Mortgage Crisis: No Political Solution to a Math Problem

Rachel Keyser and her daughter, Sydney, stand
in front of their house in Deerfield, New Hampshire.
(photo: Chris Arnold/NPR)

Dylan Ratigan and Eliot Spitzer, Reader Supported News

12 February 12

his week officials from the Obama administration, the banking regulators, and state Attorney Generals announced a settlement of claims stemming from the financial crisis. The nominal amount put forward as the cost of the settlement is $26 billion, and in return the banks will be released from civil claims on origination of mortgages and the falsification of documents in the foreclosure process, or "robosigning". This caps off a month of political noise on the housing situation which started at the State of the Union, when the president announced a task force on financial fraud headed by officials from his administration as well as New York Attorney General Eric Schneiderman.

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.   READ MORE

Study: Errors in 84 percent of SF foreclosures

February 16, 2012 5:30 PM

(AP)  SAN FRANCISCO — More than 80 percent of residential mortgage loans that have gone into foreclosure in San Francisco have missing documents or signatures or otherwise violate the law, according to a review ordered by the city assessor.

The results hint at potentially broader problems with how foreclosures have been handled since the collapse of the housing market.

While many of the errors were technical and related to paperwork, the problem shows the state needs to change its antiquated real estate regulations, Assessor-Recorder Phil Ting said on Wednesday.

"The whole process ... is absolutely, 100 percent broken and not working for any of us at this time," Ting said. "These rules were made for people who walked or rode their horse to the bank."

The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.

The review was conducted by Newport Beach-based Aequitas Compliance Solutions. The company looked at 382 of the city's 2,405 foreclosure sales between January 2009 and October 2011.
  READ MORE

Foreclosure abuse rampant across U.S., experts say

A foreclosed home is shown in Stockton, California
May 13, 2008. Home foreclosure filings in the U.S.
jumped 23 percent in the first quarter from the prior
quarter, and more than doubled from a year earlier.

By Tim Reid

LOS ANGELES | Fri Feb 17, 2012 12:34pm EST


(Reuters) - A report this week showing rampant foreclosure abuse in San Francisco reflects similar levels of lender fraud and faulty documentation across the United States, say experts and officials who have done studies in other parts of the country.

The audit of almost 400 foreclosures in San Francisco found that 84 percent of them appeared to be illegal, according to the study released by the California city on Wednesday.
"The audit in San Francisco is the most detailed and comprehensive that has been done - but it's likely those numbers are comparable nationally," Diane Thompson, an attorney at the National Consumer Law Center, told Reuters.

Across the country from California, Jeff Thingpen, register of deeds in Guildford County, North Carolina, examined 6,100 mortgage documents last year, from loan notes to foreclosure paperwork.
  READ MORE
 

A Victory for the Public on Foreclosures?

A foreclosed home in Miami, Florida.

POSTED: January 28, 12:07 PM ET 

So there was big news yesterday on the foreclosure settlement front. We still have to wait and see what the final deal looks like, but there are reports out that the long-awaited settlement is a far, far better deal for the public than expected. If these reports are true, it looks like New York Attorney General Eric Schneiderman and California AG Kamala Harris have scored an enormous victory in narrowing the scope of the settlement to the point where it really only covers robosigning abuses.

According to reports (like this one in the Huffington Post), the deal will not include:

1. Criminal liability.
2. Tax liability
3. Fair lending, fair housing, or any other civil rights claim.
4. Federal Housing Finance Agency or the GSEs [Fannie Mae and Freddie Mac]
5. CFPB claims for the period after they came into existence in July 2011
6. SEC claims
7. National Credit Union Association Claims
8. FDIC claims
9. Federal Reserve Board claims
10. MERS claims

If that is true, and all of those things are out of the deal, and the banks are still exposed to liability not only for all of those things, but also for the broad range of offenses related to securitization, then $25 billion, dare I say it, might not even be a completely sucky number. It's far less than the real liability, but it's a much bigger sum than I ever thought would be negotiated just for robosigning.

READ MORE

7 of the Nastiest Scams, Rip-Offs and Tricks From Wall Street Crooks

December 26, 2011

How many high-level Wall Street players have been put in jail for the crimes that led to the financial crisis?  Not. Even. One.   

Last week several executives from the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, known as “Fannie Mae and Freddie Mac,”were sued by the Securities and Exchange Commission (SEC) for civil fraud. They were charged with misleading investors about the quality of the loans they were buying.  But this is a civil suit, not a criminal prosecution, so they face no possibility of jail time.  And the SEC is notoriously ready to settle these cases, accepting fines without admission of guilt.  Meanwhile, last month Bloomberg News revealed that the Federal Reserve secretly loaned  $1.2 trillion to banks on Dec. 5, 2008, their neediest day, even as some of their CEOs were assuring investors their banks were healthy.  Are these CEOs facing prosecution or even civil fraud suits for doing the very same thing?  Not so much.  READ MORE