San Francisco recently carried out an audit on a number of foreclosures. Their findings were released in a report this week that shows just how rampant mortgage fraud has been. From Reuters:
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.
Similar studies around the country show comparable results. These numbers are astounding. And worse, they’ve essentially gotten away with it.
In many cases during the housing bubble that burst in 2008, original mortgages were repackaged and sold to so many investors that it is now unclear who actually holds the loans. O’Brien could only find the current owners of the mortgages he studied in 287 out of 473 cases.
In the San Francisco study, which studied properties subject to foreclosure sales between January 2009 to November 2011, 45 per cent were sold to entities improperly claiming to be the owner of the loan.
“It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans,” the report stated.
This should be unimaginable. Instead it is chilling – the story of a largely unregulated financial industry gone amuck. The consequences to homeowners and their families is devastating. Of course the most chilling aspect of the whole mess is that the banks have never admitted to any wrongdoing. There have been no prosecutions. No banksters are wearing orange prison jumpsuits as a result of their role in defrauding millions of US homeowners.
Seth is right. The banks did get off too easy in the foreclosure/fraud settlement.
Tags: economy, Housing
This morning, the federal government and state Attorneys General announced a major settlement through which big banks will offer some compensation for fraud and consumer abuses that helped cause the financial crisis. Holding the banks responsible for their misconduct is a good thing—but, unfortunately, this settlement is disappointing in its scale and in the leeway it gives to these banks.
The settlement is set to include 49 states (all but Oklahoma, whose Attorney General, Scott Pruitt, apparently objects to the idea that banks who broke the law should face any penalty whatsoever).
Here’s what we do know about the deal. It represents about $26 billion coming from the banks, of which the majority will be used to reduce the principal on underwater mortgages. For homes that are underwater, that’s a good thing—but the housing collapse led to $700 billion in lost home value, far beyond what this settlement will cover.
Some homeowners affected by specific abuses of the foreclosure process, like “robo-signing,” will be compensated—but not much, certainly far less than the loss represented by a hasty or unjust foreclosure.
The remainder of the money from the settlement will go to other forms of homeowner assistance, like helping mortgage-holders refinance at lower rates.
The amount of money we’re talking about here will be a help to some hard-hit homeowners, but it’s way out of scale to the size of the problem.
The other question about the settlement is one of responsibility and justice, not just monetary compensation. On the bright side, the settlement comes alongside a new task force to investigate misconduct in the housing market—but, unfortunately, it also releases the banks from liability for many of the most destructive foreclosure-related practices. We have laws against fraud for a reason, and it’s the responsibility of our officials to actually see to the enforcement of those laws.
For now, the first part of this fight has come to a close—and, despite the flaws in this settlement, working people have won some victories over the banks along the way. But here are the questions we’ll be asking as we move forward. Will homeowners who need it actually get the help this settlement provides in a timely manner? Will the investigation task force be able to uncover and actually penalize misconduct on the part of the banks? And, most importantly, will the settlement and the next steps have enough force to prevent large-scale abuses like this from happening again?
(Image via Felix Salmon)
Tags: Corporate Accountability, foreclosure crisis, Housing
The following is AFL-CIO President Richard Trumka’s statement on President Obama’s proposed housing agenda, announced today:
Today President Obama proposed welcome new assistance to homeowners who cannot refinance their mortgages because the bursting of Wall Street‘s real estate bubble has led to the precipitous decline of their homes’ value. These underwater mortgages are hampering America’s economic recovery by preventing homeowners who are current on their mortgage payments from taking advantage of today’s low interest rates.
Without a path to refinance their underwater mortgages, millions of working families are trapped paying inflated mortgage payments. We need to ensure that the Federal Reserve’s monetary policy of maintaining low interest rates helps all Americans, not just the big banks. That’s why today’s announced plan is so important to getting our economy working again.
The jobs crisis and the foreclosure crisis are two sides of the same coin – we need to tackle both to repair our economy. We applaud the President’s leadership in offering jobless homeowners at least 12 months of forbearance on their mortgage payments to get back on their feet. And Congress must act now and enact President Obama’s Project Rebuild to invest $15 billion in construction jobs to renovate homes and businesses in communities where foreclosures are most concentrated.
As proposed by the President, a Homeowner Bill of Rights will protect working families from abusive mortgage servicing practices. Principal reduction will offer genuine help to homeowners who are struggling with their mortgage payments. The big banks that caused the financial crisis now need to pay their fair share to help homeowners refinance their underwater mortgages. We strongly support the President’s commitment to hold the banks accountable by partnering with state Attorneys General to investigate wrongdoing in the creation of mortgage backed securities.
Tags: foreclosures, Housing
A new report by the Corporation for Enterprise Development (CFED)shows a major increase in what they call “asset poor” households:
In the United States, 27 percent of all households are “asset poor,” meaning they lack the savings or other assets to cover basic expenses for just three months if a layoff or other emergency leads to loss of income, according to the 2012 Assets & Opportunity Scorecard, released today by the Corporation for Enterprise Development (CFED). Since the release of the 2009-2010 Assets & Opportunity Scorecard, the number of asset poor families has increased by 21 percent from one in five families to one in four families. The asset poverty rate is now nearly twice as high as the Census Bureau’s official income poverty rate of 15.1 percent.
An increase of 21% is certainly significant.
“Growing numbers of families have almost no savings or other assets to see them through if they lose their jobs or face a medical crisis,” said Andrea Levere, president of CFED. “Without savings, few will be able to build a more economically secure future, including buying a home, saving for their children’s college educations or building a retirement nest egg.”
Levere added that the Scorecard findings are “particularly disturbing in the context of precipitous drops in incomes for many Americans and widening of the wealth gap between the richest and poorest households.”
Last year Business Insider provided us with fifteen graphs looking at income inequality and wealth in the US. Graph #5 above illustrates the flat wages many of us have experienced since at least 1990.
A look at key findings from the report shows something of crucial importance:
One in five jobs (22 percent) is low wage and nearly half of employers (46 percent) do not offer health insurance. Most workers (55 percent) do not have or participate in retirement plans. These low- quality jobs make it harder for families to both meet their needs today and create a reserve for tomorrow.
As wages continue to stagnate, good paying jobs are replaced with low wage jobs, and the costs of housing, food, transportation, heating oil, and everything else continue to rise, how will people save for the future, when they can’t even make ends meet in the present?
And why aren’t the presidential candidates talking about this?
Photo by woodleywonderworks on Flickr, via Creative Commons
In July I wrote about folk stampeding for Section 8 housing vouchers in Dallas, when thousands of people showed up, some waiting all night, to get vouchers for subsidized housing. It was a terrible story.
Since then, nothing much has changed, other than the fact that even more people are in need of affordable housing. From The Nation:
In Oakland, California, which opened its waiting list in January, officials expected as many as 100,000 people to apply for 10,000 vouchers. In Atlanta, sixty-two people were injured in 2010 at an East Point shopping center where 30,000 lined up after the local housing authority opened its waiting list for the first time in eight years. Even small communities like Aiken, South Carolina, saw hundreds queuing up in October for a chance at housing aid about as likely as seeing three cherries in a row on a Vegas slot machine.
Another way you can find tangible evidence of the housing affordability crunch is by visiting one of New York City’s exploding number of homeless shelters, where a record 41,000 homeless people bed down each night, including more than 17,000 children. The New York Times recently told the story of one of those children, fourth-grader N-Dia Layne, who travels two and a half hours each day between her Upper Manhattan shelter and her school in Brooklyn’s Brownsville neighborhood. In Cleveland, the number of homeless families and kids grew so rapidly this past summer that for the first time shelters were forced to eliminate daytime meals, housing-search assistance and other services in order to move workers to the overnight shifts, according to Brian Davis of the Northeast Ohio Coalition for the Homeless.
I had to read those New York numbers a few times. I can’t imagine that there are over 17,000 homeless children in New York City and this isn’t an issue being discussed in the endless presidential debates?
By nearly any measure, there are fewer and fewer homes affordable to working-class and poor Americans. The federal housing agency’s annual assessment finds that “worst-case housing needs” grew by 42 percent from 2001 to 2009, and nationwide there is a shortfall of nearly 3.5 million housing units for the poorest households. According to Harvard University’s Joint Center for Housing Studies, the share of renter households with the most severe cost burdens—that is, where more than half of income goes to rent and utilities—grew from a fifth to a quarter over the past decade and has doubled in the past half-century. And as household incomes stagnated for most of the past decade and then dropped during the economic crisis, the nation saw its already inadequate stock of cheap rental housing shrink even faster.
It’s pretty simple, really. The cost of living is increasingly high, while wages are increasingly low. It’s not a recipe for keeping a roof over one’s head.
All of the plans to “end homelessness in 10 years,” either are, or will be abject failures. The programs were all underfunded, and as the budget for federal housing programs continues to shrink, their failure is guaranteed. In the name of “deficit reduction” these programs are being cut, and cut again – with the goal being to eliminate them all together.
Despite the bleak policy landscape and the worsening affordability crisis, many local advocates and people working on the front lines talk about the renewed energy and hope generated by the nascent Occupy movement and the revived national discourse about income inequality. Donovan talks hopefully about the “other 1 percent”—the homeless and poor—saying that the concentration of wealth and power in the hands of the superrich 1 percent is “causing the other 1 percent to agitate, and to show that homeless people are something other than a herded mass. They’re saying, Enough is enough.”
The Occupy movement changed the national discussion when it began last fall. Instead of deficits and debt, we’re now hearing about income inequality, joblessness, and a host of other issues that weren’t even on the horizon over the summer. It is my hope (as someone living with housing insecurity) that Occupy brings housing to the forefront of our national dialogue.
Tags: California, Housing, New York
Last night’s State of the Union address revolved around themes of fairness and rebuilding America’s middle class. As in any speech of this size, there was a lot to absorb. What we found most interesting was President Barack Obama’s emphasis on not repeating the mistakes that led us to the economic catastrophe of the past few years.
It’s encouraging that President Obama paid special attention to the issue of housing and financial-sector fraud. Tens of thousands of Working America members and union members called for a real investigation into banks and their role in causing the housing crisis, and the President announced the creation of a new task force to investigate fraud in his speech last night.
We will have to watch this task force closely. We can’t have an investigation just for show, one that doesn’t take a comprehensive look at wrongdoing and impose real penalties. What powers will the investigators have, and who are they? The co-chair of the panel is Eric Schneiderman, the New York state Attorney General who has led opposition to a bad deal, which is encouraging. But David Dayen, a close observer, is skeptical of the panel and thinks it may be a way to ease us into an insufficient settlement. As we’ve said before, we can’t accept a deal that lets big banks break the law and abuse consumers without being held responsible.
We’ll also be looking closely at the President’s pledge to help homeowners refinance, which could provide some much-needed assistance to struggling families.
The State of the Union message showed that, in many ways, President Obama is attuned to the economic crisis that’s still ongoing in our country. His insistence on extending the payroll tax cut for working families is important, as is his attention to investing in infrastructure jobs and schools, which creates jobs now and builds economic strength for the future. His proposals on job training and support for companies that “insource” good jobs to America’s communities are encouraging as well.
Our members understand that politics is about priorities. With limited resources, we have to choose whether to keep tax breaks for the very wealthiest and for corporations that outsource jobs, or whether to use those revenues to support programs that seniors, students and families depend on. President Obama showed that, like most Americans, he’d choose the latter. Now it’s up to Congress to decide where they stand.
Tags: Housing, Jobs, Retirement, unemployment
A draft settlement between five big financial institutions and the U.S. states was distributed earlier this morning. It calls for the banks – Bank of America, Wells Fargo, Citigroup, J.P. Morgan Chase, and Ally Financial – to settle with homeowners to the tune of $25 billion dollars.
The Associated Press estimates this will translate into 750,000 Americans getting checks for $1,800. That’s about half the number of Americans eligible for assistance under the deal.
$25 billion sounds like a lot of money. It is, don’t get us wrong. It’s the biggest settlement with a single industry since the 1998 multistate tobacco deal. But when there’s $700 billion worth of money owed on underwater mortgages, and when these Big Banks are handing out enormous sums in bonuses to their executives, you realize how much of a slap on the wrist this really is for them.
Not only is that a tiny amount in the eyes of a Bank of America or a Wells Fargo – settling also potentially avoids a full-scale investigation into the nastiness they’ve been pulling on the American homeowner for decades.
We know about robo-signing, which we’ve written about. We’ve also received letters from our members describing absolutely despicable treatment at the hands of these banks. It’s common knowledge that these five banks make it their mission to extract money from American workers, not get them into homes. It would be an incredible travesty of justice for them to get immunity from further investigation while paying a mere pittance to the homeowners whose lives they ruined.
This is not change we can believe in. The White House needs to know we’re watching.
Use our tool to call the White House now – tell them they can’t rush into a settlement. An investigation of the deceptive mortgage practices that caused millions of Americans to lose their homes needs to be part of any agreement with the banks.
Tags: Corporate Accountability, foreclosures, Housing
You’ve got to be kidding me.
The Obama Administration, led by Associate Attorney General Thomas Perrelli, is in final negotiations with state Attorneys General to give the tiniest slap on the wrist to the five biggest banks for years and years of reckless foreclosure fraud activities.
There was talk over the past few months about a $25 billion settlement, which would help less than 10 percent of underwater homeowners. Now today we’re hearing about an even smaller settlement, valued at around $19 billion.
Of course these are huge numbers in theory, but we’re talking about the combined financial power of Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo, and Ally Financial. It’s not even a slap on the wrist – this is like a tap on the shoulder, or a Facebook poke.
Dave Dayen at Firedoglake points out that there is $750 billion in negative equity in America, and a $19 billion settlement will deal with about 2.5 percent of that. And helping a million homeowners is great, but there are about 11 million homes in foreclosure and another 7.5 million homes on the precipice.
Not to mention that, according to reports, the proposed settlement with the banks would keep the participating states from “pursuing various claims against them in the future.” Translation: Banks don’t want anyone to really investigate the acts they committed against the American homeowners and communities. So-called “robo-signing,” the practice of assigning one person to approve thousands of foreclosures over a short period of time without checking the paperwork, is the focus of the settlements, but could be the tip of the iceberg if the Administration launched a full-scale investigation.
This could be the last chance we have to really find out what caused the housing bubble and the economic crisis that followed. This could be the last chance to hold the real financial criminals accountable. This could be the last chance to show the foreclosure fraudsters that they can’t negotiate their way out of the consequences of ruining millions of American lives and livelihoods – they’ll go to jail for robbing us the way anyone else would go to jail for robbing a home or a store.
Luckily, Thomas Perrelli, the man at the Justice Department overseeing the settlement with the banks, is leaving the post in March. Reports say he wants to get the settlement deal before he leaves.
He needs to hear from you now. He needs to know you think this tiny slap on the wrist for years of fraud is unacceptable. And he needs to know you won’t stay quiet about it.
Write to Thomas Perrelli now. Tell him to stand up for homeowners, not the Big Banks. Tell him that Bank of America and their friends might be rich and powerful, but they aren’t above the law.
Take action now.
Tags: Bank of America, Corporate Accountability, foreclosure, foreclosure crisis, Housing
“Banks don’t need a slap on the wrist, they need a kick in the ass.”
Jim from Escanaba, Michigan, wasn’t mincing words when he wrote his message to Attorney General Bill Schuette. Jim was one of thousands of Working America members and union members who sent messages to their state attorneys general about the impending settlement with Big Banks on the issue of foreclosure fraud.
As Seth wrote yesterday, state Attorneys General will be deciding soon on a “50 state deal” that could let banks off the hook for their shady, deceptive, and possibly illegal foreclosure methods. Stories about tactics like “robo-signing” – where a bank employee signs thousands of documents and affidavits approving mortgage foreclosures without really looking at them – are widespread, but if the state AG’s take sign on to a proposed deal, none of these cases will be thoroughly investigated. Worse, the very people responsible could get legal immunity.
It would be one thing if the large financial institutions were truly doing their part to aid in the recovery of the economy they helped destroy. But what we’re seeing now, and throughout 2011, is that the wealthiest are having their own private recovery while the rest of the 99 Percent remain stuck in the mud. “Please stand up to these greedy banks and punish them as though it was one of us 99 Percenters,” wrote Doug from St. Clair Shores, Michigan, “Why did my house’s value decline by nearly 50 percent while their bonuses grew?”
As for homeowners, 7.5 million homes have entered the foreclosure process, and 11 million are at risk. The problems that started the mess in 2008 have not yet abated.
If your state Attorney General doesn’t call for an investigation, and instead takes the lazy, easy way out by taking a deal, the people responsible for our economy’s collapse will never be held accountable. There will be no reason for the robo-signers, fraudsters, and predatory lenders to change their ways. Stephanie from Greenwood Lake, New York, in her message to AG Eric Schniderman, says that she has seen these dirty tactics firsthand:
As a foreclosure prevention counselor at a local non-profit for the past 6 years, I know the devastating effects of the financial crisis; I see first-hand the irresponsible behavior of the big banks towards homeowners. There is clear evidence of misconduct, fraud and out-and-out crime perpetrated against the American people and no one is doing anything about it!
If any of us did our jobs the way the Big Banks did theirs, we’d not only get fired – we’d probably go to jail. “Ordinary Americans who commit a sliver of what high financiers did over the past half-decade would be lucky to see sunlight for the rest of existence,” wrote Jim from Gatlinburg, Tennessee to his AG Robert Cooper, Jr. Stephanie from Greenwood Lake, New York echoed those sentiments: “If I ever attempted to commit any of the acts the big banks perpetrated before, during and after the mortgage crisis, I would be in jail for a very long time.”
The central issue here is not revenge, but fairness. Many messages mentioned the fact that if you or I committed theft, or if a fellow American lost their home because of our negligence, we would be summarily punished. Unless we want history to repeat itself, we need a thorough investigation of these shady mortgage practices and put a stop to them.
We know that Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial aren’t above the law. The question is, do our state Attorneys General agree with us?
Photo by scad_lo on Flickr, via Creative Commons.
Tags: Bank of America, Bankers, banks, Corporate Accountability, foreclosure crisis, Housing
Cities are already suffering from budget shortfalls, decreasing tax revenues, foreclosures, and unemployment. Now they’re being hit hard by cuts to the federal block grant program. From the New York Times:
The shrinking federal program, called Community Development Block Grants, was devised by the Nixon administration to bypass state governments and send money directly to big cities, which were given broad leeway to decide how to spend it. This year the federal government is giving out just $2.9 billion — a billion dollars less than it gave two years ago, and even less than it gave during the Carter administration, when the money went much further.
Cuts to the block grants program were cited in a recent report by the nonpartisan Government Accountability Office, which noted that the number of vacant properties in America has jumped to 10 million from 7 million in 2000, threatening to attract crime and cause blight. “With sustained high foreclosure and unemployment rates and further declining home values, local officials said that continued, flexible C.D.B.G. funding would help them maintain efforts to address vacant properties in their areas,” the report noted.
Stabilizing neighborhoods that have been hard hit by foreclosure seems like a really good idea. Over 10 million vacant properties in the US is a recipe for disaster.
But mayors see it as an invaluable tool — one of the few federal programs that sends money directly to big cities, without going through the middlemen at the state level. Before its creation, mayors had to apply for small grants in many specific areas — leading to complaints of the this-food-is-terrible-and-the-portions-are-so-small variety. Tom Cochran, the executive director of the United States Conference of Mayors, said that mayors were thrilled when the Nixon administration agreed to consolidate the various grants into a single block grant program, which could be used broadly for community development, with local officials choosing their priorities. It was signed into law by President Gerald R. Ford.
It makes sense to let the cities decide what their own needs are, and not force them into one size fits all solutions.
From the website of the Community Bock Grant Program:
The CDBG program works to ensure decent affordable housing, to provide services to the most vulnerable in our communities, and to create jobs through the expansion and retention of businesses. CDBG is an important tool for helping local governments tackle serious challenges facing their communities. The CDBG program has made a difference in the lives of millions of people and their communities across the Nation.
With poverty and homelessness on the rise, it seems more than a little short sighted to cut the funding for this program, especially given that this funding is a proven source of job creation.
Photo by Loozrboy on Flickr, via Creative Commons.
Tags: Housing, Jobs