Addressing the Foreclosure Crisis
http://thedianerehmshow.org/shows/2010-10-19/addressing-foreclosure-crisis
Attorneys general from all 50 states are investigating mortgage foreclosures. How a proposed moratorium on mortgage foreclosures could affect homeowners, banks and the economy.
Guests
Tom Deutsch
deputy executive director, American Securitization Forum.
Greg Ip
U.S. economics editor, The Economist, and author of "The Little Book of Economics: How the Economy Works in the Real World."
Kathleen Day
spokeswoman, Center for Responsible Lending; ethics teacher at Georgetown University’s graduate program in real estate studies.
Comments
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Question:
What suggestions do you have for re-mortgaging? How do you check on how responsible a bank is? If they sell their mortgages?
Thank you, Arlene Conroy
(do not use my last name)
***URGENT***
THE PHONE NUMBER TOM DEUTSCHE OFFERED IS WRONG!!
It was quite clear that he was uncomfortable, and made up the number. It was a law firm, but no one knew anything about him or the ASF.
His input has been INFURIATING!! He is so clearly downplaying this problem. And your system is clearly so overloaded with calls, it's been busy for the whole hour.
Please get him to give a proper number!!
After listening to all the anecdotal accounts this morning, I cannot help feeling that the banks are all using the same script and to call it simply a "mess" is to put way too nice a face on what seems clearly to me to be loan shark practices. Your commentator who keeps trying to minimize the criticism of the banking industry by saying that only one person has sworn to having used robo check signing practices is truly trying not informed about the lawyers in North Carolina and Florida who have documented the fact that more than 50% of the loans do not have the documents necessary to prove who is the legal owner of the loan. Gillian
Nobody is going beyond what's "LEGAL". Corporations should go beyond what's legal to help customers and put Patriotism ahead of profits in these hard times. There is obviously a backlash from customers when the bottom line is greed.
The reason the system didn't work was because they didn't hire the number of people needed to properly handle the paperwork. Why isn't anyone talking about the fact that the banks in general don't hire the number of people they should all in the chase of a higher profit. They got bailed out and in thanks they didn't even hire people back when they were in better shspe to handle the cleanup of the mess they made.
My husband and I had a similar experience to the person whose mortgage was with Wells Fargo. Our mortgage was with CitiMortgage. We applied for HAMP when my husband lost his job. The application took over nine months and we were denied because they said we earned too much money. (I earn $48,000 gross and my husband was on unemployment.) Once the denial came, our case went to their collections department and we were harassed on a daily basis. Whenever we called to explain the situation, we would get passed around to different representatives and had to repeat our situation constantly. No one seemed able to provide any explanation for what we should do next, they trashed our credit rating, and demanded we pay immediately the $10,000 we owed for our lessened payment amount during the application process.
I was furious, frustrated and bewildered how a process that was intended to help people in trouble could make the situation so much worse. The day after CitiGroup posted over $4 billion in profit I wrote a five-page letter to Vikram Pandit. I got a response the next day by an "executive service representative." She arranged for the calls from the collections department to cease and cleared up our credit. We were so disgusted with the process and the inability for Citi's representatives to help us through the process that we are re-financing with a local credit union.
One of your guests was useless; banks DO prefer to foreclose than to cope with shrinking home values. If you could write off $200,000 instead of $50,000 you would. The Office of Thrift Supervision (OTS) aka "the agency we have been looking for" competed for banks to supervise with a show of chain-sawing through regulations. The 2006 changes to bankruptcy laws gave unlucky individuals less protection from creditors, thanks to then-Senator Joe Biden et al. Despite your guest's joke comparing county records to the Department of Motor Vehicles, my locale no longer has a DMV or an office to handle food stamps, forcing everyone online which would be fine if everyone had their own Internet access or a library without shrinking hours. You never used the phrase "rocket docket" that forecloses up to 100 homes an hour (as heard in AAR's old THE RON KUBY SHOW), despite a possible 40% loss of promissory notes that would arm residents with a negotiating tool according to THE RANDI RHODES SHOW; this mirrors the bad record-keeping that now haunts residents. It's one thing for mortgage-backed securities to lump together individual mortgages for wholesale markets; it's another to shred those lumps for retail sales so no one owns one home! Note the reverse-redlining that put minorities in sub-prime loans when they qualified for prime loans, just to fuel the mortgage-backed securities thanks to the bubble of ridiculously low taxes and low interest rates.
ATTENTION to all commenter’s !
1- The phone number to Tom Deutsche given on the air is wrong; he is not affiliated with the law firm which answers to the number he provided on the air
2- FYI; Bank of America as well as Wells Fargo both have contracted with private companies who answer as the bank, but are not the bank. These companies are contracted to harass the borrowers and some are contracted to process the paperwork that you send in to them for Mortgage Modification, Short Sales, etc. However, none of these organizations communicate with each other and sometimes they do not communicate this with the bank - that is why they respond to you that they did not receive the paperwork that you send in.
3- The real owners of your mortgage loan are not the bank that processes and manages your mortgage loan, so they can NOT make a final decision on your loan. So it is in their best interest to foreclose on your mortgage loan which will relieve them of obligations with your loan and they will only tell the investor (owner of your mortgage loan) that this was a bad investment and they lost the loan to foreclosure. Thus relieving them of your loan and the processor and negotiator for the bank that handles your loan gets to keep their jobs while you loose your home.
Please pay close attention to all the documents that you receive and READ the FINE PRINT on each letter received from them.
Here is the phone # Tom has listed on his website as well as his email. I was so disgusted by his comments today I had to stop listening to Diane's show. I have been so bothered by his absolute contempt for the callers and their situations, that I had to email him.
212.412.7107
tdeutsch@americansecuritization.com
First just want to say that I really enjoy your show Diane and listen almost every day.
But I really have to take issue with Greg Ig and his assessment of our current mortgage situation. I'm really not sure that he grasps the problem. He seems so out of touch with the reality.
The stories that we hear are heart braking and could really happen to any of us give the right circumstances. Yes some made very bad financial chooses. But I cannot believe that everyone did.
After the conduct of many financial institutions which lead directly our current situation, why should we trust that they are doing the right thing. Please!!
Diane--I listed to this show and thought that you were terrific at trying to get Mr. Deutsch to say something meaningful rather than acting like an industry shill during the entire hour. It sounded frustrating.
Admittedly, Mr. Deutsch was in a tough spot, but when Ms. Day pointedly begged for the Industry to stand up and be accountable for not providing any real service to consumers, he gave that lame comment about "we'll take it on a case by case basis and let the courts sort it out" (that's a paraphrase).
Given the set up with mortgaged backed securities, the real problem seems to be diversified greed. If just one person or entity is acting greedy, then perhaps you can reason with them or build laws to manage their greed and effectively implement on those laws, but here we seem to have the wild west of greed. And those who are participating in the greed are, like Mr. Deutsch, using denial and re-direction to muddy the water.
Mr. Ip came off as an unsympathetic tool of the industry as well, which surprised me. I think it was just a matter of his being a left-brained economist type. The callers/e-mailers where presenting very human problems and he was taking a big picture approach and frankly wasn't equipped to deal with the human face of this problem.
Anyway, I am hoping to buy a house pretty soon because I need a place to live. I now question rather I should do this because the mortgage industry came off as the evil empire on a level I had not contemplated before your program. It's a scary time. It makes me question my own level of greed. Is it greedy to want to keep my hours to 40-50 hours a week and live somewhere that's bigger than a shoe box? Sounds like it's not a problem if life goes swimmingly, but if I lose my job or get cancer I'm hosed.
I know the segment is over by now, but I had to write in that Tom Deutsch was infuriating. He obviously did not believe any of the callers' examples, which he tritely called "anecdotes", and his disrespect was disturbing. I'm sure he and those like him will never read this, but I need to write it anyway.
I attempted to do a loan modification, and I can attest that it was the most unorganized fiasco I have ever been involved with. They would confirm via phone that they had received the correct paperwork from me, and then send me a letter saying that I was going to be removed from the program if I didn't send in the proper paperwork. One phone call would get me one answer, the next phone call would get me another. The best 'modification' they ever came up with was to allow me 6 months not to make a payment, but that the full 6 months worth of payments would be due at the end!! Now how does that help? Another issue I have with Tom and others like him is that they report that someone has been "delinquent for x number of months". Does that mean they were 1 MONTH behind for that time, or hadn't made any payments at all in that time? I missed one month, but until I caught up, every month's payment I made thereafter left me still behind by 1 month. So even though I had missed only 1 month they considered me late for 4 months. All in all it was a frightening and infuriating time. I finally pulled money out of my IRA to get caught up.
The co-founder of Countrywide Angelo R. Mozilo apparently knew already in 2004 that the company was selling adjustable rate mortgages to borrowers, a substantial number of whom were unlikely going to be able to make the payments, once the rates reset. In internal memos, he worried that the company's exposure to these loans had reached a point jeopardizing the company's future. Yet, Countrywide aggressively kept pushing the high-risk products onto customers.
Read more here:
http://brainmindinst.blogspot.com/2008/09/subprime-lending-truthiness-de...
With this history in mind, BofA should feel more than obliged to help with restructuring these mortgages. Mr. Deutsch's comments today were ignorant and shameful.
What about all of the fees (probably in the millions or even billions of dollars) that county governments never collected in the assignment process when the mortgage industry created their new "mortgage electronic recording system" MERS and never properly recorded the documents so no one is really sure who the actual owner is. That is the issue. The documents were never recorded at the county recorders office but only at the MERS system so no one really knows who the mortgage payments were assigned to. This is in addition to them creating false document and lying to the courts. It's as if the banks believed they didn't have to follow the law - they created their own recording system then when they didn't have the documents. No question many people have not paid and the forclosures in the end should happen, but let's ensure the forclosure is being ordered by the OWNER of the loan not some random person to avoide horrible titling issues. Why are the title companies reluctant to give title policies to these homes? Do the paperwork right. That is all we are asking.
Yes, isn't that crazy. Why foreclose on those that want to keep their home? There plenty of other foreclosure ripe for the picking. Why don't they just sort them?
A. Upside Down/Walk Aways - Simple - Give them an option to Deed in Lieu of Foreclosure. No court action necessary - bank gets property back easy squeasy.
B. Abandoned Properties: Simple - Foreclose
C. High Desire to Keep Home - Simple - Loan Modification (combine 1st & 2nds) with no underwriting criteria. Just modify the loan at a 4% rate for 30 years. Perhaps with a "no future 2nd mortgage clause encumberment while this loan is in 1st."
A, B, C - Simple as that.
I find it frustrating that Mr. Deutsch understandably wants banks to have the benefit of the doubt in this public debate, but does not extend that same courtesy to callers who have actually been through the process of foreclosure. I challenge Mr. Deutsch to take one caller and silently follow them through the foreclosure process....monitor phone calls and emails. I think he will find the process from the borrower's perspective lacks a good deal of due process let alone common decency. My experience has been that banks assume the borrowers are incapable of and have no intention of doing everything they can to work toward a feasible solution. The actual process is vastly different from the one he is describing.
Listening to this program today is making my blood boil. It has been my experience that some banks have not had the homeowners best interest in mind with the re-modification program as it was intended to do. I won't go into detail of my circumstances, but trying to work with the bank after a job loss, with no other debt besides the mortgage payment, the bank did nothing to ease the situation, just made it worse and the home was lost with a tremendous amount of emotional stress and turmoil. I don't think that the comments from listeners on the program today are are all that isolated. The most telling comment was the last call from the former loan officer from Watchovea. Yes, I do believe many banks did not really care to do re-modifications in the first place to assist the home owner to remain in their home.
Thank you ever so much for your marvelous program, Diane.
Banks have strong incentive to foreclose and not modify!
Diane, I am among your greatest of fans, but I was disappointed today by the lack of depth of information provided by the show on foreclosures and mortgages. Finally, at the end, you read an email from an astute listener hinting that the banks have incentive only want to foreclose. Why?
Because the FDIC, through its "Loss Sharing" program, covers 80% of an acquirer's (purchaser or provider of a loan) losses! (see the FDIC Loss Sharing page). This means that the more the bank "loses", the more it can recover from the FDIC. And, you can see why banks drag their feet in the loan modification department, which will result in much lower payouts for them from the FDIC program (here is a video that, while a bit extreme, will take you through some of what I'm talking about).
It becomes clear, once this little fact is understood, why the foreclosure scene has evolved as it has. This would have vastly improved the discussion, and your listeners' understanding of, today's show.
Mrs. Rehm
Thank you so much for addressing this topic. It needs to be covered more.
Mary Jo - Detroit
I've been trying to modify my mortgage with WAMU/CHASE since October 2008 when my co-owner lost his job. I have submitted and reapplied more than 8 times for a modification. They told me they would n't do anything until I was no longer current. I stayed current as long as I could but not until I was in forclosure did they offer me a "temporary modification" in Feb 2010. I have made my payment on time ever since but they have never made my mod permanent and have never sent me anything telling they won't. Sherrif sale on my house is now scheduled for December. I've been forced into bankrupcy. At that time they filled paperwork that was full of inaccurate information including ignoring my temp mod and all payments that have been made since March 1.
My home is now worth less than half of what is owed on it. So when they foreclose I will be homeless and they will be lucky to get 1/2 of what they are owed. Who wins?
Tom Deutsch has made false statements about MERS and it's function. MERS was started by Countrywide, EDS and other Banks. The system is NOT a system of record; providing for duplicate loan numbers and other risk scenarios, unobstructed.
MERS is operating in the RED, does not respond to it's mail, and has transparency issues. There is NO oversight or regulation, of the MERS Company. Just a process that provides banks with the opportunity to further manipulate the pool of money currently called mortgage.
The scenario with MERS is so complicated, it is hard for the average US Citizen to understand. The information is difficult to find. If I can understand anyone can.....
Mr. Deutsch, please tell the truth!
Thanks. I called it and Tom answered at about 6 PM EST. I was gobsmacked. This guy was very frank about his job,.
He admitted he could not help with the problem I presented, but suggested that I get in touch with the Home Owners Preseveration Foundation at their phone 1.888,995,HOPE or the website.
http://www.995hope.org/
See you in DC for the Sanity thing on the 30th.
As an attorney exclusively representing troubled homeowners in Northern Nevada and California, this foreclosure crisis, I have found nothing but greed and incompetence from mortgage servicres.
For example, B of A formed BAC HOme Loan Servicers to service mortgages it SOLD to freddie mac and fannie mae.... Bof A therefore owns NO mortgages, but "services" mortgages and collects huge foreclosure fees from the "investors" i.e., those who Bof A sold the loans to.... thus the massive losses in each foreclosure are passed onot, for example, freddie mac (YOU & ME!) while BAC records record profits.
In Nevada, I have put up a YouTube Channel: "T2esquire" where I have simple explanations of why the entire mediation program is a complete farce from the homeowners' perspective. This "feel good" massage is basically ignored by mortgage servicers and the courts openly defy the law. This is not the America we grew up in.
I just wanted to add my experience to the plethora of others who commented yesterday on the show. I live in OK and am experiencing much of what the callers stated. The modification process has been a wreck. I continue to try to contact Bank of America but NO ONE will call back. When they call me they leave a message...that number leads to a computer and that leads to a 30+ minute wait at best. I've even tried going into the local BOA branch and they cannot help me. I was told in July by a BOA employee that someone would contact me within 48 hours regarding the modification process. Two weeks ago I received a foreclosure letter. And I am only $800 behind on my payments....NOT 24 months like the experts kept saying on the show. LOSING my house is not an option. This is a mess.
One of the experts tried to chalk this up to isolated incidents. When people called with horror stories, he dismissed them by saying "they were such saaad stories," "but they are only anecdotal". When your industry doesn't keep statistics, anecdotal information is ALL you have.
Thanks Diane for bringing this to light.
After re-listening to parts of this segment I have come to the conclusion that it remains dangerous to undertake a home mortgage in the United States. The other segment the same day began a series on the Constitution. The Constitution as it is implemented is failing to protect the outlined and expected rights of the common citizen in deference to corporate or institutional interests or rights. What good does it do citizens to study a founding document that is flawed, and one where the few protections have been over-ridden by sheer economic power? For the working class (70% or more of the people) the United States is a lawless place where no contract, guarantee or assurance is honored. For the wealthy class (fewer than 10%), capitalism is a mechanism that guarantees an uninterrupted and ever increasing revenue stream regardless of prevailing conditions among the rest of society. The most popular choice among the 20% middleclass and upper middleclass people caught in the "middle" is to support the actions of the wealthy whom they believe are the source of their income. Only a few privileged people realize extraction from the people who make things and provide services is the real source, and that financial manipulation creates nothing. A subset of these want substantive changes but see no effective way to work for change. Most people are at the mercy of TV, the game console, their personal gadgets or the censorship of glut on the Internet. No single show Diane Rehm has presented has made me feel more cheated, hopeless and doomed than this one. But I have no choice other than resistance. Needless to say I would discourage anyone from buying property today. (See my comments about the Constitution on that comments page.)
I am a realtor in Phoenix, AZ, and the question I am always asked is "What is with the banks? Why foreclose instead of working with the owner?" I can not answer that, but I have a suspicion that the banks somehow get a financial advantage by foreclosing and selling the property at a low price. I never hear this addressed. One example is: the owner of a 1 bedroom condo in a nice area was working on a modification and/or short sale for the property with a current resale value of $25000 to $30000. The bank foreclosed, and a few days later when I went to the property to secure it and get it ready for sale I discovered that the angry owner had stripped the property completely, leaving only the bathtub and toilet. The bank is now marketing it at $18000, the minimum commission (split between 2 agents) is $3000,; the bank is paying for electric and the $175 monthly HOA fee. I doubt if it will sell for more than $15000, and with closing costs of at least $1000, plus servicing fee, the bank will realize only about $10,000. Unless the bank is getting something out of doing things this way, I just can't figure out why they are being so reluctant to work with owners. Since the DR show is prerecorded I can not ask this question on the air, but I sure wish I knew an answer to this that made sense.
Thanks for your info. I just posted a comment from my realtor point of view. This disgusting bank process is just unbelievably evil and I am ashamed of the banking industry. Just so you know, I was warning everyone I could get to about the bad loans, the lies my clients were telling to get loans, etc., etc. And no one listened, not even the National Assn of Realtors. So I am ashamed of my industry, too. But I am doing all I can to help my friends and clients understand this mess...so far, I have only one person who has actually gotten a modification that made sense, and it took almost a year and a lot of work on her part to get it to happen.
What a mess.
My daughter contacted her mortgager ASC ( purchased from GMAC, etc.) as her business faltered. She asked if she could submit her loan payment in two installments,and was told there was no point because it'd "all go to fees". She was told no help was available unless she was 2 months in arrears. She requested a modification, and received a lesser payment amount. She always paid on time and talked to ASC every month. She responded promptly to frequent demands for updated financial information, which was often "never received" or "lost," and had to be resubmitted.
Her payments were put in a "suspense account," and her credit report showed only missed payments. She began a government job, made improvements to her financial situation, and asked about paying up and returning to her original loan. She was told she was now in "loss mitigation status" and there was no way out. After about 1 1/2 years, she received a denial,and was told a major source of income was not included, and improvements to her financial situation had not been considered. Foreclosure papers were filed by Bank of America.
I find it amazing that, in 51:34, with BoA as a showcased entity, no one apparently thought to mention the $108 Million FTC Enforcement action against Countrywide/Bank of America Home Loan Servicing. Or Mortgage Servicing Fraud in general.
"One individual" - Jeffrey Stephan, Cheryl Sammons, Erica Johnson-Seck, Krystal Hall, Beth Cottrell, H John Kennerty, Mary Cordova, Angela Nolan, Xee Moua, Kelly Scott, Tammie Lou Kapusta, Scott Anderson, Laura Hescott, Linda Green, Kerry Selman, Jeff Rivas, Tywanna Thomas, Korell Harp, Jessica Ohde. Yes, some of these people are employed by the Law Offices of David J. Stern and/or David J. Stern Enterprises in FL, Fidelity National/Lender Processing Services, Ocwen Loan Servicing, DocX etc. as opposed to "lenders" but still... One individual Mr. Deutsch?
I've been to my county registry of deeds and other counties in other states. I've NEVER seen one that could even REMOTELY be compared to a DMV.
Several state Appellate and Supreme Courts have ruled that MERS basically has no legal standing to do virtually anything. Landmark v. Kesler, Bellistri v. Ocwen, MERS v. Johnston, MERS v. Saunders, In Re Box, In Re Mitchell.
"Robosignors" are simply the tip of the iceberg in Mortgage Servicing Fraud issues. Mr. Deutsch IS correct in that the issue really DOES need to be handled on a loan by loan basis b/c once you get past whether the documentation is correct, the actual accounting of the loan needs to be examined for accuracy.
Mr. Deutsch, very nice representation of the securitization industry and extremely well spun arguments to blame the borrower whenever possible.
Kathleen Day, well argued. I could almost hear you telepathically throttling Mr. Deutsch.
Greg Ip... Ummm... Switzerland?
I am a housing counselor in MA and first of all thank you for doing this show and asking tough questions of all of your guests. The banks/servicers created most of the issues that have now
resulted in the bursting of the housing bubble. They continue to aggravate the problems by dragging their feet in regards to the federal and other programs for Loan Modifications. Since the rules they operate under are rife with conflict - it is really not reasonable to expect rational behavior from these lenders. This is where consumers and the Congress need to act and change the equation. The Making Home Affordable Programs do work and work well. The issue is not really the program it is the implentation by the Servicers - most of whom have chosen the path of resisitance and set up numerous barriers to succeed, including false marketing, blatant disregard for laws and regulation.
I hope you consider a followup program with guests from each area - borrowers, housing counselors and bank/servicers representatives. Happy to help in any way. Thank you - Bruce