Tag Archive: Housing Crisis

Apr 11 2016

Nobody Goes To Jail

Once again the Obama Department of Justice has reached a settlement with a To Big To Fail Bank for pennies on the dollar and let the perpetrators walk away without criminal sanctions or penalties. Goldman Sachs will pay $5.06bn for its role in the 2008 financial crisis, the US Department of Justice said on Monday. …

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Aug 12 2013

Mortgage Fraud Settlement: Is a Fraud

As we have documented here at Stars Hollow, the task force that was created to pursue mortgage fraud and hold the banks accountable was, and is, a sham game to protect the banks from real relief for defrauded homeowners.

Your mortgage documents are fake!

by David Dayen, Salon

Prepare to be outraged. Newly obtained filings from this Florida woman’s lawsuit uncover a horrifying scheme

A newly unsealed lawsuit, which banks settled in 2012 for $1 billion, actually offers a different reason, providing a key answer to one of the persistent riddles of the financial crisis and its aftermath. The lawsuit states that banks resorted to fake documents because they could not legally establish true ownership of the loans when trying to foreclose.

This reality, which banks did not contest but instead settled out of court, means that tens of millions of mortgages in America still lack a legitimate chain of ownership, with implications far into the future. And if Congress, supported by the Obama Administration, goes back to the same housing finance system, with the same corrupt private entities who broke the nation’s private property system back in business packaging mortgages, then shame on all of us. [..]

Most of official Washington, including President Obama, wants to wind down mortgage giants Fannie Mae and Freddie Mac, and return to a system where private lenders create securitization trusts, packaging pools of loans and selling them to investors. Government would provide a limited guarantee to investors against catastrophic losses, but the private banks would make the securities, to generate more capital for home loans and expand homeownership.

That’s despite the evidence we now have that, the last time banks tried this, they ignored the law, failed to convey the mortgages and notes to the trusts, and ripped off investors trying to cover their tracks, to say nothing of how they violated the due process rights of homeowners and stole their homes with fake documents.

The very same banks that created this criminal enterprise and legal quagmire would be in control again. Why should we view this in any way as a sound public policy, instead of a ticking time bomb that could once again throw the private property system, a bulwark of capitalism and indeed civilization itself, into utter disarray? As Lynn Szymoniak puts it, “The President’s calling for private equity to return. Why would we return to this?”

White-collar fraud expert proves ‘mortgage-backed securities’ neither mortgage-backed nor secure

by Scott Kaufmann, The Raw Story

The forged documents were endorsed by employees of companies long bankrupt, executives who signed their name eight different ways, or “people” named “Bogus Assignee for Intervening Assignments” so that the banks could establish standing to foreclose in courts. The end result, according to white-collar fraud expert Lynn Szymoniak, is that over $1.4 trillion in mortgage-backed securities are still, to this day, based on fraudulent mortgage assignments.

The lawsuit against Wells Fargo, Bank of America, JPMorgan Chase, Citi and GMAC/Ally Bank was settled in early 2012 for $1 billion, but now that the evidence is unsealed, Szymoniak and her legal team are free to pursue the other named defendants, including HSBC, the Bank of New York Mellon, and US Bank. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.

Eric Holder Owes the American People an Apology

Jonathan Weil, Bloomberg News

The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated. [..]

In an updated press release Friday, which corrected its initial release of last October, the Justice Department said a review of the cases found that the inflated figures included defendants who had been sentenced or convicted in fiscal year 2012 — not just people who had been criminally charged, as originally reported. Its original, lofty tally also included cases in which the victims weren’t distressed homeowners. [..]

What a charade. No wonder the government found it so difficult to bring a meaningful number of accounting-fraud cases against bank executives after the financial crisis. Its own books were cooked. [..]

This was the second time, mind you, that Holder’s Justice Department had pulled a stunt like this. In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

Between this sham that protects the banks and the egregious violations of the press and privacy of all Americans with abusive use of FISA, Eric Holder owes us more than an apology, he owes us his resignation as Attorney General.

Jan 26 2013

ROTFLMAO: Tax the Banks to Punish Obama

Seriously, you can’t make this stuff up.

Dave Camp Bank Tax Bill Would Punish Obama-Friendly CEOs

by Zach Carter and Ryan Grim, The Huffington Poat

WASHINGTON — House Ways and Means Committee Chairman Dave Camp (R-Mich.) is considering legislation that would significantly increase taxes for the nation’s largest banks while providing tax breaks to struggling homeowners. [..]

The bill would significantly strengthen the Volcker Rule, which bans banks from speculating in securities markets with taxpayer money. The Volcker Rule’s implementation has been delayed as bank lobbyists have flooded regulatory agencies in Washington, pillorying the ban with loopholes. Hefty tax burdens for proprietary trading would reduce bank incentives to engage in the risky activity.

Camp’s legislation also would permanently establish a homeowner aid plan advocated by former Rep. Brad Miller (D-N.C.), who retired this month. When banks grant homeowners mortgage relief, the IRS considers the debt-reduction taxable income. As a result, struggling homeowners can face an unmanageable tax burden. A $50,000 debt reduction can spark an $18,000 tax bill — money that borrowers struggling to avoid foreclosure simply do not have. Miller successfully lobbied to include a one-year fix on the tax policy in the fiscal cliff deal. Camp’s legislation would permanently end the tax policy.

Steve Benen at The Maddow Blog aptly notes that “hell hath no fury like a House Ways and Means committee chairman scorned” but points out Camp’s “big deal” won’t impress the bank lobby:

Camp sent an angry letter to the Business Roundtable a month ago, and now Republicans are saying if there must be new revenue, it should be “on their backs.”

How big a deal is Camp’s bill? I think it’s safe to say the bank lobby won’t be impressed.

   Camp’s new bill would harvest government revenues from complex financial transactions involving derivatives, some of which figured prominently in the 2008 banking collapse. Although the 2010 financial reform legislation would curb some excesses in the derivatives market, the legislation isn’t yet fully implemented, and leaves much of the market unregulated. Financial reform advocates have urged new taxes on derivatives to deter excessive risk-taking by big banks. […]

   Camp’s bill would establish a new tax regime for derivatives, requiring banks to declare the fair market value of the products at the end of each year. Any increase in value would be considered corporate income, subject to taxation. It’s a more aggressive tax treatment than Wall Street enjoys for either derivatives or for trading in more traditional securities. […]

   The bill would significantly strengthen the Volcker Rule, which bans banks from speculating in securities markets with taxpayer money. The Volcker Rule’s implementation has been delayed as bank lobbyists have flooded regulatory agencies in Washington, pillorying the ban with loopholes. Hefty tax burdens for proprietary trading would reduce bank incentives to engage in the risky activity.

How serious is Camp about this? It’s hard to say at this point, though I suspect it’s mostly about posturing and political chest-thumping. Camp wants to send a message that he’s displeased and see this as a vehicle. Even if the committee chair got serious about this, I imagine other Republicans would intervene to stop its progress.

Benen thinks that in the aftermath of Pres. Obama’s reelection the business community see him as “a leader who is going nowhere” but “is reaching out to them.” At the same time they view the Republicans as untrustworthy and increasingly reckless.

But seriously, folks, the Republicans are threatening to tax the banks and help stressed homeowners as a “payback” for supporting Pres. Obama. Oh, please, let them.

ROTFLMAO

Aug 21 2012

“Foaming the Runway for the Banks”

Disregard all cheery news you hear from the MSM that the housing crisis is over and housing prices are stable and on the rise. It’s not over. We are still bailing out the banks over the troubled homeowner.

“The evidence is overwhelming: home prices are anything but stable.”

Michael Olenick: Still Looking for a Housing Bottom

Two trends are apparent. One is that banks are delaying foreclosures, or not foreclosing at all despite long-term delinquencies. The other is that private equity firms – flush with cash thanks to Tim Geithner’s religious devotion to trickle-down economics and the resulting cascade of corporate welfare – have been bidding up and holding foreclosed houses off the market. These two factors have artificially limited supply and, combined with cheap mortgages rates, driven up prices. While we can debate whether these strategies represent the best public policy, these policies are obviously not long-term sustainable. [..]

Holding back inventory means that the houses that are put on offer sell faster and at higher prices. That creates an incentive to delay foreclosures or not foreclose at all even when a home is delinquent. Though this seems obvious, the mainstream housing finance community – aided by a freelance “housing analyst,” – uses the faster figures to somehow prove banks are not holding houses. [..]

Besides lower foreclosure activity, the government is going all out to give away houses to private equity firms. Recently Fannie Mae sold 275 properties across metro Phoenix in one sale to a mystery buyer, according to a report by Catherine Reagor of the Arizon Republic. [..]

Anybody who has been a landlord seems to quickly tire of it so, assuming there isn’t a pending planned mass immigration to Phoenix, these investors will eventually want to cash out by selling these houses. Further, they will want to minimize maintenance expenses while they are renting out these houses, so the eventual sale of these houses will increase supply and prolong the housing crisis. Geithner’s policy of shaking down Main Street to help Wall Street continues to hurt your street. [..]

Taking account of the delayed foreclosures and the beginning of mass purchases of houses would mean there should be a surge in home prices, but we’re still seeing little movement in many areas. This is especially puzzling given how inexpensive mortgage are. [..]

Of course, this assumes that people can get mortgages for these houses, though many can’t. Young people especially are hopelessly in debt thanks to out-of-control tuition hikes predictably caused by equally out-of-control student loan policies. [..]

Thanks to low lower foreclosures, real-estate speculators buying in bulk, and low interest rates there is enough direct and anecdotal evidence to suggest that we may be seeing a real-estate recovery on paper. Further, these policies are clearly calibrated to bring about a bubble, despite that bubbles are difficult to control and are not, by definition, sustainable: they always eventually pop. Let’s at least hope that when this bubble bursts the new Wall Street bulk buyers are treated with the same ruthless “free market” vigor that the prior owners of these houses were treated with after the last bubble burst. However, I doubt the mystery Asian money buyer, that Fannie sold Phoenix to, will ever be subject to something like the rocket docket.

Washington’s Blog goes down the list of evidence that “the government’s “Homeowner Relief” Programs are disguised bank bailouts … not even AIMED at helping homeowners. It’s a fascinating piece with all the links to this sham.

Former special inspector general overseeing TARP Neil Barofsky (@neilbarofsky) joined Up w/ Chris Hayes to talk about his book “Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street.” Along with panel guests Heather McGhee (@hmcghee), vice president of policy and research at the progressive think tank Demos; Josh Barro (@jbarro), who writes “The Ticker” for Bloomberg View; Michelle Goldberg (@michelleinbklyn), senior contributing writer for Newsweek/Daily Beast; and Up host Chris Hayes (@chrislhayes), Barofsky shares his thoughts on the failure of TARP and the housing crisis.

Jun 29 2012

Federal Reserve Lies About Foreclosures

While the attention was on the SCOTUS ruling on the affordable Care Act, this is what was going on under the radar at the Federal Reserve:

Federal Reserve, Regulators Arguing for More, Quicker Foreclosures

by David Dayen

The Federal Reserve has decided to put their thumbs on the scales of justice, explicitly attempting to overturn state-based anti-foreclosure laws on the spurious grounds that they hurt the economy.

This story by Tim Reid in Reuters cites the Fed arguing against the kind of laws in states like Nevada – and soon, California – that have saved hundreds of thousands of homes from foreclosure.

   “State and federal laws enacted to protect homeowners from eviction in the wake of the 2008 housing crash may be extending the slump, according to a growing number of economists and industry experts.

   Foreclosures have all but ground to a halt in Nevada, which passed one of the stiffest borrower-protection laws in the country last year. Yet the housing market is further than ever from recovery, local real estate agents say, with a lack of inventory feeding a “mini-bubble” in prices that few believe is sustainable.

   A recent U.S. Federal Reserve study found that in states requiring a judicial review for foreclosure, delays associated with the process had no measurable long-term benefits and often prolonged the problems with the housing market.”

There’s been a concerted effort to overturn due process in these judicial foreclosure states, on the theory that foreclosures must be quickly flushed through the system so the market can “clear.” Incredibly, house organs like the Fed still express this opinion even after years of documented evidence of illegal foreclosures using false and forged documents in court. The explicit recommendation from the Federal Reserve is to react to systematic foreclosure fraud by closing the courthouse doors to troubled borrowers.

The entire premise that judicial foreclosure states are prolonging the housing slump is completely spurious. Nothing furthers the housing slump more than a spate of foreclosures flooding the market, increasing the supply of distressed homes that sell cheaply and bringing down property values in a particular area. That’s what the Fed is arguing for.

Yes, they’re serious. This is basically siding with the banks, giving fraud as pass and screwing the homeowners and housing market with a flood of foreclosures. And Reuters and other trade publications have decided to publish the propaganda that keeping people in their homes is causing the market to slump and the solution is more foreclosures.

Freelance writer and attorney who helped expose the foreclosure fraud, Abigail Field takes on the Reuters “b.S.” sentence by sentence, shredding the propaganda that the housing crisis was caused by homeowners but by the banks themselves who created the shadow market of foreclosed homes and the underwater crisis. She makes these four points:

  • First, en route to committing mass securities fraud the banks dishonored their contracts and failed to document the mortgage loans as they promised investors they would. As a result, they’ve had to fabricate nonsensical, obviously fraudulent and often sworn statements to try to foreclose. It’s that swamp of fraud that’s causing the delays.
  • Second, banks are manipulating housing market inventory, letting properties they own rot, not listing them for sale, and when auctioning them, sometimes outbidding third parties.
  • Third, bankers’ securities fraud broke the secondary market for non-government backed mortgages. As a result, there’s a lot less capital to lend wannabe homeowners.
  • Fourth, lender-driven appraisal fraud led to such inflated prices that the underwater problem is directly attributable to them.
  • Rather than deal in the reality that our housing crisis is banker driven and dare push the meme that bankers must be held accountable, Reuters is helping bankers (and their government allies) push the idea that if only we made it easy for bankers to use their fraudulent documents, the housing market would heal quickly.

    There’s even more that exposes not just the Federal Reserve’s pass on bank fraud but the how the Obama administration’s so called homeowner bail out is just more hand outs to the banks:

    Sentences ten and eleven:

    “The increasing doubt about the impact of anti-foreclosure laws on the long-term health of the housing market calls into question a basic principle of the Obama Administration’s approach to the housing crisis.

    Many Democrats, including Obama, say struggling homeowners should get more time to make good on their mortgage arrears, or have the breathing room to renegotiate their loans with lenders, especially in the wake of the “robo-signing” scandal in which banks were found to have falsified foreclosure paperwork.”

    How I wish the Obama Administration’s approach had really been about helping struggling homeowners. Instead it has been mostly theatrics with gifts to the banks thrown in. Most recent example – the latest refinancing program has become a fee/profit center for the big banks. Moreover, if homeowners did “make good”, that would be better for everyone involved, including the broader market, but in the era of maximally predatory servicing, it’s not easy. Ditto with mortgage mods that work – and when they include principal reduction that’s meaningful, they work.

    Hey, look! In sentence 11 we get the first whiff of banker wrongdoing. And wow, he not only uses the misleading “robo-signing“, but he also says “falsified foreclosure paperwork.” Foreclosure “paperwork” doesn’t sound that serious, though, does it? How about “falsified documents affecting property title”? Or, “lied under oath about how much borrowers owed and to whom?”

    And as Yves Smith at naked capitalism notes in her article the lies get repeated ad nauseum:

    The way Big Lies get sold is by dint of relentless repetition. In the wake of the heinous mortgage settlement, foreclosure fatigue has set in. A lot of policy people want to move on because the topic has no upside for them. Nothing got fixed, the negotiation process took a lot of political capital (meaning, as we pointed out, it forestalls any large national initiatives in the near-to-medium term), and Good Dems don’t want to dwell on a crass Obama sellout (not that that should be a surprise by now). But the fact that this issue, which ought to be front burner given its importance both to individuals and the economy, is being relegated to background status creates the perfect setting for hammering away at bank-friendly memes. When people are less engaged, they read stories in a cursory fashion, or just glance at the headline, and don’t bother to think whether the storyline makes sense or the claims are substantiated.

    Just look at the headline: “Evidence suggests anti-foreclosure laws may backfire.” First, it says there are such things as “anti-foreclosure laws.” In fact, the laws under discussion are more accurately called “Foreclose legally, damnit” laws. Servicers and their foreclosure mill arms and legs have so flagrantly violated long-standing real estate laws in how they execute foreclosures that some states have decided to up the ante in terms of penalties to get the miscreants to cut it out. [..]

    And that is perhaps the most remarkable bit, the failure to consider that gutting the protections to the parties to a contract undermines commerce. Borrowers in judicial foreclosure states paid higher interest rates due to the greater difficulty of foreclosure. So now they are to be denied what they paid for because the banks recklessly disregarded the procedures they set up and committed to perform? What kind of incentive system is it when we reward massive institutional failure with a bank-favoring settlement and supportive messaging from central bank economists? As Dayen stated:

       “So when these officials argue against laws like those in Nevada, which merely criminalize a criminal practice, or California, which provides due process for people having their homes taken from them, they’re arguing in favor of what amounts to a dissolution of justice.”

    I don’t think you’ll read anything like this at Reuters. Shameful

    Jun 27 2012

    Housing Market’s Irrational Exuberance

    … how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions…

    – Alan Greenspan, Dec. 5, 1996

    “Irrational exuberance”, “unrealistic expectations” accurately describe some of the reports about the alleged rebound in the housing market, such as this report on the increase in housing prices:

    Home prices rose in nearly all major U.S. cities in April from March, further evidence that the housing market is slowly improving even while the job market slumps.

    The Standard & Poor’s/Case-Shiller home price index shows increases in 19 of the 20 cities tracked. That’s the second straight month that prices have risen in a majority of U.S. cities.

    And a measure of national prices rose 1.3 per cent in April from March, the first increase in seven months.

    San Francisco, Washington and Phoenix posted the biggest increases. Prices fell 3.6 per cent in Detroit, the only city to record a drop.

    The month-to-month prices aren’t adjusted for seasonal factors. Still, prices in half of the cities are up over the past 12 months.

    Then there was this news in Bloomberg about the increase in demand for new homes:

    Demand for new U.S. homes rose more than forecast in May as mortgage rates dropped, bolstering the residential real-estate market while other parts of the world’s largest economy cool.

    Purchases climbed to a 369,000 annual rate, the most since April 2010 and up 7.6 percent from the prior month, the Commerce Department reported today in Washington. The median estimate in a Bloomberg News survey of 67 economists was 347,000. The number of houses on the market held near a record low.

    The problem with this rise in housing prices and an increase in new home sales is that its a poor indicator of the real “health” of the housing market. Even Yale Prof. Robert Shiller, co-creator of the quoted Case-Shiller house price index, takes a cautious view of these optimistic predictions of a housing recovery:

    MUCH hope has been pinned on the recovery in home prices that began about a year ago. A long-lasting housing recovery might provide a balm to households, mortgage lenders and the entire United States economy. But will the recovery be sustained? [..]

    The most obvious reason for hope is that, unlike stock prices, home prices tend to show a great deal of momentum. Correcting for seasonal effects, home prices as measured by the S.&P./Case-Shiller 10-City Home Price Index increased each month from June 1995 to April 2006, then decreased almost every month to May 2009. Since then, they have risen through January, the latest month for which data is available.

    So, because home prices have been climbing of late, isn’t it plausible that they’ll keep doing so?

    If only it were that simple.

    Home price booms and busts do end, sometimes quite suddenly, as was the case for the boom of 1995 to 2006 and the bust of 2006 to 2009. Today, we need to worry about strong headwinds, as the government begins to withdraw its support of a still-troubled lending industry and as foreclosures are dumping millions of homes onto the market.

    Michael Olenick explains at naked capitalism:

    Yale Prof. Robert Shiller, co-creator of the well-known Case-Shiller house price index, takes a more sober approach. Shiller argues in the New York Times until meaningful principal reductions are put in place that house prices are hosed. Pricing may bump up on artificial scarcity caused by the relatively low number of foreclosures after the robo-signing scandal, but in the long run underwater borrowers are likely to drown. Further, because of sky-high loss severities in foreclosures – my own data shows it is not at all uncommon for investors to lose the entire face value of a mortgage in a foreclosure – principal reductions make good business sense.

    Shiller embraces an idea being floated about lately; having municipalities use eminent domain to “take” mortgages at fair market value. Databases like the one I’ve been compiling clearly show the loss severity of similar mortgages in similar ZIP codes, allowing municipalities to ascertain fair market value of the mortgages, as opposed to the houses. In bubble-states, where negative equity issues are most pronounced, fair market value of most mortgage would be no more than 20-percent of the face value of the first mortgages – and oftentimes far less; no more than a few cents on the dollar – while second liens would be worthless.

    Assuming this approach is only used with the consent of the homeowner, I’d suspect that one last call the servicer before implementation would magically result in an almost immediate modification: no lost paperwork, no transfers to the offshore call center, no capitalized interest.

    That’s too rational for anyone to heed.

    May 04 2012

    Bring Me DeMarco’s Head

    From Glen Ford at the Black Agenda Report

    Bring Me the Head of Ed DeMarco!

    President Obama must fire Federal Housing Finance Agency acting director Ed DeMarco because he “has flatly refused to do any kind of principal reduction for the millions of ‘underwater’ homeowners that are suffering, that are drowning in debt because of how the banks crashed the economy,” said Tracy Van Slyke, co-director of New Bottom Line. The coalition of faith-based and community organizations demand a “minimum of $300 billion in principal reduction.” Van Slyke claims New Bottom Line and other Occupy Wall Street-related efforts have “moved the administration far along from where they were. We have moved the dial.”

    Why Obama Won’t Help Foreclosure Victims

    The Obama administration has repeatedly refused to spend moneys a set aside for distressed homeowners and communities. Why? Because banks have refused to cooperate with such programs, fearing that intervention in the housing market “would threaten to upset the bankers’ carefully calibrated market manipulations.” They would rather continue rigging the game. “The banks have been carefully dribbling out houses for sale, attempting to artificially stabilize prices with the goal of pumping up another bubble.”

    The Obama administration’s failure to spend almost any of the $7.6 billion in TARP housing money set aside for the neediest regions of the country seems counterintuitive [..]

    The Hardest Hit Fund was specifically targeted to homeowners in areas most seriously impacted by unemployment and falling home values – a formula tailor made for Black and Latino communities devastated by massive foreclosures and layoffs. [..]

    The problem was, Obama’s people resisted putting the program into effect. [..]

    The problem begins at the top. Obama has consistently protected bankers’ rights to deal with homeowners as they please.

    AS reported in the Washington Post: Fannie Mae had seen benefits to lowering some home loans, documents indicate:

    Officials at government-backed mortgage giant Fannie Mae concluded years ago that the company could “reduce its losses substantially” by lowering loan amounts for some troubled borrowers, according to internal documents cited Tuesday by the top Democrat on the House oversight committee.

    The new insights into Fannie Mae’s analyses about the potential benefits of so-called principal reduction surfaced in a letter from Rep. Elijah E. Cummings (D-Md.) to Edward J. DeMarco, the acting director of the independent agency that oversees Fannie Mae and Freddie Mac.

    Since being appointed head of the Federal Housing Finance Agency (FHFA) in 2009, DeMarco has refused to allow Fannie and Freddie to write down loan balances, in part because he worries that some homeowners would stop paying their mortgages to get relief, ultimately costing taxpayers more money. He has been steadfast in his disapproval in recent months despite growing pressure from Obama administration officials and House Democrats to allow principal reductions.

    Those “internal documents” led to accusations that DeMarco, a Republican career public servant appointed by Obama to head the FHFA, withheld information from Congress about the findings:

    “This just adds to the pile of evidence that calls into question how sincere DeMarco is about treating this issue seriously,” said Ian Kim, director of campaigns for Rebuild the Dream, a progressive advocacy group that has been urging a principal reduction program.

    Supporters of principal reduction argue that it would reduce foreclosures by lowering the monthly payments for underwater homeowners and giving them hope they would one day have more equity in their homes.

    Opponents counter that reducing the principal on mortgages owned or backed by Fannie and Freddie could increase their losses and encourage homeowners who are making payments to fall behind in order to lower their debt.

    The new documents contradict DeMarco’s congressional testimony in November that analyses by Fannie and Freddie concluded that other forms of homeowner assistance were less costly to taxpayers, the lawmakers said. [..]

    The failure to launch a principal reduction program “was not merely a missed opportunity, but a conscious choice that appears to have been based on ideology rather than Fannie Mae’s own data and analyses,” the lawmakers said.

    It’s time for DeMarco to go and the Obama administration to stop protecting the bankers who won’t support him ever.

    Apr 06 2012

    The Haunting Housing Crisis

    It seems like there is no end to the housing crisis that continues to be a major drag on the economy. The recent foreclosure agreement solved little to nothing of the problem and may have exacerbated it with thousands of homeowners still facing foreclosure or loss of equity in their homes. There is also the matter of all those homes that sit vacant, boarded up as a sign of the “suburban decay” that is plaguing minority neighborhoods the worst.

    David Dayen at FDL News Desk points out the bright side and dark side of suburban foreclosures:

    Kaid Benfield from the Natural Resources Defense Council takes a look on the bright side in regards to the foreclosure crisis, postulating that it will sound the death knell for exurban communities and sprawl. [..]

    I don’t think there’s much question, from my perspective, that a sharply reduced exurbia would benefit the country. It would limit fuel consumption and demand; and culturally, more livable, walkable, sustainable cities would foster a greater sense of community, which typically aligns with progressive values. Sprawl policies can answer for a number of societal problems over the past decades. [..]

    And yet I’m not convinced that we’re in for an era of reduced sprawl. The private equity players trying to purchase homes at a discount and rent them back out will find most of their inventory in the exurban areas. The expected rental market increase will probably increase the number of single-family units for rent more than anything. In fact, a report in today’s Washington Post finds that these kind of units are practically the only livable vacant properties left. Studies show that banks maintained their properties in white areas at a far greater rate than the ones in minority areas.

    With regard to the Washington Post article Think Progress‘s Travis Walden had this to say:

    The report is the latest sign of discrimination on the part of big banks when it comes to America’s housing market. Earlier reports found that blacks and Latinos were twice as likely to have been affected by the housing crisis, largely because an industry that has become infamous for its predatory lending practices was even more predatory when dealing with black and Latino borrowers. Banks and lenders often pushed minority borrowers into subprime loans even when they qualified for prime loans, adding as much as $100,000 in interest payments over the life of the loan.

    Housing prices remain depressed and are likely to drop another 10%:

    Sales of repossessed properties probably will rise 25 percent this year from 1 million in 2011, according to Moody’s Analytics Inc. Prices for the homes could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc. That month, 43 percent of foreclosures were delinquent for two or more years, from a 21 percent share in 2010, according to Lender Processing Services Inc. in Jacksonville, Florida.

    Prices for repossessed properties could drop as much as 10 percent because they deteriorated as they were held in reserve during investigations by state officials resolved in February, according to RealtyTrac Inc.

    As Yves Smith at naked capitalism notes, this isn’t just a few thousands foreclosed homes but millions that are sitting empty:

    Note this view is based simply on the notion that foreclosures were attenuated on 1.25 million houses, allegedly due to banks keeping them off the market due to the robosiging crisis. By contrast, top housing analyst Laurie Goodman estimates the amount of shadow inventory at between 8 and 10 million homes, and our Michael Olenick, using a different methodology, comes in at just under 9 million homes.

    Moreover, evidence on the ground suggests that the banks had reasons other than the robosigning scandal for drawing out foreclosures. While NEW foreclosure actions slowed down markedly, and have ramped up again in the wake of the settlement, it looked far more likely that banks were attenuating foreclosures to maximize income . The longer a house in delinquent and then in the foreclosure process, the more the bank can collect in late fees and servicing fees. And there is considerable evidence that banks pile junk fees on top of that, for instance, double charging the borrower and the trust for fees like broker price opinions.

    To get a better idea of what this crisis looks like o a map, Ben Geddes of the Florida Coastal School of Law, working with April Charney, has been putting together Google Maps of vacant properties in Jacksonville, Fl.. If you go to the article you can zoom in on neighborhoods. It’s really very depressing and this is just one medium sized city.

    Until this crisis is truly addressed in a way that helps the homeowner stay in the home the housing market will continue to haunt any recovery from the recession.

     

    Oct 10 2010

    Rant of the Week: Jon Stewart: Foreclosure Crisis

    Rube Goldberg, himself, could not have designed a more convoluted method to, in fact, fuck us. . . . .

    Thank you, President Obama. You know it’s crazy when getting back to square one feels like a victory

    The Daily Show With Jon Stewart
    Foreclosure Crisis
    www.thedailyshow.com
    Daily Show Full Episodes Political Humor Rally to Restore Sanity

    Aug 26 2010

    Foreclosure

    They Go or Obama Goes

    Robert Scheer,

    Truthdig, August 25, 2010

    Barack Obama and the Democrats he led to a stunning victory two years ago are going down hard in the face of an economic crisis that he did nothing to create but which he has failed to solve. That is somewhat unfair because the basic blame belongs to his predecessors, Bill Clinton and George W. Bush, who let the bulls of Wall Street run wild in the streets where ordinary folks lived. And there was universal Republican support in Congress for the radical deregulation of the financial industry that produced this debacle.

    The core issue for the economy is the continued cost of a housing bubble made possible only after what Clinton Treasury Secretary Lawrence Summers back then trumpeted as necessary “legal certainty” was provided to derivative packages made up of suspect Alt-A and subprime mortgages. It was the Commodity Futures Modernization Act, which Senate Republican Phil Gramm drafted and which Clinton signed into law, that made legal the trafficking in packages of dubious home mortgages. In any decent society the creation of such untenable mortgages and the securitization of risk irrationally associated with it would have been judged a criminal scam. But no such judgment was possible because thanks to Wall Street’s sway under Clinton and Bush the bankers got to rewrite the laws to sanction their treachery.

    It is Obama’s continued deference to the sensibilities of the financiers and his relative indifference to the suffering of ordinary people that threaten his legacy, not to mention the nation’s economic well-being. There have been more than 300,000 foreclosure filings every single month that Obama has been president, and as The New York Times editorialized, “Unfortunately, there is no evidence that the Obama administration’s efforts to address the foreclosure problem will make an appreciable dent.”

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