California State Senator Vargas has introduced SB 980, which would extend SB 94 through 2017.
Sb 980 Bill 20120123 Introduced
Mandelman out.
Mar
20
Atty. Bruce Levitt of Kemp v. Countrywide – A Mandelman Matters Podcast
The more you learn about the Kemp v. Countrywide case, the more you realize how unlikely it is that anything like it will ever happen. This was the case on which the banking industry went to school. On behalf of the plaintiff, was New Jersey’s own, bankruptcy and foreclosure defense attorney, Bruce Levitt, of South Orange, who actually had taken over the case from another lawyer only a couple of weeks in advance of the trial. Not a whole lot of time to prepare, as big, complicated law suits go.
However, as luck would have it, Bank of America’s star witness was Linda DeMartini. (See graphic at top of page, lol.)
Linda kind of stole the show right from the beginning, and made the plaintiff’s case seemingly within a few minutes of taking the stand, not that Bruce Levitt didn’t handle everything brilliantly, mind you… he absolutely did.
Join Bruce and me, as we talk about the Kemp v. Countrywide case, about a much anticipated New Jersey Supreme Court decision, and a whole lot more. Just turn up your speakers and click PLAY, on this… A Mandelman Matters Podcast.
Mandelman out.
Mar
08
Wells Fargo Warns Shareholders – it’s own behavior may hurt the bank’s performance.
Wells Fargo
2011 ANNUAL REPORT TO STOCKHOLDERS
Furthermore, there can be no assurance as to when or whether a
definitive agreement regarding the settlement will be reached and
finalized or that it will be on terms consistent with the settlement in
principle.
Risk Factors (continued)
Page Report 107 PDF 72
Negative publicity, including as a result of protests, could damage our reputation and business.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and increased substantially because of the financial crisis and the increase in our size and profile in the financial services industry following our acquisition of Wachovia.
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the “Wells Fargo” brand, negative public opinion about one business could affect our other businesses and also could negatively affect our “cross-sell” strategy.
The proliferation of social media websites utilized by Wells Fargo and other third parties, as well as the personal use of social media by our team members and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our team members interacting with our customers in an unauthorized manner in various social media outlets.
During the past several months, Wells Fargo and other financial institutions have been the targets of numerous protests throughout the U.S., such as the “Occupy Wall Street” protests and other movements designed to cause customers to close their accounts with large financial institutions. These protests have included disrupting the operation of our retail banking stores and have resulted in negative public commentary about financial institutions, including the fees charged for various products and services.
There can be no assurance that continued protests and negative publicity for the Company or large financial institutions generally will not harm our reputation and adversely affect our business and financial results.
Thanks for the warning, Wells Fargo. So far, I’d say you’re right on track to be referring to this warning as part of your defense one day. I’m just saying…
By the way, is Warren Buffet okay with this whole thing? Amazing.
Mandelman out.
Mar
08
Wells Fargo Warns Shareholders – it’s own behavior may hurt the bank’s performance.
Wells Fargo
2011 ANNUAL REPORT TO STOCKHOLDERS
Furthermore, there can be no assurance as to when or whether a
definitive agreement regarding the settlement will be reached and
finalized or that it will be on terms consistent with the settlement in
principle.
Risk Factors (continued)
Page Report 107 PDF 72
Negative publicity, including as a result of protests, could damage our reputation and business.
Reputation risk, or the risk to our business, earnings and capital from negative public opinion, is inherent in our business and increased substantially because of the financial crisis and the increase in our size and profile in the financial services industry following our acquisition of Wachovia.
The reputation of the financial services industry in general has been damaged as a result of the financial crisis and other matters affecting the financial services industry, and negative public opinion about the financial services industry generally or Wells Fargo specifically could adversely affect our ability to keep and attract customers. Negative public opinion could result from our actual or alleged conduct in any number of activities, including mortgage lending practices, servicing and foreclosure activities, corporate governance, regulatory compliance, mergers and acquisitions, and disclosure, sharing or inadequate protection of customer information, and from actions taken by government regulators and community or other organizations in response to that conduct. Because we conduct most of our businesses under the “Wells Fargo” brand, negative public opinion about one business could affect our other businesses and also could negatively affect our “cross-sell” strategy.
The proliferation of social media websites utilized by Wells Fargo and other third parties, as well as the personal use of social media by our team members and others, including personal blogs and social network profiles, also may increase the risk that negative, inappropriate or unauthorized information may be posted or released publicly that could harm our reputation or have other negative consequences, including as a result of our team members interacting with our customers in an unauthorized manner in various social media outlets.
During the past several months, Wells Fargo and other financial institutions have been the targets of numerous protests throughout the U.S., such as the “Occupy Wall Street” protests and other movements designed to cause customers to close their accounts with large financial institutions. These protests have included disrupting the operation of our retail banking stores and have resulted in negative public commentary about financial institutions, including the fees charged for various products and services.
There can be no assurance that continued protests and negative publicity for the Company or large financial institutions generally will not harm our reputation and adversely affect our business and financial results.
Thanks for the warning, Wells Fargo. So far, I’d say you’re right on track to be referring to this warning as part of your defense one day. I’m just saying…
By the way, is Warren Buffet okay with this whole thing? Amazing.
Mandelman out.
Mar
01
New Jersey Supreme Court’s Guillaume decision meaningless – Should foreclosure defense rethink its strategy?
The foreclosure wars have always had two easily identifiable sides. It’s homeowners in one corner… and banks and mortgage servicers in the other. In the beginning the battle was largely over TILA and RESPA claims. After that, we fell into loan modifications, and then into the HAMP guidelines that were never really followed by the servicers, or if they were on occasion, no one could tell.
Lawyers who went to court over HAMP “rules” quickly discovered that they were more like pointers, intimations, tips, or perhaps clues… but whatever they were, HAMP had no teeth, and if there was anything that could be construed as a rule or law, then there was no private right of action. And as far as the HAMP contract between Fannie Mae/Treasury and the participating servicers, well… forget about it because borrowers were not considered third party beneficiaries to that contract.
I never liked any of these decisions one bit… and I still don’t. But I’m no lawyer, so I went along with whatever the foreclosure defense attorneys thought best. Obviously, on these points at least, the fix was in, so I climbed on the bus and went on down the road.
We arrived at the battleground called “securitization fail,” and soon everybody on the homeowner side was learning to sing a new version of their ABCs that went like this… A to B, B to C, C to D, which represented the steps required to properly negotiate a note into a REMIC trust, steps that were almost never followed… or maybe never followed.
The argument, however, was a technical one and judges weren’t exhibiting much patience for the technical learning that was required to understand the argument. It seemed that the judges were having trouble seeing past the 300 cases on their dockets and the homeowner who hadn’t paid their mortgage payments in over two years. The argument may very well have been rock solid, but many lawyers came back from court reporting that their judges had heads that were solid as rocks.
Next up was the media darling “robo-signing,” a practice that created documents to be filed in the records that were forged or signed without knowledge of anything, or illegally notarized, or whatever else you could think of… the paperwork was all wrong.
This debate is still raging, but it hasn’t done a lot of good for many homeowners, truth be told. It certainly has delayed things, in certain instances, and it even slowed the number of foreclosures filed during the year… but it’s certainly not keeping people in their homes in any number.
The bank and servicer side of this argument says that it’s just sloppy paperwork, technicalities causing no harm to borrowers… to which the foreclosure defense side replies, “YOU’RE BREAKING THE LAW… and then in response we hear, “IT DOESN’T MATTER.” “YOU’RE BREAKING THE LAW.” “IT DOESN’T MATTER.” It’s annoying… I’ll certainly give it that.
Good Morning, New Jersey…
Well, yesterday the New Jersey Supreme Court ruled in the Guillaume case, a much-anticipated decision, so I’d been told… and the ruling says that in addition to the servicer’s name and address, the lender’s name and address must appear on the document that states that a bank intends to foreclose on a mortgage. (You’ll find a copy of the case at bottom.)
Earth shattering news? Yes, I thought so too. File this one right next to “Brown v. The Board of Education,” or “Plessy v. Ferguson.” I’m sure law schools all over the nation are rushing to change their curriculums to add a class on the “Much Anticipated but Meaningless.”
140 Elmwood Ave, East Orange, NJ
The case involves an East Orange, New Jersey home owned by Maryse and Emilio Guillaume. The couple received a notice of intention to foreclose in May of 2008, and that notice included the name and address of the mortgage servicer, America’s Servicing Co., but it failed to include the name and address of the lender. And somehow, this issue made it all the way to the state’s Supreme Court.
The state’s high court ruled that because the foreclosure notice that the servicer sent to the Guillaumes did not include the name and address of the lender in addition to that of the servicer, it did fail to comply with New Jersey’s Fair Foreclosure Act.
The court said that, failure to include such information creates the potential for “significant prejudice” to homeowners. According to the high court…
“A misunderstanding about a lender’s identity could prompt a homeowner to make a critical error at a time when he or she is struggling to avert foreclosure.”
From the sounds of that, you’d think that the decision represents some sort of a win for homeowners, right? Not so much.
While the court ruled that the lower court judge was wrong about the need to include the lender’s name and address on the notice of intent to foreclose in addition to the servicer’s, the ruling also said that the lower court was correct to order a default judgment against the couple. Specifically, the court ruled that the couple did not make a case for “excusable neglect” or a “meritorious defense” related to their foreclosure, so the Guillaumes still lose their home.
Additionally, the high court also reversed a separate appellate decision, known as “Laks.”
The Laks decision said that a foreclosure should be dismissed if the notice of intent to foreclose did not comply with New Jersey’s Fair Foreclosure Act, and by reversing that decision, now trial court judges that find a notice that’s fails to comply, will be able to either dismiss the action, or simply order a corrected notice, or even select another solution they deem appropriate.
So, now… after all this… while it’s true that the lenders name and address has to be included on the notice of intent to foreclose along with the name and address of the servicer’s, in the event that the lender’s name is missing, that will no longer necessarily mean that the foreclosure will be dismissed and the servicer will have to start over. Now, the judge will have the discretion to simply order a corrected notice and allow the foreclosure will proceed.
Throughout last year, uncertainty over how the court would ultimately rule in this case led servicers to postpone foreclosures in New Jersey, and as a result foreclosures were down by 80 percent.
Now, I’m not saying that’s necessarily a bad thing, and if it were the goal, then I would call it a success. But, time is the natural enemy of a loan modification, because the longer the delay, assuming no mortgage payments are being made, the greater the amount of arrearages that have to be dealt with in order to modify the loan.
Now consider that reports all indicate that there are at least 100,000 New Jersey foreclosures that were stalled throughout last year, and that will now move forward. That’s 100,000 or more homes that have less chance of being modifiable today than they would have a year ago. So was the delay truly beneficial to homeowners?
I suppose for those that have no chance to save their home by getting their loan modified, they got an extra year living in the house, but even these people might have been better off dealing with it a year ago and today being one year closer to rebuilding their credit and buying their next home, assuming that’s they’re goal. The point is that a delay can be a dual edged sword, because it almost never leads to saving homes from foreclosure.
Lawyers that represent servicers all appeared quite happy with this decision because now a process that’s been clogged by uncertainty has been clarified by the court, and foreclosures will be free to move forward.
But it occurs to me… homeowners would not have been happy regardless of how this decision had gone.
I suppose I could be missing something, but I just don’t see a potential win in this case for homeowners no matter what. It was from its outset, a lose – lose scenario.
Bloomberg, covering news of the decision, quoted Rebecca Schore of Legal Services of New Jersey, an attorney for the Guillaumes, saying that…
“While she was pleased with the ruling on the need to name the actual lender in a notice of intention to foreclose, she was disappointed that the court didn’t require dismissal of the complaint.”
Okay, I hate to say this but… does any of this really matter to homeowners? Aren’t both positions merely a delay, and not much of a delay at that?
I mean, one way the notice of intent to foreclose includes the name and address of the lender in addition to the servicer, and the other way the notice doesn’t.
It seems to me that we’re pretty much exclusively fighting for delays, these days… in the hope of gaining leverage… all to achieve one thing… an affordable and therefore sustainable loan modification, because that is the only way homeowners are remaining in their homes in any number. Everything else seems to carry the odds of a Hail Mary at best.
Why are we giving our government a pass?
In February of 2009, our president introduced a plan that was to provide a path to precisely that, a sustainable loan modification, but when the participating servicers weren’t following that program’s rules, no one was willing to enforce them. And because of that entirely unacceptable and unforgivable unwillingness to enforce the programs rules, our entire nation has endured unspeakable suffering and financial pain.
But we didn’t turn to our legislature to demand that something be done to correct the unjust situation, we followed other paths instead, perhaps for good reason. But the fact remains that we have largely ignored the fact that the failure of HAMP is our government’s failure. As such, it is our government that should be held accountable. And as this is an election year, it seems the timing for such efforts is fortuitous.
I’m certainly not saying that people and their attorneys shouldn’t be doing whatever they can to protect their homes, and I’m sure there are times when a delay is advantageous. All I’m saying is that when the rules set forth by a federal program are being ignored it’s up to our elected representatives to do something to make damn sure those rules are followed because they were written in best interests of the program’s participants.
EPILOGUE…
The rules set forth under HAMP should be followed. Now, with whatever the AG settlement says, we’re about to have a new round of rules… and since it’s possible that Congress will again refuse to enforce those rules, I believe that we should be working to structure and demand a private right of action and attorneys fees to allow homeowners and trial attorneys to turn to the courts for relief.
To be blunt, it seems to me to be insane that our president should be allowed to announce and implement a $75 billion program designed to save homes from foreclosure, in order to rescue our economy and protect our middle class population, and then when program applicants are abused because program rules are not followed, that our legislature sit on their hands pretending that nothing can be done… as we go off to try other approaches.
It also seems ridiculous that a $75 billion program, three years after its launch, has only spent five percent of its budget, and no one says a word. If we had a $75 billion program for rats and mice, and three years later only five percent of the budgeted amount had been spent, there would be people screaming about how we’ve underserved the rats and mice. In fact, I don’t think I’ve ever heard of a government program under-spending to this degree. Has it ever happened before?
Why is there no effort to hold the administration and member of Congress accountable for what has clearly been their failure related to the federal government’s loan modification initiative? Why are we accepting such utter failure and holding them accountable for nothing, when in point of fact, their failure has cost the country trillions, and destroyed the lives of millions?
Instead it seems that we’re being corralled into a position where almost all of our efforts, even if successful, only have the potential to lead to a delay… a delay that in most cases reduces the potential to save the home.
We still have a democracy of sorts, do we not? Isn’t it the responsibility of our elected representatives to protect us from abuses caused by inadequacies in federal programs? Aren’t we supposed to be holding them accountable and demanding they so something. That’s how democracy is supposed to function, is it not? Why are we not trying to force our democracy to function, as it was intended to function… as it has functioned for hundreds of years?
Or, what about at the state level? Our AGs settled and let us down. That much seems water under the bridge, so fine. Well, I for one want the “new” servicer standards or guidelines to be more than mere suggestions… can they be codified at the state level.
I’d certainly feel a lot less let down by the AG’s settlement if the servicer standards were made into law that had a private right of action and a provision for attorneys fees because that would save homes and stop foreclosures, and it would do so more effectively than any amount of money.
Let’s UNITE homeowners around fairness, instead of DIVIDING them over delays…
I’m not talking about bailouts for borrowers, I just want the rules associated with a federal program to be followed and enforced, and I think every homeowner in the country should and would want that too, regardless of whether at risk of foreclosure or not at this moment.
Every homeowner in America should have an interest in federal programs operating as they were intended to operate. It’s not about who is at risk of foreclosure and who isn’t. It’s simply about being in favor of basic fairness in our federal or state programs. And basic fairness, competence and accountability from our elected officials. No one should, and few would, oppose any of those ideals, and those that suffered as a result of being deprived such fairness would engender sympathy from others.
Technically deficient paperwork, on the other hand, as was the crux of the Guillaumes decision by the New Jersey Supreme Court, is an entirely different matter. Guillaumes will appear to many to be a distinction without a difference. Who cares if the lender is mentioned on the notice or not… the answer is most assuredly not many people.
It will also appear to be a transparent a stall tactic, since even if the judge were to dismiss a foreclosure that failed to comply with the state’s Fair Foreclosure Act, the remedy would simply be to begin again. I realize that this would buy a homeowner some time, but it would not buy much, and the time it would buy would make it that much harder to get the loan modified, as time is the enemy of modifications.
The truth is, Guillaumes is what it appears to be… stalling… hoping for leverage, and losing a house to foreclosure. And that does not engender sympathy from homeowners not facing foreclosure. What it does is further divides those in foreclosure from those who are not.
Delays for technical reason are never going to make homeowners in foreclosure look good to those not in foreclosure. Don’t shoot the messenger, but it’s one thing if you’re being treated unfairly… screwed around by a government program where participating servicers who are receiving money from the program are not following the rules. That’s wrong in anyone’s book.
It’s quite another when it appears that all that’s happening is a delay of the inevitable based on what’s perceived as relatively trivial or technical, and that’s what comes to pass. This decision helps no one but servicers, and does significant further harm to the image of homeowners at risk of foreclosures as “deadbeats” postponing the inevitable.
I believe it is to large degree indicative of a need to re-think our strategy on behalf of homeowners and the foreclosure crisis. The track we’re on far too often has no win available, and can cause significant harm to the cause and the individual homeowners we’re trying to help.
I would appreciate responses to the ideas presented in this post, at least the Epilogue… Thank you.
Mandelman out.
Feb
29
Atty. Gen. Kamala Harris ASKS Fannie and Freddie to Stop Foreclosing
Did you hear about this? California’s Attorney General, Kamala Harris has asked the Federal Housing Finance Agency, or FHFA, which is the government agency that is acting as conservator for failed mortgage behemoths Fannie Mae and Freddie Mac, to stop foreclosing in California until it has conducted a “thorough, transparent analysis of whether principal reduction is in the best interests of struggling homeowners as well as taxpayers.”
Well, damn woman… that’s the spirit. I didn’t know you had it in you. Bravo!
Can I just tell you something about this? If this works… I am going to be so pissed off that I may have to be medicated. We’ve already lost a bazillion homes to foreclosure in California, half the damn state is underwater and you know it’s higher than that if you add in real estate commissions and other miscellaneous costs associated with selling a home. And there are about 2 million homes in foreclosure or very seriously delinquent right this moment in this state.
As a result of the foreclosure crisis, we’ve got headline unemployment around 12 percent, with the real number being over 16 percent, and some economists saying under-employment in the state is 22 percent, which isn’t at all hard to believe.
And all of this has created a huge budget deficit of $9.2 billion through June 2013. That’s after making significant cuts, raising taxes on the wealthy, adding a half-cent sales tax bump and assuming the Facebook IPO goes well. And even with that, the nonpartisan Legislative Analyst’s Office has just released its study of Governor Brown’s numbers, saying…
“We can identify no strong rationale for the administration’s assumption that capital gains will grow very rapidly in 2012 and later years.”
I’m not even going to mention how much yours truly has watched evaporate since 2007. It may not be as much as it cost for the Obamas to take their family ski vacation in Aspen recently, but it’s quite a bit more than it would cost to send SEVEN kids to Harvard for FOUR years.
So, if she ASKS for the foreclosures to stop and they do… well, I’m… I mean… no, I think… but when you… um… oh my God… it’s just that… would you… arghhhhh.
A Mind of His Own…
The U.S. Congress, President Obama, and Secretary Geithner have all been leaning on acting director Edward DeMarco to allow Fannie and Freddie to do more to stop foreclosures, and specifically to start reducing principal for quite some time now, as in over a year, and DeMarco has said, “No.” And when this man says “no” he means no, damn it.
Rep. Elijah Cummings (D-MD), who has also urged DeMarco to change his position, was quoted in the Huffington Post as having said in a recent interview…
“All the administration can do is keep pushing. DeMarco has the power.”
I’ll say this… it’s fascinating to watch, that’s for sure. I must have missed it, and I do apologize for that, but what’s this form of government we’re now using called? I tried looking it up… is it an “Adhocracy?” Here are a few of the characteristics of an adhocracy according to Wikipedia:
- Little formalization of behavior.
- Job specialization based on formal training.
- A tendency to deploy specialists in small, market-based project teams to do their work.
- Low standardization of procedures.
- Roles not clearly defined.
- Work organization rests on specialized teams.
- Power-shifts to specialized teams.
- High cost of communication.
- Culture based on non-bureaucratic work.
That sounds close, doesn’t it? It’s either that or “Chiefdom,” seems to fit as well.
Ed DeMarco is so lucky that Obama’s a wussy… wait, oh my God, did I just say that out loud? I am so sorry; I can’t believe I did that. But my point is the same.
I’d like to see DeMarco trying this sort of thing with Lyndon Johnson in the Oval Office. Oh, ho, ho… Ed would kick some sand in Lyndon’s face and find himself being called “Stumpy” for the rest of his natural life, you dig what I’m saying here?
Actually, truth be told, I can’t even think of a President in my lifetime that would tolerate this nonsense from some econocrat hired to be a fancy-pants version of a bankruptcy trustee for a failed mortgage company. Were it President Kennedy we were talking about, DeMarco might have climbed into the back of his limo to head home after a long day, only to find Sam Giancana had replaced his driver.
“Yeah, well Jerry wasn’t feeling so good, so I gave him the night off, Mr. DeMarco,” Mooney would have said… as the doors all locked at once. “You just sit back and relax, we’ll be across the river and in Virginia in no time.” And then he’d turn on the radio and start singing “That’s Amore,” along with Dino.
At least that’s how it would go in a Martin Scorsese picture about President Kennedy, which is how I like to think of JFK. Either that, or DeMarco would have found himself on his way to Playa Girón in the Gulf of Cazones on the southern coast of Cuba.
So, Kamala says, “Boy, if you don’t… don’t make me come out there…”
I was about to jump into a Chris Rock routine there for a moment. Actually, I don’t even know if she can pull off that angry black woman thing, but that’s exactly what we need at a time like this. You think Weezy Jefferson would be putting up with some nerdy pasty white guy causing people to be thrown out of their homes? I’d say not. Isabel Sanford would have kicked DeMarco’s butt out into the street last summer before Labor Day.
But, so help me Lord… if Kamala’s “request” accomplishes anything close to what she’s asking for, I’ll probably pass out, hot the floor, and have to be hospitalized for weeks as I sit in the bed mumbling all sorts of strange things to myself.
I mean, people have been abused, tortured, taken years off their lives no doubt, and some even taken their own lives, and all we had to do was get Kamala to request that he cut it out? And she’s only just thinking of this now? She couldn’t have come up with the “maybe I could ask him” idea last year? Just what was it that caused her to have this epiphany right now anyway, and does she THINK that it might work?
Or, is she treating me like I’m a toddler with a learning disability who’s going to give her credit for trying. “It’s okay, at least you tried. Let’s give her a hand everybody, at least Kamala tried. She’s looking out for us all… she’s trying… can’t argue with that… thank you Kamala.”
And what do you suppose is next… I mean if her request happens to fall on Ed’s characteristically deaf ears? Is she going to try again, but with “pretty please and sugar on top?” And what if that doesn’t do the trick either… “Simon says?”
Oh hell… you know what? The bar’s so damn low nowadays, I’m starting to think… well, at least she did ask, and that’s a damn sight more than Governor Brown has done… or at least most of the House of Representatives and the entire United States Senate.
And our state legislature… do we still even have a state legislature? Someone should run over to our state capital and see if everyone’s okay in there. You don’t know… maybe they’ve all been gassed or someone poisoned the water supply and bodies are strewn across the floors in there, dead for weeks or even months… you don’t know, how would you know? It’s been so quiet, I’d forgotten they even exist… maybe they’re all gone?
Alright, so never mind, Kamala… good job, thanks for thinking of us, we do appreciate it… and you’ll let us know if DeMarco says yes, won’t you? We’ll just be waiting over here someplace… you have my number, right? I’ll email my contact information just so you have it.
Sorry everybody… false alarm… Kamala’s asked, and that’s really all anyone can do… so, we’ll let you go back to bed now. Lo siento. Que’ se mejore pronto!
It means… “I’m sorry. And I hope you get better soon.”
Mandelman out.
Feb
29
Mandelman on “Saving the California Dream” on Fox 11 News KTTV Los Angeles
Okay, late one night this past week I got a call from Heidi Cuda, a producer from Fox 11 News in Los Angeles. She explained that she’d been producing a week long series about the foreclosure crisis in California, titled, “Saving the California Dream,” and several people including an attorney friend of mine, Walter Hackett, said that she should be talking to me.
“Why?” I asked. ”I’m not in foreclosure, did Walter say I was a deadbeat borrower?” I think I threw her off with that line.
“No,” she said. ”Everyone says you’re the guy that knows everything about the foreclosure crisis.”
“I’m going to kill him,” I replied.
“Noooo,” she said. ”Everyone said you were wonderful. I want to interview you for the final segment.”
“Where the hell have you and the rest of the mainstream media been for the past three years?” I asked.
She took the bait. ”Well, I’ve been going all over the state talking to homeowners and I’ve learned all about… blah, blah, blah.”
I wasn’t really listening.
“So, what makes you think you’re qualified to interview me?” I asked in earnest.
“I’m not, but that’s why I need you, you’ll make the series and I need to learn from you,” she said sounding sincere.
Ooooh, she was good. Very slick. Soooo L.A. Like she just got off the set of “Entourage,” on HBO.
“What time,” I asked.
“Noon on Friday.” She replied.
“Okay, I’ll try.” I said.
“I can’t wait to meet you,” she fired back still sounding sincere.
Yep, she was a “producer” all right. ”Alright, see you then.”
Ciao.
Click.
“Love ya’ babe…” I said under my breath, after she’d already hung up.
So, I drove up to LA, we taped the interview and I drove home. Then I went back to my desk, started writing and promptly forgot all about it, so I missed it at 6:00 PM, or whenever it was on, and missed it again at 10:00 PM, when it aired for the second time.
The next day people kept asking me if I’d seen it, so I watched it on-line. Didn’t think much of it. Hated it, actually. What a waste of time. Never doing that again.
Then she called me today. ”Hi,” I said. I was wimping out. She tells me Part 2 is on tonight and it’s going to be great. I didn’t know anything about a second part. So, this time my wife called me when it was starting… so, I watched it. And it was much better than Part 1, I thought. You, however, can decide for yourself, if you’re so inclined.
I’d skip Part 1, if I were you… but that’s just me.
Mandelman out.
PART ONE…
Saving The California Dream: Foreclosure Toolbox Part 5: MyFoxLA.com
PART TWO…
Saving The California Dream: Foreclosure Crisis Part 2: MyFoxLA.com
Feb
27
Economy Recovering? No, it’s not. Housing? NO. Unemployment? NO. Stock Market? NO.
A couple of quick clarifications related to stories now in the news:
A. NO, housing has NOT hit bottom. If anyone tells you they think it has, just reply by saying: “Shut up, shut up, shut up, shut up.” Until they go away.
The way things stand today, housing won’t “bottom” this year, it won’t bottom next year, and it won’t bottom the year after that, and should you come across someone who has money and disagrees vehemently, please give them my email so I can make some extra cash on the side.
How do I know this? Well, I’ve been right since 2007 and that would be pretty remarkable if there was anything else that could possibly have happened… but there couldn’t have been, so the more interesting question is how can all these people running our show be so consistently wrong? That’s the question, and I’ve asked it before… are they stupid or lying?
Housing can’t bottom because there’s essentially no demand for housing, okay… very little demand for housing… and you don’t need a calculator to figure this one out. Follow me here…
- At least half the homeowners in this country are under water or effectively underwater, so they can’t move. And they used to be about 66 percent of home sales, those who would sell a home in order to buy another one.
- Getting a loan today requires 20 percent down at least and a fairly high credit score, and we’re short a few million people with either of those things going for them, right? (Average FICO at Fannie Mae still over 760.)\
- The only people selling now are those who have to, because this isn’t exactly the best time to cash in your equity position. And the only people buying are trying to steal something.
- The burden of student loan debt continues to cause people to delay family formation, and that means fewer first time buyers than in the past. (Allan Carlson PhD, president of The Howard Center for Family, Religion & Society has an excellent research paper here.)
- There’s a shadow inventory, made up of homes that have gone back to the bank but are not being put on the market. Why? Because there’s no one to buy them, silly. In Maricopa County, which is Phoenix et al, has about 16,000 properties listed in the MLS and roughly 112,000 REOs. Beverly Hills has a dozen homes on the market at the moment, and 186 REOs. Just for future reference, that’s not what a “bottom” looks like, millions of distressed and deteriorating homes being kept off the market.
- Foreclosures haven’t slowed down. No they haven’t. No… they haven’t. Banks slowed down on foreclosing this past year because they were waiting for the AG settlement to provide them with immunity from the whole fraudulent paperwork thing. They’re about to kick foreclosures back into high gear again, so NO THEY HAVEN’T. And there’s no reason for them to.
- Is that enough, or do you want to hear about aging baby boomers, changing attitudes about homeownership, or consumer debt ratios? ‘Nuf said, right? If you want more, it looks like Michael Olenick has a great piece on this subject this morning on Naked Capitalism here. (I haven’t read it all yet though, so let me know if I missed something important. I’m pretty sure that he and I agree on most everything related to this subject.)
Just try to remember what I’ve said countless times… NOTHING goes down in a straight line.
Warren Buffett admitted yesterday that he was “dead wrong” about housing when he predicted it would recover by now. That’s cute, isn’t it? The billionaire made a boo-boo. Ooopsie! But, he’s still a billionaire and the people that listened to him in 2009 and 2010 are the current wave of foreclosures at FHA, which by the way, is the new sub-prime and the next bailout for sure.
Buffett has no idea what he’s talking about. He’s been living in the same house in Omaha, Nebraska since 1958. Have you been to Omaha, Nebraska? Well, I have. And the fact that some multi-billionaire is still living in the same house he bought in 1958 in Omaha is not quaint… it’s not “old school.” It’s f#@king nuts. Insane. Weird. Like, as in… needs some sort of clinician to diagnose it, sort of weird.
I don’t know what his deal is… but I’ll bet it’s difficult to pronounce.
B. NO, unemployment is NOT “down.” The only thing that changed to any significant degree is the participation rate, which dropped to its LOWEST point in 29 years.
That means that more people stopped looking for work, not that more people found it.
The participation rate sunk to 63.7 percent last month, which is the lowest since May of 1983! Do you remember 1983? I do, and it was God awful. It means that roughly 88 million people in this country over 16 years old not only didn’t have a job, but weren’t even trying to find one. Not even trying.
I’ll bet they’re a cheery, upbeat bunch. Probably all out looking for houses to buy now that we’re hitting the bottom and all. Maybe Buffett will put them to work so they can all buy homes in Omaha…. and then kill themselves.
The employment-to-population ratio, which is the percentage of Americans that have jobs… HAS NOT CHANGED AT ALL. It’s 58.5… the SAME as it was in January 2010. Oooh baby… what our dust, we’re recovering now.
Oh, wait. That’s right… I totally forgot… everything’s fine… it’s a “jobless recovery,” remember? So, why is Bernanke so worried about the whole unemployment thing anyway? It’s “jobless” so we’re right on track, we’re in line with the forecasts… hitting the numbers perfectly.
The “headline” unemployment rate in which we like to bathe in this country only counts people who answer the phone and tell the survey taker that they’re actively looking for work. And if more people were looking, then the unemployment rate would be a lot higher. So, what Obama really needs is for more people to STOP LOOKING. And if that doesn’t make you want to chew on glass all by itself, then I don’t really know what to say to you.
Seems like most folks are cooperating though, because at the beginning of this month, based on the latest census data, the Labor Department increased the number of working age people by 1.5 million, and of those 1.25 million were not even looking for work, so you gotta’ figure they’re all Obama supporters, right? Just doing their part.
Bloomberg’s got the data here, in case you feel a need to check my numbers.
C. NO, the stock market at 13,000 doesn’t mean anything good. Think of it as Bernanke pushing string.
The Fed chief continues to do the only thing he can do, I suppose… come right out and promise low interest rates until at least 2014 and pump money into the system like a mad man. The problem is that money isn’t exactly going places.
Since the recession in 2008, M1 money supply has increased by an absolutely jaw-dropping 60 percent, coming in over $2.2 trillion in January of this year, and with no end in sight… it’s going higher for sure. And tons of cash makes the stock market happy, but today’s cash flood isn’t doing much for the economy.
Money supply is one part of the equation, but the other component to the deal is called “velocity,” and the velocity of money in this country has fallen off a cliff, going from 10.37 in late 2007 to 7.09 as of late 2011. Ouch.
Velocity of money is about how fast money is changing hands, buying goods and services… you know, making for economic activity. And the scads of money Bernanke continues to pump into the system with reckless abandon isn’t moving… it’s not changing hands… he’s just pushing string, get it?
As a result of all this, what they call the M1 “multiplier” has stayed below the 1.0 level for the last three years. The multiplier effect is an economics term that refers to the amount of commercial bank money that’s created by central bank money. So, it’s like the Fed increases it’s loans to banks and its purchases of government securities (called bonds) and by doing so pushes money into the commercial banks who are in turn supposedly “encouraged” to loan it out and earn interest, and thereby turn the Fed’s one dollar into more than one dollar.
Except it’s not happening, right? In fact, between August 2008 and November 2009, bank reserves grew by 500 fold, from $2 billion to one trillion. The banks didn’t lend it out. They didn’t find the excess money very encouraging. Do you know why? Because they knew that we were getting screwed, that’s why.
They knew we were in debt big time, because they’re the ones that put us there, and they knew that we’d be getting no help from the government, so there weren’t a whole lot of people to lend it to without taking on too much risk. So, they just kept it. And that’s why I keep saying, it’s not a liquidity crisis, it’s a credit crisis.
So, you know you have a credit crisis if the money multiplier is 1, right? Because if banks were lending the money out, the multiplier would have to be greater than one, right?
And when you have a credit crisis, then many people can’t buy houses, and that means that the prices of houses will go DOWN. And that means that we won’t spend like we used to when our houses were worth a lot more and there was credit available, and that means companies will make less money and lay people off. And that leads to more foreclosures, which puts additional downward pressure on house prices, which leads to more foreclosures still.
So… super low interest rates for an extended period of time… literally trillions in cash sitting in bank reserves with more being pumped into the system every day, but with the velocity of that money falling and a multiplier that stays at 1… add it all up and what do you get?
Well, on one hand you get a stock market that’s artificially pumped up by the Fed’s assurance of continued low rates, and a free flowing money supply. But on the other hand you have anemic velocity, a multiplier stuck on 1, and unemployment that’s only getting worse, which means company’s won’t be growing they’ll be shrinking… so you has is an economy that’s deflating.
Bernanke would rather deal with just about anything than deflation, so he just keep a-printing and a-pumping hoping against hope that one day the banks will be so bloated with cash that they loan it to anyone that asks. It’s really quite sad, if you think about it. Poor little man… only knows one trick and when it isn’t working all he knows to do is just try it over and over again. Makes me get all teary eyed, poor guy. Someone should really teach him a new trick.
Last thing… take the artificially pumped up stock market and hold it up next to the dog-doo economy and what do you see? You see some seriously over valued stocks, which is another way of saying that you see stocks priced to deliver some exceptionally poor returns to investors.
Because one day, the Fed won’t be able to pump, because the pump she will run dry, as all pumps do. And then what will be holding up the market at these levels… uh oh… no clothes… run away!
Then you’ll hear, “Come Mr. Tally man, tally me banana,” and daylight will come and you’ll want to go home.
So… housing is not, not, not at bottom, – check. Unemployment not improving – check. And does the stock market at 13,000 mean something to the economy? Nothing good – check.
Oh yeah… and then there’s always Greece, et al. Can’t forget them. Opah!
You might want to bookmark this page, so as the election gets closer and thing get even better than they are today, you’ll be able to contain yourself.
Mandelman out.
Feb
27
Bank sues itself, wins, and then forces itself into bankruptcy to satisfy judgment
During the mortgage madness of 2003 – 2006, banks wore many hats related to the complex derivatives and mortgage-backed securities being packaged and sold to investors all over the world. Then, the meltdown forced many mortgage originators into bankruptcy and saw numerous financial institutions become insolvent. When the surviving banks acquired the various assets of the fallen… it became difficult or in some cases near impossible to ascertain from where certain risks might come.
Of course, the banking lobby has successfully resisted efforts aimed at breaking them up into more manageable entities, less capable of causing systemic damage to the global financial system. The industry’s position seems to be that every thing is just fine. Goldstein Such’s CEO, Lord Blankcheck, speaking at the dedication ceremony of the American Securitization Memorial, had the following to say…
“The size of our financial institutions is not the problem. Just because in some instances I have not been aware that we created a market in which we took a significant position and then on another floor were aggressively shorting that position, should not be a cause for concern. Remember, when that happened last year, we were able to unload our position as soon as we discovered it, and it was the Germans who ultimately took the hit. That’s what we mean when we say our systems are both agile and resilient.”
Critics, however, point to a recent case involving HPMagnum Chaste who, after acquiring the assets of Snare Burns and Punxsutawney Federal, buying some of the default servicing rights of Hemann Bros., the trustee division of Bakeley’s, a pool of loans once owned by World Slavings that had been originated by Dog Beach Mortgage before being sold to Dowdy Savings & Moan, which was later acquired by USA Bunko, and then buying Credit Default Swap counterparty positions once owned by Goldstein Suchs, but used as collateral for repo agreements involved in the hedging of assets tied to the commercial paper markets, until in 2008, the global financial behemoth began to arbitrage by becoming the bond holder and master servicer of a sub-set of loans that had been originated by Countrywide before BofA sold put options and preference shares to Morgan Stanley under an agreement whose terms may not be disclosed.
Apparently, Citibank was serving as trustee for the mezzanine tranches of some of the loans, and was the investor in the AA- 2-year CDO squared, but says the bank hired Wells Fargo to short AIG in order to protect itself from volatility in the asset-backed commercial paper market and the possibility of margin calls resulting from exposure to default by Greece, if it occurred in the third quarter of 2011, but through leveraging inverse interest rate swaps against bonds offered by Wachovia, through Merrill Lynch as trustee, IndyMac ended up as custodian, and servicer, with Deutsche as depositor.
In a bizarre twist of fate, when a homeowner is Shitsburgh, Tennessee lost his job at the local crayon manufacturing plant, and failed to make three months of mortgage payments, the entire structure unwound like a spring load bear trap, causing Moody’s to downgrade the country of Luxembourg from AA- to BB+, which forced MBIA to file for bankruptcy protection, and one of Jamie Dimon’s vacation homes to be sold at a trustee sale.
Goldman Sachs, however, says that it will record an $11 billion profit from the compound transaction although a spokesperson from the investment bank says the firms is not yet exactly sure why. “We know it’s a gain,” said Mimi Guffaw, a partner in charge of Goldman’s Double-barreled Default Anticipation Yield desk, known as D-DAY. “It’s always a gain. We just can’t put our finger on precisely where it’s coming from.”
The Tennessee homeowner says that the whole thing started when his bank called him to tell him that he qualified and should apply for a loan modification. He tried to explain that he had just bought the home a couple months back and had paid cash, but the Citibank representative said that it didn’t matter he would be receiving a Notice of Default later that month if he didn’t apply, or agree to pay 14 years of back taxes on the adjoining lot owned by a Danish concern.
In a related story, Bloomberg News is reporting that senior partners from cordovan loafer law firm, Mammoth, Pervasive & Bland LMNOP will testify in front of Senators Shelby and Bachus, along with several other members of the powerful Senate Banking Committee. The two partners, Godim Pervasive and Arenti Bland told the senators that the new regulations imposed under Doss Frank requiring banks to keep track of their capital positions and disclose derivatives that leverage defaulting sinking funds with option-adjusted durations, are far too onerous and if not repealed, will make our nation as a whole unable to compete globally and deprive hundreds of thousands of retired rail workers of their dental plans.
Heinreich Svenerrrson Bjork-Hadern, Assistant Monday Morning economist for the International Literary Fund said they are studying the problem carefully, but at this point all they could say with certainly is that either Spain is on much more solid financial footing than previously assumed, or Canada has unexpectedly just gone into default, causing firefighters in Muncie, Indiana to ask AIG for $4 billion in collateral and leaving U.S. taxpayers to pick up the tab.
President Oblabla held a press conference to try and calm global currency markets by introducing the head of his new Global Asset and Confounded Equity Derivatives Exposure Security Task Force, known as GAACEDESTF. No one noticed, however, and the president went to play golf with Herman Cain.
The Treasury Department is trying to unravel the global conflagration taking place in the over-the-weekend debt markets, which nobody had ever heard of, but apparently are crucial to keeping the power grid functioning in the mid-Atlantic states. Former SIGTARP Neil Barofsky has promised to try to figure things out, but again suggested that in the future Ben Bernanke refrain from accepting baseball card collections as collateral for loans made by the Federal Reserve, that the too-big-to-fail banks not be allowed to do more than three or four things at a time, and that leverage of 200,000 to 6 is taking things a bit far.
Bernanke says he doesn’t see the problem, noting that the Fed didn’t actually take possession of the baseball cards in question; rather it created a new form of security that is being called a “Promise to Insure Structure and Securitize.” Bernanke claims that by accepting PISS as collateral, the Fed is protected from fluctuations in the commodities markets that might otherwise lead to hyperinflation once oil prices have collapsed and the ongoing deflationary spiral has stalled.
“If something goes wrong, we won’t have the exposure that we might have had were we to be holding the actual cards, Bernanke explained. Under this structure, no matter what happens, all we’ll have as collateral for the loans is the PISS.”
Bernanke closed by saying that he thinks the U.S economy remains strong, even though the reverse opportunity swaps now secured by the Social Security Trust Account will like cause the Singapore Sovereign Wealth Fund to foreclose on The second and third floors of The White House sometime this summer.
Clearly, the obfuscation of information conveyance from financial institutes to the end consumer is a paradigm best explained by specialist terminology synergizing with superfluously convoluted modes of communication.
# # #
So, why did I write this? Because it makes just as much sense as everything else that’s going on in this country, and at least it made me smile.
Mandelman out.
Feb
26
Best Picture Nominees Meet the Foreclosure Crisis at the 84th Annual Academy Awards
This year at the 84th Annual Academy Awards
The nominees for Best Picture are…
“The Con-Artist”
The Scary Scummers story, filmed in black & white. Growing up with prominent professors of economics at the University of Pennsylvania as parents, and the nephew of two Nobel laureates in economics, a young Scary Scummers realizes he can’t follow the conversations at the dinner table. In one scene, after scoring a combined 480 on his SATs, he overhears his parents saying the family’s genes have obviously skipped a generation.
About to start a job sweeping up in a bagel bakery, his life takes a dramatic turn when a friend fakes his resume. Because of his last name, no one thinks to check, and next thing we know, he’s chief economist at the World Bank. When a charismatic, but inexperienced community organizer from Chicago’s south side inexplicably finds himself in the Oval Office, Scary convinces the new president, who knows nothing about economics, that he’s the one who should drive the nation’s economy. And he does… straight off a cliff. (Warning: May cause motion sickness.)
“The Defendants”
This fantasy-drama follows a dozen Bank of America senior executives as they are forced to travel from courtroom to courtroom all over the country defending hundreds of lawsuits of all kinds. Each time the bank execs think things are going well, but invariably lower level employees are called to the stand, completely blowing the bank’s defense.
As the judgments mount into the billions, new suits are being filed each day. Law school enrollment skyrockets as the country starts churning out lawyers all anxious to take their shot at BofA or any of the too-big-to-fail banks. As the law firms and the companies that support the new industry grow, so much money is being made beating the banks, that the U.S. economy starts turning around and soon the middle class is debt free. 99% on Putrid Potatoes: “It’s the feel good movie of the year!”
“No HELP”
The story centers on attorneys litigating on behalf of homeowners in foreclosure throughout California where judges actually favor MERS’ assignments, sincerely do not care who owns which house, and believe that “securitization,” is what happens when having a home alarm system installed.
As their clients become more and more dissatisfied, they start blackmailing the lawyers, threatening to file bar complaints in order to get their money back. The frustrated lawyers finally turn to their own state’s bar association for support, but when they do the bar promptly has them arrested. Filmed in a hand-held style best described as “gritty realism,” the film is based on a true story.
“HUGE”
In this 3-D animated fantasy, Crazy Jamie Diamonds and Johnny Stumpedwells travel together to find Lord Blankcheck, in the hopes that he will do God’s work and tell them how to find King Angelo Mozillion, the one they call Too-Huge-to-Jail. Along the way they come across all sorts of familiar characters including GS egghead, Fab Faberge, who keeps repeating, “I did nothing wrong, but I could have been more careful,” and Kenny Lewser, who roams the country wide belching as he says, “I can’t believe I bought the whole thing… twice.” Rated PiG.
“2:00 PM in Paris”
When Frugal Williams lost his job as a loan officer in 2008, he knew he was in trouble. But then one day, after a year spent living on his savings and a few loans from his parents, he’s about to put his Paris, Texas home up for sale, until he finds himself watching the country’s recently elected president describe a new federal program designed to help him save his home.
That night, he has the best night’s sleep in over a year, but he wakes up on a different planet. His life is turned upside down from the moment he sends in the package of forms to his his servicer… First Infidelity Bank (FIB). Theater owners across the country report audiences screaming out, “No! Stop! Don’t!” as he slides the package into the Fed-Ex drop-box.
Soon his life is entirely consumed by requirements of his loan modification. Unable to keep up, his wife is forced to quit her job, as well, in order to help him, and soon the Kinko’s bills for faxing and photocopying drive the family into bankruptcy. Now there’s a sale date. But with Hitchcockian flair, no one knows what will happen for sure… tomorrow at “2:00 PM in Paris,” TX. (NC-17 – Not for viewers over 17 yrs.)
“Moneyballers” 
This futuristic thriller stars ex-Morgan Stanley bond trader Howie Hubler, the man who lost Morgan $9 billion in a single trade, inadvertently kicking off the new favorite competitive-craze among the country’s wealthiest individuals. The year is 2016, and every megalomaniac hedgefunder wants to be a “Moneyballer.”
In games of Moneyball, the whistle blows and seated at screens equipped with trading platforms, the uber-rich compete to see how fast they can irrationally pump up various stocks, bonds and/or commodities in order to wipe out the retirement savings of middle class Americans, referred to as “pawns,” who follow them as prices rise to disastrous ends.
In an opening scene, we see Hubler in his Central Park South penthouse. He is laughing almost uncontrollably.“There’s no question, it can be expensive to play. Last week, I had to throw away $4 million and change just to bankrupt this small business owner from New Rochelle. He was quite guarded and pretty tenacious, but in the end he took the bait. When everything collapsed, I swear to God, I think he and his wife both soiled themselves… I’m not kidding… I almost choked on my foie gras.”
“The Free for Life”
In this reality-based comedy, John and Jane Q. Public are seen taking their shot at the lottery wheel of justice. Couples appear before judges in courtrooms across the country hoping to wipe out their mortgage and walk away with a free house. The laughs come from watching the pro per/pro se litigants go up against lawyers from JPMorgan Chase and Wells Fargo, attempting to explain to judges why it matters that the assignment of the deed of trust was illegally notarized, and why it doesn’t matter that they haven’t made their mortgage payment in 36 months.
“War House”
Brighton Badass and his son, Redneck, have lived in their home all their lives and they don’t plan on leaving it just ‘cause some bankster says so. In an opening scene, we see and hear Bright talking on the phone, “Well, you just tell the sheriff… she comes out her looking for me and my boy to leave, she better be armed to the teeth, ‘cause I sure will be. That’s all we invest in out here in the woods… guns and gold,” he laughs as he hangs up the handset.
The camera pulls back and we see that this home is more than just well fortified. There are snipers in trees, and trenches dug six feet deep for 50 yards all around the property. Bright pops a few pills in his mouth and washes them down with some white lightening whiskey. Then he blows his whistle and the hundred or so men, women and children come out from their positions to receive their orders.
The “War House” trailer, voted #1 in 2011, ends when the camera zooms in on Redneck Badass as he says laughing, “Come on, ya’ll… sheriff’s a comin’ so get yourself some amo… time to show the law how we practice foreclosure defense round here. They robo-signing, so we robo-shooting.”
“Extremely Quiet & Incredibly Corrupt”
This semi-historical docudrama chronicles a year of negotiations between 50 state attorneys general and five bankers. From the beginning we see that neither side knows what in the world they’re doing, as the discussion mostly consists of one side saying, “$20 billion,” and the other side yelling back, “$10 billion.”
Along the way rumors start to swirl as the senseless drama leads to enormous amounts of press coverage, only to end with nothing being accomplished and little being disclosed. This film concludes Steve Stealbanks’ social commentary on meaningless media hype and corrupt, unfeeling politics, a quadrilogy that began with, “OMG IT’S Y2K,” followed by, “WMD & ME,” and then, who could ever forget, “Hope & Change, 2008.”
OMG, did you see what SHE was wearing?
Mandelman out.
Feb
26
America Needs Buddy for President in 2012!
Who are you going to vote for in 2012? Here’s how it breaks down…
If you’re an Obama supporter, which means you’re going to vote for Obama even though you don’t really want to. But, you’ll explain that we have to vote for Obama again because the GOP candidates are unbelievably bad. I mean, Santorum might be interesting, if we were living in the year 1642. And Mitt Romney would be… or maybe he wouldn’t… but then again I think he is… except that he’s probably not… but then again… And in terms of Romney’s position on the issues, you’ll have no trouble pointing out that Republicans are in the pocket of Wall Street… and completely insane.
So, okay… fair enough, I agree… they’re insane.
And if you’re a GOP supporter, which means you’re going to vote for Mitt Romney even though you don’t really want to. But, you’re going to list the numerous and obvious reasons that Obama has been an abject failure in his first term. You’ll remind me of how he spent a year debating health care while the economy slid off a cliff, only to pass a bill that no one really wanted, and that his economic policies have failed in every way and at every turn. And you’ll ask, how can I possibly vote for him again, when he’s clearly not capable of leading this country at a time like this. And all I’ll be able to say in response is “Yeah, it’s true, but the other guys are insane.”
So, once again… I agree, he’s been dreadful.
SO, FIRST LET’S LOOK AT MITT…
Mitt Romney is the epitome of a Wall Street “fat cat.” He’s running on the traditional GOP platform of cutting taxes, spending, regulation (repeal Dodd Frank and Obamacare) and government programs. He wants to increase trade (meaning jobs going overseas is a plus), energy production (drill baby drill), human capital and labor flexibility (whatever those last two mean).
Mitt’s already got enough money to start his own space program, but to run for President he’ll need zillions, so let’s look at a list of his top 20 contributors, according to the Center for Responsible Politics.
- Goldman Sachs
- JPMorgan Chase & Co.
- Morgan Stanley
- Credit Suisse Group
- Citigroup
- Bank of America
- Kirkland & Ellis
- Barclays
- HIG Capital (Private Equity firm.)
- PriceWaterhouseCoopers
- Blackstone Group (Private equity firm)
- Bain Capital
- Wells Fargo
- UBS AG
- EMC Corp.
- Citadel Investment Group
- Elliott Management (A hedge fund.)
- Bain & Co.
- Sullivan & Cromwell (Law firm)
- The Villages (“Florida’s friendliest retirement hometown?”)
The money donated came from the organizations’ PACs, their individual members or employees or owners, and those individuals’ immediate families… but after reading that list, do you have any questions about Mitt? Right… you don’t.
Also, as far as the new “Super PACs” go, well… the top six ALL support GOP candidates. Restore Our Future ($25 million and change for Mitt Romney), Winning Our Future, Red (just under $12.5 million for Newt Gingrich), White & Blue, Make Us Great Again (Just under $5 million for Rick Santorum), Endorse Liberty (just under $3.5 million for Ron Paul), and Our Destiny PAC (roughly $2.5 million for Huntsman).
“Bundlers” are another important source of campaign funds, and the Center for Responsible Politics defines “Bundlers” as being, “people with friends in high places who, after bumping against personal contribution limits, turn to those friends, associates, and, well, anyone who’s willing to give, and deliver the checks to the candidate in one big bundle.”
Romney’s list of bundlers, offers no real surprises, except that it’s worth noting that #4 on his list is… Lender Processing Services, better known as LPS, who I believe handle about 80% of the foreclosure market for the banks.
NOW, HERE’S PRESIDENT BARACK OBAMA…
Now let’s look at Obama’s platform and where his money is coming from. In the aggregate, he’s raised about twice as much as Romney, roughly $136 million to $62 million, but when Romney gets the nod and becomes the GOP’s candidate, I’m sure he’ll catch up quick.
There’s only one Super PAC listed as supporting Obama… “Priorities USA Action” for $611,766. Their Website’s main message seems to be that Mitt Romney wanted GM to go bankrupt (as did the Obama administration, and GM did go bankrupt, by the way), that he has made money from companies that have gone bankrupt, and is therefore, if elected president, going to make American businesses go bankrupt, bankrupt, bankrupt, bankrupt… it echoes. So, don’t vote for Romney the zillionaire because he’s going to drive us into bankruptcy, I suppose is the message?
However, in the bundler department, Obama is the king by far with just under $75 million coming in from his “elite” friends… #1 is Jeffrey Katzenberg of DreamWorks SKG, by the way. The president has 444 VIPs on his list, as compared with the 16 registered lobbyists that have bundled just $2.3 million for the Romney campaign.
Below is the list of the Obama campaign’s top contributors, and again, the “money donated came from the organizations’ PACs, their individual members or employees or owners, and those individuals’ immediate families. Just as I did above, I’ve provided links to the names that I figured you hadn’t heard of and except for one that owns/operates movie theaters they’re all law firms, by the way.
- Microsoft Corp.
- DLA Piper
- Google Inc.
- Harvard University
- University of California
- Morgan & Morgan
- Comcast Corp.
- Skadden, Arps et al
- Sidley Auston LLP
- Time Warner
- US Department of State
- Debevoise & Plimpton
- National Amusements Inc.
- Stanford University
- US Government
- Wilmerhale Llp
- University of Chicago
- Columbia University
- Mayer Brown LLP
- Arnold & Porter
In terms of the issues, Obama’s campaign Website says he’s “taking aggressive steps to put Americans back to work,” but that, “there’s more work to do.” He also says that when he “took office he both addressed the immediate economic crisis and laid the foundation for a U.S. economy that can out-innovate and out-build the world.”
Obama’s campaign site also claims to have “made the environment a priority,” and that he is “moving us towards energy independence.” He’s also in favor of equal rights (repealed “Don’t ask, Don’t tell”), thinks his health care bill will stop insurance company abuses, is pro national security (brought troops home), and wants tax cuts for the middle class (yeah, whatever).
But, how about this…
NEITHER CANDIDATE SO MUCH AS MENTIONS HOUSING OR THE FORECLOSURE CRISIS ANYWHERE ON THEIR CAMPAIGN WEBSITES. IT’S JUST NOT AN ISSUE FOR EITHER OF THEM.
So, as I was saying… and if you go around asking people, even strangers on the street you’ll see this for yourself… if you’re pro-Obama, it’s because… “How can anyone vote for the GOP candidate, they’re insane.” And it’s true… they are. And if you’re pro-Mitt… it’s because… “How can you possibly vote for Obama when his first term track record sucks, and he’s not exactly inspiring confidence in next time.” And, it does and he’s not.
You want to know what I decided… they’re BOTH right.
As a result, I had pretty much decided to do something I never do – stay home on election day, go to the movies on election night, and just try to avoid knowing who won for as long as possible.
It’s not as dumb an idea as you might think. I mean, living in California it’s not like my state’s not going to go red under any circumstances anyway, so at least I’d help keep the popular vote numbers down, which could send a message if enough people in California did the same thing. It’s not like I’m thinking of not voting as a resident of Florida or Ohio, the states that put the swing into swing state, right?
BUT… EVERYTHING HAS CHANGED…
AND NOW I WANT…
BUDDY for PRESIDENT in 2012!
“Who’s Buddy?” That’s how everyone I talk to about this responds, except for two friends of mine who somehow already knew about Buddy Roemer’s candidacy, Marc Dann, Ohio’s former attorney general, and Michael Hudson, author of a great book, The Monster, which is about predatory sub-prime lending.
Abigail Field already knew about Buddy too, in fact she’s the one who introduced me to him. She wasn’t sure about Buddy at the time, and in fact I was pretty sure she was kidding around when she said, “What about Buddy for President?” I was, however, desperately seeking a port in a storm of lousy options, so I jumped at the chance to find out about Buddy. Frankly, at that moment, I was willing to glom on even if Buddy turned out to be a dog.
So, you can imagine how pleasantly surprised when my Google search turned up a Website promoting “Buddy for President,” and Buddy was actually a very serious and eminently qualified candidate for president in 2012… Charles “Buddy” Elson Roemer III. (Apparently, “the third” makes anyone “Buddy” in the South.)
WHY HAS BUDDY BEEN IGNORED BY THE GOP?
I think the answer to this question is clear… because he’s very smart, he knows what the real issues are and he’s willing to talk about them candidly… and when he does he doesn’t play to any base, he says what’s right for America. He flat out makes sense, but in order to do that he doesn’t always agree with one party or the other… you know… like the rest of us.
He was a Democrat for 20+ years, and a Republican for 20+ years. He tried to run as a Republican in 2012, but the GOP wouldn’t let him. Buddy Roemer DOESN’T TAKE ANY MONEY FROM PACs, NEVER HAS, and the Republicans certainly didn’t want anyone like that on stage during the debates… so they refused to invite him.
He asked to be invited, however, but first the GOP said no because he didn’t have enough money… so, he raised $500,000, but then they GOP said no because he wasn’t high enough in the polls. So, he worked hard and got up higher in the polls… higher than either Rick Santorum or John Huntsman at the time… but still the GOP refused to allow him to join the other 23 candidates on the stage.
To those that are part of our established political machine, which we all know is BROKEN BEYOND REPAIR… Buddy must be SCARY. SO, BUDDY DECIDED TO RUN FOR PRESIDENT AS AN INDEPENDENT.
We’ve all thought it… we’ve all said it… we’ve all wanted it. Well, here’s our INDEPENDENT, THRID PARTY CANDIDATE that understands that both parties are joined at the billfold. And if there was ever a time where it’s possible to elect such a candidate, this is that time. If the people whose lives have been torn apart by the foreclosure crisis all get behind Buddy Roemer, he will win.
FOR AMERICA’S SAKE, PLEASE TAKE THE TIME TO GET TO KNOW BUDDY ROEMER.
The truth is that I can’t even remember being so impressed with a politician, and not because he gives good speeches, but because of the facts on his resume and because of what he believes can be accomplished. Like all of us he expected Barack Obama to bring change, and he’s deeply disappointed. So am I.
Check out these 5 FACTS I’ve learned about Charles “Buddy” Roemer III.
FACT #1: “Buddy” Roemer served 4 terms as a U.S. Congressman (1981-1988). At the time, he was considered a “Conservative Democrat,” which meant that he voted for what he believed to be right for his constituency, even if that meant breaking ranks with his party. As a U.S. Congressman, he also must have stood out like a sore thumb because he NEVER accepted special interest money, remaining free from the “special favors” expected of Congressmen by their corporate campaign contributors.
FACT#2: Buddy has the education and dedication we need in our president now. Buddy was born and raised in Louisiana. He graduated top in his class from high school at age 16 and went straight to Harvard College where graduated with a BS in ECONOMICS and then earned his MBA in FINANCE at Harvard Business School. After Harvard, he began his political career with state-level campaigns and became a delegate to his state’s constitutional convention where he helped to author the Louisiana Constitution.
FACT #3: Buddy was Governor of Louisiana, he has the ethics we can trust & the record we need. Buddy’s zeal for reforming government led him to leave Congress to challenge the corrupt incumbent Louisiana Governor Edwin Edwards, whose ties to industry had turned Louisiana into one of the most polluted states in the country, with high unemployment and a huge deficit. Without the help of any PAC money, “The Roemer Revolution” succeeded and Buddy Roemer moved into the Louisiana Governor’s mansion in 1988.
During Governor Roemer’s tenure, strict environmental protections were enacted, unemployment was reduced by nearly half, the state’s budget was balanced, education standards were enacted, and sweeping campaign finance reform legislation was passed into law.
FACT #4: Buddy KNOWS banks, banking reform and how to avoid foreclosures. After leaving public office in 1992, Buddy pursued a variety of business ventures, but his most recent was as the founder, CEO, and President of Business First Bank, a community bank approaching $1 billion in assets that focused on small business lending. Business First Bank took NO BAILOUT MONEY from the Federal Government, and RESTRUCTURED LOANS after the financial crisis of 2008 INSTEAD OF FORECLOSING ON HOMEOWNERS.
FACT #5: Buddy Roemer is the ONLY candidate that DOESN’T TAKE PAC OR SUPER PAC MONEY, special interest money or Wall Street money. The MAX that anyone can contribute to Buddy’s campaign is $100, and he needs one million people to do that…. or TWO MILLION would be even better. And, in terms of experience, he’s the ONLY candidate that’s won four elections to spend 8 years in the U.S. Congress, and to beat an incumbent to become a successful state governor.
I think the FACTS about BUDDY are CLEAR…
BUDDY UNDERSTANDS THAT WE NEED:
- Bank reform
- Budget reform
- Tax reform
- Healthcare reform
- Trade reform
- Immigration reform
He agrees we need all of those things but says they can’t happen until we have campaign reform.
If one million people give $70 each, that’s more than any of the GOP candidates has raised. He needs to get 15% in a national poll to get on the stage during the presidential debates so he can challenge what has become an institutionally corrupt system. And if he does that, he could win.
“If we continue business as usual, and let Goldman Sachs and GE be the major contributors… and let the fat cats buy their candidates… if we just sit back in our armchairs and do not get involved, what do you think will happen? We’ll be in a lot of trouble, I’ll tell you that.” Charles “Buddy” Roemer III
Please take the time to watch Charles “Buddy” Roemer…
Governor Roemer… on C-Span.
Mandelman out.
Feb
24
Insider Says Wells Fargo’s Independent Foreclosure Review for OCC is “a Sham”
I got an email the other night from one of my readers. It said…
“I was hired as one of those “Independent File Review Specialist” at a company called Promontory working on Wells Fargo Bank. I have 15 years industry experience in all facets of the mortgage & title industry, and just needed a job at the moment. I must say the whole project is a mess, and a terrible joke on the victims of foreclosure and the American people. It’s a total sham.”
No kidding, I said to myself. Or, as Yves Smith would say… “Quelle surprise.” The email continued…
“I have found errors that should be moved up through the ranks, but am told “quit digging so deep”…”put your shovel away”…Focus on the questions “in scope”… The review forms are set up so no harm could ever be found. It’s equivalent of an attorney presenting his case to a judge with just 20% of the evidence.”
Well, that can’t be good, right? He went on…
“I would also like to mention that I was brought in through a temp agency…..some of the people brought in with me do not know the difference between a truth in lending statement, and a note. It’s a shame, these are your reviewers!!! The supervisors don’t want any trouble…they are mostly temps too, just trying to get a promotion to full time. Does this sound like a fair and impartial review to you? Since we’re temps I suppose that’s impartial, not to mention they made us “affiant notaries” so we can so-called “notarize each others reviews.”
Doesn’t sound “fair and impartial” in the least, now does it? But I do like the ability to notarize each other’s reviews. That sounds handier than a pocket on a man’s shirt. He closed by saying…
“The foreclosed victims don’t realize if they do not provide specific dates on the intake forms… their complaints are considered “general comments” out of scope. They should specifically ask for a “full file review” and hopefully their info has not been scrubbed or purged… I could go on and on, but I just felt I needed to share this.”
And in my opinion, you’ve done a very good thing.
Our insider says he was hired by Promontory Compliance Solutions, LLC to do work on the Independent Foreclosure Review for Wells Fargo Bank. The company’s Website describes itself as follows:
Promontory excels at helping financial companies grapple with and resolve critical issues, particularly those with a regulatory dimension. Taken as a whole, Promontory professionals have unparalleled regulatory credibility and insight, and we provide our clients with frank, proactive advice informed by evolving best practices and regulatory expectations.
Promontory is a leading strategy, risk management and regulatory compliance consulting firm focusing primarily on the financial services industry. Led by our Founder and CEO, Eugene A. Ludwig, former U.S. Comptroller of the Currency, our professionals have deep and varied expertise gained through decades of experience as senior leaders of regulatory bodies, financial institutions and Fortune 100 corporations.
The company’s founder and Chief Executive Officer is Eugene Ludwig. According to the company’s Website…
“Gene, the Founder and Chief Executive Officer of Promontory Financial Group, is a trusted adviser to many of the world’s leading financial companies. He is widely recognized as a farsighted thinker on the most pressing issues confronting financial services. Before founding Promontory, Gene served under President Clinton as U.S. Comptroller of the Currency, the head of the federal agency responsible for supervising the preponderance of U.S. banking assets. He went on to become Vice Chairman and Senior Control Officer of Bankers Trust/Deutsche Bank.”
“As Promontory’s Chief Executive Officer, Gene provides hands-on leadership and direction to all our global offices.”
The company’s co-founder, Senior Partner, and Chief Strategy Officer is Alfred Moses, and here’s what the Website says about Mr. Moses:
“For more than 40 years, Mr. Moses was a partner in the Washington, D.C., law firm of Covington & Burling. His public service has included terms as Special Adviser and Special Counsel to President Jimmy Carter; as American Ambassador to Romania; and as Special Presidential Envoy for the Cyprus Conflict.”
Now, I am not suggesting that either Mr. Ludwig or Mr, Moses are involved in the OCC Complaint review process in any way, and neither is the insider who works there. But, they do own the company and as such, they are ultimately responsible for what goes on there. It is my most sincere hope that they fix whatever is apparently broken about the independent review process.
Now, I realize that no one was terribly impressed with the OCC’s independent review process when it was announced, and a big part of the dissatisfaction was based on the apparent lack of true independence of the company’s that were being hired to do the reviewing. But, that didn’t bother me as much as it did others because I think it’s pretty much impossible to find a company in this country capable of handling the requirements of the review that doesn’t already have a relationship with the large banks.
I thought, Gretchen Morgenson, did a darn fine job reporting on the various opinions of the program’s inadequacies. For example, in her column that appeared in the New York Times on Christmas Eve last year, she wrote: “Nye Lavalle, a foreclosure fraud expert who began warning bank executives about bad lending practices back in 1999, is troubled by this situation.” Nye had told Gretchen: “This review process is a wink-wink, nod-nod.” (By the way, I just did a Mandelman Matters podcast with Nye and Max Gardner, so look for that this weekend.)
Yves Smith on Naked Capitalism also pummeled the obvious inadequacies of the OCC’s process, pointing out flaws including the limited years being reviewed, 2009 and 2010, and borrowers asked to sign some sort of limited release of future claims. Yves referred to it as, “yet another Obama Administration pretend we are helping ordinary citizens when we are in fact helping the banks” scheme.”
~~~
This, however, is not any of that. The things told to me by the file reviewer are indicative of a process engineered to find nothing wrong, regardless of the truth of the matter. And that’s very different from potential conflicts of interest or other such issues. Here are just a few of the things the file reviewer told me about the process that caused me to feel both angry and sad.
- File reviewers are only allowed to look at the “last added and removed” dates. This is the last time the file was opened by a servicing representative before it was removed/referred to attorney for foreclosure. So they are only getting to review the file at the very end, meaning that’s the only data that’s being examined to determine if anything was done incorrectly.
- File reviewers get the intake form, which is what the homeowner submitted, and use it to answers questions on Promontory’s form, with drop down options depending on boxes checked. However, if there are no specific dates provided by the homeowner regarding the circumstance being described, the policy is that it’s considered “General Commentary’ it is “not in scope.” So, it’s disregarded in its entirety. The thing is that on the official form sent out to homeowners by the OCC, there is no instruction to provide dates for each assertion, with the exception of one of the questions where it says, “if possible provide dates.” As a result, I would suspect that the vast majority of complaints will be disregarded as “General Commentary.”
Independent Foreclosure Review Form
- When a file reviewer looks for payment history, oftentimes it comes up as “image not available” or “this time period not available.” They say that they keep the payment history on microfiche, so he’s told to order a sub-process to get payment history from God knows where, and it takes weeks. So, whoever gets his request knows exactly what he wants to look at any why, and therefore has the opportunity to scrub the data, to eliminate escrows misapplied or not applied or any inappropriate fees.
- Supervisors told his entire group that “Wells Fargo had submitted over 10,000 files to Promentory. Only 4 were found to be in question, and upon final review by Wells, no harm was found.” So, 10,000 homeowners submitted their complaints and all 10,000 were deemed to be models of perfection.
- Every problem/error he has found and reported to supervisors, he has been told such things as: “put your shovel away; stop digging; if you look long enough at anything you’ll find something; put your blinders back on and get back to work.”
- He also says that the questions on Promontory’s form are worded in such a way that it makes it very difficult to ever find fault. For example, by using compound questions, he is often told to answer “no,” when the first part of the question would be a “yes.”
- They made the file reviewers, “affiant notaries,” so that they can so-called “notarize each others reviews.”
Here’s a copy of the actual agreement between Promontory and Wells Fargo… it’s 137 pages long, incredibly detailed… SMOKE SCREEN.
Wfb Promotory Agreement
Okay, there’s more… but that’s enough for right now. I’d like to make a point here.
Everyone knew the OCC’s review process was a stacked deck, but I was willing to let that go, which apparently proves that I’m an overly trusting idiot. Wait… that wasn’t my point.
My point is that for Wells Fargo, a stacked deck apparently wasn’t good enough. In a game against homeowners, Wells had to have all the cards and then be allowed to deal them without anyone looking so that they could just lay down Royal Straight Flush after Royal Straight Flush.
I mean, basically EVERYONE thinks of the OCC as being a regulator that’s straight out of a Marx Bros. movie. It wouldn’t matter what the OCC said at this point, no one has any confidence in them to be able to do anything effectively, in terms of regulation. Personally, I’m not banking at anything regulated by the OCC anymore. It’s become clear that they’re either so entirely bought off, or so entirely incompetent that they’re actually scaring me.
Want to know how bad it is? The OCC makes the SEC look like the Gestapo of Wall Street, right? Exactly.
But, I want to make sure I say this… I don’t believe for a moment that Promontory implemented such a system and set of policies without Wells making it clear that it’s what the bank wanted. It would be impossible for Promontory to do it on their own… Wells had to be in the drivers seat here. And that stinks.
Let’s just do a quick recap here… it all started with robo-signing making headlines in September of 2010. GMAC was busted by Jeffrey Stephan’s deposition by attorney (and good friend of mine), Tom Cox of Portland, Maine. Within days, other banks were feigning shock and announcing “self-imposed moratoriums,” so they could ascertain to what degree they might unknowingly be doing it too. It’s really kind of hysterical to think about it today, right? I mean, in light of what John O’Brian, Jeff Thigpen, and most recently San Francisco has brought to light?
Not that I ever had any doubt… I knew it was ubiquitous from day one. Why, because if you’re a bank… then robo-signing is simply not an idea that appears on a list with other ideas. No one sitting around the conference table on the 32nd floor says:
“No, go back one slide… I like the one where we have everyone sign Mickey Mouse. Yeah, let’s go with that.”
I even wrote a song about it when it was revealed that GMAC had not stopped robo-signing even after they had been exposed and then told not to do it anymore. I guess, Massachusetts Attorney General Martha Coakley was the last straw and GMAC picked up their sandbox toys and stormed out of the state in a huff.
So, most of the banks stopped foreclosing so they could do their own internal investigations… okay, it was ridiculous… but it happened. And after a couple of weeks, they all started back up again, or that’s what they said anyway, having investigated without finding a shred of evidence that anything was amiss.
Except Wells Fargo, remember? I sure as heck do… I never forget a fake. While BofA and JPMorgan were voluntarily suspending foreclosures pending their own investigations, Wells Fargo was assuring the marketplace that it was certainly not their problem and that there was no need for them to even slow down, let alone stop foreclosing. They were down right dismissive about the whole thing, which is what made what happened next so great.
Does anyone know how to pronounce “Xee Moua?” (Lord, this is fun.) Yes, in a deposition of Xee Moua, just two weeks later on October 14, 2010, she said she signed as many as 500 foreclosure related papers per day on behalf of Wells Fargo, and that the only information she verified was that her name and title were spelled correctly. When the lawyer asked whether she checked the amount owed by the borrower, she said, “I do not.”
And if memory serves, Wells Fargo’s response was… “No comment.” To which I replied, “Hahahahahahaha.”
But, I”m not laughing about what’s going on a promontory Compliance Solutions on behalf of Wells Fargo Bank. Because it’s not the least bit funny. The OCC, the Federal Reserve and the FDIC said they had all investigated… and at the conclusion of those investigations, the OCC issued “consent orders,” and we all read them. And they said, among a whole lot of other things, that the banks we employing “UNSAFE AND UNSOUND PRACTICES.” And the CEOs and other senior executives all signed those “consent orders.”
And then months went by, and finally the OCC announced that the time had finally come for some small measure of justice to be meted out to the homeowners who had been victimized by the banks’ “unsafe and unsound practices.” The homeowners wouldn’t have to sue the banks, the OCC would make certain that the banks were made to compensate those they had wronged.
And even though I, like everyone else, didn’t have much faith and recognized that the deck was stacked as I mentioned above, I told people they should not just ignore it out of hand. I told my readers that I didn’t believe they should asume that no relief would be possible… it sure sounded like the OCC meant business. It couldn’t hurt anything, and maybe… they’d get something out of it. I know… the review’s aren’t exactly “independent,” but still… I think it’s worth doing.
And Wells Fargo… you should know something about me. My readers trust me. Because I never lie to them. And I take that trust very seriously. They also ask my opinions on things, and tend to think that opinion is right, especially about something like this. And yet, after three and a half years and more than 600 articles… long articles, I know, I know… you, Wells Fargo made me wrong. So, to my readers I apologize, I had no idea that Wells Fargo Bank would even contemplate these sort of deplorable acts.
You had everything in your favor, but you couldn’t even play it fair under those circumstances. I’m done with you. Doesn’t Warren Buffett own part of you? What say you Oracle of Omaha?
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Who said that, Mr. Buffett? That would be you, sir.
Well… the way I see it, Wells Fargo has deceived the victims of the bank’s unsafe and unsound practices, as determined by an investigation by the OCC, the FDIC and the Federal Reserve, by at least attempting to deprive them of what they were promised. I have nothing else to say. It’s not funny. Not at all.
Want to know something? If I got caught doing something like this… I’d probably leave the country. I’m not saying anyone else should do that, but I would be so ashamed… oh, wait… I just realized something… if I got caught doing something like this, I’d be arrested and thrown in jail. That’s right, I wouldn’t have to worry about being ashamed. Whew… I didn’t know where I was going with that for a moment.
What follows is a podcast featuring the “whistle blower”… the anonymous independent file reviewer working for Promontory on the Wells Fargo Bank account that reached out to us because he was fed up. I verified his identity and spoke with him at length. His voice has been disguised in order to protect his identity. Turn up your speakers and click play… it’s fascinating and terrifying and sickening all at the same time.
I had to modify his voice to protect his identity, so it may be difficult to understand him right in the beginning for a few seconds, but you’ll adjust so stay with it and you’ll hear him. Also, the whole thing is about 15 minutes long, so I hope you stay with it until the end because I included a recently recorded song written and produced by my good friend from Northern California, Denny Armstrong. It’s good and very uplifting… in a patriotic sort of way,
There will be more to come in the days ahead.
Mandelman & Field out.
Feb
22
Wells Fargo Bank and Patricia Martin Part 2 – A Bank that Cannot Be Trusted
Okay, so here’s a quick recap, in case you’re coming in late, followed by an update that demonstrates very clearly why I say that Wells Fargo Bank and the law firm, Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP… cannot be trusted.
First the Short Recap…
Patricia Martin, age 65, having lived in her home for 44 years, had major back surgery, so she had to send her daughter into the bank to make two payments. There were late fees of about $80 a month, but the person at Wells Fargo said they could be paid later, and accepted the check for the two payments.
The following month, October, Patricia’s home heating system required major repairs, so the next time she was able to make her mortgage payment was the following month, November. But, when she tried to make the payment, the bank said that she hadn’t made the September payment, and in fact, she was in default, and had to come up with $4829.96 by November 30th, or the bank would foreclose.
What the bank had done was deduct her late fees instead of crediting her payment in September, just like they said they were NOT going to do. They told her she would have to get a copy of the check and send it in to Wells to have it credited properly. She did that, but it didn’t matter, because…
Wells Fargo did have an idea though… they told her she should apply for a loan modification and that would take care of the back payments. Oh, joy! What a great solution, right?
Well, not so much. And for the rest of the year Wells Fargo refused to accept her continuous offers to make her payments and bring the loan current. Wells Fargo turned her down for a loan modification because they said she failed the NPV… but that was wrong… the bank was using a valuation of $370,000 and the home’s only worth $300,000. (Wells said they’d re-run the NPV test with the correct valuation, but when they re-ran the test, they used the $370,000 again.)
And, to make a long incredibly awful story short, Wells Fargo ended buying her home at a trustee sale for $298,000… like it should have been worth in the NPV test, you might recall.
The bottom-line is, as anyone should be able to clearly see… Patricia Martin should NOT have lost her home and Wells Fargo SHOULD help her get it back with a modified payment so she can continue to live in the home she should NEVER have lost in the first place.
So… I wrote all about Patricia’s situation the day before yesterday and my DOERS started emailing and calling immediately. Certainly, many hundreds of people got involved, and yet Patricia’s lawyer heard nothing from Wells or their law firm.
The Update… Why Wells Fargo Cannot be Trusted
Patricia’s attorney, Mark Zanides, got in his car and drove the five or so hours up to Pismo Beach to appear at the Unlawful Detainer action, at which Wells Fargo and their lawyers planned to have Patricia evicted from her home.
It didn’t work. Although the judge in the case started out accusing Mark of trying to delay and seemed very unlikely to allow that to happen, Mark turned things around and ultimately the judge signed a Temporary Restraining Order, so for the moment he has stopped the eviction from proceeding.
But, that only means a delay… and that I’m going to take this fight up a great BIG notch or two, and here’s why… what Wells Fargo Bank did today demonstrated to me that they DO NOT CARE and CANNOT BE TRUSTED.
First of all, Wells Fargo’s chosen law firm didn’t even show up in court… they literally phoned it in… I mean they participated by calling into the court on the phone. And I absolutely HATE that.
A human being is potentially losing their home… being evicted. You should have to come in because people communicate better in person and perhaps the person being evicted would like some extra time or some other concession… and whether you agree or don’t… the right thing to do is to get off your ass, out of your office… and into your Mercedes so you can be in court to look them in the eye, and if necessary hear their tears… you worthless, chicken-shit, foreclosure mill pieces of legal trash.
Oh, and by the way… Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP… allow me to introduce myself since I don’t believe we’ve met. You can call me Mandelman, and I’ll be the highly ranked and widely read blogger that will be soiling page one of your Google search page from here on out. (Can you imagine what it will look like a year from now… think “David Stern West,” and it’ll come to you.)
And, Lynette Gridiron Winston… since you’re the lawyer going after Patricia, you might as well Google me as well. Fun!
Wells Fargo through their lawyer, Lynn Gridiron Winston heard Patricia’s attorney explain what had occurred. Their defense to the allegations? You won’t believe it…
Basically, Gridiron said that Wells Fargo may very well have told Patricia’s daughter that the $82 and change late fee could be paid later, last September when she made the two payments, but it wasn’t in writing so it doesn’t matter.
In lawyer-speak, Gridiron cited the “statute of frauds,” saying… “Any alleged oral representations are not enforceable.”
The other way she defended this indefensible position, was to say that it wasn’t clear that Patricia’s check for the two payments was negotiated by the bank, because they said… they couldn’t read the Wells Fargo endorsement stamp on the back of the photocopy of the CANCELLED CHECK.
“Plaintiff is not entitled to injunctive relief… “ blah, blah, blah.
Memo to lawyers everywhere… this is NOT how you handle this type of situation in our society. The rest of us find it so objectionable and odious that were we to read in the paper of a lawyer being run over by the fast moving car of a homeowner, as a result of such behavior, we’d be like, “Wow, no kidding. Are you done with the Sports section? Thanks.”
Let me tell you why…
- Because it has nothing to do with the statute of frauds. If a Wells Fargo employee tells someone they can pay the late fee later, then they can. And if that’s no longer true, then fine… Wells Fargo Cannot Be Trusted, and the entire country needs to be informed that this is the way things are, because it didn’t used to be so.
- I’ll be happy to lead the charge on the P.R. campaign… and there’s no need to thank me as I’m quite sure that I’ll have lots of help. I couldn’t do it alone, don’t you know.
- (In fact, by the way, my partner, Abigail Field is writing about this situation this very evening. So, just imagine where this thing is going from here… what’s the word they use for these sorts of effects… it’s a math term… oh yeah… exponential.)
- Now onto the check issue… You know damn well that Wells Fargo negotiated Patricia’s check because Wells Fargo knows it because Wells Fargo GOT THE MONEY. And if that’s no longer the case, then the public needs to know that Wells Fargo can no longer be depended on to keep track of money or checks that are cashed… and I’ll go ahead and throw that into the aforementioned P.R. campaign as well… no extra charge.
Okay, Wells Fargo… so, let me see if I can guess what happened here…
I wrote about this two days ago and about a thousand of our DOERS called and wrote in to say that you should not do this… but it was President’s Day and you checked with the lawyers and they told you everything was fine and that you’d be evicting Patricia no problem… so you got up on your hind legs and took a shot.
“Screw him, “ one of your inappropriately overconfident executives said about me to himself.
Am I close? I’m thinking I am. You see… I’m not just some kid or some activist wearing sandals… can you read between the lines here? I don’t want to do any of this, which is to say that I don’t want to have to write this sort of thing once… and you’re now making me write it twice.
Well, I’ve got some GOOD NEWS and some BAD NEWS, which do you want first? How about the good news? Okay…
The GOOD NEWS is that it looks like you’ve given me a new part-time job, so thanks for that! And not only that, but as of tomorrow, I’ll be your newest shareholder, so I’m really looking forward to seeing everyone at the annual meeting.
The bad news is that I’m just getting started here.
Mandelman out.
Please send an email to John Stumpf and others at Wells Fargo and tell them how you feel and that they need to stop the eviction by canceling tomorrow’s UD proceedings and give this woman her home back.
# # #
Chairman of the Board, President, CEO: John.G.Stumpf@wellsfargo.com
~~~~
John Stumpf (415) 396-7018
Feb
21
It’s Gretchen Morgenson from The New York Times – A Mandelman Matters Podcast
One might imagine that these days there aren’t too many journalists that I have a whole lot of respect for, or that I find all that interesting, truth be told. I mean, watching the mainstream media ping-pong between the ignore-the-crisis and blame-the-borrower extremes, has changed my views of the media forever, I’d guess. Frankly, if you weren’t courageous enough to go against the grain on something this important… well, I don’t really have a use for you.
And, I know… there have been more showing up as it’s become more popular to do so, but that’s not the same as Gretchen Morgenson of The New York Times. She started writing about the economic meltdown in 2006, which was early… because it was before I started in 2007, which was also early. And she doesn’t write fluff… she’s just flat out really good.
When I read her, I can feel her passion or her honesty, I don’t think she writes what she doesn’t feel, and that’s both great writing and unfortunately rare writing. She’s done a huge amount of excellent work for many years now, even won a Pulitzer in 2002, but she’s a rock star of the economic meltdown and foreclosure crisis, no question about it.
Lately, Gretchen has been really going strong on foreclosure-related topics… the fraudulent document scandal, the Fannie report, DocX, the AG settlement, so I thought now would be a good time to have her on a Mandelman Matters Podcast. We had been planning to do it for a while, but I kept blowing it… she’d send me an email that would say, “How about this Tuesday,” or whatever, and I wouldn’t find it in my inbox until Thursday… stuff like that.
(I really do have to do something about my email situation… LOL.)
Anyway, she knew I really wanted to do it, so she set aside time on Saturday morning, right before she left for a week’s vacation on the slopes… and that makes her the nicest person on the planet, on top of being every other wonderful thing she clearly is. So, turn up those speakers, sit back and relax and listen to Gretchen Morgenson of The New York Times, as we talk about her book, “Reckless Endangerment,” the scandals, the settlement… and more on a Mandelman Matters Podcast.
CLICK TO PLAY NOW!
In the latter part of last year, the book that she and Josh Rosner co-authored, “Reckless Endangerment,” was released and even though I was in the middle of reading several others at the time, I rushed right down to buy it as soon as it arrived in stores. I didn’t read it right away,… I was in the middle of two or three at the time, as I said and so I flipped through it and went back to whatever I was doing.
To be entirely candid, it looked a little GSE heavy to me, so I didn’t even crack the book until Christmas came around and I had the time to devote to it that it deserved. Besides, by then I had started getting more suspicious that Fannie and Freddie were responsible for more of the problems than I had previously thought.
So, all I can tell you is… GET IT. You’ll like it a lot, and it’s not an intimidating read in the least. Plus, it fills in some blanks that you won’t find in any of the other books that are now displayed on the “meltdown” table at my Barnes & Noble.
CLICK BOOK TO BUY NOW ON AMAZON!
Mandelman out.
Feb
20
URGENT DOER ALERT – Wells Fargo You’ve deceived, confused and beaten another senior into submission
URGENT! I NEED DOERS RIGHT NOW!
This is the story of Patricia Martin, 65 years old, disabled by a crippling back injury, after suffering a stroke and a heart attack, now with a heart function approximately 35 percent of normal. This is a woman who owned her home since purchasing it with her late husband in 1968.
Not a home of great value to anyone but her. The home in which she and her husband raised their children. And the home in which today, she resides along with her daughter, son-in-law and grandson. The home that has been the centerpiece of her life for 44 years.
Yes, Patricia Martin, despite the challenges of her health, was blessed with a close family who love her and she them. And as I think of her, all I can imagine is that her memories of all the years in that house must mean everything to her.
And yet tomorrow morning, Wells Fargo Bank wants her EVICTED.
You see, after a year and a half of deceiving and abusing her, Wells finally won when last November they foreclosed on the Option ARM mortgage some predatory jackass sold her on back in 2005, and bought her house at the trustee sale she didn’t know would take place. Wells wore her down and finally beat her, it wasn’t easy… it took half dozen bank employees well over a year to do it, but they finally did.
People like Wells Fargo’s own… Alfonzo Martinez, who Patricia Martin describes as always being abusive, unprofessional and condescending. And as I’m typing those words, I can’t help but wonder what you have to do to get a 65 year-old grandmother to think that about you.
I guess the reality is that maybe I’ll never understand this sort of thing… how it ends up coming to my desk at this point… how it is that there wouldn’t be a dozen or more people at Wells Fargo Bank chasing this 65 year-old woman around, trying to apologize, offering to make things right… asking for forgiveness. How can that not be the case?
Is it part of the corporate culture at Wells to be callous and unfeeling… to shun responsibility, to be able to act with impunity even when doing things that others would consider unconscionable. Who raised these people?
I have to say that this sort of thing reflects very badly on you, CEO John Stumpf… and your senior management team, of course. But you more than the others, for it is you with whom the buck stops, does it not? And I say that because I was the CEO of my own firm for some 20 years, and were someone to have told me a story such that I’m about to tell, about my own company… well, I simply cannot even imagine it.
First of all, let me introduce you to the stars of our tragic tale: besides Alfonzo Martinez we have Amy Leffert, Shelly Melaine, Samuel Biasa who looked over the entire account, Ray Serrano in the Office of the Presidency at Wells Fargo Bank, and NDEX West, as our Foreclosure Trustee, who told Patricia Martin…
“Wells isn’t offering you a repayment option, they don’t want your money, they want your property and that’s all there is to it.”
Wells Fargo turned down Patricia Martin’s application for a loan modification because they said she had failed the NPV test… but they had run the test using a property value of $370,000. Trish Salem, who was helping Patricia, was insistent that her home was worth $301,000, and Wells agreed to re-run the test again using the lower property value. They ran it again, but with the same $370,000 property value. Why? Well, that’s easy… because they are a collection of unfeeling and incompetent idiots, that’s why.
It all started on September 26, 2010 when Patricia became quite ill and so her daughter went into the branch to make two mortgage payments, one for August and one for September, and was told she didn’t have to pay the late fees at that time, they could be paid later… the late fee was $83.41 for each of the two months. She paid the two payments by check in the amount of $3238.30.
It would be those late fees that would ultimately be what would lead to her undoing. And that’s why I say Wells Fargo can’t be trusted, because that should be impossible. Late fees, whether you pay them or not, should never be capable of causing you to go down a path to losing your house.
In October Patricia and her family had to make some expensive repairs to the home’s heating system, so it wasn’t until mid November that Patricia’s daughter called Wells to explain why the October payment wasn’t made and to say that both October and November would be made shortly.
That was the fateful day when the Wells Fargo suggested that Patricia Martin apply for a “Map 2” loan modification.
It was Amy Laffert that took down Patricia’s information, telling her, “you qualify” and stating that Particia would be “ahead of the game,” because her late payments would be folded into the modified loan.
The file was assigned to Shellie Melaine, and that was when she was told that something was amiss. Shellie said that half of the payment that had been made in September had not been applied. Patricia’s daughter later called and asked to have the missing payment rectified.
Little did she know that she would soon be getting a letter saying the loan was in default and that she would have to come up with $4829.96 by November 30th, to bring it current.
The amount could not be right, there were only two payments due.
It’s like a Hitchcock movie, isn’t it? I get chills as I’m writing it. Do you see where the twist is coming from… it’s the September payment, the late fees… they took them anyway after saying she didn’t have to pay them… I want to scream… NO, PATRICIA, STOP… but she had no idea what was going on, and Wells certainly didn’t explain anything about it to her.
But it still could have worked out okay, had Wells just accepted her two payments and brought the loan current, and this information was confirmed by Ray Serrano in the Office of the President at wells Fargo. Patricia could have made the two payments, and she only owed the two payments, but wells saw three payments as being due… they were wrong, but they’re never wrong to them.
She sent in a copy of the check for the two payments. They received it and said the matter would be corrected. But it wasn’t corrected. She called again, they said it would be corrected and they would reverse all changes and fees… blah, blah, blah… they did nothing.
Again, and again… same thing, same thing. At this point Wells is torturing this woman.
So, this goes on and on… do I have to tell it all? Good Lord, Wells Fargo and specifically to you CEO John Stumpf… why do you put people through this process? Get off your private jet and go spend the day in the loan modification department.
So, yeah… the Map 2 modification was denied because of insufficient documents. But we all know there were no insufficient documents, because next Wells Fargo, in a letter dated January 31, 2011, the bank invited Ms. Martin to apply for a HAMP modification and why would they do that? Does HAMP require LESS SUFFICIENT DOCUMENTS? You guys at Wells don’t even make sense about half the time.
And if I have trouble keeping tract of your nonsense, imagine how Patricia was handling it, especially when in the middle of all this, December 10, 2010, she had to have major back surgery.
All the documents were promptly submitted to Alfonzo Martinez, the designated agent of Wells Fargo Bank… and this is the second time I’ve bumped into Mr. Martinez and heard how awful he is. How can he not be fired by now?
Memo to Alfonso… Dude, you’re really starting to bother me. Chose another career, do the right thing… you don’t want me annoyed with you. I’ve had a tough three years, I’m cranky and I love to stick up for grandmothers. Trust me, it’s not worth it. Have you considered the Armed Forces?
According to Patricia’s lawyer…
“Mr. Martinez was unprofessional in his job. He repeatedly requested documents which had already been submitted, threatened to close the modification request if he did not get documents he had not previously requested, repeatedly asked for new RMAs although a number already had been submitted, and demanded that Ms. Martin submit RMAs with sections in blank which he would fill in.
It appears that for a period of several months from February 1, 2011 to May of 2011, Alfonso he never did complete the package and send it to underwriting, rather, he required at least three different new loan mod submissions.”
At one point in the clusterf#@k of a process, Samuel Biasa stepped in to look over the entire account and, having seen that all documents were in fact there, admitted that he didn‘t know why Alfonzo had not submitted them to underwriting. So, Mr. Biasa submitted the paperwork himself to Wells underwriting and for a short time, things were looking up.
When Alfonso came back and saw that Samuel Biasa had submitted Patricia’s file, Patricia says that he became “very abusive, unprofessional and condescending” towards both Patricia and her daughter.
Then the HAMP modification came through… DENIED. Can you guess why… insufficient documents again? Sure why not? The bank would still not accept her payments… she was told the system was being whatever and who cares.
Then she was denied for HAMP again. This time for the NPV… with the $370,000 valuation, that they just couldn’t seem to ever change… but it’s funny because HOW MUCH DO YOU SUPPOSE WELLS PAID FOR PATRICIA’S HOME AT THE AUCTION… $298,000.
By the time the system got put right, there was too much IN LATE FEES AND OTHER CHARGES FOR HER TO PAY IT IN ONE LUMP SUM.
As her sale date approached she tried filing a lawsuit, but botched it completely. She finally called Mark Zanides, an attorney who I happen to know quite well. And although Mark knew it would be a difficult case, he couldn’t leave her alone facing eviction.
He told me about Patricia’s story and I couldn’t leave her alone either.
And I have the feeling that my DOERS WON’T let her get evicted either…
IS THAT RIGHT, DOERS?
Wells Fargo… let me be clear about this because time is short. Patricia Martin is scheduled for UD Court tomorrow. So, you have some law firm, some unsuspecting foreclosure mill, no doubt… and you should call and cancel them. It looks like NDEX WEST. You should see what’s happened here and if it can be fixed… you should do the right thing and fix it.
This is a predatory piece of garbage World Savings/Wachovia loan sold to a senior.
I had this sort of situation with Bank of America a few weeks ago and they got the house back from a third party. You bought this one yourself. So, you can give it back no problem. She can make her payments, good Lord, she was trying to make her payments to you all damn year when you wouldn’t take them because of some stupid $80 late fee.
Don’t make me go any further here, I take no pleasure in this. Bank of America has been wonderful to work with and you should follow their lead. I’m hearing all sorts of terrible things about Wells lately. You don’t want to take Bank of America’s place in the shooting gallery, do you?
Come on, let’s save Patricia’s home for her… and for her daughter and son-in-law… and for her grandson. It’ll feel good to do the right thing.
Mandelman out.
Please send an email to John Stumpf and others at Wells Fargo and tell them how you feel and that they need to stop the eviction by canceling tomorrow’s UD proceedings and give this woman her home back.
# # #
Chairman of the Board, President, CEO: John.G.Stumpf@wellsfargo.com
~~~~
John Stumpf (415) 396-7018
john.g.stumpf@wellsfargo.com
CEO: John G. Stumpf
420 Montgomery St.
San Francisco, CA 94163
1-866-878-5865
~~~
Howard.I.Atkins@wellsfargo.com
James.M.Strother@wellsfargo.com
David.M.Carroll@wellsfargo.com
patricia.r.callahan@wellsfargo.com
Carrie.L.Tolstedt@wellsfargo.com
BoardCommunications@wellsfargo.com
sharon.cecil@wellsfargo.com
Todd.M.Boothroyd@wellsfargo.com
john.g.stumpf@wellsfargo.com
cara.heiden@wellsfargo.com
denise.erickson@wellsfargo.com
cara.k.heiden@wellsfargo.com
mary.coffin@wellsfargo.com
BoardCommunications@wellsfargo.com
Wells Fargo please contact Patricia’s Attorney ASAP!
Mark Zanides, Attorney at Law
415-624-4475
HOMEOWNER:
Patricia Martin
Loan #: 0040638090
And if you can’t reach Mark Zanides, you can reach me, Martin Andelman at 714-904-2288.
Feb
19
Arizona’s SB 1451 – Does Arizona Have the Right to Save Itself from Drowning in Underwater Loans?
Drowning in the desert. The irony alone could kill you.
Arizona’s Senator Michele Reagan (R-Scottsdale) is a very courageous politician. This year she has introduced SB 1451, the “Housing Finance Reform Act of 2012,” a bill that would solve the state’s negative equity problem by providing homeowners that are current on their mortgages, with a way to refinance their loans at or near current market value…. without costing the state a nickel.
If SB 1451 were to become state law, Arizona’s homeowners would no longer be dependent on the federal government, through Fannie Mae, Freddie Mac or FHA, to refinance their mortgages. The bill would make it possible for up to 90 percent of Arizona’s homeowners to refinance their existing loans, lowering their current monthly payments by a third, and reducing their principal balances to amounts at or near today’s market value.
Can you imagine the immediate impact on Arizona’s economy, even if only if 50 percent of the state’s homeowners were paying a third less each month than they’re paying now, and were no longer hopelessly underwater?
Consumer spending in Arizona would increase almost overnight as homeowners once again would view their homes as valued assets, instead of as depreciating liabilities. It’s not hard to imagine that the home improvement market would be among the first to spring to life as homeowners re-started projects delayed during the prolonged downturn in home prices and the broader economy, and that sort of spending means immediate jobs for tens of thousands of Arizonans.
What’s not to love?
As incredible as it may seem, there are a few in Arizona that oppose SB 1451. Included in that group is well-known columnist at The Arizona Republic, Robert Robb, who wrote a piece about the bill this past week in which he claimed its consequences to be “devastating.”
Devastating? Seriously?
Let’s just re-cap for a moment to make sure we’re all on the same page… SB 1451 allows for the refinancing of current mortgages at or near today’s market value, it reduces each homeowner’s monthly payment by at least one-third, it means that Arizona’s homeowners would no longer be dependent on the federal government every time they wanted a mortgage, it creates thousands of jobs faster than you can say… remodel my bathroom, and it doesn’t cost the state or its taxpayers a nickel.
Which part could possibly be thought of as devastating, do you suppose? Would it be the prosperity breaking out all over the state like the desert in bloom that Robb finds objectionable?
Robb’s argument against SB 1451 begins with his claim that it violates the state’s constitution, which frankly I found quite amusing for several reasons.
For one thing, in his article, the words “Arizona Constitution,” appear in light blue, like it’s a link to a clause in the state’s constitution prohibiting something that the bill does, thus supporting his claim that the bill is unconstitutional. But, when you click on the link you jump to a page of past stories ABOUT the Arizona constitution, only one of which has anything to do with SB 1451, and wouldn’t you know it… it’s Robb’s article… the same one you just clicked out of to begin your circular journey. Robb claims the bill is unconstitutional and then he sources himself making the same claim about constitutionality. So, very well done indeed. Perhaps later he’ll quote himself.
The other reason the constitutionality argument seems frivolous to me is that Robb raises it as an issue at the beginning in his piece about the bill, and it just seems to me that if he actually thought his point was correct, he wouldn’t have needed to bother writing the rest of his article. I mean… why worry about a bill passing if it’s only going to create an unconstitutional state law, right? There’s no danger of devastation occurring there, is there?
Seems like, even if the bill passed, the Governor would take one look, say… “Sorry, can’t sign it … it’s unconstitutional,” and then we could all go back to contemplating the timing of our respective strategic defaults on our underwater mortgages.
As one might imagine, however, Senator Reagan, with ten years in the Arizona legislature, did consider the constitutionality issue during the 10 months she was working with her legislative team on the state program and the bill’s language… you know… before she presented it to Mr. Robb and he so cleverly raised it, and so she’s quite comfortable with her bill’s constitutionality… or would that be constitutional conformity? Constitutionosity?
No matter, in my mind it’s really a question for the legal scholars anyway, isn’t it? And Robb may think it going out on a limb, but I for one have complete confidence that the State of Arizona will be able to figure out what its own constitution does and does not allow. And if it turns out that it’s okay with the state, well, then I’d have to say that it’s okay with me.
I did manage to check with two, by the way… legal scholars, I mean… unlike Reporter Robb I make it a rule never to source myself in public… and both said that it was constitutional and explained why they thought so.
(There was a third legal scholar that I’m pretty sure also agreed that it was constitutional, but honestly, I must have dozed off during his riveting 40-minute dissertation on all-things-constitutional that at one point was explaining something about due process originating with Egyptian kings. Luckily, I woke up just in time to thank him for his very thorough response and say goodbye.)
Robb says, at least in part, that SB 1451 is unconstitutional because it breaks the terms of existing contracts. But the first legal scholar responded to Robb’s claim by saying: “The law is clear: The right of the state to take private property supersedes private contracts.” See West River Bridge v. Dix, 47 U.S.C. 507 (1848) and its progeny; see also Home Building & Loan Association v. Blaisdell 290 U.S. 398 (1934). He also explained…
“Government taking of property has been part our laws for over 200 years. The basic requirements for such a taking are a clear public policy and payment of just compensation. In this case the public policy is undeniable – addressing the state’s economic and fiscal crises related to the collapse in housing market. “Just compensation,” means payment of fair market value of the property being taken – the home. SB 1451 requires payment of more than the fair market value of the home.”
And there you have it.
The second attorney I checked with was Associate Professor of Law at Loyola Law School in Los Angeles, Lauren Willis, who originally authored a paper back in 2008 that specifically examined the subject of a state taking property in order to satisfy the public good. The latest version of that paper is titled: “Good for Banks, Good for Borrowers.” According to Professor Willis’ paper…
“Eminent domain is the power of government to take private property for a public purpose, so long as the owner is paid just compensation. Eminent domain can be used to correct deficiencies in the market, particularly when they threaten public tranquility and welfare.
The property hazards, fires, crime, and other social costs imposed by foreclosures will threaten our nation’s tranquility and welfare until foreclosures are dramatically reduced. Families will continue to be uprooted and their children moved from school to school, disruptions that impose intangible and long-term costs on society. We cannot directly devalue loan contracts to reduce our excessive mortgage debt, but we can use eminent domain.
The thousands of families falling into foreclosure and bankruptcy each day will continue for years, with the limited capacity of loan servicers and courts prolonging the problem. The social costs of foreclosure will roll on, increasing the tax burdens and decreasing the quality of life for all households, renter, former homeowner and current homeowner alike.
This plan is not entirely unprecedented; eminent domain has been used to boost homeownership in the U.S. before. At one time in Hawaii, concentrated land ownership was injuring the public tranquility and welfare by preventing ordinary families from owning the property on which they lived. To fix this market failure, the state took land from large landowners and compensated them at fair market value. The state then sold the property to the families who had been living there and paying rent, offering them mortgages through the Hawaii Housing Authority. “
(I can also say that there have been other legal experts at the state capitol and elsewhere that have very carefully reviewed SB 1451 and they are in agreement that the State of Arizona does have the right to do what the bill describes. And that’s all I have to say about that.)
No More Soup for You!
Robb’s next objection to SB 1451 would have been easily predicted by anyone familiar with the banking lobby’s legendary resistance to change. According to Robb, “Once the legislature indicates a willingness to abrogate loan agreements, lending in Arizona will be more risky and borrowers will have to pay for that increased risk.”
This is the standard threat that the banking lobby uses when it wants to scare legislators into never voting for anything that would change the status quo as related to lending, because the threat implies that if you do anything the bankers don’t like, there will never be lending again in Arizona.
Well, I’m positively thrilled to have the opportunity reply to this assertion, because as assertions go, this one is absolutely preposterous. What’s going to happen? Are they going to blacklist the state?
It’s a bit like thinking that no one would ever want to own a commercial airline again because the federal government grounded the airlines for an entire week following 9-11.
Investors aren’t morons, Rob Robb, they can tell the difference between an extraordinary economic event and a communist regime out to seize private property at every turn. Maybe Mr. Robb struggles with that distinction, but I’m fairly confident that any investor with more than say $200 to invest can.
What are you asking me to fear, Mr. Robb… that there’ll be no private lending in Arizona? There’s no private lending in Arizona now. And there’s not going to be any private lending in Arizona, or anywhere else for that matter, for a long time. Banks have the same toxic assets clogging up their balance sheets that they had in 2008. CDOs that have never been traded, valued using their own valuation models, seconds that are essentially worthless. And off the balance sheet? Don’t even get me started.
In every single year since the financial crisis began, more than 90 percent of all loans have been government funded. We haven’t had any meaningful private securitization of debt since the summer of 2007. The securitization market is broken. Investors lost trust, and once you lose trust you just don’t get it back… you just don’t.
Wake me up when a few of those problems go away and then we can chat about their lending. Of course, you’ll probably need to call the nurse to wake me because I’ll probably be living in a SNF by then.
Robb also says that, “Arizonans trying to buy a home with a conventional mortgage that doesn’t have a federal guarantee would be out of luck.”
Okay, so obviously Robb doesn’t know that the only lending that exists in this country, for all practical purposes, is government lending. There are no “conventional mortgages” being offered today that aren’t funded by the federal government. It’s Fannie, Freddie, or FHA and that’s that. Well, there’s Ginnie Mae too, if you’re talking VA loans.
And please don’t tell me about the lending on $2 million homes for people with 50% down and 900 FICO scores. Just say hi to all 11 of them for me, okay?
So, let’s imagine it’s ten years from now. And because of SB 1451, Arizona’s homeowners are not loaded with debt, and have been current on their loans over the last ten years. It’s an entire state of great credit risk with equity in their homes enjoying their serenity.
Are you seriously trying to tell me that, faced with that picture, no one will want to lend in Arizona because of something that the state did ten years ago during an economic catastrophe? Would you care to bet on that, Rob Robb? There are plenty of lenders that want to start extending credit to people a month after their bankruptcies have been discharged.
And did you know that during the 1930s the government FORCED creditors to take hair cuts of 40 percent, but investors didn’t stop investing as a result. To the contrary, according to a study conducted by a former Federal Reserve Board Governor and Professor of Economics at the University of Chicago Graduate School of Business, they came out ahead.
Study Shows: “It’s better to forgive than receive.”
Economist Randall S. Kroszner is a former Federal Reserve Board Governor and an economics professor at the University of Chicago Graduate School of Business.
His study, which he describes as an, “Empirical Analysis of Large-Scale Debt Repudiation,” provides evidence of coordinated debt relief creating a win-win-win scenario, leaving all of the involved parties in better financial condition than would have otherwise occurred. In other words, there are situations when investors, and the economy overall, are best served by forgiving debt.
Professor Kroszner’s paper begins by acquainting us with a clause that, up until 1933, appeared in essentially all long-term contracts, both public and private, known as the “gold clause.” Its genesis was the inflation that followed the Civil War, and it protected creditors against devaluation of the dollar by indexing to gold the value of the payments they were owed under any given contract. If the price of gold were to rise during the life of the contract, they could demand payment in gold instead of dollars.
During FDR’s first 100 days, he asked Congress to do away with the gold clause in all public and private contracts.
Predictably, creditors screamed bloody murder, just as they undoubtedly would today, but the legislature passed a Joint Resolution on June 5, 1933, nullifying all such clauses and when the U.S devalued the dollar in 1934, and the price of gold jumped from $20 an ounce to $35 ounce as a result, the impact was akin to today’s banks granting principal reductions of 40 percent!
Next, creditors challenged the constitutionality of Congress’ Joint Resolution. The stakes were astronomical for the times. The U.S. GNP, between 1933 and 1935 was between $55 billion and $72 billion and there was a nominal $100 billion of debt with gold clauses outstanding. If the court invalidated the resolution, debts would have increased by 69 percent1 and mass bankruptcies would have followed, but in a landmark 5-4 decision, the court upheld the government’s right to repudiate the gold clause.
So, what happened? Well, bond prices actually WENT UP following the court’s decision to uphold the government’s repudiation of the gold clause. And Professor Kroszner’s paper presents a very technical examination of the financial impacts to both debt and equities, which also went up, by the way. But, the details are not important here, because that was then and this is now, and because that was a national event and we’re only talking about the State of Arizona.
The important point to be made is that, based on this historical analysis, there are circumstances when engaging in coordinated forgiveness of debt benefits all parties, including the overall economy.
Read My Lips, No State Guarantee…
Sen. Reagan’s SB 1451 is an entirely new way to handle mortgage financing. It’s “borrower-centric,” as opposed to being “lender-centric,” so no one gets to make zillions of dollars, as was the norm with the securitization schemes of 2003-2008. And you’d think that if Robb was going to question the bill, he do it on the grounds of its newness. But, no… his arguments just start attacking the bill on entirely irrational grounds.
For example he claims that even though the bond financing doesn’t put Arizona on the hook for the bonds… that it does. According to Robb…
“But it doesn’t matter what she says, or what it says in her legislation, the bonds would sell with an implicit guarantee from the state.”
See what I mean? How do you argue with someone like this? I feel like I’m arguing with my wife when she doesn’t want to let me win regardless of whether she’s decided that I’m right. It doesn’t matter what Sen. Reagan says or what is says in the legislation? Is that how we assess things in Arizona now… it doesn’t matter what something says or anyone says… all that matters is what’s in Robert Robb’s beautiful mind?
Robb’s piece even goes so far as to describe the relationship between the State of Arizona and this program as being something along the lines of the federal government’s relationship to Fannie Mae and Freddie Mac and that’s just a ridiculous comparison. Where does he get this stuff? Does he think he’s writing a John Grisham novel, or covering an actual bill in the state senate?
Senate Bill 1451 only uses PRIVATE MONEY. There is no government money involved, no subsidies, no guarantees, and no taxes. This Program utilizes a completely different structure than any current mortgage program. It includes a cash insurance fund, which won’t be less than 10% and possibly more than 20% of the amount of the bonds issued. SB 1451 is not securitization and there are no derivatives involved.
In its simplest form, the program sells bonds and uses the money to make loans. Local banks can participate by lending their money too through the purchase of what are called “Insured Home Certificates.” Banks that purchase these certificates receive detailed payment history on the homes they are investing in and can therefore look to refinance as they see fit.
Other than all that, it’s still nothing like Fannie and the Fed. Nothing is like Fannie and the Fed. And this program’s oversight is a three-member appointed panel who oversee program suppliers, and who are damn near volunteers.
And Rob… There is no state guarantee implied or otherwise… period… and that’s that, okay? I know you want there to be a guarantee, and I know you’re all worked up about it, but it doesn’t exist so why don’t you go be scared about some other fictional bogey man and leave this one be, you’re just confusing people.
Interestingly, Mr. Robb does say some very flattering things about the bill too. His words, not mine…
“What Reagan proposes is a remarkably sweet deal. Any underwater homeowner who was current or becomes current could get interest-only refinancing for just the present market value of the home for up to ten years. Who wouldn’t sign up for that?”
Hey, he gets it! In fact, he took the words right out of my mouth. So, what’s the problem?
There isn’t one… so instead, Robb just keeps making them up as he goes along. And don’t stop him cause he’s on a roll. He just can’t stop talking about an implicit guarantee. It’s like he recently read a book about Fannie and Freddie, now has “implicit guarantee” in his head and now it’s just rattling around, popping up intermittently.
Stopping the Wave…
Robb closes by showing that he does understand why the program was developed in the first place…
“Arizona is preventing an impending tidal wave of strategic defaults – in which underwater homeowners just walk away from their homes, with knock-on consequences for surrounding property owners.”
And then he says ominously, “Whether such a tidal wave is impending is uncertain. Experts disagree.”
Which experts disagree? I mean, who specifically? I’m going to need names and contact information here, because I’m an expert and I don’t disagree in the least. So, please… I want to talk to your “experts.” Assuming when you use the term experts you don’t mean Realtors and mortgage bankers, because that would be like hearing from Big Tobacco executives about how second hand smoke isn’t nearly as bad for me as people say.
That notwithstanding, Mr. Robb is admitting that it’s “uncertain,” so I guess my question to him would be… What if there IS such an impending wave coming? What then Mr. Robb? Do you have a contingency plan for that becoming a reality? Because I hope you realize that should today’s situation in Arizona worsen significantly, it’ll be nothing but desolation and wretchedness for at least hundreds of thousands of people. And I can tell by your attitude about this bill that you have absolutely no idea of what it’s like for the majority of the state’s population even now.
I do though. And I’ll be happy to take you on a tour of your own hometown anytime, just say the word and I’ll pick you up.
Sen. Reagan’s SB 1451 will provide up to 90 percent of Arizona’s homeowners with a choice… a safety net should things worsen. And it doesn’t stop any of the mega-banks from lending or competing, for that matter. They are all free to write down the principal balances of loans whenever they’d like to.
What they can’t do is continue to treat the people of Arizona like the people of Greece. They aren’t going to sit back and say… “You’ll pay your debts and we’ll do nothing until you are experiencing such a level of pain and have made so many hard choices that many won’t even want to go on living.” That the banks cannot do. The people of Arizona are not going to let that happen.
It looks like a states rights issue to me. So, let the legislative debate begin. Time to stand up and be counted. If the people want it, then it’s up to the legislature to make it happen.
Breaking Points…
According to the Federal Reserve Bank of Atlanta’s December 2011 report, titled “Exploring Impediments to a Real Estate Recovery”…
Negative equity, meaning that a borrower owes more than the house is worth, continues to prevent any sort of recovery in Arizona’s housing market, because it’s the foremost contributor to the high rate of foreclosures.
In the white paper, Moral and Social Constraints to Strategic Default on Mortgages, published July 2009, by Professors Sapienza, Zingales and Guiso, survey data was used to study American households‘ propensity to default when the value of their mortgages exceeded the value of their homes… even if they can afford to pay their mortgage.
The study found that households wouldn’t default with an equity shortfall less than 10% of the value of the house. Yet, 17% of households WOULD default, even if they CAN afford to pay their mortgage, when the equity shortfall reached 50% of the value of their house.
According to a report issued late last year by JPMorgan Chase & Co, strategic defaults are now more likely among jumbo loan-holders than any other type of borrower; nearly 40 percent of jumbo loan delinquencies, are strategic defaults.
There have even been a record number of defaults in Beverly Hills, you know… 90210. Many wealthy owners could clearly still pay but walked away anyway. Also worth noting is the fact that only 12 of 180 distressed homes in Beverly Hills are currently up for sale.
Laurie Goodman of Amherst Securities is perhaps the preeminent analyst of the U.S. mortgage market and her data and analysis is relied upon extensively on Wall Street and in the housing industry at large. According to Goodman…
The moral hazard… strategic default issue… must be addressed by first recognizing it as an economic issue, not a moral one. The point is that a borrower at a 150 CLTV is highly likely to default, regardless of whether or not he can pay.
William C. Dudley, the president of the Federal Reserve Bank of New York, laid out a housing agenda when he spoke at West Point last month. He brought up an idea that the Fed knows will probably become necessary: “reduction of the amount that many borrowers owe while they keep their homes.”
HUD Secretary Shaun Donovan called FHFA’s reluctance to engage in principal reduction, “quasi-religious,” and the moment I read it, I realized he was right… I knew exactly what he meant.
According to Goodman’s latest research, “Borrowers with more severe negative equity and perfect payment histories are defaulting at ~20% per year, nearly as fast as borrowers with equity are refinancing. We believe the government needs a mandatory program that forgives principal on the 1st lien and substantially eliminates the 2nd lien. Voluntary programs won’t work.”
Even though, in most instances in Arizona, mortgage servicers could maximize their return by writing down the principal on loans, some in the industry say they won’t do it, “because of their inability to distinguish borrowers’ breaking points.”
So, I wonder if Mr. Robb thinks he can distinguish borrowers’ breaking points… is that the plan? Catch it just in time? Right before Arizona’s economy does an imitation of the final scene in the movie “Thelma & Louise,” and drives right off the edge of the Grand Canyon.
So, it looks like it’s either that, or we get an answer to the question… DOES ARIZONA HAVE THE RIGHT TO SAVE ITSELF?
Mandelman out.
S.O.S.
Save Our State!
Want out of the RED? Tell these senators and your elected representatives in both the House and Senate that you’re watching and you want them to VOTE YES on SB 1451.
Don Shooter dshooter@azleg.gov 602-926-4139
Steve Pierce spierce@azleg.gov 602-926-5584
Find your state assembly and senate representatives CLICK HERE.
~~~~~~
Want to hear more?
Listen to Senator Reagan and her legislative team talk about her groundbreaking bill.
On a Mandelman Matters Podcast
CLICK HERE & SCROLL DOWN TO CLICK PLAY
# # #
*1 Prof. Kroszner’s paper states that the gold standard would have increased the contract value by 69% over the nominal value of the contract (that is, to 169% of the nominal contract amount). When you reduce 169% down to 100% you have reduced the figure by 40%. So if a house today is 69% underwater, that means the face value of the loan is 169% of full market value, and if that loan is reduced to 100% of full market value, this means the loan has been reduced by 41% (69/169 = .408.)
Feb
16
Bringing Up the Rear – Dale Westhoff, Credit Suisse Group AG
It takes brass balls to be a banker these days and come out in opposition to writing down mortgage balances for homeowners hopelessly underwater because of “moral hazard.” And yet, that is precisely what Credit Suisse’s global head of structured products, Mr. Dale Westhoff has done.
In January, he was interviewed for a story on Bloomberg.com under the headline: “Mortgage Principal Cuts Don’t Help Homeowners.”
The term, ‘moral hazard,” just everyone understands, is a term used in economics or finance, and it’s what can occur when one party is making the decisions about investment risk, while another party is on the hook for the losses should those decisions go awry.
You know, like if I were deciding where to invest money, but you had to cover my losses when I chose to invest in Lehman Bros. and Bear Stearns. I’m trying to think of a good example that everyone will understand… hmmm… there must be something that would work… oh wait, I know… exactly like today’s banks… the ones that have been deemed too big to fail, and too big to jail.
Today’s too big to fail banks know that the government won’t let them follow Lehman’s path to bankruptcy, so they take on more risk than is prudent. And when their leveraged bubble du jour pops, we-the-people spend years trying to get their gum out of our collective hair.
In the parlance of Wall Street, taking on risk means taking on leverage.
Leverage is Wall Street’s euphemistic word for borrowing or debt, so when a Wall Street banker says his firm is leveraged, what he means is that the firm is investing using borrowed money. As long as the chosen investments are increasing in value, or at least can be reported as increasing in value… everything’s fine.
When the market realizes what’s happening, investors start to get nervous, so they start moving money out of riskier investments into more defensive positions, which in turn increases the risk of staying put to other investors, and at some point everyone rushes to get their money out before there’s no money there to get.
Here’s a quick example, just to make sure we’re all on the same page about this topic. Let’s say we pooled our money and came up with $100,000 in order to invest in the stock market. And we make a nice 10 percent return… so, we now have $110,000.
Then one day, I mention that I have a rich uncle from whom I can borrow whenever I want or need to with an interest rate that’s only one percent. My idea is that we borrow let’s say $900,000, so we can invest $1,000,000 instead of only the $100,000 that we brought to the game.
So, we invest the million dollars, and once again, we earn a 10 percent return, which is $100,000… and voila’… we’re superstars… we’ve doubled the money we’ve invested… and so we repay my uncle plus one percent interest, and then pay ourselves huge bonuses while telling each other how smart we are.
But want happens when our chosen investments not only fail to produce 10 percent returns, but their value falls by 10 percent. If we had invested only our own $100,000, then we’d lose ten grand, lick our wounds and get ready to fight another day. But if we had invested the million bucks that included the $900,000 we borrowed from my uncle, we’d lose $100,000… and be entirely wiped out because we only had $100,000 in the first place.
Now consider that we’d borrowed 40:1… so our $100,000 fund becomes $4 million we can invest… and now, should we lose 10 percent on our investments, we lose $400,000… but don’t worry ‘cause we’re too big to fail and the American taxpayer will pick up our $300,000 tab in order to make sure that we don’t threaten the entire global banking system.
And that’s precisely what occurred in September of 2008.
The banks had derivative securities called collateralized debt obligations or CDOs that they had valued themselves using their own internal models, and then they borrowed against them.
When their value collapsed, and their payments came due… we deemed them too big to fail and invented TARP… and we’ve been inventing other, shall we say less televised ways to pump more than $16 TRILLION into those banks ever since. It’s money that our children and perhaps our grandchildren are going to be paying back for a long time to come.
Leverage, however, is like financial crack. Once you’ve been on it and experienced its highs, it’s hard to go back to investing money the old fashioned way… especially when you know you’re too big to fail.
The temptation must be impossible to resist because it might interest you to know that in 2011, margin debt on the NYSE climbed to its highest levels since February of 2008… right before the S&P collapsed in half. And the only time in history net leverage has ever been higher than it is today was back in June of 2007, which was the absolute pinnacle of the most devastating credit bubble the world has ever seen.
And that, my financially minded friends, is what is meant by the term, “MORAL HAZARD.”
To Credit Suisse’s Bail Bestoff… no, that’s wrong… I meant, Dale Westhoff… we would create moral hazard were we to write down the principal balances of mortgages that are hopelessly underwater. Dale seems to feel that if we did that, everyone and their brother-in-law would immediately start defaulting on their loans in order to get their balances reduced.
And before you knew it… we’d have… what’s the word I’m looking for… oh yeah… prosperity? People making mortgage payments again? An actual housing market? Economic recovery on Main Street? Consumer spending? A positive GDP without fudging the numbers? What Dale… what is it you fear, my lad?
Earlier this year, in the latter part of January, Dale told Bloomberg…
“Reducing mortgage balances is a risky idea that hasn’t been shown to keep borrowers who owe more than their property’s worth in their homes.”
Well, gosh Dale… you are obviously quite the research expert aren’t you? That’s true, isn’t it? Did your research point to any reasons why that would be the case? Would you mind terribly if I were to just throw out a guess just for fun? It’ll be like a game show…
I’ll take, “Because we haven’t tried it, you witless moron. And make that for $200, Alex.” Dale also said…
“We’ve never done this before; we don’t know what the risk is.”
So, I guess reducing principal balances hasn’t been shown NOT to keep people in their homes either, isn’t that right Dale? Did you forget to tell Bloomberg that part? I see… you’re a weasel, Dale.
How about this for a headline in an upcoming story I’m working on now…
“Non-recognition of Losses and 0% Interest Loans Don’t Help Banks.”
Suspending accounting rules is a risky idea that hasn’t been shown to keep banks that borrowed more than their assets are worth from becoming insolvent, according to Credit Slush Fund PIG.
Are you feeling me, Dale?
Here’s the thing, my boy… I think you’re the moral hazard here, would you like to know why? Because although you failed to mention it, I happened to be doing some reading the other day and wouldn’t you know it… Credit Suisse was in a bit of news. Nothing earthshattering or even unexpected, mind you… but news nonetheless.
Apparently, right before you made your idiotic comments about moral hazard, saying that principal write-downs won’t save homes, Credit Suisse had just won the bidding process and as a result bought $7.014 billion in face value RMBS from the Federal Reserve Bank of New York. The Fed bought the securities from AIG and had them in their Maiden Lane II… what do you call that sort of entity… shell company?
So, when Maiden Lane II bought the assets their face value was $39 billion… and they paid $20.5 billion. Now their face value is just over $7 billion and Credit Suisse paid… oh dear, wouldn’t you know it… the NY Fed says the actual price you guys paid won’t be disclosed until April 16, 2012.
Why is that, Dale? Why can’t the Fed disclose how much the Credit Suisse bid was until April 16, 2012, when the sale was made on January 19, 2012? I’m sure there’s a perfectly good reason don’t get me wrong… I’m sure it’s just something to protect the interests of U.S. taxpayers. Always looking out for us, aren’t you, Dale?
So, I hate to even mention it, but does the fact that you guys at Credit Suisse are running around like vulture investors trying to scoop up distressed residential mortgage-back backed securities at bargain basement prices bother you at all… I mean, considering that at the same time you’re publishing supposed “research” in articles on Bloomberg like the one I’m referencing now.
The only reason I’m asking is that Laurie Goodman of Amherst Securities was quoted in that same Bloomberg article and she said…
“Amherst’s (Laurie) Goodman says that principal reductions are needed to avoid 8 million to 10 million more distressed-property sales.”
See, she said that, I’m pretty sure, because she felt it would be a bad thing to have 8-10 million more distressed property sales, but it looks like Credit Suisse wouldn’t actually mind at all if there were lots more distressed property sales, since Credit Suisse is scampering about in the night buying them for pennies on the… no, that’s not right… for some undisclosed amount to be disclosed on April 16, 2012.
The suspense is killing me, Dale. I wonder if Credit Suisse overpaid for the distressed assets they bought? Any guesses on how it will turn out?
Care to know what else Laurie Goodman said about this topic? Me too… she said…
“We have shown that, even controlling for all other factors, principal reductions are more effective. Realize also that banks are doing it on their own portfolios and have been for years. Why would they continue if it was not more effective?”
Oh, Dale, Dale, Dale… so the banks have been doing principal write-downs for loans in their own portfolios for years, isn’t that fascinating?
So, it must be that principal reductions are only an effective methodology for preventing foreclosures when we’re talking about portfolio loans on a bank balance sheet.
The whole moral hazard thing only makes principal write-down ineffective when the U.S taxpayers are on the hook for the losses… and when Credit Suisse might get a chance to buy the distressed assets at pennies on the… ooops, I almost forgot… can’t tell until mid-April.
Congratulations, Dale. As rear ends go, you have no peer.
Mandelman out.
Feb
14
Stuff Ex-Homeowners Can Buy for $2,000
BANK ERROR IN YOUR FAVOR!
EX-HOMEOWNERS TO RECEIVE UP TO…
$2,000!
If you’re a recently displaced homeowner, you’ve probably already heard the fantastic news. If your bank screwed up and improperly or illegally foreclosed on your home between January 1, 2008 and December 31, 2011… the downside is that you lost your home… the good news is you’ve got a windfall coming your way! It could really be true!
You were probably thinking that your government didn’t care and wasn’t working for you, but you’re wrong because over a year ago, all 50 state attorneys general got together, took a few of hundred looks at the forgery and fraud being used freely and without remorse in conjunction with throwing homeowners out of their homes… and so they called up the five largest banks in the country and said…
“Hi there. We realize how busy you guys must be, what with all the foreclosing, but we were wondering if you would meet with us about this forgery and fraud stuff we keep heraring about? It’s probably nothing, but you know how whiney homeowners are these days. And the lawyers… forget about it.
You would? Oh thank you, you guys are the best!”
And so, the 50 state attorneys general investigation into mortgage servicing fraud was born.
At first things seemed kind of rocky, but once the AGs assured the bankers that they weren’t there to take away corporate jets or try to limit taxpayer funded executive bonuses, things started moving.
As of last March they had their starting place. The banks would pay $25 billion over some undefined period of time. Banks would agree to stop incorporating forgery and fraud into the foreclosure process and adhere to standards. MERS would be ignored. Banks would build a portal of some kind for borrowers. Principal reductions would be agreed to in principle. And homeowners whose homes were taken away improperly or illegally would get $1500 – $2,000 to spend however they saw fit!
The negotiations went on for more than a year. The feds got involved as well. It was touch and go there for a while , but in the end the 50 AGs extracted their pound of flesh from the bankers, brought home the bacon for their states, and even made sure a bone was thrown at their state’s displaced and soon to be ex-homeowners.
After a year of tense negotiations, here’s what appears to be considered for inclusion into the agreement that some are affectionately referring to as: “The Final Solution.” (It’s catchy, don’t you think? And that’s important in politics, right?.)
The banks would pay $25 billion over some undefined period of time. Banks would agree to stop incorporating forgery and fraud into the foreclosure process and adhere to standards. MERS would be ignored. Banks would build a portal of some kind for borrowers. Principal reductions would be agreed to in principle. And homeowners whose homes were taken away improperly or illegally would get $1500 – $2,000 to spend however they saw fit!
This proves it… when 100 smart people set aside petty differences, roll up their sleeves and get to work… important things can happen. I know a lot of people who say that our government is incapable of getting anything done, but when you look closely at what went on here… well, it’s truly awe inspring, as I’m sure everyone agree.
So, let’s get to the best part… defrauded homeowners win too! I bet you weren’t expecting that, now were you? And I’ve been told to let homeowners know that there’s no need to thank your AG… they were all just doing what any aspiring gubernatorial candiate would do under the same circumstances.
This was a very controversial aspect of the settlement because Fannie Mae and Freddie Mac were concerned about the moral hazard aspect of rewarding people for having lost their home to foreclosure. And look… they do have a point… I suppose it is possible that for two grand, in this economy, there could be a substantial number of people will want to be defrauded out of their homes too just to pick up the two grand.
I spoke with one of the qualifying displaced homeowners today. A friend of mine gave me her address so I got up early and went to see if she’d talk to me. I wanted to get her reaction to the two thousand dollar cash bonanza she has a chance of receiving sometime in the next 36-72 months. I parked my car, walked right up and knocked on her window. It must have startled her because she spilled her coffee and inadvertently honked the horn, causing the baby to wake up…
“I’m sorry, I didn’t mean to startle you like that,” I said as she opened the driver’s side door.
“What the f#@k is wrong with you,” she said. ”Get the f#@k out of here or I’ll call the cops.”
“No need,” I assured her. ”I’m really sorry… I just wanted to ask you a few questions about how you feel about winning the two grand as part of the AG settlement.
“What f#@king settlement?” She inquired.
“The 50 state AGs settled with the bankers last week, and all of the homeowners who had their homes taken from them improperly or illegally are probably going to be getting checks for up to $2,000 each! Isn’t that exciting?”
Actually, I can’t print the rest of that conversation as my blog is only rated PG-13, but suffice it to say that she was quite moved by the news. Then I asked her what she would probably be doing with the money that she would probably be getting. And she said that she didn’t have the foggiest idea.
So, on the way home I had an idea… maybe I could help these lucky homeowners in some small way…
Mandelman’s List of Stuff Homeowners Can Buy with $2,000!
And, I know, I know… but there’s wno need to thank me… it wasn’t that much work to put together. You would have done the same for me, I know you would. It’s my pleasure, really…
ITEM#1: You probably thought it would be years before you’d be living with four walls and a roof over your head, but it doesn’t have to be so with the Lifetime Garden Shed from Competitive Edge Products!
ON SALE!
Reg. $1758.89 Now only $1589.99
Two Shatter Proof Windows – Open for Increased Ventilation
Six Skylights and Two sets of Window Shutters
Built-In Shelving System (2 90×9 Shelves, 4 Corner Shelves)
Two 16 Super-Strong Peg Hook Strips with 10 Tool Hooks
Two Screened Vents Provide Airflow and Keep Pests Out
YES IT’S TRUE! YOU COULD BE HOME RIGHT NOW!
Lifetime Outdoor Sheds are perfect when you’re looking for a home that won’t tie you down. They are built to the highest standards and have a very attractive look no matter where you set them up. The frame is steel reinforced and the walls, floor, and roof are made from polyethylene plastic, which will not fade, crack, or peel when exposed to sunlight making these sheds a better option than living in most cardboard boxes. And since you won’t have any electricity, you’ll absolutely love the sky lights that allow for natural light to permeate down into the shed.
Just think of the advantages… No painting headaches, no colors to choose from… None of that awkward plaster or dry wall, now hang pictures with tape! With a couple of curtains, create separate bedrooms… Cleaning is a breeze, a garden hose takes care of the whole thing… Eliminates closet clutter by eliminating closets. What are you waiting for?
Many families also decide to buy the following accessories…
Lifetime Professional Grade Tables – Almond 6 Ft. Folding Table
Price: $145.09
Folding Chairs – National Public Seating Bt-Chair – 4 Pack
Now only $99.99
Blackstone Portable Commercial Griddle 1180 28 in. With 2 Burners
Price: Only $229
ITEM #2: There’s nothing that will make you forget that they took your home away from you and they didn’t even own it faster than 2 NIGHTS and 3 DAYS… At Disneyland or Disneyworld!
Family of 4 -
3-day Park Hopper Passes – $1200
2 Nights at one of Disney’s Luxury Resorts – $420
And you’ll stil have $100/day for food and $80 for keychains and ear hats!
Item #3: It’s the Benelli M4 Tactical for only $1999!
Express yourself with the new Benelli M4 Tactical… Now the same Benelli M4 that’s used by the U.S. Marine Corps can be your home defense shotgun of choice. When the U.S. Marine Corps went shopping for a shotgun, they bought the M4 — the 12-gauge shotgun that functions the first time, every time. Its unique Auto Regulating Gas Operated (A.R.G.O.) system developed by Benelli engineers has dual stainless steel, self-cleaning pistons located just ahead of the chamber that operate directly against the bolt assembly.
The M4 Tactical comes standard with a Picatinny rail for optics, a fully adjustable ghost-ring rear sight and fixed-blade front sight and a black synthetic pistol-grip style stock. An optional standard stock is offered. With features and reliability that do it for the U.S. military, the Benelli M4 is an excellent choice for whatever you’re planning. And it’s fun for the entire family!
Now that’s a Benelli!
ITEM #4: 50 Bottles of Patron Silver Tequila… and some limes.
I don’t need to explain this one to you , do I? I didn’t think so. But, if you want my advice on this… if this sounded like it might not be a terrible idea… then you should skip it and read the next one down… Item #5.
ITEM #5: MOVE SOMEWHERE CHEAPER & BETTER! Hello, U-Haul?
Austin, Texas is a better place to live than wherever you are now. The average price of a home is just $229,145, but median household income is $57,109. It’s called “The Live Music Capital of the U.S.
Did you know Texas has no state income tax? Did you know Austin is on the banks of the Colorado River? Did you know the city has a desire to protect small, unique, local businesses from being overrun by large corporations? Or that it’s the City of the “Violet Crown” because of the wintertime violet glow of color across the hills just after sunset. Did you know comedian Lewis Black, Lance Armstrong, Sandra Bullock, Willie Nelson and Karl Rove all libe in Austin?
The Austin area includes Round Rock, Georgetown and Cedar Park, and it is home to numerous technology companies, most famously Dell, along with numerous Fortune 500 companies. The result is that median household income is just $2,000 less than the median income of Los Angeles, one of the most expensive metro areas in America to live. But Austin’s housing, transportation and food costs are very low compared to national averages.
How much do you NOT know about other cities in the U.S. that might be better places for starting over? My guess is there are quite a few. Well, you were tied down, stuck underwater in your house… but that’s been fixed for you. Maybe it’s time for an adventure?
~~~~~~
IN CONCLUSION…
Okay, listen to me for just a minute about all this… we’re grown-ups, right? We can handle the truth… right?
The monetary terms aspect of the mortgage settlement agreement is completely worthless to everyone. Three billion to provide refinancing for underwater mortgages? If that was executed perfectly, it MIGHT refinance 15,000 homes nationwide. Why even bother doing that? They’ll just be underwater again in another year anyway as prices all around them continue to fall.
Then there’s the $5 billion that’s to go to the states. Want to know something about that amount of money compared with the states and their budget deficits… it’s a meaningless amount. Remember the Obama stimulus bill… the very first thing the Republicans voted against in unison? Yeah, well it provided $500 BILLION to the states, in fact, that’s how all of our states have been managing to survive these last three years without looking like Greece. This year, there remains only $6 billion or so left out of that $500 BILLION… so the states spent $494 BILLION over last three years… and that’s states dividing up about $164 BILLION a year.
Now we’re talking about the states dividing up about $4.25 Billion… not even the whole five billion, because the Fed is stepping in to take $750 million to support its… incompetency habit? I don’t know, nor do I care.
And the $17 billion that remains… assuming it ever really shows up in the first place… is supposed to be for principal reductions, but why would that be the case. There’s certainly something that’s been stopping us from doing principal reductions, but it sure as heck isn’t money. We’ve spent $16 trillion in the financial sector. I’ll bet if they on Wall Street wanted us to reduce principal I’ll bet we would do it and in a damn hurry.
But, they don’t and we won’t… and that’s the way it is. As my friend from North Carolina likes to say, “thems the rules.” We’re not going to do any sort of mass principal reduction for at least two years… the pain is not great enough yet. It will be sometime, but that means at least two years, if not longer… if we ever do them. Don’t let me stop you from doing whatever you want to fight the system… but I only want to be in the solutions business at the moment… because that’s the only way to lessen the pain to come.
And that leaves us with the topic of this article… the $1500-$2,000 that they say may go directly to homeowners who were foreclosed on with fraudulent paperwork. Now I hear something about it could take three years… to do what, I don’t know. Get the checks cut… I’d believe that.
Is two grand an insane amount of compensation for having someone kick you out of a home you should never have been kicked out of… you’re damn right it is… but try to let it go… or hit the streets and go demonstrate… I don’t care which as long as you maintain your sanity and not let your anger overtake your good sense. There have been lots of unfair things happen to people thought history. And as bad as this is, and even with it getting much worse… we will survive it.
If you’re one of the displaced homeowners that’s hoping to receive the two grand… all I can say is, no… it isn’t even cliose to fair… and I’m truly soory this happened to you. Now, let’s keep going forward together, shall we?
Mandelman out.
Feb
13
Greece Will Leave EU… They Should Do It Now.
Athens is burning through the night.
EU is forcing 22 percent reduction in minimum wage.
20 percent of government jobs to be cut over three years.
Large reductions in retirement pensions.
And German Finance Minister Wolfgang Schaeuble’s assurances of more to come…
International lenders… that’s who is causing Greece to burn… they demand the people endure pain and more pain before they will release funds so that Greece can make bond payments to… International lenders. These new austerity measures come on top of two years of harshly imposed income losses and tax hikes. Headline unemployment is now over 20 percent. And the deep recession in Greece is only deepening. That’s all it can do.
The only thing I can think of that could make things measurably worse in a hurry would be to accept the EU’s sadistic conditions and reduce minimum wage by 22 percent and cut 15,000 government jobs. That should just about guarantee that the situation deteriorates into something straight out of Dante’s Inferno. Do what German Finance Minister Wolfgang Schaeuble is demanding and the economy in Greece will be in absolutely no danger of recovering… ever.
At least 100,000 of Greece’s citizens descended on the capitol in an attempt to stop the country’s lawmakers from bending over for the bankers once again.. Reports coming out of Athens say that the riots raged on for hours as police fired tear gas and stun grenades into the huge crowds. In response, black-masked protesters using gasoline bombs created a wall of fire, and more than 45 buildings in the city of Athens were burned overnight. As the lawmakers voted once again to accept the EU demands that harsh punishment be imposed upon the people, in exchange for more bailout funds, which can then be used to repay some of the same the bankers that are demanding the country be punished.
For God’s sake stop the madness. Tell Germany to go f#@k themselves. Leave the EU now. Default on the ridiculous debt and return to the Dracma. The world will survive, and it will become clear that they want Greece to remain in their death grip… not only do they want their precious bond payments, but should Greece default then we’d all get to see just who exactly is holding which Credit Default Swaps on what. And wouldn’t that be interesting at the very least?
The violence isn’t isolated to Athens anymore either. Six other Greek cities are reporting riots overnight, the worst in Volos where Reuters is reporting that the town hall and tax office have been badly damaged by fire.
And if this were the end of the austerity measures, that would beb one thing, but they are not… not even close. Greece has been surviving, if you can call it that, since May 2010, because of a €110 billion ($145 billion) bailout from EU’s central bank and the International Monetary Fund. Everyone knew the last bailout was a short-term band aid and here we are again with a new rescue-Greece-loan-package, this time worth €130 billion ($171 billion). How do you say “only slightly bigger band aid,” in Greek anyway?
In an interview published Sunday in Welt am Sonntag newspaper Schaeuble, quite obnoxiously said: “The promises from Greece aren’t enough for us anymore.” Yeah, I can see how Germany gets away with making comments like that. After all, they’ve hardly caused the world any problems over the last century or so. And I’m not interested in hearing about how long ago that was… it could have been yesterday to some of the survivors of the Holocaust with whom I’ve had the privilege of speaking.
Oh, hell… doesn’t everyone see what’s happened to our world over the last thirty some years? We’ve lost all compassion for our fellow man, and have become a world run by global finance ministers to whom being unable to pay a bond payment is a crime tantamount to treason. In the U.S. we’ve allowed financial services to become 40 percent of our GDP… and we wonder why Main Street doesn’t think the recession has ended? Forty percent of the United States of America shouldn’t be derived from any single source, how about that for a starting place kind of idea.
Dear Greece… The Dracma will be fine and so will the people, but not if you wait too long, or if you continue with a prime minister who is an ex-central banker. Toss him out, re-shuffle the deck and find someone who understands more than money. You have a breathtakingly beautiful country and we will all vacation there as soon as things calm down.
Mandelman out.
P.S. Watch the videos below… and pray for the people of Greece. I wonder what Fannie Mae and Freddie Mac will force the American people to undergo before we default on our debt to them. You see the parallel, don’t you? Fannie and Freddie refusing to do principal reductions even in light of half the country being underwater and much of it severely so, and yet… their answer is NO. We’ll remain in debt as they want it and we’ll get nothing more… NO SOUP FOR YOU. And for those of you that are thinking that Greece, an 11-hour plane ride away, has nothing to do with here… Hahahahahahaha… wrong.
Visit msnbc.com for breaking news, world news, and news about the economy
Feb
12
The Good, the Bad and the Ugly in the Mortgage Settlement
By now if you haven’t already heard that the 50 State AGs reached a settlement with the five major banks, then you’ve either been adrift at sea, or perhaps you’re just now coming out of a coma.
If either situation is true, I envy you. Personally, had you asked me last Thursday morning, I would have willingly agreed to have any one of a number of organs removed that day in order to have had a failsafe way to avoid the administration’s fustian charade of a press conference followed by the punditry’s entirely uninformed blather on the so-called “landmark” settlement to the yearlong negotiations.
I feel differently about things today though.
After spending my entire Saturday reading just about every article I could find claiming to analyze the terms of the settlement, I came away about as confused as a Christian Scientist with appendicitis…. or, how about a chameleon sitting on top of a big pile of Skittles. (See how confused I am? I can’t even decide which folksy phrase to use.)
First of all, let’s understand the bad news…
The deal, for the most part, provides the banks/servicers with a free pass as related to three categories of prior bad acts: Robo-signing, Servicer fraud, and Origination fraud. Now, as I understand it, criminal charges brought in the future are not included, New York Attorney General Schneiderman’s lawsuit remains in force, as does Delaware Attorney General Biden’s. Nevada Attorney General Mastow’s criminal indictments remain as well. But the rest… I believe, is history.
So, what did we get in exchange for letting the banks off the hook for accusations of forgery and rampant fraud in the foreclosure process? Well, it depends on who you ask. No final settlement agreement has been released, and they won’t release one until very last minute and only after it’s been approved by the court. There’s no two ways about it, they don’t want this to become any sort of public debate.
For letting the banks off the hook, we got a settlement for $25 billion, which I think is said to be the second largest such settlement in U.S. history, not that I care where its ranked, as far as that goes. It’s not enough by a long shot.
If you don’t already know the supposed breakdown of the $25 billion, it’s best to just keep it simple by only dividing it into its basic categories… $5 billion, $3 billion, and $17 billion.
There’s $5 billion that will be paid to states and federal government… $4.25 billion to states and the $750 million balance to the federal government to resolve it’s claims. Included in the states’ $4.25 billion, is $1.5 billion that is to compensate homeowners who lost homes to foreclosure between the beginning of 2008 and the end of 2011 and the consensus is that this is going to end up being $1500 – $2,000 per foreclosed borrower. And no one likes that.
There’s also $3 billion that’s supposed to be devoted to the refinancing of underwater but current mortgages, but this fund will only apply to mortgages owned by one of the five banks involved in the settlement… Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and Ally Bank/GMAC… and then, only to those current on their mortgage payments.
The remaining $17 billion is said to fund the exceedingly ambiguous, “Commitment to Foreclosure Relief Efforts,” portion of the settlement agreement. According to the government’s “National Mortgage Settlement” website…
“The servicers collectively agree to commit a minimum of $17 billion directly to borrowers through foreclosure relief effort options, including principal reduction for qualifying borrowers, short sales, anti-blight measures, and enhanced homeowner transition programs.
The principal reduction program will target homeowners who cannot afford their current payment but could make reasonable payments if the loan amount were reduced.”
Pardon me… I don’t want to be a spoilsport here, but aren’t those, for the most part anyway, the same sorts of things already supposed to be offered by the HAMP loan modification program? And doesn’t HAMP still have almost $35 billion left unspent?
It’s rhetorical, the answer to both questions is yes, so it’s beyond me why anyone would look at this and think that anything’s going to change this time around. It’s true there are some monetary penalties and increased oversight also described in the proposed settlement draft, but one such penalty I saw mentioned was $5 million… and well, it reminded me of Dr. Evil in the movie, “Austin Powers” when he was going to hold the world hostage for… ONE MILLION DOLLARS! (Click that link… it’ll be fun.)
There’s a lot I don’t understand about the thinking behind the principal reduction aspect of this settlement. The word on the street is that it’s going to help 500,000 homeowners, a figure I find to be… well, both nutty and chewy.
There’s the obvious questions like how could this meager amount of money make any difference whatsoever as far as helping anyone stay in their home? I mean, a few thousand bucks per falls kind of short, wouldn’t you think? And how are servicers going to determine who gets what and when and why?
But, beyond those sort of inquiries, I think it’s fascinating that the principal reductions only apply to portfolio loans, which are those on bank balance sheets, and some percentage of investor owned loans. As I understand it, Fannie, Freddie, FHA… the government owned loans have decided that they won’t participate in principal reductions… period. Not even a little bit.
And look… we’ve asked them to participate in such principal reductions several times now, and they keep saying no. I think we had better stop asking because I think we’re taking a major risk… what if they get angry at us, or even just become annoyed with us for asking? I shudder to think what they might do to punish us… I mean look at what Greece’s creditors are making those people go through over there. I mean, what if they did that to us… like they are now?
More than just money…
In addition to the $25 billion, the servicers are also agreeing to a new set of loan servicing and foreclosure standards. With the actual agreement still being withheld from the public, it’s impossible to know the ultimate outcome here, but there is an outline on the government’s Mortgage Settlement website of what is intended to be involved… and if you’d like, you can review it HERE.
However, if you want to keep things simple for the moment, I’ve summarized what I think are the most important components in my own Reader’s Digest version that follows:
On the issue of legal “standing”…
- Puts an end to “robo-signing,” which is defined as “signing affidavits filed with the court without personal knowledge.”
- Pre-foreclosure referral notice to borrowers, “14 days before a delinquent loan is referred to a foreclosure attorney.”
- Bank/Servicer shall properly document their authority to file foreclosure action, their right to ultimately foreclose, the basis for the authority to foreclose, and all of this is to be disclosed to the borrower in the 14-day notice mention above.
On the loan modification process…
- No more “dual tracking.” Notify homeowners of all loss mitigation options, and upon receipt of application for loan modification, evaluate for all available modification options prior to referral to foreclosure.
- Servicer shall offer loan modification if NPV positive. (I’ll have to address this one in greater detail separately.)
- Homeowners may reapply for HAMP if first time around was under old methods that didn’t include a pre-qualification process, and trial modifications are to be promptly converted to permanent modifications.
On the timing involved…
- Determine if homeowner is approved for loan modification within 30 days of receipt of completed loan modification application, and follow either HAMP or GSE timelines related to the loss mitigation process, whichever is shorter, for all loans. These include: time within which servicer must inform borrower that loan modification application has been received and whether any documentation is missing, and how quickly borrower is to be informed of approval/denial decision.
On post-foreclosure referral…
- Even after a loan has been referred to foreclosure, the borrower has 30 days after attorney letter is sent, to submit a loan modification application, in which case servicer must not seek a foreclosure judgment or sale until it completes review and determination of the application. If servicer offers a loan modification, it must continue to delay any action in the foreclosure proceedings until borrower accepts or denies offer, and if the borrower accepts, servicer must continue to delay any action until borrower fails to perform on the loan modification. And homeowners may accept verbally, in writing or by making first trial payment.
On servicer communication…
- Continues the Single Point of Contact (SPOC) rules, and talks about servicer ensuring timely and accurate communication of homeowner’s status to its foreclosure attorneys and/or court mediators.
- Servicers will be required to communicate with a homeowner’s authorized representative upon receipt of written request by borrower.
- Servicers must cease all collections efforts while reviewing a completed loan modification application, or which borrower is making timely trial payments under the terms of a trial modification.
- Banks/servicers shall develop loan portals so that at no cost, borrowers can check… the status of their loan modification application, and the status of applications must be updated every 10-business days.
On denials for modification…
- Denials for loan modifications shall contain the reasons for denial and a notice to borrower that he or she has 30-days to rebut the denial.
- If reason for denial involves the investor, the servicer must disclose the name of the investor and summarize reason for denial.
- If modification is denied for being NPV negative, servicer shall disclose in the denial notice, the gross income and property value used in the calculation.
- All denials for modifications must be submitted for additional independent internal review.
On the appeals process…
- There is now to be a detailed appeals process. After denied, homeowners have 30-days to appeal decision, UNLESS… the denial is ineligible mortgage, ineligible property, offer was not accepted by borrower, loan was previously modified.
- If denied for negative NPV, borrower can contest property value used in calculation by requesting a full appraisal.
- Banks/servicers shall respond to all homeowner appeals within 30-days.
- If homeowner is denied after appeal, the denial letter shall include a description of other available loss mitigation options.
On general requirements for servicers related to loss mitigation…
- There is language about the requirement that servicers maintain adequate staffing and systems for tracking documents submitted by homeowners, and maintain adequate staffing and caseload limits for SPOCs and employees handling loss mitigation.
- No compensation structures that encourage foreclosure over loss mitigation, no fees are to be charged for loan modifications, and homeowners shall not be required to waive any claims and defenses as condition of loan modification unless done to settle litigation.
On proprietary or “in-house” FIRST & SECOND LIEN loan modifications…
- All information related to applying for ”in-house” or proprietary loan modifications, whether FIRST OR SECOND LIENS shall be made public.
- All such programs shall be designed to produce sustainable loan modifications and affordable payments.
- As related to FIRST LIENS ONLY, banks/servicers shall track the outcomes, characteristics, and performance of proprietary loan modifications.
On short sales…
- Banks/servicers must make information on all short sale requirements publicly available., and servicers shall develop a process for short sales that allows homeowners to obtain a short sale evaluation in advance of putting home on the market.
- The letter confirming receipt of an application for loan modification shall include information on the servicer’s short sale process, and the servicer shall send the homeowner written notice of any missing documents within 30-days of receipt of application.
- In the event of a transfer/sale of a loan, servicer shall inform the successor servicer if a loan modification is pending, and all contracts for sale of loans must obligate the successor to accept and continue processing loan modification requests AND to honor trial and permanent loan modification agreements.
- Any contract for sale or transfer of a loan shall designate the homeowner as a third-party beneficiary. (I don’t see any language about “private rights of action” and will discuss this further below.)
On bankruptcy and loss mitigation…
- Banks/servicers cannot deny loss mitigation to a borrower on the basis of he or she being a debtor in a bankruptcy proceeding.
On fees charged related to default, foreclosure and bankruptcy…
- There is language restricting both internal and third-party fees charged to borrowers related to default, foreclosure and bankruptcy, stating that such fees shall be bona fide (which means, made in good faith without fraud or deceit), reasonable as to their amount, and disclosed to homeowners.
- Fee schedules shall be kept current and schedules shall explain each fee, state its maximum, and describe how each fee is calculated.
- Servicers may collect default-related fees if for reasonable and appropriate services, disclosed to homeowners and nor otherwise prohibited by law, the loan instrument or settlement agreement.
On attorneys fees charged to homeowners in foreclosure…
- Attorneys fees are also limited to work actually performed and shall not exceed what is considered “reasonable and customary.” When foreclosure action is terminated prior to final judgment, homeowner shall only be liable for work performed.
On late fees charged to homeowners…
- If a homeowner is two payments delinquent, but then makes a full payment that is applied to the current payment, the bank or servicer cannot charge a late fee on the older delinquent amount.
- And banks/servicers shall not collect late fees while borrower is under consideration for a loan modification… which borrower is making timely trial payments… or while short sale is being evaluated.
On third-party fees…
- Banks /servicers shall not impose unnecessary or duplicative fees on homeowners related to property inspections, property preservation, or property valuation.
- There is language limiting other categories of fees charged to homeowners, including preservation fees, inspection fees, BPO valuation fees, price of fees charged, referral fees, and mark-ups.
On forced-placed insurance…
- Banks/servicers shall not obtain forced-placed insurance without reasonable cause to believe a homeowner has failed to pay for property insurance.
- If homeowner pays into an escrow account, bank/servicer shall continue to advance payments to the insurer REGARDLESS of homeowner payments.
- Written notices shall be sent to homeowners reminding homeowner that obligation is due and payment has not been made, that bank/servicer may obtain coverage at homeowner’s expense, and cost may be significantly higher and only protect the mortgage holder.
- Forced-placed insurance must be purchased at a commercially reasonable price in all cases.
On community blight and tenant’s rights…
- There is language related to bank/servicer responsibilities and community blight, and requirements to comply with applicable state and federal laws related to tenant’s rights and foreclosed properties.
- Should a servicer make a decision not to pursue foreclosure, the servicer must notify the borrower and local authorities of the decision to release the lien and not pursue foreclosure on the property.
- Servicers must implement policies to ensure that REO properties do not become blighted.
If I set aside my cynicism, I have to say that those new servicer guidelines sound nothing short of awesome. But, the thing is… they also seem… hmmm… what’s the word I’m looking for… oh yeah… I know… IMPOSSIBLE. Like, when would those rules apply, exactly?
And I’ll tell you what… even though a huge part of me would like to see all of those new rules implemented for homeowners by the day after tomorrow, at the same time… I’d be on FIRE if servicers could comply with the new rules quickly because that would mean they could have done so all along.
Anyway, I’m not actually worried about that happening because there’s just not a chance in the world of that happening.
As I understand it, the settlement gives the banks three years to reach certain laudable goals. So, is that the plan here? Are we settling now and hoping that things get better by three years from now? Because that just isn’t going to work for anyone. And how will foreclosures and loan modifications and short sales go between now and then? More of the same? Not good.
A fair number of the articles published since the announcement of the settlement three days ago say that we should expect foreclosures to increase significantly now that the negotiations between the AGs and the bankers have settled. From an article in U.S. News & World Report…
Yesterday’s foreclosure settlement is a little like saltwater in the wound, says Scott Ryles, CEO of Home Value Protection, a California-based insurance provider. “[Home] seizures have been stalled awaiting this settlement,” he says. “The homes in the foreclosure pipeline are four times the REO [current bank-owned properties], and yesterday’s settlement is going to accelerate the seizure process. They have a total green light to seize those homes that are in the foreclosure process.”
Does this mean that the new servicing rules won’t apply to all of the homes already in the foreclosure process? Does it mean that robo-signing is still okay? If it is, there’s no way that the administration isn’t going to suffer significantly in the 2012 elections as a result.
The President’s National Mortgage Settlement Press Conference…
Watching President Obama’s press conference announcing the mortgage settlement four days ago, many people came away exuberant over what he had to say. I even had a friend call me bursting at the seams to tell me that Obama had just locked in his reelection in 2012 by virtue of that televised speech. Standing behind him on the podium were those that he was congratulating for helping to get the AG-Bank settlement in the can.
If you could have watched me while I was LISTENING to President Obama pontificate on how the settlement, “will speed relief to the hardest hit homeowners,” and also how it will, “end some of the most abusive practices of the mortgage industry,” I must have looked like someone being sprayed in the face with an aerosol can of Lysol disinfectant from seven or eight inches away.
Obama went on to say that also because of the settlement, we were “beginning to turn the page on an era of recklessness that has left so much damage in its wake,” and it was all I could do to suppress the urge to run screaming into oncoming traffic.
You see… I’ve watched this president closely these past three plus years. In fact, I’ve watched him so closely that were I any closer, I’d essentially be sitting on his lap. And he has, thus far, never failed to disappoint. At the State of the Union speech a few weeks ago, I really got angry at his utterly pointless rhetoric… so angry that I was ready to vote for Romney… or Mickey and Friends, for that matter… as long as it wasn’t him.
I don’t care what anyone says about Obama… he blew it when he spent a year debating what turned out to be a mediocre health care bill and ignoring the plight of homeowners. And his overall performance has left me with no expectations whatsoever whenever he speaks.
Then, however, the president started explaining that millions of Americans who had done “the right thing and the responsible thing by buying homes they could afford” and making their payments on time, were nonetheless “hurt badly” by the “irresponsible actions” of others.”
I was now on the edge of my seat… just who was it that so screwed over these fine people… let’s round them up and put them in prison, right?
On Obama’s list of those that caused the responsible ones such harm were, “lenders who sold loans to people who couldn’t afford them,” followed by, “buyers who KNEW they couldn’t afford them.”
Oh good Lord, I thought to myself, does the man have a learning disability?
But, next came “speculators looking to make a quick buck.” And, glory be to God, his list ended with “the banks.” I swear to you, Obama said that it was banks that caused such harm by packaging risky loans and “trading them off for large profits.”
He went on to say that “it was wrong,” and that “it cost four million people their homes.”
It was getting better by the moment. He explained that, “Many companies that handled these foreclosures didn’t give people a fighting chance to hold onto their homes. In many cases they didn’t even verify that these foreclosures were legitimate.
Obama was explaining robo-signing and he was calling it a crime. He was admitting that what had happened was wrong. I have to tell you that I got teary-eyed a couple of times. My heart was beating faster and faster.
“Some of them didn’t read what they were signing at all. We have to think about that. You work your whole life to buy a home. That’s where you raise your family, it’s where your kids memories are formed… that’s your stake, your claim on the American dream… and the person signing the document couldn’t even take the time to make sure that the foreclosure was legitimate.”
The president’s speech was the best one he’s ever given. He even explained why helping homeowners wasn’t just good for the homeowners but for everybody… in fact for our national economy. He even said that we’re Americans and we watch each other’s backs. We help those in trouble. We care about each other.
The bottom-line is, I could have literally written the speech President Obama gave last Thursday. And that realization is something new for me. I’ve sure as hell never thought such a thing before… that much is certain.
Attorney General Eric Holder followed the president, and then Shaun Donavan from HUD. Here’s AG Holder…
“Our investigations revealed disturbing practices. Far too often, we saw that servicers pushed borrowers into foreclosure even though federal regulations required servicers to try other alternatives first.
These servicers didn’t just hurt borrowers who might have been able to afford modified mortgages. They fueled the downward spiral of our economy and of communities nationwide. They eroded faith in our financial system. And they punished American taxpayers who have had to foot the bill for foreclosures that could have been avoided.”
And here’s something from HUD Secretary Shaun Donovan…
“It will also provide immediate relief to homeowners. Forcing banks to reduce principal on loans refinance loans for underwater borrowers and pay billion of dollars to states that can be used for direct help to consumers struggling today.”
In conclusion…
This is not the only piece I’m going to be posting today having to do with the mortgage settlement agreement between state AGs and the bankers from the five largest banks. I’m posting more than one because I think you need to absorb the whole picture from every angle.
There is no question that the utter mayhem in the housing market is Barack Obama’s personal failure. There’s also no question that the speech he gave at the press conference last Thursday was the first thing anyone has done to fight back against the “deadbeat homeowner” stereotype.
So, although I know there are many who find the settlement agreement a terrible travesty, I guess I’m not quite ready to go quite that far. Because as I’ve always said, if we could change the perception of the “irresponsible borrower,” as the cause of this crisis, we would find out fast that there are solutions all around us.
The settlement agreement is supposed to help one million households by reducing their loan balance reduced. There’s no way is there enough money in this settlement to do all that much for anyone. But Obama has said it’s a first step, and I’m willing to walk with him for a few more steps before I throw in the towel.
An additional 750,000 families or individuals who lost their homes to foreclosure will receive checks for about $2,000 each. Those who receive these restitution payouts do not give up their right to participate in future lawsuits. And I’m as offended by that idea just as much as if my own home had been stolen.
I also agree with some of what Yves Smith from Naked Capitalism wrote yesterday in her, “Top 12 Reasons Why You Should Hate the Mortgage Settlement.” For example, she’s undeniably right that if the mortgage task force announced during the State of the Union was serious, they wouldn’t have settled. No one settles and then investigates, so fair enough.
But, I suppose the truth is that I’ve never been as driven to see prosecutions as I have to see homeowners be treated fairly, presented options, and whenever possible, remain in their homes with payments that are affordable.
Nothing is going to take the situation we face in this country and set it right. And nothing is going to turn our economy around any time soon. I’m afraid we’ve let it go too far down for either of those things to even be possibilities.
So, I guess I’m choosing to believe that this can be a beginning for something good to build on, and that President Obama didn’t just give a speech for political reasons, but that he believed what he said, and it was all he could do.
Not that it doesn’t also suck. Not that there isn’t a lot wrong. But regardless… I started my blog to break the “irresponsible borrower” stereotype and last Thursday the nation moved in the direction I’ve hoped against hope that it would go.
So, I’m choosing to be happier about tomorrow than I was the day before. There is more to come…
Mandelman out.
Feb
09
The Top Twelve Reasons Why You Should Hate the Mortgage Settlement – Yves Smith
Yves Smith asked that this be cross-posted and I am happy to do it.
I’m certainly not going to write about it. I haven’t even read her piece yet and I’m not sure I’m going to. But, by all means, feel free. Click link below to read the rest on Yves’ site. I can’t do what she does and respond to this stuff with thoughtful and indignant outrage.
Here’s the deal… I wrote a year ago when the whole AG/banker political circus started that I was not going to follow it, not going to write about it, and certainly not care about it. It was a colossal waste of time by childlike participants who set out to embarrass themselves and succeeded. Now everyone is upset that it didn’t turn out to be more. Why? It’s to be ignored… unless anyone feels like wagering on any of its promises, in which case, I’m your huckleberry and we should talk.
Remember how the whole thing started… AGs: We want $30 billion. Banks: No, $5 billion. AGs: okay $20 billion. Banks: No, $10 billion. AGs: $20 billion. Banks: $10 billion. 20… 10… 20… 10… 20… 10…
Like watching two 9 year olds. No math involved. Just a stupid tug of war over nothing. Might as well have set the $20 BILLION ON FIRE! That’s not a joke, I mean it… set it on fire for all the impact it will have… assuming it ever gets spent, and I’ll bet a whole bunch that unless the money is going to banks, it’s not getting spent.
Remember HAMP was to be $75 billion… then reduced to $50 billion… then reduced to $37 billion. And we spent $2.4 billion and essentially all of that went to servicers. Oh, but I’m sure the money is going to be handled very efficiently. Just watching the jockeying is enough to turn my stomach. Children… badly behaved children. And Obama you have the leadership skills of a gerbil, the instincts towards transparency of a criminal. How dare you trumpet this as a success… treat the American people like their idiots… you should be ashamed.
Sorry, it’s Yves time…
Mandelman out.
The Top Twelve Reasons Why You Should Hate the Mortgage Settlement
As readers may know by now, 49 of 50 states have agreed to join the so-called mortgage settlement, with Oklahoma the lone refusenik. Although the fine points are still being hammered out, various news outlets (New York Times, Financial Times, Wall Street Journal) have details, withDave Dayen’s overview at Firedoglake the best thus far.
The Wall Street Journal is also reporting that the SEC is about to launch some securities litigation against major banks. Since the statue of limitations has already run out on securities filings more than five years old, this means they’ll clip the banks for some of the very last (and dreckiest) deals they shoved out the door before the subprime market gave up the ghost.
The various news services are touting this pact at the biggest multi-state settlement since the tobacco deal in 1998. While narrowly accurate, this deal is bush league by comparison even though the underlying abuses in both cases have had devastating consequences.
The tobacco agreement was pegged as being worth nearly $250 billion over the first 25 years. Adjust that for inflation, and the disparity is even bigger. That shows you the difference in outcomes between a case where the prosecutors have solid evidence backing their charges, versus one where everyone know a lot of bad stuff happened, but no one has come close to marshaling the evidence.
The mortgage settlement terms have not been released, but more of the details have been leaked:
1. The total for the top five servicers is now touted as $26 billion (annoyingly, the FT is calling it “nearly $40 billion”), but of that, roughly $17 billion is credits for principal modifications, which as we pointed out earlier, can and almost assuredly will come largely from mortgages owned by investors. $3 billion is for refis, and only $5 billion will be in the form of hard cash payments, including $1500 to $2000 per borrower foreclosed on between September 2008 and December 2011.
Banks will be required to modify second liens that sit behind firsts “at least” pari passu, which in practice will mean at most pari passu. So this guarantees banks will also focus on borrowers where they do not have second lien exposure, and this also makes the settlement less helpful to struggling homeowners, since borrowers with both second and first liens default at much higher rates than those without second mortgages. Per the Journal:
“It’s not new money. It’s all soft dollars to the banks,” said Paul Miller, a bank analyst at FBR Capital Markets.
The Times is also subdued:
Despite the billions earmarked in the accord, the aid will help a relatively small portion of the millions of borrowers who are delinquent and facing foreclosure. The success could depend in part on how effectively the program is carried out because earlier efforts by Washington aimed at troubled borrowers helped far fewer than had been expected.
2. Schneiderman’s MERS suit survives, and he can add more banks as defendants. It isn’t clear what became of the Biden and Coakley MERS suits, but Biden sounded pretty adamant in past media presentations on preserving that.
3. Nevada’s and Arizona’s suits against Countrywide for violating its past consent decree on mortgage servicing has, in a new Orwellianism, been “folded into” the settlement.
4. The five big players in the settlement have already set aside reserves sufficient for this deal.
Feb
09
Foreclosing on Oscar… Mandelman’s List of Best Picture nominees
Another tradition at Casa del Andelman is our Academy Awards Party, held each year on the night the stars come out… for Oscar. Yes, it’s the time of year when we instruct the staff to roll out the red carpet, polish the chandeliers, dust off the champagne fountain, my wife throws on an evening gown, I always appear in tux and tails… are you buying any of this? No?
Okay, so would you believe my wife makes a huge amount of chili in the crock-pot along with some delicious cornbread… and I prepare my award-winning specialty… cocktail weenies in my secret, special barbeque sauce. (I’d tell you what’s in it, but then I’d have to kill you.) They’re best when eaten with a toothpick, by the way… so tangy… mmmm, can’t wait.
The Andelman bar is always pretty much stocked, but everything else is potluck, so someone usually shows up with the ambrosia salad, and others bring whatever else. We go ahead and spring for the paper plates and plasticwear, and we get the good stuff… you know the Chinette, with the forks and spoons that look like silver even though they’re not, and the red plastic cups.
I’ll tell you what… some years there’s been so much class oozing at our place that it gets to feeling like you’re at a real honest-to-Henry, Hollywood-type soiree.
But all of that is not what keeps bringing people back to our house on Oscar night year after year. Nope, what everyone comes to our Academy Awards gala for is the gambling. And we start ‘em young too… I think about 9 years old, if I recall correctly. Never too young to have your money taken from you, that’s what I always say. (Okay, so I’m kidding about that last part.)
I’m not sure how the whole thing got started, it must be about 20 years plus now that we’ve been doing it, but we make up special ballots for a whole bunch of categories and as our guests arrive, they ask for their ballot right after they say hello… grab a pen and start making their picks.
That’s when the house really comes alive… it’s like that scene from “Guys & Dolls”…
“I got a horse right here, his name is Paul Revere, and there a guy who says that if the weather’s clear… Can do… Can do…“ Remember?
“I didn’t see ‘The Help’… did anyone see that?”
“Yeah, I did.”
“Was it good?”
“Yeah, I liked it… kind of sad at the end though.”
“Would I have liked it?”
“I don’t know, probably.”
“What are you voting for in the ‘Documentary Short’ category?”
“I’m not telling you.”
“Come on…”
“Nope, you’ll just have to guess like the rest of us.”
“Let me see.”
“No, get away from me.”
“Why did we include ‘Best Foreign Film’ again, I thought last year we said we weren’t going to do that anymore… who sees foreign films… no one.”
“I saw one of the foreign films last year.”
“You did not, you’re lying.”
“I am not.”
“What’d you see?”
“Jodaeiye Nader Az Simin.”
“You are so lying.”
“So what if I am?”
“Hey, does anybody remember what’s the difference between sound editing and sound mixing? Didn’t we look it up or something last year? I know someone told me last year but I can never remember. Honey, would you hand me my iPad.”
“No, you can’t use an iPad, you’ll cheat and look up who the favorites are.”
“Oh my God, I will not. How could you say that about me?”
“Because I know you.”
“I hate you, did you know that about me? Go sit over there with your friend.”
“Fine.”
Yep, it can get a little heated at times, but no one has physically harmed anyone to-date, and the kids have a ball helping the grown-ups guess at which movies are going to be this years’ Oscar winners… while they listen to their parents make idiots out of themselves.
Until mom or dad needs to pick a winner in the Animated Film category, and then all the parents start looking around for their kids… “Meagan, come in here please. I need you.”
It’s $10 to play, by the way and the one who gets the most right, splits the pot with the one who gets the least right… plus there’s usually a bonus category or two that each win ten bucks or something like that. I won at least one year… took home $180, if I remember correctly… or maybe it was only $80… or maybe we split the $180… I don’t know. The kids always win something too… it’s a real good time all around. If you’re in my neck of the woods, come on by… there’s plenty of food and drink… and we’ll take your ten bucks and hand you a ballot, if you’d like.
Well, it seems to me that some years are better than others, when it comes to the Academy Awards, we usually show our age by engaging in a few discussions that lament the fact that they just don’t make movies like they used to very often… but this year we’ve got quite a list of Best Picture nominees… pretty compelling stuff, if you ask me.
I haven’t actually seen any of them, but I’ve gone ahead and described them, so you can see the candidates through my somewhat jaded perspective… and my list is likely a little different than the others you’ll run across… I don’t know why but other reviewers often miss what the movies are really about. Me… why I see a little bit of the foreclosure crisis in everything, don’t you know.
There are 17 days to go, so you better get to the movies in a hurry if you want to be in the know come Oscar night… Sunday, February 26th.
And now…
This year at the 84th Annual Academy Awards, the nominees for Best Picture are…
“The Con-Artist”
The Scary Scummers story, filmed in black & white. Growing up with prominent professors of economics at the University of Pennsylvania as parents, and the nephew of two Nobel laureates in economics, a young Scary Scummers realizes he can’t follow the conversations at the dinner table. In one scene, after scoring a combined 480 on his SATs, he overhears his parents saying the family’s genes have obviously skipped a generation.
About to start a job sweeping up in a bagel bakery, his life takes a dramatic turn when a friend fakes his resume. Because of his last name, no one thinks to check, and next thing we know, he’s chief economist at the World Bank. When a charismatic, but inexperienced community organizer from Chicago’s south side inexplicably finds himself in the Oval Office, Scary convinces the new president, who knows nothing about economics, that he’s the one who should drive the nation’s economy. And he does… straight off a cliff. (Warning: May cause motion sickness.)
“The Defendants”
This fantasy-drama follows a dozen Bank of America senior executives as they are forced to travel from courtroom to courtroom all over the country defending hundreds of lawsuits of all kinds. Each time the bank execs think things are going well, but invariably lower level employees are called to the stand, completely blowing the bank’s defense.
As the judgments mount into the billions, new suits are being filed each day. Law school enrollment skyrockets as the country starts churning out lawyers all anxious to take their shot at BofA or any of the too-big-to-fail banks. As the law firms and the companies that support the new industry grow, so much money is being made beating the banks, that the U.S. economy starts turning around and soon the middle class is debt free. 99% on Putrid Potatoes: “It’s the feel good movie of the year!”
“No HELP”
The story centers on attorneys litigating on behalf of homeowners in foreclosure throughout California where judges actually favor MERS’ assignments, sincerely do not care who owns which house, and believe that “securitization,” is what happens when having a home alarm system installed.
As their clients become more and more dissatisfied, they start blackmailing the lawyers, threatening to file bar complaints in order to get their money back. The frustrated lawyers finally turn to their own state’s bar association for support, but when they do the bar promptly has them arrested. Filmed in a hand-held style best described as “gritty realism,” the film is based on a true story.
“HUGE”
In this 3-D animated fantasy, Crazy Jamie Diamonds and Johnny Stumpedwells travel together to find Lord Blankcheck, in the hopes that he will do God’s work and tell them how to find King Angelo Mozillion, the one they call Too-Huge-to-Jail. Along the way they come across all sorts of familiar characters including GS egghead, Fab Faberge, who keeps repeating, “I did nothing wrong, but I could have been more careful,” and Kenny Lewser, who roams the country wide belching as he says, “I can’t believe I bought the whole thing… twice.” Rated PiG.
“2:00 PM in Paris”
When Frugal Williams lost his job as a loan officer in 2008, he knew he was in trouble. But then one day, after a year spent living on his savings and a few loans from his parents, he’s about to put his Paris, Texas home up for sale, until he finds himself watching the country’s recently elected president describe a new federal program designed to help him save his home.
That night, he has the best night’s sleep in over a year, but he wakes up on a different planet. His life is turned upside down from the moment he sends in the package of forms to his his servicer… First Infidelity Bank (FIB). Theater owners across the country report audiences screaming out, “No! Stop! Don’t!” as he slides the package into the Fed-Ex drop-box.
Soon his life is entirely consumed by requirements of his loan modification. Unable to keep up, his wife is forced to quit her job, as well, in order to help him, and soon the Kinko’s bills for faxing and photocopying drive the family into bankruptcy. Now there’s a sale date. But with Hitchcockian flair, no one knows what will happen for sure… tomorrow at “2:00 PM in Paris,” TX. (NC-17 – Not for viewers over 17 yrs.)
“Moneyballers”
This futuristic thriller stars ex-Morgan Stanley bond trader Howie Hubler, the man who lost Morgan $9 billion in a single trade, inadvertently kicking off the new favorite competitive-craze among the country’s wealthiest individuals. The year is 2016, and every megalomaniac hedgefunder wants to be a “Moneyballer.”
In games of Moneyball, the whistle blows and seated at screens equipped with trading platforms, the uber-rich compete to see how fast they can irrationally pump up various stocks, bonds and/or commodities in order to wipe out the retirement savings of middle class Americans, referred to as “pawns,” who follow them as prices rise to disastrous ends.
In an opening scene, we see Hubler in his Central Park South penthouse. He is laughing almost uncontrollably. “There’s no question, it can be expensive to play. Last week, I had to throw away $4 million and change just to bankrupt this small business owner from New Rochelle. He was quite guarded and pretty tenacious, but in the end he took the bait. When everything collapsed, I swear to God, I think he and his wife both soiled themselves… I’m not kidding… I almost choked on my foie gras.”
“The Free for Life”
In this reality-based comedy, John and Jane Q. Public are seen taking their shot at the lottery wheel of justice. Couples appear before judges in courtrooms across the country hoping to wipe out their mortgage and walk away with a free house. The laughs come from watching the pro per/pro se litigants go up against lawyers from JPMorgan Chase and Wells Fargo, attempting to explain to judges why it matters that the assignment of the deed of trust was illegally notarized, and why it doesn’t matter that they haven’t made their mortgage payment in 36 months.
“War House”
Brighton Badass and his son, Redneck, have lived in their home all their lives and they don’t plan on leaving it just ‘cause some bankster says so. In an opening scene, we see and hear Bright talking on the phone, “Well, you just tell the sheriff… she comes out her looking for me and my boy to leave, she better be armed to the teeth, ‘cause I sure will be. That’s all we invest in out here in the woods… guns and gold,” he laughs as he hangs up the handset.
The camera pulls back and we see that this home is more than just well fortified. There are snipers in trees, and trenches dug six feet deep for 50 yards all around the property. Bright pops a few pills in his mouth and washes them down with some white lightening whiskey. Then he blows his whistle and the hundred or so men, women and children come out from their positions to receive their orders.
The “War House” trailer, voted #1 in 2011, ends when the camera zooms in on Redneck Badass as he says laughing, “Come on, ya’ll… sheriff’s a comin’ so get yourself some amo… time to show the law how we practice foreclosure defense round here. They robo-signing, so we robo-shooting.”
“Extremely Quiet & Incredibly Corrupt”
This semi-historical docudrama chronicles a year of negotiations between 50 state attorneys general and five bankers. From the beginning we see that neither side knows what in the world they’re doing, as the discussion mostly consists of one side saying, “$20 billion,” and the other side yelling back, “$10 billion.”
Along the way rumors start to swirl as the senseless drama leads to enormous amounts of press coverage, only to end with nothing being accomplished and little being disclosed. This film concludes Steve Stealbanks’ social commentary on meaningless media hype and corrupt, unfeeling politics, a quadrilogy that began with, “OMG IT’S Y2K,” followed by, “WMD & ME,” and then, who could ever forget, “Hope & Change, 2008.”
OMG, did you see what she was wearing? See you on the red carpet!
Mandelman out.
Feb
07
IT’S UNANIMOUS! AZ’s SB 1451 Passes Senate Banking Committee
Arizona’s hundreds of thousands of hopelessly underwater homeowners are having the best day they’ve had since the “days of equity” back in 2006. Even with opposition from professional obstructionists to change-in-anything-mortgage-related like MERS own William Hultman, and other banking industry lobbyists including James Lundy, president of the Arizona Bankers Association, among others… the state’s Senate Banking & Insurance Committee’s hearing this afternoon on SB 1451, the Housing Finance Reform Act of 2012, went exceptionally well. The bill not only passed, but it passed unanimously… ’6′ Ayes to ’0′ Nays.
Hultman flew in to Phoenix last night around 7:00 PM specifically to testify at today’s hearing… and boy were his arms tired. For those familiar with him from seeing him on C-SPAN and the like, I can tell you that he looks a lot shorter… when he loses.
Actually, Hultman didn’t have too much to say about the bill’s revolutionary approach to revitalizing the state’s increasingly water-logged housing market, which has left over 500,000 Arizona’s homeowners in a hopelessly immobile state. He said a few things about how the new state program would add complexity and that MERS remains committed to working closely with Sen. Reagan to address the possibly unforeseen and snugligby pomid gibble hmzzzzzzzz … Oh dear. Sorry about that. Nodded off there for a moment.
Lundy, a silver-haired smooth talker that one imagines looks marvelous on the links or by the courts in crisp tennis whites delivered the standard banking industry objections… “I fear it will cast a pall over all lending in Arizona for at least a millenium…” I’m paraphrasing, of course.
Other industry representatives were slightly more vocal expressing concerns that came across as pure scare tactics. The state can be sued by taking title to a home for any environment damage? Under the program the state takes title for about an hour… maybe two. And, of course, all echoed how it’s unconstitutional and in general just not fair.
Sen. Reagan was quite adept at fielding all of the statements made in opposition to the bill… she was calm… entirely confident… and best of all persuasive and I think the rest of the committee fed off of her obvious conviction that the State of Arizona has seen enough of the federal government’s response to the housing crisis and needed to now take matters into the state’s hands. She made very clear that her bill used private money, cost taxpayers nothing, and offered the equivalent of a much needed rescue ship to people adrift in a sea of unfairness created by the national players in the mortgage industry.
Reagan’s peers on the committee were impressive in their resolve as well, and as the Ayes had it, the bill seemingly passed the committee effortlessly and with a couple of revisions to amendments and the like, is headed to the full senate. Senator Robert Meza (D-W. Phoenix), in explaining his Aye vote said that “the bill obviously creates tension… and if there’s one thing this problem needs it’s tension.”
Here here!
The Arizona State Senators that make up the Senate Banking & Insurance Committee: Sen. Gray, Sen. Schapira, Sen. Meza, Sen. Smith, Vice-Chairman Reagan, and Chairman McComish, and although it’s only the beginning and there are certainly battles ahead, it was inspiring to see a bi-partisan group of politicians courageous enough to stare down the empty threats and scare tactics of the banking industry and put the interests of constituents above everything else.
Mandelman out.
Feb
07
OneWest Bank DOES IT for Lisa in Massachusetts! (DOERS ROCK!)
It all started early last Saturday morning when I got a call about a homeowner in Massachusetts scheduled to lose her home to foreclosure sale in just two days…
Now, I don’t mind telling you that I had just posted a DOERS ALERT the day before, and to be honest they’re all a lot of work and I really didn’t want to have to write another one the very next day… I was exhausted and looking forward to sleeping for the next couple days.
The client’s name was Lisa Ferrecchia, who I was told was one of the thalidomide babies. At the time, I did’t know if that meant she was part of a sister singing trio… you know… The Thalidomide Babies,” or what, but I’d soon find out.
So, I read about thalidomide and OneWest Bank most of the day and then started writing a DOER ALERT, which was finally ready to post at about 5:30 PM on Sunday afternoon. I was beyond tired and feeling kind of awful, if you must know. I hadn’t been outside of my study for yet another weekend straight… my wife wasn’t saying anything, and my daughter was saying she missed me. But what could I do? I mean, seriously? Lisa Ferrecchia’s home was to be sold the very next day at 3:00 PM in Massachusetts.
Plus, in Massachusetts, do you know how they do it? They auction the home off right on the soon to be ex-homeowner’s front lawn, for all to see. I’ll tell you what… that is some 17th century nonsense right there. As in… Me thinketh she is a witch! Aye, a witch! Might as well be making the homeowner walk around with a scarlet ‘F’ on his or her clothing. I figured that Lisa had probably spent a lifetime seeing people stare at her, and the thought of her home being auctioned off in front of her neighbors… well… that just was not going to happen. Not today.
I had spoken to attorney Glenn Russell early on Saturday, and told him to have a skeletal bankruptcy filing ready just in case. I had just spent the whole weekend behind closed doors in my study typing and posting at 5:35 PM on Sunday, I wasn’t at all sure my DOERS would DO it in time… or even could DO it in time. And if that was the case… why the heck did I just blow the whole weekend with my family… again. I was conflicted and unsure of everything.
To make matters even worse… and I wouldn’t normally share this publicly… but Steve Diberrt of MFI Miami called me on Sunday evening… he was in Denver for something foreclosure-related. He had read my DOER ALERT post and asked me what I was doing about Lisa Ferrecchia. I said I posted a DOER ALERT and my DOERS would handle it. He asked if I had called Glenn Russell and if Glenn was going to file a TRO, etc. etc. to stop the next day’s sale. He asked a bunch of other technical legal questions until I had a headache.
I said there wasn’t time for any of that, but my DOERS would handle it. He wasn’t buying any of it. I said, don’t worry… I’m sure it’ll be fine.
And he replied: “Dude, I think your nuts. I’ll call Glenn and find out what else can be done.” He hung up.
“Oh, ye-of-little-faith-shithead,” I thought to myself.
We all know what happened next, right? OneWest Bank’s CEO emailed me late on Sunday night saying that he’d look into the situation the next morning… and the next morning OneWest contacted Lisa… told her that the sale had already been postponed… and that they’d do everything they could to get her a loan modification that would allow her to keep her home. I wrote to tell everyone the good news, and said that I was certain that OneWest Bank would do exactly what they had promised. Of course, not everyone was sure whether I was kidding… I was right… or I was a fruit loop.
One West said that they would let Lisa know by today… Tuesday, February 7, 2012. And so here we are…
OneWest Bank Called Today and Lisa Just Couldn’t Be Happier!
Yes, ladies and gentlemen, it’s a HAMP modification… 2 percent for 40 years.
Her mortgage payment went from $2700 and change… to $1500 and change.
~~~
DOERS you DID it again!
(Hey, Dibert… how do you like me now?)
Mandelman out.
Feb
05
MM EXCLUSIVE: AZ Bill Writes Down Underwater Loans for Homeowners – A Mandelman Matters Podcast
It’s an issue that begs to be turned into a riddle, such as… Who lives hopelessly underwater and in the desert at the same time?
Answer: Arizona’s homeowners.
Over this past year, Arizona State Senator Michelle Reagan (R) began a careful study of what appeared to be some very frightening numbers about her home state, but she was never willing to view them as a fait accompli.
“In Arizona we don’t ignore problems, nor do we pretend they aren’t there,” Sen. Reagan explains. “Obviously, the federal programs aren’t going to address our state’s needs, and that’s fine. We’re perfectly capable of doing what’s best for Arizona.”
This past week Sen. Reagan brought her historically significant solution bill, SB 1451, to the Arizona State Senate.
According to CoreLogic, as of the third quarter of last year, more than 50 percent of Arizona’s homeowners were underwater, meaning they owed more on their mortgage than their homes were worth… 52 percent, to be specific.
If that weren’t bad enough, according to the latest Case-Schiller survey, which uses data from the Federal Housing Finance Agency (“FHFA”), by the third quarter of 2012, home prices in the Phoenix metro area are expected to drop another 9.6 percent, and the same study shows an additional 3.4 percent drop a year after that.
And the really frightening thing about such forecasts is that for at the last four or five years, the actual numbers have, in all cases, exceeded forecasted amounts. The reverse is never true.
Now, run a tape on all that and you’ll be looking at 65 percent of Arizona homeowners being underwater by the third quarter of 2013, then add in the eight percent or so to account for the homeowners “effectively underwater,” meaning they would be underwater were real estate sales commissions and the like factored in, and we’re talking about well over 70 percent of Arizona homeowners underwater within a couple of years, which is to say nothing of the amounts involved. Recently, one Arizona homeowner wrote to me about the sale of a home across the street from his for $310,000. He was very upset. His mortgage, I later learned, was $860,000.
Why hadn’t he just walked away, was my immediate question. His response was the his adjustable rate mortgage had been reduced annually and was now at 2.25 percent. Were interest rates to rise even to five percent and he’d be out of there in no time flat.
Want to know why there aren’t more strategic defaulters in places like Phoenix, AZ? Now you know.
So, what’s the federal government’s response to the soggy situation? Well, last fall the Obama Administration loosened restrictions on the HARP program, so now it can be used to refinance your home no matter how far it’s underwater… 100 percent, 200 percent… 300 percent… it doesn’t matter. Of course, you’ll still be just as underwater as you were before, but you might shave a point or two off your interest rate, which might save you a couple hundred bucks a month… maybe.
Not surprisingly, the new HARP program has not exactly taken off like gangbusters in Arizona or anywhere else for that matter. And just imagining someone signing a promissory note that obligates one to pay an amount two or three times the market value of the property, will give you an idea why it doesn’t happen all that often.
Moody’s now pegs Arizona’s recovery in the housing markets at 2034, without adjusting for inflation. One might as well have forecasted recovery as coming… never. When 70 percent of a housing market is underwater, and recognizing that under normal circumstances at least two-thirds of home buyers are also home sellers, it’s easy to see that future demand will look nothing like demand seen in past years.
More homeowners realizing they are hopelessly underwater and walking away would seem a certainty. Costs associated with foreclosed homes being incurred by the state are mounting beyond all previous forecasts and the resulting state budget deficits are becoming increasingly difficult to close. By 2013, many state economies will be caught up in negative feedback loops that will prevent recovery as, for example, requisite budget cuts and tax increases further surpress consumer spending.
Foreclosures breed foreclosures…
So, after five years of being told that next year would be better… Sen. Reagan had enough.
First, she set out to learn everything about the economic meltdown and the situation related to foreclosures and underwater homes, and once she understood the dynamics, she set out to find a way to free homeowners in her home state from the downward spiral in which they were clearly locked, because she came to understand that otherwise the state’s future could only be bleak. She assembled a team of experts in various disciplines and the result is found in Senate Bill 1451, The Housing Finance Reform Act of 2012.
I like to refer to it as… Raising Arizona… or, sometimes as, “The shot heard ’round the world.” You’ll see why soon enough.
Senator Reagan’s bill represents BREAKTHROUGH THINKING as far as solutions to the housing crisis are concerned. To be blunt, there’s been nothing like it proposed anywhere as yet, nothing close… but that’s not going to be the case for long… already other state legislatures are taking a close look.
Want a little taste? How’s this just for starters…
- Writes down mortgage balances for Arizona homeowners to up to 125% of current market value.
- Lowers monthly mortgage payment by at least 33%.
- NO COST to taxpayers, not a dime.
- No credit score requirement, borrower must be current on mortgage or be able to bring loan current.
But, I’m not going to spoil it for you… CLICK PLAY BELOW and listen in on the conversation with Senator Michelle Reagan, along with key members of her team, Ira Hecht, Steve Kravitz and of course, yours truly, as we talk all about… what the bill is all about.
(You’ll also find a copy of the bill below.)
Mandelman out.
*******
ATTENTION ARIZONA HOMEOWNERS…
IF YOU WANT IT, YOU HAVE TO SPEAK OUT!
Sen. Reagan NEEDS YOUR SUPPORT to get this revolutionary mortgage financing bill passed into law. It’s crucial that you email your state representatives and tell them how important this bill is to your life and your future.
To find email addresses for your state assembly and senate representatives…
CLICK HERE.
It’s easy and only takes a few seconds, I promise.
Feb
04
Attorney Wins “Free House” in Case Before 9th Circuit Court of Appeals – A Mandelman Matters Podcast
When it comes to defending homeowners against wrongful foreclosure, or suing banks on behalf of homeowners, Attorney Nathan Fransen, of the firm Fransen & Molinaro in Corona, California is a very smart, experienced and dedicated attorney. This I know for a fact.
How do I know this? It’s simple. Over the last few years, I’ve watched him literally bang his head against the wall as California’s courts have unabashedly approved of MERS, disregarded flaws in the securitization process, not cared one bit who signed what, and in general ignored everything having to do with foreclosure cases except the fact that the borrowers hadn’t made mortgage payments in so many months. He argued complex legal theory and simple fraud… he was honing his approach, and although he had his share of frustrating days, he was careful which cases he took on, never following an unproductive path twice. I’d refer potential clients to him fairly often, and in most cases, he’d talk them out of filing suit against whoever they had thought they had wanted to file suit against.
Don’t tell him I said it, but he’s also just generally a very smart person, you know, paid attention in school kind of person… fairly well-read… knew about things outside his area of expertise… the whole bit. He also had both the patience and ability to explain things about the law to me when I was frustrated over how things weren’t working. When someone can keep complicated things simple, you know they understand them inside and out… and when they can hold their own in a debate with me… well, I’m sorry but that’s saying something.
So, he called me a few weeks back and told me quite nonchalantly that he’d had a very good week. I was happy to hear that someone had. What was so good about it? Well, he had won two of his cases and at least one would result in his client getting a “free house.” The other might be a free house too, or maybe just a pretty good size pile of money. It’s true… Nathan had gone in front of the 9th Circuit Court of Appeals… his first time, by the way… and beaten US Bank, hands down… in Causey v. US Bank.
It seemed to me to be an impressive win, because he was appealing after losing in the lower court. He’s smart, patient and methodical… three things that tend to pay off eventually, but he wasn’t just going up against US Bank… no, he was going up against the dreaded “free house,” meaning that if the court ruled in his favor, his client would no longer have a mortgage secured by real property. At best, the amount owed would be unsecured debt, like credit card debt, and that would mean it could potentially be discharged in bankruptcy.
But, don’t jump to conclusions because it’s not what you’re thinking.
He showed me how I could actually listen to him argue the case in court, the 9th Circuit has audio files of the courtroom proceedings online, and listening to it was fascinating. So I figured out how to download it and then convert it to a file format that I could put inside a podcast. Then I asked him to comment before and after the case so listeners would really get valuable information and be able to learn from his experience.
I don’t want to spoil it, so I won’t say anything more… well, okay I’ll say one more thing. As I listened to him argue his case in court, one thing came through loud and clear: Judges hate the dreaded “free house.”
This is one Mandelman Matters Podcast that you definitely don’t want to miss. Nathan sets it up in the beginning, then you hear the audio of the actual courtroom arguments, both his and the lawyer for US Bank… and then he and I argue various topics such as whether robo-signing should be prosecuted and by whom, along with several other things that I know are frustrating homeowners today.
This is the real deal… you could call it “reality podcasting.” Turn up your speakers, sit back, relax, and listen as three justices from the 9th Circuit Court of Appeals struggle to balance the rule of law against the dreaded “free house.” I hope you enjoy it as much as I did…
CLICK BELOW:
Mandelman Out.
Feb
03
Foreclosure Politics Here and Across the Pond – Professor David Coates on a Mandelman Matters Podcast
Since 1999, Professor David Coates has been the Worrell Chair of Anglo-American Studies at Wake Forest University. Prior to joining the faculty at Wake Forest he directed the International Centre for Labour Studies, and was Professor of Government at the University of Manchester in the United Kingdom. He also writes a blog at www.davidcoates.com, and it’s absolutely a fantastic read in all cases.
I found Professor Coates’ blog last year on my birthday as I was searching the Web for like voices and when I came across his, I felt like I had been given a birthday present. And I wrote to him at the time and told him exactly that.
David’s latest article, for example, is titled: Republican Truth and the Real Truth: GSEs and the Housing Bubble.
David and I have been communicating over the last year and I invited him to join me on a podcast because he offers points of view that are as fascinating as they are erudite and well-considered. They are also not the same thing you’ve heard before, as they cover the foreclosure crisis both here in the U.S and in the UK. He also talks about the global financial crisis and the political ramifications that are manifesting themselves in this country and frankly, what he says is important at every turn.
David has also written two books, both of which you can find on his blog. One is, “Answering Back,” which offers “liberal responses to conservative arguments,” and the other, “Making the Progressive Case.” Both are worth reading.
I’ve learned a lot from Professor Coates and I’m confident you will too. So, turn up your speakers… click below… sit back and relax… and listen to an uninterrupted hour with Professor David Coates as he talks about the foreclosure crisis here and in the UK, why democracy and progressive politics are more important today than perhaps ever before… and whole lot more… on A Mandelman Matters Podcast.
(Plus… I don’t know about you, but somehow the foreclosure crisis sounds better in a British accent… go figure.)
CLICK BELOW
Mandelman Out.
Jan
31
Thank You Wells Fargo… Signed the DOERS of Mandelman & Field
Hey DOERS… Good News Once Again, this time for
Tom Stover & Jeneane Traynor-Stover
(And that would be 8 out of 8 for the DOERS… but who’s counting?)
Ooops, you did it again! Yes, it’s true… Wells Fargo contacted Tom and Jeneane up in Granite Bay, California mid-day today to let them know that their SALE DATE of February 3, 2012 HAS BEEN POSTPONED. This was the DOER ALERT posted late in the day last Friday, and today is Tuesday, so even though it wasn’t handled within 24 hours as we’ve gotten used to… I can live with 48 hours too. (I don’t like it, but I can live with it… LOL.)
The truth is that although I did see that some DOERS sent emails in response to the ALERT on Friday, there weren’t nearly enough. And then when we didn’t hear anything from Wells yesterday, Jeneane called me and mentioned that she thought that maybe the DOER ALERT got lost in people’s inboxes as a result of being posted late on Friday.
So, I reposted it yesterday and last night I sent out about 100 emails to DOERS, and sure enough… a lot more emails started flying towards Wells… and by today at 11:00 AM… it was a brand new day for Jeneane and Tom. See how that works? DOERS have got to stay up on this… you promised to for 120 days, right? And I’ll try not to post late on Fridays… deal? Cool.
Here’s the email I received from Jeneane at 11:00 AM today.
Dear Mandelman and the DOERS…
I wanted to let you know asap that I received a call from Michael Berg from the executive office of complaints at Wells Fargo. He was very nice, the first thing he said was the sale was postponed and he is my single point of contact and he is getting a package out to me today and when I receive it tomorrow he wants me to call him back to go over it.
WOW, that was great, you really are doing an amazing job at getting results, I will keep you posted!
You are a lifesaver, or shall I say a family saver, I do realized that there is not guarantee of a loan modification, but just being given the consideration of being informed is all I asked for!
Thanks again,
Jeneane
Okay, well now that Wells has stopped the clock on the sale date… I for one have all the confidence in the world that Wells Fargo will find a way to modify this loan so Tom, Jeneane and their beautiful daughter will be able to stay in their home with payments they can afford. And I’m sure all of our prayers are with Tom that he fully recover so he can get back to work on a full-time basis soon.
Thank you to all the DOERS who helped DO this! But there still aren’t enough of you DOING what you promised you would DO. If we want to be able to affect bigger issues… national issues… then everyone’s going to have to turn up their game… get with the program… start taking this more seriously and continue spreading the word.
Sorry… it’s work I know. But it’s not that much work. You should all be very proud of what we’ve accomplished together and over a very short period of time… so you should be talking about it everyone you know… bragging even.
Stay tuned… unfortunately there are more DOER AlERTS to come!
Mandelman & Field OUT!
~~~
OFFICIAL DOER STATEMENT OF PURPOSE
BY MARTIN ANDELMAN & ABIGAIL FIELD
We, Mandelman & Field, are joining forces to end the foreclosure crisis. We’ve been writing about the crisis—Mandelman for more than three years and 600+ articles, Field for about half that—but frankly, writing’s not enough.
We need to DO more to solve the massive crisis our country is enduring. We must act now, because the crisis we’re in will get much, much worse. This year is an election year… the time for decisive action is now.
But by ourselves we can’t do enough. We need YOU to DO too.
Mandelman has already inspired a core group of DOERS, people who have already solved the mortgage modification nightmares of six people. But to solve the problems faster than one mortgage at a time and to attack bigger problems, we need more DOERS… a lot more.
Here’s what we DOERS DO:
1. We take action.
We are knowledgeable, active and involved. We know that our actions make a difference because we’re all working together, multiplying our impact. That’s why we continue to take action, each and every day.
2. We know there’s no “try” in DO.
Either you DO, or you don’t.
3. We build big victories out of little victories.
We’re singles hitters with a really high on base percentage. We scratch out the runs it takes to win every way we can. Our actions are simple, discrete, and quick to do, like sending an email, making a call, mailing a letter.
We work this way because swinging for the fences wastes lots of effort and results in more strikeouts than our country has time for. Besides, it took years to make the mess we’re in, and there’s no silver bullet that fixes everything all at once. We have to do many things, and collectively they will make the big changes we need.
4. We focus on our similarities, not our differences.
We’re not about right and left… we’re about right and wrong. Frankly, our nation’s policies on housing and banks are so bad, we have plenty of solid common ground for everyone. Since we’re focused on fixing those two interrelated issues—housing and bank policy—our divisions on other issues are irrelevant.
5. We believe in “We, the People.”
We join forces to make change because we are Americans. It’s our Constitutional birthright to be in charge, to make change together. And we know if we act together to make good policy, we all benefit.
6. We recruit more DOERS, because size matters.
To solve the big problems we need to be correspondingly big. We’re not playing games. We are DOING to win.
7. And we are in it to win it.
We are relentless. We take our tasks seriously. We do our best. We never let down our fellow DOERS by not DOING our individual parts.
###
So, please don’t delay… DO it today… it’s easy to DO… and to win, we need you.
Becoming a DOER and committing to our code of action is easy. Just send an email to either one of us:
Martin Andelman at: mandelman@mac.com
Abigail Field at: ACFRealityCheck@yahoo.com
And also don’t forget to subscribe here: SUBSCRIBE
All you have to write in the message is: Count on me to be a DOER. Or, just say: I’m in. Tell me what to DO.
About once a week we’ll call on you to DO something important… something that matters a lot.
It feels really good to be a DOER, ask anyone who is.
Mandelman & Field… OUT!
Jan
30
Freddie Mac’s Crimes Against Homeowners are NOT an Isolated Incident
ProPublica is reporting that Freddie Mac has been placing “multi-billion dollar bets designed to only pay off when homeowners remain “trapped” in high interest rate loans, and that the government-owned mortgage monster began increasing such bets late in 2010, which they say is, “the same time Freddie was making harder for homeowners to get out of high-interest mortgages.”
Now, the ProPublica story goes on to say…
“No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.”
And I suppose ProPublica had to say that for whatever reason, probably because that’s what the Freddie Mac SpokesLiar said when they asked about this egregious, fraudulent, criminal behavior that is also AT BEST yet another FAILURE OF GOVERNMENT to protect the American people.
Now, let me be very clear here, so as not to leave any doubt in what we should all understand about this situation that has been uncovered by an investigation conducted by NPR and ProPublica…
1. Freddie Mac has essentially been nationalized. It is 100 percent funded by U.S. taxpayers because if it weren’t for U.S. taxpayers Freddie Mac would be bankrupt.
2. As ProPublica also points out in its story, Freddie Mac’s charter “calls for the company to make home loans more accessible. Its chief executive, Charles Haldeman Jr., recently told Congress that his company is “helping financially strapped families reduce their mortgage costs through refinancing their mortgages.” Really, Haldeman? Or maybe, not so much.
3. The statement above about how Freddie’s traders are “WALLED OFF” from the people at Freddie who have restricted homeowners from getting lower rates so they could keep their homes is OFFENSIVE in so many ways I hardly know where to begin.
First of all, Freddie Mac… IT’S A BOLDFACED LIE. Do you think you are dealing with a nation of 4 year-olds? How dare you even try to make such a case to the American people? Secondly, what right do you have to be “restricting homeowners” from doing ANYTHING? You are a bankrupt mortgage company that failed so spectacularly that you have cost the American taxpayers incalculable and untold billions of dollars. The way I see it, you have no right to “restrict” anyone from doing anything.
4. Mr. Charles Haldeman Jr. if you do not end up in prison for the rest of your life, it will be an abominable miscarriage of justice. When you consider the state of the U.S. and even the world’s economy, and the fragile nature of our banking system, in which almost all trust has been destroyed… Freddie’s acts here constitute TREASON, and Mr. Haldeman should be considered nothing less than a TRAITOR to this country.
No, he didn’t declare war on the United States, or give aid and comfort to our enemies, but congress has, at times throughout our history, passed statutes creating offenses related to treason for acts that undermine the government or the national security, and in my mind, Mr. Haldeman as Freddie Mac’s Chief Executive, most certainly allowed such acts to occur in this case.
5. But Haldeman didn’t commit these acts alone… the others involved must be arrested and tried for these crimes so they may be brought to justice as well. And where is Mr. Edward DeMarco, the head of the FHFA, the conservator of both Freddie Mac and Fannie Mae?
At an absolute minimum, and to avoid his own prosecution, if that’s even possible, we should all be calling for his IMMEDIATE RESIGNATION, and he should be delivering on national television his most profound apologies to the people of this country, for what he has overseen is a national disgrace at a level I’ve never even contemplated as being possible in this country.
6. Because you should make no mistake about this… the acts committed here have cost more than trillions of dollars in lost wealth, but beyond the incomprehensible monetary cost, they have cost American lives.
There are children who will grow up without their loving parent or parents because of our foreclosure crisis, senior citizens who have lost all faith in our nation in the last years of their lives… families that have suffered in muted agony for months turned years… and to have used American taxpayer dollars to intentionally exacerbate the effects of the crisis, is so appalling… so contemptible… so utterly vile… that it truly is unspeakable.
Eric Holder & Lanny Breuer
Further, U.S. Attorney General Eric Holder should also immediately RESIGN in DISGRACE…
That these unconscionable trades of securities and derivatives, whatever they are, had to be uncovered by an investigation ProPublica and NPR illustrates the, at best laughable, and at worst corrupt nature of Attorney General Eric Holder and his Department of In-Justice.
Not only has Eric Holder failed to prosecute any of the banking industry executives responsible for our catastrophic economic collapse, but he hasn’t even lifted a finger to do so, or even taken the time to tell the people of this country anything substantive about anything related to the crisis.
It should go with saying that he needs to be replaced, and perhaps this time we should not hire as our “top cop,” a lawyer from Covington & Burling, one of Washington’s biggest white shoe law firms, widely known to represent… WHILE HOLDER and BREUER WERE PARTNERS AT THE FIRM… some of the largest banks in the country, including Bank of America, JPMorgan Chase, CITIGROUP, WELLS FARGO BANK, MERS, one of the largest servicers, and yes… FREDDIE MAC too.
As reported by Huffington Post on January 19th…
“U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.
Covington represented Freddie Mac, one of the nation’s biggest issuers of mortgage-backed securities, in enforcement investigations by federal financial regulators.
A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.
Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.
But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”
And get this…
“Covington declined to respond to questions from Reuters. A Covington spokeswoman said the firm had no comment.”
Roger that. I understand perfectly. Let me see if I’ve got this straight…
- President Obama announces Making Home Affordable Program.
- Obama puts Treasury Secretary Geithner in charge of HAMP loan modification and HARP refinancing programs.
- Geithner appoints Fannie Mae administrator and Freddie Mac regulator of MHA programs.
- Obama puts Edward DeMarco in charge of FHFA.
- FHFA is responsible for oversight of Fannie and Freddie.
- Obama and Geithner say they want Fannie & Freddie to offer principal reductions to stem tide of defaults.
- But DeMarco says no to principal reductions, claims it’s because of “short-term accounting reasons.”
- In 2010, Obama nominates permanent replacement for DeMarco, but Republicans in Congress block nomination.
- Charles Haldeman Jr. is in charge of Freddie Mac.
- Late in 2010.Freddie starts making it much harder for homeowners to get out of high interest loans.
- For example, during Thanksgiving week 2010, Freddie increases post-settlement delivery fees charged to borrowers refinancing.
- Also late in 2010, Freddie starts placing multi-billion dollar bets that pay off by keeping homeowners trapped in high interest loans.
- These investments are called “inverse floaters.” Instead of backed mainly by principal, these are banked by interest payments.
- Because inverse floaters are riskier, they pay much higher rate of return, if people remain in higher interest rate loans.
- Meanwhile, Sec. Geithner and President Obama continue to state publicly that they want loans refinanced and/or modified.
- It’s impossible to believe that Obama, Geithner, DeMarco, and Haldeman haven’t interacted over the last two years.
- FHFA knew about Freddie’s purchase of $3.4 billion in inverse floaters in 2010.
- The Federal Reserve recently said Fannie and Freddie fees charged make it harder to refinance “difficult to justify.”
- And the U.S. Attorney General Eric Holder was a partner in the law firm representing Freddie Mac, along MERS and major banks.
- Freddie and Fannie need another multi-billion bailout in 2011… and will need more in future.
Does that about cover it? Awesome.
And President Obama…
If you haven’t figured it out yet, and I think you have, you’ve hired the WRONG PEOPLE, or been given bad advice, because the way your administration has handled the financial and foreclosure crises is fast getting entirely out of anyone’s control. Today’s crisis is very much like a tsunami in the middle of the ocean when it looks like a small bump on the water. But it’s approaching the shore and when it arrives it is likely to be 1,000 feet tall and moving at 600 miles per hour.
You are where the buck stops, and ultimately it is your administration that has allowed Freddie Mac to commit these horrific acts against America’s distressed and vulnerable homeowners. You are the one responsible for putting Covington and Burling lawyers in charge of the DOJ… you are the individual in which we placed our trust and you have let us down.
I wish I thought you were capable of redeeming yourself, but you can’t… can you? You’re in too deep and can’t see a way out. You allowed Washington’s powerbrokers and structure to take over your presidency and now you don’t know how to change the path you’re on… I can feel it. I am truly sorry, as I’ve felt that way before in my life.
All I can say is that you are still the President of the United States and you can break what needs to be broken. It’s all about inches, like the journey of 1,000 miles beginning with one small step.
ONE LAST THING… A NOTE TO PROPUBLICA and NPR…
Thank you for your work on this. Now, if you haven’t already done so, would you mind sauntering on over to Fannie Mae to check out what’s trading places over there. I’m pretty sure I already know, but I don’t want to say because frankly… I don’t want to be right.
And after that… maybe check out what’s trading at all the major banks… you know… just round up the usual suspects and that oughta’ do it, don’t you think? Yeppers… I think you’ve just uncovered one of the reasons why it’s been so damn hard to get a loan modification.
Because it seems to me that the odds are outstanding that… just like “robo-signing” wasn’t… this ain’t no “isolated incident.”
Mandelman out.
ARE YOU A DOER, OR JUST A READER?
TO FIND OUT MORE CLICK HERE.
Please don’t delay. It’s FREE, so DO it today It’s easy to DO. And to win, we need you.
Becoming a DOER and committing to our code of action is easy. Just send an email to either one of us:
Martin Andelman at: mandelman@mac.com
Abigail Field at: ACFRealityCheck@yahoo.com
And also don’t forget to subscribe here: SUBSCRIBE
All you have to write in the message is: Count on me to be a DOER. Or, just say: I’m in. Tell me what to DO.
About once a week we’ll call on you to DO something important… something that matters a lot.
It feels really good to be a DOER, ask anyone who is.
