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 26^th.

And now…

This year at the 84^th 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.

We have not talked a lot about payment protection plans, those great deals where the bank agrees to pay your credit card balance in the event of disability or death in exchange for premiums. They are great for the banks. In an article in the American Banker, Victoria Finkle and Jeff Horwitz reports that the banks only return to the consumer 21 cents of every dollar paid in premiums and earn profit margins of 50% or more on the plans. Finkle and Horwitz report that the FDIC and CFPB are looking into the plans, with a regulatory probe of Discover Financial Services already underway. The article is worth a read, especially for the surprisingly candid assessments of industry insiders.

These plans are another example of "gotcha capitalism"--a business model dependent on sustained miscalculations or mistakes by the other party to the transaction. For everyone but the consumer at death's door, the premiums are way too high to justify the expense.

UPDATE (2/8): More on the CFPB probe of Discovery from Donal Griffin and Carter Dougherty over at Bloomberg.

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.

1. Correspondence with Washington Attorney General Rob McKenna Staff RE Multistate Fraudclosure Settlement
2. KABOOM | Washington State AG McKenna Sues Recontrust in State of Washington v Recontrust
3. Another Settlement Fail | FDIC Reaches $64 Million Settlement with 3 Former Washington Mutual Executives, Kinda…

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.

1. Lynn Szymoniak and Jeff Thigpen Video | Mortgage Fraud Investigation in Guilford Co.
2. Occupy Palm Beach Foreclosure Fraud Teach-In Sunday Jan 29 1-3pm
3. Open Letter to Sheila C. Bair of the FDIC from Lynn Szymoniak (60 Minutes) RE Compensation for Foreclosure Fraud

1. Lynn Szymoniak and Jeff Thigpen Video | Mortgage Fraud Investigation in Guilford Co.
2. Occupy Palm Beach Foreclosure Fraud Teach-In Sunday Jan 29 1-3pm
3. Open Letter to Sheila C. Bair of the FDIC from Lynn Szymoniak (60 Minutes) RE Compensation for Foreclosure Fraud

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.

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.

Mandelman & Field… OUT!

Who Let the DOERS Out?  Who-Who-Who-Who-Who?

Who Let the DOERS Out?  Who-Who-Who-Who-Who?

First thing this morning and in response to our DOERS… One West Bank STOPPED THE SALE of Lisa Ferrechia’s home in Milford, Massachusetts… asking that we please call of our DOERS!  They have assured Lisa that they are looking at her situation at the highest levels and will do everything possible to make sure she can keep her home.

DOERS… you did it again.  That’s 7 out of 7 DOERS… we really are DOING it and making a real and very meaningful difference not only for the homeowners whose homes we’ve saved by helping them get sustainable loan modifications, but we’re also helping in a bigger picture sense as well by calling attention to situations that no one should want to see happen.

Obviously, we’ll be staying on top of what’s going on in Lisa’s case, but I’m quite confident that One West Bank is going to find a way for Lisa keep her home, they responded quickly… as a matter of fact the CEO emailed last night… Sunday night… to say that they would be looking into the situation first thing this morning… which they obviously did… and we thank them for being responsive and considerate in this instance.

So, thank you ONE WEST BANK.  Let’s get this done for Lisa and thousands of other homeowners… let’s make this into a win-win scenario, instead of the lose-lose-lose situation we have today.

But, we also recognize that we still have a long way to go before this fight will be over.  So, we need more DOERS signing on every day.  We can’t rest on our laurels, our voice needs to get stronger so we can take on bigger and bigger challenges.  Remember what they say… politicians won’t see the light until they feel the heat.  So, here’s what you need to know about DOERS…

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, HERE’S THE BOTTOM-LINE…

In 1954, Brown v. The Board of Education didn’t end segregation.  It took ten years and hundreds of thousands of people marching in the streets before President Johnson signed the Civil Rights Acts of 1964-65.

In 1971, President Nixon saw from his White House windows, tens of thousands of people protesting the war in Viet Nam and became paranoid that he would lose the election in 1972.  It drove those around him to break into the Democratic headquarters and led to the Watergate scandal… even though he won reelection in 1972 by a landslide.

And more recently, in 2009, news of AIG bonuses totaling $160 million and a corporate retreat at the St. Regis luxury resort in Southern California, caused people to take to the streets, outraged that a company recently bailed out by the taxpayers would be allowed to pay out what appeared to be extravagant bonuses.  Within two weeks the House of Representatives authored and passed a bill that would have placed a 90 percent tax on those and other bonuses.  It was killed in the senate, of course, but that’s not the point.

The point is that our elected representatives can move quickly… if they are properly motivated.

To become a DOER you only need to DO 3-4 things and they’re all easy:

1. Click here to SUBSCRIBE to Mandelman Matters.  That’s the only way you’ll get an email whenever there’s a new post and when you see “DOER ALERT” in the headline, you know it’s time to DO something that will matter.
2. Send an email to me at mandelman@mac.com.  Just type: I’m a DOER or something close in the subject line.  I’ll add you to the database of DOER emails.  When we want the element of surprise I won’t post it, I’ll email you the plan.
3. Actually check your email from Mandelman Matters or from mandelman@mac.com and when you see the words DOER ALERT, open it and read it right away or certainly ASAP.  Not the next day… that day.  Then, assuming you want to help make a difference, read it and send an email to the CEO’s email while I always list at the bottom of the DOER Alert.  Of course, the more thoughtful the email the better, but it doesn’t have to be a long email if you’re pressed for time.  Just a few sentences is just fine and dandy.
4. Help recruit other DOERS.  Send others links to articles on Mandelman Matters and tell them you’re DOING it and it’s working.

That’s all there is to it, and all I’m asking for is a four month commitment.  After that, if you agree that it’s worth DOING, then give me another four months.  The more DOERS we have the larger the problem we can tackle.

Consider this… right now there’s all this controversy over the 50 state AG settlement.  A few days ago many people thought the deal was about to be announced and people were very upset.  Well, if we had 100,000 DOERS now, we could stop that deal from getting done for sure.

Just think of being a DOER as being a way to “occupy” without leaving your home, sleeping on the ground, getting arrested and sprayed with pepper spray.  It’s also more effective than doing those things.  I’m not saying you shouldn’t do them, but I’m telling you that DOERS can stop this mess in its tracks this year or next.

]]> http://thepatriotswar.com/index.php/our-doers-did-it-again%e2%80%a6-one-west-bank-stops-sale-in-east/loan-modification/feed/ 0 http://thepatriotswar.com/index.php/doer-alert-onewest-bank-needs-to-stop-a-foreclosure-sale-monday-because-it%e2%80%99s-wrong/loan-modification/ http://thepatriotswar.com/index.php/doer-alert-onewest-bank-needs-to-stop-a-foreclosure-sale-monday-because-it%e2%80%99s-wrong/loan-modification/#comments Mon, 30 Jan 2012 01:31:18 +0000 Mandelman http://mandelman.ml-implode.com/?p=8805

In just two days from now, on Monday, January 30, 2012, at 3:00 PM… a terrible, tragic and yet easily avoidable event is scheduled to occur… and MUST BE STOPPED. 

OneWest Bank is scheduled to conduct a foreclosure auction of Lisa Ferrecchia’s home in Milford, Massachusetts, a home worth roughly $209,800 today, although the balance of Lisa’s loan is about twice that amount… $396,046, as of January 3rd of this year.

The day on which IndyMac Bank originated Lisa’s mortgage was arguably the worst date in history to get a mortgage, July 24, 2007, but she wouldn’t have had any way of knowing that at the time.  The loan’s interest rate, fixed for 30 years, is 7.625 percent.

In the early part of 2010, Lisa’s income went down, just as happened to countless others, but it’s the reason Lisa’s income went down that’s not so common… it went down because someone said that her job was paying her too much money… she was earning $35,000 a year and that was apparently too much money.

Lisa’s income went down because she lost the disability income that I would imagine she had always received as an adult.  You see, Lisa Ferrecchia is a victim of what is often called: “One of the biggest medical tragedies of modern times.”

Lisa Ferrecchia is one of the thalidomide babies.

German pharmaceutical company Grünenthal launched the drug in October of 1957, claiming that it was an effective tranquilizer and painkiller, and proclaiming it a “wonder drug” for insomnia, coughs, colds and headaches. It was also found to be an effective antiemetic with an inhibitory effect on morning sickness, so thousands of pregnant women took the drug to relieve their symptoms.

Scientists at that time did not believe that any drug taken by a pregnant woman would be able to pass across the placental barrier and harm the developing fetus.  And as it turned out, they were so very wrong.

Here in the U.S. the Food and Drug Administration (“FDA”) never licensed thalidomide for general use, however, samples were distributed to a numerous physicians as part of a clinical trial, in which 20,000 patients in the U.S. received thalidomide.  It’s impossible to know how many pregnant women actually took the drug to help alleviate morning sickness or as a sedative, between 1957, the year my wife was born… and 1961, the year I was born.

Thalidomide was withdrawn from the market in 1961 after the drug was shown to cause birth defects.  Roughly 10,000 babies had been born with disabilities such as the characteristic stunted arms or legs, and some babies were born with no limbs at all.

Even today, it is not known exactly how many worldwide victims of the drug there have been, although estimates range from 10,000 to 20,000… and Lisa Ferrecchia is one of them… basically, she was born with her hands on her shoulders… they’re often called “flipper limbs.”

Some evidence published by the Thalidomide Trust in the U.K. suggests that the drug was first developed by Otto Ambrose, a Nazi scientist, as a possible antidote to nerve toxins, such as sarin gas.  Furthermore, a relation between testing thalidomide and the Nazi death camps has also been suggested.  And according to Grünenthal, Heinrich Mückter was among those responsible for inventing thalidomide.  Mückter was a pharmacologist who is known to have carried out wartime experiments on Polish prisoners allegedly in an effort to find a cure for typhus, but causing the death of many hundreds in the process.

Frances Kathleen Oldham Kelsey, Ph.D., M.D., who under pressure from the Richardson-Merrell, the company with the rights to market thalidomide, correctly refused approval of thalidomide by the FDA, saying that further studies were needed.  As a result, she eventually received the President’s Award for Distinguished Federal Civilian Service at a 1962 ceremony with President John F. Kennedy.  That same year, the United States Congress enacted laws requiring tests for safety during pregnancy before a drug can receive approval for sale in this country.

In September 2010, some fifty years later, the FDA honored Kelsey with the first “Kelsey Award,” which is an award now given annually to an FDA staff member.

Lisa Ferrecchia may have been born a thalidomide baby, but she’s not “disabled,” as far as she’s concerned.  She goes to work each day at a medical facility, where she works as a medical coordinator of care.  She bends over in order to write and her handwriting is beautiful.  I’m told that she has learned to apply her make up beautifully, as well.
So, in some sort of cruel joke, her income went down when her income went up, and now it was difficult to keep up with her $320,000 mortgage.

Stay with me, because here’s where her turning point occurs.  Here’s that moment in time when had she not chosen the path she did, everything could be different today and she would not be worrying about where she will go once her home is sold on Monday…

SHE LISTENED TO THE PRESIDENT OF THE UNITED STATES, AND CALLED ONEWEST BANK FOR HELP.

(If this were a movie, this is the part where the audience, seeing what she’s about to do screams, “No, Lisa… it’s a trap, don’t do it!  Don’t listen to them… get a roommate… anything… don’t call ONE WEST BANK!  Noooooo!)

Not realizing that Treasury Secretary Tim Geithner was both an uncaring, incompetent and dishonest shithead, and that banks like ONEWEST could not be trusted any further than they could be thrown, Lisa explained her situation to the OneWest representative… and can you guess what that person told her?  I know you can…

The OneWest representative said: “I’m sorry, I can’t even talk to you about this unless you’re 90-days delinquent.”

Ding, ding, ding!  Winner, winner, chicken dinner!

Over a year later, still being tortured by today’s version of thalidomide, Lisa decided she needed help and turned to a law firm who thought to themselves… “We have got to be able to get this done.  This is crazy.”

I spoke with someone from that firm and she says they have submitted Lisa’s paperwork on ten separate occasions, although she admits that number could be nine.  Each time, apparently, the bank takes at least 45 days to review the documents and by then they need new ones once again.

They tell me that she’s been turned down for not enough income, too much income, and the latest excuse du jour… her investor doesn’t participate… whatever the heck that means.

Memo to OneWest Bank – If you force me to actually go find out who her investor is and then pull the PSA for that trust, and I end up finding out this is an IndyMac portfolio loan that you bought for 30¢ on the dollar, or if it’s a Fannie or Freddie deal… I swear by all that is holy, that you will regret having made me go through that exercise, and I don’t give a rat’s petute how many multi-zillionaires you stack up over there.  As far as I’m concerned, the richer they are the more fun it is to ruin page one of their Google search.  Run that by Dell and Soros and see what they want to do, because they may have the money, but I’ve got the time.

So, now… TWO YEARS LATER… now Lisa has almost a $400,000 mortgage… thank you for that, by the way, OneWest Bank.  And when I first heard about her numbers, I thought, hmmm… she is short a few bucks on the income side here, but you know what… horse pucky!  You’re charging her 7.625 percent interest… what kind of unnecessary if not predatory garbage is that?  You can take that rate down quite a bit… and if you have any soul at all, you’ll wipe out at the $80k that’s your fault here, and then reduce the principal so that she can afford to keep her home… period.

I’m not usually like this, I’m a numbers person, but I’ve spent all day and night on this article and I’ve decided that you’re just not going to do this to Lisa Ferrecchia… not today.  Not this time.  Not happening.  Your bank told her to stop making her payments because that was the only way she could get her loan modified and that was TWO YEARS AGO.

Fix this thing… Lisa has had to overcome more than any of us… more than you George Soros. And you, a Hungarian Jew that lived through being a part of the Nazi’s own Jewish Council that carried out acts against Jews during the war.  You above all should know what it feels like to have others avert their eyes rather than to look at you, isn’t that right… Mr. Schwartz turned Soros?

And you, Michael Dell, yet another privileged Jew in a long line of over privileged Jews… don’t you want to do something about this?  Then for God’s sake, Dude, make the call and stop Lisa from losing her home, damn it!

And don’t freak out everybody, I’m Jewish so I’m ALLOWED to say what I’ve said here.  Where I come from, Jews don’t stand by and allow injustices like this happen to other people if we can help it… EVER.

Look, I’m not saying that Michael Dell or George Soros knows anything about this prior to my writing about it today, but they do now.  So fix it and do it fast, because the sale is Monday at 3:00 PM.  And just so you know, the house is not going to sell tomorrow no matter what, because we’ve already got foreclosure defense attorney Glenn Russell ready with a bankruptcy filing to stop it if that’s what we need to do.  (You’ve heard of Glenn, right, he was one of the lead attorneys from the Massachusetts Supreme Judicial Court “Ibanez” decision.)

BUT LISA SHOULD NOT HAVE TO FILE BANKRUPTCY, AND IF YOU MAKE HER DO THAT, I AM GOING TO BE SUCH A PROBLEM FOR YOU THAT YOU’LL HAVE TO HIRE AN ENTIRE DEPARTMENT TO CONTEND WITH MY ANTICS GOING FORWARD.  ARE YOU FEELING ME HERE?

One West Bank is the reincarnation of failed IndyMac Bank, brought back from the dead by a list of multi-billionaires, with the support of the FDIC.  The list of multi-billionaires involved includes: J. Christopher Flowers – who comes from Goldman Sachs… John Paulson – who runs a hedge fund that did quite well shorting the meltdown along with Goldman Sachs… George Soros – who should need no further introduction, and Michael Dell, of “Dude, I’m getting a Dell” Computer.

I only offer those names so that everyone recognizes with whom we are dealing here. These are a bunch of guys so rich they could fund their own space program, take their space shuttle out for a spin whenever company comes to town, and even after all that I’m confident that they’d still be multi-billionaires.

On November 25, 2009, Judge Spinner in Long Island, New York penalized OneWest for what he said were, “harsh, repugnant, shocking and repulsive” actions related to their dealings with a homeowner at risk of foreclosure, by canceling the debt in favor of the borrower.  The decision was ultimately overturned on appeal, but the words still ring out across the land: harsh, repugnant, shocking and repulsive.

For most of my lifetime, those were not the sorts of words one expected to hear being associated with a bank.  Now, however, one reads them and thinks… Yeah!  You go, Judge. 

And George Soros, you’re referred to as a “philanthropist.”  I read that “Time” magazine says you’ve given away $7 billion to causes you’ve deemed worthy.  You provide funding for important causes all over the world.  You have to be someone who cares.  But how do I reconcile the way Judge Spinner described OneWest as being, “harsh, repugnant, shocking and repulsive,” against that?  How do you reconcile a contrast that stark?  Surely, it’s not about the money, is it?  Surely it cannot be that.

And you don’t get to average out your philanthropic deeds, you realize that right?

NoBody’s Perfect…

In 2008, Niko Von Glasow, also a “thalidomide baby,” produced and directed his first feature documentary, “NoBody’s Perfect.”  Without any deference to political correctness the film follows eleven people who, like him, were born disabled due to the disastrous side effects of Thalidomide, and who are prepared to pose for a book of photos… and to pose naked.

The film provides those who regularly throw furtive glances at “thalidomiders,” and other physically disabled people, with a good, long look, and along the way introducing us to fascinating characters working in such diverse areas as “politics, the media, sport, astrophysics and acting.”

It’s a darkly humorous look at people who have learned to live with their disability to an impressive level of “normality,” completing the picture by showing Niko’s numerous unsuccessful attempts to contact the chemical company Gruenenthal, to talk about Thalidomide and its effects

About making the film, Niko’s wife told him that it was “time to look the devil in the eye.”  And has he explains, “It was the first real cinema film, historically, made by a disabled director about disability.”  In 2009, the film won the German Film Award for Best Documentary.

Von Glasow asked himself, “What’s my biggest fear?  And in his case, he says the answer was public nudity.

“People stare at me anyway, Niko explains.  

“When I go to a beach with my swimming suit on people stare even more, so I don’t go to beaches. I had to find 11 other thalidomiders who strip naked for a calendar and I became Mr. December. It became a dark but very funny comedy. I did it and now I feel better! More secure: in my soul, in my being, inside. Once you go into it, honesty is very healing.”

So… Dear OneWest Bank…

Lisa Ferrechia should not be in the position she is in today, two years behind on her mortgage and facing the loss of her home tomorrow at 3:00 PM… and she wouldn’t be except for you, and a crisis created by Wall Street’s investment bankers.  This is NOT her fault… she has done nothing wrong except to listen to your bank and her government.

If you hadn’t told her to stop making her mortgage payments in order to get her loan modified, I don’t know what would have happened, but I do know she would have done something else… and because Lisa is a person infinitely better than me at overcoming life’s obstacles, I fully believe she would have overcome this one… were it not for OneWest Bank.

Do you, OneWest Bank really want to be the thing that beat her?

It is inconceivable that any of the “Richest Americans” that are OneWest Bank’s owners, would want the bank’s management to do anything but STOP THIS SALE and do everything possible and then some, to keep Lisa in her home.

And I’m sorry if you or anyone else feels that I’ve been unfairly harsh here.  I assure you that I take no pleasure in any of this.  With every article I write, come prayers that it will be the last I ever need to write in this regard.

This article took me over 18 hours to write.  I started early on Saturday morning, worked on it until 11:00 PM on Saturday night.  Picked it up on Sunday morning at 7:00 AM and as I’m wrapping up now my clock reads 5:35 PM.  And the whole time I knew that Lisa would be wondering whether I would be writing something about her situation, as the research involved made it take a long time to get done.

And sure enough, when I just now called the law firm who is representing Lisa to get her loan number, I was told that she has been watching my blog… waiting to see if there was anything left on which she could pin her hopes. The law firm said that I would be… but Lisa, obviously preparing for the worst, replied: “Miracles like that just don’t happen for people like me.”

I wish more than anything that I could turn back the clock for Lisa Ferrechia and all of the other thalidomide babies… all the way back to the years 1957 – 1961.  I wish I could go back and stop what is referred to as, ”One of the biggest medical tragedies of modern times” from ever happening…. I know I can’t, of course… but I want more than anything to be the miracle she needs.

I wish that I could stop her home from being taken away from her… but I can’t DO that either.  All I can DO is write about this tragic situation in an effort to stop it from worsening.  I just don’t know what else I can possibly DO…

BUT LUCKILY MY DOERS DO… AM I RIGHT, DOERS? 

You know exactly what to DO in an effort to stop Lisa’s home from being sold out from under her… I know you DO.  And time is really of the essence here, so let’s DO this in a BIG way for Lisa… it’s Sunday, so everyone has time, right?

Let’s DO together what I couldn’t possibly DO alone… Let’s be her miracle.

Mandelman out. 

Lisa Ferrechia

Loan #3002965774

I assume you have Lisa’s phone number in your records, and you should also have contact information for the law firm that represents her, but just in case contact…

Lisa Reed

Lombardi & Stephenson, Attorneys at Law

Ph. 781-396-4663 Ext. 2205

Cell: 781-718-1993

HERE’S ONEWEST CONTACT INFO:

Steven Mnuchin

Chairman and Chief Executive Officer

steven.mnuchin@owb.com

 ~~~

John Casillas

President

john.casillas@owb.com

Ph. 562-904-9001

~~~

Suggestion from a DOER add:

ombudsman@fdic.gov

 ~~~

Rick Hall

President Hall

richardhall@owb.com

 ~~~

Brandon Latman

brandon.latman@owb.com

Ph. 626-535-5970

 ~~~

Joseph M. Otting

Chief Executive Officer, President & Director

Corporate Offices Ph. 626-535-2500

Toll Free: 800-669-2300

joseph.otting@owb.com

~~~

Michael Mayer

Associate General Counsel

michael.mayer@owb.com

 ~~~

Claudia Mann
Default Escalation Specialist

Fax: 626-440-7148

claudia.mann@owb.com

ONE MORE THING…

Make no mistake, although Lisa doesn’t see it this way… this country OWES Lisa, big time.

In 1900, the Canadian government finally compensated thalidomiders with an award of $7.5 million, roughly just $100,000 each, as far as I can tell.  And that’s just not enough considering that government failed to properly warn the public of the dangers involved in using the drug.  Our government, it seems, has done nothing to compensate the victims of this unnecessary tragedy.

SIGN A PETITION seeking justice and dignity for thalidomiders worldwide.

The thalidomide tragedy was Europe’s worst man-made disaster outside of war or genocide since 1945. It came about because a greedy pharmaceutical company put profit ahead of humanity and because German politicians colluded with the profiteers to give the drug the best possible launch pad. Early warning signs were ignored and even discredited, evidence of birth defects was dismissed and thousands more babies were damaged needlessly. The German state allowed the survivors to have their rights trampled underfoot while Chemie Grunenthal continued to prosper.

This was a company that had its roots in the Nazi death camps and was staffed by unrepentant, former Nazis. This was their last, unpunished crime against humanity. It is time that the German Government recognized its own culpability and made a settlement with thalidomide survivors wherever they are and whoever they are. We believe that not doing so continues to heap shame on the German people.

 Thank you… 

On Monday at 5:00 PM, as I was running to catch a flight to Phoenix to work with a state senator on a piece of legislation I’ll be announcing soon, I posted a DOER ALERT titled: “Dear Bank of America,” about an octogenarian by the name of Dale Wright.  He had been trying to get his loan modified for a couple of years… been turned down… reapplied, and was told he was under consideration as recently as December 23, 2011… and then Bank of America sold his home on January 3, 2012.  Mr. Wright found out when an investor showed up at his door saying that he would understand it he needed more than THREE DAYS to get out.

By mid-day on Tuesday, Bank of America had responded to say they were looking into it… and by 4:30 PM that same day Bank of America DID THE WRIGHT THING, and gave Mr. Dale Wright his home back… from a bonafide third party purchaser.  BofA has also notified me to assure me that the bank is also modifying the loan, and I’ll be talking with them tomorrow to get details, among other things.

The point is that there should be no question that my DOERS are very effective, and likewise there shouldn’t be any question as to why that’s the case.  In our democracy, there’s only one thing more important than money and that’s getting reelected.  If our elected officials understand that they are at risk of being voted out of office… they react.  Their loyalties to banking lobbyists dissipate quickly when they realize that no amount of money will overcome the will of the people.  We used to understand this to be the case.

In 1954, Brown v. The Board of Education didn’t end segregation.  It took ten years and hundreds of thousands of people marching in the streets before President Johnson signed the Civil Rights Acts of 1964-65.

In 1971, President Nixon saw from his White House windows, tens of thousands of people protesting the war in Viet Nam and became paranoid that he would lose the election in 1972.  It drove those around him to break into the Democratic headquarters and led to the Watergate scandal… even though he won reelection in 1972 by a landslide.

And more recently, in 2009, news of AIG bonuses totaling $160 million and a corporate retreat at the St. Regis luxury resort in Southern California, caused people to take to the streets, outraged that a company recently bailed out by the taxpayers would be allowed to pay out what appeared to be extravagant bonuses.  Within two weeks the House of Representatives authored and passed a bill that would have placed a 90 percent tax on those and other bonuses.  It was killed in the senate, of course, but that’s not the point.  The point is that our elected representatives can move quickly… if they are properly motivated.

We’ve got over a thousand DOERS… and we’ve saved 6 out of 6 homes, all of which were about to be sold within days or already sold as was the case with Mr. Dale Wright.  (6 out of 6 is NOT a coincidence, by the way.)  But, if you really want to stop the foreclosure crisis…

We’ll need at least 100x that number… 

To become a DOER you only need to DO 3-4 things and they’re all easy:

1. Click here to SUBSCRIBE to Mandelman Matters.  That’s the only way you’ll get an email whenever there’s a new post and when you see “DOER ALERT” in the headline, you know it’s time to DO something that will matter.
2. Send an email to me at mandelman@mac.com.  Just type: I’m a DOER or something close in the subject line.  I’ll add you to the database of DOER emails.  When we want the element of surprise I won’t post it, I’ll email you the plan.
3. Actually check your email from Mandelman Matters or from mandelman@mac.com and when you see the words DOER ALERT, open it and read it right away or certainly ASAP.  Not the next day… that day.  Then, assuming you want to help make a difference, read it and send an email to the CEO’s email while I always list at the bottom of the DOER Alert.  Of course, the more thoughtful the email the better, but it doesn’t have to be a long email if you’re pressed for time.  Just a few sentences is just fine and dandy.
4. Help recruit other DOERS.  Send others links to articles on Mandelman Matters and tell them you’re DOING it and it’s working.

That’s all there is to it, and all I’m asking for is a four month commitment.  After that, if you agree that it’s worth DOING, then give me another four months.  The more DOERS we have the larger the problem we can tackle.

Consider this… right now there’s all this controversy over the 50 state AG settlement.  A few days ago many people thought the deal was about to be announced and people were very upset.  Well, if we had 100,000 DOERS now, we could stop that deal from getting done for sure.

Just think of being a DOER as being a way to “occupy” without leaving your home, sleeping on the ground, getting arrested and sprayed with pepper spray.  It’s also more effective than doing those things.  I’m not saying you shouldn’t do them, but I’m telling you that DOERS can stop this mess in its tracks this year or next.

I have to be honest about something…

There are two things that really bother me.  One is that we only have a thousand DOERS.  That means that thousands of people are reading and not signing up as DOERS.  How can that be?  Hopefully it’s because Im haven’t promoted it well, which is something that’s going to change.  But, if its not that… if you’re reading my column and not signing up and subscribing so you can join forces with the rest of us… why the heck not?

How can you not want to help save someone’s home or influence the state legislature, or make congress in Washington D.C. take notice and hear our voice?  I really don’t understand… so please… if you’re not going to DO it, please at least let me know.  Maybe you have a good reason that I’m not thinking of, in which case fair enough.  But if you don’t, why wouldn’t you DO this?  How can you not DO this?

And two… if you’re a DOER and you didn’t send an email this last time around… and please don’t tell me you didn’t have time to send a 3 line email because if I had time to write it, you could send an email about it.  I missed my flight to write about Mr. Wright by the way.  Had to drive all the way back home, then worked until 2:00 AM and then back to the airport the following morning.  And you didn’t have 5 minutes?  Come on…

Not only that, but how could you let down your fellow DOERS… to say nothing of Mr. Wright?  What if BofA hadn’t done what they did, and Mr. Wright had lost his home?  And you didn’t send an email as you promised by being a DOER.  I’m serious about this… I couldn’t DO that and sleep at night.  Your email can be the one that matters.  But you were too busy… so now at 82 years old, a veteran loses his home… and you let down your fellow DOERS?  Not cool, people.  Really, not cool.

Time Matters… A Lot.

DO you not see that we are losing this war… because we definitely are.  More than 3,000 evictions a day, seven days a week.  Foreclosures not slowing a bit.  And interest rates are still low.  What’s going to happen when they are six percent or even higher?

And this is an election year… this is when politicians are the most concerned with reelection.  We have to act and it must be now.  Period.  We’re doing the wave and we need you and everyone else or it doesn’t look like a wave.  And even though it’s just begun, it’s unquestionably working.  What else is working even half that consistently… NOTHING, I’m sorry to say.

Sample emails from a few DOERS to Bank of America this last time around…

Some of the emails received by the bank show just how deeply offended Americans are by what’s being allowed to go on… I’ve excerpted a few paragraphs as examples… they are all addressed to Mr. Brian Moynihan, CEO, Bank of America…

“It seems more and more these days your Bank and the rest of the Banks that are involved in Mortgage backed secured investments are reaching criminal status 

 What has just happened to Mr Wright in Cloverdale, CA should at least bring a long jail sentence to your door. I am sending out as many e-mails as I have contacts and then I am going on every blog site I can find and pass this article to them as well. Then I am writing my congressman and then the Attorney General !!!!!”

###

“As if we needed any more proof that servicers have no clue who owns the loans or how to properly service them, now we have the nincompoops who worked on Mr. Wright’s foreclosure to illustrate the depths of BOA’s incompetence. This one will stick in everyone’s mind because an old man is being thrown out of his house after BOA repeatedly “lost” the papers or “misidentified” the investor in a series of memorably unfortunate events.

I work a lot of real estate buyers and if this mistake isn’t rectified immediately then I’m telling all of them about elderly Mr. Wright and cautioning them to stay away from BOA mortgages from Wednesday until I retire in 20 years. Hope we’re able to do business again in the next two decades Brian, but remember there’s lots of other lenders out there and I can’t recommend BOA with this kind of crap going down.”

###

“I have read the story about Bank of America’s foreclosure sale on January 3, 2012 of the home of Mr. Dale Wright of Cloverdale, California.  He is an 82 year old Veteran and a widower.  Your bank refused to convert his HAMP trial payment plan because of a false claim that he had failed to send you in IRS Form 4506-T.  This was a false claim.  Even if it wasn’t, for the lack of such a minor document, no institution with any moral sense would have allowed that to be a basis to proceed to take away this man’s home. The action of Bank of America feeds the public view of your institution as one which has no corporate responsibility or conscience.

I was recently told by Bank of America’s Maine Market President how Bank of America has improved its practices.   How can anyone believe that when a story such as Mr. Wright’s is exposed.

 Bank of America’s abuse of America’s homeowners has simply got to stop.  Would you please act like a responsible executive of one of America’s largest financial institutions and intervene in this case by telling your people to do what ever it takes to get the title to Mr. Wrights back into his hands, to give him the HAMP permanent modification to which he is entitled, and to compensate him for the enormous emotional distress that your bank has caused him to suffer.

 It would be unconscionable for you to fail to do this at once.”

###

“I’m not sure how much more egregious you can possibly get than to sell a home out from under an 82 year old veteran after 1) approving him for a modification and 2) admitting that after you screwed up the first time since he was making his payments and then 3) while he was “under consideration” a second time as recently as December 23, 2011 you sold his home? 

 And then you BLAMED WELLS FARGO?

It would behoove you to immediately rectify this situation with Mr. Wright.  Make it right!  I don’t really care how you do it, but to turn his home over to a “home flipper” when he not only qualified for a modification but was approved for one and made his payments on time is beyond disgusting. 

 I’m only e-mailing this because your offices are closed at the moment.  Wait until I call, then I’ll give all of your staff an earful.  This really has me steamed.  And they should be ashamed that you are their boss.

 I’m positive that I will not be the only one that will be contacting you on this one.  This is only the first wave of a coming tsunami.      

 Fix it, Moynihan.  We are all tired of you and your cronies shenanigans and the dam of outrage is about to break all over this country.  There will be way too many holes in it for you to plug up, and it will all come crashing down like the worthless paper you claim to hold on all these mortgages.”

###

“Regarding the above-referenced loan, please use your infinite powers to assist this elderly gentleman in the later years of his life to work through this difficult situation.  It is so atrocious the way in which distressed property owners in all age groups, of all ethnicities and from all socioeconomic strata are being treated by institutions that simply do not appear to care about the impact their industry has had on the citizens of this country.  But his particular story goes beyond the customary and usual.  This gentle man has served to defend those of us that are unable or unwilling to put our lives on the line for our country! 

When will you do something about the way in which Bank of America’s servicing departments botch up paperwork, lie to people in life-changing circumstances, and then blame it on others?  As a major institution within the financial realm, one would think that BofA would be on the cutting edge in the technology arena to keep paperwork intact; in hiring capable and ethical employees to problem-solve rather than lie, cheat, or delay, and in providing resources with whom customers can discuss their problems to get back on tract? 

More importantly, however, is when will Bank of America become the financial institution that deserves the trust of the people that keep you in business? 

It is time to stop the spiraling loss of wealth to the vast majority of homeowners that rely on the equity in their homes to enjoy a peaceful and well-deserved retirement. It is time to have compassion for those individual homeowners whose jobs have been cut out and now must move their entire families elsewhere in a real estate market that causes them to go into default.  It is time to develop a plan to actually work on customer service that truly assists (rather than bullies) homeowners in lieu of the almighty dollar. 

Mr. Wright’s story is, without a doubt, a very sad story that requires immediate measures.  Mr. Moynihan, let his story be the catalyst for extreme changes within your institution.  It is, after all, within your power to make these changes.  The bucks stops with YOU.”

###

Having read the story of Mr. Wright and his appalling treatment by Bank of America, I trust you will reverse the sale of this house and return it to its rightful owner.

I hope you are familiar with the details of this horrific treatment by your bank.  If not, then you can read about it here:

http://mandelman.ml-implode.com/2012/01/doer-alert-dear-bank-of-america/

###

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.

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.

And we’ll be in touch. Something like 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!

Dear Bank of America, and by Bank of America I mean CEO Brian Moynihan…

Brian, I am running out the door at the moment.  I have to make a flight to Arizona so I can attend a meeting this evening and another in the morning at the state capitol.  A state senator called me last week asking for my help on a bill related to the foreclosure situation there.  Were it not for my schedule, I’d be ripping you and your bank to pieces in this column, and then asking all of my DOERS to inundate you with emails and letters in support of yet another homeowner who’s life you have irrevocably, unconscionably and inconceivably harmed.

I’ll be back at my desk tomorrow, so I was just going to wait until then to deal with you, but you see… this story brought tears to my eyes asa I sat here checking in for my flight… I guess I’m just emotional (although I think “human” is the more appropriate word) about such things, while you apparent;y are not.  Anyway, after I wiped them away I decided even though I didn’t have time to write the story in detail… I’d let you know what’s coming soon to a theater near you.

My thinking is, if you want to avoid me having to spend the eight or so hours it takes me to write all of the details into a piece that will be read and remembered by tens of thousands of people all over the country, you’ll address this situation before I get home tomorrow afternoon.  I hope you don’t view this as some sort of threat… I don’t mean it that way… I hate people that threaten, you know what I mean?  Either do it or shut up, has always been my motto.

I’m just giving you a heads up, if you will of what tomorrow afternoon is absolutely certain to bring if you don’t do something about… do you remember the Perry Mason television show from days gone by…

The Case of the Grieving Grandpa and the Lying Lender

Starring…

Mr. Dale Wright of Cloverdale, California

Loan Number 149664284

Brian, this one’s going to make a great story too, so if you can’t make time to handle it before I’[m home tomorrow afternoon, you’re going to wish you had.  Here are a few highlights… think of it as the show’s preview, if you will.

Mr. Dale Wright of Cloverdale, California turned to Bank of America for help in 2009 after being told by the President of the United States that Bank of America would help him if at all possible.  Mr. Wright is an 82 year old veteran who’s been a pillar of his community since before you were born, Brian.

He was approved for his trial modification under the Making Home Affordable program on March 23, 2010.  I’m told by several people involved in his case that he made all of his payments on time and as agreed and I have reason to believe they are correct.  He was denied for a permanent loan modification because of Bank of America claimed not to have received a new 4506T… even though they had received said 4506T 30 days earlier and I’m told those things are good for 90 or 120 days.

No matter… he was told he was being reconsidered as of December 6, 2011.  In fact, he was told he was under consideration as of December 23rd.  You SOLD his house on January 3rd, Brian. He’s 82 years old, Brian.  December 25th is Christmas, Brian.  January 3rd is two days after New Years, Brian.  God damnit… Bank of America doesn’t need to do shit that week, Brian. (I’m sorry, for my language, but I can’t take much more of this without swearing, Brian.)

Of course, your bank didn’t tell him it was sold on January 3rd.  He found out when the investor knocked on his door on January 3rd and told him that it would be understood if he needed more than three days to move out!  The investor told Dale he was buying the property to “flip it.”

(SIDEBAR: You might want to mention to whoever that was that said that to him, that he’s damn lucky that it wasn’t me that answered the door that day because I don’t have any prior criminal record and I’d be willing to pick up a first offense charge for beating the crap out of him for doing that to my grandfather. But, I don’t suppose he would have said it to me, now would he.  No, he only says things like that to 82 year olds, I am sure.)

Mr. Wright called and Bank of America was like… “Wo, wo, wo… we don’t know how this happened… we were trying to postpone the sale, but Wells Fargo wouldn’t do it and they’re the investor that owns the loan. It wasn’t our fault… blah, blah, blah.”

Your bank sold the home of an 82 year old vet right after New Years so some investor could flip it, and couldn’t even be bothered to make a call to let him know?  No… instead you blamed it on Wells Fargo, saying they were the investor and they wouldn’t agree to delay the sale or modify the loan.  Hmmm… think that’s true, Brian?  I wonder…

But I didn’t have to wonder for very long… here’s the email from Wells Fargo from just a few days ago:

From: catherine.h.martin@wellsfargo.com

To: kristiesheets@hotmail.com

Date: Tue, 17 Jan 2012 14:01:19 -0600

Subject: Dale Wright

 Dear Ms. Sheets,

Wells Fargo Bank, N.A. received and reviewed your recent correspondence regarding your concerns as it relates to your Grandfather’s mortgage.

After researching this matter, we have verified that Wells Fargo Bank is not the Investor/Owner and does not have a direct role in servicing the loan.  That being said, I am forwarding your letter to the servicer, Bank of America, instructing that they subsequently respond in a timely manner to your concerns giving Mr. Wright every consideration allowed. 

I urge that you continue addressing Bank of America with concerns pertaining to this matter.  You may contact Ms. Nora Jones at 817-864-2293 at Bank of America to request that she escalate this matter within Bank of America. 

Wells Fargo Bank makes every effort to facilitate and inform servicers of such issues so they may properly respond. 

Respectfully,

Cathy Martin 

Client Service Consultant 

Wells Fargo Bank 

9062 Old Annapolis Road 

Columbia, MD  21045 

410-884-2161 FAX 866-493-7814 

Ooopsie!  I guess your system was wrong… or your bank’s wires got crossed.  Or maybe they were just feeding Mr. Wright “Lie Number 32,863,” from the Bank of America Handbook?

The man’s wife passed away in 2006.  They were married for 53 years.  Your bank explained that a request for postponement went in on the 23rd of December 2011 on a loan which Bank of America agreed to review for HAMP on December 1, 2011 and then you sold  the home on January 3, 2012… Brian, are you trying to punish this man?

Fix this, Brian.  Fix it so that it doesn’t happen to even one more elderly person.  Because if you’ve heard of karma, your later years are going to be a bear if you don’t.

COME ON DOERS… DO SOMETHING ABOUT THIS… I CAN’T SAY ANYTHING ELSE WITHOUT BREAKING MY KEYBOARD AND MISSING MY FLIGHT, AND BESIDES I CAN’T SEE AGAIN…

BRIAN… Kristie Sheets is his granddaughter… HER NUMBER IS: 707-632-6101.  You can call her and ask how to make this right, if you have the mind to do so.  I’ll be home tomorrow afternoon, and I’ll check with her before I do anything else.  This, as I mentioned, was just a preview of coming attractions.  (Insert Perry Mason Music here.)

Mandelman out.

DOERS YOU KNOW WHAT TO DO!

Brian Moynihan, President, CEO & Chairman

Bank of America

Email: brian.t.moynihan@bankofamerica.com

Matthew Task, Executive Relations, 
Office of the CEO (At BofA)

Phone: 813-805-4873

Dear Bank of America, and by Bank of America I mean CEO Brian Moynihan…

Brian, I’m running out the door at the moment.  I have to make a flight to Arizona so I can attend a meeting in the morning at the state capitol.  A state senator called me last week asking for my help promoting a bill related to the foreclosure situation there.  Were it not for my schedule, I’d be ripping you and your bank to pieces in this column, and then asking all of my DOERS to inundate you with emails and letters in support of yet another homeowner who’s life you have irrevocably, unconscionably and inconceivably harmed.

I’ll be back at my desk tomorrow, and I was just going to wait until then to deal with you, but you see… this story brought tears to my eyes asa I sat here checking in for my flight… I guess I’m just emotional (although I think “human” is the more appropriate word) about such things, while you perhaps are not.  Anyway, I decided that even though I didn’t have time to write the story in detail… I’d let you know what’s coming soon to a theater near you.

My thinking is, if you want to avoid me having to spend the eight or so hours it takes me to write all of the details into a piece that will be read and remembered by tens of thousands of people all over the country, you’ll address this situation before I get home tomorrow afternoon.  I hope you don’t view this as some sort of threat… I don’t mean it that way… I hate people that threaten, you know what I mean?  Either do it or shut up, has always been my motto.

I’m just giving you a heads up, if you will, of what tomorrow afternoon is absolutely certain to bring if you don’t do something about… hey, do you remember the Perry Mason television show from days gone by…

The Case of the Grieving Grandpa and the Lying Lender

Starring…

Mr. Dale Wright of Cloverdale, California

Loan Number 149664284

Brian, this one’s going to make a great story too, so if you can’t make time to handle it before I’m home tomorrow afternoon, you’re going to wish you had.  Here are a few highlights… think of it as the show’s preview or a movie trailer…

Mr. Dale Wright of Cloverdale, California turned to Bank of America for help in 2009 after being told by the President of the United States that Bank of America would help him, if at all possible.  Mr. Wright is an 82 year-old veteran who’s been a pillar of his community since before you were born, Brian.

He was approved for his trial modification under the Making Home Affordable program on March 23, 2010.  I’m told by several people involved in his case that he made all of his payments on time and as agreed and I have reason to believe they are correct.  He was denied for a permanent loan modification because of Bank of America claimed not to have received a new 4506T… even though you had received said 4506T, 30 days earlier and I’m told those things are good for 90 or 120 days.

No matter… he was told he was being reconsidered as of December 6, 2011.  In fact, he was told he was under consideration as of December 23rd.  You SOLD his house on January 3rd, Brian. He’s 82 years old, Brian.  December 25th is Christmas, Brian.  January 3rd is two days after New Years, Brian.  God damnit… Bank of America doesn’t need to do sh#t that week, Brian. (I’m sorry, for my language, but I can’t take much more of this without swearing, Brian.)

Of course, your bank didn’t tell him it was sold on January 3rd.  He found out when the investor knocked on his door on January 3rd and told him that it would be understood if he needed more than three days to move out!  The investor told Dale he was buying the property to “flip it.”

(SIDEBAR: You might want to mention to whoever that was that said that to him, that he’s damn lucky that it wasn’t me that answered the door that day because I don’t have any prior criminal record and I’d be willing to pick up a first offense charge for beating the crap out of someone for doing that to my grandfather. But, I don’t suppose he would have said it to me, now would he?  No, he only says things like that to 82 year olds, I’m fairly sure.)

So, Mr. Wright called and Bank of America was like…

“Wo, wo, wo… we don’t know how this happened… we were trying to postpone the sale, but Wells Fargo wouldn’t do it and they’re the investor that owns the loan. It wasn’t our fault… blah, blah, blah.”

Your bank sold the home of an 82 year-old veteran right after New Years so some investor could flip it, and couldn’t even be bothered to make a call to let him know?  No… instead you blamed it on Wells Fargo, saying they were the investor and they wouldn’t agree to delay the sale or modify the loan.  Hmmm… think that’s true, Brian?  I wonder…

But luckily, I didn’t have to wonder for very long… here’s the email from Wells Fargo from just a few days ago:

From: catherine.h.martin@wellsfargo.com

To: kristiesheets@hotmail.com

Date: Tue, 17 Jan 2012 14:01:19 -0600

Subject: Dale Wright

 Dear Ms. Sheets,

Wells Fargo Bank, N.A. received and reviewed your recent correspondence regarding your concerns as it relates to your Grandfather’s mortgage.

After researching this matter, we have verified that Wells Fargo Bank is not the Investor/Owner and does not have a direct role in servicing the loan.  That being said, I am forwarding your letter to the servicer, Bank of America, instructing that they subsequently respond in a timely manner to your concerns giving Mr. Wright every consideration allowed. 

I urge that you continue addressing Bank of America with concerns pertaining to this matter.  You may contact Ms. Nora Jones at 817-864-2293 at Bank of America to request that she escalate this matter within Bank of America. 

Wells Fargo Bank makes every effort to facilitate and inform servicers of such issues so they may properly respond. 

Respectfully,

Cathy Martin 

Client Service Consultant 

Wells Fargo Bank 

9062 Old Annapolis Road 

Columbia, MD  21045 

410-884-2161 FAX 866-493-7814 

Ooopsie!  I guess your system was wrong… or your bank’s wires got crossed.  Or maybe they were just feeding Mr. Wright “Lie Number 32,863,” from the Bank of America Handbook?

The man’s wife passed away in 2006.  They were married for 53 years.  Your bank explained that a request for postponement went in on the 23rd of December 2011 on a loan which Bank of America agreed to review for HAMP on December 1, 2011 and then you sold  the home on January 3, 2012… Brian, are you trying to punish this man?

Fix this, Brian.  Fix it so that it doesn’t happen to even one more elderly person.  Because if you’ve heard of karma, your later years are likely going to be a real bear if you don’t.

COME ON DOERS… DO SOMETHING ABOUT THIS…

I CAN’T SAY ANYTHING ELSE WITHOUT BREAKING MY KEYBOARD AND MISSING MY FLIGHT, AND BESIDES I CAN’T SEE AGAIN, THIS IS JUST TOO UPSETTING… I FEEL LIKE IT’S GROUNDHOG DAY…

BRIAN… Kristie Sheets is his granddaughter… HER NUMBER IS: 707-632-6101.  You can call her and ask how to make this right, if you have a mind to do so.  I’ll be home tomorrow afternoon, and I’ll check with her before I do anything else.  This, as I mentioned, was just a preview of coming attractions.  (Insert Perry Mason Music here.)

Mandelman out.

DOERS YOU KNOW WHAT TO DO!

Brian Moynihan, President, CEO & Chairman

Bank of America

Email: brian.t.moynihan@bankofamerica.com

Matthew Task, Executive Relations, 
Office of the CEO (At BofA)

Phone: 813-805-4873

Believe it or not, I’m not an easy person to shock or offend.  No one that knows me would ever say that I possess delicate sensibilities, or anything close.  For example, the only thing I found at all shocking upon learning that Newt Gingrich had asked his now ex-wife if they could have an “open marriage,” was that there were more than two women (or even one gay man), that would even consider having sex with Newt.

But, when I read Bloomberg’s headline yesterday, “Mortgage Principal Cuts Don’t Help Homeowners, Says Credit Suisse,” I have to admit that I found myself recoiling in total shock that, in view of what’s happening today in the housing market, anyone would put forth such an utterly preposterous argument.

Here’s the beginning of the Bloomberg piece, you can read the rest later.

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, according to Credit Suisse Group AG. (CSGN).

 

Of the 11 million of “underwater” homeowners, about 6.5 million have never missed a payment and 2 million more are making on-time payments after a delinquency, said Dale Westhoff, the bank’s global head of structured products research. Widespread principal reductions may drive defaults “much, much higher” as borrowers seek the aid, he said.

 

“We’ve never done this before; we don’t know what the risk is,” Westhoff, a top-ranked mortgage-bond analyst in polls by Institutional Investor magazine for 15 years in a row while at Bear Stearns Cos., said today at a briefing for reporters in New York. Along with creating so-called moral hazard, the step may also tighten lending by forcing banks to offer “price protection” to borrowers, he said.

 

Credit Suisse’s view puts it at odds with Federal Reserve Bank of New York President William C. Dudley; Amherst Securities Group LP analyst Laurie Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame; and hedge-fund manager Greg Lippmann, who last year advocated principal reductions, citing data from his former employer, Deutsche Bank AG.

 

Pretty offensive stuff, don’t you think… as you sit there reading this in your home that’s underwater by six figures and going down further every day?  Feel a little like wringing the guy’s neck that said it?  Yeah, well… me too.

Instead, I’ve written a corresponding article that I’d like to see Bloomberg run in the interest of being… what should I say… fair and balanced?  If you want the full impact, however, go back and read the Bloomberg version above one more time, then continue…

Not Recognizing Losses and Unlimited 0% Interest Loans Don’t Help Banks, Says Credit Slush

 

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.

 

Of the 11 most bailed out banks, about 6 have never been able to make their payments, and 2 more are making on time payments after being allowed to become bank holding companies in name only so they could borrow unlimited amounts from the Fed’s discount window at zero percent interest, said Bail Worstoff, the consumer’s global head-case for unstructured thinking. 

 

Widespread zero interest borrowing and the ongoing suspension of accounting rules that allow banks to push off the recognition of losses far into the future may drive insolvency rates “much, much higher” as banks become entirely dependent on the unrealistic and inappropriate aid.

 

“We’ve never done this before; we don’t know what the risk is,” Worsthoff, a top-ranked banking behavior analyst in polls by Concerned Citizens with Common Sense for 15 years in a row, said today at a briefing for reporters in New York.  Along with creating so-called “moral hazard,” these steps are also likely to perpetuate the irresponsible risk taking and amounts of leverage taken on by banks, which is what caused the global financial crisis in the first place, and would force congress to once again be unable to offer “any protection” to taxpayers who will be on the hook when the bankers invariably become insolvent once again, he said.

 

Credit Slush Fund’s view puts it at odds with Federal Unreserved Chair Ben Bailsnakee, Treasury Secretary Skim Getmore, Scary Summers, a member of the Fixed Outcome & Opacity Legion (“FOOL”); and sludge-fund manager Greed Hittmann, who last year advocated unlimited and unreported zero interest borrowing, undisclosed backdoor bailouts, and the elimination of all bank accounting and reporting requirements, citing data from his former employer, Deushbag Bank PIG.

First of all, the idea that reducing the dollar amount someone owes on his or her mortgage isn’t helpful to the homeowner… well, it’s simply a goofy thing to say.  I mean, it has to be a question of degree, right?  Like, reducing someone’s $100,000 balance by $1 wouldn’t be terribly helpful, I understand.  It’s the Sorites Paradox, I suppose… which back in my debate-the-useless days as an undergrad we used to refer to as the “Paradox of the Heap.”

(Assuming you have no idea what I’m talking about, but would like to… the Paradox of the Heap deals with a heap of sand from which one grain of sand at a time is removed.  The first premise is that one million grains of sand is a heap of sand.  And the second premise is that a heap of sand minus one grain of sand is STILL a heap of sand.  With me so far?  Good. 

So, the question is… when a single grain of sand is all that’s remains, is it STILL a “heap of sand?”  If you answer yes, then you sound ridiculous because a heap is defined as a group of things placed or thrown on top of each other.” And if you answer no to that question, then the follow-up question is when did it stop being a heap… when it was two grains of sand… three… four… 100? 

I can’t remember exactly, it’s been too many years… but I think after that you either run screaming from the room, beat the crap out of your roommate for dragging you into this inane conversation, or take a hit off the bong.)

Am I getting my point across here?  Or am I being too subtle?

Because I often worry that my use of humor or sarcasm either goes over too many heads or is solely as thought of as being entertainment… instead of as the less-than-veiled threat to societal tranquility that was my actual intention.  (That was supposed to be funny, people… stay with me, okay?)

After reading the Bloomberg article, it occurred to me that this was not the first time I was being shocked at the hubris of Credit Suisse’s conclusions allegedly derived from some review of distressed homeowner data.  The last time it happened was more than two years ago, November 2009, when I wrote about it in an article titled: “Why Banks Are Better at Making Loans Than Modifying Them.”

Back then Credit Suisse in conjunction with UBS, published a statistic saying that loan modifications were re-defaulting in 60 percent of cases after just 10 months… the clear implication being that loan modifications didn’t work, so better for all involved to simply foreclose.  It took some digging as I recall, but in the end it came out that in 2008… 60 percent of the loans modified ended up with higher monthly payments than before they were modified… which would explain the 60 percent re-default rate quite handedly.

It’s been a while, but I remember having an exasperating conversation with a banker during which I was trying to make the point that when the payment amount increases, it should not be called or classified as a “loan modification.”  The banker I was talking to… bless his heart… was trying to patiently explain to me why in point of fact, it was a “modification” of the loan and therefore had to be classified and reported as a “loan modification.”  (Amazing I’m still alive, don’t you think?  Or that the banker is… I’m not sure which.)

I replied that it didn’t matter.  What mattered is that if I were to line up 10 million homeowners in this country, and ask them whether a loan modification makes your monthly mortgage payments go up or down, for the most part they’d all say down.  Therefore, the term “loan modification” should only be used when the modification results in a reduced payment amount.

“So, what should we call it if the loan gets modified but the payments go up,” he inquired.  His tone made it sound as if he was sure that he’d have me in one or two more moves on an imaginary chessboard.

“Well, I’m not sure,” I replied.  “I’m not a banker or anything, and I wouldn’t want to presume to know your job better than you do by any means, but you could give some thought to calling it… oh, I don’t know… A PAYMENT INCREASE?”

Unfortunately, our conversation had to wrap up quickly after that… apparently something unexpected had come up and he had to run.

Do Principal Reductions Help, or Are they the Poster Child for Moral Hazard?

Credit Suisse should be exposed and discredited for being banking industry propagandists more than willing to risk further destruction of America’s middle class economy and our reduced standard of living before they lift a finger to make things better economically speaking.  That much is certain… and all too obvious.

But, the question is: Would principal reductions help homeowners avoid foreclosure?  And I want to address the substance of Mr. Dale Westhoff’s/Credit Suisse’s arguments against, lest anyone think that I’m being purely snarky about this whole thing, and therefore am in any sense being non-responsive to the issue at hand.

It’s not a simple subject, by the way.  So, don’t expect me to offer an oversimplified and hence meaningless response.

Mr. Westhoff, the bank’s “global head of structured product research,” the term “research” being used extremely lightly… hinges his argument against principal reductions for homeowners as a means for preventing foreclosure on the same old argument: it will create a moral hazard.

Now, let’s take a look at what this “moral hazard” thing is all about.

Traditionally, moral hazard exists when a party can make decisions about how much risk to take on, while another party bears the costs of that risk going badly.  And if that’s how we were defining it here, the only moral hazard that we’ve got to be concerned about is the moral hazard resulting from banks taking on too much risk knowing that they are “too big to fail.”

That’s the type of moral hazard that’s gotten us into this mess in the first place, and since the bailouts of banks in 2008, it’s the most significant risk we bear as a nation because if banks think they’ll be bailed out no matter what because they are too big to fail… we can all count on them needing to be bailed out again… and again… and again.  So, that’s that.

Westhoff, however, is using the term moral hazard in a different sense.  He’s asserting that if homeowners know that there are principal reductions available to those in default, more and more homeowners will intentionally go into default in order to get their principals reduced.

Moral Hazard and Principal Reductions

It’s shocking how little the financial services industry understands about the people it serves.  One particularly telling example of this was seen in May of 2011, when one of the three major credit bureaus, TransUnion, published the results of a study that shocked the banking industry by concluding that many who have lost homes to foreclosure did so because of the downturn in the economy and not as a result of an inability to handle debt, as was previously thought.

“Lenders always try to distinguish a one-off, life-crisis event like divorce or a medical catastrophe versus people who are just ineffective at managing credit,” said Ezra Becker, TransUnion vice president of research and consulting, and one of the study’s authors.

 “Our argument is that this economy disproportionately affected certain people in a way akin to a one-time crisis. Those consumers have not in fact forever changed their personal philosophy on repaying debt. It was a one-time event because of the specific and personal circumstances of the recession, and they otherwise would be good credit risks.”

What’s most amazing about the TransUnion study is that they needed to conduct a study to establish that people losing homes to foreclosure in the last few years were not irresponsible deadbeats, as the financial services industry had been assuming, but rather… well, it was the economy, stupid.  That anyone in financial services needed a study to tell them that foreclosures were being caused by the credit crisis that their industry brethren created is either some distorted form of irony or disingenuous nonsense.

The banking industry’s abysmal knowledge of consumers is also readily apparent when looking at the issue of moral hazard as related to principal reductions, or the incidence of strategic default, which is when someone chooses to walk away from a mortgage even though they can afford to make their payments.  These are the two subjects from which one might write a book of scary bedtime stories for bankers.

To understand this topic, first you have to understand how regular people view their homes. 

The years 2003-2007 notwithstanding, homes are not seen by regular people as investments in the traditional sense, they are more like forced irrational savings accounts we inhabit.  We don’t care what interest rate we’re getting on our “home/account,” but we do know the balance will be significant if we pay it off, and so they are a key component of America’s retirement plan.

Most people save money for a down payment on a house during the early part of their lives when their costs of living are relatively low.  After that, if property values are rising, they become relatively more mobile because they use the equity in one home to purchase the next.  It’s true that our incomes rise as we get older, but life gets more expensive over the years too.

Because the costs and expenses of buying a home and moving, if property values are falling or flat, we do everything we can to hold on to the homes we have, which is why so many underwater homeowners have applied for loan modifications even though from a strictly financial perspective, it doesn’t appear to make any sense.

It actually does make sense, however, once you understand that most people know that their only hope of buying another home will come from equity they build up in their current one.  And even if they don’t build that equity as a result of market price appreciation, that’s okay because the forced savings account functionality will eventually kick in, and they’ll have the equity to move up, or an asset of significant value for unplanned emergencies or retirement years, or the foundation of an estate to leave to our children.

It should be obvious that this line of thinking is foreign to financial investment types who think in terms of comparing returns on different investments.  It would be easy to show someone why it would be advantageous to accumulate wealth through a diversified set of investment vehicles while renting a home, but regular people know that they can’t trust themselves to be disciplined about saving and investing, but they can make a mortgage payment each month for 30 years because not paying that payment means disrupting their family’s tranquility… and having nowhere to live.

As a result, to stop making one’s mortgage payments on a primary residence is in general a big deal… a huge risk… you may end up losing your home… you can’t tell a living soul about what you’ve done… and your credit score goes to pot within a couple of months.  It’s immensely stressful, and no one does it unless financially speaking it’s absolutely necessary, meaning that some significant life event has occurred… job or income loss, injury or illness, divorce… those are the big ones anyway.

The bottom-line is, if people can afford to make their mortgage payments… they make their mortgage payments, and this is most easily verified by looking at how low foreclosure rates have been historically, again these past few years notwithstanding, even though between 1950 and 2000, home prices nationally were flat if adjusted for inflation.

So, will homeowners in any meaningful number take the risk inherent to going into default on their mortgage in order to get their principal balance reduced?  The answer should be obvious… it depends on how far underwater the homeowner is, how does the homeowner view the potential and timeframe for home price appreciation to occur, how certain is it that by defaulting they will be granted the principal reduction, and what are their options if their principal isn’t reduced and they lose their home to foreclosure.

Obviously, someone $200,000 underwater who thinks it will be 20 years before the market price appreciates by that amount, is much more likely than someone less severely underwater who views prices as coming back in five years, to walk away… or to go into default in order to try to get their bank to reduce the principal balance of their mortgage.

The other question about the efficacy of principal reductions in foreclosure prevention, applies to homeowners who are already seriously delinquent and seriously underwater, who are applying for a loan modification.  Lowering this homeowner’s interest rate and extending his or her term can make the monthly payment affordable and therefore prevent a foreclosure in the short term, but the question is, by leaving the homeowner so far underwater, are we just creating a strategic default in the future?

A couple of years ago, there were a slew of articles in places like the Wall Street Journal among others, that claimed that there a rash of strategic defaulters, which are defined as people that can afford to pay their mortgage no problem, but choose not to because they owe more than the home is worth.  And a couple of years ago, I wrote that strategic defaults are nonsense because no one that can afford their mortgage payments gets up on Sunday and says to their spouse:

“Honey, I realize that we can afford our mortgage payments no problem, but I was just thinking how far underwater we are and thought now might be a good time to clean out our garage, ruin our credit scores, endure the hassles of moving, and go rent a place for a five years.”

That is not what’s been happening to-date.  Not that it never has or will happen, but it’s exceedingly rare.  Everyone that hasn’t made a mortgage payment in months or even years is in their current situation because of money.  They didn’t stop making their mortgage payment because they became upset about being underwater, nor was it because of an ability to handle debt.  They stopped, in the vast majority of cases, because the economy or a life event knocked them down financially, and after using whatever savings they had, there came a day when they simply couldn’t make the payment… it wasn’t because they didn’t want to.

Optimism is a hard thing of which to let go…

I think I can remember the exact day that the dot-com bubble popped… it was April 10, 2000… and I was watching it happen on a television screen showing CNN as I waited in line to board a flight home from San Jose where I had spent the day in meetings.  I remember saying to my assistant at that time, that’s it… it’s all over now, or something to that effect.

I also remember seeing the cover of Newsweek two months later; I think it was the June issue.  It suggested that the tech sector would be coming back by December of that year, the obvious message being, “Don’t sell.”  I laughed when I read it… but not as much as I did two years later when I was at my favorite local watering hole after work with a friend of mine.  Mid-sip of my martini, he told me he was still holding onto his shares in Cisco Systems, purchased at $84, causing me to spit out my drink, choking as I laughed.

At the time, I think Cisco was trading at around $9, but my innumerate and hopelessly optimistic friend was explaining that he was only hoping the stock would return to half of its $84 price so he could then get out, losing only half of his dough.  I tried to explain the math involved showing him why he should sell and take the loss on his tax returns, and he listened… but it was another year before he took the advice and I learned that optimism is a hard thing of which to let go and this crisis has been no exception.

In the early stages of the crisis, essentially everyone listened to the administration, other government sources, and financial industry PR, and as a result believed that we were experiencing a temporary downturn as had happened before… that the housing market would start to come back around in a few years.  The idea of a “lost decade” was something that only happened in Japan… and everyone was saying that we were not Japan, which made sense to most folks because we cooked our fish before eating it in most if not all cases.

Recovery, the so-called experts said, would come by the end of 2010… then it was 2011… and then 2012.  As the years passed and home prices continued falling, consumer spending followed, and people came to realize that any recovery in the housing market would take longer than it had after past downturns… maybe it would be five years… maybe seven, so maybe by 2014 or 2015?

As long as most people believed that what was happening had happened before they could remain grounded, go on with their lives, and await our return to national prosperity.  This was the way people felt through 2009, 2010 and some part of 2011.

Last year, the news started to change and for a large segment of the population hope for recovery within a decade started to seem overly optimistic.  A lost decade was now understood to be almost a certainty, and the idea of a 20-year downturn, unthinkable only a couple of years earlier, now seemed a possibility.

Of course, there will come a time when some significant number of people sans money problems walking away from their mortgages en masse, and if we continue on our current path, that time will be here soon enough.

For millions of homeowners today, their situation has deteriorated to the point that it has become close to paralyzing.  Government programs have in all cases, not only been spectacular failures, they’ve also been spectacular lies.  As a result people have lost both trust and confidence in those they elected as they have plainly misled and ultimately abandoned them.

Additionally, having been televised it’s now widely recognized that too many courts have been ambivalent to the flagrant forgeries and fraudulent documents banks have used in the foreclosure process.  And losing faith in the courts and rule of law, is leading millions of homeowners to increasingly view their future as potentially dire.

And you know what they say: Desperate people take desperate measures.  (Or is that… “Disparate people choose different pleasures.  I can never remember how these sayings go… LOL.)

So, the bottom-line is that today, the issue of moral hazard as it relates to principal reductions is an entirely different matter than it was even a year or two ago. Today, and looking forward, I’m sure there is increasing reason to be concerned about homeowners being inspired to intentionally default in order to have their principal balances reduced, but the banking industry should realize that those that do so… well, if they’re willing to take that sort of risk then they’re on their way to a strategic default anyway… so, it’s really just a matter of choosing your poison.

ENTER: Mr. Dale Westhoff of Credit Suisse…

Dale Westhoff, our insipid bond analyst from Bear Stearns, says that beyond the creation of moral hazard, offering to reduce principal may also tighten lending by forcing banks to offer “price protection” to borrowers.

Now, I have no idea what “price protection” is, but I would like to say something to Dale about the idea that offering to reduce principal balances may result in tighter lending standards… so if you’ll just excuse me for a moment… be right back.

Dale?  Hi there.  Mandelman here.  Listen, I want to be diplomatic about this… you know that pseudo-threat you made about tighter lending standards as a result of principal reductions?  Did someone tell you that if you run out of rationales for not reducing principal balances, hit them with the old “banks will tighten lending” line? 

 

Well, Dale… that would sure make for an interesting threat that I might actually care about… if banks were actually lending… or, I don’t know… maybe if anyone was interested in borrowing.  However, since neither is the case, nor is it likely to be the case anytime soon, I’d say the only thing that comes to mind in response to your empty and barely veiled threat about tighter lending in the future as a result of principal reductions is… Shut the front door, Dale.

 

Let me share a little something with you and your banking pals… it has to do with principal reductions.  Do them… don’t do them… stick them up your tailpipe… homeowners barely give a rat’s behind anymore what you do or don’t do… think or don’t think.

 

You see… I guess you could say that it’s wearing kind of thin, Dale my boy… and homeowners wouldn’t believe you if you said the sky was blue.  Loan modifications don’t work because of their re-default rate… and now it’s principal reductions aren’t worth a darn because they create moral hazard. 

 

Well, what would “work” for you and yours, Dale?  I think I have an idea of what you and Credit Suisse are all about actually… tell me if I’m getting warm…

Just a scant couple of days ago Credit Suisse won the bidding process and as a result bought $7.014 billion in face value RMBS (“Residential Mortgage-backed Securities”) from the Federal Reserve Bank of New York.  The New York Fed bought them from AIG and had them in their Maiden Lane II, which is the New York Fed’s… 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… darn the luck… the NY Fed says the actual price you guys paid won’t be disclosed until April 16, 2012.

Why is that, Dale?  How about a little research on that issue?  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 us 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” under headlines like, “Mortgage Principal Cuts Don’t Help Homeowners, Says Credit Suisse?”

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 Goodman says that principal reductions are needed to avoid 8 million to 10 million more distressed-property sales.”

See, she said that 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?

On January 6, 2012, Federal Reserve Bank of New York President William C. Dudley, had the following to say on this very subject…

“Analysis by my staff that looks at likely borrower behavior over an extended time horizon suggests that without a significant turnaround in home prices and employment, a substantial proportion of those loans that are deeply underwater will ultimately default — absent an earned principal reduction program.”

Yeppers… so absent principal reductions, looks like I was about right once again… a whole bunch of loans are going to default… which will create a whole bunch of distressed RMBS assets for sale at pennies on the… well, at undisclosed prices for three months.

And Credit Suisse would just HATE that, right Dale? Since it’s evidently the bank’s business model at the moment.  I wonder why the bank isn’t making it’s money LENDING, like banks used to do.  You know, lending before all that tightening that we’re supposed to be so afraid of, according to you, if we allow principal reductions.

I’m actually thinking that you’re the moral hazard here, Dale… because you certainly don’t seem to have a moral compass.  And besides, you’re statements are starting to make me dizzy.

I scanned that Bloomberg article over and over, and it must have slipped your mind because you forgot to mention the bit about Credit Suisse having bought the distressed RMBS assets from Maiden Lane II… two days before you gave the story… or rather the press release…. to Bloomberg… nicely done, Dale… very nicely done… in fact, I’d have to say crackerjack work, my slimy friend.

Don’t feel too badly about this whole thing coming out this way though… I have skills.

Oh, and one more key point… Laurie Goodman made it… it’s about the one place where principal reductions appear to be very effective in preventing defaults…

“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?”

Got to hand it to her there… it’s a darn fine question, isn’t it Dale?  Why do you suppose banks offer principal reductions when it’s their own portfolio loans, but not when it’s the taxpayers who are on the hook, such as when the loan is owned by Fannie, Freddie, or insured by FHA?

Or, maybe the whole moral hazard thing doesn’t apply when it’s a portfolio loans on a bank’s balance sheet, is that what it is… or isn’t?  Or, whatever Dale… no need to reply…no one is listening to you anymore.

Mandelman out.

It’s time for me to have an adult conversation with the experienced practicing attorneys in this country.  Other grown-ups are welcome to sit in as well, but it’s time for children to be in bed or occupied elsewhere, okay?

Well, today we have a mammoth size foreclosure problem in this country, and it’s being talked about like it’s damn near an unsolvable problem… as if solving it would require determining the chemical origins of life, or figuring out whether black holes really do exist in space.

The foreclosure crisis, thank goodness, is not a black hole-type problem as many would have us believe.  It is a problem that, political constraints notwithstanding, exists at the juncture of economics and the rule of law.  In other words… it’s an oil spill… perhaps the worst oil spill of which the world has ever conceived… the Exxon Valdez meets Deepwater Horizon x 100, if you will… but it’s still just an oil spill.

It’s also important to note that as an economics problem alone, the foreclosure crisis is not a particularly challenging one to solve.  Some would rush to remind me that any proposed solution would be rife with “moral hazard,” and while that may be true, it doesn’t make the problem insoluble, by any means.

The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

A couple of years ago, many would have said that my use of the word “fraud” before “closure,” is just hyperbole.  Today, however, anyone voicing that sort of opinion is selling something.  Even a cursory review of last year’s scathing “consent orders,” that federal regulators issued after months spent investigating mortgage servicers… or a quick perusal of the complaints filed against the servicers by attorneys general in Massachusetts, Nevada, Maryland, or Arizona… or by reading any number of published court decisions favoring homeowners… and one can only conclude that use of the word “fraud” is, if anything, understatement.

Additionally, this past year has been a turning point for the general public as far as FRAUDclosures are concerned.  Television’s most venerable news magazine, “60 Minutes,” along with newspaper-of-record, “The New York Times,” joined a long list of others documenting the many ways that banks and mortgage servicers are routinely breaking numerous laws in order to take advantage of homeowners in foreclosure.  It’s now widely understood to be something that’s occurring all over the country, and even though the banking industry continues to try to dismiss publicized instances as insignificant dalliances or “isolated incidents,” their sheer number has made such attempts laughable.  And the levels of wholesale anger and dissatisfaction with government felt among the populace are both palpable and rising fast.

Today, even forecasts from the likes of Goldman Sachs and Amherst Securities peg the number of foreclosures between 10.4 and 14 million by year-end 2014, and those numbers could easily go higher should home prices continue to fall… which they invariably will.  Add those numbers to the millions of foreclosures already water under the bridge, and were talking about a crisis that results in ONE IN FOUR Americans with mortgages losing their homes to foreclosure in the next handful of years.

What I’m describing will unquestionably devastate any hope for recovery in our broader economy for any number of reasons.  For one thing, as banks are forced to recognize their losses incurred on the mortgage-backed securities and CDOs that capitalize their balance sheets, they will become insolvent… and this time many will be forced to fail.  For another, home prices will continue falling pushing more and more homeowners underwater and consumer spending will continue to decline and that will lead to rising unemployment, which will in turn fuel further foreclosures.  And those hopelessly underwater will begin walking away en masse, which will further exacerbate the decline in prices and become impossible to combat.

All of these factors and more will combine to reduce future demand for residential real estate dramatically… perhaps by half, but in addition, with no secondary mortgage market… no ability to securitize debt… even those wanting to buy homes going forward will find credit to be tight and tighter, destroying any potential for recovery in the housing market.

And I’m no longer in a small group of people writing about this deteriorating situation as was the case three plus years ago.  Every day others are waking up to the fact that what we’ve been told about foreclosures to-date by our government and the financial services and related industries, has proven itself to be at best mistaken… at worst misdirection… or, not to put too fine a point on it, outright folderol.

As conservative columnist, Peggy Noonan, has pointed out recently, it’s simply impossible to imagine this sort of future without also seeing social unrest on a scale not seen in this country since at least the 1930s.  Writing recently about the Occupy Wall Street (“OWS”) movement, Noonan echoes my sentiments on the situation to a tee…

“OWS is an expression of American discontent, and others will follow.  Protests and social unrest are particularly likely if people feel they are unfairly losing their homes to support irresponsible, law-breaking institutions that have successfully disregarded the fundamental rules of capitalism and good citizenship.”

There should be no question in anyone’s mind… there are only two paths ahead from which to choose.  Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

Make no mistake about it… if we are to mitigate any of the  damage being caused, uphold the rule of law, and protect the rights of millions of homeowners… it should be obvious to anyone that WE NEED TENS OF THOUSANDS OF LAWYERS trained in foreclosure defense, loss mitigation and bankruptcy.  And yet, more than four years into the FRAUDclosure crisis, we don’t have anywhere near the number of trained, ethical attorneys required to meet the demand.

We’re all adults here, so let’s not kid ourselves about why that’s the case.  

We all know why we don’t have the lawyers we need to marshall a more effective defense of homeowners engulfed by the FRAUDclosure crisis… it’s because THERE’S NO MONEY IN IT.  Or, at least that’s what lawyers have been told they are supposed to believe.  Not only that, but the message has been that there  shouldn’t be any money in representing homeowners at risk of FRAUDclosure. It’s as if attorneys profiting from representing homeowners at risk of FRAUDclosure is somehow a bad thing.

AND THAT’S JUST 100% BANKER-INSPIRED B.S.

Don’t you see what’s happened here?  We’ve allowed the banks, and the government that’s been bailing them out, to essentially criminalize the profit potential in representing homeowners at risk of foreclosure… and wonder of wonders, miracles of miracles… here we sit with what appears to be an unsolvable problem.

Consider this… bankers say that they’ve been overwhelmed by the millions of homeowners unexpectedly seeking loan modifications and that’s why applying for a loan modification has been such a nightmare.  But, what about the number of foreclosures occurring in the same time frame?  Haven’t there been an unprecedented and unexpected number of foreclosures too?  So,why is it that the banks have no problems accommodating the millions of unexpected foreclosures, but the millions of unexpected loan modifications represent an unsolvable problem?

It’s simple… because on the foreclosure side of the equation, banks allow lawyers to be profitably compensated for handling foreclosures, and sure enough those law firms have figured out how to handle any number of foreclosures that come down the pike… in fact, the more the merrier, as they say.  On the loan modification side of the house, however, profits are a dirty word… and wouldn’t you know it, the problem is unsolvable.  Why am I not surprised?

Over the TWO YEARS following the Deepwater Horizon disaster, BP spent $21 billion to clean up the Gulf of Mexico.  In the FOUR YEARS since the tsunami of foreclosures began, we’ve spent roughly ten percent of what BP spent cleaning up the Gulf… $2.4 billion… and the vast majority of that amount paid to mortgage servicers… and we’re wondering why the problem can’t be solved?

 A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION. 

The fact is… there is a HUGE OPPORTUNITY today to build a very profitable legal practice based on the ethical and effective representation of homeowners caught in the FRAUDclosure crisis.

From the very beginning of the mortgage meltdown, banks have tried to make sure that homeowners were not represented by attorneys when trying to save their homes from FRAUDclosure.   The reason is now apparent: Banks knew it was a FRAUDclosure crisis before the rest of us did because they’re the ones who put the FRAUD into FRAUDclosure.  From the earliest days of the crisis, the banks and the Obama Administration have been reinforcing TWO LIES:

1. Homeowners at risk of foreclosure don’t need lawyers… they can just call their bank directly.  That’s like the police telling someone under arrest that he or she doesn’t need a lawyer because any questions can be answered by the District Attorney.  It’s a damn lie… homeowners DO NEED LAWYERS to help them save their homes because it’s not just a foreclosure crisis, it’s a FRAUDclosure crisis.
2. A lawyer who charges a homeowner at risk of foreclosure up front… is a “SCAMMER.”  That is not only a LIE, but it’s a lie to achieve two key bank objectives.  One – It stopped many homeowners from seeking legal representation, thus allowing the banks to do whatever they wanted as related to foreclosing on their homes.  Two – It stopped countless attorneys from building a profitable practice based on representing homeowners at risk of foreclosure.

The California Example…

In California, the efforts to stop lawyers from representing homeowners have been more extreme than in any other state.  Here the campaign to malign the legal profession has been driven by legislative committees and supported by the California State Bar Association.  In October 2009, California’s SB 94 created a law that has effectively prevented lawyers from offering to represent homeowners who are seeking to avoid foreclosure through modification of their loans.  Under the guise of “charging up front makes you a scammer,” SB 94 has made it illegal for a lawyer to charge a homeowner an upfront retainer for legal fees.

Quite predictably, the law has made it difficult or even impossible for California homeowners to find quality legal representation related to seeking loan modifications, forcing those at risk of foreclosure who want to be represented by an attorney into either litigation or bankruptcy.  Writing for The New York Times in December 2010, David Streitfeld’s article titled, “Homes at Risk, and No Help from Lawyers,” described the situation in California related to SB 94.

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. 

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

To make matters worse, SB 94 has recently become controversial.  In late September 2011, Suzan Anderson, who is the supervising trial council of the state bar’s special team on loan modifications, made an unscheduled appearance at the bar’s annual conference, presenting what she purported to be the bar’s new interpretation of SB 94.  Literally hundreds of attorneys and legal scholars disagree, however, and litigation has recently been filed against the bar seeking declaratory relief, so we’ll soon see the courts decide the issue.

The core issue is about when a lawyer who represents a homeowner trying to get their loan modified can be compensated.  The bar claims the law requires an attorney to wait until the very end of the case, however, the actual language contained in SB 94 doesn’t say that… it says lawyers cannot be paid until completing “any and all services (the lawyer) has contracted to perform…” Up until Ms. Anderson’s presentation at the annual meeting, lawyers were dividing services into separate contractual arrangements and accepting payments from homeowners as discreet sets of services were completed.

Regardless of which side of the debate you’re on, the issue highlights how far the banking lobby will push a state legislature and state bar association in an attempt to prevent homeowners from being represented by legal council when trying to to avoid foreclosure, and it should come as absolutely no surprise that SB 94 was born in the state’s Senate Banking Committee, sponsored by Sen. Ron Calderon, who chairs that committee.

Advocates of SB 94 claim that it was needed to stop “scammers” who were preying on homeowners in distress from accepting up-front fees.  As quoted from Streitfeld’s article in The New York Times…

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

The evidence of any sort of army of lawyers-turned-scammers ripping off homeowners has always been thin, and by “thin” I mean nonexistant.  In the two years since the bill became law, the bar has taken some type of disciplinary action related to the representation of homeowners in foreclosure against two dozen lawyers, give or take a few.  In a state with more than 200,000 lawyers and 2 million homeowners in foreclosure, two dozen lawyers disciplined would hardly seem justification for a law that effectively prevents lawyers from helping homeowners get their loans modified.

Last December, Suzan Anderson, who heads up the bar’s task force on loan modifications, told The New York Times…

“I wish the law had worked,” Ms. Anderson said.

It’s also telling that no other state in the country has a law anything like SB 94, in fact, the rest of the states follow the FTC’s Mortgage Assistance Relief Services rule, MARS, which was adopted on January 30, 2011, and it does allow attorneys representing homeowners seeking loan modifications to accept funds in advance into their trust accounts.

The New York Times article also offered the perspective of several California homeowners seeking legal assistance in a post SB 94 world…

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

 Without the lawyer, Mr. Stone said, “I’d be living under a bridge.

”The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.

“This law,” Mr. Royston said, “took the wrong people out of the game.”

A Bleak Picture in California…

California’s approach to discouraging lawyers from representing homeowners at risk of foreclosure has not served the state or its residents well at all.  California is the “hardest hit” of all 50 states, accounting for one of every five foreclosures in the U.S.  Almost half of California’s homeowners are either underwater or effectively underwater today.  Since 2008, there have been 1.2 million foreclosures statewide, and that number is expected to exceed 2 million by the end of 2012.  And, according to the report published by the California Reinvestment Coalition…

The 2 million foreclosures expected by the end of this year are forecasted to cost the state and its residents $650 billion statewide.

Today, in California alone there are roughly TWO MILLION homeowners in foreclosure.  I don’t know exactly how many we have nationwide, estimates vary, but are in the 5 million range.  I do know that if two million people needed just 10 hours of legal assistance, it would take 20 million man hours.  Assuming a six hour work day and a 260 day work year… that’s just under 13,000 years assuming only one lawyer were involved.  To help two million people, assuming 10 hours each, at best would require more than 10,000 lawyers trained and working efficiently.

How many attorneys do we have  trained and ready to help loans get modified, represent homeowners in foreclosure defense matters and/or in bankruptcy.  Nowhere near 13,000 that’s for sure… in fact, we might not find 1300 either… and many would say the number could be closer to 130, and with the proliferating fraudulent documents… the abuses by servicers… the number of people who are foreclosed on illegally… its become easy to see the disease, and trained ethical lawyers would seem the only cure.

Mandelman out.

~~~

We need a literal army of experienced litigators, and Max Gardner’s Bankruptcy Boot Camp has trained close to 900 attorneys to protect the rights of homeowners in foreclosure.  I’ve attended Max’s Boot Camp… I could never recommend it strongly enough… and often do.  But, there’s more than legal training that’s required here… and if we’re going to attract the number of lawyers we need to fight this war…

The Answer is Money…

What Was Your Question?

Ohio’s former Attorney General Marc Dann is a highly experienced foreclosure defense attorney and a graduate of Max Gardner’s Boot Camp. He’s proven in his own successful practice that lawyers have the opportunity to DO GOOD… and DO WELL at the same time by learning the ins and outs of this, unfortunately, very fast growing and specialized field.  And he’s developed a comprehensive training and ongoing support program that allows experienced foreclosure defense attorneys to immediately access new clients and the right clients, improve operations within their firms, and yes… increase their profitability dramatically.

Marc understands our need for an experienced army of foreclosure defense lawyers, but he also understands the reality that lawyers have to make money in order to operate effectively.  In a phrase, a lawyer that can provide effective representation for homeowners at risk of foreclosure today, should not be worried about losing his or her own home to foreclosure because that benefits no one.

So, Marc has developed and employed best practices in building his own successful foreclosure defense practice, and now he’s teaching other attorneys how to make money in foreclosure defense so that ultimately he will have provided countless thousands of homeowners all over the country with access to highly capable, ethical and experienced attorneys.

Marc Dann’s LAW PROFITS program will take experienced and effective attorneys committed to foreclosure defense and protecting the rights of homeowners, and help transform them into vibrant, profitable firms or individual legal practices.  Some of the innovative solutions Marc will be delivering include:

• How to cut through the noise created by scammers, reaching out to homeowners in a very honest and compelling way.
• When and how to sue the bad modification company or bad lawyer.
• Suing the foreclosure mills for fun and profits.
• Using Fair Debt Collection Practices and State Consumer Protection.
• Learn about the new practices available under Dodd Frank.
• Harnessing TILA and RESPA inside and outside bankruptcy court.
• Unconventional approaches stay one step ahead of servicer practices.
• Billing structures, methodologies, and practice accounting.
• Designing compensation programs that balance the needs of homeowners with the needs of your firm.  
• Never lose clients – Ongoing communications program that’s turn-key and educates clients so they become fans.
• Fee agreements – for contingency and hourly clients.
• Become part of a highly visible network of top foreclosure defense attorneys, and strategic partners.
• Communications strategies and tactics proven effective and unavailable anywhere else.

Making little or no money in foreclosure defense isn’t doing your clients any favors because you cannot be your best without it.  Marc Dann’s LAW PROFITS is not a pot of gold, or a winning lottery ticket, but it is a proven process and suite of best practices that makes a law practice profitable… essentially immediately.  It’s work, no question about it, but it’s important and gratifying work.

I wholeheartedly support Mar’c Dann’s LAW PROFITS initiative.  And I strongly urge all of the lawyers reading this to take action now by clicking the link below, so you can find out more about what his LAW PROFITS program for foreclosure defense and bankruptcy lawyers can do for you and your firm.  The FRAUDclosure crisis and its ancillary topics, I’m sorry to say, are going to be with us for a long time… a decade plus, if we’re lucky.  Longer if we’re not.  It’s time to settle in and start capitalizing on being one of the best at solving on of the worst case scenarios.

Click below to find out more about…

Marc Dann’s 

LAW PROFITS

It’s time for me to have an adult conversation with the experienced practicing attorneys in this country.  Other grown-ups are welcome to sit in as well, but it’s time for children to be in bed or occupied elsewhere, okay?

Well, today we have a mammoth size foreclosure problem in this country, and it’s being talked about like it’s damn near an unsolvable problem… as if solving it would require determining the chemical origins of life, or figuring out whether black holes really do exist in space.

The foreclosure crisis, thank goodness, is not a black hole-type problem as many would have us believe.  It is a problem that, political constraints notwithstanding, exists at the juncture of economics and the rule of law.  In other words… it’s an oil spill… perhaps the worst oil spill of which the world has ever conceived… the Exxon Valdez meets Deepwater Horizon x 100, if you will… but it’s still just an oil spill.

It’s also important to note that as an economics problem alone, the foreclosure crisis is not a particularly challenging one to solve.  Some would rush to remind me that any proposed solution would be rife with “moral hazard,” and while that may be true, it doesn’t make the problem insoluble, by any means.

The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

A couple of years ago, many would have said that my use of the word “fraud” before “closure,” is just hyperbole.  Today, however, anyone voicing that sort of opinion is selling something.  Even a cursory review of last year’s scathing “consent orders,” that federal regulators issued after months spent investigating mortgage servicers… or a quick perusal of the complaints filed against the servicers by attorneys general in Massachusetts, Nevada, Maryland, or Arizona… or by reading any number of published court decisions favoring homeowners… and one can only conclude that use of the word “fraud” is, if anything, understatement.

Additionally, this past year has been a turning point for the general public as far as FRAUDclosures are concerned.  Television’s most venerable news magazine, “60 Minutes,” along with newspaper-of-record, “The New York Times,” joined a long list of others documenting the many ways that banks and mortgage servicers are routinely breaking numerous laws in order to take advantage of homeowners in foreclosure.  It’s now widely understood to be something that’s occurring all over the country, and even though the banking industry continues to try to dismiss publicized instances as insignificant dalliances or “isolated incidents,” their sheer number has made such attempts laughable.  And the levels of wholesale anger and dissatisfaction with government felt among the populace are both palpable and rising fast.

Today, even forecasts from the likes of Goldman Sachs and Amherst Securities peg the number of foreclosures between 10.4 and 14 million by year-end 2014, and those numbers could easily go higher should home prices continue to fall… which they invariably will.  Add those numbers to the millions of foreclosures already water under the bridge, and were talking about a crisis that results in ONE IN FOUR Americans with mortgages losing their homes to foreclosure in the next handful of years.

What I’m describing will unquestionably devastate any hope for recovery in our broader economy for any number of reasons.  For one thing, as banks are forced to recognize their losses incurred on the mortgage-backed securities and CDOs that capitalize their balance sheets, they will become insolvent… and this time many will be forced to fail.  For another, home prices will continue falling pushing more and more homeowners underwater and consumer spending will continue to decline and that will lead to rising unemployment, which will in turn fuel further foreclosures.  And those hopelessly underwater will begin walking away en masse, which will further exacerbate the decline in prices and become impossible to combat.

All of these factors and more will combine to reduce future demand for residential real estate dramatically… perhaps by half, but in addition, with no secondary mortgage market… no ability to securitize debt… even those wanting to buy homes going forward will find credit to be tight and tighter, destroying any potential for recovery in the housing market.

And I’m no longer in a small group of people writing about this deteriorating situation as was the case three plus years ago.  Every day others are waking up to the fact that what we’ve been told about foreclosures to-date by our government and the financial services and related industries, has proven itself to be at best mistaken… at worst misdirection… or, not to put too fine a point on it, outright folderol.

As conservative columnist, Peggy Noonan, has pointed out recently, it’s simply impossible to imagine this sort of future without also seeing social unrest on a scale not seen in this country since at least the 1930s.  Writing recently about the Occupy Wall Street (“OWS”) movement, Noonan echoes my sentiments on the situation to a tee…

“OWS is an expression of American discontent, and others will follow.  Protests and social unrest are particularly likely if people feel they are unfairly losing their homes to support irresponsible, law-breaking institutions that have successfully disregarded the fundamental rules of capitalism and good citizenship.”

There should be no question in anyone’s mind… there are only two paths ahead from which to choose.  Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

Make no mistake about it… if we are to mitigate any of the  damage being caused, uphold the rule of law, and protect the rights of millions of homeowners… it should be obvious to anyone that WE NEED TENS OF THOUSANDS OF LAWYERS trained in foreclosure defense, loss mitigation and bankruptcy.  And yet, more than four years into the FRAUDclosure crisis, we don’t have anywhere near the number of trained, ethical attorneys required to meet the demand.

We’re all adults here, so let’s not kid ourselves about why that’s the case.  

We all know why we don’t have the lawyers we need to marshall a more effective defense of homeowners engulfed by the FRAUDclosure crisis… it’s because THERE’S NO MONEY IN IT.  Or, at least that’s what lawyers have been told they are supposed to believe.  Not only that, but the message has been that there  shouldn’t be any money in representing homeowners at risk of FRAUDclosure. It’s as if attorneys profiting from representing homeowners at risk of FRAUDclosure is somehow a bad thing.

AND THAT’S JUST 100% BANKER-INSPIRED B.S.

Don’t you see what’s happened here?  We’ve allowed the banks, and the government that’s been bailing them out, to essentially criminalize the profit potential in representing homeowners at risk of foreclosure… and wonder of wonders, miracles of miracles… here we sit with what appears to be an unsolvable problem.

Consider this… bankers say that they’ve been overwhelmed by the millions of homeowners unexpectedly seeking loan modifications and that’s why applying for a loan modification has been such a nightmare.  But, what about the number of foreclosures occurring in the same time frame?  Haven’t there been an unprecedented and unexpected number of foreclosures too?  So,why is it that the banks have no problems accommodating the millions of unexpected foreclosures, but the millions of unexpected loan modifications represent an unsolvable problem?

It’s simple… because on the foreclosure side of the equation, banks allow lawyers to be profitably compensated for handling foreclosures, and sure enough those law firms have figured out how to handle any number of foreclosures that come down the pike… in fact, the more the merrier, as they say.  On the loan modification side of the house, however, profits are a dirty word… and wouldn’t you know it, the problem is unsolvable.  Why am I not surprised?

Over the TWO YEARS following the Deepwater Horizon disaster, BP spent $21 billion to clean up the Gulf of Mexico.  In the FOUR YEARS since the tsunami of foreclosures began, we’ve spent roughly ten percent of what BP spent cleaning up the Gulf… $2.4 billion… and the vast majority of that amount paid to mortgage servicers… and we’re wondering why the problem can’t be solved?

 A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION. 

The fact is… there is a HUGE OPPORTUNITY today to build a very profitable legal practice based on the ethical and effective representation of homeowners caught in the FRAUDclosure crisis.

From the very beginning of the mortgage meltdown, banks have tried to make sure that homeowners were not represented by attorneys when trying to save their homes from FRAUDclosure.   The reason is now apparent: Banks knew it was a FRAUDclosure crisis before the rest of us did because they’re the ones who put the FRAUD into FRAUDclosure.  From the earliest days of the crisis, the banks and the Obama Administration have been reinforcing TWO LIES:

1. Homeowners at risk of foreclosure don’t need lawyers… they can just call their bank directly.  That’s like the police telling someone under arrest that he or she doesn’t need a lawyer because any questions can be answered by the District Attorney.  It’s a damn lie… homeowners DO NEED LAWYERS to help them save their homes because it’s not just a foreclosure crisis, it’s a FRAUDclosure crisis.
2. A lawyer who charges a homeowner at risk of foreclosure up front… is a “SCAMMER.”  That is not only a LIE, but it’s a lie to achieve two key bank objectives.  One – It stopped many homeowners from seeking legal representation, thus allowing the banks to do whatever they wanted as related to foreclosing on their homes.  Two – It stopped countless attorneys from building a profitable practice based on representing homeowners at risk of foreclosure.

The California Example…

In California, the efforts to stop lawyers from representing homeowners have been more extreme than in any other state.  Here the campaign to malign the legal profession has been driven by legislative committees and supported by the California State Bar Association.  In October 2009, California’s SB 94 created a law that has effectively prevented lawyers from offering to represent homeowners who are seeking to avoid foreclosure through modification of their loans.  Under the guise of “charging up front makes you a scammer,” SB 94 has made it illegal for a lawyer to charge a homeowner an upfront retainer for legal fees.

Quite predictably, the law has made it difficult or even impossible for California homeowners to find quality legal representation related to seeking loan modifications, forcing those at risk of foreclosure who want to be represented by an attorney into either litigation or bankruptcy.  Writing for The New York Times in December 2010, David Streitfeld’s article titled, “Homes at Risk, and No Help from Lawyers,” described the situation in California related to SB 94.

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. 

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

To make matters worse, SB 94 has recently become controversial.  In late September 2011, Suzan Anderson, who is the supervising trial council of the state bar’s special team on loan modifications, made an unscheduled appearance at the bar’s annual conference, presenting what she purported to be the bar’s new interpretation of SB 94.  Literally hundreds of attorneys and legal scholars disagree, however, and litigation has recently been filed against the bar seeking declaratory relief, so we’ll soon see the courts decide the issue.

The core issue is about when a lawyer who represents a homeowner trying to get their loan modified can be compensated.  The bar claims the law requires an attorney to wait until the very end of the case, however, the actual language contained in SB 94 doesn’t say that… it says lawyers cannot be paid until completing “any and all services (the lawyer) has contracted to perform…” Up until Ms. Anderson’s presentation at the annual meeting, lawyers were dividing services into separate contractual arrangements and accepting payments from homeowners as discreet sets of services were completed.

Regardless of which side of the debate you’re on, the issue highlights how far the banking lobby will push a state legislature and state bar association in an attempt to prevent homeowners from being represented by legal council when trying to to avoid foreclosure, and it should come as absolutely no surprise that SB 94 was born in the state’s Senate Banking Committee, sponsored by Sen. Ron Calderon, who chairs that committee.

Advocates of SB 94 claim that it was needed to stop “scammers” who were preying on homeowners in distress from accepting up-front fees.  As quoted from Streitfeld’s article in The New York Times…

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

The evidence of any sort of army of lawyers-turned-scammers ripping off homeowners has always been thin, and by “thin” I mean nonexistant.  In the two years since the bill became law, the bar has taken some type of disciplinary action related to the representation of homeowners in foreclosure against two dozen lawyers, give or take a few.  In a state with more than 200,000 lawyers and 2 million homeowners in foreclosure, two dozen lawyers disciplined would hardly seem justification for a law that effectively prevents lawyers from helping homeowners get their loans modified.

Last December, Suzan Anderson, who heads up the bar’s task force on loan modifications, told The New York Times…

“I wish the law had worked,” Ms. Anderson said.

It’s also telling that no other state in the country has a law anything like SB 94, in fact, the rest of the states follow the FTC’s Mortgage Assistance Relief Services rule, MARS, which was adopted on January 30, 2011, and it does allow attorneys representing homeowners seeking loan modifications to accept funds in advance into their trust accounts.

The New York Times article also offered the perspective of several California homeowners seeking legal assistance in a post SB 94 world…

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

 Without the lawyer, Mr. Stone said, “I’d be living under a bridge.

”The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.

“This law,” Mr. Royston said, “took the wrong people out of the game.”

A Bleak Picture in California…

California’s approach to discouraging lawyers from representing homeowners at risk of foreclosure has not served the state or its residents well at all.  California is the “hardest hit” of all 50 states, accounting for one of every five foreclosures in the U.S.  Almost half of California’s homeowners are either underwater or effectively underwater today.  Since 2008, there have been 1.2 million foreclosures statewide, and that number is expected to exceed 2 million by the end of 2012.  And, according to the report published by the California Reinvestment Coalition…

The 2 million foreclosures expected by the end of this year are forecasted to cost the state and its residents $650 billion statewide.

Today, in California alone there are roughly TWO MILLION homeowners in foreclosure.  I don’t know exactly how many we have nationwide, estimates vary, but are in the 5 million range.  I do know that if two million people needed just 10 hours of legal assistance, it would take 20 million man hours.  Assuming a six hour work day and a 260 day work year… that’s just under 13,000 years assuming only one lawyer were involved.  To help two million people, assuming 10 hours each, at best would require more than 10,000 lawyers trained and working efficiently.

How many attorneys do we have  trained and ready to help loans get modified, represent homeowners in foreclosure defense matters and/or in bankruptcy.  Nowhere near 13,000 that’s for sure… in fact, we might not find 1300 either… and many would say the number could be closer to 130, and with the proliferating fraudulent documents… the abuses by servicers… the number of people who are foreclosed on illegally… its become easy to see the disease, and trained ethical lawyers would seem the only cure.

Mandelman out.

~~~

We need a literal army of experienced litigators, and Max Gardner’s Bankruptcy Boot Camp has trained close to 900 attorneys to protect the rights of homeowners in foreclosure.  I’ve attended Max’s Boot Camp… I could never recommend it strongly enough… and often do.  But, there’s more than legal training that’s required here… and if we’re going to attract the number of lawyers we need to fight this war…

The Answer is Money…

What Was Your Question?

Ohio’s former Attorney General Marc Dann is a highly experienced foreclosure defense attorney and a graduate of Max Gardner’s Boot Camp. He’s proven in his own successful practice that lawyers have the opportunity to DO GOOD… and DO WELL at the same time by learning the ins and outs of this, unfortunately, very fast growing and specialized field.  And he’s developed a comprehensive training and ongoing support program that allows experienced foreclosure defense attorneys to immediately access new clients and the right clients, improve operations within their firms, and yes… increase their profitability dramatically.

Marc understands our need for an experienced army of foreclosure defense lawyers, but he also understands the reality that lawyers have to make money in order to operate effectively.  In a phrase, a lawyer that can provide effective representation for homeowners at risk of foreclosure today, should not be worried about losing his or her own home to foreclosure because that benefits no one.

So, Marc has developed and employed best practices in building his own successful foreclosure defense practice, and now he’s teaching other attorneys how to make money in foreclosure defense so that ultimately he will have provided countless thousands of homeowners all over the country with access to highly capable, ethical and experienced attorneys.

Marc Dann’s LAW PROFITS program will take experienced and effective attorneys committed to foreclosure defense and protecting the rights of homeowners, and help transform them into vibrant, profitable firms or individual legal practices.  Some of the innovative solutions Marc will be delivering include:

• How to cut through the noise created by scammers, reaching out to homeowners in a very honest and compelling way.
• When and how to sue the bad modification company or bad lawyer.
• Suing the foreclosure mills for fun and profits.
• Using Fair Debt Collection Practices and State Consumer Protection.
• Learn about the new practices available under Dodd Frank.
• Harnessing TILA and RESPA inside and outside bankruptcy court.
• Unconventional approaches stay one step ahead of servicer practices.
• Billing structures, methodologies, and practice accounting.
• Designing compensation programs that balance the needs of homeowners with the needs of your firm.  
• Never lose clients – Ongoing communications program that’s turn-key and educates clients so they become fans.
• Fee agreements – for contingency and hourly clients.
• Become part of a highly visible network of top foreclosure defense attorneys, and strategic partners.
• Communications strategies and tactics proven effective and unavailable anywhere else.

Making little or no money in foreclosure defense isn’t doing your clients any favors because you cannot be your best without it.  Marc Dann’s LAW PROFITS is not a pot of gold, or a winning lottery ticket, but it is a proven process and suite of best practices that makes a law practice profitable… essentially immediately.  It’s work, no question about it, but it’s important and gratifying work.

I wholeheartedly support Mar’c Dann’s LAW PROFITS initiative.  And I strongly urge all of the lawyers reading this to take action now by clicking the link below, so you can find out more about what his LAW PROFITS program for foreclosure defense and bankruptcy lawyers can do for you and your firm.  The FRAUDclosure crisis and its ancillary topics, I’m sorry to say, are going to be with us for a long time… a decade plus, if we’re lucky.  Longer if we’re not.  It’s time to settle in and start capitalizing on being one of the best at solving on of the worst case scenarios.

Click below to find out more about…

Marc Dann’s 

LAW PROFITS

Well, I want the bankers reading this to know that I was somewhat hesitant to post the videos below.  It’s not really my sort of thing.  Not because they are attacking the big name banks, lord knows I’ve done more than my share of that… but because they’re just… oh, I don’t know… they’re too broadly targeted… or maybe because they’re too cheery.  I’m not really sure.  I certainly don’t have any beef with any of the folks that work at some Chase Bank branch, and I don’t really like the idea of making those bank employees feel persecuted or somehow unsafe… or that they are hated, because they are not… at least not by me.

However, the people that wrote and performed the adaptations of our Christmas classics deserve to be recognized, and millions of others who are suffering as a result of the foreclosure crisis deserve to know they are not alone.

You know, two years ago I was invited to speak at a conference put on by the American Bar Association for bank lawyers… it was held in Park City, Utah… and I was on a panel with Tom Pahl from the FTC.  I enjoyed going after Tom a bit and he was a good sport about the whole thing… but watching these videos caused me to recall what I said to the 200+ bank attorneys as I wrapped up my talk about the foreclosure crisis.

I said that in my view, the pendulum was swinging too far to their side… that they may feel like they’ve taken an early lead, and that they are safe in their position… but, that it was a deceptive feeling… a false sense of security, if you will.  I pointed out that historically, divides such as the one being deepened and widened at that time, between the distressed homeowners and their mortgage servicers… well, they just never end well.

I said that at the end of battles like the one that was obviously shaping up between bankers and homeowners, they shoot the Romanovs and then we all wonder what happened to Anastasia, a reference to the murders of Czar Nicholas II and his family during the Bolshevic Revolution in Russia back in 1917.  (I know… you knew that.  I was just being clear for those who might not have known.)

At the time, I thought my audience understood my point, but today… two years later… I’m not sure they did.  I was trying to say that there are certain points beyond which things don’t snap back… like if you pull an elastic band far enough, it loses its elasticity forever.  Or like an argument between two family members that just went too far and destroyed a family forever.  I think many would say that we have already past that point as far as the bankers are concerned, and I think to some degree that’s probably true… it’s certainly close to being irrevocable damage, if it isn’t already.

And I wonder if Secretary Geithner, Fed Chair Bernanke and the bankers realize that passing that point doesn’t mean that bankers win… it means we all lose, but make no mistake… it means that they lose a lot more than we ever could.  Maybe they don’t see it.  I guess they do not.

Anyway… here we go… Christmas Caroling for the Banksters…

Mandelman out.

Well, I want the bankers reading this to know that I was somewhat hesitant to post the videos below.  It’s not really my sort of thing.  Not because they are attacking the big name banks, lord knows I’ve done more than my share of that… but because they’re just… oh, I don’t know… they’re too broadly targeted… or maybe because they’re too cheery.  I’m not really sure.  I certainly don’t have any beef with any of the folks that work at some Chase Bank branch, and I don’t really like the idea of making those bank employees feel persecuted or somehow unsafe… or that they are hated, because they are not… at least not by me.

However, the people that wrote and performed the adaptations of our Christmas classics deserve to be recognized, and millions of others who are suffering as a result of the foreclosure crisis deserve to know they are not alone.

You know, two years ago I was invited to speak at a conference put on by the American Bar Association for bank lawyers… it was held in Park City, Utah… and I was on a panel with Tom Pahl from the FTC.  I enjoyed going after Tom a bit and he was a good sport about the whole thing… but watching these videos caused me to recall what I said to the 200+ bank attorneys as I wrapped up my talk about the foreclosure crisis.

I said that in my view, the pendulum was swinging too far to their side… that they may feel like they’ve taken an early lead, and that they are safe in their position… but, that it was a deceptive feeling… a false sense of security, if you will.  I pointed out that historically, divides such as the one being deepened and widened at that time, between the distressed homeowners and their mortgage servicers… well, they just never end well.

I said that at the end of battles like the one that was obviously shaping up between bankers and homeowners, they shoot the Romanovs and then we all wonder what happened to Anastasia, a reference to the murders of Czar Nicholas II and his family during the Bolshevic Revolution in Russia back in 1917.  (I know… you knew that.  I was just being clear for those who might not have known.)

At the time, I thought my audience understood my point, but today… two years later… I’m not sure they did.  I was trying to say that there are certain points beyond which things don’t snap back… like if you pull an elastic band far enough, it loses its elasticity forever.  Or like an argument between two family members that just went too far and destroyed a family forever.  I think many would say that we have already past that point as far as the bankers are concerned, and I think to some degree that’s probably true… it’s certainly close to being irrevocable damage, if it isn’t already.

And I wonder if Secretary Geithner, Fed Chair Bernanke and the bankers realize that passing that point doesn’t mean that bankers win… it means we all lose, but make no mistake… it means that they lose a lot more than we ever could.  Maybe they don’t see it.  I guess they do not.

Anyway… here we go… Christmas Caroling for the Banksters…

Mandelman out.

 YOU DID GOOD! 

Okay, DOERS… you’ve DONE IT again… but it’s not over yet, so if you’re one of the DOERS that hasn’t DONE anything yet, WE NEED YOU NOW!

I don’t usually do this, but with Holly’s permission, I’ve posted the three emails I received from her today.  I get a lot of very flattering emails from homeowners across the country, and I appreciate them all very much… but I don’t post them because it just seems weird and icky to do so… like, “look at how great I am.”  (Yuck.)

But, I’m posting Holly’s emails today for three reasons:

1. Because it’s not just about me… it’s about my DOERS too, and you DOERS deserve to feel like I do when I get an email like the ones you’ll read below.  I couldn’t DO it, without YOU.
2. Because not enough people have sent me an email to say they are a DOER… we NEED MORE… many more. So, I’m hoping by reading what Holly said and seeing the results DOERS get, more of my readers will become DOERS by sending an email to: mandelman@mac.com.  And DOERS… I need you to help recruit DOERS too!)
3. Because not enough DOERS have sent an email to John Stumpf at Wells Fargo as a result of the article I posted on Friday morning, and it’s a little disappointing.  I’m going to try to send everyone an email later to ask them to be the DOER they promised to be, but I assume the reason they haven’t sent their email is because they haven’t read my article yet.

So, if you’re already a DOER, but haven’t subscribed to Mandelman Matters please DO it now: SUBSCRIBE.  That way, you’ll get an email with each new article and if it’s a DOER ALERT, you’ll receive it that day.

I need DOERS to DO BOTH… SUBSCRIBE and send me your email.  The reason is that the SUBSCRIBE tab is through Feedburner, it sends an automatic email with each new article.  The emails you send me I’m putting in a private database of DOERS, so that when I need to tell DOERS about something but I don’t want everyone who reads Mandelman Matters to know… I’ll email everyone from that database.  Get it?  Cool.

So THANK YOU to all of my DOERS that did it… I just LOVE  the way you DO what you DO!  You DO it so well… BUT IT’S NOT OVER YET… It’s close though… you’ll see.

HERE’S THE 1ST EMAIL HOLLY SENT ME,

I READ IT EARLY THIS MORNING…

Mr. Andelman,

Thank you again for the great article. I cried through the entire thing. That someone would be so kind and do something for myself and my children to this magnitude is just heartwarming to me.

You know I didn’t mention this to you but it was the first time in 20 years that I did not go home to Erie with my family for Christmas. My children were really upset about it but with the eviction and house being in foreclosure I couldn’t take them there. My entire family was so disappointed because for my mom and dad their daughter and grandchildren weren’t there and for my brother and sister their sister and nieces and nephews were not there either.

Instead, I spent Christmas trying to pack everything up and do as much research as I could to stop the foreclosure from going through. I feel like I let my entire family down. Now though it was worth it because I got to you. I found someone who cared enough to stay up all night writing and trying to help me. It was a Christmas present I never expected. An early birthday gift (tomorrow is my birthday). I found hope.

Tonight an executive from Wells Fargo called me with her boss and Paula in her office. I wrote John Stumpf and the others today after reading your article. I let them have it. I told them I was going to fight til the end.

She said John Stumpf read my e mail and she wanted to talk to me about it. So, by the end of the conversation, she is calling the attorneys office and telling them that they are no longer doing an eviction or an inspection of the property.

They are going to let us live there until they can look into modifying our loan or something else to help make it affordable. She is putting this in writing and over nighting it to me. 

She also said that if they can not find a program that she would be the one contacting me and letting me know that we will be evicted. She said they want to work to see if they can work something out but she of course could not guarantee anything. She kept telling me how sorry she was that we had an eviction hanging over our head at Christmas time.

I also went down to the court house and got some documents and had them notarized. One is confusing to me as it was dated March 10, 2011 that the assignment transferred from Flick mortgage to Wells Fargo on that day. That isn’t true at all. Wells Fargo said it transferred title in 2007.

I am reading your blog and reading comments from your readers. The girl Beth something that called me to night said she is now the only point of contact for me and that she has escalated everything.

I will keep you posted on what happens,

Holly Niemic

AND HERE’S THE 2ND EMAIL FROM HOLLY TODAY…

Dear Mr. Andelman,

So, because of your article and your DOER’S my children may be able to stay in the only home they have known.

Another thing I didn’t tell  you is my daughter came home from PA where she was in college because she could not concentrate on school when all this was going on. She called me every day crying where are we going to live. Where are Kipper, miller and Sasha going to live (our dogs)?

I told her I don’t know. I’m going to fight to keep our home but other then that I don’t know. I will work ten jobs if I have to to put a roof over your head but she just wanted her home, her room and her life back. she wanted something stable as her parents are separated. She is now on cloud nine and filled with the same hope that I have thanks to you.

I honestly believe that we have won. I know it is all because of you! Thank you so much from the bottom of my heart. I will continue to do everything I need to do and then when my home is our home again without any banks coming after me I will help someone else that needs help. I now know where to go at the court house, I am learning so much that I will pass the knowledge on and I will point them to your blog and try to help them as much as I can.

I will also continue to be one of your DOERS. I will follow you forever.

Thank you so much for helping my children. You can not imagine how in awe I am at you and how much I appreciate everything.

I will keep you posted on what happens,

Holly Niemic

AND HERE’S HER 3RD EMAIL TODAY…

Mr. Andelman,

Yes, You can print anything I ever send you. If it helps just one person then it is so worth it to me.

I just recieved a letter by UPS from Beth Dorsett, Vice President, Office of Executive Complaints. It says that the subject property does not currently have a scheduled eviction date and that she will work with me in order to determine which workout options are available for the loan. 

She will also contact the attorney’s office to advise them of our intent to review the loan for retention options. ( I have been asking them to do this since before the Sheriff sale, but each department said they couldn’t do it and of course never did it).

She also gave me her personal cell phone number last night and her phone number at work which is (800) 853-8516  extension 40586.

I got that letter because of you! You are winning this not just for my children, myself but for everyone facing foreclosure. I have even had more people contact me who are offering advise and telling me not to give up hope.

Now I will never give up hope. You made me believe that there are truly good people out there who think of others and really not only thinks of them but does for them without even knowing them. That is so amazing to me.

All your DOERS, they have been so supportive. Like I said I am one of your DOERS for life now. I will have always lived my life helping others and now others are helping me. it is so touching I’m crying again.

Thank you once again and I will keep you posted on what Wells Fargo is doing.

I don’t know you but God knows I love you! 

Holly Niemic

###

SO, WHAT ARE YOU WAITING FOR?  IF YOU HAVEN’T DONE IT, DO IT NOW! AND BECOME A REGISTERED DOER TODAY BY SENDING AN EMAIL TO MANDELMAN@MAC.COM.

AND SUBSCRIBE TO MANDELMAN MATTERS HERE

Mandelman out.

“Integrity is not a commodity. It’s the most rare and precious of personal attributes. It is the core of a person’s — and a company’s — reputation.”

John Stumpf, Chairman and CEO, Wells Fargo Bank

Doug and Holly built their home in Raleigh, North Carolina back in 1994.  It’s the only home their four children… ages 12, 13, 15 and 18… have ever known.  For something like 18 years, they never missed a mortgage payment.  I spoke with Holly for a couple hours last night… she’s simply as nice a person as I can imagine exists.

In 2009, the recession hit Doug’s business pretty hard… but no surprise there right?  He certainly was far from alone.  And I would think that Wells Fargo should at least somewhat understand that situation.  After all, the federal government’s taxpayer funded bailout that year sent $38.6 billion Wells Fargo’s way, isn’t that right Mr. Stumpf?  No matter.

Holly wrote to me yesterday… her message began by saying:

“Time is of the essence. I am writing to you today for your help.”

Here’s how her message ended:

“We really need to be out of our house today but Freddie mac put it out in the public that we have until January 3, 2011.  I asked Wells Fargo and their attorney to put that in writing but they wouldn’t. They just agreed to it.

However, I am afraid that they will send the sheriff out today to lock us out of our home. We have not moved yet as we are still under review.  Can you help us by pointing us in the right direction?  We are so desperate.”

I’m going to tell you their story in a moment.  But, first I want to point something out to Wells Fargo CEO John Stumpf and the folks at Wells Fargo.

Holly asked you and the bank’s attorneys at Brock & Scott, if her family should expect to be evicted today or whether they had until the 3^rd of January and you agreed that it would not be until January.  You wouldn’t give her anything in writing, but that shouldn’t be necessary… you agreed.

But you see, Mr. Stumpf, as Wells Fargo’s CEO, at least one point should not be lost on you… she doesn’t TRUST you… she can’t trust you, and I don’t blame her.

She doesn’t believe your bank even when it comes to something like whether she and her four children will be evicted today or next week.  Just before New Years’ Day or right after.  She can’t trust your bank to answer a question like that and she has damn good reason… it’s because you and your bank have been proven to be entirely untrustworthy on so many occasions that she’d rather trust a convicted felon off the street than someone from Wells Fargo Bank.

And so would I, Mr. Stumpf, so would I.  And the same will go for her four children… someday.

Mr. Stumpf, you were one of the 100 highest paid CEOs in the country last year, with almost $19 million in total compensation.  That seems like a lot considering we don’t seem to be able to trust you to answer a question like the one Holly asked, does it not, sir?

Holly and her husband separated in August of 2009.  I didn’t ask why, it’s none of my business, but I could tell that they were very loving and caring parents because she explained how they’ve alternated staying in the home with the kids, 4 days on, 3 days off.  They didn’t want their marital problems to disrupt the lives of their children, so she stays at an apartment and he sleeps at his office.

Perhaps it was their financial difficulties that put too much strain on their marriage, it certainly couldn’t have helped.  Doug’s business was coming back slowly but in October of 2010, Doug couldn’t make the mortgage payment for the first time in over 16 years.  He didn’t tell his wife, I’m sure I know why… he couldn’t.  Like I would have done, he probably devoted all of his time to work so he could catch up as soon as possible.

Holly received a letter from Wells Fargo in February of 2011.  It said their home was in foreclosure.  She called the bank immediately to make payment arrangements that would bring loan up to date right away, but the bank wouldn’t talk to her.  She learned that she was not on the loan, she was just on the Deed of Trust.

She went to see Doug at his office, and the two of them called the bank on speakerphone to arrange to make up the back payments.  Holly had $12,000 in her IRA, and she owned a second home that had equity of roughly $60,000.  And wouldn’t you know it, that mortgage was with Wells Fargo too, and she had never missed a payment.

But, Wells Fargo said they couldn’t accept payments at that time, the couple would have to contact the bank’s foreclosure attorneys at the law firm of Brock & Scott.

SIDEBAR: I’m no banker, but I hear about this sort of thing happening all the time.  Why the hell can’t banks accept a payment… ever?  And don’t bother telling me there’s a rule or a law, because banks treat either like a speed bump when it suits them, that much is clear.  When a homeowner tries to make a payment, figure out how to accept it and get them back on track as quickly as possible.

Doug ended up asking Wells Fargo about a loan modification.  There were delays on Wells Fargo’s end, according to Brock & Scott, so for the purposes of our story, let’s fast forward.

On October 7, 2011, Doug received a letter from a Wells Fargo Preservation Specialist, Katerina Williams.  The letter said that all Doug had to do was have all of the required documents submitted to Wells by October 22, 2011 and he would be reviewed for a loan modification or some other program offered by the bank.

Here’s what the letter of October 7^th said:

“As your mortgage servicer we want to help you stay in your home.  If you do not qualify for a loan modification, we will work with you to explore other options available to help you keep your home.”

Doug submitted and Wells Fargo confirmed receipt of all required documents by October 19^th, three days before the deadline of October 22^nd.  (Holly has the fax receipts showing the date.)

So, the bank immediately started doing what Katerina Williams said the bank would do… they began reviewing Doug and Holly’s file for a loan modification?  No, I’m afraid they didn’t do that.

What Wells Fargo did do was sell their home at a Sheriff’s Sale on October 21, 2011… a day BEFORE THE DEADLINE FOR SUBMISSION OF THE REQUIRED DOCUMENTS.

I can only imagine the feelings of panic Holly and Doug were experiencing as they made call after call to their Wells Fargo Preservation Specialist who “wanted to help them stay in their home.”  They had been told that there would be no sale assuming everything was submitted by the 22^nd.  But, now Katerina couldn’t be reached.

I’m sure she was busy.  Perhaps friends had unexpectedly come in from out of town, or maybe she had a dentist appointment… that lasted for the next two months.  What?  It could happen.

Holly and Doug were finally able to reach the woman’s supervisor who said all she could do is submit their file for review after the sale because no one had bid on it and so it ended up going back to Freddie Mac.

So, the supervisor did exactly what she said she’d do and submitted the couple’s file for review?  No, I’m afraid not… once again.

Next thing the couple knew two letters arrived from the foreclosure attorneys at Brock & Scott.  One was an eviction letter, which said they had 10 days to get out of the home they had built in 1994 and for which they had paid without incident for 16 plus years.  The other was a cash-for-keys letter that said they could stay in their home until December 29, 2011.

They checked and were told that if they left the home it would be considered abandoned and any review of their situation would be over.  So, with no other choices apparent, they chose the cash-for-keys offer, hoping the extra time would allow them to fight the foreclosure and allow them to get an answer to their case, still supposedly under review.

The couple wrote to Wells Fargo, to Freddie Mac, and to Brock & Scott asking that the eviction date be postponed as their review was still pending. Not even one person even responded.

Out of desperation, Holly sent an email to the bank’s CEO, John Stumpf.  (Oh good… that’s you John.  Here’s your chance to help your customer stay in her home.  For almost $19 million a year, I’m thinking you can at least make sure the nonsense stops, right John?)

Holly and Doug heard from Paula Kingery, who said that Mr. Stumpf had forwarded Holly’s email and that she was now on the case.  And what a relief that must have been.  The bank’s CEO had taken action, and thank the good Lord for that.

Today is the 30^th of December… and still no response from anyone, even though Holly has called, faxed and emailed too many times to count them anymore.  The couple assumes that their originally assigned Preservation Specialist, Katerina Williams, must be dead, as they have been unable to reach her via phone, fax or email since before the date of the Sheriff’s Sale.

Here’s the situation in Holly’s own words, as I could not improve on them no matter how I might have tried…

“Paula Kingry called me last night to let me know that she has a phone call in to the lead investigator on our case to see if they can do anything to lift the eviction date. I don’t understand how they don’t know if they can do that and how they can ask us to leave our home when we are still under review. We were told that if we leave we will give up our rights to that review, but if we stay I’m scared that the Sheriff will forcibly remove my four children, and me… and any belongings in the home will be forfeited.”

That’s very nice John Stumpf… very nice indeed.  Have you ever felt like that?  Have you ever felt afraid that the Sheriff would soon be coming to forcibly evict you and your four children from somewhere?  Probably not, would be my guess.

By the way, I should have asked earlier… are you having a nice holiday, Mr. Stumpf?

I only ask because Holly’s living through her own personal hell because of your bank, Mr. Stumpf.  You foreclosed on their home illegally… and if it wasn’t technically illegal because your industry’s lobbyists have made it so, I don’t care one bit… it was WRONG.  And I am going to assume you know the difference between RIGHT and WRONG.

Your bank sold Doug and Holly’s home the day before the submission deadline for the paperwork required to apply for a loan modification.  Then your people told the couple that they were in review to see if the sale can be rescinded… and never called, nor could anyone involved be reached again.

Mr. Stumpf… I want you to know that I take absolutely no pleasure in any of this.  It is now 5:29 AM, and I’ve been up all night writing this article for Doug and Holly because I care about them.  I have a family and I could be doing other things, not the least of which is sleeping… if only Wells Fargo were able to treat its customers like anything above the way a state penitentiary treats its inmates.

You see… I’ve been writing about the financial and foreclosure crises for just over three years now… I’ve written over 600 articles on the subject.  Your bank, meanwhile, has not gotten any better at this whole loan modification thing during that time.  How is that even possible, Mr. Stumpf?  How can you not be any better at this after three years of doing it every day?

It seems, for example, that you still can’t answer the phone with any consistency.  What’s the problem?  Is it all those buttons?

Here’s what you were supposed to do in this situation, and trust me… although it may seem presumptuous, I feel safe speaking for EVERYONE in America…

As Holly has informed your people, she’s prepared to make the payments to prevent the loss of her home.  In fact, she tried to do just that on several occasions.  She has more than $10,000 in her IRA, and she owns another home on which Wells Fargo has the mortgage… it’s current, by the way… and there’s approximately $50,000 in equity.  She’ll sell it and use that money to pay for her home, if that’s what is required.

Also, she’s working, earning $4-5,000 a month on her own.  Doug’s insurance agency business is also doing better, and he’ll likely make close to $100,000 this year.  They remain separated, but he still supports the family.  Plus, they only have 10 years left on their loan.  If Wells could extend the term to a 30-year loan, there would be no problem making the payments as they always have.

I imagine that there could be some issues because she’s not on the loan, and only appears on the Deed of Trust, but they’re not divorced… and regardless, those are the sort of issues that a bank is supposed to help their customers with… what the bank is not supposed to do is screw around for months, lie, stop responding to calls, and then sell someone’s home the day before the bank told them to submit the paperwork required to apply for a loan modification.

In fact, I had a woman in Tennessee that I had to write about a couple of months ago… same problem, but Bank of America figured it out and got her mortgage modified… after I wrote about them too, of course.  (And if you’re not already familiar with me, feel free to ask Brian Moynihan about me, he’ll fill you in, I’m quite sure.)

Doug and Holly were excellent customers of your bank for over 16 years, and then they hit a rough patch.  They needed the bank’s help… some guidance to get them through difficult times.  You had a chance to earn the trust of a customer for life… (and the good news is you still do… but as Holly said in her message to me: Time is of the essence.)

Here’s an excerpt of what Mr. Stumpf wrote about his company’s Vision & Values…

“Our progress has not been perfect. We learn just as much from failure (perhaps more) as we do from success. Companies are made up of human beings who make mistakes. When we make them we admit them, learn from them, then we keep moving forward with even more understanding, guided by the same values toward the same vision.”

I like the sound of that, Mr. Stumpf.

Here’s what Holly said at the very end of our conversation:

“We went to the courthouse yesterday Dec 28, 2011 to file a TRO but they didn’t have forms there for us and we weren’t sure how to do it, but they told us we had to have a attorney file them. We are having a very difficult time finding an attorney here in Raleigh, NC on such short notice. I have called a few but they can’t help and am waiting for phone calls to be returned from others.”

You see, the thing is… I DO KNOW LAWYERS IN NORTH CAROLINA, lots of them, actually, and one in particular… a good friend… Max Gardner.  And I’m going to have to call Max later today and find out what can be done through the courts to stop you from sending the Sheriff to Holly’s to throw her children into the street.  I don’t want to, mind you… especially since you could so easily correct this.

See, and I’d like to think that what I’ve written here would be enough… but I fear it won’t be.  So, if you’ll excuse me for just a moment… I’m going to introduce you to some friends of mine…  Mandelman out.

 ~~~~

Ahem… Excuse me…Are there any DOERS in the house?

CALLING ALL DOERS!

 ~~~~

Doug & Holly Niemic

Raleigh, NC

Loan Number: 0157248618

 ~~~~

And look what I found… a whole list of Email addresses for Wells Fargo execs, but let’s start with letting Mr. John Stumpf know how littler we think of this situation his bank has created.  Let’s let him know we’re here and we’re paying attention… and that there are quite a few of us.

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

~~~

Sharon Cecil, Assistant to Both
WELLS FARGO HOME MORTGAGE
sharon.cecil@wellsfargo.com

~~~

Todd M. Boothroyd
Senior Counsel, Real Estate Division
Todd.M.Boothroyd@wellsfargo.com

~~~

**** Kovacevich (415) 396-4927
kovacedm@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

~~~

Mark Oman (515) 324-2035
mark.oman@wellsfargo.com

~~~

Cara Heiden (515) 213-4040
cara.heiden@wellsfargo.com
Executive number for members to use to escalate the mod process 1-800-853-8516.
Executive Communications
MAC X2302-02J 800 S. Jordan Creek Parkway
West Des Moines, IA 50266
515-324-3130
&
515-324-2872

~~~

Denise Erickson
Executive Mortgage Specialist, Office of the President, WF Home Mortgage
MAC X2302-019
1 Home Campus
Des Moines, IA 50328
denise.erickson@wellsfargo.com
1-515-324-2610 

~~~

Cara K. Heiden, CEO
WELLS FARGO HOME MORTGAGE
cara.k.heiden@wellsfargo.com

~~~

Mary Coffin, Vice President
WELLS FARGO HOME MORTGAGE
mary.coffin@wellsfargo.com

~~~

And a few more… just in case… 

Executive Vice President, General Counsel: James.M.Strother@wellsfargo.com

Executive Vice President, Controller: Richard.D.Levy@wellsfargo.com

Senior Executive Vice President – Wholesale Banking: David.A.Hoyt@wellsfargo.com

Senior Executive Vice President David.M.Carroll@wellsfargo.com

Senior Executive Vice President: patricia.r.callahan@wellsfargo.com

Senior Executive Vice President, CIO: kevin.a.rhein@wellsfargo.com

Senior EVP, Community Banking: Carrie.L.Tolstedt@wellsfargo.com

Senior Executive Vice President: AVID.MODJTABAI@wellsfargo.com

The Board of Directors, Wells Fargo Bank: BoardCommunications@wellsfargo.com

The Wall Street Journal is reporting that the negotiations between remaining state attorneys general and the big banks over issues related to the foreclosure practices employed by the banks’ mortgage servicing operations, are nearing an end.  According to the WSJ, $19 billion settlement is near… in fact, the Journal makes it sound imminent, although the paper does concede that delays could result from no agreement as to who should be appointed to monitor the agreement.

Let me guess… the bankers want appoint Jon Corzine as the monitor, while the state AGs are proposing a banker whose ponzi scheme or insider trading scandal hasn’t yet made headlines.  Gee, I can’t wait to see how this turns out.  Don’t you wish the negotiations were on C-SPAN?

(It has been reported that Sheila Bair’s name came up for potential monitors, but she turned down the job saying she has other commitments.  It’s really still only a rumor at this point, but I’ve been told that those commitments include a standing Thursday morning with a nail salon and a pilates class.)

I want to be very clear about something here… this entire thing is just astonishingly stupid, and what’s most amazing is that there are functioning adults involved… I mean adults that can do things for themselves… like tie their own shoes, cross streets at the crosswalk… things like that.  I’ll tell you why this is the case in a minute… and it’s not my opinion… it’s the fact of the matter.

I decided that the best person to ask about what’s going on with these positively inane negotiations would be a former State Attorney General, so I called Ohio’s former AG, Marc Dann.  Marc knows these people, he understands the process, and he’s heard some of the inside scoop, so you don’t want to miss this Mandelman Matters Podcast… I promise you that.  (Scroll down and you’ll find the PLAY button.)

But meanwhile… let me just say a couple of things about what’s going on here… and correct the facts that the WSJ got wrong… or embellished… embroidered… or just were misleading about.

First of all, the WSJ refers to the negotiations as “months-long.”  That’s a true statement, but it sure is a funny way to phrase a time period that’s just one month shy of lasting ONE YEAR.  It’s like describing the amount of time that elapses between my birthdays as having been “months-long.”  In point of fact, HousingWire reported the following on January 26th, 2011…

“Iowa Attorney General Tom Miller told more than 200 homeowners and consumer advocates in a meeting Tuesday that the investigation into foreclosure practices at major lenders is drawing to a close, and that negotiations will begin soon.

Major lenders froze foreclosures in October when employees were found to be signing affidavits en masse and without a proper review of the files as required by law in some sates. Miller and the other 50 state AGs along with seven federal regulators launched an investigation into what is now known as the robo-signing scandal.”

Secondly, the WSJ refers to the settlement as relating to “alleged foreclosure improprieties,” and it’s the sort of description that took me back to the Fall of 2006, when evidence of Republican Congressman Mark Foley’s attempts to molest several under age boys working as White House Pages was made public by ABC News.   Lest you forget, Foley was the staunchly anti-gay legislator who, as it turned out, was a sexual predator who hunted young boys.

On October 5th, ABC News reported  that in 2002, Foley e-mailed one 17 year-old male page with an invitation to stay at the congressman’s home in exchange for oral sex… the page declined the offer. The same report also stated that Foley e-mailed another under age male page requesting a photograph of his erect penis.  Another former page reported that he had seen sexually explicit e-mails sent by Foley to “three or four” other pages from that same class.  Foley’s office ultimately confirmed that Foley had in fact sent the messages, before he slinked off to rehab.

And then, on one of the Sunday morning shows I watched Newt Gingrich and White House spokesman Tony Snow describe Foley’s conduct as being nothing more than “naughty e-mails,” which is a lot like the WSJ referring to the banks’ “alleged foreclosure improprieties.”

Alleged?  There’s nothing alleged about AT LEAST hundreds of thousands of fraudulent affidavits, forgeries of Linda Green’s name, among dozens of others.  For heaven’s sake, the whistleblower in Nevada recently committed suicide… or something… after blowing the whistle on Lender Processing Services as a robo-signing Mecca, if you will.

Additionally, the State of Nevada passed a new law that makes it a felony and threatens to hold individuals criminally liable for making false representations concerning real estate title. Under the new law, individuals are also subject to civil penalties of $5,000 for each violation.  And what happened as a result?  Well, for one thing, foreclosure filings fell by roughly 80% in month one following the new law’s passage.

And do I even need to talk about the Registers of Deeds, like Jeff Thigpen of North Carolina, and John O’Brian of Massachusetts?  But, the bank-friendly folks at the WSJ, want us to think of the banks being forced to pay out $19 billion because of “alleged foreclosure improprieties.” Hardly seems fair, right?  I wonder if the bank PR team masquerading as journalists over at the WSJ understands that were they to have done what the banks did, just a couple of times, they’d be in jail right now.

And yet, the WSJ story does it over and over again… here’s the second reference, found in the article’s third paragraph:

“The talks center on the banks’ use of “robo-signing,” in which employees approved legal documents without proper review, and other questionable foreclosure practices.”

The only thing “questionable“ surrounding this discussion, is the way the WSJ reporters apparently view massive fraud and the rampant use of forgeries when kicking people out of their homes… after lying to them about their intent to modify their mortgage payments.

Thirdly, the WSJ story goes on to explain that without California’s AG, Kamala Harris, participating in the deal, the settlement amount is to be $19 billion… with Harris’ going along with the flagrant whitewash, it would have been $25 billion.  The Journal says the  amount is to fund…

“The dollar value of the deal would include the value of principal write-downs, interest-rate reductions and other benefits to homeowners as well as cash penalties.”

All that for $19 billion, huh?  Wow… somewhere there must be a sale on principal reductions and cash penalties, because $19 billion on my calculator doesn’t go very far in that regard.  In California alone, there are more than 2 million people in foreclosure, and if we gave them all a principal reduction using the $19 billion settlement, they’d each get $9500.  Of course, that wouldn’t leave any funds to cover the interest rate reductions, cash penalties, or “other benefits,” unless by “other benefits,” they mean that the homeowners will be deemed “eligible for HAMP,” or something that costs about the same amount.  Nor does it leave even a nickel for anyone in the other 49 states.

In case it’s not yet seeming “STUPID” enough to you…

Fourth, here’s how the WSJ describes the expectations of the administration and the bankers involved in the negotiations…

“Administration officials have viewed the foreclosure settlement as a chance to break the foreclosure logjam, increase the number of reductions in loan principal and provide other assistance to homeowners. Banks, meanwhile, would like to reassure investors and put questions related to foreclosure practices behind them.”

Really?  Who in the Obama Administration specifically has been viewing the proposed $19 billion settlement that way?  I’m serious… I want to know who.  Names… name names, because obviously they are entirely innumerate, and I’d be happy to get a math tutor over there right away at my own expense.  Seriously… I’m happy to do it… just tell me which member of the president’s cabinet didn’t finish 5th grade math, and I’ll take care of it right away.

Fifth, the WSJ story wraps up by explaining that the “negotiators are still are ironing out details to determine what additional legal claims prosecutors could bring once a deal is signed. Under the proposal, banks would be released from legal claims tied to servicing delinquent mortgages as well as certain mortgage-origination practices, but government officials still would be able to pursue claims related to the packaging of mortgages into securities.”

And then the WSJ closes its story of how a settlement between the bakers and state AGs is essentially imminent with the following sentence:

“Even if a deal in principle is reached, the formal announcement of the agreement could be delayed until January. Once a deal is agreed to, it is likely to take a month or two for the legal language to be finalized, people familiar with the discussions said.”

Well, alrighty then… in other words, there’s no deal anytime soon, and in fact there may never be one.  Is that what you were trying to get at, WSJ reporters, Ruth Simon, Nick Timiraos, and Dan Fitzpatrick?  And, three of you were needed to write this bank brochure of an article?  Why?  Was it that one of you started it, but soon found that you needed the fingers and toes of the other two to handle the math?  No, wait… it can’t be that because you guys didn’t do any math.  Ooops, my bad.

Okay, so is it STUPID enough for you yet?

Now, click the PLAY button below and listen to Ohio’s former Attorney General, Marc Dann, as he provides us with a window into the negotiations between the remaining AGs and the banksters.

Mandelman out.

###

If after listening to this podcast, you feel that you want to voice your views n this sham of a settlement proposal, as Marc Dann suggests would have an impact, click HERE to link to the home page of the National Association of Attorneys General.  You’ll see a map of the U.S. on the home page… just scroll over the little boxes and you’ll get your state AG’s contact information.  Come on DOERS… DO IT!  Stop the madness.

Originally posted in December of 2009… how tragic is that?  Read it and you’ll see why.

HO, HO, HOmeless!

The Real Story Behind the Crisis

We Still Don’t Want to Understand.

A 46 year-old single mother lies awake as night threatens to turn to morning.  She wonders how she’ll make it through even one more day.  She can’t cry… anymore.  Can’t look into the eyes of her two young children, age 7 & 9.  For a fleeting moment she wonders if her sister, 3,000 miles away, should take the kids, for a while anyway.  She pushes that thought from her mind, reaches for her prescription on the nightstand, swallows two without water, and rolls onto her side.  She’s a Registered Nurse; she knows sleep will soon come.

~~~~~

A father of three stands in the shadows made by the tree in the front yard of his home of 14 years.  It’s 2:30 AM.  He’s wearing a tee shirt and boxer shorts. The wind is audible and cold.  His eyes fixate on the flower box he built his first year as a homeowner.  His stare moves to the driveway… his driveway… and remembers pitching underhand to his youngest son.  He had thought they would live in this house forever.  He absent-mindedly scratches his chest with the barrel of the .38 Smith & Wesson Super he’s holding in his hand.  He wonders if insurance policies pay off after suicide.

~~~~~

An older couple, returning from a trip to the grocery store, pulls into their driveway.  They’ve been married for 38 years; bought the house in ‘72.  He opens the back door of the sedan and reaches in for the bags.  She admonishes him not to do so.  The doctor said not to lift anything heavy… might tear his stitches.  They walk inside together, close the door; neither speaks.  There is paperwork taped to the front door.  It says they’ll have to be moving soon.

~~~~~

A young child listens to her father talking on the phone as he makes her breakfast.  His voice doesn’t sound normal to her ear.  He sounds nervous… he’s being very polite. Like when he’s talking to the men at church.  He hangs up and even though she didn’t ask, he tells her everything is fine.  But the child doesn’t think so.  She looks at him.  Thinks he’s crying.  She wants to help.  He wipes his eyes.  He says cutting an onion made them water.

~~~~~

A mother is on the phone first thing one morning.  She reads my column on-line.  She calls to tell me that her son, 41 years old, hung himself in the basement of his home last night.  She found him yesterday morning.  He had been laid off and out of work for nine months. He tried to convince his bank to modify his mortgage since then.  Went through his savings.  Started spending hers. Her voice shakes.  “Now,” she says, “the bank will finally get what they’ve wanted all along… his house.”

~~~~~

Happy Holidays everybody…

This has been a very hard article for me to write.  It’s been hard for me this year during the holidays.  I want to be happy.  I want to make this holiday season even more wonderful than the last, for my daughter, my wife and my family.  But it’s just harder this year.  Harder to forget everything else that’s going on around me.

The foreclosure crisis that began in mid-2006 continues to destroy the wealth of American consumers and the financial strength of our nation’s banking institutions.  And, although it pains me to say it, the end is still nowhere in sight.

It now seems likely that, before the crisis is over, not just millions, but tens of millions of Americans will have lost their homes to foreclosure, and thousands of banks will have shuttered their doors for good.  The scars will be deep and we will be a nation forever changed.

In 2007, the number of foreclosures filed hit 1.3 million, a 79% increase over 2006.  In 2008, that number had risen to 2.3 million, an 81% increase over 2007.  It appears that this year we’ll have something in the neighborhood of 3.9 million foreclosure notices sent out homeowners, if not more.  And next year, absent some unexpectedly competent response from government, is all but certain to be even worse.

As of August 2008, 9.2% of all U.S. mortgages were either seriously delinquent or already in foreclosure.  Today, that number is 14.7%.  Forecasts predict a staggering 14-17 million foreclosures over the next five years, depending on their source.  And, according to Bloomberg, mortgages of $1 million plus are now defaulting at twice the national rate, so there’s no question that the water level is rising.

Meanwhile, unemployment… the real unemployment, known as U6… has reached 17.5%.  In October of this year alone, our country lost another 558,000 jobs, and most of those in manufacturing and other areas that may never return.  In Detroit, according to the city’s Mayor, the actual unemployment rate is fast approaching 50%.

By now it should be abundantly clear that foreclosures breed foreclosures and that the problems are spreading state by state.  And it should be equally clear that our nation’s economy cannot begin to recover until the free fall in the housing market, and the resulting foreclosures, have been brought to an end.

Perhaps you’re among those only interested in blindly optimistic thoughts, and if so, there’s certainly no shortage of those.  Now that our government has run out of things to actually do, and since they’ve run out of money with which to paper over problems, as this year draws to a close it seems they simply would like us to believe the worst is over.  That recovery is right around the proverbial corner.  Few do, though, at least not in earnest.  It’s like Ben Bernanke keeps saying in so many words, the recession is over, damn it… probably… I think… sort of… it’s a jobless recovery… yeah, that’s the ticket… a jobless and homeless recovery.

I’ve come to understand many things about this housing led, increasingly complex economic crisis as I’ve written more than 200 articles on related subject matter over the last year.  I now believe in every fiber of my being that we will remain incapable of finding meaningful solutions until we as a nation come to understand the problems we’re facing and why we’re facing them.  And in this regard we have a very long way to go.

We still don’t know… and maybe some of us don’t want to know.

I have never in my life seen anything like what’s happening in this country today.  I’m not just talking about the severity of the crisis; I’m talking about the amount of misinformation and utter confusion about its proximate cause.  It is truly stunning to behold.  I can barely get through a week without bumping into another armchair economist who’s got lots of opinions on AIG, but has no idea what a Credit Default Swap is, let alone how one works, or why they were sold or purchased in the first place.

It’s uncomfortable to be around, frankly.  When did we become a nation filled with people who feel the need to hold a view on everything?  A few weeks ago I wrote a piece in favor of judicial loan modifications… you know, bankruptcy reform… the “cram down,” if you must.  Quite a few people wrote in to say they disagreed with my position, every one of them based their argument on the identical position: “It will raise borrowing costs in the future for everyone.”

It’s a ridiculous presumption, you should realize.  The “cram down” bill that recently was once again killed by the banking industry has no significant measurable potential to raise borrowing costs in the future.  For one thing, it would only apply to loans on the books at the time of its passage, so no future loans would be affected.  And for another, it only applies to those filing bankruptcy, a statistical probability that investors already price into their models.  And for a third, when a judge writes down a mortgage to the market value, that judge isn’t costing the investor a nickel… which is why it’s called the “market value”.

The funny thing about judicial loan modifications is that we clearly need them badly at the moment, as we watch another 14-17 million homes fall into foreclosure, so some miniscule, incalculable, potential threat hardly seems a good enough reason to kill the amendment within hours.  And many of the people who hold onto views in opposition to changing the bankruptcy code, would all unquestionably benefit from such a common sense approach.  But, regardless… no one changes his or her view on much of anything these days.  I suppose only two factors result in real learning: age and pain.  We don’t have the time to wait for age to do it, but stand by, because the pain will be increasing each month that passes, so maybe there’s still hope as that pain increases.

As it stands, all we’re left with in terms of a plan to stop the free fall in the housing market, is… well… we don’t really have a plan to stop the free fall in the housing market, now do we?  Even if Obama’s loan modification program was working, which it is not, it’s not designed to stop the foreclosure crisis.  Remember, it’s only designed to help “responsible” homeowners, if there’s still such a thing.

My intention is that this article doesn’t beat around the bush, so I want to go directly at the question of why we don’t have a plan to stop the foreclosure crisis.  What is it that prevents our adoption of policies that would lead to our economic recovery?

We don’t have a plan for two reasons, and both are political as opposed to economic.  What I mean by that is that we could fix the problems we’re facing, but a lot of people won’t like what we need to do.  In other words, if we could just get over ourselves, we’d all be much better off.

Okay, so here goes:

1. Stopping the Foreclosure Crisis

In terms of fixing the housing market and stopping the foreclosure crisis, we’re going to have to write down the seriously underwater mortgages to their market value, and we can’t do that because politically it’s potential suicide.

There are still many people that view the homeowners losing their homes to foreclosure today as being “irresponsible,” and who could possibly want to bail irresponsible homeowners out of their underwater mortgages?

What people fail to realize is that the mortgages that are seriously underwater need to be… and will be… written down to their market value.  The only question is the mechanism we use to write them down.  If we continue to use foreclosure as the mechanism, then we’re going to be in for a lot of pain, as we take down everyone else’s home value at the same time.

As a country, however, we don’t want to write down mortgages, in fact we barely want to modify them, because we’ve still got a sizable percentage of our population that blames homeowners for the economic collapse and therefore believes they must be punished.  And by punishing them through foreclosure, we will punish everyone else as well.

The problem with this kind of thinking, besides it being untrue, is that it prevents our elected officials from looking at real solutions to the problem.  Eventually, people will change their views on this issue, but it may take several years for the pain to become intense enough and sufficiently widespread, before people are willing to look at the situation differently.

Until then, we’ll keep foreclosing, and those foreclosures will continue to drive housing prices down… which will in turn create more foreclosures.

2. Fix the Banks and the Credit Markets

In terms of fixing our insolvent financial institutions, the only plan with the potential to succeed, short of nationalization, of course, is to buy the toxic assets off of the bank balance sheets at 100% of their face value… something that’s simply not politically palatable.  We could pay some amount less than full face value but that would only leave giant holes in the balance sheets of banks and we’d have to pony up the difference anyway.

It looks to me like Geithner’s plan is to keep the banks propped up with federal slush money, provided under one wonky acronym or another, and the suspension of all accounting rules that would give away their insolvency… until the banks can earn enough by lending to Treasury and charging us exorbitant fees.  There’s a bit more to it than that, but those are the important points.

I’m not the only one who sees this plan not working.  Geithner isn’t just forecasting economic recovery in 2010… he’s depending on it.  When it doesn’t happen, he’s going to act surprised, I’m sure, but he’ll be acting because he knows now that he’s taking a huge risk.

The “toxic assets” that are still clogging up bank balance sheets aren’t getting any less toxic on their own.  In fact, the more homes that are lost to foreclosure, the more toxic they’ll become.  So far, we’ve papered over the problems, but that only fixes the problems in the short run.  Remember, if the banks believed their balance sheets today… they’d be lending.

Let’s look at today’s conventional wisdom pertaining to the economic meltdown:

1. It’s the fault of sub-prime borrowers…

No, it’s not.  Today’s crisis isn’t a sub-prime crisis, and never was a sub-prime crisis.  From the beginning, sub-prime and prime loans defaulted at the same proportional rate.  That’s not to say that there weren’t more sub-prime foreclosures than there were sub-prime foreclosures… there were.  But proportionate to prime loans, the problem was never a “sub-prime” problem.

2. It’s unemployment that’s causing foreclosures…

No, it’s not.  Unemployment and other life events don’t cause foreclosures.  Look at the spikes in unemployment that followed the dot-com crash that began in April of 2000.  Unemployment in places like Northern California and Massachusetts skyrocketed, as did mortgage delinquencies, but foreclosures remained low.  Why?  Because in flat or slightly appreciating real estate markets, when people get in financial trouble or lose their jobs, they sell their homes, they don’t start losing them to foreclosure en masse.

3. Borrowing too much and not properly qualifying for loans caused the crisis…

I’m sorry, but no.  Roughly 54% of the foreclosures are prime loans for which people did qualify, and as far as borrowing too much, well… it’s just beside the point.   In light of where things are today, it would seem that any borrowing was over-borrowing.  And when you look at the leverage employed by Wall Street firms, which was in some cases up to 100:1, the whole idea that homeowners could have caused the economic meltdown of this country becomes preposterous.

Think about the 40:1 leverage at Lehman Bros.  On one hand, you’ve got a homeowner taking out a 100,000 mortgage, and on the other you’ve got Lehman Bros. borrowing $4 million based on that mortgage.  In terms of de-leveraging, which is the problem… the $100,000 mortgage or the $4,000,000 in leverage.  And, by the way, while we’re talking about it… who was it that thought that housing prices would go up forever?

None of this is to say that lending standards weren’t far too lax, that more sub-prime borrowers didn’t initially lose their homes than others, or that today’s unemployment rate isn’t contributing to the number of loans in default.  All are true, but none are the proximate cause of the crisis we face today.

The Birth of a Crisis… and the Crises that Followed

First of all, we’re not having a crisis; we’re having multiple crises.  The foreclosure crisis is one.  The credit crisis is another.

We could go back many years to begin such a discussion, but I don’t see the point.  Many say that the Glass Steagall Act should not have been repealed.  At the moment, however, I don’t care one way or the other whether it should or shouldn’t.  I’m sure some combination of experts and political types will figure that out soon enough, and resolving the issue today won’t change anything tomorrow morning.

For the moment, I’m only interested in what happened in July of 2006, on a day when housing prices dropped by 30% or more… although we didn’t all realize it at the time.

Declining real estate values are what cause foreclosures, and on a day in July of 2006, a number of pension funds realized that the AAA bonds they were holding were not in fact AAA… and they dumped them in a hurry.  They might have been AA… they might have been junk… no one could be sure.  All investors needed to know is that they were not AAA, as they had been rated by the ratings agencies, Standard & Poors, Moody’s or Fitch, and that was enough for them to know that they didn’t want to hold them in their portfolios any longer than they had to… and the bond market froze solid.  Money stopped moving.  And wherever the mortgages were at that moment, that’s where they would stay.

Banks, like IndyMac, who had $40 billion in mortgages on their books that they had planned to sell to Wall Street, now had real problems.  Banks don’t have any money they can loan out for 30 years.  They originate mortgages, but then they sell them to recoup their cash… or at least that’s what they did prior to the day the bond market froze solid.  Now, unable to sell their mortgages, banks immediately began hoarding cash.  Lending dried up within days.  And all of a sudden, what had been a market plush with mortgage cash, was now dry as a bone.

At the same time, there was another force in play… interest rates had been rising.  In fact, by the summer of 2006, the Fed had increased interest rates 17 times in a row.  Those with adjustable rate mortgages had already started to default, and sales had already started to slow appreciably.

Now, however, since essentially no one could get a mortgage, no one could buy a house… and prices had nowhere to go but down.  As they dropped, refinancing became impossible, and foreclosures were the only option.  The crises had begun.

Treasury Secretary Hank Paulson saw the problem as being limited to the sub-prime market and believed it would be contained there, but he failed to take into account what had really happened.  The credit markets had been broken.  Banks didn’t trust each other.  And as housing prices fell, and more loans defaulted as a result, the bonds were downgraded, and Bear Stearns was the first to go.  Paulson wanted to act at that point, but the now Democrat controlled Congress told him not to come to Congress unless he could assure the legislators that “a crisis was at the door”.

There are always a certain number of homeowners that need to sell their homes each year for a variety of reasons, both personal and career related, and when housing prices are declining rapidly, many of those sales inevitably become foreclosures.  The bubble was deflating fast and the loans that were the worst of the bunch went first.  But as prices fell, people who had over-extended themselves, and everyone else for that matter, stopped spending, and it was only a matter of time before unemployment would start to rise.  It was the beginnings of the downward spiral that continues today, albeit at a slightly slower pace than was experienced at its beginning.

The response by our government has been to pump trillions of dollars into our financial institutions in order to prevent their insolvency and make investors whole, but as long as the flood of foreclosures continues unabated, economic recovery cannot occur and we will all increasingly suffer as a result.  Hank Paulson tried to buy some of the toxic assets off of the bank balance sheets using the now infamous TARP funds, but the banks needed him to pay face value, not some discounted amount, and that would not have been politically palatable.

Even with the evidence of our deepening problems all around us, there is still a significant percentage of our population that is preventing our politicians from taking the steps necessary to stop preventable foreclosures and start the economy back on the road to prosperity.  Those that make up this group, in large part, gained their inadequate understanding of what’s transpired since 2006 from government and banking lobby inspired sound bites.  And even more importantly, their views haven’t changed over the last couple of years, even though almost everything else has.

The bottom-line is that this group continues to blame the borrower… the homeowner… as opposed to the commercial and investment banks, and if you’d like, the government regulatory agencies that stood idly by as Rome burned.

It’s a bleak picture, and sadly it is also one whose duration could be easily be reduced significantly if we as a nation shared a common understanding of how our crisis began and what must be done to stop its continuing spread.  That’s right… I have seen the enemy and it is us.

President Obama, however, now places the blame for the recession on “the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences.”  He and others are trying to get us to change our view of what happened so he can do something about it, but we continue to resist… we continue to hold onto our desire to punish our neighbors for buying too much.  It appears that we’d rather go down with the ship then reduce the principal on our neighbor’s mortgage.

In Conclusion…

Look… I realize that there’s more to the crisis than I’ve described here.  I realize that the bonds I’m referring to were insured by AIG’s credit default swaps, which were unregulated and resulted in a systemic risk to our financial system.  I know that AIG went under because of collateral calls that came along with the downgrading of the bonds it was insuring.

I realize that the process of securitization played a major role in how banks viewed mortgages, and why they were underwritten so poorly.  I realize that Wall Street’s CDOs, collateralized debt obligations, and other derivatives were, if not instruments of destruction, then something in that neighborhood.  And most recently, I’ve come to realize that the investment banks like Goldman Sachs, that packaged these deceptively risky investments and sold them to investors all over the world, bet against their success without disclosing their positions to investors or anyone else.

Yes, I realize that what I’ve described here is a dramatic oversimplification of a very complex situation, and I plan to write more about each aspect of the crisis in simple terms in the hopes that more people will become comfortable with what is now part of our history, and as a result tell their elected representatives that they are not to do whatever the banking lobby wants them to do.

But for the purpose of this article, none of that matters.  For the purpose of this article, I only wanted to say in no uncertain terms:

A. It wasn’t the borrowers that caused this crisis.  Did some people buy too much house?  Sure, some did.  Did some act irresponsibly?  Sure, to varying degree some did.  But today’s foreclosure crisis won’t abate as long as many cling to the belief that they should somehow sit in judgment as to who was irresponsible and who was just caught up in the worst economic downturn since the Great Depression, a task that will be increasingly difficult as each day passes.

B. Water is wet, the sky is blue, children want candy, and people want houses and money.  Some knew what they were doing and some didn’t.  So what?  No one entrusted individual people to make sure our banking system was safe and well managed.  We trusted the banks and they, of one variety or another, let us down.

C. We would be experiencing a similar meltdown regardless of whether we had a real estate bubble.  As long as some group’s actions were going to destroy the secondary mortgage or credit markets, then house prices were going to fall and fall fast.  And that’s what causes foreclosures: declining home values.

D. Our government mischaracterized its cause in the beginning.  Or, in other words… it was never a “sub-prime” borrower crisis.  We know that now.  If you still think it was a sub-prime crisis, caused by those high-risk loans… well, it’s time to take another look at the data.  Your views are wrong.

And to the homeowners who feel ashamed… who have suffered the indignity of losing a home in silence… this wasn’t your fault.  You didn’t break the bond market and send housing prices into a free fall.  You didn’t fail to address the problem, or fall asleep at the switch as a regulator.  You didn’t securitize every payment stream in the country, or leverage untold billions of investments or create untold trillions in synthetic derivatives.  It wasn’t your belief that real estate would continue to go up that caused the problem, it was Wall Street’s belief that it would continue to do so that brought the financial markets to the brink of destruction.

All you did was buy a house you thought you could afford.  Now it’s worth half of what you paid for it… or it will be worth half soon.  No one saw THAT coming.  No one.

So, don’t be ashamed and afraid to speak about what happened here.  Your neighbor may seem to know what he’s talking about, but he more than likely doesn’t know any more than he heard on television or read in some Newsweek article.  Besides, he’s going to be drowning soon enough anyway.  The economic situation we’re in as this New Year begins doesn’t discriminate… everyone will feel its powerful bite as this year continues to see our economy spiral downward.

Unless you’re a banker, of course.  In which case… stop judging others, you jackass.  You want to have a debate someone about how it was borrowers who caused the meltdown, or pick on someone for being an irresponsible… have the debate with me… pick on me.  Go ahead… it’s easy… I’m at mandelman@mac.com.  And I respond to even the most idiotic of opinions.  Bring it.

In fact, next week I’ll be in Park City, Utah, debating this very issue with a bunch of lawyers that represent bankers at a conference of the American Bar Association.  I’ll let you know how it goes, but I think you have some idea already.

For everyone else reading this… let’s stop the madness and tell our politicians we want solutions for the homeowners in trouble, not punishment.  Because at this point, we’re only punishing ourselves… because it’s the right thing to do… because we smarter now and see the situation more clearly… because there, but for the grace of God, go us all.

~~~

(P.S. If anyone wants sources for any of the data presented, just email me and I’ll send you the links.  It’s the holidays and I didn’t feel like writing a term paper, but I’ve got plenty of sources for everything I’ve written.)

And, as always, the illustration of Santa coming down the chimney into a foreclosed home was brilliantly interpreted and then drawn by Richard Taylor.

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.

Well, it’s officially the “holiday season,” and that means it’s time once again to look back at the year that’s ending, so we can see exactly what we never want to have to think about again.

A lot happened in 2011… the shooting of Rep. Giffords… Wisconsin’s unions and teachers take over the capitol… gay marriage gets the nod… Arab Spring… Japan get walloped by tsunami and earthquake, then fallout from nuclear plant threatens to export killer cloud… Osama gets taken out… terror in Norway… Obama still born in Hawaii… Qaddafi finally gone… Casey Anthony… MJ’s doctor convicted of manslaughter… the GOP’s position of Just Saying NO, except to bankers… Summers gone, Geithner inexplicably still there… US economy in shambles… 10th anniversary of 9-11… Penn State does Catholic Church impersonation… Mitt in first place… Obama clearly not in control…

All in all, I’d say this past year was… awful.  But, I’m sorry to say, this next year will be significantly worse, so buckle your seatbelt.

But enough about that… it’s the holidays, and that means no worrying about next year… yet.

And, since it is the holidays, it’s also time for my annual year-in-review-in-rhyme, read to the famous holiday poem, ‘Twas the Night Before Christmas. I started writing my ‘Twas the Night year-in-review in 2007, or at least that’s the year I started keeping them, and they’ve been increasingly popular each year.  In fact, ‘Twas the Night was my very first blog post on MSNBC’s Newsvine, which was my very first blog.

Read it… or, I’ll read it to you…

This year, the written version is the December issue of The Niche Report magazine, center spread by the way.  But click play below, and you be able to listen to it as part of a very Special Holiday Podcast.  So, come on… get into that holiday spirit starting right now… join me for ‘Twas the Night Before Christmas – 2011.

Mandelman out.

###

‘Twas the Night Before Christmas… 2011

~~~

‘Twas the night before Christmas, 2011.

And I realized this poem began life in ’07.

This past year was bad, all the growth curves did flatten,

So I mixed up a pitcher and poured my Manhattan.

~~~

First the shooting, of AZ’s representative,

As beginnings go, this one felt rather tentative.

Wisconsin’s unions and teachers, they’re more than just talkers,

Senators fled, said the idea was Scott Walker’s.

~~~

Obama had upheld the ban on gay marriage,

Causing many supporters to malign and disparage.

Did the lawsuits cause Barack to reverse and agree?

Or did he just watch this past season of Glee?

~~~

Three billion saw Prince Willy, wed Mary Kate,

And it looked like $3 billion, would be billed to the state.

She seemed like a girl who’d soon have her prince trained,

Her dress wasn’t the only thing, that looked so restrained.

~~~

Then Egypt exploded over wealth distribution,

Tens of thousands in streets, ready for revolution.

“Arab Spring,” it was called, among them not one quitter,

It was the first time a regime was overthrown using Twitter.

~~~

But, Egypt was just, one link in a chain,

Because Tunisia and Libya, and which other? Bahrain?

Yes, thousands of people had now seen the light,

The beacon of freedom, which now shone so bright.

~~~

And right out of nowhere, came the death of Osama,

We smiled when the credit was heaped on Obama.

Did G. Bush get mad ‘cause the credit got switched,

Dubya said, “Heck no, the win goes to who pitched.”

~~~

And over in Norway, terror attacks came as twins,

I understand how it ended, but not how it begins.

And all the world mourning for religion’s guns,

Had brought darkness to, the land of midnight suns.

~~~

Then while I sat eating some rye with pastrami,

I saw Japan hit by a giant tsunami.

The footage, it made any movie look phony

And I resigned to buy Kodak, if I couldn’t get Sony.

~~~

And just when it looked like they should build an ark,

The concern changed to would people glow in the dark.

Fukushima made leaving one’s home not allowed,

We feared wind would bring us a radioactive cloud.

~~~

And throughout the year, although it was annoying,

It was Obama’s birth cert, with which we were toying.

But born in Hawaii, is what we discovered,

And Trump is a nutcase, that we also uncovered.

~~~

Casey Anthony got off, and few thought it was groovy,

But I’ll bet she’ll be back in her own Lifetime movie.

We found MJ’s doctor was really a killer

And Michael’s now gone and so heaven got Thriller.

~~~

Then over in Libya, Qaddafi’s done too,

I’m not sure what happened, perhaps a CIA coup?

They say making war was one of old Muammar’s vices,

But what we hated most, was that he raised gas prices.

~~~

And throughout the year, the GOP just said NO,

They would only agree to keep things status quo.

Which was bad for Obama, for hope and for change,

The political landscape went from odd to damn strange.

~~~

With health care behind him and financial reform,

The economy, he realized, was far from the norm.

So he turned to his team, Larry Summers and Geithner,

And asked how come credit was now even tightner.

~~~

Not one idea raised, that would fix unemployment

Obama knew then there would be no enjoyment

And banks denied loan mods, seems they’d rather foreclose

When Tim at Treasury talks, his nose grows and grows.

~~~

Watching homeowners who were all underwater,

Apply for loan mods, was like watching manslaughter.

They cried and they screamed, but their cries were ignored,

Bankers blamed borrowers, which left me totally floored.

~~~

And homeowners in court were treated like louses,

The judges all thought that they wanted free houses.

The stereotype whose idea was Wall Street’s,

Turned struggling homeowners into reckless deadbeats.

~~~

S&P with the meltdown, I can’t help equating,

So why allow them to cut our credit rating?

Then Republicans said the U.S. should default,

Which even made Lieberman exclaim, “Oy gevalt.”

~~~

Barack tried a Hail Mary, and threw up a jobs bill,

But Republicans made sure that it was a clean kill.

But what about spending some billions on school,

The GOP yelled out NO, which was not at all cool.

~~~

We remembered 9-11, on its 10^th anniversary

Shows reviewed every detail, it was far more than cursory.

Then Michigan’s straw poll, would the rightwing admit?

That a process of elimination, had left them with Mitt.

~~~

It was time once again, for political season,

With a Republican field, that defied rhyme or reason.

To understand Cain, you need a sentence contextual,

And I assure you I don’t mean to imply something sexual.

~~~

We can’t chance another Texas Gov sympathizer,

‘Cause that’s how we got a community organizer.

I think Perry and Dubya, they’re just too much the same,

Either one in the moment, might forget his own name.

~~~

Penn State was so shocking, so I did some research,

To see if Sandusky was trained by the Catholic Church.

And I know it’s not funny, and I know there’s no reason,

But did some say Paterno should finish the season?

~~~

The GOP’s line up should be like running unopposed,

Bachman plays Palin, her mind completely closed.

With Paul and Gingrich back, it’s hard to keep a straight face.

John Huntsman is “the other Mormon,” and Mitt’s in first place.

~~~

Santorum, Perry, Herman Cain, others past the comma,

There’s no better way to drive voters towards Obama.

The wild card is Europe, what if they default,

It’s our financial system, that they’re going to assault.

~~~

So, with my wife and children in bed and at peace,

I sat by the fire, stressing out over Greece.

I refilled my glass, pulling out all the stops,

Closed my eyes and was dreaming of defaulting swaps.

~~~

Then out on the lawn there arose such clatter,

I sprang to my feet to see what was the matter.

I stared out the window, the glass touching my nose,

It was Santa’s real sleigh, pulled by bank CEOs!

~~~

I yelled Blankfein! now Stumpf, John Mack, and now Dimon!

I didn’t know how long I could keep the names rhymin’.

On Lewis!  on Davis!  on Logue! And on Pandit!

Kelly, Davis, Rohr, Gorman… all my favorite bandits!

~~~

And then there he was, dressed in red suit so fine,

I asked him to stay, but he didn’t have time.

I was hoping his sleigh, that he’d teach me to fly it,

But to the North Pole, he had to get to Occupy it!

~~~

So, I said Merry Christmas, and with a crack of two whips,

Those bankers took off running in their Italian wing tips.

I yelled thank you Santa! It was my final remark,

He called back, “Cherish the spirit born in Zuccotti Park!”

~~~

So, I went straight to bed, and fell asleep quite content,

Knowing Santa was part of the 99 percent.

And I heard him exclaim, as he flew out of sight,

Merry Christmas, Happy Chanukah… God bless and good night.

~~~

HO! HO! HO!  Happy Holidays Everybody!

Martin Andelman

Mandelman Matters

~~~

Here are the preceding years, in case you feel like taking a walk down memory lane.

‘Twas the Night Before Christmas – 2007

‘Twas the Night Before Christmas – 2008

‘Twas the Night Before Christmas – 2009

‘Twas the Night Before Christmas – 2010

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]]> http://thepatriotswar.com/index.php/%e2%80%98twas-the-night-before-christmas-%e2%80%93-2011/loan-modification/feed/ 0 http://thepatriotswar.com/index.php/mandelman-on-the-news-dissector-radio-show-with-danny-schechter/loan-modification/ http://thepatriotswar.com/index.php/mandelman-on-the-news-dissector-radio-show-with-danny-schechter/loan-modification/#comments Wed, 21 Dec 2011 01:11:03 +0000 Mandelman http://mandelman.ml-implode.com/?p=8225

Listen to the Podcast of last week’s News Dissector Radio Hour on PRN.fm

Subjects:

Occupy Wall Street and the Foreclosure Crisis.

Captain (Ret.) Ray Lewis of the Philadelphia Police Department

Martin Andelman of the blog, Mandelman Matters

and Laura from Occupy Wall Street

Danny Schechter is an Emmy award winning journalist, television producer and independent filmmaker who also writes, blogs and speaks about media issues.  His latest film is PLUNDER The Crime Of Our Time. He’s also become a friend and I’ve appeared on his weekly radio show a couple of times in the past.  This time, however, I was on with a couple of people that have been in the media spotlight lately as a result of their involvement with Occupy Wall Street, or if you’re hip and in-the-know, OWS.

So… if you’re interested in what I had to say, click the play button below and you’ll be listening to The News Dissector… Danny Schechter… on PRN… the Progressive Radio Network.

Mandelman out.

1. MTD Denied | FDIC has to Face a $10 Billion Lawsuit Tied to the Failure of Washington Mutual Bank
2. Washington Mutual JPMorgan Chase FDIC Deal NOT Finalized? So how can JPMorgan Foreclose on WAMU Loans?
3. FDIC Sues WaMu Executives, Kerry Killinger, Stephen Rotella, David Schneider and their Wives

Did you know that Fannie & Freddie had a policy stating that they didn’t want to receive “notes?”  I didn’t.

Meet a reader of mine, attorney Shawn T. Newman of Olympia, Washington.  An exceptional and highly experienced lawyer who fights for the rights of homeowners, among others.  A professor at both undergrad and graduate levels, and an exceptionally nice person who is both very knowledgable and very easy to talk to.  Washington State homeowners should know of him, as should the other foreclosure defense attorneys around the country.  As he says, he’s not terribly well-connected, so I said I’d would certainly help connect him.  Unquestionably, he’s one of “US.”

As a public sector lawyer, Shawn has worked as a Washington State Assistant Attorney General (Education Division), Evergreen State College Legal Counsel, Washington State Senate Staff Counsel (Senate Committee Services) and as a Public Defender.  In his private practice, he represents various individuals, community groups, for profit and non-profit organizations and businesses.

Shawn is currently General Counsel to Saint Martin’s University and has served on the editorial board of the Journal of College and University Law.  He is a member of the Washington State Bar Association, Washington State Trial Lawyers Association and the National Association of College and University Attorneys.  Mr. Newman also serves as Washington State Director for the Initiative and Referendum Institute, based at the University of Southern California.

Shawn is a graduate of Notre Dame Law School and Ohio State University.  While at Notre Dame, he received a fellowship from the White Center for Law and Government and served as the Legislative Research Editor for the Journal of Legislation.

Shawn’s Guest Post follows, but also be sure to look for him in his upcoming Mandelman Matters Podcast.  And starting today, you can also find his contact information as the latest addition to my Trusted Attorneys tab.  We need a lot more lawyers like Shawn, but I’m sure glad he’s with us and representing Washington State homeowners.

Mandelman out.

That’s Shawn appearing before the Washington State Supreme Court

Welcome to Freddie and Fannie’s Mortgage Shell Game

By Shawn Timothy Newman, J.D.

Adjunct Professor

Saint Martin’s University

In common parlance, a mortgage (or Deed of Trust) includes the underlying loan (promissory note) and the security on that loan (mortgage or Deed of Trust).  This ignores the fact that the note and mortgage (or DOT) are two separate contracts governed by some different laws and legal principals.

As noted in Powell on Real Property, sec. 37.27 [2] (Michael Allan Wolf ed., LexisNexis Matthew Bender 2010)

It must be remembered that the mortgagee has two interests: (1) the debt or obligation which is owned to him, and (2) the security interest in land represented by the mortgage…. In fact, the primary interest is the personalty debt obligation.  The interest in land which is available in case security is necessary because of the debtor’s default is considered as collateral interest.  Much trouble has been caused by mortgagees attempting to transfer only one of these two interests.  Where the mortgagee has “transferred” only the mortgage, the transaction is a nullity and his “assignee,” having received no interest in the underlying debt or obligation, has a worthless piece of paper.

Regarding #1, the debt is the loan contract (i.e. the promissory note).  Promissory notes are governed by the Uniform Commercial Code (UCC) Art. 3 (Negotiable Instruments).   The UCC is a uniform law adopted by every state.  In addition to promissory notes, negotiable instruments include checks.  Like a check, you must negotiate (deliver with proper endorsements) the promissory note to another for that person to claim ownership of the promissory note.  Absent proper negotiation of the note, another party cannot claim ownership.  So, for example, you find a check made payable to someone else and it is not endorsed to you; you cannot cash it because you are not the owner.

Regarding #2, the security on the debt (i.e. mortgage or deed of trust), is a contractual interest in land with the home buyer designated as the mortgagor and the lender/creditor as the mortgagee.  Because a mortgage/DOT is an interest in land, the Statute of Frauds requires such contracts to be in writing and signed to be enforceable.  Any assignment of a mortgage or deed of trust must be in writing and signed to be enforceable.  Agreements that violate the Statute of Frauds are void and unenforceable as contracts.  There are some exceptions to the Statue of Fraud’s writing requirement including an admission in court and under oath “by the party to be charged” that there is a contract (this can be done via discovery).  So, as is the case with most mortgages, they are sold by the originating bank (or mortgage company) to either Freddie Mac or Fannie Mae.  This is known as the “secondary mortgage market” (secondary, since Freddy and Fannie don’t originate the loans but buy them up from the banks and mortgage companies that do).  According to Freddie Mac’s website:

Every day, Freddie Mac provides a continuous flow of funds to mortgage lenders. We do so not by making individual mortgage loans to consumers; instead, we support the U.S. home mortgage market by providing money directly to lenders, ensuring that the system is liquid, stable and affordable.  To fulfill this vital mission, Freddie Mac buys residential mortgages and mortgage-related securities and guarantees mortgages made by lenders. We issue debt securities to the global capital markets to fund the purchase of mortgages and mortgage-related securities we hold as an investor. We also create and sell mortgage-related securities to the capital markets, providing a guarantee to investors on those securities.

Freddie Mac pools the mortgages it purchases from lenders across the country and packages them into securities that can be sold to investors. These investors include the lenders themselves, pension funds, insurance companies, securities dealers, commercial and central banks, and others. Freddie Mac also is one of the largest investors in mortgage-related securities, purchasing and holding in portfolio a portion of our own securities and those issued by others.

http://www.freddiemac.com/corporate/company_profile/our_business/securities.html

If Freddie or Fannie truly “own” your mortgage, they have “legal title” to the property and are the “real party in interest” to foreclose.

However, this brings me to an issue raised by Professor Dale Whitman in his article, “How Negotiability Has Fouled Up the Secondary Mortgage Market, and What To Do About It,” 37 Pepp. L. Rev 738, 757-758 (2010):

While delivery of the note might seem a simple matter of compliance, experience during the past several years has shown that, probably in countless thousands of cases, promissory notes were never delivered to secondary market investors or securitizers, and, in many cases, cannot presently be located at all.  The issue is extremely widespread, and, in many cases, appears to have been the result of a conscious policy on the part of mortgage sellers to retain, rather than transfer, the notes representing the loans they were selling.

This “policy” was created by Freddie and Fannie and clouds who actually has legal title to the property (i.e. mortgagee) and who “owns” the note.

First, as noted above, it is important to understand that a mortgage contract is an interest in land and, as such, must be in writing to be enforceable per the Statute of Frauds (or fall within one of the exceptions such as an admission in court).  Any “sale” or assignment to Freddy or Fannie must also be in writing per the Statute of Frauds.  Some states (like Ohio) require such transfers to be recorded.  If you are challenging a foreclosure action, the mortgagor (borrower) should ascertain if a servicer (loan originator or its successor) has sold the mortgage to Freddy or Fannie.  This can be done on line at either:

https://www.freddiemac.com/corporate/

http://www.fanniemae.com/loanlookup/

Chances are Fannie or Freddie “own your mortgage.”  If you are in litigation, you should follow up with targeted discovery requests to the servicer confirming the servicer does not “own” your mortgage.  Moreover, you should inquire and demand any records showing Freddie or Fannie assigned the mortgage to the servicer.  Servicers will point to Freddie or Fannie servicing guidelines which basically provide that the servicer forecloses in its (the servicer’s) own name.  Given a mortgage is an interest in land and the requirement under the statute of frauds that such contracts be in writing, the servicer’s standing to foreclose can be challenged absent some proof that the mortgage was specifically assigned by Freddie or Fannie to the servicer.  Legally, Freddie and Fannie must assign back the note to the servicer.  In fact, Freddie has a specific form 105 to do so.

See: http://www.allregs.com/tpl/Main.aspx [Sections 66.17 and 66.54].

However, Freddie and Fannie’s guidelines have evolved over time and you may find that there is no such assignment in most cases.   Unless there is a written assignment from the mortgage owner (Freddy or Fannie) to the servicer, the servicer cannot foreclose for the simple reason they are not part of the mortgage contract.   Simply put, only the mortgage owner can foreclose on the mortgage contract.  Moreover, if the assignment of the mortgage is invalid or fraudulent, then there is a “cloud on title” which should be identified by title and mortgage insurers.

Second, according to Powell on Real Property section 37.27 (quoted above),

It must be remembered that the mortgagee has two interests: (1) the debt or obligation which is owed to him, and (2) the security interest in land represented by the mortgage ….  In fact, the primary interest is the personalty debt obligation.  The interest in land which is available in case security is necessary because of the debtor’s default is considered a collateral interest.  Much trouble has been caused by mortgagees attempting to transfer only one of these two interests.  Where the mortgagee has “transferred” only the mortgage, the transaction is a nullity and his “assignee,” having received no interest in the underlying debt or obligation, has a worthless piece of paper.

Given what Professor Whitman describes as a “conscious policy on the part of mortgage sellers to retain, rather than transfer, the notes representing the loans they were selling,” it would appear that any alleged “sale” of the note or mortgage to Freddy and Fannie is a fraud.  By analogy, you cannot cash a check that is not in your possession or that is not made payable to or endorsed to you.  Not only is the sale of the note a sham where there is no delivery and/or endorsement of the underlying loan/note to Freddie or Fannie, if their records (per the website) “show that Freddie Mac is the owner of your mortgage”, then the unity of interest (i.e. loan/note and mortgage/security must be transferred together) is destroyed leaving Freddie and Fannie with nothing.[1]

This begs the question: why would Fannie and Freddy have such a policy given the laws governing mortgage contracts and promissory notes?  Consider the fact that Freddie and Fannie are Government Sponsored Entities [GSEs] albeit private corporations owned by the major banks.  It seems to me that Freddie and Fannie have been hijacked by the major banks and are being used to buy up bad mortgages and then seek a bailout from the taxpayers.[2]

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[2] Note:  Freddie and Fannie are major stockholders in MERS which has some of the same legal problems regarding delivery and possession of the note.  http://www.mersinc.org/about/shareholders.aspx

You can’t fully understand the economic meltdown and foreclosure crisis

without reading this book…

“The Monster,” by Michael Hudson

I’m not kidding about that.  I don’t think it’s possible to fully understand what’s going on today economically… politically… socially… legally… it’s just not possible.  I don’t care what else you’ve read either.  There’s simply not another book related to the meltdown that replaces this one.

Why?  Well, for one thing… it’s the historical perspective Mike Hudson provides.  Wall Street’s sub-prime lending binge of 2003-2006 had it’s roots in the Savings & Loans of the 1970s.  If you don’t understand the linkage there, you need to read this book… and listen to this podcast.

If you’ve wondered how the banking and financial services industry amassed so much political power over the last 30 years… how all the different pieces of litigation came together to create today’s situation, you need to read this book… and listen to this podcast.

Is sub-prime lending a good thing or a bad thing?  How did securitization change the world forever in ways we couldn’t see?  Who were the “sub-prime” lenders, like Ameriquest and First Alliance?  What was it really like to work inside the sub-prime industry?  And how did the sub-prime industry seduce Wall Street, and impact everyone, no matter the credit score?  The history is fascinating and once you understand all of the pieces, you find that not only does everything today makes more sense, but you’ll also see clearly what we’re up against… and what we have to do to push back against the banking lobby.

Did Wall Street’s executives know what they were doing?  Did they see all of this coming?  Whose really was responsible for this economic catastrophe?  Was it the borrowers… was it the loan officers and brokers… or was it the bankers of Wall Street?

Someone online said that only in the last 100 pages does Hudson talk about the years 2003-2007… and that’s true.  But Hudson responds by saying: “If I were writing about WWII, I’d have to start by writing about WWI.  Well, same thing here.”  And I couldn’t agree more.

Even if you were part of the real estate or mortgage industries over the last decade, and you think you already know everything there is to know about what went on and why… you don’t… and you’ll be glued too.

Now, before you go off reading “The Monster,” here’s something you can’t do anywhere else… listen to Michael Hudson not only talk with me about his book, but listen to how he applies his vast knowledge of the subject matter to what’s going on today in our society, our government… and even in our banking industry.

Michael and I became friends over the past year or so… we’ve never met face to face, but we’ve spent hours talking on the phone about various issues of the day… he’s a great writer and a really smart guy, simple as that.  But, because we’ve gotten to know each other, I think you’ll agree that the interview is one that couldn’t be duplicated anywhere.

By the way, Michael’s a staff writer at the Center for Public Integrity, a former reporter for the Wall Street Journal, and he was also an investigator for the Center for Responsible Lending.  He’s also written for the New York Times, the Los Angeles Times and Mother Jones.  If there’s one thing he knows about it’s fraud on Wall Street.

I’m telling you… this is a Mandelman Matters Podcast you’re really going to enjoy… in a weird sort of way… I mean, it is disturbing… especially if you’re a homeowner… in fact, I’d say it’s safe to assume that you’ll be outraged more than once.  But, you can’t hide from the facts, and you need to know about how we all ended up in this seemingly unsolvable nightmare.

So, click the big PLAY NOW button below, turn up your speakers,

and get ready for the author of

“The Monster,” Michael Hudson,

because this is a Mandelman Matters Podcast…

To order your copy of the book, “The Monster,” simply CLICK HERE!

Mandelman out.

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Okay, so here’s the next installment of Mandelman’s Monthly Museletter, which I’ve decided I post whenever there are a bunch of things going on that need to be put into proper perspective, but there’s just no way I can write individual articles on each because to do so presents a serious health risk.  Capisce?  So, without further delay… here’s Version 16.0… it’s the DECEMBER EDITION, hence the festive photo above and throughout.

1. Robo-Signing KILLS…

First the facts of the matter, as reported: Tracy Lawrence was only 43 years old when it appears she took her own life after blowing the whistle on a foreclosure scheme involving “robo-signing,”  which was implemented by a company used by most banks when repossessing homes, Lender Processing Services (“LPS”), based in Jacksonville, Florida.  According to KLAS-TV in Las Vegas, Lawrence admitted that she had fraudulently notarized about 25,000 documents as part of the fraudulent foreclosure scheme.

Lawrence blew the whistle on the LPS operation in which title officers Gary Trafford, 49, of Irvine, Calif., and Geraldine Sheppard, 62, of Santa Ana, Calif. allegedly told employees to forge their names and notarize the signatures on tens of thousands of default notices from 2005 to 2008, which were used to initiate foreclosures, according to the Nevada AG.

Two weeks ago the State of Nevada charged Trafford and Sheppard with 606 counts of offering false instruments for recording, false certification on certain instruments and notarization of the signature of a person not in the presence of a notary public. You can read the indictment here: Nevada Robosigning Indicment 11-16-11

The Nevada AG’s office sent investigators to Lawrence’s home after she didn’t show up for her sentencing on Monday morning.  And here’s the fact that caused me to pause… she would have faced up to a year in jail and a possible fine up to $2,000.

Now, my views on this story: Am I being asked to believe that Tracy Lawrence took her own life because she might have been sentenced to up to a year in jail and a perhaps fined two grand?  Because if that’s what I’m supposed to believe… well, I don’t.  And yet the fact remains that she’s dead, and it certainly appears to be suicide.  I also don’t believe that she was overcome with guilt at having done what she did and that’s what caused her to take her own life.  Nope, I’m not buying either of those explanations.

The other thing I don’t like about the way the story has been reported is that LPS is mentioned sort of secondarily, as if Trafford and Sheppard were committing their crimes independently… like rogue employees… and that LPS had nothing to do with it.  And that is simply pure, unadulterated crap.  Robo-signing, as these crimes are euphemistically called, went on all over the country… all the major banks were involved, as were LPS and other vendors used in the foreclosure process.  It’s obviously anything but an isolated incident… plainly, as practices go, it is ubiquitous.  (And you know what they say about ubiquity… it’s everywhere.)

Did LPS know about the rampant robo-signing?  Of course they did.  Someone had to produce the documents for her to sign them, right?  Did the banks know it was going on?   Of course they did.  Did the CEOs of the banks know what was going on?  Of course they did.

Look, I spent twenty years working as a consultant for large corporations at the C-Suite and senior management levels, including several of the TBTF banks, and I’m very familiar with their corporate cultures and operations.  No mid-level manager at JPMorgan, for example, made a call to start committing fraud and forgery.  Why?  Because there’s be no reason to do so, that’s why.  Faced with the problems that robo-signing addresses, any mid-level manager at a Fortune 500 company could and would simply kick it upstairs for a decision.  There just wouldn’t be any upside to trying to handle it alone.

A First Vice President at Bank of America once told me the following story about the path to advancement at the bank.  He said that when you take over a department, as long as you don’t change anything, you’ll move up regardless of how your department performs.  But, if you so much as changed the brand of pencils ordered by that department, and then the department performs poorly… you’re fired.  Now, I understand that the story is an exaggeration, but it’s an exaggeration to make a point.

The people that work in giant organizations like JPMorgan are not entrepreneurs, if they were they’d be starting their own businesses.  Consequently, they are not the type to go around attempting to solve problems not of their own making, and for which they would receive no reward, especially when you realize how easily the issue can be kicked upstairs.

Lastly, robo-signing is not a solution that exists on a list that contains other solutions.  In other words, if you’re a giant financial institution, and you chose robo-signing as your solution, it’s because you didn’t have anywhere else to go.  For example, you didn’t say to the others at the conference table, “Well, we could solve the problem by doing XYZ.  But, no… lets go with the fraud and forgery idea instead.”

Now, as to why robo-signing only seems to be a serious prosecutable crime in the State of Nevada?  Why, hat’s a darn fine question with which few in positions of power seem to be concerned.  Of course, the question of MERS assignments, or even the question of proper legal standing seem to be the same sort of thing… in some states it matters, while in others it doesn’t.

Frankly, I’d be fine with it either way.  If many of our current laws governing the transfer of property don’t matter and aren’t going to be enforced then let’s get rid of them.   Just change the existing statutes to reflect our new definition of acceptable practices as related to foreclosure.  You don’t need standing, anyone can sign off on any required document as long as their boss say it’s okay, and nothing needs to be recorded.  If you receive a foreclosure notice from your bank, the only thing to do is pack your stuff.  You see?  Problem solved.

So, why did Tracy Lawrence take her own life?  Obviously, I couldn’t know for sure… but it also seems obvious that LPS is a very large and very powerful company with employees all over the country, and Tracy blew the whistle.  I don’t believe she was so scared that she might be sentenced to under a year in jail and up to a $2,000 fine, especially because as the whistle blower, she may have been sentenced to neither.  Nor do I believe that she was overcome by guilt at having fraudulently signed and notarized documents used to foreclose on people’s homes because it wasn’t her idea… she was told by her employer to do it.

But I do believe that she was scared of the repercussions for her having blown the whistle on LPS … in fact, I believe she was scared to death as to what the rest of her life would be like having turned on LPS and the largest financial institutions in the world.  And I also believe the Nevada AG should indict LPS or do whatever is necessary to put them on the stand, answering questions under oath.  Because there is no doubt in my mind that Tracy Lawrence’s death is on their collective hands.

2. OCC proposes credit rating duties go to banks – A real conversation with a banker-friend of mine.

BANKER: Careful, my FB blood pressure app is registering an elevation…

MANDELMAN: LOL… banks should be public utilities.

BANKER: “A” to the 4th is called biquadratic – much more scientific sounding.  Public utilities have done so well, haven’t they?  Did you see LV robo-signer found dead on eve of sentencing.

MANDELMAN: Yes, I’m writing about it tonight.

BANKER: FYI – Retired OCC staff are like GS alumni infecting the executive ranks of major banks;  we have several very senior managers that retired from the OCC.

MANDELMAN: What are implications of that?

BANKER: Mostly, I’m  just saying that nothing changes… that the change agents don’t exist. New DNA/blood does not come from outside to strengthen the gene pool. They’ve seen what they’ve seen and will act according to their predispositions, experiences which were successful at regulators.

MANDELMAN: Got it.

BANKER: Not deep-thinkers; a little weak-willed — don’t like to offend others, don’t like to buck the trend – political… that sort of thing.

MANDELMAN: Gotcha… sounds encouraging… exactly the kind of people we want running the world.

BANKER: Well, the meek shall inherit the earth, remember?

MANDELMAN: Didn’t a bunch of banks get downgraded today?

BANKER: 37 of ‘em reviewed, I think 15 downgraded.

MANDELMAN: Yeah, I’m sure the rest are fine.  And so… the answer is to let them rate themselves from now on?  Brilliant!  I do love the way you guys think.  And by “love” I mean “deplore.”

BANKER: Oh, so what? We borrow from depositors for nothing, we borrow from the Fed for nothing. Since we are all downgraded and we have each other as counterparties with the Feds backing, it probably doesn’t matter much.  I haven’t read the justification for downgrades – seems counterintuitive to say our debt is riskier, when you consider the level of government support we all enjoy.

MANDELMAN: Yeah, and Europe is too far a flight to make any difference, right?

BANKER: Europe, schmeurope… makes the dollar stronger – Yay!

MANDELMAN: LMAO! Here, here! Clearly, I haven’t been looking at this correctly.

BANKER: Besides, GS can go over there and advise them on how to get out of the trouble they’re in because of them.  Just means more jobs, more bonuses… Yay again!  And European vacations might become cheap.  Mandelmanissimo can buy an Italian villa!

MANDELMAN: Another very solid point.  I definitely was not looking at it right.

BANKER: See – you need banker schooling. It isn’t about the cool-aid you drink… you need single malt scotch, cuban cigars, shiny wing-tips, an inability to feel empathy, an air of total superiority, and the belief that you can outsmart anyone else creating and harnessing the next financial weapon of mass destruction.  You gotta breathe Gordon Gekko.

MANDELMAN: Of course it probably helps to have the Federal Reserve’s checkbook and credit card.

BANKER: Hey, “you” gave it to us. You gotta’ be the parent/adult and draw the line.  You can use your forum to make the populace understand.

MANDELMAN: I’m working on that.

BANKER: I’m all for a coup d’etat.

MANDELMAN: Shall I order you a torch or are you more the pitchfork sort?

BANKER: Marginalize us… return us to the 99%… take away our social standing as the aristocracy.  Oh, you’re a legacy?   No, your gene pool no longer belongs here in positions of power and authority.  We want rational thinking, enlightenment, selfless behavior – you were elected to act on behalf of the population – 5 year no-compete clause with private industry – go back to law and write up some wills, divorces, trusts… try a Accident/Injury practice.  And no automatic pension for 1-termers.

Ya’ll (Nomi, Yves, Abigail, Max, April, et al) ought’a gather at USC, UCLA, etc. for a rally or giant speaking engagement.

MANDELMAN: I’d sure love to host that event… a Mandelman Matters conference.

BANKER: Put a simple slide presentation together, collage like an Apocalypse Now montage… boom-boom-boom… ”class war” atrocities… show scale, scope, impact… gotta’ bring the war into the living rooms of America, and show the body bags – it affects all of us.  Nothing opinion-based… just the facts, show cause and effect, make FactCheck the AAA rating. BTW, have you thought about a simple video background for your articles to post on YouTube?

MANDELMAN: Yes, I’m working on that too.  All it takes is money… why don’t you send me some?  How about a no doc, stated income re-fi at 150% of appraised value?  It’ll be just like old times, you’ll love it.  Wouldn’t want to do anything that’s not professional.

BANKER: I said YouTube not Universal Studios. Just a panorama of North Las Vegas, Phoenix, etc. to use as a background. Maybe snippets of public use video clips that aren’t too far out of context. With you narrating the video… your wife and daughter could be the audience that asks you questions.  Obama/Bush can plant journalists to lob softball questions, why can’t you can stage it too?  Any chance you could get on NPR?

MANDELMAN: I’d love to… or maybe MSNBC on Dylan Ratigan’s show.

BANKER: Hook up with Whalen and you might have a great shot at it.  I don’t think the NAR will be inviting you to their X-Mas party.

MANDELMAN: Oh gee… and I so wanted to hang out with a room full of delusional liars.

BANKER: You might be on the short list to keynote JPM’s X-mas party though.  BTW… Occupy LA Raid Happening Tonight, LAPD En Route to Begin Eviction.  Live coverage of the raid via Ustream says the raid is slow moving and strategic. Venice 311 tweeted information from an LAPD scanner, which said that 900 officers are currently en route to evict the remaining occupiers and that the LAPD has setup a processing and booking station at Dodgers Stadium.

MANDELMAN: Oh God…

BANKER: Hearing that when LAPD helicopter light is turned off that is a signal for cops to move in.  Police clad in riot gear are standing at Broadway and 1st.  CBS just stated that they are “working with law enforcement” and are not showing scenes they are “not allowed to show.”  Quote from KCAL-9, “We made an agreement with LAPD not to give away their tactics.”

MANDELMAN: Well, good then… about time we did away with that pain-in-the-neck 1st Amendment.  They’re just a bunch of whiny hippie types anyway, right?

BANKER: Hey, now you’re talking like the chairman of my bank.  Nice to have you back.

MANDELMAN: Sorry, but no thanks.  I think I’ll just go back to my work making you and yours look like the destructive, power hungry despots that you are. Besides, I took that vow of poverty when I started blogging, remember?

BANKER: Okay, well… have fun storming the castle!  I think I’ll go see which fees I can raise for no reason and without disclosure.

MANDELMAN: Sounds like a gas… I’m sending you a current copy of GAAP for Christmas… figured you’d enjoy a little nostalgia.

BANKER: Yeah… I gotta go too… and FYI — The Fed has demanded capital stress tests by Jan 4th that consider Europe/unemployment, blah, blah, blah.  And as a result, many of us bankers have had to cancel vacations for the remainder of year.  But, at least we’re getting reimbursed for lost airline/travel spending, so that’s a relief. TTYL…

MANDELMAN: You’re disgusting… text me tomorrow… are you going to make it Christmas Eve?  Chinese food on me, as usual.

BANKER: Wouldn’t miss it.

MANDELMAN: Okay, and try not to bankrupt any sovereign nations before then, okay?

BANKER: You’re no fun… c-ya!

MANDELMAN: Mandelman out.

3. PMI Files Bankruptcy – Regulators step in and take over yet another mortgage insurer…

They’re almost dropping like flies… mortgage insurers, that is.  The latest casualty is PMI Group Inc. of Walnut Creek, California… a Delaware Corporation whose parent company is PMI Mortgage Insurance Co. whose headquarters are in Arizona.  And with all of those machinations in place to avoid paying taxes and no doubt obfuscate whatever else, they still went broke… so, nice job there… don’t you feel silly now?

Now, let me assure you that I could care less about PMI Group, or whatever other holding company is or isn’t involved.  The reason I’m writing this is because I found a few of the details involved fascinating.  The company’s Chapter 11 bankruptcy petition, filed on November 23rd, showed assets of $225 million… and debt of $736 million as of August 4, 2011.  PMI had posted losses for the last 16 consecutive quarters.

I don’t know about you, but to my way of thinking, that makes them irresponsible insurers.

Last month, Arizona Director of Insurance Christina Urias took control of the PMI unit on an interim basis, directing that claims be paid at 50 cents on the dollar. (Wait until Secretary Geithner hears about this, he’s not going to be happy… he hates haircuts, don’t you know.)

Of course, it goes without saying that this is not the first mortgage insurer to fall from grace… Triad Guaranty Inc. stopped selling mortgage insurance policies when it ran short of capital back in July of 2008.  A state regulator ordered the company to defer 40 percent of claims payments because of “uncertainty” over whether it could meet its obligations.  And Old Republic International Corp. was suspended by Fannie and Freddie as an approved guarantor of loans this past summer when it failed to meet capital requirements.

It seems that these companies do much better when they don’t have claims… so, go figure.

Here’s where I thought it got interesting…

According to data provider CMA, the credit-default swaps that are tied to PMI’s bonds went up in cost after the bankruptcy filing, and the effect may be that that contract provisions trigger amounts owed totaling more than twice the company’s debt.  They’re talking about collateral calls associated with credit default swaps again… see how devastating their impact can be, even on this relatively small scale.

So, the cost to protect the company’s debt increased by 0.7 percentage points to 75.2 percentage points upfront, which is roughly twice what it would have cost to do the same thing last June.  That means that today, investors would have to pay $7.52 million up front, and $500,000 a year to protect $10 million of the insurer’s debt obligations (read: bonds).  If we’re talking about a ten year bond, that would seem a tad pricey, don’t you think?  I mean, that means the total cost would end up around $12.5 million to insure $10 million in debt.

4. Citigroup may settle, but federal judge says not Yeti…

Remember the Bumbles, from the animated television classic, “Rudolph the Red-Nosed Reindeer,” starring the voice of Burl Ives as Sam the snowman?  You know the one… Rudolph gets tossed out of the reindeer games because of his glowing nose, and he ends up taking off with Hermey, an elf who wants to be a dentist, and Yukon Cornelius, the gold prospector. They run into the Abominable Snowman… the Bumbles… and then they find a entire island of misfit toys.  I don’t want to say any more, because I don’t want to give away the ending.

Well, the reason I bring it up is that the Bumbles always scared the heck out of me as a kid, until of course, we learn that he’s really a nice Bumbles who just has a toothache.  That’s not the part that scared me though… the scary part was that Hermey doesn’t just want to be a dentist, he fancies himself an amateur dentist… and he actually performs dentistry on the Bumbles… like, OMG.  I tell you… it was decades before I could sit in a dentist’s chair without inhaling nitrous oxide… or at least that’s my story and I’m sticking to it.  But I digress