Ritholtz: Why foreclosure fraud is so dangerous to property rights

[coyotes_geek]

dp

[boutons_deux]

F & F (DeMarco) refuse to bail out the homeowners after the homeowners (taxpayers) bailed out F & F.

Why Millions Won’t Get Help From Big Mortgage Settlement

The two companies aren't directly part of the settlement. They don't service mortgages, or deal directly with borrowers. But Fannie and Freddie do guarantee or own roughly half of the mortgages in the U.S. They also hold more than 3 million of the nation's nearly 11 million underwater mortgages. Since Fannie and Freddie are backing the loans -- and are the ones who will take a loss if the mortgage isn't paid back in full -- they often have a veto on whether homeowners get a break.

Even if Bank of America, for example, services your mortgage, you would not be eligible for principal reduction if Freddie or Fannie back it.

. The administration recently tried to encourage Fannie and Freddie by offering to triple incentives for principal reduction. So far, the companies and their federal overseer, DeMarco, have declined to do so. An FHFA spokesperson said that the agency is "not a party to the agreement. We await a copy of the agreement to determine its implications."

Lowering the amount of money owed on a loan would result in at least short-term losses for Fannie and Freddie, as well as to any other investors in mortgages that are reduced. But many economists and analysts argue that Fannie and Freddie would ultimately benefit since such moves could help restore the health of the housing market as a whole.

The reluctance by Fannie, Freddie and others to take on principal reduction is partly why the administration's mortgage modification programs have been so ineffective.

http://www.propublica.org/article/wh...age-settlement

[Winehole23]

An investigation, and a multi-billion dollar settlement. That sounds like a lot, until you put it into perspective. Here are the numbers. Roughly half of homeowners with mortgages are underwater, which means they owe more than they own, to the tune of $1 trillion or so. And housing values are still declining so far in this "recovery", throwing more homes underwater. In terms of an investigation, the Savings and Loan crisis used roughly 1000 FBI investigators to uncover fraud -- this task force taking on a crisis forty times more severe will employ 10 FBI agents.


There's a reason this is so inadequate to the problem at hand. For the last three years, the policy has been to impose a political solution to a math problem. It hasn't worked. America simply has too much mortgage debt to pay back. Serious economic thinkers across the spectrum, from Democrat Alan Blinder to Republican Martin Feldstein to New York Fed President William Dudley, believe that there is only one solution -- writing down the enormous creaking mound of debt. This solution is currently off the table, because writing down these unsustainable debts could cost our fragile banks enormous sums of money and possibly lead to a restructuring of one or more of our major banks. Avoiding this clear policy choice has resulted in our economy falling into a Japan-style "zombie bank" torpor, with debts carried on the books at full value which everyone knows will not be paid back at par.

http://www.huffingtonpost.com/dylan-...b_1267710.html

[Winehole23]

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren't public. The website created for the national settlement lists the do ent as "coming soon."
That's because a fully authorized, legally binding deal has not been inked yet.
The implication of this is hard to say. Spokespersons for both the Iowa attorney general's office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the do ent's non-final status, saying that the terms were already fixed.


"Once the do ents are finalized, they'll be posted to nationalmortgagesettlement.com," the representative said in an email to American Banker.


Other sources who spoke with American Banker raised doubts that everything is yet in place. A person familiar with the mortgage servicing pact says that a settlement term sheet does not yet exist. Instead, there are a series of nearly-complete do ents that will be attached to a consent judgment eventually filed with the court. That truly final version will include things such as servicing standards, consumer relief options, legal releases, and enforcement terms. There will likely be separate state and a federal versions of the release.


Some who talked to American Banker said that the political pressure to announce the settlement drove the timing, in effect putting the press release cart in front of the settlement horse.

http://www.americanbanker.com/issues...1046574-1.html

[boutons_deux]

Foreclosure Deal to Spur New Wave of U.S. Home Seizures, Help Heal Market

The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures, inflicting short-term pain on delinquent U.S. borrowers while making a long-term housing recovery more likely.

Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.

“The best thing about the settlement, frankly, is that it will be done,” said Stan Humphries, chief economist for Seattle-based Zillow Inc. (Z), a provider of home-sales data. “The shadow of the settlement hung over the market for a year now.”

The backlog of foreclosures has trapped homeowners in properties they can no longer afford, depressed neighborhood prices by increasing the number of abandoned homes and led banks to tighten mortgage credit standards because of uncertainty about the cost of their potential obligations. Foreclosure starts fell 46 percent in December from October 2010, when the investigation into the so-called robo-signing of mortgage do entation began, according to Irvine, California-based RealtyTrac Inc.

The agreement will direct $17 billion to writing down debt to buffer about 1 million homeowners from foreclosure through mortgage forgiveness, forbearance or loan modification programs, according to Housing and Urban Development Secretary Shaun Donovan. About 750,000 borrowers may get direct payments of as much as $2,000 to compensate them for servicing errors.

http://www.bloomberg.com/news/print/...al-market.html

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So the predatory, corrupt, criminal capitalists, having allowed/lent the toxic mortgages and bankrupted themselves, are free to pillage Human-Americans. A "wealth redistribution" that right-wingers love.

[Winehole23]

Wisconsin will use a chunk of its $140 million share of a national settlement over foreclosure and mortgage-servicing abuses to help the state budget rather than assist troubled homeowners, Gov. Scott Walker and state Attorney General J.B. Van Hollen said Thursday.

http://www.jsonline.com/news/wiscons...139014139.html

State government also receives $41 million. Earlier this week, (Missouri) Gov. Jay Nixon proposed using nearly all that to soften a budget cut for colleges and universities.

http://www.businessweek.com/ap/finan.../D9SQJ97O0.htm

[Winehole23]

Critics also pointed to the fact that millions of mortgages owned by the government’s housing finance agencies, Fannie Mae and Freddie Mac, would not be covered under the deal, excluding about half the nation’s mortgages.

http://www.nytimes.com/2012/02/10/bu...ners.html?_r=1

[Winehole23]

But perhaps the largest question looming over this settlement is how it will be policed. Recent history is littered with agreements that required banks to take specific steps to make amends. All too often, the banks have skated away from their promises.



A prime example is a settlement over predatory lending that was reached by Countrywide Financial in 2008. Led by attorneys general in California and Illinois, that deal had Countrywide vowing to provide $8.4 billion in loan relief to borrowers in the form of lower interest rates and loan modifications.



It sounded good on paper. But Bank of America, Countrywide’s parent, defied many aspects of the settlement, according to Catherine Cortez Masto, Nevada’s attorney general. She sued Bank of America last summer, contending that it had raised interest rates on loan modifications even though Countrywide had promised to lower them.



Bank of America also declined to provide loan modifications to qualified homeowners as required in the deal and improperly proceeded with foreclosures while borrowers’ modification requests were pending, Ms. Masto’s suit said. Furthermore, the bank failed to meet the settlement’s 60-day requirement on granting new loan terms, allowing months — and in some cases, more than a year — to go by with no resolution, the lawsuit said.

http://www.nytimes.com/2012/02/12/bu...s8u23rQMuGIhXg

[Winehole23]

The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. This fact is demonstrated by a November report by Syracuse University’s Transitional Records Access Clearinghouse (TRAC), “Criminal Prosecutions for Financial Ins ution Fraud Continue to Fall.”

The truth is that neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis, in contrast to over 1,000 elite felony convictions arising from the Saving & Loan debacle in the 1980s. Yet today's ongoing crisis caused losses more than 70 times greater than the S&L debacle, and the amount of elite fraud driving this crisis is also vastly greater. Bank CEOs leading what I call "accounting control frauds” now do so with impunity. They become wealthy through fraud, and even if they are sued civilly they almost invariably walk away wealthy with the proceeds.

http://www.alternet.org/story/154038

[Winehole23]

We have forgotten the successes of the past. During the S&L debacle, Congress responded to the S&L crisis, once the presidentially-ordered cover up of the scope of the crisis ended in 1989, by ordering and funding a dramatic increase in DOJ resources dedicated to prosecuting the S&L accounting control frauds that drove the second phase of the debacle. President Bush (II), President Obama, and Congress have each failed to emulate such policies. DOJ and the S&L regulators made the prosecution of the elite frauds a top priority by their deeds as well as their words.

[Winehole23]

DOJ should have been issuing grand jury subpoenas to every lender making liar’s loans and every en y packaging liar’s loans no later than September 2004 when the FBI warned that there was an “epidemic” of mortgage fraud and predicted that it would cause a financial “crisis.”

[Winehole23]

An audit by San Francisco county officials of about 400 recent foreclosures there determined that almost all involved either legal violations or su ious do entation, according to a report released Wednesday.

Anecdotal evidence indicating foreclosure abuse has been plentiful since the mortgage boom turned to bust in 2008. But the detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.



The improprieties range from the basic — a failure to warn borrowers that they were in default on their loans as required by law — to the arcane. For example, transfers of many loans in the foreclosure files were made by en ies that had no right to assign them and ins utions took back properties in auctions even though they had not proved ownership.



Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

The report, which was compiled by Aequitas Compliance Solutions, a mortgage regulatory compliance firm, did not identify specific banks involved in the irregularities. But among the legal violations uncovered in the analysis were cases where the loan servicer did not provide borrowers with a notice of default before beginning the eviction process; 8 percent of the audited foreclosures had that basic defect.



In a significant number of cases — 85 percent — do ents recording the transfer of a defaulted property to a new trustee were not filed properly or on time, the report found. And in 45 percent of the foreclosures, properties were sold at auction to en ies improperly claiming to be the beneficiary of the deeds of trust. In other words, the report said, “a ‘stranger’ to the deed of trust,” gained ownership of the property; as a result, the sale may be invalid, it said.



In 6 percent of cases, the same deed of trust to a property was assigned to two or more different en ies, raising questions about which of them actually had the right to foreclose. Many of the foreclosures that were scrutinized showed gaps in the chain of le, the report said, indicating that written transfers from the original owner to the en y currently claiming to own the deed of trust have disappeared.

http://www.nytimes.com/2012/02/16/bu...ures.html?_r=1

[Winehole23]

The audit also raises serious questions about the accuracy of information recorded in the Mortgage Electronic Registry System, or MERS, which was set up in 1995 by Fannie Mae and Freddie Mac and major lenders. The report found that 58 percent of loans listed in the MERS database showed different owners than were reflected in other public do ents like those filed with the county recorder’s office.

same

[boutons_deux]

The 1% doing what they do best, stealing from and defrauding the 99%.

[Winehole23]

boutons doing what he does best, pseudo-plai udinous finger-pointing.

[boutons_deux]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/ho...the-government

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Boutons doing what he does best, delivering the -slapping goods.

[TeyshaBlue]

lol @ boutons forgetting the -slapping he took on 3 pages of this thread.

[boutons_deux]

TB always adding a informative comment and only to try to reach high enough to hit The Great Boutons

[boutons_deux]

Subprime Mortgage Bonds Back In Fashion



The home loans responsible for blowing up the housing market are regaining popularity.

Prices are climbing for some bonds backed by subprime mortgage loans given to higher risk borrowers, with one index rising 14 percent, according to the Wall Street Journal.

These home loans, given to anyone essentially with a pulse during the housing boom, saw massive defaults and helped cause the foreclosure crisis. Subprime bond investors suffered enormous losses in the crash--financial ins utions collapsed because of subprime exposure.

Investors' belief that the housing market has finally hit bottom could be fueling their return to these riskier mortgages. Despite the mess that took place in 2008, investors are eager to try again. Investors who made hundreds of millions betting against subprime mortgage loans in 2007 jumping into the market for risky mortgage securities, say that today's subprime mortgage bonds are priced to withstand an economic slowdown, according to Bloomberg.

If demands for these kinds of bonds rise, banks may loosen up and do more lending to higher-risk borrowers. Already, some mortgage lenders may be starting to loosen standards, according to Time.

In addition, as the economy has started to recover, Americans are becoming less gun shy about taking on more debt. After de-leveraging in the years immediately following the recession, credit card use climbed last year, even as Americans contended with falling incomes, according to statistics from First Data.

But if history is any indication, a boost in investor appe e for these types of bonds may spell disaster. Indeed, the fallout from subprime is ongoing. The Securities and Exchange Commission sued six former Fannie Mae and Freddie Mac executives at the end of last year, alleging they misled the public about the mortgage giants' exposure to subprime mortgages during the crisis. In addition, the SEC may be preparing a lawsuit against some of the country's biggest banks over their subprime mortgage loan practices.

http://www.huffingtonpost.com/2012/0...comm_ref=false

[Winehole23]

http://www.naca.net/sites/default/fi...022%202012.pdf

[Winehole23]

U.S. Bankruptcy Judge Robert E. Grossman in Central Islip, New York, in a decision he said he knew would have a “significant impact,” wrote that the membership rules of the company’s Mortgage Electronic Registration Systems, or MERS, don’t make it an agent of the banks that own the mortgages.



“MERS’s theory that it can act as a ‘common agent’ for undisclosed principals is not supported by the law,” Grossman wrote in a Feb. 10 opinion. “MERS did not have authority, as ‘nominee’ or agent, to assign the mortgage absent a showing that it was given specific written directions by its principal.”

http://www.bloomberg.com/news/2011-0...udge-says.html

[Winehole23]

“MERS and its partners made the decision to create and operate under a business model that was designed in large part to avoid the requirements of the traditional mortgage-recording process,” Grossman wrote. “The court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

same

[Winehole23]

The case is In re Agard, 10-77338, U.S. Bankruptcy Court, Eastern District of New York Central Islip).

[boutons_deux]

How Citibank Dumped Lousy Mortgages on the Government

Citigroup agreed yesterday to pay $158 million to settle a lawsuit over bad loans that the bank passed on to the Federal Housing Administration to insure. The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi's mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The FHA insures one-third of the mortgages loans in the country, taking on the risk of homeowners' default from lenders like Citi. The government requires lenders to certify that insured loans meet FHA standards.

Citi appears to have flouted those standards. According to the lawsuit, the bank passed along subpar loans to the FHA until very recently, making "substantial profits through the sale and/or securitization of FHA-backed insured mortgages" while "it wrongfully endorsed mortgages that were not eligible."

In the settlement, Citi, which was bailed out by taxpayers in 2008 to the tune of $45 billion, "admits, acknowledges, and accepts responsibility" for passing on bad loans.

http://www.propublica.org/article/ho...the-government

[boutons_deux]

While state govts' are stealing the funds the Feds intended for homeowners, homeowners risk getting raped harder by the IRS

Homeowners Who Negotiate Debt Relief Could Soon Face Massive Tax Bill


You bought your house when the market was high and then lost your job. In order to avoid foreclosure, you negotiated a short sale for half of what you paid, ruining your credit rating for years and draining your bank account. But there is a tiny silver lining: Thanks to a 2007 law, you don't have to pay taxes on the $100,000 of debt your bank forgave as part of the short-sale agreement.

This week, real estate columnist Kenneth R. Harney pointed out that this important tax break will expire at the end of 2012 -- and, because of opposition from conservative members of Congress, might not be renewed.

http://www.propublica.org/article/ho...ssive-tax-bill