It’s the Mortgages, Stupid

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There is only one course left for Obama, and it is to do now what he should have done at the start of his term: abandon the hope that banks will voluntarily aid desperate homeowners and instead push for new government regulations and changes in the bankruptcy law to force the banks to make deals to keep people in their homes. There is precious little else to talk about, for if the housing market—the bedrock of not only the American dream but, more important, the financial security of a nation of consumers—is not restored, we are in for one long, dreary period of economic stagnation at best, or a severe downturn and a society in dangerous turmoil.

It’s the Mortgages, Stupid

(YES DEAR GOVERNMENT OFFICIALS, LAWYERS, LOBBYISTS, JUDGES, FORECLOSURE MILLS, ETC.)j.l.s.

Posted on Sep 7, 2010
AP / J Pat Carter

By Robert Scheer

This week’s proposals by the Obama administration to deal with the persistent economic crisis will be, as with previous plans that involved trillions of taxpayer dollars, little more than salt in the wounds. Once again the strategy is to stimulate the economy by funding projects and tax cuts while ignoring the root cause of the problem: a housing foreclosure meltdown that has chilled the spending of a majority of American consumers.

With 11 million homeowners underwater on their mortgages and 3 million more already foreclosed, we have to assume, given the average household size, that some 40 million Americans are feeling mighty strapped. The numbers grow to an overwhelming majority when you take into account the distress of all homeowners, who have watched the value of the family nest egg dwindle even if they substantially paid down or paid off their mortgage debt. And this very widespread feeling of being suddenly much poorer is a nationwide scourge that has dramatically cut the appetite for consumption that drives the economy.

That fact is recognized even by the very business people who are supposed to be inspired to new investment and hiring by Barack Obama’s proposal on Wednesday of an accelerated tax break on business investments. As William Dunkelberg, chief economist for the National Federation of Independent Business, told The Wall Street Journal, “If you give a small business guy $20,000 he’ll say, ‘I could buy a delivery truck but I have nobody to deliver to.’ ” Although Dunkelberg’s members would be happy with a tax cut, he said the most important help would be to “finally address the most important person in the economy—the consumer.”

The anger of wannabe consumers who no longer feel they have the wherewithal to feed that most important of American passions is what is fueling the widespread rage against elected officials. The Democrats, being the party in power, are the most popular target, but they are in deep denial when they blame their pending electoral plight on the demagoguery of their Republican opponents.

Of course the Republicans and their deep-pocket sponsors are being outrageous hypocrites when they blame others for the horrid consequences of their decades of lobbying for radical financial deregulation. Ever since the “Reagan Revolution,” their mantra has been “get government off the back of big business,” and once that was accomplished and Wall Street crumbled under the weight of its own greed, they supported George W. Bush in bailing out the knaves.

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But the fault is clearly bipartisan. It was Bill Clinton who signed off on the radical deregulation legislation, and it is Obama who continued Bush’s practice of bailing out the bankers while ignoring the anguish their toxic mortgage packages caused the rest of us. That is why the Fed has gifted the banks with interest-free money to finance their new acquisitions while making them whole again by purchasing more than $2 trillion in toxic mortgage-backed securities and other dubious assets. Not surprisingly, the bankers pocketed that enormous gift from the taxpayers but did precious little in return by way of lending and investment that would bring down unemployment.

Which brings us to the current disastrous moment. The president who inherited a deep recession that began 13 months before he took office is now viewed as a big “socialist” spender because he followed in Bush’s footsteps, blackmailed by the notion that the entire system would go kaput if the bankers were not accommodated. The amount of money now available for him to spend without freaking everyone out about an increase in the debt is paltry. The commitment of $50 billion to a national infrastructure program to be phased in over the next decade would prove to be too little too late. It is chump change compared with the $350 billion in loans and guarantees to one bank alone, Citigroup, which still cannot stand steadily on its own feet.

There is only one course left for Obama, and it is to do now what he should have done at the start of his term: abandon the hope that banks will voluntarily aid desperate homeowners and instead push for new government regulations and changes in the bankruptcy law to force the banks to make deals to keep people in their homes. There is precious little else to talk about, for if the housing market—the bedrock of not only the American dream but, more important, the financial security of a nation of consumers—is not restored, we are in for one long, dreary period of economic stagnation at best, or a severe downturn and a society in dangerous turmoil.

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29 Responses

  1. David

    Not sure what you disagree with me on. Agree much was criminal – just disagree that “deregulation” had nothing to do with it. Deregulation, under the circumstances applicable here, promoted rampant fraud – which, became out of control for authorities. Still out of control due to continued fraud and abuse. Does not mean I do not think that the authorities should not do their job – they should – believe in some instances they now are – but, we have a long way to go.

  2. Hi ANONYMOUS,

    I agree – the frauds & other illegal acts committed are vast. Yet, I look at it this way – we went to the “dealership” to purchase a new Range Rover. The dealership sold Fords, Rovers, Chevy’s, and 5-6 other brands. We picked out the Range Rover – drove it home – started making the payments – deal done. I pop the hood and see a plate – DODGE RAM…? Hmm, I look at the back and the emblem says Dodge… In fact, everywhere I look – the damn thing says Dodge… I call the dealership – they tell me to bring it in and they’ll have a look. I get the vehicle back and all the emblems were replaced and now say Range Rover…

    The Range Rover was about 110k – but the Dodge was only 50-60k fully loaded…? My paperwork says I bought a Range Rover and I paid 110k… When I call the dealership’s customer service department they tell me – hey, it has 4-doors – 4-weels – steering wheel – – turn the key it starts – it’s a truck – the emblems on it say Range Rover and the paperwork shows the same – so, the service manager smirkly asks, why am I complaining? We simply wanted to buy a new Range Rover – THEY DECIDED to rip us off.

    Do I continue paying the outrageous OVER-CHARGE for something valued significantly less? The judge says – hey, what’s the big deal – it’s brand new – they both do about the same things and he can’t tell the difference from his mini-me thrown – and dismisses the pictures as buyer’s remorse… Make the payments or they’ll take the truck and make continue paying anyway…? Hmm,

    Do I continue paying 110k for a 50-60k truck…? Not much more than 100yrs ago, someone would be HUNG for doing much less…

    As for indicting “all” of the participants – what I know is this – if I defrauded the Fed – State – SEC – FDIC – IRS – OCC – and countless others – I’d be in jail. If there are too many to indict – then they will reap the consequences. How about we start doing some “Rocket-Docket” indictments instead of foreclosures? Surely, you are not suggesting that foreclosing on 10-20 million families is somehow easier than prosecuting 20-30 thousand criminals? Have we really gone that low – to dismiss raw criminal acts that have destroyed countless families – marriages – relapses back into drugs & alcoholism – countless murder suicides even by elderly folks, the loss of millions of jobs and has bankrupted our country… We fought the war of Independence and Civil war for the same reason. We are not their slaves – gov or no gov – laws or no laws – my inalienable RIGHTS were not granted by these pukes – maybe they need a reminder?

    It isn’t about too many to indict. The reality is this – the lender we used didn’t simply defraud my wife & I. The builder that embezzled over 100k from us didn’t only steal from us. The appraiser giving the lender the fraudulent appraisal for a house that was nowhere-near completed and included a 100k kitchen that doesn’t exist. These liars/criminals committed fraud on other families. The County Code Official that supplied the Fraudulent U&O Permit to the Lender – then received a nice little 247k loan from that same lender signed off on other inspections and supplied other fraudulent U&O Permits before. These people are criminal-virgins. The raped 100s -&- even 1000s of families in the process so the numbers are not that large.

    If they arrested and prosecuted 20-30 thousand, is that too many…? NOT to me it isn’t – They can sit in jail and wait for their trial date – no bail. After what they’ve done to our families – that’s the least of what they need to worry about.

    I’d be willing to put it at 500 or 1000 to borrowers affected per 1 – manipulating, lying, corrupt, broker, lender, etc. I might be wrong – but what’s the difference – if they broke the law, they should be prosecuted. The very notion that they’ve committed such a heinous act “knowing” the consequences to these families is unthinkable. Those at the top levels should be executed – IMHO. The Bernie Madoff crowd should stood before a firing squad and SHOT! The CEO’s of CW – BofA – Citi – Chase – Wells – Lehmann – etc… ALL of them should be arrested – including their Wall Street associates…

    If this country allows this to continue without very heavy consequences, then we deserve every terrorist bomb al-Qaeda can possibly deliver. If we do NOT demand justice, then we are as guilty as them. This not merely wrong – it is Anti-American. Those involved should be MARKED as terrorists and they and their families should be treated as such.

    I normally agree with your comments but I have to draw the line on this one. Folks know where they got their loans – those criminals did the crime – they can do the time.

    The scar from this bs on our families is WAY TOO deep to simply let them slide. I might be wrong – but IMHO – if the FBI and Courts do not start prosecuting these bastards, then the PEOPLE WILL. This is not merely un-American it is Anti-American. There are times when a very serious ass-whipping is necessary – THIS IS ONE OF THOSE TIMES. I’ll gladly go about the legal route but I expect that legal route to do their job. If not, I will and I believe eventually the PEOPLE WILL.

    Keep the Powder Dry…

  3. Hi David:

    The fraud was so massive that we could never indict all the participants.

    But, Financial Reform was initiated in order to correct a system that allowed massive fraud by loose regulations and control. The purpose is to now control some of the financial areas that escaped regulation (such as derivatives). Problem is that Financial Reform has been watered down – and you are right about this – by the politicians whose campaign donations are received from the financial institutions who support the politician and lobby for – “loose” regulation.

  4. Hi ANONYMOUS,

    Bro – the guilty are EASILY seen. Their signatures are on the LOAN docs – assignments – and ESPECIALLY the agreements between the warehousers and lenders – brokers – all the way up the ladder through to Wall Street.

    It’s as pathetic as passing more gun regulation. There are plenty of laws – regulations – etc. The lack is not in regulation. They’ve determined it to THEIR best interest NOT to prosecute. Laws are useless when deliberately ignored.

    Banking 101 = it is illegal to lend more than a borrower is able to repay. That doesn’t take regulation to figure out. Here’s the irony of the “subprime” hypocrisy…

    Borrowers could barely qualify at the teaser rates. While the borrower was paying the estimated (minimum) payment which was all they could afford – the lender was tagging on the “unpaid” amounts to the principle. Once the loan accrued to 115% of the appraised amount – it IMPLODED.

    Do you get the picture? A borrower couldn’t afford that 200k house but were told they could by artificial insemination by the lender. The lender controlled the entire ordeal before that borrower ever walked in their doors.

    A 130k house gets inflated to 200k after 4-5 yrs of so-called housing boom – economic prosperity… this was originally created to help their credit-card buddies so folks could roll their credit card debt into the mortgage – because they could always sell the house and break-even, right?

    The bummer was those folks couldn’t afford that 200k nut unless it was at some fictional teaser rate. Thorough some subprime magic – suddenly their 200k mortgage was only 675 bucks per month. Well, hell, they were paying rent higher than that so – why not – roll the dice – go for the gusto…

    While those borrowers paid 675-bucks per month for the next 3yrs or so – the SERVICER was diligently tracking and TAGGING on a little fee PLUS that NON-PAYMENT amount which in this case would slightly over 1000 bucks PER MONTH. So, after the loan RESET to the scheduled amount – they had accrued another 36k – so NOW they were paying the full interest rate on 236k and their mortgage jumps from a great 675- to approx 1,850 per month.

    What does that do – well – that puts the lender in PRIMO position one. They get the house back – cash-in the insurances – hock the house – but they now have a HIGH RISK customer for the next 5-10 yrs (or longer) and they will continually RAPE that borrower OVER & OVER & OVER because they’ve been marked to be a HIGH RISK… gives new meaning to discrimination… Law – that equates a crimes against humanity – IMHO…

    As I mentioned a while back – everyone knew there were credit addictions – but to put the damn drug-pusher in the rehab center and LET THEM CONTINUE PUSHING their drugs – that’s despicable. So, WHO was the guilty one – the freaking loan agent – broker – lender – all the way to the top. Most are still working for the same thieving mortgage lenders – shuffled a few chairs but they are still there.

    They know who the guilty are. If they prosecute – the dominos will begin falling until it finally starts tumbling their direction… Until people are willing to exact a consequence regardless – they do nothing but make a dog-&-pony show by having a few arrests sporadically to keep the appearance of justice stumbling forward.

  5. De-Regulation is hardly the problem – enforcing LAWS to crush the corruption within our politicians who then APPOINT their buddies to certain positions would have prevented most of this mess. Blame Reagan, Bush, Clinton, or the Gandhi doesn’t matter. None of that matters anymore. The question now is what WE are willing to do about it. How much will we continue to take – how far can they push – how much are we going to allow them to steal & pillage before WE THE PEOPLE start exacting consequence? Until we are willing to STAND UP – get used to the shackles because they are actively re-writing the laws to accommodate the law-breaking lenders. If the Glove doesn’t fit – they must acquit legal logic works for you – well, bend-over because they’ve not finished yet. It worked for OJ and apparently is working fine for the lenders too.

    Holding accountable violators would have sufficed to curtail this freaking mess. Bummer-dude – they didn’t do that – probably because once they starting playing TAG by prosecuting a few – well, the dominos will start falling. They won’t risk that because they don’t have to. They know how to please the crowds and keep the malcontents labeled as rebels to quash any WACO or Ruby Ridge rebellion.

    Passing more laws – creating more regulation is kind-of what THEY expect. Whatever it takes to appease the whiners so they think something is being done about it. NEWS FLASH – they don’t care – they’ve already made their millions and put them safely out of our reach. Passing more regulation is akin to telling Iran they shouldn’t build nukes – it’s akin to telling HAMAS to quit firing rockets at Israel… These are terrorists – economic terrorists – suit wearing terrorists – but they are TERRORISTS destroying this country by infecting it with an incurable disease that is rotting away the

    If they prosecuted 10-15 of the top CEO’s of these lying lenders, but the same amount of folks were foreclosed and lost everything they owned, would that somehow suffice for justice…?

    When the Fed passes legislation closing the doors to the Fed Reserve and NOW the SEC – what’s that tell-ya folks? So, much for TRANSPARENCY – we’ve been put a NEED to KNOW basis…and we obviously do NOT need to know – according to THEM…

    They have deemed it necessary to enslave YOU and YOUR KIDS until THEY feel their retirement plans are replenished… or maybe they’ve figured out we’re dumber than they thought and we’re going along with it so why change…

    They’ve tapped into THE LARGEST CASH COW ever known to man, why stop now… after-all aren’t they entitled to their share…?

    Just my 2-pence – keep the powder dry…

  6. neidermeyer

    Sure – there is a lot of crime – just have to know WHO is committing the crime!!! That is what is being concealed by deregulation. We do not know who is committing crimes. We know Wall Street originated much of it – but then they sold it off to some unregulated, undisclosed, distressed debt buyer.

    So, how do you go after an entity that you do not know – because deregulation allows them to be silent??

    That is the major problem.

  7. Anonymous,

    So you’re saying there aren’t enough laws and regulations? Isn’t buying a AAA rating on a CCC- portfolio a crime? Isn’t NOT RECORDING documents that legally MUST BE recorded at the county a crime? Isn’t charging your “real money lender” $400k for a loan that you bought for $250k a crime if you report to them you paid $400k for it? And to facilitate the crime you have created a structure to the payment stream so the fraud would be hidden… Isn’t that a crime also? Isn’t creating a system of straw man lenders a crime?

    There are plenty of enforceable crimes here … The problem is that no amount of regulation does a damn thing if the regulators and the regulated are one and the same… Bernie Madoff was outed with good solid evidence 10 years before his arrest. The SEC and FBI investigated with blinders on because Madoff had friends.. And what about all this naked short selling ,, ANYONE can follow a documented paper trail but nothing ever happens… GS OPENLY frontruns their customers and anyone else using their order entry system ,, THAT’S ILLEGAL!

    I originally was thinking of regulations that every one of us breaks every day with huge federal fines and such… Just look under your kitchen sink read the labels, look up the statutes ,, you could conceivably go to jail for using that can of bug spray the wrong way or by throwing out an empty can of oven cleaner or a busted CFL bulb, you could definately be fined more than a years salary… The tax code is 6 million lines or more ,, NOBODY knows everything that’s in there … You yourself are complaining about past financial deregulation ,, DO YOU personally know whats in the recently passed so called “financial reform bill” … NO YOU DON’T because there are hundreds of new “administrators” and “councils” and “committees” created , many hundreds of rules with the force of law will come out of every one of them…

    The problem isn’t that there aren’t enough laws , the problem is that the meanings of them are lost through non-enforcement…

  8. Peter Boyd,

    Please send the links to: mrsdiamond@msn.com … Thank you!

  9. peter boyd:

    saw your post, please send me the links at gwencaranchini@sbcglobal.net

  10. I used to practice law for some 30 years and now, since my husband died, do real estate. My mom did real estate for 50 years in Westchester County, New York. I have a pretty good prospective. I am also suing BOA/BAC and a bunch of other characters, including MERS on my note. But this is about real estate. I have held at least one open house every weekend since January 1 this year. I have sold nothing. Last year my first year in real estate, I sold about $1m all to first time homebuyers. This year, the market is totally dead. In K.C. the middle of the market is 200-600. We have lots of empty nesters come through our houses, but they can’t sell their houses to downsize or move closer in from the far out suburbs. A stimulus would be helpful in that price range as the first time home buyers have now bought. Real estate is down 1/3 in prices over the last two years. The number of real estate agents are also down one third in the last three yaers. Finally, about 1/3 of our office has not sold anything. I also run across a fair no of people, especially in real estate, who are trying to refinance or do loan mods. Every one of them have a horror story of stonewalling, ridiculous reasons for turning them down and flat out months if not years that they have been trying to accomplish this. Short sales are a nightmare and reos not far behind. One out of three sales are not consummated because of lending issues. And our agency, who I will not name, is “up” 29 percent in our market–we are the highest ranked agency in KC market! So–what should we do? Stimulus is needed in the middle of the market. People need to get real as to what their houses are worth– about 25 percent less than they were two years ago–price is the only thing that drives sales–and these loan mods–they are a total and complete joke and the reason I sued. Get this for a reason for initially denying my loan–I refused their financial assistance! This when I never heard from them until they denied me! Yes we need help–but understand the banks are not going to help unless MANDATED TO DO SO AND THEY ARE LYING THRU THEIR TEETH. In my opinion they are denying these mods so they can foreclose and get the asset off their books because they already have gotten paid on the note by AIG, FANNIE, FREDDIE, or TARP or more than one. Wake up!

  11. Karen Pooley –

    You are a brave young lady – there should be many more like you.

    neidermeyer

    Sounds like you may belong to the Tea Party. Deregulation ceases to have any economic benefit when it is used to abuse the American public. And, that is what happened when financial services were deregulated – a mortgage monster was created. MERS is just a place to hide the fraud – it is the entities that that take advantage of the system that are to blame. Those entities do not have to report to anyone – how can you regulate when no one controls you? Hedge funds and distressed debt buyers are not regulated by any government agency. Congress wanted it that way. The intent was to make the US internationally competitive in financial services – but it backfired. As Mr. Alan Greenspan has said – “you cannot regulate greed.” Well, Mr. Greenspan – when deregulation causes a near collapse of the financial system, and continues to destroy middle-class America, it has lost any purpose.

    Deregulation can be effective when the benefit is apparent. This may be the case when there is a monopoly – one seller faces many buyers – such as when airlines were deregulated decades ago. What we have with financial services and mortgages is/was a “monopsony” – where one buyer “Wall Street” faces many sellers – homeowners – who, .unknowingly “sold” their home to Wall Street – when they took out their mortgage loan. There is no economic benefit in this scenario – deregulation failed to achieve any benefit.

    Once Congress gives something away – it is very hard to get it back. Financial reform is in a weak format. By the way, what happened with the Consumer Protection Agency – and Elizabeth Warren – why hasn’t Obama nominated anyone yet??

  12. ANONYMOUS,

    I’m not waking it back , deregulation was a good thing , there are far too many laws and regulations governing every move we make in this country.. The problem we have is because of a lack of integrity and ethics on the banker side and a lack of enforcement on the regulatory side.. MERS for example should have been challenged in it’s first month of existance, not 15 years down the road. The gov’t regulators are lazy and inept.

  13. karen
    i was also surprised & angered by that [remove me nonsense ] wtf!!

    there will be nor can there be any trusting our gov , there cant be any salvaging this gov!
    the cancer of corruption has ravaged the self serving behemoth of U.S. GOV. The trap was set long ago for the middle- class us [ you & I ] we were sold out to corporate profit to the banking cabal & the oil giants , we have been readied for slaughter , This gov we have can only be removed like a tick, burn the body to dislodge the head.

    btw…everyone in our gov KNEW that HAMP was to postpone foreclosure for the benefit of the banks., our part of the hamp deal was to pay servicers whatever $$ we had before they foreclosed.

    http://mandelman.ml-implode.com/2010/08/america-lost-treasury’s-meetings-with-bloggers-tells-a-story-that-i-didn’t-want-to-hear/

  14. ANONYMOUS,
    I HAVE been trying to organize. I have written down all the emails off this website from people who have listed them. And do you know what response I’ve gotten???

    “Unwanted emails”
    “Take me off this list”
    “I would like a response to request to take me off your email campaign”

    It’s no wonder that people are losing their goddamn home, they are too selfish to step out of their comfort zones and take a goddamn sign to their own fucking auctions.

  15. Tea-partiers – are outdoing us – they have been organizing – we are doing – NOTHING.

    See – http://www.aolnews.com/politics/article/tea-party-activists-hold-rallies-in-cities-across-us/19630355?icid=main|main|dl1|sec1_lnk1|170115

    Time to step out big and loud – time to stand together.

    Neidermeyer – Deregulation was a terrible thing – it is because of deregulation that we do not know who owns our mortgage loan – and who wants/owns our home/property.

    Finally – people ARE realizing that they were targeted – that their home was targeted – that any wealth they had was targeted – that they were the target of massive fraud.

    But, the people are still fighting only for their own home – they do not yet get it that they will NOT win this battle without an all out joint campaign against the perpetrators and Congressional parties who have remained silent. (although some large law firms are making bundles on class actions – for which the people get – NOTHING).

    Time to wake up. Stop letting the tea-partiers have the media attention – stop letting class action attorneys steal your thunder. We are better than that – we know more – we know what is really happening.

    David C Breidenbach, – the big banks saw big profit in – the American home. The big banks utilized every means and method to siphon every penny they could from – the one asset middle-class America had – their home. Thus, the American economy shifted from middle-class income/wealth to – the big bank profit (and coat-tail debt buyer) eaters (much like a horror movie).

    This is far more serious than anyone here is even imagining – the US is finished – not in our lifetime will we see a recovery. And, while we fight, rightfully, to save our own home, we are not fighting to restore the US to it’s former position of prestige and power – to before the great mortgage fraud was commenced. While Neil has put forth numerous excellent articles as to what is really going on – no one is stepping up to organize. Neil has done his share – time for the people here to step forward. It is not just about what is in it for ourselves – it is about exposing the massive fraud to the public and Congress – that still just “DOES NOT KNOW WHAT TO DO”. We cannot just let Neil be the only one to fight our battles –

    It takes courage and strength to lead – to organize – to fight for what is right – even if you lose your own home – even if you lose in court. I am just not seeing this happen.

    Again, the tea-partiers – are way ahead of us.

  16. The article makes a good point about the existing levels of stress for a select group–those already in a financial bind. but if one really wants to get a sense of the economic fear gripping American workers. there is more to be considered –also affected bu the interplay of mortgage deficiencies and bankruptcy.

    Every Monday many millions of American workers go to work wondering if Friday will be the last day of work at their employer. These people are making their payments-but live in terror. Younder families with one or two kids—both parents laboring to keep the Dream. But these families are subject to twice the risk of a single. Two incomes at risk! And EVERYBODY knows that a job lost that earns $35000—-will be replaced by a job that earns $25000—it doesnt matter what the top number is–the new number will be half to 2/3-unless you are old–then you are really out of luck. No job!

    So the young family with two workers also knows that the only chance of getting that 2/3 income relacement is to move to another region. Anybody in the rust belt knows this well. But how do you pick up and move if you are underwater. Take any savings and pay off the deficiency and hope that the new job doesnt become a last in first out layoff? What do you do? Bankruptcy? Not since Congress “fixed it” by virtually eliminating Chapter 7 for employed persons. What is left? Its straight out of Grapes of Wrath. Why dis the DEMS not deal with this urgently pressing problem for working middle class? Why did the REPS remove the bankruptcy escape that people depended upon when they made business decisions? How can they change the rules that people used as a background for generations. Even a young single is now “locked into” the current job -he she cant advance if it requires a relocation-unless the employer has a very generous buyout plan. What is left-what can a young family do? What can an older worker do? The freedom of movement within the US is destroyed under the current structure—-and why? Because the BIG BANKS saw fit to pump the prices of homes to unsustainable levels while simultaneously betting against the result. These fake trusts–so illussory that the banks didn’t even bother to make the SEC and UCC filings that they represented in the SEC filings. And SEC that sat by without even checking to see oif the necessaries were filed. There is plenty of blame to go around–but the most culpable are not the people who labor day in and day out just to make it to work-to pay the payments and buy food for their kids–the utilities—the insurance–the doctor bills. Where is the Justice–that a Court is supposed to look to for Equity.

  17. Suddenly their house is taken over Another Wells Fargo mistake

    http://www.latimes.com/business/la-fi-lazarus-20100910,0,1753169.column

  18. CITY OF BELL CASE STUDY + NEIL GARFIELD WILL DO THE JOB.

    SHAME ON THE ATTORNEYS OF AMERICA THAT ARE NOT DOING THE ETHICAL AND MORAL JOB. THEY SIDE WITH THE BANK MONEY. IF MORE MAINSTREAM ATTORNEYS WOULD LISTEN TO NEIL GARFIELD THE BANKS WOULD NOT HAVE A CHANCE.

    THE ATTORNEYS NOT SO MUCH THE JUDGES ARE ALSO TO BLAME.

    BRYAN CAVE, LLC WORKS FOR THE BANKS BUT THEY ALSO BOAST PRO-BONO WORK AND THEY HAVE ALL THESE ETHICS AWARDS MAYBE IT IS TIME TO ASK FOR THEIR HELP. SEE IF THEY WANT TO BE ON THE CORRECT SIDE OF HISTORY.

    MAYBE WE SHOULD GET MORE GUYS OR GALS WHO ARE SEMI RETIRED TO HELP US OUT. MAYBE IF THE JUDGES SEE THAT PEOPLE ARE DOING IT PRO-BONO THEY WOULD PAY MORE ATTENTION.

  19. NO MORE “new government regulations and changes in the bankruptcy laws to force the banks to make deals to keep people in their homes.” We already have laws enough. We don’t need “deals,” we need our homes back! FREE AND CLEAR. Force banks AND the courts to uphold the laws we have and not ignore them for their own interests. NO NOTE, NO EVIDENCE, NO CASE. We have suffered enough! Stealing our homes is ALREADY A CRIME…The people are injured. Where’s the punishment? Are we going to circumvent punishment in favor of “deals?” Too many people know how debt is created and homeowners, especially, do NOT owe the banks a dime! Their principle balances were paid the day they signed the closing documents. It is time for homeowners to collect and get reimbursement for the fraud perpetrated upon them by big businesses (banks) and government. Our homes are already paid for. Most of our notes have been converted into bonds or securities. That’s illegal. TARP was never designed to help homeowners in the first place. Where is the incentive for banks to help out homeowners when they are profiting from the sales of our homes? There ARE NO mortgages. Banks are phantom lenders for the government who are using their “bailout funds” to buy back OUR homes and put Americans on the streets! Trustees are glorified government claims adjusters and liquidators. Thieves! Give us back our homes! Bail out homeowners NOT banks NOW. That WILL STIMULATE the economy.

  20. to continue on the posted theme of “STUPID”

    1- the perfect foreclosure ‘staring Chase

    http://mandelman.ml-implode.com/2010/09/inside-chase-and-the-perfect-foreclosure/

    2- Seems everyone in the Gov knew & was silent RE; hamp –
    It was “ONLY” for the benefit of the banks.

    http://mandelman.ml-implode.com/2010/08/america-lost-treasury’s-meetings-with-bloggers-tells-a-story-that-i-didn’t-want-to-hear/

  21. “The Special TARP Underwriting Program to Impede Development is known by the acronym, STUPID.
    “So, now that you understand what STUPID is, let’s talk about what STUPID does,” Geithner told the group”

    http://mandelman.ml-implode.com/2010/09/treasury-designs-new-federal-program-to-help-stimulate-economy/

  22. There is a strong lawsuit initiated in Las Vegas by Fidel Pajarillo that had progressed surprisingly toward disclosures of the hidden papertrails of banks, investment companies and shells that mask the hand behind the mortgage ownerships.
    An attorney in Florida has also been moving forward toward disclosures. I will send links if requested.

  23. “Blah blah blah blah blah blah,”says Phyllis Caldwell, Treasury’s chief of the homeownership preservation office.

    Phyllis really needs to go now. This whole group at the treasury are in way over their heads, especially Tim. Geithner should have a scarlet F tattooed on his forehead. He’s been a failure at everything hes tried. To name this feable attempt on their part “homeownership preservation” is a shaft to all of us who have dealt with the banker’s East Indian service departments.

    And now we’ll have the GOP back in the mix soon. One of the talking heads said just this morning, her favorite motto for the republicans is, “Government can’t solve your problems! Elect us, and we’ll prove it!”

    We are so screwed!

  24. K here goes. You work half your life building your nest egg a home your place to be creative comfortable a place to bring your grandchildren butthe home ends up owning you cause one day it’s all a big trick THE trick of tricks and so it becomes a prison because it costs do much to keep I’m sick of hearing stuff like ” well we made the payments less and enabled the “homeowner” to stay intheir home ( prison) and stuff like ” well you got to stay in ” your home” for 2 years without making a payment” well big ffin woo. Ofcourse I’m still fighting I must but tak the goddam home burn it to the ground reclaim the land what can I do more than I have to get justice I can simply keep trying and the sun will still rise . Just my take after suffering this fraud upon fraud upon fraud it’s so disgusting.

  25. NIEDERMEYER!!!!
    I am appauled at your first sentence! How can you say de-regulation is fundamentally a good thing???? You are HERE on this website blogging BECAUSE of de-regulation. The ignorance of that statement is just appauling.

    And yes, REAGAN fucked up, Bush l fucked up, Clinton fucked up and the final nail….was Bush ll. Look at that sentence and digest it.

  26. BANK OF AMERICA CLASS ACTION ISSUES- Bank of America does it again;

    Enlarge By Steve G. Schneider for USA TODAY

    Anthony and April Soper of Lake Stevens, Wash., went on a trial plan that cut their monthly payment. But they didn’t get a permanent modification, and they say they don’t know why. Now, they’re suing Bank of America, their mortgage servicer. BofA is seeking a dismissal of the case.

    RISE, FALL AND REBOUND? : Charts show the housing industry’s boom and bust this decade and forecast the possible course of its recovery the next three years.

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    By Stephanie Armour, USA TODAY
    Anthony and April Soper’s financial troubles were only starting last October when they applied for a mortgage adjustment through the Obama administration’s Home Affordable Modification Program.
    Bank of America, their mortgage servicer, put them on a HAMP trial payment plan in December that cut their monthly payment by more than half from almost $4,000 to about $1,826.

    They say they made their reduced monthly payments early and did everything else that was asked of them. But they didn’t get a permanent modification, and they say they don’t know why.

    Instead, according to a lawsuit they’ve brought against Bank of America, they are now more than $8,000 behind on a mortgage that had been current 12 months ago. Each of their credit scores has dropped by nearly 100 points. And, they allege, Bank of America has threatened them with foreclosure.

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    NEED HELP? Information on avoiding foreclosure

    “We jumped through all their hoops, and they did nothing but cause us heartache,” says April, 41.

    Whether the Lake Stevens, Wash., couple keep their home may hinge on the outcome of a legal strategy that aims to join struggling homeowners with similar experiences in the HAMP program in a class-action lawsuit against the nation’s largest bank. On Sept. 30 in Nashville, a federal court hearing is scheduled to consider consolidating the Sopers’ case with more than a dozen others against Bank of America.

    Similar lawsuits, also seeking class-action status, are pending against other major servicers such as JPMorgan Chase and Wells Fargo. Taken together, the cases threaten to amplify a growing public frustration with mortgage servicers’ treatment of HAMP borrowers and HAMP’s modest results. Permanent modifications, which lower mortgage payments to 31% of a borrower’s pretax monthly income for five years, have been given to only about a third of the 1.3 million borrowers in trial plans since the program’s launch in April 2009.

    Most of the lawsuits allege that the three- or four-month trial payment plans are contracts, and that Bank of America and other servicers broke them by not giving permanent modifications to homeowners who made their trial payments on time and provided the necessary documentation.

    Servicers have asked courts to dismiss some of the cases, saying the trial plans are not contracts. Bank of America, which says it plans to seek dismissal of the Soper case, argues in a court filing in a similar case that it must consider borrowers for a HAMP modification, but that it has discretion in granting permanent modifications.

    The bank also argues that homeowners have no case because courts have dismissed earlier HAMP-related lawsuits against mortgage servicers. Those cases claimed that in denying some homeowners modifications, the servicers had breached the contracts they made with the Treasury Department when they agreed to participate in HAMP. Courts said homeowners could not sue on those grounds because they weren’t parties to the contracts between the government and the servicers.

    Lawyers for homeowners say they are now making a different legal argument: that Bank of America and others broke contracts made directly with homeowners.

    “Borrowers have said we should be able to enforce the contract between Treasury and mortgage servicers, and many courts have rejected that. Our cases are the first filed that touch on a contract between servicers and borrowers,” says Kevin Costello, a lawyer with Roddy Klein & Ryan in Boston, which represents homeowners in cases against Bank of America, JPMorgan Chase and Wells Fargo.

    “This litigation is spreading all across the country. People have been relying on a promise all along, and then they get a denial. Then they find themselves in that much worse of a hole,” he says.

    Many homeowners could be affected: Nearly 620,000 trial modifications since spring 2009 have been canceled, according to an Aug. 20 Treasury report.

    Chronicles of delays

    The lawsuits allege servicers are purposely denying permanent modifications and keeping loans in default so lenders can profit from heftier late fees and other charges. Court filings provide detailed chronologies of borrowers who allege that over periods of months, they repeatedly sent banks requested documents that the banks said they didn’t receive, made inquiries that went unanswered, and received promises of help that were later contradicted or denied by other representatives.

    “Bank of America has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted” billions of dollars in government bailout funds in 2008, the Sopers’ complaint alleges.

    By failing to live up to its obligations, according to the court filing, “Bank of America has left thousands of borrowers in a state of limbo — often worse off than they were before they sought a modification from Bank of America.”

    The Sopers’ complaint alleges that Bank of America customer service representatives are instructed to mislead homeowners who call to inquire about loan modifications they’ve applied for. The complaint, citing information provided by unnamed former employees, says “representatives regularly inform homeowners that modification documents were not received on time or not received at all when, in fact, all documents have been received.”

    When homeowners are denied permanent modifications, even those who were current before going on reduced-payment trials are considered in default, and servicers tell them they must immediately pay the difference between their trial payments and their higher former payments to avoid foreclosure, according to the Sopers’ complaint and others.

    Borrowers’ mortgage debt in default rises further the longer they stay in trial plans.

    By making trial payments during and after the plan’s scheduled end, the Sopers’ complaint alleges, they “forgo other remedies that might be pursued to save their homes” such as restructuring their debt by filing for bankruptcy, or pursuing other ways to deal with their default, such as selling their homes.

    Foreclosure proceedings have started against some borrowers while they were on trial plans, violating a Treasury directive, according to the lawsuits. Homeowners’ credit scores have also been damaged when servicers cancel trial plans, then report the amounts in default to credit bureaus.

    Some court filings claim bank employees have demanded upfront fees to start consideration of a modification — in violation of HAMP rules — or told homeowners to stop paying mortgages in order to start a trial modification. The Sopers’ complaint alleges an unnamed homeowner was illegally asked to pay $1,400 upfront to Bank of America to be considered for a modification.

    In another case, Alex Lam of New York alleges he was told he could only be considered for a HAMP trial modification if he stopped paying his mortgage for several months, according to a lawsuit filed in U.S. District Court in Brooklyn against JPMorgan. He skipped two months of payments in 2009 and says he was denied a permanent modification. JPMorgan declined to comment.

    Homeowners’ lawyers say there is no effective way to appeal mortgage servicers’ decisions because Treasury has no ability to overturn a decision.

    Watchdogs’ criticisms

    Government watchdogs, too, have raised similar criticisms about the HAMP program, as well as about servicers’ performance and Treasury’s oversight.

    The Congressional Oversight Panel, which oversees the government fund that pays for HAMP, said in an April report it “is deeply concerned about the unacceptable quality of the denial and cancellation reasons, and strongly urges Treasury to take swift action.”

    A Government Accountability Office report in June found servicers were erroneously denying permanent modifications to some homeowners because servicers were inaccurately applying a formula used to determine if the value of modifying the mortgage was greater than the proceeds from foreclosing. The number of homeowners who had been wrongly denied could “range from a handful to thousands.”

    When errors have been found, Treasury says, it has made servicers go back and fix problems, and re-do their work as a check on their decision-making. It also says that 45% of those who started trials but were ineligible for permanent adjustments received an alternative modification through their servicer. Fewer than 2% have gone to foreclosure sale, according to Treasury.

    Some homeowners say they’ve already lost their homes to foreclosure because a permanent HAMP modification was denied to them.

    Jennifer Voltaire, 33, of Medford, Mass., alleges Wells Fargo approved her for a trial HAMP modification, which lowered her payments starting in December 2009, according to court filings in U.S. District Court in Massachusetts. Voltaire is a co-plaintiff in the case.

    But after making regular payments, Voltaire was told in May that she was being taken out of the HAMP program and was $40,000 in default, the lawsuit alleges. After she protested, Wells Fargo agreed to reconsider her for a HAMP modification, according to the complaint, but in July, the bank took possession of the home.

    “I was literally crying my eyes out,” Voltaire says. “I put everything I have into this house, into getting my kids out of the projects. That’s the part that really hurts. My kids could look at me like I failed.”

    Wells Fargo agreed not to sell her house pending further court action. Voltaire is still staying there and making her trial plan payments.

    In its motion to dismiss the lawsuit brought by Voltaire and others, Wells Fargo said the plaintiffs have not adequately shown that their trial modifications were contracts to enter into permanent modifications. It says homeowners benefited from being able to make reduced monthly payments while staying in their homes.

    Treasury Department officials say homeowners in HAMP trial plans are not promised permanent modifications.

    But the Soper lawsuit and others quote language from some trial plan agreements that states: “If I am in compliance with this trial period plan and my representations … continue to be true in all material respects, then the servicer will provide me with a Home Affordable Modification Agreement … that would amend and supplement the mortgage on the property, and the note secured by the mortgage.”

    “They get a letter from the bank that says, ‘If I comply, I’m entitled to a HAMP modification.’ That’s a contract. The bank has not performed under the contract,” says Steve Berman, a lawyer with Hagens Berman Sobol and Shapiro in Seattle, who represents the Sopers and other homeowners in HAMP cases.

    Evolving rules

    The Obama administration’s rapid launch of HAMP and its changing guidelines since then may have contributed to the program’s administrative confusion. When HAMP began in 2009, servicers enrolled borrowers in trial modifications without verifying income or financial hardship. That brought immediate financial relief to more people, but ineligible homeowners were not weeded out until they completed trial plans. In June, the government began requiring participating servicers to verify applicants’ income and financial hardship before starting trials. Treasury says that has improved the rate of conversions to permanent modifications.

    “The HAMP program was an unprecedented response to an enormous crisis in this country’s housing market. The administration needed to act quickly.” says Phyllis Caldwell, Treasury’s chief of the homeownership preservation office.

    Meanwhile, the number of homeowners claiming improper denials of HAMP modifications is climbing.

    One is Peter Salinas, 52, who struggled to pay his mortgage after the economy collapsed and his wife developed cancer. He appealed to his lender for help.

    Salinas says he felt elated last year when he received a HAMP trial modification slashing $500 off his monthly payments. But later, he was told he made too much money to qualify for permanently reduced payments, he says. Wells Fargo threatened foreclosure if he didn’t pay $9,000, the difference between his original mortgage and what he paid during the trial.

    His servicer, Wells Fargo, declined to comment on his situation. Salinas is working with Gulfcoast Legal Services, a not-for-profit civil legal aid office, that says it is preparing a lawsuit against the lender.

    “I was convinced I was doing everything right,” says Salinas, a reporter for an automotive trade publication who lives near Bradenton, Fla. “I wasn’t trying to walk away from this mortgage. It’s just infuriating.”

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  27. if i understand correctly I agree with neidermeyer 100%
    I would add for clarification Rid ourselves of the Big Banks by enforeing existing laws and by letting them fail.
    CO MINGLING OF FUNDS IS OUR BEST AND MOST DIRECT DEFENSE OR OFFENSE. IT IS THE COVER UP FOR THE PONZI SCHEME.

    If i wake up in 6 months from now and know that the big banksters are out of business this would be a good thing for America THEY HAVE NO MORALS NO ETHICS AND THEY HAVE CROSSED THE LINE. THEY ALSO ENDANGER THE NATIONAL SECURITY OF THE UNITED STATES. AND PROBABLY WITH THEIR FREE MONEY ALLEGEDLY CORRUPTED THE JUDICIAL AND POLITICAL SYSTEM OF THE UNITED STATES.

    THEY LIED FROM THE BEGINING BY CLAIMING TO BE “LENDERS” AND NOT “BROKERS”

    THIS IS A TYPICAL BROKER DRIVEN MARKET COLLAPSE. THEY LIED FOR A REASON. TO MAKE A WINDFALL PROFIT AND AN ALEGED PONZI SCHEME AT OUR EXPENSE (WITHOUT OUR SIGNATURES THIS COULD NOT HAPPEN AND WITHOUT US GOING AWAY THE PONZI SCHEME IS EXPOSED.

    I WOULD NEVER HAVE TAKEN MY REFINANCES IF I KNEW I WAS GOING TO A BROKER OR WORSE TO AN ALLEGED PONZI SCHEME (COMINGLING OF FUNDS).

  28. There have dozens of great articles and smart honest people who have recognized from the start that banks will not just do the right thing and act in good faith, as they homeowners to do. While all this is being sorted out who can help us? You can! Neils site and others make it very clear that education and some work on your own will be your only savior for now. I have put together and work with hundreds of other Wells Fargo and BOA victims to at least stave off the banks. Another great tool and recommended by Neil and other economist is principal reductions on underwater mortgages. Need someone to talk to and get some more info? Call Robert 860-599-5557

  29. Other than the swipes at Reagan (deregulation was and still is a good thing, assuming that enforcement of fundamental securities laws is maintained ,, it was the lack of enforcement that allowed the problems to erupt) he has it right… however the correct way to resolve the mortgage mess is through enforcement of the law… contract law as it has always been interpreted will do away with the “foreclosure crisis” , the “too big to fails” WILL fail and that would be a good thing,,, Fannie and Freddie , if they were on the gov’t balance sheets would increase our national debt from 90% GDP to 120% GDP… The madness must be stopped.. and new laws , throwing out existing contracts and such IS NOT the answer… it would not only be slower but it would allow the perps (GS,Morgan Stanley, WF, Deutsche etc. etc.) to escape unharmed.

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