Sen. Merkley (Ore) Proposes Principal Correction for 75% of Underwater Homeowners


Editor’s Note: If you are news junkie like I am and watch and read everything about the financial markets it is absolutely amazing how everyone seem to be in agreement that we are headed for a financial cliff and nobody wants to do anything about it.

Sen Merkley, with help from local organizers, is proposing a new bill that will require reductions in the principal due on residential loans. This isn’t hard folks, it just takes the guts to say the banks lied and they are still lying to us about the status of the loans, the origination of the loans and the money that has come and gone relating to these loans.

There are two basic reasons  why loan balances should be corrected: (1) simple arithmetic in an accounting and (2) the reality that people are simply not going to make a decision to keep their families enslaved to a mortgage (real or void) that will never justify itself in the marketplace because the original appraisal was artificially and fraudulently inflated.

In the first instance, the banks and servicers must be virtually removed from the equation because they never funded or bought any of these loans but they engaged in selling them as if they were owned by the banks. By taking out insurance, receiving bailouts, receiving proceeds from credit default swaps, just for a few examples, the banks were acting as agents for the investor lenders who were the only actual people to put up cash dollars. All the rest was paper pretending to be worth something.

An accounting from BOTH the Master Servicer and all subservicers will clear up all the money that came in from investors, borrowers and other parties and all the money that went out. We can then determine how much was paid or should have been paid by the banks as fiduciaries or agents of the investors. My analysis of hundreds of loans indicates that the total payments received on behalf of the real creditors was actually more than the obligation owed to that creditor which means that for that creditor, the loan proceeds should be corresponding reduced. That means the notice of default, notice of sale, foreclosure lawsuit are all based upon fake figures that at the very least should be reduced.

Under our laws, if a borrower has been defrauded under these facts, he is entitled to restitution under civil or criminal proceedings, which means that payments of actual money to actual recipients who may or may not have turned the money over to actual investors should be credited to the investor and therefore correspondingly reduce the principal due on loans funded by that creditor. They can only get paid once. If there are excesses that are legal, then I agree that it is an entirely separate matter as to whom that money should go, but to foreclose on a homeowner where the creditor has been entirely or mostly paid is absurd.

The second reason is equally simple as the mere adding and subtraction of a proper accounting. Nobody expects a businessman to languish without income in a failing business. He will walk from it, declaring bankruptcy or otherwise making arrangements with creditors. Somehow this basic principle has been warped, most recently by the renegade DeMarco in a moral hazard if a homeowner reaches the same conclusion. Whether you agree with the moral hazard argument or not, it is a simple fact that people WILL walk from the homes or stay as long as possible without paying a dime to get some of their equity back, if they find themselves in a failed investment that can never recover. It’s going to happen whether you like the idea or not. Better to manage the situation than have homes go without ANY bidding because the value is just too low but the people were kicked out anyway without accepting a loan modification. Those homes are the ones being bulldozed by the tens of thousands across the country.
If any of this makes sense to you, then you work for a bank and you are getting paid very well and expect bonuses despite an economy that is driving toward an economic cliff. You want as much money as possible before catastrophe hits, which is driven almost solely by the financial crisis caused by the use of deriviaties, especially in the mortgage markets — false and faked derivatives that are every bit as fraudulent as the robo-signed, forged and fabricated documents used in foreclosure.

Se. Merkley has cleverly gone the route of securitization to accomplish it so that it might incite the banks to agree and see this as a way of getting out of millions of lawsuits and criminal investigations. But perhaps we give the banks too much credit.

Merkley refi plan could reach 75% of private underwater mortgages

by John Prior,

Roughly 75% of underwater mortgages securitized into private-label bonds could be eligible for a refinance under the new plan from Sen. Jeff Merkley, D-Ore., according to analysts at JPMorgan Chase ($35.05 -0.95%).

The proposal would allow a Rebuilding American Homeownership Trust buy underwater mortgages with revenue from government bonds. The trust would be assembled either in the Federal Housing Administration, the Federal Home Loan Banks system or the Federal Reserve.

Principal would be reduced, and the loans would be refinanced into FHA-backed mortgages. The trust would profit off the difference between the interest earned on the new loan and the cost of borrowing money through the bonds, according to the plan.

While Merkley said the program would target roughly 8 million borrowers, bank analysts anticipate less participation.

Roughly 1.2 million nonagency mortgages with loan-to-value ratios above 100% could benefit from the program, according to Chase analysts.

Borrowers would be able to refinance into either a 15-year 4% mortgage, a 30-year fixed-rate mortgage at 5%. Borrowers could also split the new loan into a 30-year fixed on 95% of the property’s value and a “soft second” on the remaining balance, which the borrower wouldn’t have to pay on for five years.

More than three-fourths of these borrowers would choose to split the refinanced loan into a “soft second,” according to analysts.

“Of course there are a lot of details that would need to be ironed out. After all, this is effectively forming (or building upon) another GSE,” Chase analysts said. “While we can see clear benefits for both borrowers and investors, the devil is in the details.”

Banks with large amounts of underwater mortgages would be unlikely to participate. Refinances aren’t like modifications. They must be offered to all borrowers who qualify, and many banks and servicers have been reluctant to write down principal for delinquent underwater borrowers, let alone current ones.

Borrowers with severely underwater mortgages would likely be shut out. Servicers must reduce principal to at least 140% LTV. In the analysts’ example, a borrower with a $340,000 mortgage at 170 LTV (owes 70% more on the loan than the house is worth) would need $60,000 reduced. Along with an $18,000 risk-transfer fee, the lender would likely lose $78,000 on the deal, and the risk of default would still remain.

Treasury Department Secretary Timothy Geithner testified before the Senate Banking Committee last week that he thought the Merkley plan was a good one and would work with the senator on possibly producing a pilot program, maybe even using unspent Hardest Hit Funds.

Chase analysts estimated that more than 525,000 borrowers with private-label loans could refinance into full 30-year fixed mortgages and save an average $207 per month or $1.3 billion total every year.

Celia Chen, senior director at Moody’s Analytics, said the program would also help borrowers rebuild equity faster and significantly reduce the risk of default.

“Moreover, it would benefit the broader economy, as refinancing frees up cash for consumer spending and generates business for mortgage originators and servicers,” Chen said.

But other questions remain such as selecting a servicer for the RAH Trust loans. It also remains unclear if trusts could participate in the program.

“Clearly, bonds with the highest concentration of current borrowers will benefit the most if this program will reach nonagency trusts,” Chase analysts said. “We expect any pilot program to target bank loans first.”


Synovus Ousts Senior V.P. of Asset Management; Shady Foreclosure Deals to Blame?


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Synovus Ousts Senior V.P. of Asset Management; Shady Foreclosure Deals to Blame?

by Mark Stopa

Have you ever wondered what happens to houses when the banks foreclose? The Fort Myers News Press recently wondered just that, and its findings may have prompted the termination of a high-ranking bank officer.

To those in the foreclosure industry in the Tampa area, Michael E. Johnson was fairly well-known. He was the Senior Vice President of Asset Management for Synovus Bank. This was no phony title, like the “Assistant Secretary” designations we see given to robo-signers; Mike Johnson was the decision-maker on foreclosure cases for Synovus in the Tampa area. To illustrate, here was the signature on his emails (copied and pasted from an email he sent me):

Michael E. Johnson

Senior Vice President

Asset Management

12450 Roosevelt Boulevard

St. Petersburg, FL 33716

727.568.6521 – Direct

727.568.6532 – Fax

I personally dealt with Mike Johnson on several occasions in recent years, and it was clear to me that if a settlement agreement was going to be reached in a case involving Synovus, he would be the one approving it. This dynamic was both good and bad. It was good because, unlike many foreclosure cases, at least there was a person at the bank with settlement authority with whom communication was possible. It was bad because, frankly, he and I butted heads frequently and, in my view, he was rather stubborn in negotiating. (Of course, I’m confident he thought the same things about me.) That was his reputation, at least as I knew it – difficult to deal with, but Synovus liked him because he got a lot of deals done for the bank.

Anyway, with that backdrop in place, I find this article from the Fort Myers News Press particularly interesting. Essentially, this journalist studied the Public Records in Lee County to investigate what happened to properties after being foreclosed, or after they went to the bank. According to the article, there was a disturbing trend of properties being sold by Synovus to third-party investment companies, then flipped soon thereafter for a significant profit.

In my view, the information contained in the article forces some tough questions:

1. Why would Synovus sell a house for $53,000 to an investment company when said company was able to sell the house two months later for $78,000? Or a duplex in Lehigh Acres for $30,000 that was re-sold 15 days later for $79,000? Seriously, think about those numbers for a minute. More than doubling the sale price? Merely by doing a flip? 15 days later? For a bank that was so stubborn in negotiating with homeowners, why not insist on a higher sale price (to the investor)?

I suppose it’s possible the investment company did significant repairs to improve the value of the property. However, as the article notes, how much work can really be done when no building permits were obtained?

2. Doesn’t this have the feel of a shady, back-room deal? After all, why would a bank sell a house for $30,000 if it was possible to sell it 15 days later for $79,000? We may never know for sure, but it sure is interesting that Synovus had numerous deals like this with the same investor, and Mike Johnson was the one approving most of these deals.

Think about that for a minute. One man approving multiple sales of properties to the same investor, which investor was flipping those properties for a profit.

When you put it like that, it’s not hard to wonder whether this banker had a had a personal stake in these transactions. To be clear, I don’t know this to be the case, and I’m not saying that was the case, but when the same bank is selling multiple properties to the same investor, at prices like this, it’s not hard to wonder whether that banker was getting a kickback on the re-sale. It sure wouldn’t have been difficult – investor simply tells banker “sell this to me for $30,000, and I’ll give you $5,000 on the re-sale.”

You may think I’m reaching or just plain wrong, and maybe so. However, it sure is interesting that Mike Johnson no longer works for Synovus, having been let go (after what had apparently been a distinguished career with the bank) shortly after this article came out. In fact, according to my sources, he now works with investment companies who buy houses from banks!

The point here isn’t to talk about this one banker, of course. My point is that it’s terribly, indescribably sad to know that Florida homeowners are being foreclosed and this is what’s happening with their homes. Even if there was nothing shady going on with Synovus, it’s awful to know that banks are so willing to foreclose on homeowners yet so willing to sell properties for a fraction of their actual value. Anything shady, of course, only increases the level of misery.

3. I’m also troubled at what may be attempts to increase the extent of the homeowner’s liability. Using the example from the article, should the prior homeowner be liable to Synovus for $275,000, i.e. $328,000 (the judgment amount) minus $53,000 (the alleged value of the house)? Apparently, by my read of the article, that’s what the court ruled, as that $53,000 sale price is how the fair market value was determined. The fact that the house sold for $78,000 sale price two months later (and that the deficiency amount probably should have been $23,000 lower? The court may not even have known about that re-sale. Heck, the homeowner may not even have known.

This prompts a serious question … Are banks selling properties at reduced values to increase the amounts of their deficiency judgments against homeowners?

You might think that makes no sense. After all, why would a bank sell a house for less than its maximum sale price? That said, do we really know what, if any, back-room deals are going on here? For instance, is this deal an arms-length transaction when Synovus is selling many such properties to the same investor? Who’s to say there weren’t other, under-the table monies changing hands?

It’s not hard to envision ways Synovus could artificially increase the liability of homeowners … ”you give me a better deal on this one; I’ll give you a better deal on that one,” or “give me a deal for $30,000 on this one, and I’ll give you half of the profits on the resale.”

I don’t think I’m the type of person who espouses conspiracy theories. However, I just can’t help but wonder, given what I’ve read, seen, and know, if homeowners are getting screwed on a routine and systematic basis by bankers who aren’t looking out for anyone except themselves. And when a high-ranking banker is suddenly ousted after an article like this, it really raises some difficult questions.
Mark Stopa

Settlement is a Scheme to ratify the Other Schemes of Banks and Servicers


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Editor’s Comment: With the Revolving Door between the finance sector and public law enforcement, it is hard not to wonder where Oregon Attorney General John Kroger will be employed when he finishes his term as AG.  
A great deal of spin has been put out there about how much more enforcement power the states are going to have over the banks. Even if that was true, it is likely to be blunted in the conflict of laws situations that will be raised in any major effort by States to hold Banks and servicers responsible for the the full extent of the havoc they have created in housing and the economy.
The so-called settlement like the securitization scam that brought it in front of the American people, is a scam.
  • There was no actual securitization process — the banks and servicers pretended as though the loans were securitized all nice and pretty with proper handling of the money and the paperwork, and they used their credibility as bankers to give false assurance to investors and borrowers alike that financial institutions were the experts in loan underwriting and creating ironclad documents to collateralize the real estate to assure repayment. In reality the investment banks, and servicers have done everything possible to make every investor penny  move from the investor to the investment banks and servicers. The proposed settlement enables and facilitates that process.
  • Until it was far too late, over the objections of those who DID know what was going on, when the public, government, pension plans who provided the money found out that the whole thing was a hoax.
  • There was no loan underwriting, confirmation, reviews of viability of the loans. I know of one particular case where the “projected income” from another scam was used as the basis for approving the loan. No ordinary loan underwriter would accept that. And there was no paperwork of any value — there was only sham paperwork giving the appearance of a loan closing when the documents intentionally mislead the homeowner borrower into thinking that the loan process was normal, like it had been for hundreds of years.
  • The “paperwork” was missing because of two things: (1) the pretenders wanted to claim ownership over loans on which they had not underwritten or accepted the risk of loss, paid for, or funded, so they created a grey area with straw-men and “nominees.” and (2) the reason they wanted that grey area was that they were going to sell the loan multiple times from multiple “owners” and create “trading profits on assets they did not own. It worked — so far — but only because they have not yet been put behind bars.
  • When it came time to foreclose on loans that were based upon false appraisals, false income and false underwriting procedures, they needed to present the picture of  a standard foreclosure, so they created (fabricated) the documents that would like right, but had no substance.
  • Specifically the Banks and servicers had neither the creditor nor the debt in the court room or non-judicial sale and they were assured, in non-judicial sales, that substituted trustees would not due their homework because the “trustees’ were persons employed by or controlled by the pretenders. Those documents were fraudulent, faked and forged with notary stamps being used like children”s markers by people who had no idea what they were signing, who was signing and whether the signature was valid.
  • Now we get to the point where after scant investigation in which very few law enforcement personnel were involved, a settlement is proposed in which the real objective is to ratify the bad loans, ratify the bad origination paperwork, ratify the bad papers of “transfer” of the loan, and ratify the credit bid at auction of a non-creditor, ratify the foreclosure sale and ratify the evictions, with small payments to people who lost all their money and equity on property that legally they still have a right to claim ownership.
  • The Banks and servicers promise to be good in the future but we all know that they have millions more properties ready to go into foreclosure, that they have no interest in modification of settlement of each loan or property, and that they intend now to make a business out of packaging up these ill-gotten properties into rental units that will be sold to even more investors.
  • Besides the obvious criminality of forging documents, recording false documents, and fraudulently misrepresenting themselves to “substitute trustees” and the courts, the settlement glosses over the largest problem confronting the nation in the housing market — the corruption of title in the state, county registries that can’t be fixed by some global settlement.
  • Either you own it or you don’t. If you do, then you should be able to get an affidavit or other document from the person whose title claim is apparent but not real — or get a court order commanding the homeowner to provide that title affidavit or getting a court order declaring the rights and obligations of the parties. They can’t do any of that because they have no basis upon which to do so. They are the the originator of the loan, they did not fund the loan, they did not pay for the loan and their paperwork is all false. No homeowner is going to cooperate without a much more substantial payment and no court is going order title transferred to a stranger out of the chain of title.
  • The settlement like its counterparts in the loan origination, underwriting, transfer, foreclosure and eviction counterparts, is a sham in that it takes trillions of dollars of stolen property and allows the miscreants to created this mess to not only get away with a tiny fraction of payment that they owe, but provides a mechanism in which more lawyers for banks and services can hoodwink overworked judges into thinking that  now the title question and the wrongful foreclosure question are settled and it is “inevitable” that these people should be evicted.
  • These people are mostly composed of people who sought and were denied modifications even though they offered far more money on valid enforceable plans than the proceeds of foreclosures in which the investor lenders were shorted vast sums of money that went (a) to the pretenders who took fees out of what was left of the property in feeding frenzy and (b) to the investment banks who diverted the money of the investors away from the funding of loans ( thus guaranteeing that the pool would fail) and who diverted the “trading profits” and other third party obligee payments that were received and sometimes credited to the investor lender but never reported to the courts or the borrowers.
In short, the settlement, like everything else we have seen in this mess is a scheme to ratify other schemes.

Oregon Attorney General John Kroger says he’ll sign on to multistate foreclosure settlement with largest loan servicers

Oregon Attorney General John Kroger said Wednesday he will sign on to a multistate pact settling wrongful foreclosure chargesagainst the five largest loan servicers.

The proposed settlementwould set aside between $100 million and $200 million to help “underwater” homeowners with principal reductions and refinancings. Homeowners are considered underwater when the balance on their mortgage exceeds their home’s value.It would also net the state $30 million and give an estimated 8,000 Oregonians who believe they’ve been wronged during a foreclosure checks for up to $2,000.”I am confident that signing this agreement is in the best interest of Oregon consumers,” Kroger said in a statement this morning. “This agreement penalizes banks that engaged in wrongful foreclosure practices and brings badly needed relief for distressed homeowners.”

More information
Oregon Attorney General John Kroger has set up a website for homeowners to request more information about the settlement as it becomes available. He also has a question-and-answer pageabout the proposed deal.Also, read It’s Only Money’s 2011 column on how to deal with poor loan servicing.

The proposal reportedly would waive Oregon’s right to bring civil lawsuits against the servicers for their foreclosure practices. But it does not bar Oregon or other states from pursuing how mortgages might have been improperly securitized — that is, bundled together and sold to investors.

It also would not impact homeowners’ rights to sue servicers in court. And it allows states to pursue criminal charges against the banks, if necessary.The fate of the agreement remains unresolved, however. State attorneys general in California and Delaware have publicly rejected the settlement, saying it won’t protect enough distressed homeowners. Ultimately, a federal judge must approve the agreement, possibly late this month, Kroger’s chief of staff Keith Dubanevich said.
Dubanevich said 18 states have signed on to the agreement. The deadline for signing on is Monday.
A spokesman for Iowa Attorney General Tom Miller, who spearheaded the settlement talks, confirmed this morning that other states have signed on to the agreement, though he would not say how many.
“I think it’s safe to say that AGs who helped negotiate the proposed settlement, including my attorney general, support the agreement,” Miller’s spokesman Geoff Greenwood said.The Associated Press has reported the settlement will cost the servicers — Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Ally Financial Inc. and Citigroup Inc. — up to $25 billion, depending on how many states sign on to the agreement.
Dubanevich provided new details of the settlement, which hasn’t been released publicly. He said the settlement establishes new protections for homeowners in the form of 42 pages of servicing standards.
The standards prohibit the servicers from conducting a foreclosure sale while considering homeowners for a modification  — the so-called “dual-track problem.” It also requires servicers to be clear and responsive to homeowners when they ask who owns their loan, Dubanevich said.
A national monitor will oversee compliance with the standards, Dubanevich said, and a federal judge also will ensure the banks comply.
However, many homeowners won’t be covered by the agreement. Smaller servicers have not signed on to the pact. The deal covers mortgages held privately during 2008 and 2011, but not those owned by government-sponsored Fannie Mae and Freddie Mac.  Fannie and Freddie own about half of all U.S. mortgages, roughly about 31 million U.S. home loans, according to the AP.
“This is just one of many steps that have to be taken before we completely clean up the housing and financing industry,” Dubanevich said today. “There are plenty more financial institutions out there we’ll turn our attention to.”
Consumer advocates generally agreed with Kroger’s decision.
Angela Martin, executive director of advocacy group Economic Fairness Oregon, called on legislators to put the state’s $30 million payment toward foreclosure-relief and prevention programs.
“I don’t believe we get a better deal by holding out for a larger settlement or a different settlement down the road,” Martin said. “Once the money arrives in Oregon, we need to make sure we spend it strategically.”
Nancie Koerber, co-founder of Central Point homeowner advocacy group Good Grief America, called last week for Kroger to hold off and further investigate the finance industry. But after reviewing some details of the settlement today, she called it “a decent compromise.”
“It appears that there is no money in the budget for large lawsuits, and in addition, the AG’s have few (laws) in place to go after (servicers),” Koerber said.

Late last week, Kroger issued temporary rules detailing behaviors by servicers that violate state consumer protection laws, giving homeowners and the state another weapon in court in wrongful foreclosure cases. The Oregon Legislature, which convened today, will consider permanently adopting even tougher standardsfor all servicers, not just the top five.Since 2008, Kroger’s office has received 1,700 complaints about loan servicers, making it the fourth most complained-about industry in that time, the department says.
Washington State Attorney General Rob McKennahelped negotiate the agreement. But his spokesman Dan Sytman said he would make no announcement about McKenna’s intentions until next week at the earliest.– Brent Hunsberger



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EDITOR’S COMMENT: The Occupy movement is taking on a life of its own, expressing citizen outrage over the behavior of the banks and the complicity of the government in aiding and abetting the stealing of homes. As the movement matures, it is getting increasingly focussed on the weak spots of the Banks and it is having a political effect as well as a judicial effect. Judges are having conferences that differ substantially from the ones they had only 6 months ago.

Judges still want to move their calendar along. And the issue of “finality” still looms large for them — someone has to say “game over.” But they are expressing doubt and dismay as more and more cases show up where it is obvious that the Banks are playing fast and loose with the rules of evidence and more importantly, violating criminal statutes to get a house in which they have no economic interest.

I say we should give the Occupy movement as much support as possible and that we should encourage Occupy leaders to take whatever political action they can to turn the course of the country from becoming a third world nation. The failure of the judicial system and the failure of law enforcement to lead the way on this, as they did when we had the savings loan scandal in the 1980’s is a sure sign that our system is broken and we know who broke it — the Banks.

If we succeed, then we will have reversed control over the government to the people, and reverted to the rule of law required by our Constitution. For those who depend upon the Bill of Rights for their existence, like the NRA (which depends upon the second amendment) they should be aware that acceptance of the status quo means that government can and will take any action it wants ignoring the Constitutional protections that were guaranteed. First, they take your house, then your guns.

Occupy Protests Spread Anti-Foreclosure Message During National ‘Occupy Our Homes’ Action

WASHINGTON — In the late evening on Tuesday, Brigitte Walker welcomed Occupy Atlanta onto her property in an effort to save her Riverdale, Ga., home from foreclosure.

Walker, 44, joined the Army in 1985 and had been among the first U.S. personnel to enter Iraq in February 2003. “I wasn’t happy about it,” she told The Huffington Post early Tuesday afternoon, speaking of her deployment. “But it’s my call of duty so had to do what I was supposed to do. It was a very difficult duty. It was a very emotional duty.”

Walker saw fellow soldiers die, get injured. She saw a civilian with them get killed. “It was very nerve-wracking,” she said. “It makes you wonder if you’re going to survive.”

She was in Iraq until May 2004, when the shock from mortar rounds crushed her spine. Doctors had to put in titanium plates to reinforce her spine, which had nerve damage. Today her range of motion is limited, and she still experiences a lot of pain. She still struggles with post-traumatic stress disorder. Loud noises and big crowds are painful. The Fourth of July is difficult for her

She settled in Riverdale, a town outside of Atlanta, after purchasing a house in 2004 for $139,000. She has a brother who lives in the area and enjoyed it when she would visit him. “It seemed peaceful and quiet,” she said. “That’s what I needed.” Her active duty salary covered the mortgage.

But in 2007, the Army medically retired Walker against her wishes. “I thought I was going to rehab and come back,” she said. “But they told me I couldn’t stay in.” Walker now has to rely on a disability check.

After retiring from the Army, Walker used up her savings, and then got rid of a car to help pay her monthly mortgage payment. “I didn’t have problems until they put me out of the military,” she said. “It was just overwhelming.”

By April of last year, she was starting to fall behind on her mortgage. JPMorgan Chase — which owns Walker’s mortgage, according to an Occupy Atlanta press release — has since begun foreclosure proceedings. She said the bank is set to take her house on January 3.

“Nobody is willing to help me,” Walker said. “Where are the programs to help vets like me? I know I’m one of many.”

Enter Occupy Atlanta.

“I’m very hopeful that it will help me save my home and allow Chase to give me a chance to keep my home,” Walker said, speaking of the Occupiers. She added that she’s willing to celebrate Christmas with the activists.

“I guess,” she said with a laugh. “As long as it takes.”

Hours before Occupy Atlanta joined Walker at her home, the activists organized protests aimed at disrupting home auctions at three area courthouses. At a Fulton County Courthouse, civil rights leader Dr. Joseph Lowery joined 200 demonstrators at the county’s monthly foreclosure auction.

Across the country, activists associated with the Occupy movement and Occupy Our Homes reached out to families threatened by foreclosure and highlighted the crisis with marches, rallies and press conferences.

“Occupy Wall Street started because of a deep need in our country to address the financial and economic crisis that’s been created by the consolidation of wealth and political power in our country,” said Jonathan Smucker, 33, an organizer with Occupy Wall Street in New York. “The foreclosure crisis, at least as much as anything else, illustrates the deep moral crisis that we are facing. It illustrates what you have when you have your whole political system serving the needs of the one percent.”

Mothers spoke out on front lawns. In New York City, Occupy Wall Street marched through the streets of East New York. At the same time, Occupy groups were protesting home auctions in Nevada and New Orleans. In Seattle protesters tried to save a family from eviction. In all, activists took over vacant homes or homes facing foreclosures from being evicted in 20 cities.

During the actions, the activists tried to keep the mood light. In Chicago they planned a house-warming party for a family moving into an abandoned home. To announce their presence in New York, protestes held a block party and, in a play on police tape, wrapped a home in yellow tape bearing the word “Occupy.”

As the protest were taking place, the Government Accountability Office, an investigative arm of Congress, released a new report that found an increasing number of American homes are going unused, a spike attributed to high foreclosure and unemployment rates.

“According to Census Bureau data, nonseasonal vacant properties have increased 51 percent nationally from nearly 7 million in 2000 to 10 million in April 2010, with 10 states seeing increases of 70 percent or more,” the report read. “High foreclosure rates have contributed to the additional vacancies. Population declines in certain cities and high unemployment also may have contributed to increased vacancies.”

Vacant homes can cause a number of problems for the communities their located in, the report noted: “Vacant and unattended residential properties can attract crime, cause blight, and pose a threat to public safety.”

The need for action was obvious to Smucker.

“People need a place to live,” he said. “People need to have homes. Kids need to be able to count on not having to move, having some stability in their lives. That’s something we can all agree on in this country.”

Some of the most powerful stories came from the homeowners Occupiers targeted during the day’s events. One mother from Petaluma, Calif, held a press conference outside her home and discussed her struggle with foreclosure. An Oregon mother talked about her lose of a second job, cancer and bankruptcy at an event at her house.

In Old Fourth Ward neighborhood of downtown Atlanta, Occupiers came to the Pittman family home. Carmen Pittman, 21, said the home has been the backdrop to every family function and holiday dinner as far back as she can remember. The ranch-style home had been in the Pittman name since 1953.

“My every Christmas, my every Thanksgiving, my every birthday, my every dinner was in this house,” Pittman told HuffPost early this afternoon. “This was the base home. We could not stay away form this home. This home is my every memory.”

Now she worries that the last memory she will have is the home’s foreclosure. Her grandmother had become too sick to deal with the ballooning mortgage, and never addressed the court papers that arrived in the mail. Shortly before she passed away, the family finally realized the home was being foreclosed on when they got a notice on the front door. They have had to scramble ever since.

But on Tuesday, Pittman was feeling good about her prospects after the Occupy group had come to the house. “Maybe somebody heard my cries,” she said. “I’m full of sadness and joy. It’s like two mixed feelings at the same time.”

Walker, the Iraq War vet, let the Occupy Atlanta activists set up tents on her property this evening. While her eviction date is still set for Jan. 3, she said she remained cautiously optimistic that her situation could change.

“Everything’s fine,” she said. “Everything’s good. They have the tents set up outside. It’s awesome. I was a little nervous. But it’s awesome. I’m really hopeful and happy. I’m feeling really hopeful. I don’t feel like all is lost anymore.”

Additional reporting by Arthur Delaney.

Just some of the odd foreclosure stories of the last year:

CT Family Never Missed A Payment
Shock Baitch and his wife Lisa of Connecticut were threatened with foreclosure by Bank of America after never missing a payment. BofA mistakenly told credit agencies they were seeking a loan modification. “Now I am literally and financially paying for it,” Baitch told



COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE


The Oregon Trail to Banking Local

Katrina vanden Heuvel on November 28, 2011 – 11:05am ET

Before there was “Move Your Money” there was “Fire Your Bank.”

It was January 2009, and 3000 miles from the epicenter of the financial meltdown, 800 people attended an economic justice town hall in Portland, sponsored by Jobs with Justice, the Oregon Working Families Party (OWFP) and others. People wanted to take action to protect their own local economies from the aftershocks of the disaster wrought by the Big Banks.

Barbara Dudley, co-chair of the OWFP, suggested that folks begin looking at where monies are deposited and invested. A core group focused on banking emerged and came up with the name, “Fire Your Bank.” The group organized several actions, with people serving giant pink slips to Wall Street banks in downtown Portland, closing their accounts, and moving their money to local banks and credit unions. It also began researching the community banks and credit unions, and contacting local bankers to garner support for a longer-term effort to create a state-owned bank that would partner with local banks to make loans to Oregon businesses, farms, students and homeowners.

The 2009 campaign not only was a precursor to the Move Your Money campaign, but it also involved many key organizers now taking part in the local Occupy protests throughout the state.

Fast forward to the first Saturday of November—“Bank Transfer Day”: 40,000 new customers nationwide deposited $90 million with credit unions, adding to the 650,000 people and $4.5 billion in deposits that had been moved to community banks in the preceding weeks. In Oregon, a savvy and diverse coalition that had already been working for nearly three years to create a state bank realized it isn’t enough to simply move money.

“We were telling people move your money but weren’t being clear about where to,” explains Dudley. “Some of the credit unions or local banks are just as bad as the big banks—I mean, there is a difference amongst them.”

So a coalition of six organizations that includes OWFP, Jobs with Justice and the Rural Organizing Project created Oregon Banks Local to help people determine just “how local a bank or credit union truly is.”

Oregon Banks Local—with assistance from the New Rules Project—researched and rated real, objective and measurable data, including: whether an institution’s headquarters is in the state, region or elsewhere; whether ownership is cooperative, private or limited stock, or NASDAQ/NYSE traded; percentage of branches in-state, the region or elsewhere; and the percentage of assets in small business loans.

The other key strategy of Oregon Banks Local was to connect with the Occupy Portland movement for Bank Transfer Day.

“They had energy and we had a plan,” says organizer Jared Gardner, who has been instrumental in both the state bank campaign and Oregon Banks Local.

The plan was to march to a highly rated local credit union and “connect the dots,” as Gardner puts it, between the Occupy, Move Your Money and state bank movements which are trying to make the local economies more resilient. So Northwest Resource Federal Credit Union stayed open that Saturday and added 30 new accounts. (The bank typically adds 24 new accounts per month and serves more than 6100 members.)

Jim McCarthy, president and CEO of the $92 million bank in Portland, told the Credit Union Times “it was one of the best days” in his fourteen years in banking.

While individuals moving their money to local banks is critical in order to shore up local financial systems, borrow locally and increase demand for local banking, Steve Hughes, state director of OWFP, said at the event that there is a bigger campaign on the horizon.

“I think the biggest chunks [of money] we need to look at are municipal, county and state governments,” said Hughes. “They hold huge deposits and right now they deposit that money into the very same Wall Street banks that ran roughshod over our community.”

Which brings us full circle to the Oregon state bank movement. Currently, the big five Wall Street banks receive 66 percent of Oregon’s total deposits, according to Oregon Banks Local. But they aren’t lending to small businesses and commercial properties in small town main streets and rural areas (just like they aren’t doing in the rest of the country).

The current “virtual state bank” proposal—supported by both the State Treasurer and Governor—would leverage existing state funds (such as economic development funds, a portion of the public employee pension fund, lottery dollars) to issue these kinds of neglected loans in conjunction with community banks and credit unions—institutions that aren’t currently in a position to make the loans themselves.

According to Dudley it looked like there would be a vote on the proposal during the 2011 legislative session when it moved through committee with bipartisan support. But on the last day, with a divided State House of 30 Democrats and 30 Republicans, the Republicans didn’t let it come up for a vote. While the 2012 session will only meet for one month both the Governor and Treasurer are determined to pass the bill.

“I think the Republicans are feeling quite a bit of pressure because they did nothing for jobs or the economy last time around,” says Dudley. “Also, with election season coming up, we’re finding candidates who are running hard on a ‘let’s move public money into local credit unions’ message. This is really becoming popularized on a very significant level.”

Gardner says the coalition is also now collecting reports from partners all around the state regarding where every city and municipality banks, and what the local investment policies are—which policies need to be changed so that jurisdictions can freely move monies to local banks and credit unions. It isn’t always as easy as one might think—there can be local regs about bank size, caps on amounts permitted in banks with less than $10 billion in assets, and diversification requirements, to name a few obstacles.

“That’s really where the strategic next level is for us,” says Gardner, “and it’s already going on, because people have been working at this for so long.”

When it comes to building a truly local and sustainable economy that keeps resources in state, investing in Main Street and rural communities, just follow the Oregon Trail.



The McCoy Case Analyzed – MERS Smackdown!

Today, February 10, 2011, 1 hour ago | Phil QuerinGo to full article

“…the powers accorded to MERS by the Lender [whose name appears in the Trust Deed] – with the Borrower’s consent – cannot exceed the powers of the beneficiary.  The beneficiary’s right to require a non-judicial sale is limited by ORS 86.735.  A non-judicial sale may take place only if any assignment by [the Lender whose name appears in the Trust Deed] has been recorded.”

[Frank R. Alley III, Chief Bankruptcy Judge, published opinion, Donald McCoy III v. BNC Mortgage, et al., Adversary  No. 10-6224 -fra, Case No. 10-63814-fra-13, February 7, 2011]

Slapdown!  In a relatively uncomplicated adversary proceeding in Oregon’s bankruptcy court, Judge Alley hit the nail squarely on the head:  If lenders in Oregon want to foreclose people out of their homes, they must follow ORS 86.735(1). Or in the words of one Oregon title counsel, Judge Alley’s decision means that “…all assignments behind a MERS trust deed must be recorded for a non-judicial foreclosure.  In McCoy, it appeared there were unrecorded assignments by the original lender identified in the promissory note.  A “beneficiary” in Oregon is defined as the entity or person identified in the trust deed as the one for whose benefit the trust deed is given (or their successor in interest) – that was not MERS, but rather the original lender making the actual loan to the borrower.

For some reason, this relatively simple requirement has been routinely and flagrantly ignored in virtually every non-judicial foreclosure I have reviewed last year and this year.  I suspect if I went back to 2008 and 2009, I would see the same thing.  And this holding isn’t confined to situations in which MERS is the (nominal) beneficiary.

As this site has repeatedly pointed out, the Oregon statute is pretty clear:  Oregon Revised Statute 86.735(1) provides that a successor trustee [i.e the bank’s “enforcers” who actually process the foreclosure from beginning to end – PCQ] may foreclose a trust deed by advertisement and sale if “(t)he trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded…” in the public records of the county in which the property is located.  [Underscore mine.  PCQ]

Without going into details, suffice it to say, that from the initial funding of most loans, the note and trust deed, travel far and wide.  In many, many residential loans from the Big Banks during 2005 – 2008, loans were securitized, that is, sold into the secondary market to be sliced and diced into billion dollar REMICs and then gobbled up by investors.  Of necessity, this meant that the trust deed would be transferred into and out of the hands of multiple banks.  In theory, each time the trust deed was transferred, there needed to be an official “Assignment” document transferring ownership.  Compliance with this law was of little consequence if loans were always paid off.  But when they went into default, as millions did commencing in 2008, the handling of the trust deeds came under scrutiny.  People began to notice that lenders who were foreclosing through their successor trustees, simply materialized out of thin air.  There was really no way to trace the “genealogy” from the first bank to the last.

This blatant disregard for Oregon law was due to the need for speed in the foreclosure process.  It was also due to years of sloppy lender practices. In truth, it appears that most Big Banks never bothered recording the assignments every time they transferred their trust deeds.  In fact, it appears that they may have never even prepared the assignments at all.  The effect of the McCoy holding is a direct consequence of the MERS model, which sought to “electronically record” trust deed transfers, rather than following laws such as Oregon’s, that require recording in the public record.  This meant that the public record no longer disclosed multiple assignments of the trust deed.  The only way for successor trustees – the persons or companies foreclosing on behalf of a lender – to deal with this problem, was to ignore the law.  So they took it upon themselves to prepare and record assignment documents either from the originating lender whose name appeared on the trust deed – or MERS – to another lending institution.  No question was ever asked or inquiry made about the many other assignments – yet we know from the securitization process, that multiple banks, of necessity, received and delivered each trust deed multiple times, in order to obtain what is known as “true sales” and “bankruptcy remoteness.

In many Oregon foreclosure cases, the successor trustee signs and recorded all of the necessary documents that tee up the foreclosure – the Assignment of Trust Deed, the Appointment of Successor Trustee, and the Notice of Default and Election to Sell.  For the answer to this and other cosmic (and comic) mysteries, see my posts here and here.  The process is patently wrong.  Now, Judge Alley, has said “Stop.”  In effect, he ruled that if you want to non-judicially foreclose someone out of their home in Oregon, the trust deed assignments must be recorded.  The next move is up to the folks who’ve been ignoring the law to date.  That includes those companies acting as successor trustees, who should think twice before recording a Notice of Default without first recording the other trust deed assignments.

Of course, the recording  problem now raises several moral conundrums for the major players in the booming foreclosure industry (from MERS and the Big Banks to their processor services, successor trustees, title insurance carriers, and attorneys: “Do I comply?” Do I pretend I didn’t know better?” “Do I rely upon the ‘I was just following orders’ excuse?”  Do I rely upon the time-honored lawyer practice of “distinguishing” the McCoy case from everything else?”  And then there is the ultimate ruse, which raises the civil and criminal consequences exponentially: “Do I participate in the fabrication of assignment documents, suitable for recording?”  How long will they be able to cloak themselves in “Don’t Ask, Don’t Tell” hoping that the issue will never find it’s way into the court system?  And ultimately, the lawyers advising their foreclosure industry clients will have to face the reality that their licenses may be on the line if they give bad or illegal advise. Time will tell – but the problem is not going away.

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