Home, Lost Home
Posted: November 16, 2010 Filed under: Bailout Blues, Equity Markets, Global Financial Crisis, U.S. Economy | Tags: bad lending practices, Bank of America, Foreclosure Crisis, Mortgage Loans, Subprime mortgages, truth in lending 41 Comments
The Senate Banking Committee is looking into allegations today about Bank of America’s Foreclosure process. As you may know, there have been problems with foreclosure documents that have led many to question the legality of many foreclosure actions by banks. At least seven banking officers will appear before the committee to argue the case that robo-notorization and other means of speeding up the process of making people homeless are not illegitimate. Retiring Senator Bank-Lobbyist-in-Training Chris Dodd is in charge of that committee.
Bloomberg has this to report about the hearings.
Democrats said they are concerned not only about foreclosures, but also about whether mortgage servicers are properly handling mortgage modifications intended to keep some homeowners from losing their properties.
“If many banks and servicers are not handling even basic foreclosure procedures correctly, it is likely that many are also not correctly evaluating homeowners for mortgage modifications,” Senator Robert Menendez, a New Jersey Democrat who is a member of the Banking Committee, said in a letter to Treasury Secretary Timothy F. Geithner that is scheduled to be sent today.
In the House, lawmakers will also call in overseers and regulators from government agencies, including the OCC and the Federal Housing Finance Agency.
Consumer advocates have been expressing concern about this process for years and aggressive lobbying is apparently paying off for the financial institutions. This report on a flurry of FIRE lobbying is from WAPO.
The spotlight on the foreclosure process has anxious financial executives mobilizing on Capitol Hill. A financial lobbyist said senior executives have been meeting with lawmakers and their staffers, and industry groups are planning letter campaigns aimed at preventing aggressive new legislation.
“Everyone’s very nervous about what’s going to happen this week,” said another industry official, who spoke on condition of anonymity because his firm has a stake in the outcome. “We have all hands on deck.”
It’s unclear what new measure could pass in a politically divided Congress, but some ideas under consideration could broadly reshape the mortgage industry.
Some lawmakers want to resurrect legislation that would give bankruptcy judges the power to order lenders to reduce the principal that homeowners owe. Others are pushing for some big banks to spin off their mortgage-servicing arms to avoid conflicts of interest. There’s also discussion of replacing the industry’s current system for tracking mortgages with one that would be subject to federal regulation.
“The risk is small that a bill gets through,” the financial lobbyist said, but “we are taking it very seriously.”
Meanwhile, Americans for Financial Reform have requested the FED withdraw a Rescission Rule. In real estate transactions, these rules generally offer up a ‘cooling off period’ that give a buyer a chance to nullify a sales contract within a certain period. Most state rescission rules run from five to 15 days. The FED’s considering tightening the process to favor the lenders. Here’s some information on the request from AFR to the FED.
In the face of an unparalleled foreclosure crisis, now is the time to reinforce the fundamental importance of TILA rescission. Instead, the Board’s proposal would eviscerate the single most effective tool that homeowners have to stop foreclosures and avoid predatory loans: the extended right of rescission. The FRB Docket R-1390 contains a series of proposed changes to the TILA rules governing mortgage lending.
A few of the proposed changes, including new “material A much greater concern is the proposed decimation of TILA’s right of rescission. At the depths of the worst foreclosure crisis since the Great Depression, we are surprised that the Federal Reserve Board has proposed rules that would eviscerate the primary protection homeowners currently have to escape abusive loans and avoid foreclosure: the extended right of rescission in 12 CFR § 226.15 and 226.23. disclosures” for home secured credit, would advance consumer protections.
Some changes are neither particularly damaging nor particularly beneficial to consumers. Other parts of the proposal, however, would seriously undermine the reliability of TILA disclosures on home secured credit. Instead of informing consumers about the terms of their loans as Congress intended, these proposals would allow broad misstatements of loan terms through new tolerances that are without statutory authority.
The Truth in Lending Act passed by Congress specifically provides consumers the right to unwind an illegal loan through “rescission” for up to three years after the loan was consummated. The statute – and current Board regulations –both provide that if the proper disclosures were not provided to the homeowner at the closing, the homeowner can rescind the loan by sending a notice to the creditor. The statute then requires the creditor to cancel the security interest. Only after the creditor has complied with its obligation to cancel the security interest is the homeowner required to pay back the lender the amount still due on the loan. This order of obligations is the essence of the protection provided by TILA’s extended right of rescission. The cancelling of the security interest means that the homeowner has a defense to a foreclosure. It also means that the homeowner has the means to obtain refinancing so as to be able to tender the amount due. The extended right of rescission does not mean that the homeowner does not have to repay the loan. While the amount due is reduced by the finance charges, fees and amounts the homeowner has already paid, the balance is still due the creditor.
Current momentum to push the laws to protect mortgage loan originators and processors appears aimed at protecting them from the consequences of some really shoddy underwriting practices. This seems mostly motivated to save them the billions of dollars of costs they–and in turn the Federal Government–would incur should there be zero tolerance of these egregious practices. Not only are billions of dollars of investors money at risk–including pensions and institutional investment funds–but there’s also that little matter of the bankrupt Fannie and Freddie that sit on tons of the nasty stuff and are currently being propped up by tax payer money.
Oddly enough, there are calls again for the FED or Treasury to do more ‘stress tests’ to see exactly what the potential fall out from this massive stupidity might be. Will we once again have to fork over our Treasury to pay for the greed of the housing and mortage debacle? All of this undoubtedly has the markets shaky, I went in search of why so much Big RED numbers in the major stock indexes today. The uncertainty inherent in this problem is undoubtedly fueling the equities set back. We continue to see fall out from the District’s inability to deal with the current systemic risk in our Financial System due to massive and hasty deregulation. Here’s some more analysis from WAPO.
At the same time, he said, panel members sympathize with the conundrum facing policymakers as they deal with the issue: On one hand, grinding foreclosures to a halt unnecessarily could harm the economy and slow its recovery. On the other, he said, distressed borrowers are entitled to due process, especially when banks are trying to take their homes.
Administration officials say they are keeping a close watch on the issue.
“We strongly believe that the reported behavior within the mortgage servicer industry is simply unacceptable, and servicers who have failed to follow the law must be held accountable,” said Treasury spokesman Mark Paustenbach. He added that the administration has led an interagency effort to “investigate misconduct, protect homeowners and mitigate any long-term effects on the housing market. The independent regulatory agencies, the Justice Department and [the Department of Housing and Urban Development] are examining servicers’ behavior, and we will continue to monitor the situation closely.”
This loosely means they’re probably anticipating the need for more bailouts. Good luck with that given the influx of hostile partisans coming in from the right wing of the Republican Party in January. What’s a bunch of lame ducks to do?
peej
Carissa
bostonboomer
ecocatwoman
mablue2
Mama Lopez
peggysue22
quixote
skydancingguestblogger
Mona (aka Wonk the Vote)
Sky Dancing 
I wish some of those Congresspeople would meet with some of the people who have been screwed out of their homes by the banks.
This is really frightening. It seems our government has lost all respect for the rule of law. We are doomed.
This mess has been running out for so long and is so complex it will be nearly impossible to get a handle on it.
Obama surely needs to appoint a Commission to study it and make some suggestions – deadline December 2016 as he waves goodbye. I doubt he has given any real thought to the matter.
Obama is a Judas goat
P.S. I have nothing against regular goats
I’ve actually been watching the dog fight between big money and big money or investors vs banks with great interest. It’s going to be interesting to see who takes a powder when both sides have more then their fair share of financial clout to purchase representation in Congress. Frankly, I’d rather bail out some of the homeowners and tell both sides to take a powder.
Right. Congress is only interested in a shake down…that’s why they bother to look at this at all. Nothing will come of it expect more booty for them.
We probably could have bailed out all the homeowners and every other kind of debtor for what has been handed over to the banks to use for bonuses.
So, I just found out that Fannie Mae has listed our house with a realtor. Selling a short sale for 77,000 (we paid 100,000 when we built it in 2003) AND they are offering 3.5 interest…you only need to make 22,000 a year to qualify. This was not offered to us when we tried to get a modification. It makes me sick. I am so upset…
Just curious – what city/state are you in?
Who was your original lender?
When did you stop making your house payment? (Don’t answer if too personal)
http://www.weichert.com/34723929/ This is our house. Countrywide was original lender, BOA then took over, and there was never any notice that the loan was assigned to Fannie Mae. Which is the one now who has the house listed. We tried to get some assistance with a modification, but they would not even entertain us…did not even give us a chance to send in the paperwork. I think that since there was not a large amount of loan, 102,000 on the first and 15,000 on the second, they saw a chance to steal our house from us. We were 3 months late when we got the notice to clear out. (we tried calling before we were late and were told they could not help us until we had not paid our mortgage payment for at least 3 months) The house has sat empty for over a year. It was foreclosed on the first week of Oct…a few days before BOA halted foreclosures.
So do you think that they saw a rich opportunity to put you in a vice because you had a 2nd ?
If you had it to do over again would you stay in the house until they locked you out?
We moved in with my parents, next door. So we stayed as long as we could. I honestly don’t know if the powers that be saw an opportunity, it just feels like they did to me. Like so many of us that have lost our homes, we are beaten down and exhausted. There is only so much a family can take. At least our family is still together, and we are pooling all our resources together to survive.
That looks like a great house/space. Sorry that you got caught in a situation not of your making. I am glad your family is working together.
Good luck to you and your family going forward.
That should be criminal. I am so sorry.
JESUS!! we are in the mists of an illegal land grab of mind blowing proportions.
So sorry you are living this nightmare!!!
I think it’s that old puritan thing of punishing people who are poor. We used to throw widows and orphans into prison for it. You have to be punished for not being ‘whole’. It’s like rich people think they do everything right rather than realizing how much luck and genes have to do with it. They want people punished who don’t succeed by their rules or who have some set back. It’s like a form of gods’ punishment.
They want people punished who don’t succeed by their rules or who have some set back.
And it’s great to feel morally superior to those you are stealing from.
Luck and….genes?
I have thought this many times. I’m reading a book about, in part, class in the middle ages. The upper classes looked upon the lower with 3 things: contempt, criticism and compassion. As I read the book I keep thinking, ‘wow, attitudes never really change, do they?’
I’m realizing that since I read that thing on how the Catholic church is training more exorcists because they don’t have enough to keep up with the demand. Sheesh!
OMG, that’s criminal!! You should go to DC and visit your Congressmen and Senators just like the lobbyists are.
AND they are offering 3.5 interest…you only need to make 22,000 a year to qualify…..
and so will raise a new crop to bilk down the road . They found a renewable source of income alright. The very principle of property ownership is under attack.
The only rules of law are those found in Alice in Wonderland .
The 1st National Bank of Serta never looked so good
You have to probably read the fine print. The 3.5 interest only applies to people making 100k a year with pristine credit and a hunk of change for a down payment. The people with the 22,000 get qualified on a loan then reprices to credit card rates in three years.
I would have jumped at the chance to get some sort of loan modification that reprices to credit card rates in three years…anything to stay in our house. But we did not have that opportunity. There was no cooperation from BOA. The only solution they offered was pay the full 3 months mortgage payments, or get out of the house.
MM, I’m very sorry to hear this, and it makes me sick as well. It’s as though they are punishing your family for whatever ‘wrongdoing’ they think you did, offering a deal they could have gotten from you to others.
Gods, the system is really, really, screwed.
Yup, We were not late when we first tried to get some sort of modification…to lower payments. The thing that gets me is that BOA said they could not do anything for us until we were three months late…so what happens, after reaching that 3 month limit, they tell us to get out. BOA never even let us apply for any help. The only option was to pay them for the full 3 months back payments, or leave the house and they start foreclosure. We were not the only ones to experience this sort of bullying either.
Minx that is really bad-I am so sorry.
Now they’re selling it for $77,000 seems very strange to me…
They are RUNNING to comfort the comfortable … I never see them break a sweat other wise….and yes BB, no rule of law…nor has there been since Dec 2000 when the Supreme Court gave Bush 2 the White House. What we have seen since is a continual expansion of that cancer
I’m looking forward to them re-opening debtor’s prisons too. I can’t imagine what is next.
When they do re-open debtor’s prisons it will be with private companies of course…with stocks ( no pun intended ) Soylent Green is already people ….in financial terms
Yup.
Okay let’s try THIS link.
http://action.momsrising.org/call/11_16_PFA/?rd=1&t=3&referring_akid=2404.129418.HvcVVP
I watched the hearing. I am just sick now. Minkoff minx, I am so sorry. My house is underwater $50,000.00 and to listen to that Chase guy made me want to become violent. The banks won’t stop foreclosing while in moderation and they oppose principle write downs. And all the while, adding charges and fees, paying in the wrong order of the mortgage contract, charging triple for home insurance (without you knowing, before you can’t pay triple) I didn’t hear one person say THIS IS FRAUD. It has come to this; It is more shame to own money than to steal it in this country. All I heard was what laws do we need to keep the To Big To Fail Banks solvent. No one to wear the orange jumpsuits what brought this country down once again.
I find it odd that they’re foreclosing and trying to sell so many houses for less than the previous loan. Unless there is some odd tax angle I’m missing or some extra fees they can pick up from some sure thing like a government agency for the foreclosures or the state governments or something. It just doesn’t make sense to let certain cash flows go for some promised future sale. You think they’d get better cash flows from the cramdowns.
I think the Federal Government needs to create an adjustment board in every county. I would like to serve on one. I am getting ready to retire and looking for something to do.
First step – make sure the paper trail is accurate and complete. Second step – make everyone pay up to the county / state all the transfer fees that the lenders and secondary market has avoided with their illegal activities. Third step – re-evaluate and/or cram down the loans and move into a program like HOLC if applicable.
They are trying to keep the real number off the books. If the banks really showed the loss, homes without clear title, etc, they would all be in bankruptcy.
If they write it down we the taxpayers will be bailing them out again. As far as I am concerned we just need to go ahead and get it over with.
Put the women in charge of this mess. Men no longer seem capable of doing the right thing.
Take To The Streets
Dee, I Didn’t understand your comment. “get it over with”.
I think Dee means that the banks and the fed need to stop playing as though nothing is wrong and swallow the losses that the bubble they created have made.
Until they do, the wounds will just keep festering and the economy will not recover. Plus, what does it do for our citizens to see all these criminals getting away scot free. One rule for the rich, one rule for the other 95% of the country.
Ok, that’s my interpretation. I hope I’m not super wrong 🙂
pd – If I understand the situation correctly the government will need to fund (bail out) the banks as we have already learned that many are too big to fail.
The banks will be forced to buy back their little or no value pieces of paper from their big investors and the banks must write off the problem from the other side of the coin – uncollectable notes from home owners. They are totally squeezed with nowhere to go but the WH and congress.
Check this out – Man Makes Ridiculously Complicated Chart To Find Out Who Owns His Mortgage (CHART)
http://www.huffingtonpost.com/2010/11/16/mortgage-security-chart_n_784274.html
sima – you are right. I just want to get it over with.
Check out the chart above.
It has to be cheaper for the government just to buy every one their homes and give them to them under a certain price than pay for ten banks five times for as they fail along all these processes and leave fees due and write-offs and such … with the loans paid off it makes all those funny derivatives and the loan good too and there’s just one little guy to bail out rather than 5 too big to fail fuck ups. Plus states and municipalities are more like to collect their taxes so every one wins for that one.