MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. I believe our recovery will never reach the majority of struggling Americans until we restore equal protection for all citizens and especially borrowers in our debt-ridden society. LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient resources to combat bloated banks who are flooding the political market with money. We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. And we provide paid services, books and products that enable us to maintain an infrastructure to provide a voice to the victims of Wall Street corruption.
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WHOSE LIEN IS IT ANYWAY? by Neil F Garfield. E-Book available on our online store.
CHAIN OF TITLE by David Dayen. Available on Amazon
LISTEN LIBERALS! by Thomas Frank. Available on Amazon and Kindle.
Full Measure News is broadcast to 43 million households in 79 markets on 162 Sinclair Broadcast Group stations, including ABC, CBS, NBC, FOX, CW, MyTV, Univision and Telemundo affiliates and streams live Sunday mornings at 9:30 a.m. ET.
In some markets they are seen more than the cable news competition in that time slot, and by more viewers than CNN, MSNBC, and CBNC combined and equal or surpass the audience size of CBS’ “Face the Nation,” NBC’s “Meet the Press,” and ABC’s “This Week.” Theyexplore “untouchable topics in a fearless way,” from immigration, terrorism, government waste, national security and whistleblower reports on government and corporate abuse and misdeeds. It is hosted by Sharyl Attkisson, a five-time Emmy Award winner and recipient of the Edward R. Murrow award for investigative reporting.
This past Sunday, I was honored to be featured on my “experience” at Citigroup, which many have called “The Immaculate Corruption.” [watch it here].
The interview started with, “This is the story of how systems intended to hold people accountable failed and Bowen claims even helped cover for them… Richard Bowen knew where the figurative bodies were buried at banking giant Citigroup, once the largest company in the world. As a senior vice president, Bowen blew the whistle on Citigroup’s practices leading up to the banking crisis – practices like buying and selling risky mortgages and misrepresenting them to the public and investors.”
Sharyl noted, ”Not much has happened in terms of from what I can see to the actual people at Citigroup who were allegedly responsible for this behavior.” “That would be very accurate,” I responded.
In 2009, Congress created the Financial Crisis Inquiry Commission. Six members were appointed by Democrats, four by Republicans.
Bowen was asked to testify. And he was eager to do it. It was a setting where he says he could publicly tell what he knew, exempt from his Citigroup confidentiality agreement. He wrote up his testimony, naming names and laying blame. However, shortly before he testified Bowen was told to “take out much of the damning evidence that they had originally told me to put in.”
He says the commission wanted major edits; “what they also conveyed is that the edits were not optional. If I did not make the edits I would probably be taken off the witness list.” Bowen says he had to cut out eight pages, almost a third of his planned testimony. And almost nobody knew that when he testified on April 7, 2010.
Last March, the financial commission’s records were quietly unsealed for the first time. And we were able to obtain copies of Bowen’s original testimony, including parts that were cut.
Sharyl: “Did they have you take out names of people responsible”?
Richard Bowen: “Yes. They had originally wanted me to put in the names and the specific instance of cover-ups that I had witnessed. All of that had to be taken out, at least the names”.
Financial commission staff members who dealt with Bowen say the reason his testimony was shortened is simply because it was too long. They deny suggesting any edits, say there was no attempt to censor or silence Bowen, and say that all acted with the best of intentions and followed the highest ethics…
And there’s something of a bombshell in the formerly hidden documents: In 2011, when the Financial Commission concluded work, it secretly determined some of the world’s largest financial institutions had possibly violated securities law.
Now that the documents have finally been released after 5 years, Senator Elizabeth Warren has written the FBI and Justice Department Inspector General asking why nothing came of those criminal charge referrals.
“The [Department of Justice] has not filed any criminal prosecutions against any of the nine individuals,” writes Warren. “Not one of the nine has gone to prison or been convicted of a criminal offense. Not a single one has even been indicted or brought to trial.”
On the program I expressed my concern, ”If we do not hold people accountable, then we’re going to see the same behavior. In the 1980s and the banking and S&L crisis, we sent over 800 senior bankers to jail. This crisis which is 70 times worse, I’d say, maybe even greater than that, we have sent no one to jail. And, and I think we basically are saying, there’s no downside to doing this.”
I fervently believe that by allowing the big banks to get away with fraud we are condoning their behavior and it will happen again. The large banks have a stranglehold on the financial services industry. If we are going to institute real change, then we must first break up the large banks, then repeal parts of the Dodd-Frank act to open up the banking industry to real competition.
Although Dodd-Frank was originally passed to reign in the large banks, it has turned into a gift to the larger banks because they have the wherewithal to lobby and gut those provisions that directly affect them. This leaves a disproportionate share of compliance costs on the smaller banks; which then has them selling to the larger banks as they can’t afford to compete.
And Sharyl concluded the interview, “As for Citigroup, it continues to rack up the fines. Last week, it paid $28 million more to settle claims that it gave homeowners the “runaround” when refinancing their home mortgages.”
So you just received that dreaded letter in the mail announcing that a loan servicer who likely never loaned you a dime is going to foreclose on your home. Your adrenaline rockets through your veins, you go into Fight or Flight mode and at some point you say, “Holy sh*t- what do I do now?”
Hopefully by the time you get the letter you have already done some research starting with a trip to the county record’s office (or online) and examined and purchased certified copies of the documents filed in the county records. Typically you will find a copy of your Mortgage or Deed of Trust, followed by subsequent filings called Assignments. The Assignments show a transfer of ownership. There may be Notices of Default filed in the records as well as Quit Claim deeds or Probate documents.
Once you have these documents you should examine every bit of information contained on those documents or hire a company specializing Chain of Title assessments. The Lending Lies team can conduct an affordable Chain of Title assessment to determine any breaks in title, robosigning or ownership issues that cloud title. To date, the Lending Lies team has not found one Chain of Title without significant issues clouding title and evidence that ownership is in question.
We also highly recommend investigator Bill Paatalo of the BP Investigative Agency if the homeowner requires a more in-depth report on securitization and trust issues in addition to Chain of Title issues. For more information about Bill Paatalo please go to: http://www.bpinvestigativeagency.com. He also has an excellent blog on his site with information about fraudulent foreclosures.
Please be careful who you hire to conduct a Chain of Title assessment. There are companies out there professing to be affiliated with Neil Garfield who may attempt to lure unsuspecting homeowners into Chain of Title assessments and Quiet Title packages that are not proven.
If you decide to do the assessment yourself you will need to google every entity claiming ownership, alleged dates assigned, and evidence of robosigning. You are looking for evidence of fraud. Was the company in business when the assignment was made? Are Fannie, Freddie or MERS involved? Is the signor a known robosigner who did not work for the company they signed for? Could the notary have actually been present when the assignment was done? Is there evidence of the document being photoshopped? We recommend that every homeowner facing foreclosure conduct a thorough Chain of Title assessment so that they can identify possible issues early on and be better prepared to present their case to an attorney.
In the past many homeowners would file a lawsuit hoping their attorney would find the breaks in the Chain of Title or other issues affecting ownership somewhere down the line. The attorney and homeowner would hope to get this information in discovery- but were often stonewalled. However, waiting until years to obtain information in discovery is not a pro-active method of attack.
For example, it is much better to know that the entity that transferred your loan was not in business, that the assignment was signed by a known robosigner, and that the trust had already been dissolved years before the assignment- or some other issue early on before filing suit. The bank already knows what they did fraudulently and how to cover their tracks before they set foot in court. Shouldn’t you have some idea of where the fraud exists in regards to your own loan? By knowing information about the entities claiming ownership of your loan and their weaknesses you have more leverage from the onset.
The next thing you should do, if you haven’t already, is to send a Qualified Written Request and a Debt Validation letter to your servicer. Examples can be found on Livinglies or if you prefer, a Lending Lies paralegal can help customize a targeted letter for mailing. Instead of a general Qualified Written Request, the Lending Lies team will request specific information- that the servicer can’t likely provide. The benefit of this service is having Neil Garfield and his paralegal tailor the letters specifically to the findings in your Chain of Title assessment so the servicer is accountable and must answer the questions in your request.
The more information you can receive from your loan servicer, the more apt they are to make errors and provide conflicting information that can help you demonstrate the servicer’s lack of standing. Typically the left hand doesn’t know what the right hand is doing at most servicer’s organizations. Many homeowners who send Qualified Written requests and Debt Validation letters will often not receive the information requested but on occasion receive information that raises further issues. The servicer’s failure to properly respond sets up the servicer for fines and damages under the Fair Debt Collection laws.
Armed with a Chain of Title Assessment, a Qualified Written Request, and Debt Validation information, a homeowner facing foreclosure will have a better understanding of what occurred over the course of their loan. Armed with this information, it is much easier to get an attorney interested opposed to calling an attorney and stating, “my servicer is foreclosing on me illegally” without any evidence to support your claims.
At Lending Lies we routinely speak to people who have been litigating a foreclosure issue for years and still don’t know the basic facts of their case. Before contacting an attorney to defend against foreclosure you should have the following items before proceeding:
One-page Overview of Case with 3 to 5 primary issues you have targeted as wrongful
On average, an attorney will assess the merits of your case in less than two minutes. If you can get his or her attention immediately you have a much better chance of the attorney agreeing to represent you. The attorney, like the court, wants hard evidence that substantiates your claims. The attorney will also appreciate a client who is focused, organized and doesn’t go off on tangents that waste valuable time.
In conclusion, don’t wait to start building your case after you retain an attorney. Conduct your due-diligence on the entities claiming they own your loan, research who and when they obtained the rights, investigate the parties on your documents and all entities including the signers, trust and if those parties are licensed to conduct business in your state. If you keep digging- you are more likely than not to find issues that support that the servicer attempting to foreclose has no standing to do so.
For consultations with Neil Garfield or paralegal assistance, please contact Lending Lies at:
Or call in at (347) 850-1260, 6pm Eastern Thursdays
Mortgage Fraud Investigator Bill Paatalo and Southern California Attorney Charles Marshall join Attorney Neil Garfield to discuss Loan Modification Fraud, and recent foreclosure trends.
Bill Paatalo, a dogged investigator of the WaMu transfer of “loans” to JPMC has discovered recently that WaMu loans claimed to be owned by JPMorgan Chase, through the “Purchase & Assumption Agreement” with the FDIC, were in fact sold by WaMu to “Private Investor – AO1” prior to the FDIC’s Receivership.
JPMC claims to own these WaMu loans to which there is also no record of the sales and transfer histories of the loans-even within their servicing platform. It is likely that WaMu sold and securitized the loan(s) prior to September 25, 2008.
If no schedule or inventory of WaMu loans has ever been produced, and there are no servicing records in existence from WaMu showing whether or not the loan was ever sold or securitized, could it be possible the loan(s) were sold by WaMu prior to September 25, 2008?
Paatalo states that Chase’s own witness testified that “Ao1” is a private investor, and this code does not mean “bank owned.” Paatalo continues, “It is almost too much to believe that one of the largest banking institutions in the world, would not have tracked the loans it originated and sold into the secondary market within its servicing systems.”
Homeowners and Attorneys may want to ask Chase, who is “Private Investor AO1?”
If you have a WaMu/Chase loan or foreclosure issue, and need answers about your loan- we recommend that you contact Bill Paatalo and order a report so that you will have a better understanding of your situation.
David Dayen (dday to old-timers at Daily Kos) has been the most single most dogged journalist digging into the massive fraud perpetuated on American homeowners in the last decade, the fraud that almost brought down the global economy. In fact, he wrote the book on it—Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud, winner of the Studs and Ida Terkel Prize (reviewed here). He is a contributing writer to The Intercept, and a weekly columnist for The Fiscal Times and The New Republic. He also writes for The American Prospect, Vice, The Huffington Post, and more. He lives in Los Angeles. Here I followed up with him about his reporting on the foreclosure fraud and the book for our five questions feature.
1. You wrote about it in the book, but can you tell us how you connected with Lisa, Michael, and Lynn, the people at the heart of your story?
So there’s a scene in the second half of the book where Lisa, Michael, and Lynn are invited to Washington to discuss the foreclosure fraud scandal (that’s the mass delivery of false documents in foreclosure cases by financial institutions who do not have the legal right to foreclose) with a bunch of activists, lawyers, writers, some political staffers. I think someone from the Financial Crisis Inquiry Commission was there. And I was asked to be there. At the time I was writing for Firedoglake and was just starting to wrap my head around this particular scandal.
I knew of Michael’s website but didn’t know him. And I don’t think I knew Lisa and Lynn at all at that time. But their stories stood out, because they were the only foreclosure victims in the room. They had something to bring to the crisis that none of us shared. So they became sources of mine. I’d read their websites and ask them questions. Years later, one of them, I think Lisa, told me that they were surprised I was interested in this and even though I was not in foreclosure. In their experience everybody fighting foreclosure fraud was personally affected. So their world was foreign to me and my world was foreign to them.
2. What led to your interest in the issue?
I was blogging at FDL, I was editing the news desk. And the portfolio of what I was to write about was “the news.” So, be it The Huffington Post or Talking Points Memo while sitting in your living room 3,000 miles away from Washington, or sitting in an office, I was still working my day job off and on at that time. (I edited television shows for many years.)
So I was always looking for those stories where I could add value, something to set me apart from other writers, something I could cover that wasn’t being covered. It still kind of amazes me that foreclosures could fall into that bucket. Over 9.3 million people were evicted in foreclosures or some other transaction that forced them to give up their homes from 2006 to 2014. This is the largest financial purchase that most people will ever make, the source of a large portion of their wealth, and the human drama associated with it is really incalculable. And yet the foreclosure crisis still remains on the fringes, on the business pages if anywhere.
What brought it home for me was a personal interaction. My wife and I have a friend who was very involved with the Obama campaign in 2008, he traveled to Nevada to knock on doors for him, was a major supporter. And one day, in the middle of an email conversation, he just came out with, “What I want to know is, why was President Obama’s plan to help those struggling with their mortgage written to favor the banks instead of the people?” At the time none of us knew that he was even having a problem with his mortgage. But I asked him to tell me his story, and it turns out it was a very familiar situation, he was trying to get a loan modification from his mortgage company (Citi Mortgage), and they approved him for a trial payment that was several hundred dollars a month lower. The trial payments were supposed to convert to permanent within three months, but Citi dithered and stalled for half a year, and then told him he was denied a permanent modification, and that he owed the difference between his trial payment and his original payment within 30 days or they would kick him out of his house.
This was very common, it turned out, a way for the banks to weaponize Obama’s modification program (called HAMP) and turn it into a predatory lending scheme. And I wrote that up and posted it at FDL (using an assumed name for my friend because he was still negotiating with Citi Mortgage). And I put out the call for more stories. Dozens of them came in, and the rest is history.
3) The book has been extremely well-received and well-reviewed. In fact, Sen. Elizabeth Warren raved about it: “If you’re looking for a book to read over Labor Day weekend—one that will that will get your heart pumping and your blood boiling and that will remind you why we’re in these fights—add this one to your list.” You’ve had numerous appearances talking about it around the country. What have you learned from that experience?
First of all, this is an ongoing nightmare. I wrote this book as sort of a work of history, to rescue something that had verged on going down the memory hole—that for all the excuses about how no high-ranking executives went to jail for the sins of the financial crisis because there were no good cases or what they did wasn’t illegal, there was an alternate history to be written, led by these three remarkable people who took it upon themselves to expose the greatest consumer fraud in American history while fighting their own punishing foreclosure cases. But in talking to people and getting feedback through email and social media, it reinforced what I already knew, that this is a living history. Every day in America, someone is thrown out of their home based on false documents, and both the political system and the justice system is thoroughly disinterested in changing that fact to arrive at a different outcome.
In St. Louis, I had a guy drive four hours from Chicago to tell me his story about experiencing fraud on his home and starting to work with a half-dozen lawyers to fight foreclosures in his city. In Philadelphia a woman told me she was about to be evicted in a week; the bank just got awarded summary judgment in her case. In Los Angeles a man told me he’d been in court over his home for almost a decade. And I’m pen pals with at least two dozen other homeowners keeping up the fight. It’s remarkable that these cases go on, that these people summon the inner courage to persevere against incredible odds. But Americans have this emotional connection to their homes and a resistance to injustice. They care enough to see things through, to not extinguish the fire burning inside them. Though the stories are horrible, they’re oddly life-affirming at the same time.
4. The book leaves us with kind of a frustrating ending—as admirable and important as the work these activists have done is, it’s still happening. What would it take to fix it, and do you think your book can help kick-start a reaction?
I try to be very clear with the people who ask me for advice. I’m not a lawyer and I cannot counsel them. But it’s very, very hard to win these cases. I didn’t set out to write a book that someone at the Justice Department would read and say “He’s right, we screwed up, let’s round up everyone on Wall Street.” It’s not going to happen.
I’d say two things—one looking backward, and one looking forward. One, I do think that people in high-ranking positions were shaken by the work they did, or rather didn’t do, in the face of this crisis. I have been told by people that the work of the activists, for which I was mostly a conduit, made a real difference. Someone who didn’t give me his name, but who told me he worked at a very high level on this issue, came up to me at an event and said that the $25 billion settlement we got over these practices, which was woefully inadequate, would have been much worse without my efforts. It’s not the first time I’ve heard that.
The other point is that this is a book that tells the story of a movement. And movements don’t always succeed. We hear about the great successful movements in history in our textbook, the civil rights movement and the gay rights movement, but lots and lots of smaller groups failed leading up to those victories. I say in the book that movements crash on the shore like waves, and each one gets a little bit closer to its destination. These three people didn’t have anything—no resources, no institutional knowledge, no history of activism. But they got on the Internet and built websites and collected knowledge and pushed this huge scandal into the public consciousness, if only for a brief moment. And without them, you don’t have Occupy Wall Street, and you don’t have the Elizabeth Warren wing of the party, and you don’t have the Bernie Sanders campaign. There’s a level of awareness about the financial industry now that didn’t exist in 2008, one that’s not going away. And Lisa, Michael, and Lynn helped to forge that.
5. What do Daily Kos readers need to know and do to help fight this ongoing battle?
Stay educated and involved! And recognize that the financialization of our economy, the power and hold that the banks retain, is about more than just foreclosures. Just after Labor Day we saw Wells Fargo fined for creating high sales targets that led its workers to forge documents and create millions of phony customer accounts. That’s not exactly what happened in the foreclosure fraud scandal but it’s a close cousin. And the real scandal there is not about consumer fraud actually—most of these accounts sat dormant, and only a few generated fees. It was securities fraud; Wells Fargo demanded high sales targets because they wanted to show robust growth to their shareholders and boost the stock. Incidentally, Wells Fargo’s CEO took $155 million in stock options from 2012 to 2015, giving him a real incentive to kick up the stock in whatever phantom way possible. That drive for short-term profits remains the biggest single source of recklessness among major banks, with consequences for consumers and investors and the broader economy. Dodd-Frank has not come close to wiping that away. And we need to be speaking out about how we can.
The Fair Housing Financing Agency has announced the details on the principle reduction program. The program is severely limited and requires that reductions be made only to owner-occupied borrowers who are 90 days or more delinquent as of March 1, 2016. The program will only apply to borrowers whose mortgage have an outstanding unpaid balance of $250k or less, and whose market-to-market loan-to-value rations exceed 115%.
Thus, the program is likely targeted towards the lower and middle class borrower who are upside down. This program clearly discriminates against the middle class borrower who purchased homes in the $250,001.00 to $417,000 loan limit range insured by the FHFA. Where is their relief? Many of these borrowers were offered homes based on inflated appraisal values.
Under the proposed rules, the FHFA said that approximately 33,000 borrowers are potentially eligible for the “final crisis-era modification program.” The reality is that the number of eligible borrowers is actually less than that.
A new report, published Monday by the FHFA, states that the FHFA now estimates that more than 30,000 borrowers will be eligible nationwide – the number is 30,761 to be exact. The FHFA report, states that the reduced number of eligible loans can be attributed to “the fact that the housing market is continuously evolving and may have improved in some areas.” Great excuse FHFA- by the time the program is done, Lending Lies team members predict that less than 12,000 homes will receive principle reductions based on prior results of the FSHA and GSEs.
Even more worrisome is attempting to predict how the FHFA and the loan servicers will use this program to ensure a default and foreclosure occurs. We predict that applications will be lost, eligible people will be foreclosed on during negotiations or turned away- and the program will end as soon as the intended public relations blitz creates the illusion that your government genuinely wants to help. We’ve seen how this type of program plays out when you get servicers administering assistance programs- the programs become a tool to engineer a default.
Since the program already requires homeowners to be at least 90 days past due on your loan, how many homeowners will be told to simply skip three months of mortgage payments to become eligible? All of a sudden the borrower’s options diminish quickly and the unsuspecting homeowner loses their home.
Don’t be fooled, we’ve been down this road before. Why must a homeowner fall behind 3 months on their mortgage payments? Because it will likely make it almost impossible for most families who have no savings to come up with a lump sum to cure the arrearage to stop a foreclosure sale. This is but another tactic to strip lower-middle class families of their homes and the end result will be a nation of renters who can never build any true wealth.
Back to the story. Where will these eligible borrowers be located? According to the FHFA report, eligible borrowers “tend to be concentrated in communities across the country that have not yet fully recovered from the foreclosure crisis, especially in states with long foreclosure timelines.”
The latest FHFA report actually sheds more light on that, showing the top ten states where the eligible borrowers are.
According to the FHFA report, the top ten states with the most potentially eligible borrowers are located in:
Florida – 6,260 potentially eligible borrowers
New Jersey – 6,257 potentially eligible borrowers
New York – 2,823 potentially eligible borrowers
Illinois – 2,434 potentially eligible borrowers
Ohio – 1,214 potentially eligible borrowers
Pennsylvania – 1,109 potentially eligible borrowers
Nevada – 1,032 potentially eligible borrowers
Maryland – 726 potentially eligible borrowers
Connecticut – 703 potentially eligible borrowers
Massachusetts – 682 potentially eligible borrowers
The FHFA report also provides more detail on the delinquency status, loan balances, and loan-to-value ratios of the eligible borrowers.
In Florida, for example, the 6,260 potentially eligible borrowers have an average loan balance of $156,719, an average LTV of 158%, and are an average of 1,590 days delinquent, which is nearly 4.5 years.
In New Jersey, the 6,257 potentially eligible borrowers have an average loan balance of $171,403, an average LTV of 163%, and are an average of 1,791 days delinquent, which is almost 5 years.
According to the FHFA, the principal reduction modification terms include capitalization of outstanding arrearages, an interest rate reduction down to the current market rate, an extension of the loan term to 40 years, and forbearance of principal and/or arrearages up to a certain amount to be converted later to forgiveness. This sounds like a pretty good option for those borrowers who are likely to lose their home.
However, when the government offers a plan that appears too good to be true- it usually is. Most modifications we have examined in the last year are not a good deal for the homeowner, and in the majority of cases the homeowner would be better off letting the home go back to the servicer. Typically, the homeowner will end up paying all arrearages, their payment will go up, and at the end of the 40 year term there will be a balloon payment required.
The process of capitalizing outstanding arrearages typically makes it impossible to modify the principal value of the home. The FHA admits that the average home in Florida is 4.5 years delinquent. The arrearage on a 200k home would be around $48,000 and with late penalties probably another $10k or more. The program doesn’t make sense because the homeowner is still going to end up in a loan where the own more than the property is worth.
This may be the reason behind the program for the FHFA. If they can get borrowers to sign new loan documents (even if they can’t afford the payments), they can “fix” all of the loans that have major title issues including robosigned and fabricated documents. This program could create the illusion that the homes that were in the home reduction program convey clear title (when they don’t and never can).
In theory, the federal government benefits in these ways from the home reduction program:
1. They create more defaults by telling people to fall behind 90 days or lost their applications. Thus creating larger arrearages that can’t be cured (or even forcing a homeowner over the $250k limit by delaying if the numbers are close).
2. They can use the program to create new loan documents to ‘fix’ title issues.
3. They can collect some of the payments before the home once again falls into default (which is likely since the borrower will have larger payments and balances amortized over 40 years).
4. With the continuing cooling real estate market, the homeowner will be underwater.
I won’t get into how the FHFA and servicers will issue reduction programs on loans they don’t own- but apparently the federal government housing agencies create the rules as they go.
At Lending Lies, we are gearing up for more calls from homeowner who lost their home while being considered for a loan reduction plan. Next year we will field calls for homeowners who accepted reduction programs that were unaffordable and resulted in the loss of their home. We hate to be skeptics, but the HAMP program actually caused more suffering and resulted in more home losses than it saved. This program, just like HAMP, sounds great on paper- but the numbers and strategy only work in a land of make-believe.
Eligible borrowers should expect a letter from their mortgage servicer about a principal reduction no later than Oct. 15, 2016, the FHFA said. Caveat Emptor.
Losing your home by foreclosure to a bank that used fabricated documents to foreclose is a tragedy that has tainted the American dream for millions of Americans. The process is unjust, unlawful and dehumanizing. But even years after the former homeowner has moved forward with their lives they sustain another injury they are probably not even aware of- and that is the loss of rebound gains in the market.
Oddly, homes that are foreclosed on tend to gain value back at a higher rate than properties that have not been previously foreclosed according to real estate website Zillow who conducted research on the matter. Former owners missed out on potential profits generated by the “recovery” and therefore sustained even more financial harm. Instead, the profits went to governmental agencies, GSEs (Fannie/Freddie), hedge funds, investors and flippers who bought these properties for pennies on the dollar.
In the Miami-Dade, Broward and Palm Beach, homes that were foreclosed had a 79 percent increase in price from the market’s lowest point. The research also shows that the homes that were foreclosed upon were the homes of lower-income people and young families.
These families who were illegally foreclosed upon were thrust into an inflated renters market where they likely secured accommodations that were inferior to the living conditions of the home they lost and even less affordable. The prior owner lost their down payment, any equity and any appreciation in home value. Many of these families may never recover from the financial slaughter they suffered.
“You had a ton of appreciation for these foreclosed homes, but the [prior] homeowners weren’t getting the benefits,” said Svenja Gudell, Zillow’s chief economist. “Lower-end and foreclosed homes were bought up by investors who would transform those homes into rental properties. … Had they held onto their home in many markets, homeowners would’ve made back their original investment plus much more.” The foreclosure crisis has contributed to the massive wealth gap that has evolved since the 2008 market crash.
Even more concerning are the actions of the Veteran’s Association that guarantees the loans of United States service members who obtain VA-guaranteed mortgages. The VA is not assisting veterans who served their country to retain their homes when default threatens. In fact, the VA is known to foreclose on the homes of veterans for pennies on the dollar, evict the veteran, hold the property and then sell the property at a large profit.
Recently the Lending Lies team learned of a veteran with health issues caused by Agent Orange exposure. The VA foreclosed on his home that had a remaining balance of 7k. The VA held the property for a year and then sold the home for over 100k. The displaced veteran who had paid on his home for decades did not share in the profits the VA made from the sale of his home.
Homeowners have the potential to be damaged at three different junctions during their loan: at closing, during default, and post-default. The homeowner is damaged at closing when they receive a table funded loan, there is no disclosure regarding WHO the true creditor is, and they are not told that they are signing a Note that is actually a security and not a mortgage. The homeowner does not receive disclosure that investors will make millions of dollars from the homeowner’s signature and is not told that he/she will carry all of the risk when the game of securitization is put into play.
A homeowner may be damaged during the term of their loan by the loan servicer who is looking for an opportunity to create a default so they can foreclose on the home. The homeowner may be given erroneous information by the servicer or may not receive service to resolve an issue that may occur during the life of the loan. The servicer may create a default by misapplying payments, inflating the balance by applying illegal fees, and other tactics to engineer a default. When a homeowner facing default contacts their loan servicer looking for assistance, the homeowner is not engaging with a servicer who is looking to find a solution. Instead, the homeowner is dealing with an agent who is trained to find the homeowner’s Achilles heel in which to exploit and create a default.
At this point the homeowner in default will experience the Foreclosure Machine where documents disappear into ether or magically transform, bank presidents have G.E.D’s, and due process means you had your three minutes in front of a judge. The majority of homeowners caught up in this stage of foreclosure will gladly do anything to end their misery. Despite their knowledge that the servicer foreclosing has no standing- the wounded homeowner may prefer to chew off their own arm to escape the clutches of attorneys, motions, and bank intimidation. This is the stage where the homeowner should refuse to back down and dig in their heels, but the majority flee.
After the homeowner has lost their home to an entity who had no standing to foreclose, the homeowner will suffer further economic decimation. The vultures who made millions off of the economic destruction of the American middle and lower-middle class will become their landlord. While the tenant works to make his monthly rental payment and is not building any equity, the landlord will sit back and collect the passive income while the foreclosed property appreciates at 18% plus a year.
Can there be any doubt that taking out a home mortgage from a mega-bank is not a method of middle-class mass destruction? Caveat Emptor.