White House warns banks on foreclosures and the law

Better late than never, but still very much appreciated. The banks listen to little other than an iron fist so hopefully the White House is ready to carry through on their talk.

Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people's homes, according to people familiar with the matter.

The Obama administration's Financial Fraud Enforcement Task Force is in the early stages of an investigation into whether banks and other companies that submitted flawed paperwork in state foreclosure proceedings may also have misled federal housing agencies, which now own or insure a majority of home loans, according to these sources.

The task force, which includes investigators from the Justice Department, Department of Housing and Urban Development and other agencies, is also looking into whether the submission of flawed paperwork during the foreclosure process violated mail or wire fraud laws. Financial fraud cases often involve these statutes.

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Bank of America to resume foreclosures next week

We should expect the other banks to get re-started quickly also, though GMAC is already there.

Meanwhile, GMAC Mortgage, whose procedures helped prompt the controversy when one its executives testified that he had signed 10,000 documents in a month, is also proceeding with foreclosures.

“We announced a temporary suspension of evictions and foreclosure sales in the 23 judicial states several weeks ago so we could commence the appropriate review,” said Gina Proia, a spokeswoman for GMAC. “As cases are being reviewed and, when needed, remediated, the foreclosure process moves forward as appropriate.”

Guy Cecala of Inside Mortgage Finance, an industry publication, said: “This draws a line in the sand that the banks expect this problem will be over in relatively short order and it will be back to business as usual. If Bank of America can do it, certainly the smaller ones will follow suit.”

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White House again calls for calm in foreclosure crisis

Maybe they missed it, but people don't exactly have the greatest faith in the way the White House negotiates with anyone about anything. They certainly haven't been impressive from a consumer perspective with the banks so far and it was only a few months ago they decided to play nice with BP as well. Everyone can appreciate the negative impact of delayed business in this economy but people can also appreciate the harshness of throwing a family onto the street.

Telling the public that the Justice Department will get tough but not open a criminal investigation could lead people to believe that another big talk, little action move is ahead. For some reason this administration is afraid of conflict and ready to fold at even the slightest hint of it. They forget that they have already played the "let's talk tough but act nice behinds the scenes" card a few too many times. Asking nicely does not work with this industry. It also doesn't win over a suspicious public that is already upset with the financial industry.

The full extent of the foreclosure mess is still coming into focus. Congress has called for a hearing on the subject, and the housing market in certain parts of the country has come to a near standstill.

The officials on Sunday stopped short of announcing a criminal investigation, and did not suggest that one was imminent. Instead, Mr. Donovan wrote that the Financial Fraud Enforcement Task Force — a coalition of federal agencies and United States attorney’s offices — has made the foreclosure issue “priority No. 1,” adding that Attorney General Eric Holder has said that if wrongdoing was discovered by the task force, it “will take the appropriate action.”

“Banks must follow the law,” Mr. Donovan wrote on The Huffington Post, “and those that haven’t should immediately fix what is wrong.”

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Wells Fargo also using robo-signers to foreclose

Wells Fargo contends that unlike everyone else in the industry with robo-signing problems, their internal checks and balances are fine. It's possible, but at this point, it's not convincing. The banks are always very casual with details when it's someone else's money and life on the line.

The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses.

In a sworn deposition on March 9 seen by the FT, Xee Moua, identified in court documents as a vice-president of loan documentation for Wells, said she signed as many as 500 foreclosure-related papers a day on behalf of the bank.

Ms Moua, who was deposed as part of a foreclosure lawsuit in Palm Beach County, Florida, said that the only information she verified was whether her name and title appeared correctly, according to the document.

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Wall Street blames foreclosure problems on everyone besides themselves

For starters, let's remember who created "liar loans" and the housing bubble. Hold that thought and then let's look at one or two quick examples of houses that were repossessed illegally even though defaulting on payments had NOTHING to do with the process. Then let's think about the Wall Street people who created these documents yet now can't live by the law, as if they are above it. Why is it so hard for Wall Street to live by the law that their lobbyists helped write in the first place? Keep talking Wall Street because you haven't pissed off the country enough to get real change.

Those on Wall Street, however, are largely unsympathetic, insisting that possible errors in the foreclosure process are beside the point, that the process begins only when a borrower starts missing mortgage payments.

"If you didn't pay your mortgage, you shouldn't be in your house. Period. People are getting upset about something that's just procedural." said Walter Todd, portfolio manager at Greenwood Capital Associates.

Some said the issue is one of personal responsibility for one's own debts.

"Everyone's responsible for following the law. If we all don't have to pay our mortgage, should we just stop paying taxes, too?" said Anton Schutz, president of Mendon Capital Advisers. "Your mortgage didn't get to a robo-signer by accident, it's because you're not paying."

Now that is seriously funny. Wall Street spongers talking about responsibility and the law. You can't even make this up. Please Anton, tell us more about the law and those robo-signers. Then, tell me a bedtime story about personal responsibility and the financial industry. Read More......

Obama administration asks mortgage companies to clean up their documents

Could someone please provide an example of where this industry has positively responded to gentle requests? I'm at a complete loss on this one. As friendly as Obama has treated the finance industry, they still scream "socialist" and throw their money at the GOP. Nobody is asking anyone to give a free ride to those who bought real estate that they couldn't afford but there's no reason to ignore the very real problem of proper documents.

Is this the best regulators can do? Asking nicely is no replacement for firm regulation that protects consumers.

Federal regulators sought Wednesday to prevent the growing furor over improper foreclosures from escalating, pressing mortgage lenders to replace flawed and fraudulent court documents while insisting that foreclosures continue apace.

The approach adopted by the Federal Housing Finance Agency (FHFA) is Washington's clearest response so far to a crisis that threatens to roil the national real estate market and overwhelm courts around the country.

Some consumer advocates and lawmakers said the policy was soft on banks and industry insiders and may have little effect, because many lenders are already taking such steps. In addition, the handling of individual court cases is the province not of federal officials but of judges at the state level.

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Rule by laws vs. rule by men

Ian Welsh has had quite a lot to say lately that's worth listening to. (This on Afghanistan is itself worth a click.) But I'd like to focus on a theme we both share — are we ruled by law or ruled by men?

I won't re-create his piece (please read for yourself), but he does a fine job of connecting the fraudulent mortgage foreclosure mess with Bush-era crimes and their non-prosecution:

This is a logical consequence of refusing to go after banksters for fraud. The fraud was so systemic (the majority of CDOs based on housing) that virtually every major executive was involved. The DOJ and others chose not to prosecute criminally, and as a result the message was sent that the executive class, as a group, will not be prosecuted for fraud.

So, of course, they doubled down.

First the political elites skate; then the corporate elites. The result, in Welsh's view, is that we're fast-morphing into a nation ruled by men, not laws. He believes the decay can be stopped, but only via criminal prosecution — an actual option in states with actual Attorneys General.

But if that fails, his predicted next step is chilling: "Deficiency judgements: going after people for the amount that’s underwater." Check it out. (Oops, here's Masaccio's post–Face the Nation take. Ugh.)

By the way, Chris in Paris has been all over the fraudulent foreclosure story — here, here, here, and here. Stay tuned; this is far from over.

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Eric Cantor supports bogus bank foreclosure documents

Need more proof that the GOP is completely own by Wall Street bankers? Why is it so hard to wait for valid documents before a foreclosure? If insisting that banks have legitimate documents before they destroy someone's life, Cantor and the GOP may realize that yes, Americans do like government intervention. It's unthinkable that anyone could even suggest banks have the right to foreclose without correct paperwork. Of course consumers need to be responsible for themselves but the same should also apply for banks, no? More from Think Progress:

On Fox News Sunday, Rep. Debbie Wasserman-Schultz (D-FL) called for a nationwide moratorium on foreclosures, saying “it’s absolutely imperative that we keep people in their homes.” House Minority Whip Eric Cantor (R-VA) disagreed strongly, however, saying he was “just perplexed” at Wasserman Schultz’s answer, and that “people have to take responsibility for themselves.”

CANTOR: I’m just perplexed to that answer, Bret… what we’re seeing if you do that, if you impose a moratorium on foreclosures what you are telling people and institutions that lend money is they do not have the protection to take the risk they need to, to extend credit for people will get a mortgage. You’ll shut down the housing industry if that is the case[...]

What we’re talking about, Debbie, you have 10 percent, if that, of the population who are now in a foreclosure situation or in a mortgage that they have been unable to meet the obligations… Now, come on, people have to take responsibility for themselves. We need to get the housing industry going again. We don’t need government intervening in every step of every aspect of this economy.

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Axelrod defends banks, 'not sure' about foreclosure moratorium

Siding with the GOP and Wall Street bankers is a unique way of inspiring the base to get out and vote but hey, they're the experts. There's little question about the foreclosure abuse outside in the real world. The White House bubble that we heard so much about during the Bush years seems to be continuing under Obama.

White House senior adviser David Axelrod signaled Sunday that the Obama administration is opposed to a national moratorium on foreclosures, even as pressure from Congress, labor unions and consumer groups mounts for the federal government to take action.

Calling the growing evidence that lenders have used inaccurately prepared and even fraudulent documents to foreclose on homes a "serious problem," Axelrod said it had already "thrown a lot of uncertainty into the housing market that is already fragile."

"I'm not sure about a national moratorium, because there are, in fact, valid foreclosures that probably should go forward, and where the documentation and paperwork is proper," Axelrod said Sunday on CBS' "Face the Nation."

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Obama administration had been warned of foreclosure signing problems

If ever we had (and these days it's past tense, sadly) a president who had the ability to grab a microphone and speak, it was Obama. Somehow I have a very hard time listening to the excuses here that they had no choice but to go along with this. If this president and his wonder team could not figure out how to take such an issue to the public and push the banks into both stopping fake foreclosures and also forcing the banks to go along with other programs, then we have some serious problems.

Who really thinks the public would not be receptive to shoving the banks in the right direction? Maybe the White House brain trust never heard of the bully pulpit. Either that or there wasn't any desire to change an obvious wrong. It's unfortunate that there doesn't seem to be any issue worthy enough for the White House to dig in for a fight. It's not easy being enthusiastic as a voter when thhose who promoted change keep staying the course. Washington Post:

Consumer advocates and lawyers warned federal officials in recent years that the U.S. foreclosure system was designed to seize people's homes as fast as possible, often without regard to the rights of homeowners.

In recent days, amid reports that major lenders have used improper procedures and fraudulent paperwork to seize properties, some Obama administration officials have acknowledged they had been aware of flaws in how the mortgage industry pursues foreclosures.

But the officials said they could take only limited action to address the danger. In part, this was because they wanted lenders' help carrying out federal programs to modify mortgages that had fallen into default or were poised to do so.

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Bank of America to halt foreclosures in all 50 states

It's pathetic that the others are only stopping foreclosures in the states that regulate, but hey, that's the modern finance industry for you. Will this industry ever really learn?

Potential flaws in foreclosure documents are threatening to throw the real estate industry into a full-blown crisis, as Bank of America on Friday became the first bank to stop sales of foreclosed homes in all 50 states.

The move, along with another decision on foreclosures by PNC Financial Services Inc., adds to growing concerns that mortgage lenders have been evicting homeowners using flawed court papers.

Charlotte, N.C.-based Bank of America Corp., the nation's largest bank, said Friday it would stop sales of foreclosed homes in all 50 states as it reviews potential flaws in foreclosure documents. A week earlier, the company had said it would only stop such sales in the 23 states where foreclosures must be approved by a judge.

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Bank of America halts foreclosures in states that regulate the process

It's shocking what happens when banks are required to provide basic information to the courts instead of simply pulling demands out of thin air. Maybe most of the houses will be foreclosed though it's only fair for consumers that the banks are being forced to provide proof that they own the properties. For the remaining twenty-seven states that do not require the banks to provide accurate documents, consumers are left with few, if any, options. Tell me again why regulation and oversight is so bad?

Bank of America said on Friday it is delaying foreclosures in 23 states to review whether it has been conducting them properly. Two other big lenders—JPMorgan and Ally Financial's GMAC Mortgage—have already suspended foreclosures.

Also, a Maine state court judge reprimanded GMAC Mortgage for how it repossesses homes. The judge concluded that GMAC submitted a company official's affidavit to support a foreclosure "in bad faith."

Companies are scrambling to defend and where needed improve their foreclosure procedures in the face of anger among homeowners and regulators.

The issue came to the forefront last month when GMAC revealed that officials had signed thousands of affidavits supporting such proceedings without knowing their contents.

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24% of second quarter home sales were foreclosures

Another sign that there is still a lot of surplus in the market. Some banks had been holding back foreclosed inventory though there could be years worth out there. Those in Washington who thought this problem could potentially be turned around quickly are being proven wrong.

Nearly one in every four U.S. homes sold in the second quarter was a deeply discounted foreclosed house, putting the market on pace to work through distressed properties in about three years, RealtyTrac said.

Banks stepped up foreclosures through the summer and will take over a record 1.2 million homes this year, up from around 1 million last year and about 100,000 in 2005 before the housing bust, according to a forecast from the real estate data company.

Foreclosed homes accounted for 24 percent of all second-quarter sales, at an average price discount of more than 26 percent compared with homes not in the foreclosure process.

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US home repossessions up 25% from last year

Ouch. This is yet another sign that the problems are not yet over.

In all, banks repossessed 95,364 properties last month, up 3 percent from July and an increase of 25 percent from August 2009, RealtyTrac said.

August makes the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high was in May.

Banks have been stepping up repossessions to clear out their backlog of bad loans with an eye on eventually placing the foreclosed properties on the market, but they can't afford to simply dump the properties on the market.

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Home sales plummet

WSJ:

U.S. home sales plummeted in July to a level not seen in more than a decade, spurring fears of renewed weakness in housing prices and the broader economy.

Sales of previously owned homes fell 27.2% from June to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday, the lowest level since the industry group started its tally in 1999.

The expiration of a home-buyer tax credit in the spring was expected to damp buying, though less severely. Economists said the sales drop—together with a corresponding rise in the inventory of unsold homes—meant another decline in housing prices was on the horizon. House prices had stabilized last year after declining since 2006.

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Huffington Post investigative report on HAMP: 'It's not working'

Last week, Gaius did a post on the Home Affordable Modification Program (HAMP), based on coverage from Chris Hayes. He described it as "painful."

Housing foreclosures have been one of the biggest problems facing many Americans in the wake of the economic crisis. The Obama administration's HAMP was supposed to be a solution. But, there's more painful coverage today. According to an extensive report by Huffington Post's Shahien Nasiripour and Arthur Delaney, it's not working:

President Barack Obama's signature plan to combat the housing crisis has fallen short of its goals -- rather than significantly and permanently reducing home foreclosures, it is only delaying them.

The administration unveiled its Making Home Affordable plan in February 2009. Obama vowed in front of an audience gathered at Dobson High School in Mesa, Ariz., that MHA's signature effort, the Home Affordable Modification Program, would "enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure."

The $75 billion initiative -- $50 billion from the bank bailout, $25 billion from government-owned mortgage giants Fannie Mae and Freddie Mac -- was designed to induce lenders, servicers and investors to modify distressed mortgages through a series of cash incentives.

It's not working.

This was supposed to be a signature program for Team Obama. Read the full report. It's worth it. And, this quote isn't what anyone would have expected from HAMP:

"They told us we were a great candidate, so we went for it," [Bea Garwood] says. "And as a result we're losing our home."

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Foreclosures hit record high

So who will the Republicans blame for this? It's asking too much for them to accept that this is a result of their poor policies. Their friends in the financial industry have either walked away with cash in their pockets or they continue to live a very exclusive lifestyle on the backs of everyone else. LA Times:

The number of U.S. homes taken back by banks through foreclosure hit a record high in the second quarter, even as lenders delayed more homes from entering the process through short sales and loan modification efforts, according to data to be released Thursday.

This growing supply of lender-owned properties could set back the nation's housing recovery but probably won't sink it completely if the nation's employment situation doesn't deteriorate further and the economy begins to pick up steam, experts said. Sales of homes have faltered nationally in recent months with the expiration of government tax incentives for buyers.

U.S. bank repossessions increased 38% in the second quarter from the same period a year earlier for a record total of 269,952, according to Irvine research firm RealtyTrac. That was also a jump of 5% from the previous quarter. If that pace continues through the year, the number of homes taken by banks is likely to top 1 million by the end of 2010, said Rick Sharga, RealtyTrac senior vice president.

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Mortgage defaults dominated by rich

There go the McMansion subdivisions. What a tragic loss for society.

Whether it is their residence, a second home or a house bought as an investment, the rich have stopped paying the mortgage at a rate that greatly exceeds the rest of the population.

More than one in seven homeowners with loans in excess of a million dollars are seriously delinquent, according to data compiled for The New York Times by the real estate analytics firm CoreLogic.

By contrast, homeowners with less lavish housing are much more likely to keep writing checks to their lender. About one in 12 mortgages below the million-dollar mark is delinquent.

Though it is hard to prove, the CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment.

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31% of home sales were on foreclosed homes in first quarter

The good news is that it's only 30 points higher than the pre-recession number.

Foreclosure homes accounted for 31 percent of all residential sales in the first quarter of 2010, with the average sales price of properties that sold while in some stage of foreclosure nearly 27 percent below homes that were not in the process, Irvine, California-based RealtyTrac said.

"In a normal market, only 1 to 2 percent of home sales are foreclosures, so this is certainly a significant level," Rick Sharga, senior vice president at RealtyTrac, said in an interview.

Total U.S. foreclosure sales in 2009 were up more than 1,100 percent from 2006 and more than 2,500 percent from 2005. Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and a mere 6 percent in 2007, the real estate data company said.

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Bank of America tries to take away yet another house

Documents? We don't need no stinkin' documents. Seize the house! Who cares that the problem has happened once or twice or more? Bank of America is above the law. They are the law.

Nancy Willmes paid cash for her Tuolumne home in 2001. So she was quite surprised when Bank of America send her a notice of default on the property in February.

"I honestly felt like Bank of America was trying to steal my property," Willmes said.

She contacted Bank of America to try to find out why the bank believed it could foreclose on property she had purchased outright.

Willmes has chain-of-ownership records, which show Bank of America had sold the property to Fannie Mae years earlier. Fannie Mae foreclosed on the previous owner, and Willmes purchased the property with cash from Fannie Mae.

But Willmes said Bank of America did not care about the documentation.

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