Once again, as another harebrained scheme unravels, the swinging dicks of Wall Street manage to appear impervious to reality and completely immune to the truth.
Nearly every Attorney General in the country is now investigating what was not just simply serial fraud but a no-holds-barred crime spree affecting millions of mortgages across the country.
If you want to see an excellent explanation of the foreclosure fraud, check out the in-depth post, "Foreclosure Fraud For Dummies" by Michael Konczal, a fellow at the Roosevelt Institute.
In a piece from the New York Observer, one guy who was most likely too gutless to be identified by name is described only as a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said, "You had people putting zero down to get massive houses they couldn't afford to be in, but now they want to stay. And the government wants to let them stay, because they're voters."
One example of these massive houses is the house in Maine that started the robo-signer investigations. Nicolle Bradbury bought her house seven years ago for a whopping $75,000. "A major step up from the trailer she had been living in with her family", the New York Times reported.
Propaganda isn't new to the Masters of the Universe. It started with the dream of homeownership and cheap loans. Alan Greenspan perpetuated the attitude by suggesting that people use their homes as ATM machines and praised the use of Adjustable Rate Mortgages (ARM). Wall Street ran with that and pushed ARMs at an alarming rate. At the height of the boom, during the four to five year period before the financial meltdown it was virtually impossible to get a conventional 30 year mortgage. When the financial crisis hit, banks quickly went into action and blamed the entire fiasco on subprime borrowers.
"If it weren't for the banks pushing these risky mortgages on brokers and agents with massive incentives, no one would have bought them. But when it's the only thing you can buy and you're looking at skyrocketing home values being artificially inflated, what choice do you have," said Steve Dibert a loan fraud investigator at MFI-Miami.
Bankers, of course, see it the other way around and prefer to blame homeowners -- who had nothing to do with creating, what bankers refer to as "complex financial instruments" when asked to explain credit default swaps, securitized loans, and derivatives as if the rest of us are too stupid to understand.
Citi chairman Richard D. Parsons told the Observer this summer in an interview, "The loans wouldn't have been there in the first place if American home buyers, driven by what The Weekly Standard calls immediate gratification without personal responsibility, hadn't overstepped their bounds."
Stories like Bradbury's are the majority. As opposed to the occasional ridiculous story of the cab driver with eight homes and the 14-year-old who bought a McMansion with paper route money, which the banks would like us to believe are the cause of the meltdown.
The majority are hardworking, honest people who simply want to stop being screwed at every turn. One homeowner who contacted me through ShameTheBanks.org had this to say:
For the past three years, my life has been on hold. All of my income goes right back to fix my mistakes. I don't have enough to eat but don't qualify for food stamps because I make too much money. I don't get free legal assistance to fight foreclosure because I make too much money. No help paying for my medicine because I have health insurance and make too much money.
I work two jobs and burn the candle at both ends. I sold almost everything I have, which is fine; probably shouldn't have it in the first place. Now I have two things left - my art house/foreign film movie collection and my childhood Lego sets that I wanted to give to my children someday. I shouldn't have to be making that choice. Not this close to the finish line.
Follow the money. I pay taxes. TARP gives that tax money to the banks. Some of it comes back to me to get me over the hump. I continue to pay taxes and my creditors. Everyone wins.
Try to explain that to an editor for the Wall Street Journal, also for some reason anonymous in the New York Observer article who joked, "The problem is they don't deserve to be in that place. They probably deserve to be there less than they used to," referring to incomes lower now than they'd been when the loans were made in the first place. "You do need to foreclose, and you need to go back to people living in houses that are consistent with their income levels."
That's right, let the serfs go back to their hovels. Cake anyone?
Anton Schutz, president of Mendon Capital Advisers said, "Your mortgage didn't get to a robo-signer by accident, it's because you're not paying."
"We're not evicting people who deserve to stay in their house," Jamie Dimon, JPMorgan Chase chief executive, said on a conference call with analysts on the company's third-quarter earnings last week.
John Carney, Senior Editor, CNBC.com, wrote, "It's actually a bit sickening to hear defaulted borrowers describing the misdeeds of banks as 'mortgage fraud.' What some banks have done might well be fraud--but the fact of that fraud doesn't erase the other fact that the borrower agreed to make payments or face the penalty of losing her home."
What Mr. Carney along with the rest of the foreclosure proponents, doesn't seem to understand, or has conveniently forgotten, is that millions of homeowners were convinced by the banks and servicers that defaulting on their loans would help save the very homes he seems to think they deserve to lose.
In many cases banks and servicers pushed people into default with false promises of modifying their loans. Banks were offered programs like Making Home Affordable and HAMP in an effort to negotiate interest and principal reduction with homeowners. The same banks and servicers told struggling and desperate homeowners that in order to qualify for the program they had to be in default. Once homeowners were behind on their mortgage, some were offered trial modifications that according to the program guidelines, were to last three months and then made permanent if the new payments were made on time. Over one million trial modifications were started, some lasting up to nine months. Inevitably, at some point in the trial process homeowners were denied a permanent modification - in most cases no reason was given for the denial. The banks and servicers took this opportunity to hold homeowners accountable for the difference in the payments, added fees and fines for default, legal fees, and a slew of other junk fees servicers have become notorious for, pushing them even further into default.
By managing to keep people paying for a little longer, tacking on fees, and stalling the foreclosures, loan servicers were able to suck out an estimated $4 billion from struggling homeowners - all by playing them for suckers. In addition they were also over charging investors extra fees for managing the loans.
Chandra Anand, 59, a telecommunications consultant from Germantown, told The Washington Post that he called his lender in the fall of 2008, before he missed any payments, to warn the company that his wife's open-heart surgery might cause the family financial difficulty. He was told that in order to qualify for a loan modification he needed to miss payments. So he did and applied for a modification. He never heard back from his lender until he got a foreclosure notice in January 2009.
Every time he calls his lender to resolve his situation an official tells him "to be patient, that it could take 60 more days to review things," Anand said. "It's now been a year and a half."
There are hundreds of stories like this, submitted by homeowners, at ShameTheBanks.org.
In response to attorneys general and lawyers questioning the paperwork around foreclosures a few of the banks have postponed foreclosures in an attempt to rectify the situation. To hear the banks tell it, it will be a quick fix.
According to a Wall Street Journal article, a bank spokesman for Chase said that its cancellations only cover foreclosure sales scheduled between Oct. 9 and Oct. 31 because it doesn't expect the review to take longer. Jamie Dimon, Chase's CEO made a similar statement.
These are the same bankers who told Congress nearly 2 years ago that it could take years to ramp up their infrastructure to handle loan modifications in order to help homeowners.
Maybe they're planning on another hiring spree like the one they had when they needed to foreclose on millions of homes.
To keep up with the rash of foreclosures, document processors and mortgage service firms rushed to hire anyone they could -- hair stylists, Wal-Mart clerks, assembly-line workers who made blinds -- and gave them jobs in their foreclosure departments without formal training, according to court papers.
Several of these employees have testified that they did not really know what a mortgage was, couldn't define "affidavit," and knew they were lying when they signed documents related to foreclosures, according to depositions of 150 employees for mortgage companies taken by a law firm in Florida.
Martin Andelman of MandelmanMatters interviewed a former Chase employee who told him, "A perfect foreclosure was supposed to take 120 days and the closer you came to that benchmark, the better your numbers looked and higher your bonus would be."
The point is, foreclosure makes more money than modifications. It even makes more money than high interest rates. As Moe Tkacik, of Washington City Paper writes:
Banks do not just walk away from a cash cow like "mortgage servicing" without a good reason. Mortgage servicing is a $200 billion a year business and that is not because of the flat 0.25% fee mortgage servicers receive to process the timely payments of responsible homeowners. In the boom years, mortgage servicers raked in fees every time they convinced a homeowner to refinance--the more "adjustable" the better!--and in the bust years, late fees and foreclosures are the cash cows. Like all things banks do, it is truly recession-proof! The catch is that because foreclosures sort of necessarily involve, you know, "laws" governing "property rights" and "trespassing" and whatever, they require someone acting on behalf of the theoretical new "owner" of the property (whoever that is) to sign an affidavit saying something along the lines of, "yes, I've thought about it and reviewed the documents and whoever the local sheriff is should know that definitely these people deserve to have their locks abruptly changed and all their shit ransacked by some contract team of meatheads, and whoever shows up on this property after that they should feel free to harass, arrest, and what the hell waterboard.
Andrea Bopp Stark, a lawyer with the Molleur Law Office in Biddeford, Maine, told The Washington Post, "that a number of her clients should be eligible for loan modifications through a Treasury Department program but that servicers are in such a state of disarray that they often can't give homeowners basic answers about the state of their loan modification request. Then a few weeks or months later, the same servicers evict homeowners as if those applications were never filed."
"Their whole bureaucratic procedure," Stark said, "is working against helping homeowners."
"There are several class actions pending for homeowners who allege that they are being foreclosed despite being eligible for HAMP modifications," said Alan White, a professor at the Valparaiso University Law School. "In a case where a homeowner should be approved for HAMP modification, but the servicer has lost the paperwork or just hasn't responded yet, the robo-signer will send the foreclosure documents to the court without checking to see whether in fact there is an alternative to foreclosure in the works."
"We waited and waited and waited for wide-scale loan modifications," said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, one of the first government officials to call on the industry to take action. "They never owned up to all the problems leading to the mortgage crisis. They have always downplayed it."
The latest development, uncovered by Huffington Post Investigative Fund, is about banks now collecting taxes. According to the article:
In many cases, the banks and hedge funds created new companies to do their bidding. They gave the companies obscure, even whimsical names and used post office boxes as their addresses, masking Wall Street's dominant new role as a surrogate tax collector.
In exchange for paying overdue real estate taxes, the investors gain legal powers from local governments to collect the debt and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. In some jurisdictions, the new Wall Street tax collectors also chase debtors over other small bills, such as for water, sewer and sidewalk repair.
Pretty convenient arrangement considering they also collect those taxes in the form of escrow payments from borrowers. I have heard and read hundreds of stories from homeowners who have paid their taxes and insurance through escrow payments with their mortgage only to find that the servicer didn't actually pass those payments along to tax offices and insurance companies. Now the homeowner is behind on their taxes and the insurance has been canceled for non-payment. So, one department collects the escrow payments that should be going towards taxes, but doesn't pay it, then another department takes over the collection of taxes and fines the homeowner - who has been paying all along. In many cases the the servicer don't apply these payments to anything. They simply pocket the money, much in the same way they pocket trial modification payments.
By blaming homeowners, bankers are trying to harness the anger of ordinary people -- who are angered by the economic disaster that Wall Street itself created -- and give ordinary people a reason to turn on each other.
In a pervasive culture of greed, like the one that exists on Wall Street, the lack of ethics and compassion has permeated every corner of the industry. It has become more important for banks to simply make money at any cost than it has to take part and play a role in a flourishing and successful economy, as they are designed and expected to do. That being said, it almost makes sense that they would vilify the very people who they bilked, conned, and stole from, now that the jig is up.
In her book" Bird by Bird", Anne Lamott tells the story of a conversation with her pastor. In it she questions why she doesn't have an abundance of money. The pastor says to her, "If you really want to see what God thinks about money, just look at who he gives it to."
Remember: You can post your own mortgage horror story at www.ShametheBanks.org