Wall Street and Their Seductive Loan Promotions Tricked Many on Main Street

In Wayne County, Michigan, 195 homes go into foreclosure each day. According to the Congressional Oversight Panel, nationally, 1.8 million homes were lost to foreclosure from July 2007 through August 2009. And yet, in spite of these haunting numbers, as the New York Times blogged last week, bank executives seem more concerned about winning the blame game than anything else. Testifying before the House Financial Services Committee, the CEO of JP Morgan Chase insisted the foreclosure crisis is really the fault of the mortgage brokers. However, the New York Times revealed details of JP Morgan Chase's circulation of subprime loan advertisements advocating the loans' loose requirements to mortgage brokers back in 2005. The headlines of the leaked ads [pdf] read, "The Top 10 Reasons to Choose Chase for All Your Subprime Needs," "Chase No Doc," "Got Bank Statements?" and "Get Approved!"

Too many companies like JP Morgan Chase rushed into this sub-prime mortgage spotlight of praise and profit to the demand of the investors, but now after being invited to take their rightful places on the stage of reality and responsibility, nobody's walking. The stage is too bare and the call too faint. Such seems to be precedence. The call to rewards and favor is always loud and clear while the call to justice resounds barely above a whisper. It is mind-boggling to believe that with such a vast chain operation, banking giants like JP Morgan Chase were not the least bit aware of the wrongful lending practices being undertaken. Nonetheless, now we know that JP Morgan Chase was more than hands on. They advertised and promoted this unscrupulous lending scheme. They were hands on when the money was flowing and hands off when critics were looking. Not only should they own up to the responsibility and take their rightful places of shame, but they should change their modus operandi to make sure that this doesn't happen again.

While last week's annual Dow Jones record high may breed optimism for many, I cannot help but be fearful of a possible repeated cycle emerging in which the run of record high revenues may continue to fuel these greedy practices that create inevitable losses, disproportionately felt by the hard-working individuals on Main Street. Sadly, a year after the supposed push for heightened financial reform, countless individuals are still left unemployed and financially plagued with burdensome mortgage loans. We cannot continue to allow Wall Street greed to solely drive revenue at the expense of others' welfare. Something must be done not only to stop this cycle, but most importantly, to provide relief. And I have a plan.

With Detroit being among the worst hit cities of this crisis, I have been tirelessly and intimately engaged in getting out better tools for people who are stuck in this downward spiral. First, since countless individuals facing foreclosure lack legal representation to protect their rights, I am working to increase funding for Legal Services Corporation (LSC) and lift the restrictions on whom LSC can service. LSC provides civil legal assistance for low-income individuals, but currently inadequately funded, in the category of foreclosures -- LSC-funded programs have been projected to turn away two for every person served. Should such restrictions get lifted and funding increased, more people will be empowered with the necessary resources to battle these scheming banking giants. In fact, next Tuesday, I will be holding a hearing on the fine points of these needed changes.

Second, Treasury Secretary Timothy Geithner recently announced that approximately 500,000 American families were participating in the home loan modification program first initiated in March by the Obama Administration. Paling in comparison to the great number of those facing foreclosure, this rather skim number indicates the mere few who have broken down the barriers to qualify for the program. The Home Affordable Modification Program (HAMP) neglects a large portion of those in need, because it requires unreasonably complex paperwork and unfair qualification restrictions. Revamping the program's administrative process will allow the program to carry out its intended purpose. To make matters worse for borrowers, bankruptcy judges are prohibited in modifying home mortgages, such as reducing excessive interest notes and hidden charges. Eliminating this anomaly in law will encourage more lenders to voluntarily modify mortgages and broaden bankruptcy foreclosure relief for the larger sums.

I will continue to fight and demand for all these remedies in the coming weeks in order to get out better solutions to help those facing such financial hardships. Like many of the other nationwide debates we find ourselves immersed in today, this debate on the subprime mortgage crisis is sadly shifting in focus at the detriment of people's welfare. We must now refocus and bring back into the spotlight the need for change and aid those who have fallen victim during these financially perilous times.

 

Comments

[alley boy]

Stop trying to keep real estates prices from finding their true value with taxpayer money, Congressman.

Anyone facing foreclosure should stop paying, start looking for a place to rent and save your money until the sheriff shows up.

[dnpvd51]

If you really want to help people, you will get government out of the housing market so prices can come down so people can afford to buy a house.

As it is government is keeping housing prices elevated with tax breaks, credits, home affordability programs that make housing more expensive, and further siphoning money from Renters(taxpayers) to homeowners by bailing out banks and government purchases of MBS.

Please get government out of the housing market and give poor people a break.

[balancedsolution]

Actually Mortgage brokers play with your money too.

It's something I learned.

If you ever get someone telling you, you have a fixed rate! GET IT IN WRITING !!!!

I was younger and he called me 3 days before closing to tell me the rate had changed.

I was like what?

NO recourse....but i've refinanced a couple of times. But apparently that guy had played with my rate, and maybe lost money on a bet. I don't know specifically how it's done, but if you are a broker you proabably do. Fill us in.

[ShelleyStark]

According to Prof. Picciotto, Lancaster University and advisor to Tax Justice Network, there is a link between tax avoidance dealings in offshore tax havens and the speculation that fuelled the current financial crisis. He states: “large multinationals are as much financial as business entities, they have freedom to devise complex financial structures, and financial institutions such as banks, even more so: in recent surveys by the US Government Accountability Office and the Tax Justice network, the largest user of tax havens in every country was a bank”.

‘Treuhand’ is a German language term that refers to a ‘legal trust’. Conversely, a hidden ‘Treuhand’ is completely non-transparent, only somewhat legal, and operates covertly - it is used to hide the beneficial ownership and control of any asset, located anywhere in the world, by owning the asset through a corporate structure. When the corporate structure is created with a hidden ‘Treuhand’, a lawyer/trustee is the listed shareholder. The real shareholder’s identity remains anonymous in all business dealings.

The key role played by the hidden ‘Treuhand’ is to prevent transparency regarding economic activities, not just beneficial ownership. Economic activities are not confined to Europe; in fact, via the corporation, these activities have a global scope. Thus, non-transparent economic activities are encouraged. There is no means to disclose the secrets a Treuhand is meant to hide. The hidden ‘Treuhand’ is a black box.

Google: Hidden Treuhand or put this in your browser: http://www.universal-publishers.com/book.php?method=ISBN&book=1599429292

[pokeyphil]

Yes lets be fair and square about buying a house. If you can't afford one then rent. If the mortage payment is out of your reach then forget it. There is a time and place for everything and if you are not prepared then go and improve yourself then go for a mortage. Forget any handouts , we don't need ACORN pressuring the banks to lend to the poor who can't afford it and I'm in no position to pay for someone else's mortage. Some things in life you just gotta work for till then get busy.

[thewebbwahm]

BRO CONYERS, STAND STRONG,
Help your fellow legislators understand that it is GOOD BUSINESS to DO FAIR BUSINESS with the BLACK COMMUNITY. 2.2 million vacant and distressed homes, 10s of Millions of distressed workman needing jobs rebuilding them, and 10s of Million WORKING First Time Homebuyers willing and able to pay $65,000.00 to purchase a quality ReBuilt Affordable Home.

Hopefully this time Washington will hold Banks accountable to develop fair and affordable home loan products for the COMMON MAN. Blue collar Americans from all communities deserve an Affordable home and JOBS.

James Thomas Webb Master Builder and Author "Save Your Neighborhood and Yourself with WAHM"
www.theWAHM.ORG

[alley boy]

That's right Brother Conyers, throw more good money after bad!!!!!

[MissVirginiaVoter]

Need to break these large institutions up! Mortgage loans should only come in 10, 15, 20 and 30 Year Terms. Home Loan Officer's make their commissions based on the rate they give you. The higher the rate the more commission they make.

[Peter Noble 2]

We need to tax bankers until they start screaming.
Things could get ugly unless Congress acts. Look at Britain with the upsurge of Fascism (BNP). Rage began when Gordon Brown bailed out the banks while everyone else went under and many lost their homes. Then Goldman Sachs announced million pound bonuses and had their spokesman tell the Brits they had better just suck it up as the rich deserve more...add a mix of hatred towards Jewish bankers/ Muslims and voila a people's revolt of the vilest kind. The Tory party is hardly any better with their Fascist friends in Europe happy deniers of the Holocaust.

Do we want that to happen here? We should look at Britain and be very, very afraid. The Labour Party turned themselves into Clinton Democrats and they have spawned a revolt that no one can control.

Now the Dems have morphed into big business Republicans.

Conyers and his party must not allow this to happen. They must show a vote for change and a fairer society actually results in just that. So far it has been business as usual. And I'm left with the dreadful premonition of cheering the violent death of a smug CEO at the hands of a bankrupt citizen. This is not a good feeling or one that instills pride.

Obama has fiddled while our Republic burns with outrage.

[ErnestineBass]

Well said. FAN #8!

[Stosh59]

these greedy bankers need to be punished to the max

[Peter Noble 2]

Yes it's called taxation.

[sameoljoe]

Starting in the early 90's whenever a bank wanted to grow or expand, rights groups would file complaints that it was not sufficiently sensitive to the needs of minorities in providing home loans. As the "lifestyles of the rich and famous" culture spread, everyone wanted a mansion, whether they could afford it or not. Sub-prime mortgages became the norm as congress sought votes.
A lie, repeated often enough, will end up as truth. Dr Paul Joseph Goebbels, Hitler's Minister of Propaganda (1933-1945)

[billw8017]

Ah, yes ... These poor bankers, wanting only to do the right thing, pushed by an ignorant Congress into bad business practices. So, helpless, adrift in every breath out of the capitol.

You would hardly know these are the Masters of the Universe or that they made out like bandits by supposing there was no tomorrow.

[martin2]

In 1982 we applied for a mortgage loan at a local bank they turned us down,
The gentleman said we could not handle the payments We found a less expensive
house I was promoted we received our loan, we payed it back early a win win situation
for the bank and for us .
What happened in 2004?

[Car84]

The sub-prime mortgage loan was the "stuff" of all the problems that followed. What motivated banks to make bad decision? Regulation. Wait ... I thought there wasn't enough regulation? Well, there are BAD regulations that tell businesses to do things, and GOOD regulations that tell them what they shouldn't do. Getting Community Reinvestment Act points was what the bank boards were after. There should have been regulations that made it illegal to write loans for people who cannot afford to repay them.

[MissVirginiaVoter]

It was NOT the Community Reinvestment Act This act was passed, in 1977 to not allow the Banks to deny loans based on where you lived! What happened was DERUGULATION in 1999, the repeal of the Glass Steagall Act of 1933. The original law did not ALLOW WALL STREET firms to issue home loans, after 1999 they did and now we are here today!

[MN Twins]

This is such a poor entry. Why help fund legal expenses for foreclosures? So people can stay in homes they can't afford longer? The faster we hit the reset button the better. I know it's hard for families in foreclosure, but the bottom line is if you can't make the payment on the note you signed the debtor needs to collect the collateral.

Loan modification programs are asking for too much paperwork? Again, sucks but the paperwork they ask for consists of income documentation, asset documentation, describing what your hardship is along with some personal data. I think thats reasonable. Its a nightmare having to deal with the people the banks have hired to facilitate loan modification programs because incompetence is thick, but the paperwork required isn't the problem.

My apologies for sounding hard, but the the banks were evil and greedy. Everyone wants to talk about that. The brokers were greedy and evil. Everyone wants to talk about that. What no one wants to talk about are the actual borrowers buying homes they couldn't afford. And all Conyers is doing with this silly article is patronizing the voter. Politicians can't come out and say people were wrong to buy homes they couldn't afford. They can't say people should always understand what they are signing. Because people are the ones voting for politicians. Instead Conyers has to say the banks mislead people. Deflect the blame from the voter and place it on the big, bad instituation, a classic political move.

[billw8017]

The bankers all are professionals and trained in the principles of accounting, a rigorous art. Say, the wolves eat until they burst, to blame the sheep devoured by the wolves is ingenuous. Expertise should count for something. Where do you get the idea bankers have such little input to lending laws?

[hm1342]

MN Twins said:

"What no one wants to talk about are the actual borrowers buying homes they couldn't afford. And all Conyers is doing with this silly article is patronizing the voter. Politicians can't come out and say people were wrong to buy homes they couldn't afford. They can't say people should always understand what they are signing. Because people are the ones voting for politicians. Instead Conyers has to say the banks mislead people. Deflect the blame from the voter and place it on the big, bad institution, a classic political move."

Best analysis in this thread,,,great job!

[dnpvd51]

AMEN!

[Car84]

Ditto hm1342. Too much entitlement mentality out there. There are people out there who aren't ready to be homeowners. They're called renters. At least until they're ready to buy. There is no "right" to home ownership.

[unionave]

In 2007/2008 GWB stood at in the W.H and announced he was ordering Fannie and Freddie to guarantee home loans for low income people . But years prior to that the free trade fiasco was doing it's damage to the small businesses along with the WalMart competition which adversely affected the jobs of many small business employees . These employees stopped saving money in bank accounts then took what savings they had to live on . With savings accounts emptied the local banks folded and these local banks have been failing for years . These banks depended on stable local incomes which can not happen when jobs are exported . The situation we are in now is for every dollar we spend maybe sixty cents of it props up some other nation's economy . When "made in the U.S." was shipped out we started dying a slow death and will continue to do so until we figure out how to get our money circulating in our community . There is NO other way .

[martin2]

I with you 100%

[CAPTAINSKIPPY]

Clearly on the wrong path, when only those at the top win, and everyone else loses - survival of the fattest presumes the tolerance of a great many others.

[PhilipTaylor]

WHAT IS A DERIVATIVE IN PLAIN ENGLISH?

A Derivative = Paper Contract Derived from an asset (like home mortgage) and bought and sold

Manufacture of a Derivative = "Black Box" Process with HIDDEN FEES and Hidden R1P-0FFS!

Derivative is bought and sold for cash paid over time based on the underlying home mortgages.

Derivatives Date = Agreement to exchange the home mortgages at some future date.

Derivatives Leveraging =A $1 change in Mortgage Value = $10 to $100 Derivative Value Change

So Derivatives can GAIN VALUE QUICKLY or LOSE VALUE QUICKLY!

Derivatives = Used by Wall Street Traders to speculate W1LDLY on Your Home Mortgages

Speculators often BET on DOWNWARD MOVEMENT = That Your Mortgage Will FAIL

So Wall Street PLACES MASSIVE LEVERAGED CASINO BETS your Home will be FORECLOSED!

Also Other Traders use derivatives to OFFSET ANY RISK related to Mortgage going Down

So ALL RISK is REMOVED that CASINO BETS lose! This Encourages EVEN MORE Leveraging!

These are T0XIC T00LS that Wall Street uses to MAKE FANTASTIC GAINS on FAILURE OF MAIN STREET!

[PhilipTaylor]

In SHORT in 1999 EX-Senator Phil Gramm, Larry Summers, Arthur Lev!tt, and Robert Rub!n Created CAS1N0 GAMBL1NG without the RULES on WALL STREET!

“Former C1inton Official Says Democrats, Obama Advisers Share B1ame for Market Me1tdown”
http://www.propublica.org/feature/former-clinton-official-says-democrats-obama-advisers-share-blame-for-marke

[ChelseaC]

Indeed they do--it's not all on the Shrub.

[MissVirginiaVoter]

You are correct again my friend!

[mom2luke]

It is mind-boggling to believe that with such a vast chain operation, banking giants like JP Morgan Chase were not the least bit aware of the wrongful lending practices being undertaken

.....they KNEW just like freddie knew, they just couldn't stand for others to make more profits than they did if they did the right thing. "competition" does that to you...so does getting well compensated for doing the wrong thing

[TheRealNCal]

Maybe they didn't read and understand what they signed...