BERNANKE: Don’t Rely on Foreclosures to Solve the Problem

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SEE FULL ARTICLE ON HUFFINGTON POST by Jillian Berman

More than four years into the housing crisis, and after millions of Americans have lost their homes, Federal Reserve Chairman Ben Bernanke is finally taking a stand.

Bernanke sent a Federal Reserve paper to the leaders of the House of Representatives’ Committee on Financial Services arguing that relying heavily on foreclosures to deal with mortgage borrowers that can’t meet their obligations is “costly and inefficient” for the housing market because they can lead to deteriorating homes and weigh on the property values in the surrounding community.

Instead, the paper encourages lenders to “aggressively” pursue loan modifications and for servicers to be given more incentives to seek alternatives to foreclosure.

Foreclosures “can result in ‘deadweight losses,’ or costs that do not benefit anyone, including the neglect and deterioration of properties that often sit vacant for months (or even years) and the associated negative effects on neighborhoods,” the paper said. “These deadweight losses compound the losses that households and creditors already bear and can result in further downward pressure on house prices.”

The Obama administration has already pursued policies aimed at encouraging lenders to modify loans, although to very limited success. The Home Affordable Modification Program, which Obama announced in February 2009, had helped fewer than 700,000 homeowners as of October, despite promises that the program would encourage banks to modify the loans of 3 to 4 million homeowners.

The paper mirrors findings from regional Fed banks indicating that foreclosures can be detrimental to more Americans than just those who are losing their homes. Properties that are occupied, but in foreclosure, drive down the surrounding property values twice as much as vacant properties, an October study from the Cleveland Federal Reserve found.

And with millions of foreclosed properties already in the pipeline, the foreclosure process is already taking longer than in recent memory — a situation that may only be exacerbated if lenders don’t take the Fed’s advice. The average foreclosure process now takes 674 days, almost triple the time necessary in 2007.

Another alternative to foreclosure proposed in the paper is to combine a deed-in-lieu of foreclosure — or a program where borrowers return the home to lenders without foreclosure proceedings — with a rent-back arrangement. Others have floated a similar plan, including left-leaning economist Dean Baker, that would allow defaulting borrowers to stay in their homes, but as tenants.

The Obama administration also considered a plan in Augustto boost falling home prices by turning thousands of government-owned foreclosure properties into rentals. If the program goes through, the spaces would likely have some takers; the U.S. apartment sector has expanded past recovery, indicating a boost in rental demand.

38 Responses

  1. @ Maher: DDUUUUUUUUUUUUUUUUUUDDDDEE!

    Banks 0, Dodger 3
    Your typing sure has come a long way! Couldn’t have said it better….

  2. Smoke and Mirrors. Why doesn’t he just admit to the fraud? Because he’s being paid 100’s of millions deposited in Offshore Trust, IBC’s, Offshore Bank Accounts and Private Interest Foundations which will never lead back to him, that’s why!!!!!

  3. I have read Neils opinions and views. He does have a handle on what is going on . His approach is to state things in plain english and that’s not a bad thing to do.

    Its not my approach — as techinical details will eventually be required in a court.

    None the less, you have to get there first.

    MSoliman

  4. @ Katheryn

    In an honest world, the TILA would fly. The language is clear and being disregarded by the judges….after all they were/are attorneys who helped draft the laws. Geez!

    I am very appreciative of all these bloggers trying to dig into the trusts, pools and transfers, etc…it is daunting, but I am trying to start with the simple premises first. It is just my opinion, but some of this stuff is complex and I affiliate it to the OJ trial, i.e. DNA…keep it simple and explain it, as 1,2,3,…in terms average folks understand, this includes judges…many of them are not in the banking business, trusts, securitization and they must be educated.

    I actually have 3 seperate complaints at this time and am looking at another. I have stayed away from the quiet title, as it is a District Court venue and I think the Fraudulent Conveyance and Cloud on Title is a more comprhensive approach and can encompass all of the TILA, RESPA, unjust enrichment, fraud, insurance fraud (I sold insurance, servicers/originators have no rights to a polcy without “insurable interest”, ownership of something)…the list is very long and dirty. I’ll share with all, when some of these rulings come down and am happy to allow very specific information, to those who are struggling with filings, as I had to learn the basics and am still, in fact learning the wranglings of the court and system. It is, as you say a full time job.

  5. Government Set to Sell Foreclosures in Bulk
    http://finance.yahoo.com/news/government-set-sell-foreclosures-bulk-150844587.html

  6. @Chris

    I have the the comp. damages and prayer for relief also. I too hit them with RESPA and TILA Reg. Z. I’m pro se so attorney’s fees can not be asked for and that’s a crock considering it is my full time job! lol

    No conflict of interest; I’ll have to look that up. I went for unjust enrichment. I’ve read other blog posts that say you can’t win on that but I’ve got to tell you I did a lot of research and tailored that portion of my complaint completely around supporting case law. RICO allegations would be be fitting, however, I tried to keep mine somewhat as simple as I could because I’m in way over my head. Like you, I threw in everything that I could really substantiate with Exhibits that they will find very difficult to get around. That is with any judge that is not pro bank and there to fairly hear the case on its merits.

    In my case, we were yanked around and lied to for over a year with regards to a mod. (what’s new) We got the same old run around with you don’t qualify because you are not behind…then we get behind and we don’t qualify because we are behind blah blah blah, our income is too low, same old game.
    However, we then get an advertisment from them about a special refi program and the loan officer called us and told us that we were basically approved. He knew this based on the mod application but he still took a new application which was inflated in regards to income and
    BoA should win the award for the ‘chase your tail’ game. I put in my complaint that we did not have any idea that once we signed our loan papers our signatures had been launched in to secruityville. I would bet the judge did not see the humor in that added with the magic of the disappearing and reappearing note that somehow morphed into two distictly different notes. Ahh, so many magical tricks BoA has up its sleeves. I also used the bifurcation of the note from the mortgage which therein rendered the security interest null and void. I’m in the BK court so they would then be no different from a regular creditor. But I have one other main prayer which if that charge is ruled my way would change the scheme of things. Rescission is also a biggie in my complaint and would take too long to detail the facts but that would also change the scheme of things as far as the BK goes. They are something else. I would bet what they are spending on defense litigation would pay off the federal deficiet. You are right “who can figure”.

  7. @ Katheryn

    My complaint has the award/relief in the section asking the court in my prayer for relief and compensatory damages, resulting from RESPA violations, which if they cannot prove ownership and rights they cannot put adverse information in my credit, TILA Regulation Z, from the time of discovery of deficiency…there are fines and attorneys fees, etc…and the sanctions of stop and desist with the sale of the property, even dismissal with prejudice.

    At the current junction we are starting with the conflict of interest, which we have in black and white. The plan is to move into the funds whereby, consideration was given when the loan was funded (ha,ha) lets see the transfer documents, look at the assignments (ha,ha, again…), broken chain of assignments (missing at the deed office), then the lovely ccollections folks i.e. SPS Servicing and Ocwen…the PSA agreements, which have 2 types; the ones filed with the SEC and the one’s with the master servicer contract, which I am asking for in discovery and have not yet been able to get my hands on, go figure?
    In this I am also asking for the power of attorney/assignees 1099’s or W’2’s to see where they hang their hat and where they actually work. One more piece the notary, the lowest part of the food chain. I have acquired the original application of the said notary and her signature does not match the affidavit of assignment, from the application she made for her notary license.

    The other thing: I also have a breach of contract suit with BOA as a servicer; the crux of that is authority. BOA servicing, then BOA, NA 2 different entities. Very slick, I might add. They keep you chasing your tail. In that we are asking for damages, legal fees, and fines. We’ll see. They have said they want to settle, but that was 5 months ago…silence to date!

    And the wheel goes round and round! I am hitting them with everything I can think of. Just hoping one thing will stick to the wall.

  8. Bernanke’s job is to keep the debt slaves paying interest on credit called out of thin air. He works for the member banks not us and answers ultimately to the chief bloodsuckers of the Rothchild clan.

    His comment indicates that banker interest income is threatened.

  9. http://theuha.org/staging/toxic-directory/view_search-831.html

    go to this site and you can look up all the dead and missing trusts. tells you the cap value, too. (mine is $0) WFHET 05-2

  10. @johngault
    http://market-ticker.org/akcs-www?post=200232
    Scribd included in the link

  11. FBI refuses to do anything. The US Attorney in Milwaukee has been made aware of the fraud, as well as the US Trustee. I make it a point to blast them about every two weeks.
    Put a nasty post on the Chicago Tribune website on some “road to recovery” story and the whole comments section got scrubbed. Then the article got scrubbed.
    I may have to go underground now. ya think?

  12. @ Chris

    I’m still trying to figure out what sanctions I could ask for. My peon size brain is still processing everything I have researched today. They don’t award attorney’s fees to pro se litigants according to my understanding. The BK court, for the most part, follows the Federal Rules of Civ. P. It would take far too long to explain my case in detail and what avenue I’m travelling down, which tends to zig zag a bit, but something along the lines of a dismissal of their defense. (If that is what it is called for a defense motion). Their is a method of reasoning to my madness but after studing the Fed. Rules encompassing discovery and having to file a motion to compel, I think that how BoA has behaved since ignoring my QW Requests since last January, filing blanket affirmative defenses and answer to my complaint and now after three extensions and getting a protective order for confidential information, refuse to provide any documents at all as well as objecting with a blanket objection to each an every interrogatory. Award is just my way of referring to a win on some of the charges. I’m still working through this but it seems to me this would definately show a blatant disregard for the Rules of P. with regards to the court and the discovery process.

  13. If you can afford a lawyer – get one. Even if you prepare the data and do the research you want a professional submitting

  14. Bernanke is not on our side guys. That bank he runs exist merely to move leveraged assets among Reserve System Banks. Don’t believe me? Ask him why he removed M3 and why derivatives are not accounted as credit / supply.

    This guy is getting far more credit than he is worth. Nothing he has done has been to the benefit of the American people. We as a debtor nation can no longer unwind from this expansion and that is why the have been flooding the globe with dollars. At some point,and it will happen, safer havens will arise, and regardless of the amount of liquidity introduced Benjamin will not be able to expand to head off the capacity on sell weight.

  15. @ Bill A….

    Katheryn is right. Chapter 13 will buy you some time and a competent attorney can get what they call a “slam down”; which, with market analysis can get you a reduction of your principle. The bankruptcy trustees have been doing battle with the banks too and very successfully I might add.

    I am in the troughs of a foreclosure hearing in District Court, January 17, 2012, with a Federal Case on the docket for the same property. Filed a restraining order, Lis Pendens (filed in deed office to let potential buyers know a suit is pending and title is yet to be decided) and injunction to stop the bank from getting permission to sell the property.

    Believe it or not these things can be very simple to find the template for. Each state is different, but similar. There is a fee to file the complaint, but it buys you time too. If those don’t work, appealing it can get you 9 months or more, again based on where you are. One more thing: the complaint does not have to be overly sophisticated, you can write it on a napkin, in fact! It just needs to worded properly.

  16. @ Katheryn

    It depends on the court, District v Federal and what type of case you have. If I understand procedurally…sanctions and awards are 2 different things and awards for what?

  17. Still fighting for my home since 2007 got this far mostly on my own attorneys I had couldn’t prove snow is cold.

  18. @Bill A.,

    Where are you? Do you have a OWS where you live? If yes, contact them and tell them you’re being evicted. They can sit in your lawn and occupy until the bank caves in. it’s being done all over the US.

    Nothing to lose by trying that.

  19. @ Bill A. – This is not advice but have you looked into filing a Bankruptcy Chap. 13? There a many very knowledgable people on this site and I’m sure they can point you in the right direction.

  20. General Question if anyone can help answer it please. Can a motion to compel discovery also include a request for relief from the court to award sanctions in the form of an award in Plaintiff’s favor? I hope I articulated the question in a understandable way. I am dealing with BoA, need I say more.

  21. Everyone says to keep fighting. Well my sale date is in a couple of weeks and I have no money for a lawyer so how do you fight and force their hand. I guess I’m to small to succeed. It seems that the wrong people are being punished when I made a fair offer to the bank and my mortgage is fixable. It’s truly a sad time in America.

  22. Banks are still making their profits- even though many of us have switched to local credit unions and small banks.

    How are they doing that?
    By stealing houses they do not own.- Because they can.
    Bernanke and Co. are betting on the stupidity and ignorance of the general public too busy trying to put food on the table and gas in the tank.
    They are all betting on our stupid infighting keeping us from the truth instead prosecuting and getting our money back from the true culprits while they continue to steal.

  23. Bank of America Plaza Faces Foreclosure
    JAN 7
    Posted by Emergingtruth
    http://www.theatlanticwire.com/business/2012/01/bank-america-plaza-faces-foreclosure/47110/

    Adam Clark Estes Jan 6, 2012

    Thanks to mammoth mortgage lender Bank of America’s landlord not paying its mortgage on its Atlanta headquarters, the Bank of America Plaza now faces foreclosure. Bank of America Plaza is the tallest building in the city, a fitting sort of superlative to complement the simple irony that a lender that played its part in the Great Recession and potentially contributed to countless American families’ losing their homes. Read the details in the Atlanta Journal-Constitution to maximize the Schadenfreude:

    California-based commercial real estate investment firm BentleyForbes bought the 55-story tower at the height of the real estate boom for an Atlanta-record $436 million. It has been working to avoid default.

    The main $363 million loan on the tower went to a special servicer LNR Partners in February, while a second loan had been in default for non-payment.

    Maybe Bank of America can just liquidate some stock and make those outstanding mortgage payments. Oh wait, their stock isn’t really worth much anymore…

    Note: An earlier version of this post implied that Bank of America owned the building. We’ve adjusted the language for clarity.

    Sources
    Bank of America Plaza closer to foreclosure, Misty Williams and J. Scott Trubey , Atlanta Journal-Constitution

  24. There was that one guy a while back that rented a bulldozer and bulldozed his fancy house to the ground before foreclosure.

  25. I. Introduction

    1. In recent testimony I cited where the Plaintiff is seeking to enjoin the defendants from continuing alleged, false material representations against title to the subject realty for purposes of a compliant foreclosure. Foreclosure is not the automatic transfer of title barring subsequnet affirmed claims to a lost beneficial interests and rights in favor of establishing pro tanto claims brought under the FDCPA. The foregoing action is argued by defendants as a statutory compliant recovery. In claims for declaratory relief and other injunctive remedies, what is taking place is a benficiarys recovery that is circumventing public policy and state rules under civil code or procedures.
    2. Defendants as individuals or groups of investors or beneficial interest holders, are deemed to have never acted in the best interests of all such investors or holders of beneficial interests if the servicer agrees to or implements a modification or workout plan when the servicer takes reasonable loss mitigation actions, including partial payments.
    3. Defendants are the defacto bank relationship with a third party friendly non member bank, an international entity under a mergers and acquisition controversial business scheme disguised as the “new plan” for creating a liquidity alternative to Government Sponsored Agency loans.
    4. Plaintiff is fighting to keep his home in an international business controversy, scheme amongst the FHLBB, its customer a member bank who issued into settlement an ABA wire used to originate the subject mortgage. The settlement and disbursement to the borrower was tendered for marketable mortgage backed certificates that stand for what the department now calls worthless toxic assets.
    5. Defendants are recourse provision under a bonefide sale of a whole loan asset sold with all servicing released. Now, in receivership is brought the economic recovery and stabilization plan formed under the FDIC statutory powers granted to it as conservator for member banks assets charged to a loss. The receiver in each of these foreclosures is seeking to bring a claim to restore the interest in title lost to the conversion and contribution of assets made at the commencement of the delivery of the loans into a spate entity.
    6. Under much published troubled assets relief program “TARP” the recent recovery plan authored by the FDIC has failed to identify the gap outstanding that separates real property law, particularly in a foreclosure, from basic laws involving securities and Generally Accepted Accounting Principles. Offers to plaintiff for modifying loans made by the US Government raise a constitutional question. This is in line with the prohibitions against modifications under GAAP and the distrust title holders maintain causal to the reasons and purpose for the government not coming to the aid of American homeowners.
    7. Defendants are the sponsorship and its defacto beneficiary as registrant into a private placement. The transfers of debt to an equitable interest cause the title to emerge free and clear which is for all intents and purposes, uncharacteristic of the traditional convention holding a mortgage is a security.
    8. Investments are characterized by individuals or groups of investors or beneficial interests, holders deemed to have acted in the best interests of SEC registration as for securities and capital holdings, contribution of capital, paid in capital conversion of asstets and gerenally , capitalization of the trust scheme. Defaulted obligations of the orginating lender however , as to these Investments, are characterized by the sponsorship acting in a concealed manner and unethical enforcment while comeletly forgetting the fiduciary material rerepentations impacting the consumer also rerepresent fraud to those the best interests of SEC registration

    For more information
    M.Soliman
    expert.witness@live.com

  26. i am amazed that day before a fraudclosure sale, houses have not been burned to the ground from sea to shining sea

  27. As this plays out, I am thinking bulldozer…one can easily get to the point of: it is not yours and you will not have it!

    Obama is very inept. He is the one who gave the keys to the fox to the hen house, with zero strings. Bernanke is on the dole too.

    I said in earlier posts, why is the FBI not on this?

  28. […] Read More: BERNANKE: Don’t Rely on Foreclosures to Solve the Problem […]

  29. I guess this means Mitt Romney needs to rethink his solution for housing.

  30. You can start by ordering the bailed out FHFA/Fannie Mae to approve principal reductions and waive deficiencies in return for their $160 billion bailout. While you’re at it tell those bums to reveal which trust my loan is supposedly in. Also the blanket refi idea was good but should have been done in 2009 not 2012. It will only apply to 5% anyhow I am sure same as Obama HAMP/HARP. Meanwhile I have implemented my own modfication program. It’s pretty great. Stopped paying first and 2nd of about $2000 a month so my payment is now $0. Then hired best lawyer in my city to defend. I am 3 months in and plan to go 2 or 3 yrs or longer. Maybe at some point we come across a real decisionmaker on their side and they waive deficiency etc and I hand them the keys. Or we work out a real modification and my finances improve. This is the best path I could find. I wish I had done it 2 years ago.

  31. Rent the house back to the borrower? F that! How about SCREW YOU bank!

  32. i like the tent city idea why would i want to pay someone else mortgage unlessi defneded my fraud and appeal. the problem is people think the bank has all the power and walk away when they are served with a foreclosure. the get served its not answered and then they get evicted. instead of finding out how we were put in these liar loans and fight the fraud. i to thought wells fargo had all the power until i realized i do. the note in my complaint is robosigned by me (a fake signiture brought to you by some robo pen) and a rubber stamp endorsement signiture by joan m mills. and bernake wants us to give up our houses???? i just feel bad for the peopel that do not know

  33. problem is everyone we are the few that see the fraud most of our fellow americans beleive the bank has all the power. no we do . if people would just stop paying their mortgages and defend the foreclsoure the truth will come but to mnay people are afraid do not know what was done. just a few years ago i was there. i did not know. i desparatley tried to save my home. faxing and refaxing paperwork to wells faergo. paying a to high inhouse modificatoin that they didnt even include in my foreclsoure complaint because the servicer has no right to modify. we are in a terrible situation and i guess we have to take it one day at a time

  34. Based on the theft of homes of millions of Americans, it is not rocket science that there is and will continue to be an increase in the rental market; unless we just start building tent cities everywhere.

  35. WOWnow i have heard evrything now bernake thinks homeowners are responsible and noone should defens our foreclosures we should “give the house back to the bank?” who 1 doesnt own the mortgage and 2 lied to get us inthese liar loans so now they collect rent because they cant collect the motgage or sell the property. am i missing something. so our gracious government thinks it is our fault we have mortgages we cant afford. not that appraisers and vrokers lied. put us in stated income loans paid appraisers to over appraise or they would not use that appraiser anymore ???? isnt that blackmail werent we lied to. fraud in the factum. fruadulently put us in mortages we cant afford. didnt we send pay check stubs. w2 forms and even give the name of our employer so someone can verify the income we provided. but now our people in charge are blaming this on us and want us to give up our houses to them and rent. this is incredibly sad that we can not get anyone on our side to help us throught his. resolve this right. he is still talking about modifications on properties that are over appraised

  36. Bernanke is still not taking a stand to protect the people. He is not admitting the crimes of the banks and asking for protection of the homeowners, citizens, tax payers, that have lost homes, incomes, and damages, and own their homes by law, due to all this crime. Whom have restitution coming from these criminal enterprizes cloaked under the name of “bank”, which has taken on the image of the “clown” like in the novel by Steven King. The mortgage fraud is alike the novel and move “The Never Ending Story”, when the politicians keep running in fear of the banks (alike the wolfs shadow in the novel) allowing the fear of the banks to control them, when like in the end of the novel, when the politicans realize if they have the power to get rid of these croanie criminal entities, they will be free of them and American will discontinue being lost rock and stone at a time, alike America disappearing foreclosure by foreclosure, droppping of the face of the earth and America will heal and the land will come back rock by rock, stone by stone , property, by property, and the rock eater alike the criminal entities (foreclosure mills ) will not be able to eat the rocks and be paid for eating up the America property by property any longer. The only answer is to put these property eaters and wealth eaters in jail. And keep on fighting and do not allow the fear to take us over and keep in our homes and fight!

  37. Too little religion waaaaaaay too late in the game! Bernanke has to go…

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