1. Enough is Enough – Owners Stop Paying Mortgages, and Stop Fretting
2. Report | WALL STREET AND THE FINANCIAL CRISIS: Anatomy of a Financial Collapse
3. Fraudclosure | New York AG Investigates Banks’ Role in Financial Crisis

1. Enough is Enough – Owners Stop Paying Mortgages, and Stop Fretting
2. Report | WALL STREET AND THE FINANCIAL CRISIS: Anatomy of a Financial Collapse
3. Fraudclosure | New York AG Investigates Banks’ Role in Financial Crisis

All costs get passed to consumers. Always.

So you think you got a payroll-tax holiday for free? Think that the big fat-cat mortgage lenders will foot the bill as part of Obama’s promise to make the cut pay for itself? CBS’ Sharyl Attkisson delivers the wake-up call to home buyers, who will pay a pretty penny for the latest gimmick of Obamanomics: [...]

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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.

1. Bloomberg | Bank of America Said to Target Individual States to Block Foreclosure Deal
2. Nevada AG, Catherine Cortez Masto, Joins States Balking at Bank Releases in Foreclosure Practices Deal
3. Kamala Harris: National Mortgage Deal Still Not Good Enough For California

1. Official Press Release | FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers
2. Freddie Mac Bets Against American Homeowners
3. FHFA OIG Report | Evaluation of the Federal Housing Finance Agency’s Oversight of Freddie Mac’s Repurchase Settlement with Bank of America

1. State of Arizona vs. Countrywide, Bank of America, et al – Office of Attorney General Terry Goddard Charges Bank of America with Mortgage Fraud
2. BofA Lawsuit to Stay in State Court | State of Arizona vs. Countrywide, Bank of America, et al
3. State of Nevada vs Bank of America – Nevada Attorney General Sues Bank of America for Deceiving Homeowners

UNC's Center for Community Capital has posted a new analysis of 19.5 million mortgage loans originated between 2000 and 2008 finding that mandatory down payments of 10% would lock out nearly 40% of all creditworthy borrowers while a 20% down payment would exclude 60%. The study finds a significantly higher exclusion rate for African American and Latino borrowers. The authors (Roberto Quercia of UNC, Lei Ding of Wayne State University, & Carolina Reid from the Center for Responsible Lending) do find valuable default-reduction benefits of other forms of strong underwriting as the Dodd-Frank Act already requires (through the "QM" and "QRM" classifications), but signal caution about the significant access costs of government-mandated down payment levels that government regulators may be currently considering.

1. Credit Suisse Sued Over Mortgage-Backed Securities
2. Fraudclosure | Bondi: Don’t Cut Homeowners’ Mortgage Principal
3. MBIA Insurance Corp. vs. Credit Suisse Securities (USA) LLC, DLJ Mortgage Capital, Inc. and Select Portfolio Servicing, Inc

1. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
2. Independent Foreclosure Review | Adam Levitin – More Rot in the OCC Foreclosure Reviews
3. Foxes Guarding the Hen House | Analysis: Bank-Picked Experts Take On U.S. Fraudclosure Reviews

1. MERS Suit Seeks Class Status | TREVINO et al v. MERSCORP, CITIGROUP, COUNTRYWIDE, FANNIE, FREDDIE, GMAC, HSBC, CHASE, WAMU, WELLS
2. CLASS ACTION AMENDED against MERSCORP to include Shareholders, DJSP
3. Xee Moua – Class Action Robo Suit REGINALD JONES, v. HSBC Bank USA, N.A., Wells Fargo, et al

1. JPMorgan Chase and Bank of America, Quietly Reducing Principle Balances for Tens of Thousands of Borrowers
2. Fraud Anyone? Suits Filed Against Credit Suisse Group AG, Deutsche Bank AG, JPMorgan Chase & Co. and Bank of America Corp
3. American Banker | Robo-Signing Redux: Servicers Still Fabricating Foreclosure Documents

1. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
2. Fraudclosure | OCC Releases Public Service Ads About the “Independent” Foreclosure Review
3. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review

1. Nationwide Title Clearing | Scientology founder’s tenets drive Pinellas title company, under fire for rapid document processing
2. NY TOXIC TITLES | Herkimer County Clerk to Nationwide Title Clearing “MERS Assignments and Satisfactions Do NOT Comply with all the Legal Requirements Per NY Law”
3. KABOOM | Illinois Attorney General MADIGAN ISSUES SUBPOENAS Against Lender Processing Services (LPS) & Nationwide Title Clearing (NTC)

1. Matt Weidner | BOMBSHELL! – Banks Not Authorized To Collect Fees in Cases!
2. Foreclosure Fraud – BAC / Countrywide Must Pay $108 Million for Illegally Overcharging Struggling Homeowners; Loan Servicer Inflated Fees, Mishandled Loans of Borrowers
3. Hurry Up! Monthly Foreclosures Need to Double from April’s Record Pace to Clear the Distressed Pipeline – Lets Get Those Deadbeats OUT!

1. House Members OCC FED Follow Up Letter on “Independent” Foreclosure Reviews
2. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
3. Adam Levitin | Is the Foreclosure Fraud Settlement Overbroad?

1. Michael Olenick: The Administration Likes Foxes in Charge of Henhouses – Proof that OCC Foreclosure Reviews Are a Sham
2. Independent Foreclosure Review | OCC Says Independent Consultants Can’t Contact Borrowers
3. Federal Reserve’s Independent Foreclosure Review and HAMP Escalations Review

1. Rep. Grayson Asks the Financial Stability Oversight Council to Require a Special Capital Buffer to Large Banks Due to Foreclosuregate
2. NY AG | Investment Firms Tailwind Capital and Ares Capital Corp, Tied to Steven Baum, Pillar, Get Subpoena
3. Obama | “One of the biggest problems” of the financial crisis is that “a lot of that stuff wasn’t necessarily illegal; it was just immoral or inappropriate or reckless.”

1. Shocking – Goldman Sachs Documents List Financial Institutions with Whom Goldman Had Hedged The Risk of its Exposure to an AIG Default
2. FraudclosureGate – First Thing We Do, Kill All The Foreclosure Defense Lawyers (Then Throw The Deadbeats Into The Streets)
3. NY Times | A.I.G. to Sue 2 Wall Street Firms to Recover Some Losses Contending that it was the Victim of Fraud

1. MBIA Insurance Corporation v. Bank of America Corp., Countrywide Financial Corporation, Countrywide Home Loans, et. al.
2. Another Settlement Fail | FDIC Reaches $64 Million Settlement with 3 Former Washington Mutual Executives, Kinda…
3. BAM | CA Appeals Court REVERSES Countrywide Class Action Suit Dismissal in DAVID H. LUTHER et al. v. COUNTRYWIDE FINANCIAL CORPORATION et al.

As Alan White reported recently, the Uniform Law Commission in the U.S. has named a committee to consider the need for and feasibility of proposing a uniform foreclosure act and to report back to the ULC by early 2012. A letter from the ULC president includes a list of questions that the committee is charged to consider. But what principles will guide their analysis of these questions?

Yet, at this point, it seems impossible to treat foreclosure law as entirely distinct from broader questions of housing policy and community development. Incorporating these broader questions means asking about the shelter needs of foreclosure defendants, the disruption in education for kids in enrolled in public schools, and externalities such as neighbors' property values, declines in local tax revenues, and other community effects. These kinds of values or questions do not automatically justify continued owner-occupation, as I wrote for a symposium on foreclosure. But their consideration can shape the details of how and when owner-occupation is terminated. For thoughts on this issue in the U.K. context (albeit  now a few years old), check out Lorna Fox's book Conceptualising Home .

In any event, another set of reasons that this ULC project is worth watching. . .

I really don’t care how that headline sounds.  I’m going to make my point regardless, and I think it needs to be made bluntly.  I’m far too angry and way too upset to do anything else.  This is it for me.

I started this blog three years ago for ONE reason: Because the government and banking PR machine was blaming the crisis on “irresponsible borrowers,” and I KNEW then that would prove to be an ultimately destructive thing because, as I wrote back then… when they realize what’s really happened, that it’s not “irresponsible borrowers,” they will have destroyed  the political will to do what’s needed to fix it.  No one was going to support a bailout of the “irresponsible.”

I wrote all of what I’m about to say hundreds of times and in so many ways I couldn’t even count them all.  Recently, I wrote an article titled, “Our future depends on just one thing.”  Abigail Field worked on it with me.  I don’t know… maybe it was 15,000 words.  I was shocked at how many people actually read it… maybe 5,000, which is a lot when you consider how much time it required.

I knew what would come, but I also voted for Barack Obama and I believed that his administration would do something about the foreclosure crisis.  And as I’ve sat and watched this administration’s policies and performance, I have to admit that up until recently, I didn’t know why they were doing the abysmal, seemingly unfeeling and irresponsible job they so obviously have done.  The kind of job that led Neil Barofsky to make the comments he made this week… his comments you’ll read below.

Now, however, I know what’s happened and why it happened.  It happened because the Obama Administration continues to be afraid of being seen as bailing out irresponsible borrowers… quite a coincidence, right?  Actually, not so much.  (Here’s another of my past attempts to explain this situation in writing: “Why Americans Are Allowing the Foreclosure Crisis to Continue.”)

But, you’ve heard what I have to say, so try this on for size and see what you think.  The book, “Confidence Men,” by Ron Suskind, tells the inside story of the first three years of the Obama Administration, based on hundreds of interviews with insiders… including interviews with President Obama himself. It’s not pro or con… it just is.  Jon Stewart interviewed Suskind a couple of months ago… it’s fascinating and I’ve included part one and two of that interview below.  Watch it.  Please.

Is it becoming clear?

I’ve written 600 articles now, and I suppose if I could get anyone to read a few hundred of them it might change their mind… but that would take some time.  This is an election year, as I’ve pointed out many times lately, and we need to shatter the “irresponsible borrower” misperception now if we expect anything to change for the better any time soon.

Last summer, when I returned from a week working with people at the Hawaii legislature, I knew there was only one thing to do… produce an open and shut case in a broadcast quality documentary-style program… and make it entertaining enough that it would go viral on the Internet…. maybe raise a hundred grand and get it on cable television.  Anything else would take too long to influence the number of people that had to be reached.  Nothing is absorbed as fast as high-quality video programming.

I didn’t want to produce a documentary program… I’ve done it many times in my career and it’s a lot of work.  But there was no choice, I’d been trying to get everybody on board for two and a half years at that point, and it was simply taking too long.  And I knew I was probably the only person who could do it.  I spent 20 years in corporate America as a creative director and communications strategist and I know I’m the only person in that world that could do it, because I’ve successfully shattered similarly erroneous views many times.

But… and it’s certainly all my own fault… I just haven’t been able to promote it effectively enough to get others to fund it to any real degree.  And I didn’t want to seek an investor that would want to make it into a money-making proposition and not a viral Internet campaign.

The truth is, I’m not all that comfortable with self-promotion to begin with, and this space is packed with scammers and fast talkers, which makes it that much harder to get people to write checks no matter the purpose.  They don’t know who to trust, and I don’t blame them.  So, I resigned myself to the fact that I would have to fund it myself, and that would mean that it would take a lot longer to get it done… but, it was what it was.

I’ll probably do a book at some point too, but not now because it’s too time consuming and we have an election year in front of us.  If we’re going to succeed at influencing politicians on this key point… this would be the year.  If we fail… it’s over.  What will happen… will just happen… and it will be a tragic failure for me, and an awful period in our nation’s history.

Just last night, I was talking to a homeowner in Pennsylvania and he asked me what was stopping the administration from doing anything effective about the crisis and I said right away, “Oh, it’s Rick Santelli… it’s only one thing… the ‘irresponsible borrower.’  There’s simply NO SUPPORT to help people that the country largely perceives as having been irresponsible borrowers.”  I don’t really know if he believed that I was 100% right…. maybe he thought I was partially right, but not all the way, I really don’t know.

People want it to be more complicated that that.  They don’t want to think of our government as just a bunch of guys making decisions.  People want to imagine that there’s a puppet master pulling strings and that they just aren’t privy to the information.  It’s reassuring to think that way.  Last year, I remember saying about the Obama Administration:

“Tell me there’s a plan… I don’t care if it’s an evil plan… as long as there’s A plan, I’ll be fine.  Because this looks like a bunch of people not knowing what to do and doing at terrible job at whatever they try… and that is scaring me to death.”

I started calling bankers and servicers and those on the other side because I realized that no one was winning, and with so many people losing… someone SHOULD be winning.  But no one was or is… everyone’s losing… we’re literally circling the drain.  Oh, I know… there’s a handful of bankers still getting obnoxious bonuses, and that’s wrong… but in the big scheme of things… it’s nothing really.  In a world where losses are measured in trillions, even a $100 million bonus is a rounding error.

Very quickly I realized two things… that those on the other side of this fight weren’t all that concerned with us one way or the other… and that they had no idea what to do to improve things either.  Our politicians are obviously clueless… they’re not even afraid of people not voting them back into office.  My guess would be that most of the elected representatives in the Hawaii legislature didn’t even view what’s happening as a “crisis.”  And the jackass in Arizona, Harper, think the problem is people walking away that can otherwise afford the payments no problem.

No… we’re not winning.

By the way, it’s not like I’m not used to being right way ahead of everyone else when it comes to things like this… I’ve got a 20-year track record of being exactly that.  But I never wanted to come off like that to people as a homeowner advocate and blogger, and I knew no one knew of my professional career in this world of homeowners and their lawyers.

Now, it just doesn’t matter.  I don’t really care how I “come off.” It is what it is… and I’m not a person capable of deluding myself or others into believing something that’s not true.

Here’s the story from American Banker… it’s short, so I’m posting the whole thing… read it, please.

Barofsky Blasts Treasury, Obama for Housing Mess

Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, hammered the Obama Administration and Treasury Department Tuesday night at a panel discussion on the foreclosure crisis, saying fears of a political backlash led to the administration’s tepid response to the housing crisis and refusal to back principal reductions.

Barofsfky, a former assistant U.S. attorney who is now a senior fellow at New York University’s School of Law, said the administration’s Home Affordable Modification Program was “a failure” because the Obama White House feared being labeled as helping “undeserving homeowners.”

Asked if there was any hope for homeowners at risk of foreclosure, Barofsky said: “Um, no.”

The panel was organized by the non-profit news organization ProPublica. The other participants included ProPublica reporter Paul Kiel, Alyssa Katz, editor of Columbia Journalism School’s New York World, and this reporter.

“The crisis is an example of how people lose their faith in government, which has costs that are hard to quantify,” Barofsky said during the two-hour event at the Tenement Museum in New York’s Lower East Side. “Everything that has happened since [Tarp] has been something of a mess.”

When the administration introduced the Hamp program in 2009, Rick Santelli, an editor at CNBC Business News, went on a rant” calling defaulted homeowners “losers” and accusing the government of “promoting bad behavior.” Santelli is credited with sparking (and naming) the Tea Party Movement by suggesting that people opposed to the government form a “Chicago Tea Party.”

Barosky said the White House, out of concern that aiding homeowners would cause a political backlash, quickly backed away from its goal of helping 3 million to 4 million homeowners avoid foreclosure.

There was a fear of “moral hazard,” the idea that homeowners who were not financially strapped would default to get a principal reduction, Barofsky said.

He argued that the $28 billion left in the Tarp program should be used to modify loans, but he faulted the Treasury for never spending the money, calling it a “lost opportunity.”

###

Homeowners, lawyers and fellow bloggers… we ARE NOT winning.  And we won’t win.  I’ve tried to say this numerous times in more politically correct ways, but it obviously needs to be said in less uncertain terms.

The foreclosure crisis is has only affected less than 15 percent of America’s homeowners.  More than 85 percent aren’t having the problem… yet.  Ninety-five percent of homeowners just go through foreclosure without any representation.  And with at least 3,000 homeowners evicted every single day, seven days a week… we get all hip-hop-happy because a literal handful have some very moderate levels of success… we tell ourselves we are gaining on it… but we’re not.

We’re not gaining on it because there is no WE… so, WE can’t be fighting it.  At best we represent a speed bump to the banking industry, and that won’t change for several years when there will be so many more people swept under that there will be societal pain to a degree we’ve never even imagined.

Lawyers… fighting your cases one by one… in your own small universes, without any sort of data being reported… without any sort of association… you’ve had some great cases, but their impact is akin to a Bandaid on a severed limb.  Loan modifications are the only way people are staying in their homes in any number, but the banking industry has turned those helping homeowners get loans modified into something close to drug dealers, as they echo the familiar refrain… “Call your bank directly or call a (bank funded) HUD Counselor.”

And my fellow bloggers… we continue to limp along writing perhaps bravely and perhaps helpfully, but we’re trying to outrun a tsunami in our individual small canoes.  It’s never boring… it’s stimulating even.  But it’s just nowhere near enough.

I’m not saying we should stop what’s going on… in fact, we need to do more… we need about 10,000 more lawyers and that wouldn’t be near enough.  Maybe it’s all we can hope to do as the collection of individuals that we are, but I can’t not call it as it unquestionably is.  And I can’t just sit back, write my articles and pretend that I’m changing the world.

So… here’s the deal… I need to know how many DOERS are out there.

If you’re a DOER I need to hear from you by email.  If you’re a DOER, willing to support a campaign to strategically target and then attack chosen opportunities, I need to hear from you now.  My DOERS have saved three homes in a row by sending emails in a coordinated way.  Raise your hand now and tell me your on board, because I’ll need to be able to reach you to tell us what WE are doing via email, so as not to tip our hand.

We’re going to “OCCUPY,” but in a very different way than OWS… we’re going to OCCUPY without leaving our homes. It’s going to be a game of inches… it’s going to take 3-4 months before we reach the critical mass that moves the proverbial needle.  It’s not just about reading, it’s about doing.  But, we will gain momentum and WE WILL shatter the “irresponsible borrower,” stereotype.

We’ve already proven that we can inspire a bank to take immediate action by sending some number of emails in a coordinated and targeted way.  Imagine when I can write something that results in 1,000 or 10,000… or even 100,000… or maybe someday 1,000,000 people sending a letter and a bag of pretzels to a specific individual’s office.

• What do you suppose would happen if a senator or a governor were to walk into work one morning and find 30,000 bags of pretzels carrying one message?  And not once, but every month… or more often that that if need be.  Would it make the news?  Damn right it would… and others would join our ranks.
• Why couldn’t a group like that raise a fund to help with eviction defense for senior citizens or single moms?  Wouldn’t the existence of such a fund also make the news?  Yes it would.
• Why don’t we have one highly visible site with trusted lawyers listed on it, so no one ends up retaining sub-par legal representation?  Would that be newsworthy?  Yes.  My trusted attorneys tab gets more traffic than 90 percent of my articles each month.
• Why couldn’t such a group become its own PR machine, publishing viewpoints as part of a strategy, instead of the current passionate but disjointed efforts?  If we can’t get a documentary done, why couldn’t we produce a series of viral vignettes that we all help to distribute to the media, to politicians… to servicers… to other homeowners and that destroy the irresponsible borrowers stereotype?
• Why couldn’t we have our own bills being proposed in various state legislatures that provides solutions?
• Why don’t we make better use of headline risk by publishing the stories of injustice that go on each day?
• And much more…

We’re not wining the way we’re going.  I’m sorry to say it that way, but then again maybe I’m not.  We have to fight as a WE.  I’m not trying to be a king… in fact, I’ve never wanted to be a king.  I want to be a member of a team… but I just don’t see anyone else with any plan to inspire real change.  And yet the banking lobby is well-funded and relentless.

Raise your hand and be counted… and counted on.  Email me at mandelman@mac.com now.

No one helps those who don’t help themselves.  We need to be WE… and now.  Because as long as the country believes that irresponsible borrowers are the problem, nothing will change for borrowers… not enough lawyers will join the fight and as they say… we’ll see you in the soup line.

I need a core group from which we can build.  It shouldn’t be painful, there are many of us.

The country hasn’t changed.  The power of the people remains intact.

WHEN I POST A NEED FOR DOERS ARE YOU COMMITTED READING IT… AND DOING SOMETHING… SENDING AN EMAIL, SENDING A LETTER AND A BAG OF PRETZELS, OR WHATEVER?  LET ME KNOW NOW.

I HAVE A PLAN TO IMPLEMENT A SERIES OF TACTICS DESIGNED TO ATTACK THE IRRESPONSIBLE BORROWERS STEREOTYPE.  ARE YOU WILLING TO HELP FUND THAT INITIATIVE FOR THE NEXT 120 DAYS?  LET ME KNOW.

Any answer is fine… but I do need to know now.

Mandelman out.

1. Federal Housing Finance Agency Office of Inspector General Semiannual Report to the Congress – Housing Regulator Failed to Stop Fannie, Freddie Mortgage Issues
2. McKinley v Federal Housing Finance Agency – FOIA Lawsuit Filed Against FHFA Over Fannie Mae and Freddie Mac Documents
3. Official Press Release | FHFA, Fannie Mae and Freddie Mac Announce HARP Changes to Reach More Borrowers

Foreclosure statistics obviously vary from local jurisdiction to jurisdiction, as well as from one time period to the next. For example, sometime back in 2008, New Mexico was 36th in the nation in the number of foreclosures, obviously lower than average. Now it is 11th in the nation. Right now, one in every 452 Santa Fe homes and one in every 550 Albuquerque homes is in foreclosure, and about 15,000 cases are filed each year, about half in Albuquerque. The lack of lawyers reported by the New York Times in February of 2011 is still palpable. Attorney Angelica Anaya-Allen, from the United South Broadway Corporation, which defends foreclosures in New Mexico, did an analysis of the reported decisions in all foreclosure cases in Santa Fe over a two year period. She found that of the 828 reported decisions that favored lenders during the one-year period in which she looked, 600 were default judgments. Ms. Anaya-Allen reports that out of the 15,000 cases filed per year, she’d be surprised if more than 500 borrowers, or roughly 3%, were represented. 

1. Florida Court System Facing $72.3 Million Deficit Due to Shortfall in Foreclosure Filing Fees
2. Fraudclosure | Hillsborough County Chief Judge Menendez Responds to Accusations of Restricted Court Access
3. Foreclosure Fraud – BAC / Countrywide Must Pay $108 Million for Illegally Overcharging Struggling Homeowners; Loan Servicer Inflated Fees, Mishandled Loans of Borrowers

1. Federal Reserve Orders $85M Civil Penalty Against Wells Fargo for Steering Potential Prime Borrowers Into More Costly Subprime Loans and Falsifying Income
2. Wells Fargo Damage Control Attempt – FL Attorney General Reaches Agreement with Wells Fargo Providing More Than $388 Million in Mortgage Relief to Florida Homeowners
3. Cease and Desist Order In the Matter of: WELLS FARGO & COMPANY and WELLS FARGO FINANCIAL, INC.

1. Scripps | Treasure Coast Residents, along with 4closureFraud & ForeclosureHamlet, Exchange Sad Stories at Foreclosure Happy Hour
2. NYC Event | We Shall Not Be Moved – Stories from the Grassroots Struggle Against Foreclosure
3. Rally in Tally WEAR 3 News Top Stories Video – Home Owners Facing Foreclosure came to the Capitol Wednesday to Drive a Stake in the Heart of the Bill

There are two things I feel the need to say.  First, the economics profession sure has lost some points these past couple of years, wouldn’t you say?  Sort of like the intelligence community did during the Bush presidency just a few years back.  It pains me to see the entire economics profession relegated to being “The Pips,” to Barack Obama’s “Gladys,” if you know what I mean.

We’re never even told their names anymore, all we get to know is that when the news is bad, the “economists were surprised by the numbers.”  Not any of the economists that I either know personally, or frequently read, but a nameless and faceless band of economists who seem to forecast so poorly, they couldn’t even get hired as San Diego weathermen.

It’s like, “the number of jobs created last month came in lower than economists expected,” or… “Economists were surprised to learn that home prices have fallen for 70 months in a row, that water is in fact wet, and that the sky is blue.  Until that news was released today, the consensus answers to those three questions was: “really?”… “clean”… and “high.”

Then second thing I feel the ned to say is that while there’s no question but that Democrats do suck… they clearly suck less than anyone even remotely connected with the GOP.  The latest example of this comparative suckiness can be seen in the letter sent this week by 21 members of Congress to Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco that urges him to allow principal reductions on loans backed by Fannie Mae and Freddie Mac.

The text of the letter states:

“We do not urge that the enterprises reduce principal on mortgages as a kindness to homeowners.”  (Emphasis added.)

The letter, which cites data published by the GSEs themselves stating that 17.7 percent of Fannie borrowers are underwater, as are 19 percent of Freddie’s borrowers, goes on to explain that the representatives support principal reductions because they’ll save taxpayers from further losses, because these borrowers… “are obviously at great risk of eventual default.”

Of course, we are talking about DeMarco here, so I’d ease up on the use of the word “obviously.”  The letter continues…

“The performance of the enterprises’ mortgage modifications leaves much to be desired for homeowners, for the housing market, and for taxpayers.”

This is not even close to the first time that DeMarco has heard this pitch, in fact I covered it in an article several months ago.  But, DeMarco’s response to-date has been that the “short-term” impact to the GSEs is what prevents him from approving the principal reduction idea, which is refreshing, if you ask me.  I mean, if you’re going to be a short-term thinker, I appreciate it that you identify yourself as such.

The representatives, however, are now specifically asking that DeMarco disregard the short-term effects of principal reductions on the GSEs’ balance sheets ans instead consider the much more meaningful long-term positive effects that such reductions would likely have.  The letter also references a study conducted by Amherst Securities that negates the “moral hazard” theory, which idiotically hypothesizes that principal reductions actually encourage homeowners to default.  Sort of like saying that if you’ll reduce the balance of my car loan by a few grand, I’d be willing to let it get repossessed.

George Miller (D-CA), one of the representatives whose signatures appears on the letter signed the letter, says:

“Right now, the FHFA is preventing underwater homeowners with mortgages backed by Fannie Mae or Freddie Mac from receiving balance reductions, even when a principal modification would save the investor – in this case meaning taxpayer – money compared to foreclosure.”

I guess at this point I should state my opinion as to whether I think this letter will have any effect… and the answer is that I think it is likely to be about as effective as crawling under one’s school desk in the event of a nuclear attack.  Hard to believe, but word from inside the Beltway is that the most powerful man in the nation… and President Obama have both been asking DeMarco to green light the principal reductions plan for the GSEs for several months now.   And if Treasury Secretary Tim Geithner can’t get it done, then I’m thinking it can’t be done.  Still, I am glad to see 21 members of Congress writing a letter, because that’s more than I’ve seen them do in months.

So, I’m bringing all of this up because Mr. Edward DeMarco, who is just the “acting” director of the independent federal agency that placed both Fannie Mae and Freddie Mac into conservatorship in the fall of 2008, has actually become the single biggest impediment to a course correction in the housing market, by far, in the entire country.  And when you consider the GOP’s position on foreclosures, which is only that they need to happen faster, that’s really saying something.

With a Ph.D. in Economics from the University of Maryland and a B.A. in Economics from the University of Notre Dame… DeMarco’s an “economist.”  Prior to joining FHFA, he was COO at the OFHEO, where he provided policy advice for the FHA, before that he was Assistant Deputy Commissioner for Policy at the SSA, and before that he was the Director of the OFIP at Treasury where he oversaw analyses of public policy issues involving the GSEs… and before that he conducted economic and financial analyses of the GSEs at the GAO where he developed recommendations for improved safety and soundness related to the government’s exposure to the GSEs.

Read that last line again… “he developed recommendations for improved safety and soundness related to the government’s exposure to the GSEs?”  Well, did he now?  Obviously, that was some absolutely crackerjack work right there.  Considering that Fannie and Freddie, so far, have cost us taxpayers about $170 billion in “safety and soundness,” I’d have to say that I sleep better at night knowing that we’ve now got Ed watching out for us at FHFA.

Best I can tell that Ed’s never had a job that wasn’t a TLA (three letter acronym), and to give you a picture of what he looks like… hmmm… well, picture what might happen if Tim Geithner and Peter Orszag had a child… I mean, the man just screams Caucasian.  I’m not saying that to be a racist, I’m saying it because the combination of all of those factors makes me rock solid sure that this guy’s extensive knowledge of real people in this country comes from reading about them in policy reports.

So, even though last year, President Obama and Treasury Secretary Tim Geithner started asking Fannie and Freddie to start doing principal reductions for homeowners underwater and at risk of foreclosure, and even though Sec. Geithner testified that he believed there to be a solid economic case for Fannie & Freddie to participate in the principal reduction programs, such as the new HAMP PRA… DeMarco simply said no anyway.  Ed’s stated rationale was that principal reductions, while positive for Fannie and Freddie in the long run, he agreed, would be bad for GSE books in the short run.

This is the sort of thing that makes one long for the ghost of Lyndon Johnson to come back and kick DeMarco in the pants… I mean, telling the president to go fish is one thing, but saying no to the most powerful man in the world?  I don’t think so.

Geithner can snap his fingers and Ben Bernanke starts up the printing presses from the nightstand by his bed.  Even Lord Blankcheck over at Goldman Sachs takes his calls.  And Vikram Pandit over at Citi?  Yeah, well I heard he comes over and rubs Geithner’s feet in the evenings.  I swear… that’s what I heard.

Fannie & Freddie, in my way of thinking shouldn’t even be given a choice. They are both bankrupt… utterly failed mortgage banks.  They’ve already been NATIONALIZED, no matter what they want to call it.  For God’s sake, Fannie Mae stock is trading OTC right next to Blockbuster! And besides, Freddie and Fannie have been GSEs for years… “Government Spending Entities,” so why stop now?

And, since when does Fannie Mae base decisions on whether something is prudent in the short run, or the long run for that matter?  Because that’s certainly what comes to my mind when I think of the word “prudent”… Fannie Mae.

Hey, nice castle, by the way.

Regardless of all of this, DeMarco has not been willing to budge an inch.  It’s interesting… Obama does appoint the head of the FHFA, but apparently he can’t order him to do anything.  I’d look up the reason behind this idiocy, but I don’t want to hurt myself… check with Yves Smith over at Naked Capitalism, I’m sure she knows.  The bottom-line is that DeMarco is legally “independent,” he can’t be fired, and so far refuses to step down, so at this point he’s singlehandedly preventing our government from doing something to stop foreclosures, as if the Republicans alone weren’t enough of an obstacle in this regard.  So… fine… I say, someone have him shot at dawn… and viola!  Problem solved.  I’ll even go pay-per-view, how’s that?

Recently, Mr. DeMarco, in his testimony to congress over the $35 million in bonuses being paid to Fannie and Freddie executives, said that executive compensation at Fannie Mae and Freddie Mac has been appropriate as well as necessary to prevent taxpayer losses.  This is the kind of logic that’s obviously the product of a beautiful mind.

DeMarco defended the bonuses, saying that without them, there could be an exodus of talent, which could result in taxpayer losses.  And I have just two things to say in response to that:

• Fannie and Freddie have already cost the American taxpayer roughly $169 BILLION, and estimates are that we’re on our way to a $220 BILLION tab.  Last quarter, they needed something like $13 BILLION alone.  So, whatever talent you’ve got over there… for God’s sake, let them go.  Paying bonuses at the GSEs now is like closing the door after the horses have run out and then opening it back up and shooting the horses that remained inside.
• I’m absolutely positive that I could have saved the country a fortune here.  I’d bet anything that I could have bankrupted Fannie and Freddie for a lot less than $169 BILLION.  I would have been more than happy to run the two GSEs into the ground for a few hundred million.  Next time, pick up the phone… I’m here to help.

At this point Mr. Ed, a real horse’s behind, is standing right smack in the way of programs that could at least start turning around the housing market and that is making me insane.

On this topic, DeMarco recently told Politico.com:

“Sweeping plans to help homeowners ‘did not meet our responsibilities as conservator. That doesn’t mean principal forgiveness might not be appropriate… but it does not meet our mandate to return Fannie and Freddie to solvency and guard against another taxpayer bailout.”

He also said that the FHFA, “has exercised its responsibilities … to not undertake certain initiatives.”  Did I tell you he was an out of touch policy wonk?  I did?  Okay, just checking.

He was also recently quoted as saying:

“Americans, whatever their political stripe is, whether they are lawmakers or businesspeople or citizens, we all are frustrated.”

No, Ed… you’ve got that wrong.  I’m frustrated… homeowners are frustrated.  You?  You are FRUSTRATING.

And he also said:

“We are in a set of circumstances in the housing market we have not seen since the Great Depression. It has taken a long time to get to that point, and it’s going to take a long time to recover.”

And evidently, Ed is going to do everything in his unchecked power to make sure of that.  So, ladies and germs… I have seen the enemy, and he is Mr. Edward DeMarco.  To paraphrase the immortal Will Rogers… He makes me feel the way I do when the baby gets a hold of a hammer.

Mandelman out.

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