There's a huge buzz out there among homeowner activists who are feeling vindicated for the hard work they've done over the past couple of years and in many cases even longer. The recent news inundating the headlines of blatant fraud on the part of lenders and servicers has offered proof that their actions and fight have not been in vain.
Many of the people who've been battling foreclosure, loan servicers, banks, and legal firms bent on taking homes have done so at considerable cost to their sanity, reputation, and finances. They've been lambasted by the other side and by their neighbors, called leeches, welfare freaks, and losers. They've been accused of having bought beyond their means and blamed for being the cause of the financial crisis, when the majority of homeowners have been victimized and scammed. In extreme cases some have been labeled whack job conspiracy theorists and alarmists by the media and elected officials.
Mike Dillon of New Hampshire has been fighting an illegal foreclosure against Fairbanks Capitol Corporation/Select Portfolio Servicing for nine years.
"I didn't buy more house than I could afford. I had my evidence. I had a court order from a judge. Despite this, I still had to get used to being looked at like a guy standing out in a cornfield describing how the lights came down out of the sky and stole my cow. As devastating as this level of fraud has been, it was nice to finally get that confirmation that I really wasn't crazy," Dillon said referring to the rash of articles and testimonies proving his claims.
For some, the obvious just has a way of slapping you in the face.
As Martin Andelman, founder of Mandelman Matters said to me in a conversation that I'll never forget: "Do you know why poor people don't buy houses they can't afford? Because they don't want to move refrigerators! And don't tell me that one idiotic story about a 14-year-old kid who bought a McMansion with the money from his paper route. Do they really expect us to believe that eight million people got up one morning and became irresponsible?"
It made perfect sense and needs no explanation. Andelman was referring to what can only be described as propaganda on the part of the banks to blame homeowners for the mortgage crisis.
Apparently, listening to some of the rhetoric from Fox News, the banks, and members of the GOP over the past couple of years that's exactly what happened. Greedy homeowners went out in droves and scooped up McMansions they knew they couldn't afford by duping seemingly innocent bankers and naive mortgage brokers who were just trying to do the right thing and help these crooked homeowners achieve a little piece of the American dream. Meanwhile, again according to those same "experts", the liberal big government was strong arming the banks to make it happen. Maybe that's why we saw record deregulation during Bush's two terms.
Sorry, not quite. As it happens the banks have in fact been fraudulently foreclosing on homeowners for a while now and in the last couple of weeks I've been inundated with emails, phone calls, and links to stories recounting how Bank of America, GMAC, and JPMorgan Chase have stalled foreclosures as a result of allegations that each "robo signer" was signing off on close to 10,000 documents a month without ever knowing what the paperwork contained. Related articles have appeared about banks knowingly selling subpar mortgages to investors, ignoring proof that loans were unsafe, and deliberately destroying documents.
Those of us who have been following the meltdown saw it coming, experienced it, and have pleaded with legislators to listen. We have been waiting for the day to come when the media would finally pick up on it. The evidence has been there all along in the hundreds of stories submitted by homeowners at www.shamethebanks.org and other sites detailing how they've been abused by the lending industry. Also prevalent in many of these stories is the lack of action by elected officials and the media when these stories have been brought to their attention. Homeowners who have reached out for help to their Congressional offices have received little more than a boilerplate letter in response. After numerous letters, emails, and phone calls explaining our situation, my wife and I received a voice mail from Rep. John Tierney's office saying, "I didn't realize you required or expected some kind of action."
Those of us who have been able to reach out to people higher in the chain of command have not had any more luck at being heard.
In April, shortly after having founded shamethebanks.org, I went to D.C. and had the opportunity to speak with Treasury officials. I implored them to take a closer look at how banks and servicers were gaming the system. I confronted Diana Farrell, Deputy Director of the National Economic Council, and asked her why Treasury wasn't looking more closely at the allegations of servicer and lender fraud and misuse of the HAMP program. She skirted the issue and responded that, "we'll take that under advisement."
Homeowner advocate and loan fraud investigator Steve Dibert of MFI-Miami had a similar experience when he met with government staffers in the aftermath of the mortgage meltdown:
18 months ago, I had dinner with several staff members of the House Finance Committee. When I told them about all this they gave me the deer in headlights look. I remember approaching the mainstream media then who acted like I was nothing more than a Che Guevara wannabe.
I had associates in the mid-west doing short sales and modifications who couldn't figure out why they were getting nowhere with their files for 9-12 months, they finally came to me out of desperation. Within 3 weeks, I had the servicer begging to give the homeowner a modification because I was able to prove they lacked legal standing to foreclose and could face a fraud lawsuit.
GMAC, Chase, and Bank of America have all made self-aggrandizing announcements that they are stalling foreclosures until they get to the bottom of this. Of course they're only stalling the process in 23 states -- the ones with judicial foreclosure laws that require lenders to show proof of legal standing in court. Those states are: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.
One would guess that in the other 27, non-judicial foreclosure states, it will be business as usual and since there's no real oversight of how the banks do business, why bother? As much as these guys would like us to believe that they're doing the right thing, they're actually doing the bare minimum to avoid prosecution and continuing to take homes in over 50 percent of the country despite overwhelming evidence that they broke the law in every state. Simply because no one is watching.
"The general level of sloppiness is pervasive around the industry," said Diane Thompson, counsel at the National Consumer Law Center.
Two other big banks have been quick to distance themselves from the accusations. Wells Fargo and Citi have both announced that they are clean and that they, unlike the others, have followed necessary guidelines.
Vickee Adams, a spokeswoman for Wells Fargo & Co., said Wells' "policies, procedures and practices satisfy us that the affidavits we sign are accurate."
Mark Rodgers, a spokesman for Citigroup Inc., said the bank "reviews document handling processes in our foreclosure group on an ongoing basis, and we have strong training to ensure that appropriate employees are fully aware of the proper procedures."
We'll just have to assume this wasn't the same training that led to a $75 million fine by the SEC a couple of months ago for misleading investors by failing to disclose $40 billion in risky mortgage assets and eventually sent Citi to the brink of failure.
As luck would have it, two days after Citi and Well Fargo made those claims, Abigail Field of Daily Finance, wrote a piece outlining that in fact Citi and Wells Fargo have been involved in the same practices.
"For example, in one case I reviewed, Herman John Kennerty of Wells Fargo gave a deposition describing the department he oversees for Wells Fargo. It's a department dedicated to simply signing documents. Kennerty testified that he signs 50 to 150 documents a day, verifying only the date on each," she writes. So much for top notch training. Read the rest of the story at Daily Finance.
After two years of failed modification programs, foreclosure prevention strategies, some members of congress are starting to take notice. In Florida, a state that's been ravaged by foreclosure and foreclosure mill law firms that have made millions illegally foreclosing on properties, Representative Alan Grayson posted this video on his web site. In it he explains, in depth, how the foreclosure crisis works, complete with four real-world examples: a man who was foreclosed on when he didn't have a mortgage and paid cash for the home; a home where two servicers claimed ownership of the title; a couple foreclosed on over a contested $75 late fee; and a story that sounds like many of the ones on www.shamethebanks.org -- in the end the servicer used forged documents to claim ownership of the title.
"We are reaching a point where the easiest way to make a buck is to steal it," Grayson says in the video.
A couple other states also seem to be paying attention. Despite being a judicial foreclosure state, Connecticut Attorney General Richard Blumenthal on Friday ordered a moratorium on all foreclosures by all banks for 60 days.
"This freeze should stop a foreclosure steamroller based on defective documents and enable effective remedies," Blumenthal said.
Massachusetts AG Martha Coakley is also calling on lenders to halt all Bay State foreclosures. Thanks to Coakley's vigilance, Massachusetts has one of the more impressive track records when it comes to actively and proactively defending and protecting homeowners.
"We are asking Bank of America and other major creditors to cease foreclosure proceedings for Massachusetts homeowners until they demonstrate that they have complied with Massachusetts law," Coakley said on Friday.
The move by both Attorney General's followed word Friday that a Bank of America executive admitted in a Massachusetts deposition to signing thousands of documents in U.S. foreclosure cases without really looking at them.
The Massachusetts Supreme Judicial Court plans to hear arguments next week on a paperwork-error case that has the potential to invalidate thousands of foreclosures dating as far back as 20 years.
So what's next? I, along with many homeowner advocates am hoping that the legal community, will see this as evidence of the rampant fraud and illegal activity used by the banks to essentially throw people out of their homes for fun and profit.
At some point the lawyers who have been happily taking payments from these crooks will realize that there's more money in going after banks than there is in screwing homeowners. Much like the ridiculous medical malpractice suits that started in the '70s, we'll start seeing lawyers wanting to defend homeowners. While I don't agree with all of the views and advice on this site, Neil Garfield makes some interesting points in his post titled: "YOU MAY BE ENTITLED TO CASH PAYMENT FOR WRONGFUL FORECLOSURE -- Coming to a Billboard Near you."
Well it has finally happened. Three years ago I couldn't get a single lawyer anywhere to consider this line of work. I predicted that this area of expertise in their practice would dwarf anything they were currently doing including personal injury and malpractice. I even tried to guarantee fees to lawyers and they wouldn't take it. Now there are hundreds, if not thousands of lawyers who are either practicing in this field or are about to take the plunge.
The attorney that will take on a bank or servicer to defend a homeowner is still unfortunately rare. Massachusetts attorney, Jamie Ranney of Jamie Ranney PC is doing just that and had this to say during a recent conversation I had with him: "It's been a Sisyphean task, pushing that boulder up the hill and getting pushed back down. People in this country have been led to believe that the homeowner is the one to blame for the level of fraud that's happened. It's been extremely gratifying to see that we're making some headway in convincing the courts that we've been right all this time."
The banks have gotten their bonuses despite what they've done to people, now it's time for the homeowner to get their bonus for what they've had done to them.
For too long, lawyers on the right side of the law have been eking out a living defending the little guy against enemies with unlimited funds; fighting against a judicial system and government that essentially sides with the money; and watching as the letter of the law gets trampled. The average Joe doesn't stand a chance in a system that is no longer designed and has no desire to defend them. Maybe this will level the playing field and maybe attorneys, like Ranney will be compensated for doing the right thing -- and get paid for a job well done.
Mike Dillon had this to add: "I can't help but think of the most likely hundreds of thousands of families who have already lost their homes to a fraudulent foreclosure. There is a "rule book" that everyone is supposed to play by. The borrowers are being held to those rules despite having had the deck stacked against them for years now. Regardless of whether a borrower is legitimately in default or not, the note holders and servicers need to be held to that same rule book. And that's not just my own opinion. New York Supreme Court Judge Arthur Schack feels the same way."
The main problem is that we are dealing with a Congress that has not only given up on the middle class, but continues to assist in its pillaging. Twice since the economic disaster both parties have voted against bills that would have given bankruptcy judges the ability to renegotiate mortgages, also known as cram down. This would have provided needed relief to homeowners and potentially prevented millions of foreclosures. Ironically it would probably also have helped avert many of these investigations and potential fraud suits.
The fact that they've shot themselves in the foot is made clearer by the recent announcement that Old Republic National Title Insurance, among the nation's largest title insurance companies, will no longer write new policies for foreclosed homes.
As Dick Durbin (D-Ill) exclaimed after one of those votes, "And the banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place."
Of course, much like the bills Congress passed during the Bush years protecting oil companies from law suits after oil spills and airlines after 9/11 it wouldn't be surprising if they sprang into action to defend the banks. The banks have yet to be held accountable for the destruction they've caused and the lives they've affected on a massive scale.
But as Jamie Ranney also pointed out, "they can try and they probably will, but you can't legislate away fraud."
Remember: You can post your own mortgage horror story at www.ShametheBanks.org
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