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!

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!

Someone recently wrote to me saying that instead of continually telling everyone what’s wrong, I should tell them how to solve the problems we’re facing and I thought to myself… okay, fair enough.  This just isn’t that hard.  We’re not solving things because we don’t want to, not because no one can think of how to solve anything.

So, you ready… I’m going to show you solutions in ONE MINUTE and one solution at a time.. so please try to keep up okay?

1. Problem: Forging documents and filing fraudulent documents in public records… or “Robo-signing,” if you’d prefer.

1. Either pass a law that says these documents don’t need to be signed at all… or stop the filing of forged and fraudulent documents in public records… and Nevada has shown us how to do that… it’s easy and doesn’t cost a nickel.  And foreclosure filings in Nevada dropped by more than 80% as a result of what they did in that state, which was simply to make the penalties criminal and the fines higher for filing a fraudulent document in the public record.  Because, I don’t care if they need to be signed or they don’t need to be signed… but they don’t need to be forged under any circumstances.

2. In simpler terms: If Mickey Mouse is going to sign it, and Donald Duck is going to notarize it… THEN DON’T SIGN IT… because we don’t need it signed.  BUT… if we DO need it signed, then don’t forge it and file a fraudulent document into the public record.  If you do that, it’ll cost you thousands and you could end up in jail.

3. We already have millions of forged and fraudulent docs in our public records thank you very much, and 30 years from now some lawyer will have occasion to pull title docs for whatever reason, he’ll find a forged or otherwise fraudulent document(s) and we’ll be litigating the whole damn thing all over again.  We certainly don’t need that situation exacerbated.  The documents may need to be signed… but they don’t NEED to be forged.

4. We also don’t need to wait until the situation shakes out or the scope of the problem is known… or whatever.  There’s no reason to wait for any of that because it doesn’t matter how we answer any of the unanswered questions… the solution to however you want to define the problem is NOT under any circumstances going to be: “Oh, just forge the signature and file a fraudulent document in the public record.”  NO… that’s not allowed to be the answer no matter how you want to define the problem.

5. I’ve never lost the pink slip to my car… but I’m sure there’s a process to follow if that ever happens.  I call the DMV and fill out some forms and then I… blah, blah, blah… it’s never happened to me so I don’t know what the process is.  But I know what it isn’t.  It isn’t: “Fake one on your Mac, sign Donald Duck’s name, and use it for whatever…”  That is definitely not how it’s done.

6. There shouldn’t be ANY push back to what I’m suggesting here… NONE.  To those who say that the banks will oppose what I’m saying because I’m trying to stop foreclosures I reply: No, I’m not.  I haven’t said a word about stopping foreclosures, I’m talking about stopping the forging of documents and the filing of fraudulent documents into the public record.  I have all the confidence in the world that BofA, Chase and our state/federal  governments are more than capable of coming up with some other process… either that or pass a law that says all you need to do is place a red X on the dotted line… or leave the damn things blank… I don’t care.  But, forgery and fraud are not going to be our chosen methodology for anything ever.

7. The reason for my efforts, as I’ve explained to several state AGs and state legislators, is that what is going on now, with forged and fraudulent docs being used every day all over the country to foreclose on homes, is already changing the nature of the foreclosure crisis.  What was a terribly unfair, incompetent, cronyism, banker friendly, messed up situation is being transformed into organized crime.  Homeowners look at their title documents, and very easily see that the assignments and other affidavits have been robo-signed.  They have tangible proof of a crime having been committed.  They show the judge, he doesn’t care… and they lose their house.

8. That is the definition of organized crime… 5 huge crime families we call banks… committing crimes in the public view… and state law enforcement and the court system refusing to enforce the law because of connections with the banks.  That’s organized crime, period.  And human nature dictates that when people see that their government is failing to uphold the rule of law or enforce the laws against certain individuals or groups… well, they take the law into their own hands.  That’s always been true… it is in fact a fundamental human instinct.

9. If your son or daughter is harmed or your store or home is robbed… and the law refuses to do anything about it because of who you are relative to who the perpetrators are… want to know what happens?  Ask the KKK.  Someone takes the law into their own hands and someone gets shot in the head, or ends up hanging from a tall oak.  Every single time… and any of us are capable of doing just that… taking the law into our own hands.

10. Allowing forgery and fraud to go on unchecked is a BAD idea, and everyone should understand and agree with that.  And aren’t we lucky that we know exactly how to stop it… the State of Nevada has shown us the way.  So, change the law, increase the penalties and problem solved.  Now isn’t that a relief?

And… DING!  

The foreclosure crisis has already been allowed to grow out of control and destroy the American middle class.  Standing by idly while we watch it get even worse, when it’s easy and free to prevent that from happening, is beyond unconscionable.  And if we do it, then we deserve whatever we get as a result.

See, that wasn’t that hard, was it?   ONE MINUTE SOLUTIONS by Mandelman Matters.  Why didn’t I think of that?  Next solution tomorrow, so stay tuned.

Mandelman out.

Someone recently wrote to me saying that instead of continually telling everyone what’s wrong, I should tell them how to solve the problems we’re facing and I thought to myself… okay, fair enough.  This just isn’t that hard.  We’re not solving things because we don’t want to, not because no one can think of how to solve anything.

So, you ready… I’m going to show you solutions in ONE MINUTE and one solution at a time.. so please try to keep up okay?

1. Problem: Forging documents and filing fraudulent documents in public records… or “Robo-signing,” if you’d prefer.

1. Either pass a law that says these documents don’t need to be signed at all… or stop the filing of forged and fraudulent documents in public records… and Nevada has shown us how to do that… it’s easy and doesn’t cost a nickel.  And foreclosure filings in Nevada dropped by more than 80% as a result of what they did in that state, which was simply to make the penalties criminal and the fines higher for filing a fraudulent document in the public record.  Because, I don’t care if they need to be signed or they don’t need to be signed… but they don’t need to be forged under any circumstances.

2. In simpler terms: If Mickey Mouse is going to sign it, and Donald Duck is going to notarize it… THEN DON’T SIGN IT… because we don’t need it signed.  BUT… if we DO need it signed, then don’t forge it and file a fraudulent document into the public record.  If you do that, it’ll cost you thousands and you could end up in jail.

3. We already have millions of forged and fraudulent docs in our public records thank you very much, and 30 years from now some lawyer will have occasion to pull title docs for whatever reason, he’ll find a forged or otherwise fraudulent document(s) and we’ll be litigating the whole damn thing all over again.  We certainly don’t need that situation exacerbated.  The documents may need to be signed… but they don’t NEED to be forged.

4. We also don’t need to wait until the situation shakes out or the scope of the problem is known… or whatever.  There’s no reason to wait for any of that because it doesn’t matter how we answer any of the unanswered questions… the solution to however you want to define the problem is NOT under any circumstances going to be: “Oh, just forge the signature and file a fraudulent document in the public record.”  NO… that’s not allowed to be the answer no matter how you want to define the problem.

5. I’ve never lost the pink slip to my car… but I’m sure there’s a process to follow if that ever happens.  I call the DMV and fill out some forms and then I… blah, blah, blah… it’s never happened to me so I don’t know what the process is.  But I know what it isn’t.  It isn’t: “Fake one on your Mac, sign Donald Duck’s name, and use it for whatever…”  That is definitely not how it’s done.

6. There shouldn’t be ANY push back to what I’m suggesting here… NONE.  To those who say that the banks will oppose what I’m saying because I’m trying to stop foreclosures I reply: No, I’m not.  I haven’t said a word about stopping foreclosures, I’m talking about stopping the forging of documents and the filing of fraudulent documents into the public record.  I have all the confidence in the world that BofA, Chase and our state/federal  governments are more than capable of coming up with some other process… either that or pass a law that says all you need to do is place a red X on the dotted line… or leave the damn things blank… I don’t care.  But, forgery and fraud are not going to be our chosen methodology for anything ever.

7. The reason for my efforts, as I’ve explained to several state AGs and state legislators, is that what is going on now, with forged and fraudulent docs being used every day all over the country to foreclose on homes, is already changing the nature of the foreclosure crisis.  What was a terribly unfair, incompetent, cronyism, banker friendly, messed up situation is being transformed into organized crime.  Homeowners look at their title documents, and very easily see that the assignments and other affidavits have been robo-signed.  They have tangible proof of a crime having been committed.  They show the judge, he doesn’t care… and they lose their house.

8. That is the definition of organized crime… 5 huge crime families we call banks… committing crimes in the public view… and state law enforcement and the court system refusing to enforce the law because of connections with the banks.  That’s organized crime, period.  And human nature dictates that when people see that their government is failing to uphold the rule of law or enforce the laws against certain individuals or groups… well, they take the law into their own hands.  That’s always been true… it is in fact a fundamental human instinct.

9. If your son or daughter is harmed or your store or home is robbed… and the law refuses to do anything about it because of who you are relative to who the perpetrators are… want to know what happens?  Ask the KKK.  Someone takes the law into their own hands and someone gets shot in the head, or ends up hanging from a tall oak.  Every single time… and any of us are capable of doing just that… taking the law into our own hands.

10. Allowing forgery and fraud to go on unchecked is a BAD idea, and everyone should understand and agree with that.  And aren’t we lucky that we know exactly how to stop it… the State of Nevada has shown us the way.  So, change the law, increase the penalties and problem solved.  Now isn’t that a relief?

And… DING!  

The foreclosure crisis has already been allowed to grow out of control and destroy the American middle class.  Standing by idly while we watch it get even worse, when it’s easy and free to prevent that from happening, is beyond unconscionable.  And if we do it, then we deserve whatever we get as a result.

See, that wasn’t that hard, was it?   ONE MINUTE SOLUTIONS by Mandelman Matters.  Why didn’t I think of that?  Next solution tomorrow, so stay tuned.

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

Racial segregation. The idea sickens me. I try to imagine growing up under the horrors of segregation. I try to imagine how it must feel to not be allowed to go where others go, eat where others eat, drink from the same drinking fountains others drink from, use the bathroom that others use. I try to imagine how it could not hurt badly… how it could not scar deeply.

I close my eyes and see the face of a young boy, my age in 1968, but with skin of darker brown. I look deep into his eyes. I see him pressing his face up against the glass, looking longingly at what others have, that he does not. What he may never be allowed to have. I see him questioning… why? And I want to weep. I want to stop him from hurting. Save him from that pain.  I want to scream louder than any scream that has ever been heard… Nooooooooooo! I am ashamed of my country for its policy of racial segregation. And I am seven years old.

I didn’t see racial segregation with my own eyes. If I had, I’m quite sure that it would have burned an impression into my soul that could never have been removed. I don’t know how you grow up and make it through something like that. Do you always feel uncomfortable… always… forever? Do you look at everyone and wonder what they’re thinking about you? Will you always be angry, no matter what? Do you wake up every morning and wonder how it could be that such injustice is allowed to happen?

Today is Reverend Martin Luther King Jr. Day.

As a young boy I learned of Dr. King from my parents at home, and from teachers in school. He was fighting racial segregation… fighting for civil rights.  He was strong. Immeasurably strong. Strong like Superman was strong. He had a dream. He was right. He was a hero to so many. He was a hero to me.

Martin King would not back down from what must have seemed like insurmountable odds. Nor would he allow himself to express the rage he must have felt as much as any. He was the youngest person to ever receive the Nobel Peace Prize for his work to fight discrimination and racial segregation through civil disobedience and other non-violent means. He was the greatest kind of American. Because of what he did, what he stood for, what he accomplished… because of him we are the country we are today. Without him we are nothing.

Martin King was a man of faith. Faith in the United States of America. Faith in its people. Faith in all of us. Faith in me. I wanted to be like him. I wanted to be that strong… some day.

Then he was assassinated. Shot. Killed. It was April 4th, 1968. My mother cried. My father did not want to talk about it. I could not understand how… why… I wanted to shoot the person who had shot him. I learned about death from Martin King. I learned about peace from Martin King. I learned about hope from Martin King. I learned about struggle from Martin King. I learned about my country from Martin King. I learned to love and I learned to hate hate because of Dr. King.

Yes, today is his day and he deserves this day as much if not more than any other for whom a day is named… he earned this day… gave his life for this day. President Ronald Reagan signed the bill that made today Dr. King’s day. He didn’t want to though, but he had no choice. Many others fought against this day. I’m sure now they wish they hadn’t.

I was eight years old one month after Dr. Martin Luther King Jr. left this world forever. They sang happy birthday to me, and I was called Marty for the very last time. Because from that day forward… for the rest of my life… I told everyone…

My name is MARTIN.

“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

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.

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.

Shawn T. Newman of Olympia, Washington is a highly experienced lawyer who fights for the rights of homeowners, among others.  Washington State homeowners should know of him, as should the other foreclosure defense attorneys around the country.  Unquestionably, he’s one of “US.”

Here’s an excerpt from Shawn’s article, Freddie and Fannie’s Mortgage Shell Game, which appeared as a Guest Post on Mandelman Matters:

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.

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.

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.

So,  without further delay, turn up your speakers click below and get ready for attorney Shawn Newman and how he sees fraudclosure by Fannie Mae and Freddie Mac… on Mandelman Matters Podcast.

Mandelman out.

PLEASE DO NOT TAKE ACTION BASED ON THIS DOER ALERT…

Mandelman DOERS already took on this challenge and saved this homeowner’s home.

Arlie Matthews’ loan was modified by Bank of America on the same day that my DOERS took action.

Some of the bravest men the U.S. military has ever witnessed are the helicopter pilots and crews who flew during the Viet Nam War.  They seldom flew above 1,500 feet traffic and were essentially always exposed to hostile fire.  Getting shot at or shot down was not something uncommon. One out of every five of these pilots was killed or wounded during the war years.

They were considered “old men” at around 23 years old.

Young men off to war, soon flying million dollar machines at 150 MPH with people trying to kill them at all times.  These are the men who flew directly into machine gun fire repeatedly because it’s what was needed to get the mission done.  They are a very rare breed.

The helicopter provided unprecedented mobility.  Without the helicopter it would have taken three times as many troops to secure the 800-mile border with Cambodia and Laos.  Gunships played the role of both rescue and MEDEVAC ships. Slicks carried troops, supplies, ammo, and the wounded or fallen soldiers.

So as to deny the enemy places to hide in the jungle, they sprayed Agent Orange, which we told them wasn’t harmful.  And they flew no matter the weather… sometimes it meant they didn’t make it home.  With far too many hours without rest there wasn’t much these courageous young men wouldn’t do when duty called.

MEDEVAC helicopters flew nearly 500,000 missions.  For more than 400,000 American soldiers, the average time between being wounded and arriving at a hospital was under an hour, and as a result, less than one percent who survived the first 24 hours died.

The word “Hero” very much does apply to the men who fought by manning their helicopters during the Viet Nam War.  They did their duty with honor and courage.  Approximately 12,000 helicopters saw action in Vietnam, and this country owes those that fought so bravely a debt of enormous gratitude.  They forever will deserve, for they have more than earned, our respect.

Meet Mr. Arlie Matthews from Rancho Cucamonga, California

Arlie was one of the helicopter pilots who served his country during the War in View Nam.  He flew missions all over that country for four straight years.  In 1972, a flight physical detected a heart murmur… and Type II diabetes, caused by exposure to Agent Orange.

In 2002, he had his first open heart surgery.  Three months later he had an echocardiogram and it showed that the valve they had put in was leaking.  They had to re-open his chest and replace it.  Then in 2005, they put in a defibrillator, and his daily routine now includes taking 13 different prescription drugs.

Arlie’s heart condition and diabetes are 100% service connected disabled.  He also suffers from peripheral arterial damage on both side of his body, and neuropathy.

It’s not hard to imagine that Arlie missed a lot of work during those years of health problems, and even though his wife worked for the County of San Bernardino, by 2005 they were falling behind… and a few bills were getting paid late.

Luckily, they had owned their home for many years and since it appraised at that time for $510,000, they decided they’d refinance their loan for $375,000, using the money to pay off all of their debts.  And wasn’t it lucky that even though Arlie had a few late payments, Countrywide was happy to help Arlie into an adjustable rate loan starting at 9.3% APR.

Sure, he knew the rate sounded kind of high, but guess what Countrywide told him.  You can get this one easy… YES!  That’s right.  He could refinance to a lower fixed rate loan once he made maybe a year’s worth of payments on time.  It was now 2006.

In 2007, tragedy struck… Arlie’s wife passed away.  She had developed cancer, tumors in her heart.  Understandably, his daughter didn’t want him to be alone and she and her young children moved in to help take care of him.  They’re all still together living in the house today.  He didn’t say so, but talking to him I could feel how his daughter and her kids were keeping him young and filling the house with much joy.

So, in 2007, he tried to refinance his 9.3% ARM… but wouldn’t you know it… he had thought there was a one-year pre-payment penalty, but come to find out there was a two-year pre-payment penalty, which meant the loan would cost $13,000 to pay off early.  He decided to wait until the following year, which probably wouldn’t have been a big deal if the following year had been any year but… 2008.

He’s been trying to get Bank of America to modify his loan ever since… it will have been 35 months this January.

At one point, a couple of years ago… BofA offered him a trial modification that would have saved him $200 a month, but he said that, with his wife now gone, that wasn’t enough and he wanted to apply for the government program.  His BofA representative said that would be no problem… he could reapply… they were sending him another package to complete and re-submit.

That package was a long time coming, although every time he’d call Bank of America, someone would assure him that it was coming soon.  The BofA people told him how busy they were and that they would get to him as soon as they could.  But, month after month passed and no package arrived… until last July, more than two years since he had first applied to BofA to modify his loan.

Arlie jumped on it, provided everything the bank asked for, and he submitted it to Bank of America by the end of July 2011.  But then, at the beginning of August, there was a substitute trustee, an assignment of the Deed of Trust from MERS to BONY Mellon, and on August 5^th… BofA recorded a Notice of Default.  (Wow… that was fast, Arlie must of thought.)

Arlie spent much of his career working in the title insurance industry, so he felt he could handle getting a loan modification, but now he saw that Bank of America was getting ready to foreclose and sell the house.  He called his assigned representative at the bank, Reuben Dunn, who is apparently located in my home town, Fullerton, California… how lucky is that?

Reuben has always said not to worry about that, because Arlie was in the process of applying for a loan modification. Arlie says he has never trusted his assurances, so as the months went by, he called the California Attorney General, who must have done something because he soon got a call from Suzanne at Bank of America, who was calling to talk to him about the bank’s in-house loan modification program.

Arlie was confused, so he asked if this meant that he had been turned down for the government’s HAMP program.  She replied that she had no idea that he had applied in the first place.  He explained that he had been trying for three years.  She said she would talk to her supervisor and get back to him this week… and today is Friday… and surprise, surprise… no call yet from Suzanne at Bank of America.

You see… although Reuben keeps saying that Arlie should not worry about Arlie’s house being sold, Arlie received a Notice of Trustee Sale on December 12, 2011… and it says his house will be sold on the courthouse steps on January 3, 2011.

That’s nice isn’t it?  After 34 months being jerked around, Bank of America sends Arlie a Notice of Trustee Sale right before Christmas, and it says the bank will be auctioning your home right after New Years.  Who does something like that?

Arlie Matthews is in his 70s.  He’s a disabled American veteran, whose disabilities are 100%, meaning that he qualifies for 100% disability payments.  His daughter and her kids have lived with him since 2007, the year he lost his wife.

He can’t move anything himself, he has no idea where he’d live.  He couldn’t afford another four bedroom home, he’s sure, so the move would likely break up their “family.”  I’m sorry, but I just can’t believe ANYONE in this country finds this situation even remotely acceptable.

This is either a horrible mistake, in which case it needs to be fixed and fixed fast… or it’s by design, in which case Bank of America is likely going to end up being sued for “elder abuse,” among other things.  To say nothing of what I’ll write about… hey, I wonder how many other disabled American vets we could get going on this?

SIDEBAR: Excuse me… Bank of America people… it’s me, Mandelman.  Listen, I’m sure you’ll be hearing from quite a few others on this, but I thought I’d just jump in here and mention that you had better not let Arlie’s sale date happen.  Because that would be so wrong for so many reasons, do I need to say anything else about that?

Okay, here’s the deal… someone should DO SOMETHING about this situation.  I personally received an email from Arlie yesterday, and I personally spoke with him for a couple of hours… and although I could never promise him anything… I want to promise him that this is wrong and won’t be allowed to happen, because in the country he fought for… this sort of thing just is not allowed.

Bank of America… stop torturing disabled American veterans, and stop torturing Arlie Matthews and I do mean immediately… and I also mean… or else.  He’s a brave and strong guy, but I know he’s got to be scared to death inside and I hate you for doing that to him… or anyone else for that matter.  He has a daughter and grandchildren.  And it’s Christmas.  And you already had 35 months to torture him…. And that’s enough.

What’s his name… oh yeah… Reuben… in case you’re reading this… I’ll be over to see you later today, since you’re apparently in Fullerton.   We can chat, but please don’t tell me not to worry about the date of Arlee’s trustee sale because I want to see it cancelled… period.  You can get his loan modified in January, if you need more time… but that trustee sale… cancel it now, please.

DOERS… DO IT ONE MORE TIME FOR ARLIE AND EMAIL BANK OF AMERICA’S CEO, BRIAN MOYNIHAN TODAY, OKAY.  We have a scared American hero here… and that’s not how we treat out heroes here, is it?  Tell Bryan how you feel about this, and let’s see if the bank will do the right thing.

Mandelman out.

Arlie Matthews

Rancho Cucamonga, California

Loan #: 118935465

###

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

]]> http://thepatriotswar.com/index.php/doer-alert-%e2%80%93-bank-of-america-disables-a-disabled-vet/loan-modification/feed/ 0 http://thepatriotswar.com/index.php/neil-barofsky-and-american-banker-finally-catch-up-to-mandelman-matters/loan-modification/ http://thepatriotswar.com/index.php/neil-barofsky-and-american-banker-finally-catch-up-to-mandelman-matters/loan-modification/#comments Fri, 16 Dec 2011 00:54:23 +0000 Mandelman http://mandelman.ml-implode.com/?p=8173

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

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

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

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

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

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

Is it becoming clear?

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

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

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

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

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

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

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

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

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

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

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

No… we’re not winning.

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

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

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

Barofsky Blasts Treasury, Obama for Housing Mess

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

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

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

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

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

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

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

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

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

###

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Mandelman out.

Lowest level in more than three years.

The US got some good news, albeit qualified, on the job front today from the Department of Labor.  The level of initial jobless claims last week fell to 366,000, the lowest level since a normal recession turned into something historically ugly: In the week ending December 10, the advance figure for seasonally adjusted initial claims was 366,000, [...]

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Arizona Representative Jack Harper has absolutely stumped the panel, as they say.  If you had asked me what the Arizona legislature might do to make things MUCH worse this coming year, I’m not sure I could have come up with much.  I’m sure I wouldn’t have guessed this development even if given a hundred chances.

Like, what could you do to INCREASE foreclosures in a state where at least 50% of the mortgages are already underwater?  This year, Arizona came in #3 in the nation for declines in property values at 8.1%.  Unemployment is rock solid steady at 9%, assuming you stop counting those no longer looking for a job or those under-employed.  Now, I realize that Nevada is slightly in the lead here, but is Arizona that determined to win the race to the bottom?  Awfully competitive, if you ask me.  You’re already showing up Florida.

Currently, Arizona is a “non-recourse” state, meaning that if a homebuyer walks away from a house that’s underwater, meaning that the amount owed is more than the value of the property, the lender CANNOT recover the difference from the homeowner.

I AM NOT MAKING THIS UP.  YES, I’M BEING SARCASTIC, BUT EVERY SINGLE FACT IS CORRECT.  I’LL BE PROVIDING LINKS AT THE END SO YOU CAN READ IT THE BORING WAY.

The Arizona Bankers Association has been trying to change that for years so banks could go after the homeowners for the amount of the deficiency, and finally they’ve found their boy in Jack Harper.  Inconceivably, Harper says he will introduce a bill that will make Arizona’s homeowners responsible for deficiency judgements after foreclosure.  That could mean, if you owe say $500,000 and your home sells at auction… for say $100,000… like, in 2025 or whatever… now the bank will be able to come after you for the $400,000.

Harper, who by the way is no slouch legislatively speaking… he’s the Chairmoron (is that how you spell that?) of the powerful House Ways and Means Committee, has decided that Arizona’s status as a “nonrecourse” state is what’s keeping its real estate market from recovering. He says that people abandoning their homes further depresses the value of nearby homes… and he’s not happy about that.

According to Harper…

“The idea is to keep people from being encouraged to just walk away from their house any time they’re a little bit upside down on their mortgage,” said Harper, chairman of the House Ways and Means Committee.

Go back and re-read that sentence.  That sentence may very be a once in a lifetime opportunity.  And if it neither makes you feel enraged or sick to your stomach… you have already died inside.

The Arizona Bankers Association has been fighting for years to repeal the current law.  They say that when borrowers default, that means less money available for new loans.  They claim that lenders “get stuck with repossessed homes they cannot sell for enough at auction to recoup their losses,” and they want more than anything to be able to go after the borrowers for the difference.

Just so we’re clear… AND I DO WANT TO BE DAMN CLEAR ABOUT THIS… that is a complete and total LIE.

We should all know by now that our loans were “SECURITIZED,” sold off in complex securities to European banks and state pension plans.  Repossessed homes don’t decrease the amount of money there is for mortgages in Arizona.  The money for mortgages in Arizona NEVER came from Arizona… it never came from the bankers either.  If you meet anyone that believes that, walk away from them immediately, and for God’s sake keep them away from children.  ”They” are the best argument ever for forced sterilization.

Oh, and by the way… essentially ALL of the lending in this country today… and for the last four years… is from the U.S. government… Fannie, Freddie, FHA, VA… that’s it.  If anyone says otherwise, please refer them to me.

NOW FOR THE BEST PART… and Hat-tip to one of my favorite Arizona foreclosure defense attorneys, Beth Findsen…

Arizona’s laws that allow homeowners to walk away from mortgages were part of a legislative deal made in 1971, says Arizona Association of Realtors’ CEO Tom Farley.

Until then, a bank that wanted to foreclose on a home because of nonpayment on a mortgage had to go to court, a lengthy and cumbersome process.

That year, Arizona became a “deed of trust” state. The change, sought by the banks, meant lenders could foreclose on a property simply by giving notice and then taking possession 91 days later.

What the lenders gave up in exchange for that law was the ability to go after the home-loan borrowers, Farley said.

Yes, the bankers wanted Arizona to be a non-recourse state.  They wanted Arizona’s homeowners to be able to walk away and not owe the difference, because they didn’t want to hassle with the whole judicial foreclosure process.  They wanted to be able to foreclose faster.  And since they never lend their own money anyway, who cared…. foreclosing faster was better for them.

Of course, that was when Arizona’s property values were ALWAYS GOING UP in the future.  Hold onto the house and get more for it later.  Now that prices are in a free fall, make the deadbeat homeowners pay… f#@k ‘em!  They haven’t lost EVERYTHING yet.  Some of them still have cars we could repossess and sell off for scrap metal, and just think how that would help the traffic problems in the Valley of the Sun.  And jewelry… I’ve heard some may still have wedding rings and crap like that.

Jack “Jackass” Harper is a special kind of moron, however, as evidenced by his supporting statements.  Are you ready?

From the Arizona Daily Star, Saturday, December 10, 2011…

“Harper, a Republican lawmaker from Surprise, acknowledged that lenders may have ignored normal underwriting standards. But he said that’s not their fault.”

Keep going, if I had to read it so do you…

“The federal government uses the Community Reinvestment Act to intimidate the federally chartered banks,” he said. “They give them goals about how many loans you have to make in underserved, low-income areas. And the banks then start making risky loans to meet the goal.”

I can’t believe I have to do this but please stay with me.

1. The Community Reinvestment Act… OF 1979, by the way… had NOTHING to do with anything in 2008.  It was not a sleeping time bomb waiting for almost 30 years to destroy the planet’s economy.  And it doesn’t have any impact on Spain, Ireland, Italy, Australia… you get the idea, right?

2. If it were something related to the Community Reinvestment Act of 1979, then it would stand to reason that the foreclosures would be mostly in Community Reinvestment Act areas, right?  Is Scottsdale one of those?  I didn’t think so.

3. The Community Reinvestment Act only applies to federally chartered banks… NOT mortgage companies and Wall Street investment banks like New Century, Option One, Ameriquest, First Alliance, Lehman Bros., Bear Stearns, Washington Mutual, World Savings, Downey Savings, and the rest of the sub-prime shitheads that made all of the loans he’s talking about.  And no… it wasn’t Fannie and Freddie either… look it up for yourself if you don’t believe me.

4. The Community Reinvestment Act is about preventing discrimination and “redlining.”  Is Harper suggesting that what we need more of is discrimination and redlining?

I could go on, but my fingertips are already bleeding from pounding on the keyboard I’m going to replace as soon as I post this.

How about some more Harper from the Arizona Star?

He also said he DOES NOT believe that the banks bear some responsibility for the bad loans and should have to absorb some of the losses when borrowers default.

“The banks are taking all the risk and the buyer is taking none, other than what their down payment is,” he said.

Nope, I’m done.  I’ve got nothing else to say.  But, get this…

Harper says he’s willing to compromise and allow the banks to only go after an amount considered “fair market value,” and all I can say is that’s mighty white of him.  So, if you owe $500,000 and you walk away or lose your home to foreclosure… and your house is said to be worth say $250,000… even though God couldn’t sell it for that amount… all they can chase you for is the $250,000.

And just in case some of you are thinking… so what, I’ll just file bankruptcy… think again.  Ever since the new bankruptcy laws of 2005, that’s no easy answer or panacea.  Harper’s new law would make sure that you who already feel like you’ve lost everything… would actually be forced to LOSE LITERALLY EVERYTHING.

The really crazy thing is that Jackass Harper doesn’t even win the prize for elected morons in Arizona.  Besides him, Nancy McLain, and who could forget Carl Seel… the corporate seal, as I like to call him ever since he got his hundred grand principal reduction right before he arrived too late to propose an amendment to help homeowners in foreclosure… but at the federal level there’s Republican Senator Jon Kyl.

On the subject of extending unemployment benefits through this coming year, since there are NO JOBS, and some 25 million Americans hopelessly out of work… Senator Kyl recently claimed that…

“Continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

YEAH!  You are a lazy group out there in Arizona, and if they keep allowing you to collect unemployment, you’ll never get off your butts and look for work.  Hey, don’t look at me, you guys elected him.

IN CONCLUSION…

Well, I will say one thing about this economic crisis… it’s certainly bringing out the CRAZY in some folks.  Like Republicans, for example.  And don’t even think about accusing me of being some kind of loony-left, Democratic partisan hack because not only did I vote for Reagan and the first George Bush, but I voted for Dubya TWICE.  (I also voted for Obama in ‘08, but that only proves that I’m a pragmatist… not a crazy person.  McCain/Palin didn’t even deserve to come in second.)

I used to be a Republican because for some reason I was under the impression that they were pro-business.  They used to be pro-business, didn’t they?  I could have sworn…

Anyway, this past year you might remember that I was the one who broke the story about SB 1259… the bill that vanished into thin air after passing the Republican controlled Arizona State Senate 28-2, courtesy of the inconceivably insensitive and I would say at least brainwashed, if not entirely corrupt, Rep. Nancy McLain.

The whole thing was a big misunderstanding actually… I didn’t realize that Arizona used some other kind of government … I had always assumed the state was using the same kind of democracy thing the rest of the states were, but come to find out, I was wrong.  I’m not sure what they call it, but apparently, in Arizona they let Nancy McLain decide on which bills legislators get to vote.  If Nancy doesn’t like it, Arizona doesn’t get it.  Hey, it’s okay with me, I don’t live there and Democracy’s not exactly winning any awards lately anyway.

One more thing…

A Personal Message to Senator Harper…

Okay, here’s the deal Jack.  I hope this embarrassed you.  What you’re proposing is going to hurt so many people that I cried writing about it.  It is either the product of some highly uneducated thinking, or you are a corrupt piece of crap bought and paid for by banking lobbyists.   For the moment, I choose to believe that you don’t know any better and actually have your state’s best interests at heart.  I’m going to assume that you are misguided or misinformed… that you are not a misanthrope.  (Look it up.)

So, if that’s the case, I want to help.  Get in touch with me confidentially.  No one will ever know.  I’ll help you understand what you are missing, what you should consider if you want to: Stabilize homeprices and stop people from walking away from underwater loans… at no cost to taxpayers.  And, supplement the state budget deficit without raising taxes.

I’ll even help design a graceful and strategic way out of your idiotic statements about the bill you shouldn’t have proposed… I’ll take down my post, and say wonderful things about you… and never tell a living soul you contacted me… ever.  I’ll sign any confidentiality agreement you want.

Or, stay on the track you’re on, in which case I’ll be writing about you constantly.  If anyone ever looks you up on Google, they’ll have to wade through page after page of my articles about your shortcomings… the Internet sucks that way, I know.  Eventually, even your own mother will vote for a Democrat.

Think about it, Jack… Google search is forever, and there’s still time to course correct.  I’m a very reasonable guy… I’m a communications strategist that has worked for some of the largest investment banks on Wall Street and some of the largest corporations on the planet for 20 years.  I’m smart as a whip about these subjects… ask around, you’ll see.

I’ve had a hard year, Jack… trying to change things for the better in this country… you can just imagine, right?  So, I’m cranky and would welcome someone to take out my frustration on in writing.  Don’t let it be you, Jack.  It won’t be any fun at all, my facts are never wrong, and you are the definition of a public figure.  Are you feeling me, Jack… I wouldn’t say any of this if it weren’t that important to stop what you’re doing.

At least sleep on it.  My email is mandelman@mac.com.  I’m here for you, if you’ll just give it a try, I’ll have you running for governor or the U.S senate within 5 years.

Mandelman

Do you think that was too subtle?  I sure hope he comes over from the dark side.  He looks like such a nice young man.  In fact, I printed him out, and I’m putting his 8″x10″ glossy on top of our Christmas tree this year.  God Lord, Arizona… WTF do you have going on over there.

And you know how much I love your state too.  You know what this means, don’t you?  Now, I’m going to have to go to Vegas or New Mexico… come on fix this… I love the Camelback Inn.

Mandelman out.

###

And lest anyone think that I embellished a single fact in this story, I NEVER do that and you can read the straight news for yourself at any of the links below.

Planned Arizona Bill lets Banks Go After Homeowners Who Bail (This is on Beth Findsen’s blog, so please read this one first.)

Arizona Senator Wants to Penalize Those Who Strategically Foreclose

New Bill Could Prohibit Homeowners from Walking Away

State lawmaker wants to restrict mortgage walkaways

Lawmaker wants to change state’s non-recourse status

Arizona Representative Jack Harper has absolutely stumped the panel, as they say.  If you had asked me what the Arizona legislature might do to make things MUCH worse this coming year, I’m not sure I could have come up with much.  I’m sure I wouldn’t have guessed this development even if given a hundred chances.

Like, what could you do to INCREASE foreclosures in a state where at least 50% of the mortgages are already underwater?  This year, Arizona came in #3 in the nation for declines in property values at 8.1%.  Unemployment is rock solid steady at 9%, assuming you stop counting those no longer looking for a job or those under-employed.  Now, I realize that Nevada is slightly in the lead here, but is Arizona that determined to win the race to the bottom?  Awfully competitive, if you ask me.  You’re already showing up Florida.

Currently, Arizona is a “non-recourse” state, meaning that if a homebuyer walks away from a house that’s underwater, meaning that the amount owed is more than the value of the property, the lender CANNOT recover the difference from the homeowner.

I AM NOT MAKING THIS UP.  YES, I’M BEING SARCASTIC, BUT EVERY SINGLE FACT IS CORRECT.  I’LL BE PROVIDING LINKS AT THE END SO YOU CAN READ IT THE BORING WAY.

The Arizona Bankers Association has been trying to change that for years so banks could go after the homeowners for the amount of the deficiency, and finally they’ve found their boy in Jack Harper.  Inconceivably, Harper says he will introduce a bill that will make Arizona’s homeowners responsible for deficiency judgements after foreclosure.  That could mean, if you owe say $500,000 and your home sells at auction… for say $100,000… like, in 2025 or whatever… now the bank will be able to come after you for the $400,000.

Harper, who by the way is no slouch legislatively speaking… he’s the Chairmoron (is that how you spell that?) of the powerful House Ways and Means Committee, has decided that Arizona’s status as a “nonrecourse” state is what’s keeping its real estate market from recovering. He says that people abandoning their homes further depresses the value of nearby homes… and he’s not happy about that.

According to Harper…

“The idea is to keep people from being encouraged to just walk away from their house any time they’re a little bit upside down on their mortgage,” said Harper, chairman of the House Ways and Means Committee.

Go back and re-read that sentence.  That sentence may very be a once in a lifetime opportunity.  And if it neither makes you feel enraged or sick to your stomach… you have already died inside.

The Arizona Bankers Association has been fighting for years to repeal the current law.  They say that when borrowers default, that means less money available for new loans.  They claim that lenders “get stuck with repossessed homes they cannot sell for enough at auction to recoup their losses,” and they want more than anything to be able to go after the borrowers for the difference.

Just so we’re clear… AND I DO WANT TO BE DAMN CLEAR ABOUT THIS… that is a complete and total LIE.

We should all know by now that our loans were “SECURITIZED,” sold off in complex securities to European banks and state pension plans.  Repossessed homes don’t decrease the amount of money there is for mortgages in Arizona.  The money for mortgages in Arizona NEVER came from Arizona… it never came from the bankers either.  If you meet anyone that believes that, walk away from them immediately, and for God’s sake keep them away from children.  ”They” are the best argument ever for forced sterilization.

Oh, and by the way… essentially ALL of the lending in this country today… and for the last four years… is from the U.S. government… Fannie, Freddie, FHA, VA… that’s it.  If anyone says otherwise, please refer them to me.

NOW FOR THE BEST PART… and Hat-tip to one of my favorite Arizona foreclosure defense attorneys, Beth Findsen…

Arizona’s laws that allow homeowners to walk away from mortgages were part of a legislative deal made in 1971, says Arizona Association of Realtors’ CEO Tom Farley.

Until then, a bank that wanted to foreclose on a home because of nonpayment on a mortgage had to go to court, a lengthy and cumbersome process.

That year, Arizona became a “deed of trust” state. The change, sought by the banks, meant lenders could foreclose on a property simply by giving notice and then taking possession 91 days later.

What the lenders gave up in exchange for that law was the ability to go after the home-loan borrowers, Farley said.

Yes, the bankers wanted Arizona to be a non-recourse state.  They wanted Arizona’s homeowners to be able to walk away and not owe the difference, because they didn’t want to hassle with the whole judicial foreclosure process.  They wanted to be able to foreclose faster.  And since they never lend their own money anyway, who cared…. foreclosing faster was better for them.

Of course, that was when Arizona’s property values were ALWAYS GOING UP in the future.  Hold onto the house and get more for it later.  Now that prices are in a free fall, make the deadbeat homeowners pay… f#@k ‘em!  They haven’t lost EVERYTHING yet.  Some of them still have cars we could repossess and sell off for scrap metal, and just think how that would help the traffic problems in the Valley of the Sun.  And jewelry… I’ve heard some may still have wedding rings and crap like that.

Jack “Jackass” Harper is a special kind of moron, however, as evidenced by his supporting statements.  Are you ready?

From the Arizona Daily Star, Saturday, December 10, 2011…

“Harper, a Republican lawmaker from Surprise, acknowledged that lenders may have ignored normal underwriting standards. But he said that’s not their fault.”

Keep going, if I had to read it so do you…

“The federal government uses the Community Reinvestment Act to intimidate the federally chartered banks,” he said. “They give them goals about how many loans you have to make in underserved, low-income areas. And the banks then start making risky loans to meet the goal.”

I can’t believe I have to do this but please stay with me.

1. The Community Reinvestment Act… OF 1979, by the way… had NOTHING to do with anything in 2008.  It was not a sleeping time bomb waiting for almost 30 years to destroy the planet’s economy.  And it doesn’t have any impact on Spain, Ireland, Italy, Australia… you get the idea, right?

2. If it were something related to the Community Reinvestment Act of 1979, then it would stand to reason that the foreclosures would be mostly in Community Reinvestment Act areas, right?  Is Scottsdale one of those?  I didn’t think so.

3. The Community Reinvestment Act only applies to federally chartered banks… NOT mortgage companies and Wall Street investment banks like New Century, Option One, Ameriquest, First Alliance, Lehman Bros., Bear Stearns, Washington Mutual, World Savings, Downey Savings, and the rest of the sub-prime shitheads that made all of the loans he’s talking about.  And no… it wasn’t Fannie and Freddie either… look it up for yourself if you don’t believe me.

4. The Community Reinvestment Act is about preventing discrimination and “redlining.”  Is Harper suggesting that what we need more of is discrimination and redlining?

I could go on, but my fingertips are already bleeding from pounding on the keyboard I’m going to replace as soon as I post this.

How about some more Harper from the Arizona Star?

He also said he DOES NOT believe that the banks bear some responsibility for the bad loans and should have to absorb some of the losses when borrowers default.

“The banks are taking all the risk and the buyer is taking none, other than what their down payment is,” he said.

Nope, I’m done.  I’ve got nothing else to say.  But, get this…

Harper says he’s willing to compromise and allow the banks to only go after an amount considered “fair market value,” and all I can say is that’s mighty white of him.  So, if you owe $500,000 and you walk away or lose your home to foreclosure… and your house is said to be worth say $250,000… even though God couldn’t sell it for that amount… all they can chase you for is the $250,000.

And just in case some of you are thinking… so what, I’ll just file bankruptcy… think again.  Ever since the new bankruptcy laws of 2005, that’s no easy answer or panacea.  Harper’s new law would make sure that you who already feel like you’ve lost everything… would actually be forced to LOSE LITERALLY EVERYTHING.

The really crazy thing is that Jackass Harper doesn’t even win the prize for elected morons in Arizona.  Besides him, Nancy McLain, and who could forget Carl Seel… the corporate seal, as I like to call him ever since he got his hundred grand principal reduction right before he arrived too late to propose an amendment to help homeowners in foreclosure… but at the federal level there’s Republican Senator Jon Kyl.

On the subject of extending unemployment benefits through this coming year, since there are NO JOBS, and some 25 million Americans hopelessly out of work… Senator Kyl recently claimed that…

“Continuing to pay people unemployment compensation is a disincentive for them to seek new work.”

YEAH!  You are a lazy group out there in Arizona, and if they keep allowing you to collect unemployment, you’ll never get off your butts and look for work.  Hey, don’t look at me, you guys elected him.

IN CONCLUSION…

Well, I will say one thing about this economic crisis… it’s certainly bringing out the CRAZY in some folks.  Like Republicans, for example.  And don’t even think about accusing me of being some kind of loony-left, Democratic partisan hack because not only did I vote for Reagan and the first George Bush, but I voted for Dubya TWICE.  (I also voted for Obama in ‘08, but that only proves that I’m a pragmatist… not a crazy person.  McCain/Palin didn’t even deserve to come in second.)

I used to be a Republican because for some reason I was under the impression that they were pro-business.  They used to be pro-business, didn’t they?  I could have sworn…

Anyway, this past year you might remember that I was the one who broke the story about SB 1259… the bill that vanished into thin air after passing the Republican controlled Arizona State Senate 28-2, courtesy of the inconceivably insensitive and I would say at least brainwashed, if not entirely corrupt, Rep. Nancy McLain.

The whole thing was a big misunderstanding actually… I didn’t realize that Arizona used some other kind of government … I had always assumed the state was using the same kind of democracy thing the rest of the states were, but come to find out, I was wrong.  I’m not sure what they call it, but apparently, in Arizona they let Nancy McLain decide on which bills legislators get to vote.  If Nancy doesn’t like it, Arizona doesn’t get it.  Hey, it’s okay with me, I don’t live there and Democracy’s not exactly winning any awards lately anyway.

One more thing…

A Personal Message to Senator Harper…

Okay, here’s the deal Jack.  I hope this embarrassed you.  What you’re proposing is going to hurt so many people that I cried writing about it.  It is either the product of some highly uneducated thinking, or you are a corrupt piece of crap bought and paid for by banking lobbyists.   For the moment, I choose to believe that you don’t know any better and actually have your state’s best interests at heart.  I’m going to assume that you are misguided or misinformed… that you are not a misanthrope.  (Look it up.)

So, if that’s the case, I want to help.  Get in touch with me confidentially.  No one will ever know.  I’ll help you understand what you are missing, what you should consider if you want to: Stabilize homeprices and stop people from walking away from underwater loans… at no cost to taxpayers.  And, supplement the state budget deficit without raising taxes.

I’ll even help design a graceful and strategic way out of your idiotic statements about the bill you shouldn’t have proposed… I’ll take down my post, and say wonderful things about you… and never tell a living soul you contacted me… ever.  I’ll sign any confidentiality agreement you want.

Or, stay on the track you’re on, in which case I’ll be writing about you constantly.  If anyone ever looks you up on Google, they’ll have to wade through page after page of my articles about your shortcomings… the Internet sucks that way, I know.  Eventually, even your own mother will vote for a Democrat.

Think about it, Jack… Google search is forever, and there’s still time to course correct.  I’m a very reasonable guy… I’m a communications strategist that has worked for some of the largest investment banks on Wall Street and some of the largest corporations on the planet for 20 years.  I’m smart as a whip about these subjects… ask around, you’ll see.

I’ve had a hard year, Jack… trying to change things for the better in this country… you can just imagine, right?  So, I’m cranky and would welcome someone to take out my frustration on in writing.  Don’t let it be you, Jack.  It won’t be any fun at all, my facts are never wrong, and you are the definition of a public figure.  Are you feeling me, Jack… I wouldn’t say any of this if it weren’t that important to stop what you’re doing.

At least sleep on it.  My email is mandelman@mac.com.  I’m here for you, if you’ll just give it a try, I’ll have you running for governor or the U.S senate within 5 years.

Mandelman

Do you think that was too subtle?  I sure hope he comes over from the dark side.  He looks like such a nice young man.  In fact, I printed him out, and I’m putting his 8″x10″ glossy on top of our Christmas tree this year.  God Lord, Arizona… WTF do you have going on over there.

And you know how much I love your state too.  You know what this means, don’t you?  Now, I’m going to have to go to Vegas or New Mexico… come on fix this… I love the Camelback Inn.

Mandelman out.

###

And lest anyone think that I embellished a single fact in this story, I NEVER do that and you can read the straight news for yourself at any of the links below.

Planned Arizona Bill lets Banks Go After Homeowners Who Bail (This is on Beth Findsen’s blog, so please read this one first.)

Arizona Senator Wants to Penalize Those Who Strategically Foreclose

New Bill Could Prohibit Homeowners from Walking Away

State lawmaker wants to restrict mortgage walkaways

Lawmaker wants to change state’s non-recourse status

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]

__________________________________________________________________________________________

__________________________________________________________________________________________

###

[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

Joseph Vissarionovich Stalin was a part of The October Revolution in 1917… or the Bolshevik Revolution, if you grew up during the Wonder Years here in the USA.  Following the death of Vladimir Lenin in 1924, he consolidated power, put down competing factions within the Communist Party and was the Premier of the Soviet Union from 1941 to 1953.

Stalin is known for increasing the power and scope of the state’s secret police and intelligence agencies.  After WWII, he became the focus of literature, poetry, music, paintings and film.  He was credited with almost god-like qualities, accepting numerous titles, including Coryphaeus of Science, Father of Nations, Brilliant Genius of Humanity, Great Architect of Communism, Gardener of Human Happiness, and others.  Leon Trotsky criticized Stalin’s “cult of personality,” so in 1940, Stalin had his secret police in Mexico assassinate him.

As the head of the Politburo, he consolidated near-absolute power during the 1930s, orchestrating the Great Purge of the Communist Party, which was justified as an attempt to expel ‘opportunists’ and ‘counter-revolutionary infiltrators’. Many that were targeted by the purge were sent to Gulag labor camps… others were simply executed after NKVD troikas, which amounted to three people who convicted without trial.

According to official Soviet estimates, more than 14 million were sent to the Gulag between 1929 and 1953, with another 7 to 8 million deported and exiled to remote areas of the Soviet Union.  It is estimated that up to 43% of them died of diseases or malnutrition.  But, all of that was only the tip of the iceberg… en total, it is estimated that Stalin was responsible for the deaths of some 60 million people.  The things Stalin did were so horrific they cannot be comprehended… and in fact, he makes the top three of every list of the most evil genocidal murderers I could find online.

So, you can imagine my surprise when on “Meet the Press” yesterday, when Senator Lindsey Graham was asked why Senate Republicans blocked the appointment of Richard Cordray to head the Consumer Financial Protection Bureau (“CFPB”), he responded by describing the new agency as, “something out of the Stalinist Era.”

Now, it would be easy for me to make fun of this sort of statement… frankly, it’s in my nature to do so… but, I’m going to leave that to John Stewart and the rest of the folks on “The Daily Show”.  The truth is… this just isn’t funny any more.

The CFPB’s mandate is simply to protect consumers from financial fraud.  The idea for the Bureau originally came from Elizabeth Warren, and after a nasty political fight last year, it was written into the Wall Street financial reform legislation and signed into law.

According to Ron Suskind’s book, “Confidence Men,” however, the banking lobby told Treasury Secretary Geithner in no uncertain terms that they’d allow the Bureau’s creation, as long as Ms. Warren didn’t get to run it.  So, very nicely done there, banker people.  I’m especially glad that I wasted so much time writing articles asking people to show their support for Ms. Warren to their elected representatives.

It’s worth mentioning that the CFPB is about as benign a federal agency as could be imagined… they’ve got it operating under the Federal Reserve, for heaven’s sake.  Last week, the agency proposed a simplified credit card application designed to make costs, risks and terms easier for consumers to understand.  Here’s a copy of that Stalinist… no… I meant, simplified application:

CFPB Proposed Credit Card Applicaiton

Yeppers, after looking at that application, I see exactly what Senator Graham means now.  I mean, maybe that credit card application by itself isn’t the end of the world, but clearly it places us on a slippery slope leading directly to NKVD troikas and tens of millions sent to gulags in… let’s see, where would our version of Siberia be… I don’t know… Alabama?

Now, let us be very clear about what is going on here…

The new Consumer Financial Protection Bureau is one component of a bill that has already been signed into law by the President of the United States.  Period.  It is the law of our land.  If someone wants to change it, there is a legislative process in place for that, so by all means, go to town.  The only thing our legislators need concern themselves with is the implementation of our country’s new law. That’s their job, and the American people should be telling their elected representatives to get to work and stop screwing around.

You see, this is why we’re in the mess we’re in today… because we… and I do mean you and me… never seem to demand that this sort of thing stop immediately.  When they did away with our usury laws, the laws limiting the amount of interest that can be charged, we said nothing.  When some tried to pass laws to limit or prevent predatory lending, we hardly said a word about it.

Now, when right in front of our eyes, the banking lobby is pushing to make the only federal agency whose role is to protect consumers entirely toothless, once again we’re failing to make our voices heard.  I know this because if we were making our voices heard, no politicians would dare try to pull this sort of disingenuous crap, especially in an election year.

As it stands, and solely to appease the Republicans/bankers, the agency now reports to the Federal Reserve, which is a far cry from the original intent.

The only group that opposes the CFPB is the banking lobby and the reasons are simple… they want to continue to deceive and mistreat consumers without anyone being able to say a word about it.  They’ve been fighting any and all laws that protect consumers for 30 years now, while we’ve been sleeping… no, I mean… shopping… and this is just more of the same corrupt crap.

The only difference is that today, the Republicans… and yes, I do mean ALL of them, with the exception of those representing the Republic of Maine… are now willing to stand up and let the country see that they are here to do the bidding of the banksters.  They don’t care who gets screwed over by predatory lenders or deceptive financial product offerings.  They’re here to do what Wall Street wants them to do and that’s that.  They don’t care what the law says… bankers said no to the CFPB having any power… and no means no.

Until the CFPB’s director is confirmed, by the way, the bureau cannot use the power it received under the Dodd-Frank law… most notably it cannot regulate mortgage originators and payday lenders.  Mortgage originators and payday lenders… that’s who the Republicans are protecting by blocking all appointees?  Yes.

Currently, the board of regulators for the bureau needs a two-thirds majority to veto decisions. Senator Dean Heller of Nevada has said that the Republicans would oppose confirmation of ANY appointee unless the CFPB is restructured so that a “board of bank regulators is given the power to veto bureau decisions.”  Republicans also want Congress to be able to cut funding to the agency.  In other words, either the bankers are in control, or there will be no CFPB.

“The reason Republicans don’t want to vote for it is we want a board, not one person making all the regulatory decisions, and there’s no oversight under this person; he gets a check from the Federal Reserve.  We want him under the Congress so we can oversee the overseer,” Graham told NBC’s “Meet the Press.”

“This consumer bureau that they want to propose is under the Federal Reserve, no appropriation oversight, no board. It is something out of the Stalinist era,” Graham said.

That’s Mitch’s good side.

This idiotic, dishonest and flagrantly corrupt sentiment was echoed by Republican Senate Minority Leader Mitch McConnell who apparently said on “Fox News Sunday” that the blocking of Cordray’s appointment came as a result of his party opposing a ‘czar’ with unchecked power.

Mitch, Mitch, Mitch… we can all see what this is… it’s you and yours continuing to do the bidding of the Wall Street bankers… it’s you and yours continuing to block anything designed to help Main Street… it’s you and yours perfectly willing to be the proximate cause of untold pain and suffering for hundreds of millions of people in this country.

And, I probably wouldn’t have connected the dots before, but now that Republican Senator Lindsey Graham mentions it… that does sound somewhat “Stalinist” to me.

How about this for a 2012 slogan… “Go Stalinist.  Vote Republican in 2012!”

Or, what about… “Protecting Consumers is What’s Killing this Country.  Vote for the GOP in 2012!”

No?  Okay, how about… “Bankers Know Best… Vote Republican in 2012!”

Or… “Poor People Need Loan Sharks!  Vote Republican in 2012.”

Still no good?  Sheesh, tough crowd.

I told you this wasn’t funny anymore.

OH, ONE MORE THING…

On December 6, 2011… just a few days ago actually… Minority Leader Mitch McConnell, Ranking Member Richard Shelby, Senate Banking Committee Chair Tim Johnson, and Majority Leader Harry Reid all received a letter from Rep. Elijah Cummings (D-MD)… and then they promptly and completely ignored it.  Check it out… it’s worth it.
Congressional Letter in Support of Nomination of Richard Cordray Former AG to Run the CFPB

Mandelman out.

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Bankers in the U.S. are being warned as a result of confirmed reports that a letter bomb was sent to the CEO of Deutsche Bank in Frankfurt, Germany.  NBC in New York has reported that a warning issued by the NYPD to bank security officials in New York includes the following:

“We have received a report of a confirmed mail (package) explosive device that was addressed and sent to … Deutsche Bank in Frankfurt, Germany. The package was detected by X-ray technology inside the mail room. The package did not detonate.”

The FBI has issued a statement saying that the Bureau is, “working with German authorities to assess the incident in Frankfurt and any potential threat to facilities or people here.” NYPD has increased security around the Deutsche Bank locations in NYC, although the FBI says there have been no specific threats received against banks here in the U.S… yet.

One question comes to mind: Is anyone surprised?

Actually, I am surprised.  I’m surprised that it’s taken until now for this to happen.  I don’t have any idea from where this letter bomb was mailed, or what the motive of the sender was, but I do know that the banks have exhibited a wholesale disregard for regular people in this country, and I imagine elsewhere.  The 99% thing isn’t just a U.S. thing, right?  Right.

For example, the primary criticism of the new Greek government is how bank-friendly they are.  The new Prime Minister is a guy named Papademos, who is a former European Central Bank vice-president.  Imagine our president was Jamie Dimon, and you’ll get the idea.  It would seem that we’re not even close to cornering the oligopoly market.  And let them eat cake produces a predictable outcome, does it not?

Last year, roughly 76% of the unemployed in this country were receiving checks… next year that percentage is going to be roughly 48%.  And participation in food stamps in this country… it’s steadily rising… somewhere between one in seven, and headed towards one in six… in 2005 about 11 million… this coming year over 50 million, give or take.  Look it up for yourself, you’ll see.  But,  I know… some of you are thinking… well, that won’t affect me, I’m not on food stamps.  But that’s not the point.

What’s happening is going to impact EVERYONE, and if you think you’re somehow immune, perhaps you should consider learning more about what happened during the 1930s.  No one came through it unscathed.  And no one that did live through it ever recovered.

Of course, not everyone lived through the 1930s, and not everyone will live through this either.  A few days ago, 38 year-old Rachelle Grimmer shot her two children before turning the gun on herself inside a Laredo, Texas food stamp office.  She had been denied food stamps several times since last July, when she first applied.  The first time they turned her down the Texas Department of Health and Human Services said her application was incomplete, and later they said they weren’t able to reach her… I don’t know… maybe her phone had been turned off because she couldn’t pay the bill.  I’d imagine that’s happening a lot more these days, what do you think?

Intuitively, I think we all know that suicide rate are up, although it’s hard to find published data because no one likes to admit it.  The State of Vermont, however, has compiled and released figures as of November 4, 2011.  The state’s Department of Mental Health, says there has been a 15 percent jump in suicides in the last two years. I wonder why.

I wrote an article in May of 2010… We’re on the Brink of a New Age of Rage… maybe it will seem more relevant today.

Our stimulus spending is over, state budgets are going to be increasingly under pressure, state taxes will rise, services will be cut… unemployment will worsen… our standard of living will come down a few notches… foreclosures will steadily increase… and as we sit here today, we don’t even have anything on the drawing board that MIGHT start to turn things around.

It’s as if we can afford to worry about something else… like whether our neighbors at risk of foreclosure are irresponsible borrowers.  I hope those doing that are enjoying themselves because it’s a damn expensive hobby.

Mandelman out.

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From 2.0%?

The good news?  We may not head into another recession.  The bad news?  The US economy isn’t growing, either.  A pair of economic indicators has economists warning about a new round of “deceleration,” even though we hardly saw any real acceleration prior to now. First, the report from Commerce on durable-goods orders offers a wan [...]

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

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

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

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

The text of the letter states:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hey, nice castle, by the way.

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

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

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

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

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

On this topic, DeMarco recently told Politico.com:

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

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

He was also recently quoted as saying:

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

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

And he also said:

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

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

Mandelman out.

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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…

The SEC today reminds me of the Bumbles.  They growl and wave their arms in the air as they file a lawsuit against one of the TBTF banks, basically alleging that the bank destroyed the national and even global economy, but then they turn into the most accommodating, if not entirely malleable regulator in the history of regulators, offering to settle the case for relative nickels and dimes, complete with no admission of guilt by the settling bankster.  It’s so distasteful to watch that I’d stopped watching.

But, a friend of mine who’s a lawyer, recently brought to my attention what just happened in the latest SEC case, which is against Citigroup… the judge said no way to the flimsy proposed $285 million settlement.  It seems that Federal Judge Jed S. Rakoff believes that what’s interest of the public must be considered, and the proposed settlement clearly failed in that regard.

Now, get this… the SEC actually ARGUED in support of the proposed settlement, and part of their argument was specifically that the public interest was not a criterion that Judge Rakoff should consider.  Rakoff rejected the SEC’s argument and, citing legal precedent, refused to approve the settlement, and set the date for the trial to commence sometime next July.

Are you digging what I’m saying here?  The SEC actually argued that the judge should approve the settlement WITHOUT any concern as to what’s in the public’s interest.  I have to tell you… that revelation is, to me, proof positive of a regulatory agency that has so lost its way that it may never be able to find its way home.  I mean, were it Citigroup arguing the irrelevancy of the public’s interest  as related to the settlement, it wouldn’t faze me a bit… Citigroup, like the other TBTF banksters obviously don’t care about the public’s interests, but what in the Sam Hill is the SEC there for if not to represent… or at least be cognizant of the public’s interests?  In fact, how dare a federally funded regulatory agency stand up in court and attempt to convince a judge that the public’s interest should not be a factor in approval of a proposed settlement.

According to the SEC’s website, in the section describing the history of the agency, the SEC was created for two fundamental purposes:

Companies publicly offering securities for investment dollars must tell the public the truth about their businesses, the securities they are selling, and the risks involved in investing.

People who sell and trade securities – brokers, dealers, and exchanges – must treat investors fairly and honestly, putting investors’ interests first.

Okay, so call me crazy, but those two statements make it sound like the SEC is supposed to be concerned with the public’s interests, do they not?  And yet the SEC went as far as publicly and proudly proclaiming a settlement that the judge later described as being “POCKET CHANGE” for an organization of Citi’s size… and whether the settlement provided any benefit for the SEC beyond “A QUICK HEADLINE.”  And in the judge’s written opinion he said of the proposed settlement: “It is neither fair, nor reasonable, nor adequate, nor in the public interest.”

Keep in mind that we’re talking about allegations that center on Citi’s broker-dealer arm, Citigroup Global Market, for “intentionally misleading investors in relation to a $1 billion collateralized debt obligation known as Class V Funding III.”  You know the drill by now… Citi lied to investors, selling them crap, while betting against it on the side.

And in point of fact, it was that very behavior… far more than any sub-prime loans defaulting, that has caused an economic meltdown in this country, and around the world, not seen for more than 70 years.  Citigroup’s acts in this regard were the proximate cause behind the destruction of investor trust that has left the U.S. government the lender of first, middle and last resort.

5. Remember that final scene in Raiders of the Lost Ark?

Remember that final scene in the movie Raiders of the Lost Ark… the first one… when the U.S. Government is about to store the Ark of the Covenant and all you see are the rows upon rows of some giant government warehouse where nothing will ever be found once stored.  Well, a reader of mine was kind enough to send me a photo of one of the floors at Bank of America’s servicer… it’s where they store borrower files.

I think the photo speaks for itself. Happy holidays everybody!

Mandelman out.

I used to read the Wall Street Journal all the time, maybe even every day for a few years, back in the days when Yuppies were king, BMWs reigned supreme, and I was still stupid enough to pay $300 a year to carry around a grey piece of plastic from America Express that I idiotically referred to as being “platinum.”

These past three years, well… not so much.  It’s not just because a gaggle of insensitive and insufferable cheerleaders for the banks write the newspaper, although that certainly is a big part of it.  It’s mostly because the paper’s views are entirely predictable, and unreservedly smug… no they’re smug².  We’re not even having a recession in the Wall Street Journal, its positively surreal.

So, I’m clicking around through my news alerts yesterday, and I see this headline: “We Can’t Ignore Housing Anymore.”  Huh?  Can’t ignore it… anymore?  Well, why the heck not?  It’s been going swimmingly, thus far.  Why quit on a winner?

Neal Lipschutz, who first joined the company in 1982, is today senior vice president and managing editor of Dow Jones Newswires, wrote the article, and according to his bio, he “directly supervised the news staffs in the Americas and served as chief arbiter of and spokesman for news policies, coverage and standards on a global basis.”

And today, Neal has “global responsibility for Dow Jones Newswires editorial.”  So, Neal is a man with “global responsibility,” and I’m almost positive that I’ve never even met a man with global responsibility.  Apparently, Neal has written articles that have appeared in The Wall Street Journal, Barron’s, The Asian Wall Street Journal Weekly, The New York Times, and The Baltimore Sun among others.

So, at first I thought… Neal is Journalism Man, but then I started reading what he had to say and I quickly realized…  nope, he’s just another Lipschutz.  Here’s how he kicked off his article on how we can’t ignore housing…

“In the end, we can’t dodge housing.

The U.S. recession and financial crisis of the late aughts began with housing and the scourge of subprime mortgages, which were so messily dispensed. It spread to Europe and its banks.

For a few years we tried to work around the paralyzed housing sector – the drip, drip of steadily lower home prices, the unresolved status of the wounded Fannie Mae and Freddie Mac — and it seemed to be working.”

Obviously, either Neal has the cognitive abilities of a fruit loop soaked in milk, or he’s just disturbed.  What do you suppose he thinks “spread” to Europe and its banks?  I mean, I don’t think loans can spread… loans are not germs or viruses… they don’t just spread.  Someone has to spread them, right Neal?  And let’s assume you’re right and within the mortgage-backed securities and CDOs that were sold to Eurobanks, there were a few loans leveraged to the hilt.  So, who do you suppose might have taken them to Europe, Neal?  Because it wasn’t me Neal.

And then he writes:

“Now that worries mount about an ever more likely return to recession amid a significant equities markets decline, we are hearing again about housing.”

Hearing “again” about housing?  Who’s hearing again about housing?

I wouldn’t worry too much about you hearing anything, Neal.  I just don’t think you’ve heard anything in maybe twenty years.  I think you should consider donating your head to the particle physicists at CERN’s laboratories as they’re studying the beginnings of the universe and are apparently trying to find the densest matter on earth.

And Neal continues to offend…

“There’s the foreclosure mess, the underwater mortgage mess, the tight mortgage lending standards and all the rest. There’s displaced construction workers. There’s consumers unwilling to spend as their perceived real estate wealth evaporates.

There’s housing, traditionally the leader out of recession, still generally in decline, and harder to ignore.”

It’s only my perceived wealth that’s been evaporating?  Well, that’s certainly a relief.  Only my perceived wealth.  Well, thank goodness for that.  Hey, here’s an idea, since it was only perceived wealth, how about you write an article telling the bankers to give everyone perceived principle reductions?  You’d be in favor of that right, Neal?

You want to know what I’m thinking about right now.  I’m thinking about how much fun it would be to watch you perceive my size 12 boot kick your hard to ignore mass.

Neal’s also got some answers to our housing market problems.  Here’s what he says we should consider in order to fix the housing mess he’s having a hard time ignoring…

“… more people who are current on their mortgage payments have to be able to refinance their mortgages to take advantage of rates near 4%.

That savings for many would go into additional spending, a stimulative measure, and would boost their economic psychology, which is important. Even if they used the savings to pay down their own debt it would do long-term good.”

What kind of a word is “stimulative,” Neal?  Let me guess… were you a triple-digit SAT score kind of guy?  You know, math and verbal combined, what… about 770?  And then straight to the local community college to get your Associates in North American Egotistical Studies or possibly Recumbent Illiteracy?

How did you ever get a job as an editor at Dow Jones Newswires using words like “stimulative?”  Either the bar’s just not that high, or… hang on… I know how you must have done it… maybe I should be calling you Kneel?

Okay, I’m done.  There’s no point in going on about Kneel anyway.  If I’m not going to get to kick his callous, insensitive and entirely ignorant behind around a parking lot, then what’s the point?  I suppose I could challenge him to a battle of wits, but that wouldn’t be right either because he’s unarmed.

And Neal closes by saying…

“Given political realities, it’s hard to imagine much of a fiscal push, in housing or elsewhere.”

You know, Neal’s right about those “political realities.”  The reason we’re not solving the foreclosure crisis isn’t because of economic or fiscal realities… what has doomed us to suffer the economic pain of a deflationary spiral are only “political realities,” or in other words… what people think… just thoughts.

At least half the country doesn’t understand that it is a crisis.  They think that irresponsible people bought homes they couldn’t afford.  They do not think it right or fair to bail out those that made irresponsible decisions.  But thinking something doesn’t make it true. Ours is not a housing crisis, it is a credit crisis.  And the credit markets froze in 2007, not because of borrowers, but because of bankers.

Those that oppose saving their neighbor from foreclosure are costing the rest of us, and themselves, trillions of dollars in aggregate losses.  But the people in foreclosure have already lost.  And by forcing those losses, everyone else loses too.  Only by saving them from further loss do we save the rest of us.

And as we fiddle… Rome burns.

Are you listening, Neal?

Mandelman out.

Florida foreclosure defense attorney and controversial blogger, Matt Weidner is in the trenches fighting for the rights of homeowners almost every single day. Trained in large part by April Charney, and practicing in Florida, the major leagues of the foreclosure crisis, Matt has become one of the best known foreclosure fighters in the country, not only because of his work, but also because of his controversial blog, MattWeidnerLaw.com.

To describe Matt as “passionate” would be the understatement of the decade.  Outspoken doesn’t quite do him justice either.  He knows in his heart that what’s happening to homeowners at the hands of the banksters today is wrong, but he also knows it’s bad for everyone… the homeowner, the community, the state, the nation and even the world, and he’s dedicated his practice to helping homeowners stand up to the TBTF banks.

He’s even been talking about running for congress… and if he does, I’m certainly going to do whatever I can to help him get elected.  We very much need people like Matt serving in government, so I hope he runs, if not this year then certainly in the future.

I wanted to have Matt on a podcast so both homeowners and other lawyers would have an opportunity to hear his views on the crisis today, and specifically what he’s seeing in the Florida courts.  And sure enough, Matt did not disappoint… he’s just one of those people who can’t beat around the bush.

So, there’s no reason to delay any further, if you’re not already familiar with Matt Weidner, here’s your chance to hear from one of the most outspoken voices of the foreclosure crisis, and if you already know of Matt from reading his blog… then you’ll love listening to him tell it like it is… on a Mandelman Matters Podcast.

Just turn up your speakers and click the PLAY button below…

Mandelman out.

If there was a Hall of Fame for the foreclosure crisis, and perhaps one day there will be, there is no question that attorney April Charney would be one of the first to be indoctrinated.  She’s been fighting for the rights of homeowners for decades, and training other lawyers to do the same since 1994.  Of course, the advent of securitization and the meltdown of our financial and credit markets, combined with the effects of our housing bubble, has caused an economic catastrophe not seen since the Great Depression of the 1930s, changed everything, but April has been right there on the front lines of the fight to keep people in their homes.  I’d say she knows as much about securitization and what went so terribly wrong as anyone in the country, and she has a way of explaining it, so that judges… and anyone else for that matter can understand it.

April and I have gotten to be friends over the last couple of years, and I have an enormous amount of respect for her, both as a person and as a professional.  She is someone that will not keep quiet… she will not back down… and she will never give up when fighting for what she knows to be right.  She is one of the few people on the planet that I trust unconditionally.  I may not always agree with every single position she takes, but whenever she tells me something, I always give it great consideration, because I know that she does not take positions without having done the same.  In my view, April Charney is one of the lawyers in this country that reminds us that some attorneys should be revered by our society.  If the foreclosure mill attorney David Stern had a polar opposite or arch nemesis… no question it would be April.

Okay, so there no reason for me to say anything more to introduce April, she really is someone that requires no introduction.  She’s been quoted by the media countless times related to the foreclosure crisis, and anyone involved in representing homeowners at risk of foreclosure knows her name and what’s she’s accomplished for homeowners in Florida.  And by the way, she’s also a good friend of Max Gardner’s, another hero of this crisis.

So, whether you’re a homeowner fighting to keep your home… or a lawyer who represents homeowners in foreclosure, here’s an opportunity to hear what April has to say about where we’ve been, where we are today, and where she thinks we might be tomorrow… it’s one solid hour of April at her candid best… you really don’t want to miss it.

Just click the play button below and turn up your speakers…

… it’s a Mandelman Matters Podcast

with Jacksonville Legal Aid Senior Attorney, April Charney…

Mandelman out.

In a rare moment of semi-lucid disclosure, the National Association of Realtors (“NAR”) reported that home sales contracts are falling apart TWICE as often as they did last year, according to the numbers released at its annual convention in Anaheim, California.

In an article published in National Mortgage News, titled: NAR: Sales Falling Through Twice as Often, the NAR said that recently 18% of its members are reporting “contract failures,” which is double the number that were being turned down one year ago.

Why?  Well, according to the Realtors, it’s credit scores and appraisals coming in too low.  Well shave my head and call me Baldy… what do you know about that?  I certainly do declare, how can such a thing possibly be so?  What could possibly be the cause?  Who would have ever expected something like this to happen?

This really is precious, don’t you think?  Absolutely adorable.  Hey, I know how we can fix things… let’s have a bake sale… Lord, I do love a good bake sale.

Apparently, the Realtors are quite surprised that these days even good credit isn’t good enough, so the NAR conducted decided to conduct an “analysis.”  These guys needed to study this problem, because apparently, when the topic of conversation moves beyond the houses themselves, the NAR has no clue what’s going on.

They found that the average credit score needed to get a loan in 2007 was 717, but lo and behold, will wonders never cease, in 2010 is was 760!  So, I guess it’s going up.  Go figure.

“Weighted average FICO scores for conventional loans purchased by Fannie Mae and Freddie Mac eased a bit in this year’s second quarter, declining to 755, but remain well above historic norms, the realty group said.”

Well, thank the good Lord for the NAR’s powerful analysis.  Please do go on… I am totally glued…

Almost three out of every four loans were offered to buyers with scores of 740 or higher, while less than 1% were offered to those whose scores were 620 or lower, NAR said. Twenty-five percent of Americans have credit scores below 599 — almost double the level of two years ago.

Shut the front door!  Twice as many Americans have credit scores below 599 than did just two years ago?  Now why do you suppose that would be?  Want to know what that looks like on a piece of graph paper?  Ever heard of a trend line?  Well, this trend line follows Thelma and Louise’s car at the end of the movie.

The stiffer mortgage requirements have come at a time when banks are seeing strong profits and runs counter to the government’s efforts to use rock-bottom interest rates to get the economy and the housing market moving again, said NAR’s chief economic, Lawrence Yun.

It “Yuns counter to the government’s efforts,” run?  (Wait, flip those.) I meant, it “runs counter to the government’s efforts,” Yun?  How weird is that?  I mean interest rates have been at all time lows for the past… hmmm… oh, I don’t know… shall we say four straight years, and it’s been working great so far, wouldn’t you say?  I mean, we’ve got a housing market that might even rival that of Paraguay.

Listen… Yun… you’re an idiot.  Where did you get your economics degree?  I mean specifically.  Because you should ask for a refund.  Seriously… if you paid for your economics education you got ripped off, dude.

“We need to get back to reasonable lending standards,” said Ron Phipps, the outgoing president of the 1.1 million member trade group.

Reasonable lending standards?  Oh, for heaven’s sake.  I’ll bet Ron thinks that… after all, he’s got to find a way to keep those 1.1 million NAR members paying their dues, does he not?  But, I’m afraid Ron’s fighting a losing battle.  There’s no way he’s going to be holding his ship together much longer.  It’s going to be over soon.

It is, however, nice to see the NAR is offering some continuing education classes.

The convention featured two separate educational sessions on the importance of credit scores and how to improve them…

Improve them up to 760?  That’s a lot of improving.  How much does it cost to improve that much?

LOL… allow me to offer some slightly contradictory advice that is certain to save you a whole lot more than a couple hundred a month.

Unless there are specific reasons for you to do so, like you’re downsizing, or you simply have to move… don’t buy a house right now.  I can absolutely assure you that you will lose money in year one, two and three… and very likely beyond that.  So, RENT!  And revel in it… especially if you’re renting now, there’s no reason to buy something today, because now is definitely NOT a good time to buy.  And if anyone tells you otherwise, ask them if they’d care to debate me on a podcast… that ought to do it.

You want to know what you should be doing now?  SAVING MONEY.  Less buying and more saving is the new black.

Want to glance into my crystal ball for a few moments?  Okay, here goes…

• The banks are not enjoying “record profits,” as we often hear in the news.  They have the same “toxic” assets on their balance sheets that they had in 2008.  The biggest difference today is that the banks are not adhering to several key accounting rules, and because of that no one really knows exactly how they’re doing.  I do know one thing about the banks, however.  Banks make money by lending, and they’re not doing much, if any, of that.

• Over the last two years, for example, many of the TBTF banks have lowered their reserves in order to make their financials look better than they actually were, and last quarter a few of these banksters actually made their numbers by writing down their own debt based on their creditor’s perception that they may default.  Like, if I owed you $10,000, but you figured I might go bankrupt and not pay, so you were willing to sell my debt for $5,000… and so I wrote down the amount I owe you to $5,000 on my financials.  Nonsense.

• As of October of 2011, as a result of the “bailouts,” Goldman Sachs still owes U.S. taxpayers $12.9 billion, JPMorgan Chase owes us $32 billion, Morgan Stanley owes us $25.5 billion, and Bank of America owes us $19.7 billion.  So, if they’re in such great shape, why can’t they pay back what they owe?

• “Unless the euro zone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the U.S. banking industry could worsen,” said Fitch Ratings yesterday. “Further contagion poses a serious risk,” Fitch said.  Have you noticed how the news on Europe is getting progressively worse?  Like at first, it was over there, but now it might be coming here?  Well, of course it’s coming here… just think of the financial crisis as occupying the planet.

• Any event that triggers default on the trillions of dollars worth of synthetic CDOs that were sold before 2007 could be a disaster that tips the world from recession into deep depression. Nobody really knows what will happen for sure, but it won’t be a small event.  A synthetic CDO, by the way, is a collateralized debt obligation or CDO that is comprised of credit default swaps instead of debt securities, which are based on mortgages and leverage (read: borrowed money).  Many people describe credit default swaps as being insurance against a bond’s default, but there’s more to it than that.  For example, various credit events can require an insurer to post additional collateral, which is what got AIG in so much trouble in the fall of 2008.  Right now, truth be told, we are living on a razor blade, and hoping no one slips.

• Don’t be fooled by stimulus you can’t see.  Just because you can’t see it, doesn’t mean it’s not there.  So, when Bernanke is flooding the system with money, even though you can’t see it or even feel it… it’s there and it’s affecting things… not forever… but for some period of time.  Now that stimulus is pretty much over, you can expect things to fall faster.

• Unemployment is rising… when it will be reported as such, I don’t know because the numbers being released are not to be trusted.  For example, the September jobs report showed that the U.S. economy created 103,000 jobs in that month, but as it turns out… 45,000 of those jobs were Verizon workers returning to work from an August strike.  Job creation… well, not so much.

• According to economist Dean Baker: “The economy has created 99,000 jobs a month over the last three months, about 9,000 more than it needs to keep pace with the growth of labor force. At this pace, it will be around 80 years until the economy gets back to normal levels of unemployment.”  Regardless, news accounts say that the jobs numbers were better than expected.

• Remember President Obama’s first piece of legislation… the one that approved roughly $700 billion in stimulus spending?  Well, something like $500 billion of that money went to the states, and that’s why the states have been able to operate as if everything is hunky dory.  But, that money is gone now, or soon will be and the states can deficit spend or print money like the federal government can.  So, get ready because state jobs are being cut to the tune of 22,000 a month… my guess would be that pension cuts are coming soon.

• Foreclosures are steadily rising.  Home prices are steadily falling.  Period.  What else could possibly happen, given the circumstances?  But, you can’t tell that from the headlines.  For example, get ready for the reports showing that sales were up this year as compared with last year’s anemic total, but look below the surface and you’ll find that last year’s total was the lowest in 13 years, and this year’s median price of a home was down 4.7 percent from last year.  And frankly, even those numbers are ridiculous because there’s no real, real estate market… it’s just a mish-mosh of distressed sales and short sales, with only the federal government providing the financing, and a shadow inventory so large that no one can even guess at its size anymore.

• But nothing goes down in a straight line so don’t be fooled by interim reports offering meaningless comparisons and purporting to indicate that happy days are here again.  Nothing can change for the better until we do something to stop the free fall in housing prices, which means stopping the flood of foreclosures… and that won’t happen until we shatter the stereotype that “people bought homes they can’t afford.”  The problem with believing the happy crap is that it stops us from demanding action from our government.

Meanwhile… back at the National Association of Realtors, the following headline appeared right below the one that motivated me to write this article…

NAR: Housing Market Poised to Turn

The ever-optimistic National Association of Realtors believes the worst housing downturn since the Great Depression is almost over.

So… umm… well, okay… Yay!

Let me guess… according to the NAR, now is a good time to buy, right?

As Yves Smith would say: Quelle surprise.

Mandelman out.