail out (your money) after that Obama came with an excellent program call HAMP ( if Banks would really implemented the program) but the Banksters used all kind of tricks not to implemented or implemented the least possible, now we find out that they were doing foreclosure fraud so they can collect there mortgage insurance on top of the 299K -500K they get for the house (cash money ) This is who the Banksters are in our country, They created this mess and on top of it they making billions, Is there anybody there that still surprise of this foreclosure fraud ? We are just touching the tip of the Iceberg in regards to who the Banksters really are in our country

God help us and God bless America

Nissim Sasson

Oct. 9, 2010, 3:41 p.m.

“The reason why men enter in to society is the preservation of their property”

(Jhone Locke)

Nissim Sasson:  The best explanation I have seen in a nutshell. I just wonder why our government don’t realize what you wrote is the real story, and hold these banksters accountable.

NISSIM SASSON

Oct. 9, 2010, 8:07 p.m.

Garbor, good question I really don’t understand why specially Obama, For example, Tthe HAMP is his program, why he does not press the Banksters to implement it fairly and systematically to save 4 million homes which was Obama’s initial target ? the program exist the tools are there ! If this program was implemented correctly it will make him look good, and it will save million of foreclosures, but the Banksters do whatever they want with the program and play the borrowers.The foreclosures is one of the roots of this recession fix that and you will fix most of the economy, why? because people will have certainty that they are going to stay in there home and then they will start spending money, they will invest in there home, they will fix their homes, they will buy appliances etc all of this will stimulate the economy
Its beyond my comprehension

I think it is time that all the troubled homeowners send a letter to Obama and call him on his PROMISE about the 4 million homeowners able to save their homes.

Unfortunately the American People forget things easy.

Always new news and we forget the old ones.

What happened Mr. President? The money was and is there for the banks to do it right, instead these banksters pocketed the money. Tarp was not created to make the banksters rich or was it?

It is time to keep the promise Mr. President. we are only 90% away from your promised help.

That solution is what we the people want and its so simple, then why does it not happen ? The vested interest, the monied interest have the power to write the laws , to make sure they profit . The medicare drug act 2003 took away price negotiation for drugs . They can and do charge 3-4 times more then other countries .Energy - the oil company,s have never let alternative , solar, wind, bio get off the ground . The banks , Wall Street have manipulated the markets for decades. Why do we spend more on defense then all other countries combined . Its all about money .They have us bickering down on main street, its the Dems, no the GOP, its Obama, ITS NONE other then a few elite billionares 1-2 % of the people . CORPORATIONS rule and that happened between 1865-1900. After the civil war the congress enacted the 13th, 14th, and 15th amendment . the 14th gave equal protection to the nearly 4 million freed slaves . In a 1883 supreme court opinion ,Justice Stephen J Field said the new constitution , as interpreted by the court , applied to economic , not civil rights. the “person” whose “life, liberty, or property ” the fourteenth amendment secured was not the freed slaves but the corporation . Within 15 years of its ratification the constitution gave corporations person hood . Corporations always were to be subordinate to the people . Today corporations have perpetual life, have no liability, and freedom to endless contributions to whom they so choose . The simple fix for their unbridled greed is for the 98% of us to stop bickering over little things and take away the power this thing has over us . They have to make a profit, at any cost and it is we the people who are paying with our work, and our lives .

@Ann Browne, Roy - thank you for the affirmation. To everyone else - we’ve been reading these ProPublica reports and relating our individual trials with the banks on these boards. Now we’re starting to notice that all we really have is each other - we can’t really count on our government to rein in the financial institutions because the truth is, whether we accept it or not, the financial institutions have grown so big and monied and powerful they are beyond the scope of Congress to meaningfully regulate - they hold the purse strings of the U.S. In fact, Treasury is NOT a governmental agency but a conglomeration of banks. Because of that fact Treasury will always act in the best interests of the banks (reverse of the captain going down with the ship because everything can and will be sacrificed to save the ship).

We’re the generation taught from early childhood to respect authority but the rules of the game have changed. Now we’re asking ourselves what to do? All that attention given to dividing us as a nation - attention to our “differences” because to conquer you first divide and we are a nation divided. Those manipulating and exploitering us are one and the same. Since this financial crisis why so much work to divide? It’s because it takes attention away from the real problem and they can continue to take take take and we actually blame each other! Long past time for that game to end. I believe we can win if we stick together and we have to win because our children are being made to suffer too. They don’t care about the children. Someone once said : “When a crime is committed God creates a witness” and translated that means there is NO perfect crime. We are the witnesses to the crimes against humanity of the financial crisis - and we must fight back and every single person now battling a bank for their home has equal power to assert justice. If it takes petitions, or rallies or each one of us fighting alone at the courthouse to stop a foreclosure - we are all one voice because this is really about human rights - the right not to be exploited by corporations in the name of absolute greed.

p.s. - Just a thought but . . . Since the Supreme Court recently granted corporations “personhood” status I wonder if we could charge financial corporations with committing “hate crimes”? Their greed was malicious, they demonstrated “intent” (when bad & good mortgages were bundled as securities and passed back & forth only by financial cos., insured then bet against to fail for more profit), and the crimes were committed against a “protected class” - U.S. citizens protected by the Consitution. If nothing else it might confound the courts - we have to think of something to fight back (smile).

If you are a strategic defaulter and your house is underwater, and the foreclosure process has been delayed, as a home owner you are still better off getting/signing out ASAP, if you can find a better deal renting. Otherwise, you’ll be accruing the arrear payments to your future liability towards a house that you don’t want anymore! The present situation is a problem between mortgage company and derivative investors. The longer you stay in the home the more you’ll owe them down the road.

What I have never seen is any reference to a case where someone making payments gets foreclosed on.  Yeah I see some people claiming this, but where is a link to this?  I think it is uncommon, I would guess that 99.999% of foreclosure victims are violating their contracts, i.e. not making payments.

I don’t agree with some of the comments such as this

“1 never said homeowners should not pay their mortgage. The issue here is about banks not helping homeowners, instead kicking families out.”

Why should they help homeowners who violate their contract and live for free for many months?  They signed the contract but they won’t live by it? 

There is no free lunch.  If you live for free this is either passed on in the form of higher mortgage rates or picked up by taxpayers.

Someone above complained about being sick and getting foreclosed on.  It does not matter - unless contract has a sickness clause.  This may sound heartless but this is how the economy works.

zetec, alice your advise to sign over the house implies that the criminal who is stealing it somehow has the right to do so . They broke laws in the creation of a mortgage , knowingly and with bold statements . G/S Mr. Blankfien “were doing god’s work”  after paying a fine to avoid investigation of mortgage fraud . If their contract was a legal document, (contract) why are they submitting fraudulent docs to the courts to prove it ? If it looks like fraud, and if they lost trillions of our money, while making billions personally, its simple math , they STOLE it, the game was rigged . Do not pay a dime to the banks, do not sign another thing from them .Stay in YOUR HOUSE until they can prove they own it . This is no time for cowards ! This crime perpetrated by banks and abetted by the named above will not help restore the moral backbone of our country . Staying in your home will bring down these greedy criminals .
Help at foreclosurehamlet.org and 4closurefraud.org .

thx_zetec:

I don’t think you fully understand the situation.  Your “too bad, too sad” attitude towards those losing their homes can be argued either way, but I hope you don’t condone the deceitful behavior of our government and to a much larger extent, the banks. 

If the mortgage contracts were simply enforced and the foreclosures processed you might have a case, (albeit a heartless one.)  But consider a person, like myself, who finds himself without a job after a 40 year history of continuous employment.  Struggling to keep our home, I hear that the president has created a program called “Making Home Affordable” with the stated purpose of helping people keep their homes. Specifically it states:

“A critical piece of that effort [The Financial Stability Plan] is Making Home Affordable, a plan to stabilize the housing market and help struggling homeowners get relief and avoid foreclosure. ” 

But later, when the FDIC is finally forced to release the details, I find out that the plans stated purpose is to help the BANKS. The banks are only expected to offer a modification if it is more profitable than a foreclosure.  Helping homeowners is a coincidental benefit, only if it is in the banks best interest.

Furthermore the eligibility guidelines on the government’s web site don’t include how much equity we have in our home, so it indicates, falsely, that we are probably eligible for a modification.  Based on this I spend months battling with CHASE BANK, make 5 trial payments, only to discover that they will reject our modification because we have equity… CHASE can make more money by foreclosing than modifying our loan.  And btw, they steadfastly refuse to put this in writing!


While working with CHASE they lie, telling me we don’t qualify because we have a 2-family home (1-4 family homes qualify), they lie, telling me we don’t qualify because 31% of our income is not less than our housing expense. (it is by a large margin, and yes, they are using the right numbers…just lying about the result), they send foreclosure packages marked as such to my former place of employment even though this was never an address used with CHASE, and finally, after formally rejecting us for the nebulous reason of “negative NPV result”, they send a letter asking for a DEATH CERTIFICATE and proof of Social Security death benefits… although no one has died!  (really!)

Having been formally rejected I call CHASE to find out what’s next and, after asking if we want to keep our home, they suggest a loan modification, and suggest we start all over again..from scratch.  They claim our rejection came from “The Imminent Default” Dept., but I’m now speaking with the “Loss Mitigation” Dept, even though every employee I spoke with over the last 10 months said they were with the loss mitigation department.  The next day I hear that CHASE was forced to suspend 56,000 foreclosures because they did not follow the legal requirements.  They clearly want to get us back on trial payments, which are better than nothing, since they can’t foreclose for the time being.  They can always reject us and foreclose later! (Clearly better for CHASE than being honest)

If in fact the banks broke the law in the processing of the foreclosure paperwork, should they follow your guidelines, and live by the contract they signed, and forfeit the loans entirely?

Now add to all this that my job loss was probably an indirect result of the banks greedy behavior, and the bank is getting our tax money in the form of bailouts, rather than simply facing the consequences of their greedy behavior, and being allowed to fail.

Does all this seem right to you?

Yes, we foolishly signed a predatory loan.  Yes we failed to make payments. Yes the bank has a right to foreclose.  But not in a dishonest fashion, while making huge profits, and being bailed out with our money.

thx_ zetek
Are you really this cluless or just playing one on the internet.

@JS: I’m so sorry about what you’re going through - you state the case exactly & I can’t understand why some people have a hard time excusing the banks but blame the homeowners. Although the U.S. was once the most developed nation, alot of people have lost the ability to think at all - many rant if people on foodstamps receive an extra dollar per month but think nothing of the tens of billions paid to oil & pharmaceutical cos. (corporate welfare). What to make of people like that?

Too big to fail is onerous for the people as well as the government which must become complicit to prevent the big financial institutions from failing & taking the country down with them. It is an evil relationship, not about contracts but about control - like rape is not about sex - anyone not understanding the difference is not worth arguing with.

Putting the Foreclosure Paperwork Scandal in Perspective.          we all read this headline but we should stop for a moment and think.
WHAT WOULD HAPPEN IF ANOTHER SCANDAL WOULD COME OUT TO THE PUBLIC and the headline would say.

IT HAS BEEN PROVEN THAT BANKS NEVER HAD ANY INTENTION OF MODIFYING LOANS. BANKS JUST WANTED TO POCKET THE TARP MONEY FOR THEMSELVES.

I wonder when we will read this story. Because it is true but nobody is doing anything about it. I think an investigation could prove that banks do not want to help people. And getting away with it.

Just like these Robosigners. The Banksters new they were commiting fraud and perjury way before we saw in the headlines. To prove this all we have to ask ourselves.
The law was passed in April by both House and Senate.
The Banks probably pushed for this to pass. Whoever started this bill should be investigated.

If the headline on Robosigners would of come out a week later. The President would of signed it and like many other things banksters would of got away with it.

I think it is time we all send a letter to the president and ask for a nationwide moratorium on foreclosures and an Investigation on why banks refuse to help homeowners.

Gabor, once again you are probably correct…it might have been signed. Just even more reason that all of us should be in constant contact with our Representatives and Senators.

Linda L., You are one silver-tongued debater. I just love your sarcasm…the rape comment was a little strong for me…but everything you stated was right on. You go girl.

Speaking of going…I must now go and write a letter to a young man I have sponsored for the past 6 years (ChildFund formerly Christian Children’s Fund),to try and explain that I am unable to help him and his family anymore…due to me being a deadbeat. It will be hard to try and make him understand that it will be the difference of me being able to keep my home…or continue to help him and his family with health and academic issues. Sad, but I guess what bankers would call a “necessary evil”.

These comments, from White House advisor David Axelrod, are indicative of the indifference in the White House toward America’s struggling homeowners.  Note that Mr. Axelrod voices concern for the housing market and the banks, but not the homeowners.

From the New York Times:

WASHINGTON (AP) — A top White House adviser questioned the need on Sunday for a blanket halt to home foreclosures, even as pressure grows on the Obama administration to do something about growing evidence that banks have used inaccurate documents to evict homeowners.

“It is a serious problem,” said David Axelrod, who said that the flawed paperwork was hurting the nation’s housing market as well as lending institutions.

http://www.nytimes.com/2010/10/11/business/11mortgage.html?_r=1&sq=foreclosure&st=cse&adxnnl=1&scp=2&src=busln&adxnnlx=1286791262-mm7OWYKANSJ+8BeqGZicvg

It’s also troubling that the mainstream media focuses only on the flawed paperwork, rather the broader pattern of deliberate deceit by the banks, seemingly with the support of the White House. 

(Special thanks to Propublica for telling the story!)

@Gabor: Thanx for the compliment - I just calls em like I sees em. Unfortunately.
@thx_zetec: You posted earlier that you noticed no one is mentioning making payments on their mortgages - not true. I recognize most of the usernames posting on this and other stories on this site & many of the same people relate time after time they were denied after their trial modifications - trials require payments in full for several months - some have not missed payments ever. I’m one of those. I’ve made payments each month per the trials (in fact I wasn’t delinquent when I applied for HAMP - one reason for denial). The nature of the trials is that homeowners wait 30 days to make a 1st payment (and creating default). Most are still making monthly payments if they can afford to or not while applying for HAMP hoping to get them reduced, but it’s not happening that way because banks are taking payments and denying permanent mods in violation of HAMP (blatantly ignoring or misinterpreting the guidelines). That’s what’s so upsetting - people playing by the rules but the banks breaking them. If there are some not making payments it’s because their situation is so severe (laid off & unemployed) again addressed by HAMP - also is it wise to create ghost towns of once thriving communities to enrich the banks that had their losses reimbursed via TARP & getting further enrichment via foreclosures? We are a nation of compassion - help (hundreds of billions) given to developing countries; yet why not our own struggling people? That’s the way I see it but, more importantly, the banks signed an agreement to fully participate in HAMP in late 2009 (a contract) and give modifications to those eligible yet have done the opposite of that. The lies & corruption are what is destroying this country - not the people struggling to keep their homes. The banks passed out tens of millions in bonuses with TARP funds - offensive enough and now refuse to honor their signed agreements to comply with HAMP. Sorry - makes me mad to think of all the tow-headed babies going from pillar to post while the criminals lie to Congress & hide behind gated communities.

Anywho: @Gabor & Roy: I have a question for the two of you. If you know any attorneys it would be interesting to get an answer: 

While reviewing some closing docs the other day(searching for my FHA case#) I saw a “Notice to Homeowners” included that read (in part): “The federal government has taken steps to prevent investors and certain uncreditworthy persons from acquiring FHA mortgages . . . “, including “There are some minor exceptions to the rule regarding investors” . . .(namely Indian tribes & other not for profit groups, associations etc). A “minor exception” was created in 2007 when HUD formed the Ginny Mae II Mortgage-Backed Securities Program (FHA Mortgage Letter #2007-11), that was created to allow (1) “conventional loans that have refinanced into an FHA-insured loan after having become delinquent due to a rate reset on an ARM, and, (2) conventional loans that have become refinanced into fix-rate FHA-insured loans with subordinated 2nd liens”.

The emphasis here is that the loan must start out as a conventional loan, then be refinanced into an FHA-insured loan to become eligible for placement into a securitization pool.

It appears mortgages were bundled indiscriminately into CDO’s (conventional, ARM, FHA, VA) then sold to investors as mortgage-backed securities and no consideration given for mortgages ineligible per HUD guidelines. Clearly FHA loans must first meet the refinancing test to allow investors to legally acquire them and, per HUD’s own laws, some of those CDO’s were bundled in violation of federal law.
Many people caught in the foreclosure crisis have an unrefinanced FHA-insured mortgage - not refinanced rate-reset conventional or ARM but now owned by investors. I contacted HUD Friday to find if new laws had been passed or current ones amended to allow this - with the exception of Ginny Mae II, laws are unchanged regarding primary FHA-insured mortgages.

Just wondering . . .

Sorry - misspoke & meant to thank you Roy for the compliment (I guess - smile).

I’ve tried calling 202-456-1111 to urge the President to not legalize the Notary Act all morning but the line has been busy - a good sign. Also, CNN just mentioned the halt to foreclosures - and termed the halt temporary but the action will “delay recovery” and that the foreclosures “will eventually go through”. I don’t think so, at least not all of them anyway.

Linda L., My comment was definitely meant as a compliment!

As for your question concerning FHA backed loan…Michael or Steven, if you are still checking out this site could you maybe weigh in with some info?

Today is Columbus Day so Fed and State offices might be closed.

As I understand,Banksters will not need another TARP when the situation with the bad notes they now have blow up on them…Anyone hear of QE2?!?!

Thanks Roy - I’ll take it as such!

I’m not familiar with “QE2” - what is it about?

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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.

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