- State of Arizona vs. Countrywide, Bank of America, et al – Office of Attorney General Terry Goddard Charges Bank of America with Mortgage Fraud
- DOLFO v BANK OF AMERICA | Homebuyers Claims BofA Found a New Dirty Trick Illegally Extract Money from Customers, Foreclose
- Beals v. Bank of America – Bank of America Sued in Class Action Over Foreclosure Fraud
Feb
28
HUD CHARGES BANK OF AMERICA WITH DISCRIMINATING AGAINST HOMEBUYERS WITH DISABILITIES
HUD CHARGES BANK OF AMERICA WITH DISCRIMINATING AGAINST HOMEBUYERS WITH DISABILITIES Bank of America allegedly applied discriminatory lending requirements for borrowers with disabilities WASHINGTON–The U.S. Department of Housing and Urban Development (HUD) today announced that it is charging Bank of America with discriminating against homebuyers with disabilities. HUD alleges that Bank of America imposed unnecessary … Read more
Related posts:
Feb
09
Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses
Federal Government and State Attorneys General Reach $25 Billion Agreement with Five Largest Mortgage Servicers to Address Mortgage Loan Servicing and Foreclosure Abuses $25 Billion Agreement Provides Homeowner Relief & New Protections, Stops Abuses WASHINGTON – U.S. Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom … Read more
Related posts:
- Senators Urge OCC to Work with State Attorneys General, DOJ, and HUD to Hold Mortgage Servicers Accountable and Prevent Future Abuse
- Naked Capitalism | Yes, Virginia, Servicers Lie to Investors Too: $175 Billion in Loan Losses Not Allocated to Mortgage Backed Securities (and Another $300 Billion on the Way)
- NY Times | Attorneys General May Be Rushing Proposal for Loan Servicers
Jan
23
Texana Hollis | Evicted Woman, 101, Can’t Go Home as Promised – HUD Says Foreclosed Detroit Home is Unsafe
Posts on the original reports from September are here and here… ~ Evicted woman, 101, can’t go home as promised HUD says foreclosed Detroit home is unsafe DETROIT — The federal government now says a 101-year-old Detroit woman it promised could move back into her foreclosed home four months ago can’t return because the building’s … Read more
Related posts:
Sep
15
HUD: 101-Year-Old Texana Hollis Can Go Home and She Can Stay there for the Rest of Her Life
HUD will give home back to evicted 101-year-old Detroit woman Texana Hollis DETROIT (WXYZ) – There’s been a positive development in the story of Texana Hollis, the 101-year-old woman evicted from her home . She will now get her southwest Detroit home back after a heartbreaking ordeal. The U.S. Department of Housing and Urban Development, … Read more
Sep
14
US Department of Housing and Urban Development (HUD) Evicts 101 Year Old Texana Hollis from Home of 58 Years
~ Welcome to America… ~ 4closureFraud.org Tweet
Aug
10
FHFA, Treasury, HUD Seek Input on Disposition of Real Estate Owned Properties
Short Answer: STOP KICKING PEOPLE OUT OF THEIR HOMES ILLEGALLY . ~ FHFA, Treasury, HUD Seek Input on Disposition of Real Estate Owned Properties 8/10/2011 Range of Ideas Sought, Including Transition to Rental WASHINGTON - The Federal Housing Finance Agency (FHFA), in consultation with the U.S. Department of the Treasury and Department of Housing and Urban Development … Read more
Aug
07
HUD Settlement | Bank of America Fined $175 for Failure to Offer Alternatives to Foreclosure
B of A Signs HUD Pact Over Mortgage Abuse The Department of Housing and Urban Development has reached a settlement with Bank of America that releases the company from liability for failing to adequately provide alternatives to foreclosure on 57,000 delinquent government-insured mortgages. The agreement, a draft of which was obtained by American Banker, was … Read more
Jul
19
HAMP, HARP, HOP, HOOP… Like Watching Someone Spend $10 Trying to Fly to the Moon
The Washington Post, with Bloomberg, just did what I had been thinking about doing for quite some time, but frankly was just plain afraid to do.
They contacted the Treasury Department, the Department of Housing and Urban Development and the Federal Housing Finance Agency to ascertain just how the Obama Administration’s housing rescue programs were doing to-date… in terms of their impact and cost.
I thought about doing the same thing about three months ago, but since it had about the same appeal as scheduling a colonoscopy, I somehow managed to stay just a little too busy to get to it. Once I got close to having time, but luckily my sock drawer needed rearranging, so that took care of that.
The Post’s post didn’t even have an attributed author at the top, which made total sense to me… I wouldn’t have wanted to attach my name to it either. And check out how the story kicked off…
The Obama administration has taken several stabs at stemming foreclosures and reviving the housing market. Here is a look at some of the administration’s largest programs:
You know, that sentence alone explained a lot to me, actually. And I’m not quite as disappointed in the president as I was before I read it. He only “took a stab” or maybe a couple of three stabs at “stemming foreclosures and reviving the housing market.” So, okay then… he wasn’t really trying… it wasn’t a major effort on which he was concentrating… he just took a stab… like maybe he came up with stuff to try during a commercial break while watching American Idol with his girls, or something like that.
Boy, that sure is a relief, wouldn’t you say? Because, see… I had been under the impression that he had actually been trying to do something big and important and was putting his best foot forward, as it were. And if that were the case, well… then he’d be an incompetent loser with the vision of a Star-nosed Mole. But since he wasn’t really trying… rather he was merely “taking a stab,” well, that just makes him a careless moron for fiddling while Rome burned.
See, I like him a lot more now that I know that, don’t you?
His bien-pensance, it should go without saying, is HAMP, the Home Affordable Modification Program, and we all know what a rousing success that has been. Sheer-joy-on-a-stick is how I hear most homeowners referring to it.
It was originally slated to help up to 7 million, but according to the Post, has come up just a tad short at right around 600,000. I’ve seen some say that number is 700,000, but I don’t want to split hairs… after all, what difference does 100,000 homeowners make anyway? It’s an insignificant number, really.
The Post puts the budgeted price tag for the entire Making Home Affordable program at $30 billion, with the money coming out of the TARP funds, and HAMP was to be the lion’s share of that amount.
Now, I’m not trying to be a stickler here, but if you remember back to 2009… I know it’s hard, but try… you might recall budgets for HAMP that were closer to $80 billion, but obviously the administration is counting on no one remembering that far back, so put it out of your mind and move along… there’s nothing to see here.
To-date, the program has cost roughly $1.42 billion. And to put that number in perspective, I looked it up and the government spends $20 billion a year to air condition tents in Iraq and Afghanistan. So, if that same math holds up… that means that instead of helping only 600,000 homeowners in this country, we would have had the money to help roughly 8.5 million homeowners avoid foreclosure had we simply invaded cooler countries.
Are you with me on that calculation? If not, see me after class.
Next up is HARP, the Home Affordable Refinance Program that rhymes with TARP, but that stands for FOOL (and if you remember Robert Preston in The Music Man, that was funny.)
HARP allowed homeowners with Fannie or Freddie loans underwater at first by 115%, and later as we chased the housing market down the drain, by 125%, to refinance into lower interest rate mortgages. Roughly 800,000 homeowners refinanced under the program so far, but again the program was originally forecasted to help millions. It doesn’t really matter, however, as these were the 800,000 homeowners that didn’t need help, and had nothing to do with the foreclosure crisis.
Here’s what the Post’s article had to say about HARP’s cost:
“The Federal Housing Finance Agency, which regulates Fannie and Freddie, does not assign a specific cost to the program and agency officials say the program likely saves the firms money by keeping some borrowers out of delinquency.”
Alrighty then… what else do we have here…
Next there was the Emergency Homeowners Loan Program… or, EHLP. This is that brilliantly conceived homeowner assistance program that seeks to help unemployed homeowners by loaning them up to $50,000 over a two-year period, and then if the homeowner stays current on their mortgage payments for five years, the loan is forgiven.
Should you have the unfortunate experience of losing your job twice in five years, however, the program socks you with the $50k debt and probably repossesses your car when you fall behind on your loan.
Congress allocated $1 billion to this stunning piece of thinking, saying that the program could help up to 30,000 borrowers. Help them what, I wonder? Help them get closer to bankruptcy, perhaps, but I wonder if the government loan can be discharged or whether it’s like one of them student loans that never goes away. It’s a lot like the gift that keeps on giving… emotional baggage.
The Post failed to mention just how many borrowers the program had helped to-date… probably just an oversight, I’m sure. I’ll take a guess though… you know, in an effort to fill in the blanks… I’m going to say the program has helped… hmmm… let’s see… umm… NONE.
But, don’t worry… today is July 19th and according to the Post, borrowers have until July 22nd to apply… so with three days to go, I’d say it’s too early to call this one a complete failure… maybe there’ll be a last minute rush to get in. What? It could happen.
And last up in the Post piece was the Hardest Hit Fund, which provided at first the five… then the nine… and then I believe, ultimately the 33 states hardest hit by the foreclosure crisis with a grand total of $7.6 billion. Each state’s housing finance agency was charged with designing its own solution to the fast spreading and deepening housing meltdown.
Now, the states have until 2017 to use the funds, so the Post points out that “it’s early,” presumably, to judge the program. Apparently, about70% of the state programs established assistance programs for unemployed workers, while 20% designed programs that would supposedly reduce the principal balance of underwater homeowners.
To-date, only $480 million has been spent, and other than providing hand-outs to the unemployed for a while… I can pretty much assure you that the rest of the money is safe, as I haven’t been able to find a single state program that’s helping anyone to ay degree.
When Arizona launched it’s homeowner assistance program last year, I made fun of it, and said that it wouldn’t help a single Arizona homeowner, so wasn’t I surprised when a year later, the Arizona housing authority announced quietly that the program had in fact helped one homeowner all year.
I didn’t hide from it though… I came right out and admitted that I had been wrong… and then apologized. I still don’t know how I could have missed it by that much.
So, that’s it and that’s all… that’s Obama taking a stab… yeah… man. You go Mr. president… keep on stabbing… you’re a stabbin’ fool, sir.
Well, like I said… at least he wasn’t really trying.
I feel like I’ve been watching someone spend the better part of ten bucks… trying to get to the moon.
Nice work, sir.
We’ll let you go back to bed now, sir.
Mandelman out.
May
19
HUD Investigation Shows Banks Covered Up Widespread Illegal Acts – Government offers to bring them their check and validate their parking
It seems that the Department of Housing and Urban Development’s Inspector General has been conducting five confidential investigations into Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial and with the investigations now complete, HUD has referred the findings to the Department of Justice.
Shahien Nasiripour of The Huffington Post is reporting that the findings accuse the banks of defrauding American taxpayers through the handling of foreclosures on homes that were purchased with government-backed loans. The audits accuse the five major lenders of violating the False Claims Act, a law designed for use against companies that are alleged to have cheated and/or defrauded the government.
According to Shahien’s story in HuffPo, the secret investigations were initiated in response to last year’s reports, which indicated that large lenders were improperly accelerating foreclosure proceedings… or, in other words… look who just figured out that robo-signing affidavits and other documents required for the legal transfer of title, might just be considered fraudulent in some circles.
Bummer… Just as I convinced my daughter to major in Fraudulent Document Production in college in anticipation of a career in the banking industry, and now I’m not even sure those departments will still exist 5-6 years from now. Is this the best time to get tough on fraud, don’t we need those jobs? What will the “Linda Greens” of the world do for work now?
Besides, I thought that last fall, Bank of America froze all foreclosures in order to conduct an internal investigation and two weeks later said everything was ship-shape and commenced foreclosing once again.
Same thing went on at JPMorgan Chase, GMAC/Ally Financial, and Citibank, right? And, Wells Fargo said they didn’t even have to conduct an investigation because they already knew that they didn’t have a single duck out of line, as far as foreclosures were concerned. Yes sir, perfect paperwork starts at Wells, the signs should say.
Well, what the heck was all that about? You don’t mean to say that it was all pure fabrication theater and that in reality the banks lied through their collective teeth and attempted to white wash their crimes so no one could see them, do you?
Actually, that’s not the amazing part, as far as I’m concerned. What I’m positively dumbfounded over is that there was actually someone in Washington D.C. who wasn’t dumb enough to buy off on the banks inconceivably goofy lies.
“Yes, we were robo-signing” tens of thousands of fraudulent documents a month, but it’s not a problem, because we have the proper paperwork… it’s just that it’s in storage and the robo-signing just seemed easier than driving all the way across town to the storage unit.”
“Oh, and it’s really nothing anyway… just dotting t’s and crossing I’s. What was that? Widespread? Oh heavens, no… we’re going with the words we use to describe everything that becomes public: “isolated incidents.” What’s that? Yes, we know we were robo-signing tens of thousands a month and at least the five largest banks were involved, but we were experiencing a lot of do-overs, so 100,000 robo-signed documents may have only translated into 6-7 mortgages… see… “isolated incidents,” like we said. All but those 6-7 are in tip-top shape, we swear.”
It’s too bad that back then, no one wrote anything that pointed out how absurd this line of crap from our bankers really was… oh, wait… that would be me: Alright Banker-People… That’s Enough. You’re Not Making Sense and You’re Making Me Dizzy. (It’s even got a Mandelman-adapted Broadway show tune in the middle.)
Okay, Shahien… back to you at HuffPo…
The resulting reports read like veritable indictments of major lenders, the sources said. State officials are now wielding the documents as leverage in their ongoing talks with mortgage companies aimed at forcing the firms to agree to pay fines to resolve allegations of routine violations in their handling of foreclosures.
The audits conclude that the banks effectively cheated taxpayers by presenting the Federal Housing Administration with false claims: They filed for federal reimbursement on foreclosed homes that sold for less than the outstanding loan balance using defective and faulty documents.
And, get this…
Two of the firms, including Bank of America, refused to cooperate with the investigations, according to the sources. The audit on Bank of America finds that the company — the nation’s largest handler of home loans — failed to correct faulty foreclosure practices even after imposing a moratorium that lifted last October. Back then, the bank said it was resuming foreclosures, having satisfied itself that prior problems had been solved.
See… what did I just say?
According to the sources, the Wells Fargo investigation concludes that senior managers at the firm, the fourth-largest American bank by assets, broke civil laws. HUD’s inspector general interviewed a pair of South Carolina public notaries who improperly signed off on foreclosure filings for Wells, the sources said.
OMG, not Wells… what happened to your linear ducks?
The investigations dovetail with separate probes by state and federal agencies, who also have examined foreclosure filings and flawed mortgage practices amid widespread reports that major mortgage firms improperly initiated foreclosure proceedings on an unknown number of American homeowners.
Why is that number always unknown? Maybe they need some volunteers with decent counting skills to head over to Washington D.C. and lend a hand. I’ll go… I can count to… gosh… I want to say… well, high.
The FHA, whose defaulted loans the inspector general probed, last May began scrutinizing whether mortgage firms properly treated troubled borrowers who fell behind on payments or whose homes were seized on loans insured by the agency.
Oooh, oooh, pick me, pick me… I know the answer to that one. No need for too much “scrutinizing” the answer is NOOOOOOO, and HELL NOOOOOOO.
A unit of the Justice Department is examining faulty court filings in bankruptcy proceedings. Several states, including Illinois, are combing through foreclosure filings to gauge the extent of so-called “robo-signing” and other defective practices, including illegal home repossessions.
Uh oh… those things sound like actual crimes though, right… I mean, like criminal crimes?
Such processes “have potentially infected millions of foreclosures,” Federal Deposit Insurance Corporation Chairman Sheila Bair told a Senate panel on Thursday.
Oh, for heaven’s sake… Sheila… what are you doing here… this isn’t your article, you’re two articles to the right. I covered you two days ago… now back to your page this instant.
Last October, HUD Secretary Shaun Donovan said his investigators found that numerous mortgage firms broke the agency’s rules when dealing with delinquent borrowers. He declined to be specific.
And why should he have to be specific? It’s only people losing homes that are at issue here… no big a deal. So what, if by those rules being broken someone lost their home but shouldn’t have… keep the details to yourself Shaun. Protect the bank that broke the rules… to hell with the homeowner.
In March, HUD’s inspector general found that more than 49 percent of loans underwritten by FHA-approved lenders in a sample did not conform to the agency’s requirements. The agency’s review later expanded to flawed foreclosure practices. FHA, a unit of HUD, could still take administrative action against those firms for breaking FHA rules based on its own probe.
Oh, that sounds positively great… more loans that don’t conform to a federal agency’s requirements? Because we didn’t collect enough of those this last time around, I suppose.
- The State of Illinois has begun examining potentially fraudulent court filings, looking at the role played by a unit of Lender Processing Services.
- Nevada and Arizona already launched lawsuits against Bank of America. California is keen on launching its own suits, people familiar with the matter say.
- And New York’s top law enforcer, Eric Schneiderman, wants to conduct a complete investigation into all facets of mortgage banking, from fraudulent lending to defective securitization practices to faulty foreclosure documents and illegal home seizures.
- Delaware sent Mortgage Electronic Registration Systems Inc., which runs an electronic registry of mortgages, a subpoena demanding answers to 75 questions.
Well, swing your partner round and round,
And turn those banksters upside down.
We’ll turn the corner ‘fore it’s too late,
And say goodbye to foreclosure-gate,
We’re gonna’ want more than an interest rate.
~~~
Watch out them banksters can be rough,
But this time we will call their bluff.
When they say they’re too big to fail,
Just send them all straight off to jail,
And tell the judge to deny their bail.
~~~
Homes underwater, as you well know,
So our principal you must forego,
We won’t stand for the status quo,
Now is the time, it’s apropos.
Before this turns into a drunken brawl,
And we turn banks from too big to small.
And put banksters up against the wall,
We’re here to fight for the long haul.
~~~
Rather than punishing banks for misdeeds, the administration is now focused on helping troubled borrowers in the hope that it will stanch the flood of foreclosures and increase consumer confidence, officials involved in the negotiations said.
WHAT WAS THAT? EXCUSE ME… WHICH OFFICIALS SAID THAT… SPECIFICALLY? I WANT NAMES, DAMN IT.
Rather than PUNISHING banks for MISDEEDS?
Misdeeds? What happened to fraud on the courts, illegal home seizures, countless abuses of the Servicemember Civil Relief Act… violations of the False Claims Act? MISDEEDS? NAUGHTY LITTLE DALLIANCES? ARE THESE PEOPLE KIDDING?
Look… you can’t possibly think… I mean… there’s absolutely no chance… wait… what I’m trying to say is… no, that’s not right… it’s more that… hold on… are you out of your… how can you say… I’m not going to… because the whole thing is… Excuse me just a moment…
Memo to Nameless Officials…
Not that any of you mindless sycophants ever listen to what I have to say, but in the unlikely event that I’ve caught you in a rare moment of clarity and mindfulness, and I mean this with all due respect…
If you think, even for a moment, that the 20 million ‘troubled borrowers’ and perhaps 60 million people that you have allowed to be abused, shamed and beaten down by the servicing companies of the major banks for the last three years, are going to be in any sense mollified by your “focused help” at this stage of the crisis, while they watch banks not be punished for their ‘misdeeds,’ as you put it… you’re wacked.
I realize that you guys are oblivious to what is going on in America’s middle class communities, but let me assure you people are near enraptured by the prospect that perhaps there might be a shard of hope that we are still a country of laws and not one where justice never visits the wealthy.
So, you go ahead and focus all the help on troubled borrowers you want, and there will never be joy, there will never be peace… as long as their tormenters are allowed to go unpunished, only made richer by their acts. Amen.
~~~
In a report last week, analysts at Moody’s Investors Service predicted that while the losses incurred by the banks will be “sizable,” the credit rating agency does “not expect them to meaningfully impact capital.”
Oh, well good then.
Representatives of HUD and its inspector general declined to comment.
Of course they declined. And how transparent of them…
Mandelman out.
Aug
08
Sale of Troubled Buildings May Not Mean Rescue
Editor’s Note: Among the common myths being played out is that tired song about how market forces (a/k/a God) will provide. All corrections will come in good time and the system will be fixed. Not true — at least not this time. Whether it is a residential home, a neighborhood, an apartment building or commercial building, the fact is that there isn’t enough money in the world to fix this problem. The fact is that many people who “buy” these crumbling homes, neighborhoods and buildings have no intent of throwing good money after bad. They intend to take the property for a steal, milk it as long as they can and leave — unless something miraculous happens to real estate prices.
August 5, 2010
Sale of Troubled Buildings May Not Mean Rescue
By SAM DOLNICK and CHARLES V. BAGLI
“Bronx portfolio,” the Web posting read. “These distressed properties fetches prices that are much below its market value.”
The grammatically sloppy advertisement for 10 troubled buildings in the Bronx appeared this spring on eBay classifieds, not a forum known for attracting the kinds of investors who can afford to rescue the properties, which are plagued with crumbling ceilings, roaches and unsustainable debt piled on during the speculative boom of the previous decade.
But with scores of such buildings in foreclosure and many others in disrepair, city officials and housing advocates say a new wave of investors has already begun to swoop in. And the actions of some of the new buyers — one was recently jailed for contempt of court, another has already clashed with tenants — have raised fears that conditions in timeworn buildings could get even worse.
Rafael E. Cestero, the commissioner of the city’s Department of Housing Preservation and Development, said he had seen a number of distressed properties around the city sold to buyers who were not acting “in the best interests of the city, the neighborhood or tenants.”
Mr. Cestero said that city officials, seeking ways to intervene, had little recourse, since most of the deals were private. “This is probably the most difficult thing we’re doing at H.P.D. right now,” he said. “We don’t have a clear and obvious way to insert ourselves.”
While the buyers are often paying less than the previous owners did, tenant advocates maintain that some of the prices are still too high for the amount of rental income the buildings generate and the repairs they need.
So the new owners, the advocates say, have already revived old tactics of tenant harassment, including bringing trumped-up lawsuits against tenants in rent-regulated apartments, hoping to evict them and then raise the rents under the state’s so-called vacancy decontrol rules.
One landlord, Meyer Orbach, paid $70 million in June 2008 for 13 buildings with 250 apartments on West 49th Street; about half of the apartments were rent regulated. Last year, he bought 22 buildings with 384 apartments on West 109th Street.
The latter portfolio cost $45 million, or about 60 percent of what was owed by the previous owners, the Pinnacle and the Praedium Group, which had begun eviction proceedings against 5,000 of the 21,000 tenants it had in New York City. Mr. Orbach’s strategy, many tenants say, is no different. He has filed dozens of cases against tenants in housing court, and some tenants complain that private investigators posing as repairmen have been poking around their apartments.
Rosa Hernandez, 71, said she and her husband have lived in their two-bedroom fifth-floor apartment at 204 West 109th Street for 32 years. They raised four children in the apartment, where they pay $563 a month in rent. Mr. Orbach’s lawyers say in court papers that she now lives in her native country, Ecuador, and in Florida, where some of her children now live; she denies the claim.
Bennett Baumer, a tenant organizer at Housing Conservation Coordinators who is working with tenants on 49th Street, said of Mr. Orbach, “He’s part of a second wave of predatory investors using vacancy decontrol to evict tenants and jack up rents at the expense of affordable housing.”
Mr. Orbach’s lawyer, Ken Fisher, rejected that notion, calling Mr. Orbach a “small potatoes” investor, not a Wall Street speculator. He said Mr. Orbach was merely trying to get rid of tenants who had no right to rent-regulated apartments, because they were illegally subletting or had a primary residence elsewhere.
“It is an unfortunate fact,” Mr. Fisher said, “that tenants in New York sometimes resort to illegal tactics in order to hold on to rent-regulated apartments.”
One tenant currently in court with Mr. Orbach is Felipe Fernandez, who said he has lived in his family’s four-bedroom apartment on West 109th Street since 1974. His parents have since left the neighborhood but he remains, the sole occupant, with an $800-a-month rent. Given the apartment’s four bedrooms, it is easy to see why a landlord would want to remove him. But, Mr. Fernandez said, that does not give Mr. Orbach the right to toss him out of his home.
“I grew up around here,” said Mr. Fernandez, 50. “I know the neighborhood and everybody knows me. My daughter went to the school down the street.”
Mr. Orbach’s lawyer said his firm’s investigation had indicated that Mr. Fernandez lived somewhere else most of the time; Mr. Fernandez denied that.
City officials said they were keeping an eye on Mr. Orbach’s buildings.
Although he initially rebuffed their efforts, the City Council speaker, Christine C. Quinn, credited Mr. Orbach for evicting an illegal hotel that had been operating in one of his buildings. But, she said, “I still have concerns about whether there is or was harassment going on.”
The downturn in the housing market foiled many plans to gentrify buildings in far-flung neighborhoods. Many new landlords were stuck paying mortgages that the buildings’ rent rolls could not support, and some walked away from the buildings, while tenants languished in apartments badly in need of maintenance.
“The real culprits,” said Dina Levy of the Urban Homesteading Assistance Board, a tenant advocacy group, “are the banks who, eyes wide open, overleveraged these buildings when they should have known better.”
But there is still interest among investors for rent-regulated buildings, said Robert A. Knakal, a principal at Massey Knakal, the real estate broker that sold Mr. Orbach the 109th Street buildings. “The artificially low rents lead to a lot of upside,” he said. “If they’re paying below-market rents, it’s a positive thing if the tenant leaves.”
Many tenants in rent-regulated apartments, he said, are “abusing the system.” Legitimate tenants, he said, have nothing to worry about because they cannot be legally displaced.
Tenant advocates have had some success. Last year, the city helped broker a deal that allowed the former baseball star Mo Vaughn and his real estate company, the Omni Group, which has had success turning around neglected properties, to take over and begin to fix 14 of the city’s most troubled buildings that had been owned by the Ocelot Capital Group.
But rather than serve as a model, the Omni deal has started to look like an exception. City officials have so far not had success replicating the arrangement.
One real estate manager, Sam Suzuki, represented a group that bought six other Ocelot buildings in May 2009, raising hopes that conditions would improve. They did not. The number of violations grew under Mr. Suzuki’s watch, and the tenant group of a building at 1585 East 172nd Street filed suit against him.
Mr. Suzuki failed to correct violations, show up in court or reveal the names of the owners of the properties, and this summer he served three weeks in jail for civil contempt, a rare penalty in housing court.
Mr. Suzuki, in an interview on Thursday, blamed the buildings’ problems on tenants who failed to pay the rent. “There has to be a balance with the landlord and the tenant,” he said. “The tenants have to pay the rent.”
A real estate investment company, the Bluestone Group, bought the debt on Mr. Suzuki’s buildings from Dime Savings Bank, making it, in effect, the third time the troubled housing stock changed hands.
Eli Tabak, a principal in the company, said the deal was in line with Bluestone’s business model, which he said involved “buying distressed debt at a discount, turning the asset around and turning it into a cash-flowing proposition.”
Ten buildings owned by Milbank Real Estate, a Los Angeles company, went into foreclosure last year — and showed up on the eBay classifieds with the name of a Yonkers real estate company on March 30.
Housing advocates said these listings on eBay, where sellers may list items but do not put them up for auction, represented a new low, signaling levels of desperation that spelled only more pain for the tenants. The buildings that were owned by Milbank have 547 apartments and more than 3,200 housing code violations.
Milbank did not return calls for comment. A new buyer is currently negotiating to take over the portfolio, said Jen Brown, a spokeswoman for LNR Property, the special servicer handling the troubled loan. LNR has declined to disclose the name of the buyer, drawing concerns from Ms. Quinn, whose office has reviewed the portfolio’s finances and fears the new owners are ill-prepared to repair and maintain the buildings.
Ms. Quinn took part in a rally on Tuesday in front of one of the Bronx buildings calling for more transparency and accountability.
“We believe that this sale is just going to rearrange the deck chairs on the Titanic,” Ms. Quinn said in an interview. “I’m very concerned that this is déjà vu all over again.”
Filed under: foreclosure
Apr
13
New HUD form confuses borrowers, lenders
For anyone buying a home this spring, beware: There could be some kinks with the paperwork.
United States Department of Housing and Urban Development – United States – Loan – Department of Housing and Urban Development – Government
Aug
17
Bankruptcy Judges & DOJ Rip Mortgage Companies
Below is another story about Servicer abuses… At least some judges see the issues and are not allowing personal viewpoints or prejudices to cloud their assessment of how terrible the situation is for a homeowner in mortgage hardship or distress.
The servicers are also the main players in the massive foreclosure fraud that is occurring around this country.
One would think that at some point, the legal system is going to stop the train of abuses justice suffers because of the systemic fraud that is committed by servicers trying to foreclose on homes they have no financial stake in.
Bankruptcy Judges & DOJ Rip Mortgage Companies
by Karen Weise, ProPublica
“Systemic abuse.” “Extraordinary incompetence.” “Reckless.” In a growing body of legal cases, judges and the Justice Department are breaking from legal jargon to starkly chastise mortgage companies.
As mortgage delinquencies rise, more and more homeowners are learning the central role that mortgage servicers play in their lives. The legal cases show that role can be distressing. Judges have found that major mortgages servicers regularly mess up basic accounting, improperly credit payments and charge unwarranted fees. They’ve “not done a very good job of keeping the records,” said Judge Samuel Bufford of California.
Mortgage servicers — typically either bank subsidiaries or independent companies — handle the day-to-day work with homeowners, ranging from collecting monthly payments to determining when to modify or foreclose. Problems with servicing often, but not always, occur once homeowners start having trouble making payments.
Complaints to the government about mortgage servicers have soared in recent years. They’ve risen from 31 percent of the complaints that the Department of Housing and Urban Development received in 2006 to 78 percent in 2008, according to HUD spokesman Lemar Wooley.
Problems Exposed in Bankruptcies
Many homeowners in bankruptcy have legal representation and must settle claims with servicers. As a result, the process has revealed and documented a slew of servicer problems.
In many rulings, judges have shown frustration and even outrage. They’ve ruled that servicers have attempted to collect unjustified fees, charged homeowners for unnecessary insurance, failed to properly credit homeowners’ payments and failed to provide evidence to back up fee requests. In most cases, judges demand that servicers fix the problems and unwind the unjustified fees; sometimes, judges award damages and attorneys’ fees. In one extraordinary case, a judge issued $750,000 in emotional and punitive damages. (We’ve compiled five sample cases and rulings for you to see here.)
Take the case of Donald and Phyllis Moffitt of Arkansas. In June 2008, bankruptcy Judge Audrey Evans issued a restraining order against America’s Servicing Company, a division of Wells Fargo, saying it must stop attempting to collect payments that the Moffitts did not owe. In a 41-page ruling (PDF), the judge wrote:
“The evidence supports the premise that ASC’s servicing procedures, as exemplified by the Moffitts’ account, are not organized to assure accuracy and accountability. … ASC misapplied these payments, failed to record the correct information even though Mrs. Moffitt constantly called and talked to ASC’s agents, failed to follow her written instructions, failed to communicate with the Moffitts, sent mortgage statements that were incomprehensible and frightening, began collection calls, and engaged in a litany of mismanagement of the Moffitts’ loan.”
Wells Fargo did not respond to a call for comment.
A 2007 study looked at a majority of Chapter 13 bankruptcy filings in 2006 and found that in 70 percent of the cases studied, mortgage companies claimed homeowners owed an average of $6,309 more on their loans than homeowners believed.
Problems with servicing are not limited to families filing for bankruptcy, Katherine Porter, an author of the study and an associate professor at the University of Iowa’s law school, testified before Congress last year. She said servicers commonly foreclose when they do not have the legal right to do so, impose unwarranted or illegal fees, and miscalculate how much families owe.
In several instances, judges have taken broad action to address persistent problems with a servicer. This May, Judge Elizabeth Magner in Louisiana said her review of multiple cases involving Ocwen Loan Servicing had shown the servicer regularly acted in “bad faith.” The judge said Ocwen had charged improper fees and attempted to collect bankruptcy-related fees after the court closed a case. In one of the cases, Ocwen took 10 months to provide a full accounting of fees.
The judge wrote that Ocwen’s “systematic abuse” required more than monetary sanctions, which had not stopped the behavior in the past, so Magner issued an order (PDF) forcing Ocwen to follow specific accounting procedures. (We’ve noted before that Ocwen’s servicing procedures have raised eyebrows in the past). Ocwen’s general counsel, Paul Koches, said the company disagrees with the ruling and is pursuing an appeal in U.S. District Court.
Justice Department Takes Action
The Justice Department’s United States Trustee Program is a watchdog over the bankruptcy process. Its 21 regional offices oversee more than 1,300 private trustees who mediate between debtors and creditors in individual bankruptcy cases.
The Trustee Program’s annual report said combating servicer abuse (PDF) was a top priority last year. The program initiated 68 actions (PDF) against what it calls “systemic abuse” by mortgage servicers, including 25 large servicers such as Countrywide, HSBC and JPMorgan Chase, according to public documents (PDF) and speeches (PDF). The Trustee Program has sued Countrywide in at least six states.
Countrywide, now owned by Bank of America, is the largest participant in the federal Making Home Affordable program to modify troubled mortgages. A recent analysis by the Associated Press found that at least 30 of the 38 mortgage companies that have signed up for the program have been sued over their servicing practices.
In response to one U.S. trustee’s suit in Ohio, Judge Marilyn Shea-Stonum ruled in May (PDF) that Countrywide had charged fees with “no factual basis” and wrote: “Countrywide’s system is reckless. It appears to me designed to allow each actor in the process to act with indifference to the truth, and to rely solely on the limited information made available at each step. … [The errors in this case] evidence Countrywide’s disregard for diligence and accuracy.”
The judge is currently determining monetary and other sanctions. Countrywide spokeswoman Shirley Norton said, “We are reviewing the ruling and considering our options.”
Private trustees have sued servicers as well. Debra Miller, a private trustee in Indiana, has been active in litigation where servicers haven’t complied with federal regulations. Typically, she said, private trustees try to obtain settlements that are more about changing practices than monetary compensation. “Our job is to force mortgage companies to improve their systems,” she said.
Both the Justice Department and private trustees have stepped in to fill what they see as a regulatory void covering mortgage servicers, according to Andrea Celli, a private trustee in upstate New York.
Future Oversight Under Debate
Currently, a hodgepodge of agencies oversees mortgage servicing. HUD, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the Federal Trade Commission and the Federal Reserve all have partial authority.
Concern over mortgage servicing was part of the early discussions about the proposed new Consumer Financial Protection Agency, according to Eric Stein, the Treasury Department’s deputy assistant secretary for consumer protection. The CFPA, as proposed by the Obama administration, would be the primary watchdog for servicer abuses.
Servicers are resisting the new consumer agency. Paul Leonard, a lobbyist for the Financial Services Roundtable, said his organization’s members believe that there should be better coordination among regulators and that existing agencies can handle the responsibility.
Tara Twomey, a lecturer at Standford Law School who co-authored the large study of bankruptcy cases, says that more regulation would help, but it would only be a “Band-Aid.” “The more fundamental problem is one of market structure,” she said. “Borrowers don’t get to choose their servicer.”
