Salon.com > Foreclosure

Turns out much-hyped settlement still allows banks to steal homes

Thu, 02 May 2013 15:08:00 +0000

The absolute least Americans can hope for from a major government settlement with a large industry over well-documented crimes is that the industry wouldn’t, after signing the settlement, just continue to commit the same crimes day after day. After all, following the tobacco industry settlement, cigarette makers did manage to stop advertising to teenagers that their product had no medical side effects.

But new evidence reveals the nation’s largest banks have apparently continued to fabricate documents, rip off customers and illegally kick people out of their homes, even after inking a series of settlements over the same abuses. And the worst part of it all is that the main settlement over foreclosure fraud was so weakly written that it actually allows such criminal conduct to occur, at least up to a certain threshold. Potentially hundreds of thousands of homes could be effectively stolen by the big banks without any sanctions.

The Fed messed with the wrong senator

Mon, 15 Apr 2013 16:43:00 +0000

I have spent the better part of four years trying, with little success, to raise awareness about foreclosure fraud, the largest consumer fraud in the history of the United States. In fact, there’s a whole little band of us writers and activists and foreclosure fighters. We have provided multitudes of evidence about fake documents, forged documents, illegal foreclosures, foreclosures on military members while they served overseas, foreclosures on homes with no mortgages, breaking and entering into the wrong homes, suicides by foreclosure victims, and above all the complete lack of accountability for these crimes and abuses.

To serve and protect … banks?

Tue, 05 Mar 2013 12:30:00 +0000

Wrapping themselves in the American flag is a popular pastime among our nation's prominent institutions. But is it secretly possible for them to commit crimes against active duty members, and pay no price?

Imagine that you’re serving at a forward operating base in Afghanistan. You’ve been in country nine months, coping with hazardous and punishing conditions, trying to survive and return to your family. Then you get a call from your spouse that they’re about to be evicted from the family home. The sense of anxiety is acute, and so is the feeling of helplessness – you’re thousands of miles away, focused on your mission, and you’re wracked with regret and guilt, unable to protect your family from the tragedy and shame of foreclosure.

This has happened at least 700 times to service members on missions overseas since the beginning of the foreclosure crisis in 2008. And it’s actually illegal; it violates the Servicemembers Civil Relief Act, a statute that carries criminal penalties. The nation’s biggest banks have admitted to the conduct before Congress and in regulatory filings, and they only recently acknowledged that they illegally foreclosed on 10 times as many service members as they previously claimed. Any serious effort to hold banks accountable for routine abuse of homeowners should include prosecutions of this execrable behavior. But the government rolled out settlements years before the true depth of these violations ever began to come to light.

Banks wrongfully foreclosed on 700 military members

Mon, 04 Mar 2013 16:25:00 +0000

As part of a multibillion-dollar settlement deal over foreclosure abuses during the housing crisis, it has been discovered that over 700 members of the military were wrongfully evicted from their homes by major banks.

Federal regulators, tasked with determining how to payout the $8.5 billion settlement to victims of Wall Street abuses, demanded that Bank of America, Citigroup, JPMorgan Chase and Wells Fargo identify the borrowers who were evicted in violations of federal law. As the New York Times noted, the findings provide "the first detailed glimpse into the extent of wrongful foreclosures amid the collapse of the housing market."

The banks had long maintained that, although they had relied on faulty documents to push through foreclosures, they rarely forced people out of their homes by mistake. The discovery that over 700 active duty military members -- protected by federal law -- nonetheless faced foreclosure serves as star riposte to such claims.

As the Times noted:

Transcripts show Fed groping blindly in 2007

Fri, 18 Jan 2013 19:35:00 +0000

On the precipice of financial meltdown in 2007, the Federal Reserve was groping in the dark according to transcripts of Fed policy meetings released Friday. The very same month the U.S. fell into the worst recession in recent history, a December policy meeting saw the Fed forecast the the U.S. would avoid recession altogether. In a similar meeting in August of that year, the officials remained officials were still skeptical that foreclosures could cause a financial crisis.

As Wonkblog notes on the transcripts:

In December 2007, the month that the recession is now known to have begun, Fed officials were working from economic projections that would prove wildly inaccurate. They forecast sluggish but sustained growth in 2008 followed by a bounceback in 2009. Staff economist Dave Stockton acknowledged that his was a more optimistic view:

“Our forecast could admittedly be read as still painting a pretty benign
picture: Despite all the financial turmoil, the economy avoids recession and, even with steeply higher prices for food and energy and a lower exchange value of the dollar, we achieve some modest edging-off of inflation.”

Major settlements better for banks than homeowners

Tue, 08 Jan 2013 13:56:00 +0000

Two major settlements between 10 big banks and the government Monday totaling over $20 billion aimed to clear up allegations of widespread malpractice relating to the mortgage crisis. But what at first looks like great news for the 4 million Americans forced into foreclosure between 2009 and 2010, may be a greater boon to banks than burned homeowners.

In one settlement, Bank of America agreed to pay $10 billion to mortgage guarantor Fannie Mae to settle claims that Bank of America sold Fannie Mae bad loans for 10 years. As part of the agreement, Bank of America will also buy back $6.75 billion of bad mortgage loans. All of this settlement money will go directly to the U.S. Treasury (neither Fannie Mae nor Freddie Mac is permitted to keep profits). But as the Guardian's Heidi Moore pointed out, "the deal between Bank of America and Fannie Mae contains no mechanism by which the money would reach the homeowners who signed bad loans."

Banks to pay $10B for foreclosure abuses

Mon, 07 Jan 2013 12:02:00 +0000

Following negotiations between government officials and banks, a $10 billion settlement for foreclosure abuses like "flawed paperwork and botched loan modifications" is expected today, the New York Times reported:

An estimated $3.75 billion of the $10 billion will be distributed in cash relief to Americans who went through foreclosure in 2009 and 2010. Another $6 billion will be directed toward homeowners who are in danger of losing their homes after falling behind on their monthly payments. The deal follows a week of feverish negotiations, and it almost fell apart over the weekend. Some officials at the Federal Reserve threatened to scuttle it unless the banks agreed to pay an additional $300 million for their role in the 2008 financial crisis that torpedoed the housing market and led to millions of foreclosures.

According to the Los Angeles Times:

Banks nix “risky” loans

Tue, 17 Jul 2012 19:59:00 +0000

It's looking more and more like the banking industry might be better off spending the millions that it funnels to lobbyists on some straight-up public relations damage control. Lately, not a day goes by without another bomb dropping. Sometimes it is embarrassingly obvious -- money laundering for Mexican drug cartels?! Did HSBC really need to be that obvious? But usually it is a little more subtle.

For example, Bloomberg published an interesting article today detailing bankers' resistance to the White House effort to help underwater homeowners refinance their mortgages. Much to nearly everyone's surprise, the most recent revamping of the administration's homeowner rescue plan is actually showing some healthy signs of progress -- at least if you compare it to the woeful performance of the stillborn White House initiatives prior to the new rollout. Bloomberg reports that by May of this year as many homeowners had already taken advantage of the new rules to refinance their homes as did in all of 2011. A little late in the game to change perceptions that Obama hasn't been doing all he can for homeowners, but still, better late than never for the people who are finally getting some breathing room.

Big foreclosure payouts, but only for the right wrongs

Wed, 04 Jul 2012 15:59:00 +0000

Can you put a price on the damage caused by a wrongful foreclosure? Banking regulators have. And it’s $125,000. Or $60,000. Or $15,000. Or… it’s unclear.

Last November, banking regulators launched a process to force the big banks to compensate homeowners victimized by their foreclosure abuses. Many crucial details remained unclear, including how much victims might receive.

More than seven months later, regulators finally released a “framework” that shows some of the possible outcomes. It’s a list of thirteen mortgage servicing “errors,” each with its own associated form of compensation. In addition to fixing the bank’s errors, remedies include cash payments ranging from $500 all the way up to $125,000.

It turns out that, for homeowners seeking compensation for those errors and abuses, it’s crucially important just how the servicer messed up. The logic for the differences in payment isn’t always apparent and in some instances seems to defy common sense.

Occupy assails Wells Fargo

Wed, 25 Apr 2012 15:59:00 +0000

Intervening in and disrupting business-as-usual has characterized Occupy tactics since the movement's earliest days. From encampments in prominent plazas to mass marches to impede the flows of traffic and capital in major cities, the aim has been to visibly and physically unsettle a system symbolized by glistening financial districts and their suited denizens. As such, the new plan to disrupt shareholder meetings of major corporations seems an obvious one for Occupy and its allies -- both as a means to garner attention and take the action directly to the corporate leviathans so central to Occupy grievances.

On Tuesday, in one of what organizers across the country hope to be a string of shareholder meeting disruptions, Occupy participants, union members, housing justice advocates and individuals hurt by foreclosures descended on the Wells Fargo annual summit in San Francisco. According to reports, 15 people were arrested inside the meeting of 300 shareholders (where standing room only meant that many individuals with a stake in the banking giant or their proxies could not enter the venue). The disrupters had bought stock in Wells Fargo in order to gain access; they shouted out that the bank should pay its fair share of corporate taxes and vociferously decried investments in private prisons, according to reports. Over the course of the day there were 24 arrests, as police in riot gear flanked the Merchants Exchange Building, which was surrounded by nearly 2,000 demonstrators and one giant inflatable rat.

National Journal reports: Things are bad out in Real America

Fri, 20 Apr 2012 22:00:00 +0000

Ron Fournier, the editor in chief of the National Journal, and reporter Sophie Quinton have a story on hard times in Muncie, Ind., as a microcosm of the failure of American institutions as a whole.

It's a good piece. It's even an "important" piece, in the sense that the cloistered elites who run the country could learn something of the reality of life out in the country at large if this piece makes it to their desks. D.C.-based news organizations should report from "the rest of America" more often, because in Washington mass foreclosures and double-digit unemployment are usually seen as abstract problems slightly less pressing than the fact that Social Security will, decades from now, pay out slightly more than it takes in. (Joe Klein, who is basically a buffoon, returned from his stunt "2010 road trip" sounding suddenly much less buffoonish. Getting outside the bubble is often instructive.)

Bank of America spooked by Occupy campaign

Wed, 07 Dec 2011 19:24:00 +0000

(UPDATED BELOW)

Here’s a quick coda to the Occupy Our Homes campaign launch yesterday: One big bank is reportedly paying close attention to the anti-foreclosure effort.

The blog Zero Hedge has published a purported internal Bank of America email warning all “field services” operators that the Occupy day of action Tuesday “could impact our industry.”

(I’ve asked BoA for comment on the email, and a spokeswoman says she is looking into the matter. I will update this post when I hear back.)

BoA field services operatives are advised:

“do not engage with the protesters”
“While in the neighborhoods, please take notice of vacant [Bank of America Corp.] Field Services managed homes and ensure they are secured.”

Is this what the future of Occupy looks like?

Wed, 07 Dec 2011 01:06:00 +0000

The Occupy Our Homes campaign launched Tuesday, an attempt by some within the movement to pivot to the foreclosure crisis after the clearing by police of occupied parks and squares around the country.

The campaign is focusing on installing homeless families in vacant foreclosed upon buildings, as well as disrupting foreclosure auctions, and the like. On the policy level -- in a break from the no-demands ethos of some segments of the movement -- Occupy Our Homes is demanding that mortgage principal be written down to current home values.

Actions happened all around the country on Tuesday, which you can read about here.

I spent the day at the Occupy Our Homes march in poverty-stricken East New York, Brooklyn. It was one of the smoother Occupy events I’ve attended, likely because of the guiding hand of experienced organizers with the community, religious and labor-affiliated groups that helped put the day together. The crowd progressed in an orderly way from vacant property to vacant property in East New York, with stops at each one to hear stories from people who have gone through foreclosures.

Live from Occupy East New York

Tue, 06 Dec 2011 18:00:00 +0000

East New York is a long way from Wall Street.

While the Brooklyn neighborhood is a mere nine miles from the gilded skyscrapers of Manhattan’s financial district, its residents live in some of the most dire conditions of any place in America.

Heavily black and Hispanic, the neighborhood has the highest foreclosure rate in the entire city. Fully half of the population of East New York and surrounding neighborhoods receive some form of federal assistance like welfare or Medicaid.

Today, Occupy Wall Street activists are teaming up with existing progressive and community groups to launch Occupy Our Homes – a campaign on the foreclosure crisis – in cities around the country. One action will take place in East New York.