Faces Of Foreclosure

Dr. Seuss’ Did I Ever Tell You How Lucky You Are? (Classic Seuss)
A favorite economics lesson is from Dr. Seuss’ “Did I Ever Tell You How Lucky You Are?”

Oh, the jobs people work at! Out west, near Hawtch-Hawtch, there’s a Hawtch-Hawtcher Bee-Watcher. His job is to watch . . . to keep both his eyes on the lazy town bee. A bee that is watched will work harder, you see.

Well . . . he watched and he watched. But, in spite of his watch, that bee didn’t work any harder. Not mawtch.

So then somebody said, “Our old bee-watching man just isn’t bee-watching as hard as he can. He ought to be watched by another Hawtch-Hawtcher. The thing that we need is a Bee-Watcher-Watcher.”

WELL . . .The Bee-Watcher Watcher watched the Bee-Watcher. He didn’t watch well. So another Hawtch-Hawtcher had to come in as a Watch-Watcher-Watcher.

And today all the Hawtchers who live in Hawtch-Hawtch are watching on Watch-Watcher-Watchering-Watch, Watch-Watching the Watcher who’s watching that bee. You’re not a Hawtch-Hawtcher. You’re lucky you see.

Why are those at the heads of the investment banking businesses worldwide trying to convince us that this entire sink hole began only a year or so ago, when in fact the sink hole has been being positioned by those very actors, for decades. How and when did America become the “sloppy society?” The way our country is run is quite inelegant.

The following is from a variety of sources: “Treasury Inspector General for Tax Administration Recovery Act,” “Sovereign Society,” and a gentleman self-described as a “Disgruntled Republication.”

Federal workers owe more than $3B in back taxes
By STEPHEN OHLEMACHER (AP) – Dec 15, 2009

WASHINGTON — Federal workers owed the government more than $3 billion in back income taxes in 2008, just as federal tax revenues started to suffer from the recession.

More than 276,000 federal employees and retirees owed back income taxes as of Sept. 30, 2008, according to data from the Internal Revenue Service. The $3.04 billion owed was up from $2.7 billion owed by federal employees and retirees in 2007.

Among cabinet agencies, the Department of Housing and Urban Development had the highest delinquency rate, at just over 4 percent. The Treasury Department, which includes the IRS, had the lowest delinquency rate, at 0.98 percent.

Overall, the 9.7 million federal workers included in the data had a delinquency rate of about 2.9 percent.

“It’s not right for a few to shirk their obligations, and it’s especially offensive that these tax delinquencies come from federal employees and contractors,” said Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee.

The IRS doesn’t provide a comparable delinquency rate for income taxes paid by the public. The nation’s overall compliance rate, which includes taxes paid by small businesses and corporations, has hovered around 85 percent for decades, according to IRS statistics.

Most residents who owe back income taxes file returns but cannot pay the full amount at tax time, said IRS spokesman Anthony Burke. Others have their tax bills increased through audits and cannot pay the higher bill.

The statistics on federal employees do not include those who are on payment plans. The IRS doesn’t publicize the data, but makes it available upon request. The data was first reported by Washington radio station WTOP.

The recession has put a big dent in federal tax receipts. Individual income tax receipts for the fiscal year that ended in September were down about 20 percent from the year before.

I recently discovered that the servicer of my mortgage made TWENTY-TWO mistakes (that I know of) during 2009 with regard to my mortgage! That, of course, pushed me into wondering what in the hell is going on? . . . the IRS has trouble even with routine tasks. According to another IG report, the agency has a staggering 70 percent error rate in its processing of taxpayer identification numbers for individual taxpayers:

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its review of the IRS’s processing of applications for Individual Taxpayer Identification Numbers (ITINs). TIGTA reviewed a sample of ITIN applications and found that almost 70% contained significant errors and/or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008. ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals who may have U.S. tax reporting or filing obligations but do not qualify for Social Security Numbers, which generally are only issued to U.S. citizens and individuals legally admitted to the U.S. . . . ”The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008,” commented J. Russell George, the Treasury Inspector General for Tax Administration. “If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise,” added Inspector General George.

Everything by Dr. Seuss
Just think how much fun it will be when the IRS is in charge of determining those of us who should get fined or jailed for noncompliance with government-run healthcare! No wonder so many taxpayers put a flat tax or national sales tax on their Christmas lists.

Perhaps Dr. Seuss is our only hope . . . We’ve added a link to a collection of his books, including Dr. Geisel Goes Green (warnings against mindless progress), The Lorax, Mr. Brown Can Moo!, One Fish Two Fish Red Fish and others. The Economics of Dr. Seuss

A proposal: Keep track of every mistake your bank/lender makes. If we do our “homework” with due diligence, you may save your home (if foreclosure is looming) and not only will your finances be in better shape, but we can help banks do their job efficiently and accurately. Why should we? Because their screw ups do NOT cost them; they cost us. Each bank client ultimately pays for the bank’s messes and the only way to straighten this out is to call them on it.

WHY are the keepers of our money allowed to operate carelessly and sometimes outside of the law? Apparently it’s been sloppy for 15-20 years and no one has called them on it. This is our money we are talking about: yours, mine, ours. People work hard only to have their income carelessly handled by banks and lenders. Where is the control over these institutions? Who owns the Federal Reserve? Apparently, no matter who is “in charge,” of America’s lending institutions, they are not paying attention (or are looking the other way for profit/percentages).

Important note: I do not hate banks. They pay reasonably well, still provide benefits (health insurance and vacations), and have a growth plan for their employees . . . including funding for additional schooling. In my 20s, I worked in Bank of America’s Corporate Finance Department in their San Francisco Headquarters under A.W. Clausen and Robert Frick, both of whom rose to prominence in national and international banking. They were fine men. And most bank employees are wonderful people — although, unfortunately, I’m now thinking someone needs to be watching the store because of the multitude of errors made by those wonderful people.

Bank errors are costing you a fortune (as are erroneous credit reports, but that is another story). Start tracking the errors — when they are bank errors and not such things as overdrafts caused by your mismanagement of your own accounts; that IS your responsibility.

Setting the stage: Around 1997, my then-home-loan was sold to Washington Mutual. I wasn’t informed. I sent my payment to the prior lender and it was lost in the transfer process. After ONE YEAR of getting nowhere in straightening this out, I pulled a negative Better Business Report on Washington Mutual. I put on my best business suit and stood outside their Greenbrae, California branch handing them out to people with a suggestion that they read the report before doing business with WaMu. After successfully turning away several people, I explained my process to the bank manager and insisted he straighten out the missing payment mess immediately or I would continue handing out the BBB report. Bristling, he demanded, “Are you threatening me?” Calmly I responded, “No. I’m promising you that I will hand out this negative report re WaMu.” He cleared the record while I waited. Technically, I should have taken that further; because of the resulting poor credit report due to the lost payment, my home loan interest was higher than it should have been.

More setting the stage: In 2007 and 2008 Wells Fargo Bank lost payments on my home loan. Because of the WaMu fiasco, I began tracking all conversations and letters to/from Wells Fargo.

When the mortgage payments did not clear my account, I called Wells who informed me they did not have the checks. So I paid by phone with their assurances that they would NOT put through both payments should they find the missing checks. However, they found the “lost” payments and put both checks through. The result: $580 in overdraft fees. In 2007 I let the overdrafts go as it takes too much time to deal with bank mazes. However, in 2008, I’d had it: It took almost a month, several phone conversations and five letters to straighten this out. They reversed the overdrafts for 2007 and 2008; however, a great deal of time was spent in cleaning up their mistake. Of course, I wasn’t covered for that.

In December 2008, when I began “negotiating” for a loan modification with Wells Fargo, I began tracking all conversations and letters and now have a four-inch-thick binder and nine typed pages of who said what to whom. I’ve learned far more about banking than I ever wanted to know.

So, back to the list you should keep and the whys of it all: On December 28, 2009, curious about the volume of mistakes made by Wells Fargo since they have held my mortgage beginning July 2006, I started counting from my lists of who said what to whom.

As near as I can figure there are TWENTY-ONE errors during the past year alone. Wells’ mistakes include repeatedly lost documents resulting in denials, misinformation during telephone conversations, two outright lies (one before a Superior Court Judge and one in writing in response to a Congressional Inquiry) . . .

I’m not alone. This IS how banks are doing business – sloppy, as is indicated by my timeline, conversations with others, checking blogs with complaints about various banks, and as indicated by the loss of original mortgage papers for thousands (millions) of people.

However, hope springs eternal:

From a Wall St. Journal article written by Amir Efrati on December 24, 2009: “Now, after the country has been mired in a housing crisis for more than two years, more judges are calling these companies on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.”

and

“It makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court, says Raymond Brescia, an assistant professor at Albany Law School who has written about the role of the courts in the financial crisis. ‘I don’t think that’s a crazy idea,’ he says. ‘To expect plaintiffs to prove their case is what the judicial system is founded on.’”

SO PLEASE keep a list of your dealings with your banks, lenders (and the credit reporting agencies). For decades I considered these bastions of industry as sacrosanct; I actually thought credit reporting agencies were government agencies. They are not, and, like the banks, they hold your financial life in their shaky hands.

Never afraid of anything in my life, I am now afraid of our mortgage lenders and our banking system; they have too much control, do not manage it accurately or efficiently, seem to have no checks or balances, and can take our homes without having to prove ownership. They have also quite studiously ignored Presidential requests.

In December 2009, I received a three-month forbearance offer. This is wonderful, except that too many forbearance offers disappear into thin air as your lender does not hold the note, has no authority to negotiate anything, and after the three months may foreclose anyway — that IS happening in California.

One of Wells Fargo’s own branch managers expressed worry about this “offer” when I stopped by to give the wonderful news. The manager suggested that I track payments carefully and confirmed what I already know: “Horrible things have happened.”

I love my home and country, and Wells Fargo was a favorite bank of mine until this mess. Because of their history in California, Wells is featured on one of my Web sites (although I’m contemplating taking the time to remove all mention of them from the site), and two of their horses — Molly and King — live in my home (the stuffed ones, not the real ones). This is SO sad.

The following is from a Facebook comment posted by an observant Realtor.

(Editor’s Note: I completely understand the frustration of trying to save one’s home and then losing it. However, I can’t understand destroying something you have loved because it is no longer yours . . . years ago I read Nikos Kazantzakis “Serpent and Lily,” wherein when the artist’s lover says she is leaving him, he kills her. That didn’t make sense. Destroying property does not make sense. There HAS to be a way to bring lenders to their knees but destroying homes isn’t, in part because they have insurance for everything.)

“I showed a home just prior to Christmas that, literally, had liquified feces on the wall used as a “writing” tool and aside from some very choice curse words, there was a very solid message to Litton Loan. While the act was irrational on the part of the former homeowner, what is clear is that they got in trouble and didn’t want to leave the home . . . that is the sad reality and I’ve seen dozens of home where the person being foreclosed on ceases to care and seeks to destroy out of anger and frustration.

“The issue is deep in this country. I don’t want to walk away from real estate after ten years because I don’t believe that homes and home ownership aren’t the foundation of the economy . . . because I do. I’m ready to hang it up because I don’t know if I can ethically and with a good conscience, tell someone to buy now or even during the course of the next year, without risking losing even more.

“I anticipate that, as long as the Congress is more hellbent on shoving healthcare reform down our throats, and spending trillions of dollars a year on poorly thought out plans that do nothing but devalue our currency . . . then we’re in for a very long, very ugly road as far as real estate is concerned.

“I’d almost rather go work at a job with benefits and a guaranteed paycheck and put aside money until homes are worth half or LESS than they are today.

“Mark my words . . . it will happen and right behind it . . . hyperinflation. All the economic indicators are there and the current administration will make Jimmy Carter look like an economic genius.”

Excerpted from the Wall St. Journal
Law Journal
December 24, 2009
Amir Efrati

Foreclosure Challenges Raise Questions About Judicial Role

A group of state and federal judges presiding over foreclosures are wiping away borrowers’ mortgage debt, invalidating foreclosure sales and even barring some foreclosures outright.

The decisions in recent months by a handful of judges in states including Massachusetts, New York and Texas mark a new phase in the judiciary’s battle to stem the rising tide of foreclosures by punishing mortgage companies for paperwork mistakes and alleged mistreatment of borrowers.

The number of judges taking such action remains small, and most foreclosures go through without a challenge . . . but the growing number of rulings against lenders’ claims is raising questions among some legal experts about judges’ impartiality . . .

As early as 18 months ago, several judges in California, New York, Ohio and elsewhere would dismiss foreclosure cases if they could find reason to do so . . . Now, after the country has been mired in a housing crisis for more than two years, more judges are calling these companies on their paperwork glitches, and in some cases going much further in their efforts to help homeowners.

It makes sense for judges to demand that mortgage companies follow the rules to the letter if they want to win foreclosure cases in court, says Raymond Brescia, an assistant professor at Albany Law School who has written about the role of the courts in the financial crisis. “I don’t think that’s a crazy idea,” he says. “To expect plaintiffs to prove their case is what the judicial system is founded on.”

But if judges decide to help borrowers in ways that overlook the merits of individual cases, Mr. Brescia adds, that would “undermine the integrity of the judiciary, and that’s not going to help anybody.” Instead, he says, it might trigger a backlash from legislators or regulators to rein in activist jurists.

At the heart of some of the court rulings is what became a common practice among mortgage companies: filing a foreclosure claim without showing proof that they actually own the mortgage and have the right to foreclose. This occurs in part because mortgages change hands multiple times after the original loan is made, but the mortgage documents and the contracts between borrowers and lenders are never altered to reflect those changes. Years later, it can be difficult to verify who is the owner of the mortgage.

That played a key role in a ruling in October by Keith Long, a state-court judge in Massachusetts. He invalidated two foreclosure sales that had occurred more than two years ago. The judge affirmed his own prior ruling that said units of U.S. Bancorp and Wells Fargo & Co. never had the right to sell the homes.

Judge Long ruled that even though the companies physically held the relevant mortgage documents, the mortgages were never legally assigned to them and recorded with the state.

“They’re selling something they don’t own,” says attorney Paul Collier, who began representing the borrowers in the case last year.

Walter H. Porr, a lawyer for the companies, which are appealing the ruling, says his clients “operated in what had been an accepted industry fashion for the better part of 15 or 20 years.” He adds: “We owned those mortgages.”

In October, a federal bankruptcy judge in White Plains, N.Y., rejected a claim by a mortgage company that the debtor owed $460,000. The judge, Robert D. Drain, said the company, PHH Mortgage Corp., couldn’t prove it owned the debt . . .

And in a prominent case in New York’s Suffolk County on Long Island, Jeffrey Spinner, a state-court judge, canceled $292,000 in mortgage debt after he ruled the borrowers were mistreated by IndyMac Bank (which) displayed “harsh, repugnant, shocking and repulsive” behavior by making no attempt to negotiate a settlement with Diane Yano-Horoski after she and her husband fell behind on payments, despite a state law requiring the company to try . . .

The full story from the Wall St. Journal

The Bankers Manifesto of 1892
Distributed to a private group of elite bankers in June, 1892

The Black Book Adlai Stevenson, Adlai Stevenson II, and Adlai Stevenson III The Black Book is a primary source offering a glimpse into the minute inner workings of American politics over three generations. It began as a binder filled with anecdotes and maxims that county prosecutor, congressman, Assistant Postmaster General, and later U.S. Vice President Adlai E. Stevenson (1835-1914). He was known to jot down his thoughts on anything at hand, even menus, place cards, and napkins. The Black Book continues with writings by Governor Adlai E. Stevenson II (1900-1965) and Senator Adlai E. Stevenson (1930-). The Senator also provides commentary. The result is a treasure trove of insight into the American political machine, flavored with genuine personal convictions; the reader may agree or disagree with the expressed views, but cannot deny their authenticity, refreshing in today’s era of political sound bites and endless power mongering. “My definition of a free society is a society where it is safe to be unpopular. – Adlai II”. June, 2009 The Midwest Book Review

• “We (the bankers) must proceed with caution and guard every move made, for the lower order of the people are already showing signs of restless commotion. Prudence will therefore show a policity of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without any fear of any organized resistance.
• “The Farmers Alliance and Knights of Labor organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.
• “At the coming Omaha Convention to be held July 4, 1892, our men must attend and direct its movement, or else there will be set on foot such antagonism to our designs as may require force to overcome. This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy ) and legislation.
• “The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible.
• “When through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders.
• “History repeats itself in regular cycles. This truth is well known among our
  principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism.
• “The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be be forced to view through the Republican Party.
• “By thus dividing voters, we can get them to expend their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus by discrete action, we can secure all that has been so gererously planned and successfully accomplished.”

The above was reprinted from the book, “Economic Pinch” written by the late Charles A. Lindberg, Sr. which was first published in 1923. The Banker’s Manifesto of June 1892 was not intended for public reading, but was propaganda to hold the big bankers together. Permission was not needed to reprint the above.

The Bankers Manifesto of 1934
Distributed to a private group of elite bankers in 1934

Capital must protect itself in every possible manner through combination and legislation. Debts must be collected, bonds and mortgages foreclosed as rapidly as possible. When through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders. This is well known among our principal mennow engaged in forming an imperialism of capital to govern the world. “By dividing the people we can get them to expend their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus by discrete action, we can secure all that has been so generously planned and successfully accomplished.”

The above was printed from the Banker’s Manifestofor private circulation among leader bankers only, taken from the Civil Servants’ yearbook.” The Organizer” of January, and the “New American” of February, 1934.

I know we are being manipulated but I couldn’t figure out why. And here it is:

When through the process of law, the common people have lost their homes, they will be more tractable and easily governed through the influence of the strong arm of government applied to a central power of imperial wealth under the control of the leading financiers. People without homes will not quarrel with their leaders.

That is IT, but now, next question, what is it that they do not want us to quarrel about? Their incomes? The lack of funds behind their incomes? Rising crime in America? What are they controlling us for? Out of habit? Or is there a reason?

This also helps explain the “Forbearance Agreements” being given by lenders to homeowners facing problems: The “Agreements” are unintelligible. I actually wrote to my lender today asking for a translation and although I’m sure it sounds as though I was being sarcastic, I was not. The agreement in the first paragraph is different than that in the second paragraph which is different than anything on the second page, and all is negated by the servicer of the loan writing that the lender (the entitly currently holding the note, whomever that might be) has not agreed to anything, may not agree to anything, and can foreclose on the house at any time without notice.

This just in my eMail . . . and it’s cleared it up for me. I feel so much better!

THE BAD ECONOMY

The economy is so bad . . .

• I got a pre-declined credit card in the mail.
• I ordered a burger at McDonalds and the kid behind the counter asked, “Can you afford fries with that?”
• CEO’s are now playing miniature golf.
• If the bank returns your check marked “Insufficient Funds,” you call them and
  ask if they meant you or them.
• Hot Wheels and Matchbox stocks are trading higher than GM.
• McDonalds is selling the 1/4 ouncer.
• Parents in Beverly Hills fired their nannies and learned their children’s names.
• A truckload of Americans was caught sneaking into Mexico.
• Dick Cheney took his stockbroker hunting.
• Motel Six won’t leave the light on anymore.
• The Mafia is laying off judges.
• Exxon-Mobil laid off 25 Congressmen.
• The economy is worse than divorce. I lost half my money and still have the wife.
• Congress says they are looking into this Bernard Madoff scandal. Oh Great!! The guy who made $50 Billion disappear is being investigated by the people who made $1.5 Trillion disappear.

For the past year of dealing with my lender for a loan modification on my home, too often I wake up with bizarre questions (and equally bizarre images in my mind). Today’s question: What falls under the FBI’s definition of organized crime. Of course I am thinking of the white collar criminals running free in America.

And here are the relevant definitions:

Criminal Enterprise: The FBI defines a criminal enterprise as a group of individuals with an identified hierarchy, or comparable structure, engaged in significant criminal activity. These organizations often engage in multiple criminal activities and have extensive supporting networks. The terms Organized Crime and Criminal Enterprise are similar and often used synonymously. However, various federal criminal statutes specifically define the elements of an enterprise that need to be proven in order to convict individuals or groups of individuals under those statutes.

The Racketeer Influenced and Corrupt Organizations (RICO) statute, or Title 18 of the United States Code, Section 1961(4), defines an enterprise as “any individual, partnership, corporation, association, or other legal entity, and any union or group of individuals associated in fact although not a legal entity.”

The Continuing Criminal Enterprise statute, or Title 21 of the United States Code, Section 848(c)(2), defines a criminal enterprise as any group of six or more people, where one of the six occupies a position of organizer, a supervisory position, or any other position of management with respect to the other five, and which generates substantial income or resources, and is engaged in a continuing series of violations of subchapters I and II of Chapter 13 of Title 21 of the United States Code.

Ethics for Executives In the event you are a top level executive with questionable ethics who stumbled across this site, here is a link to a selection of books that we highly recommend you read. Apparently ethics courses are not mandatory in today’s business colleges . . . that is apparent, don’t you think?

Organized Crime: The FBI defines organized crime as any group having some manner of a formalized structure and whose primary objective is to obtain money through illegal activities. Such groups maintain their position through the use of actual or threatened violence, corrupt public officials, graft, or extortion, and generally have a significant impact on the people in their locales, region, or the country as a whole.

Once we get beyond giving free rides to those with advanced degrees, you will see many more white collar criminals in their proper place . . . which will be in jail right alongside Mr. Madoff. “Robbery” is included under state crimes. The illegal and/or lost paperwork locking you into your mortgage should come under “Robbery.”

Excerpted from The Sovereign Society2010: The Year of Institutionalized Theft

Balancing State & Local Budgets
With the Frightening Power of Civil Forfeiture
By Mark Nestmann

While the talking heads on television declare the recession over, state and local governments face record deficits and a shortage of viable solutions.

Arizona’s state budget, for example, represents more than 50% of anticipated 2010 revenues. And while Arizona faces perhaps the largest per-capita budget shortfall in the United States, many other states have a similar funding crisis.

Unfortunately, there are very few politically expedient ways to stem the flow of red ink. Raising taxes is not only politically unpopular, but threatens to further depress state and local economies. Cutting benefits is even less popular.

On the other hand, confiscating the “proceeds of crime” has a near-universal appeal. And using “civil forfeiture” statutes in effect in all 50 states, police have pursued this tactic aggressively.

Civil forfeiture is a legal procedure in which prosecutors can seize your property without accusing you – much less convicting you – of any crime.

Most federal civil forfeitures require the government to at least demonstrate probable cause that your property is somehow connected to a crime to confiscate it. But the federal rules don’t generally extend to state and local governments. In many states, the government can simply seize your property and wait months before allowing you to contest the forfeiture.

While The Soverign Society considers seizing your property as a bad thing, I can see cases where it might be a good thing and a means to get back that which has been stolen from taxpayers.

If you are a good and hardworking citizen, this is a nightmare and should not happen to you. However, if you are one of those questionable citizens who came to your wealth by cheating others . . . which is commonplace these days . . . well, one can only hope they seize everything you have just as you have done to others.

During a holiday gathering last evening, a gentleman from Ireland asked, “Isn’t the government embarrassed?” He was referring to the current mortgage nightmare America is facing. I ask that also.

My larger concern: Who manages the charters of these large lenders. Why aren’t they heavily fined . . . I know that’s being proposed now, but will it be carried out? Money from fines could then be used to actually modify loans. Why aren’t operating licenses suspended until they begin acting ethically?

The latest painful story excerpted from a loan workout site:

Are Wells Fargo, Wachovia, ASC and CEO John Stumpf
the Kings of the Predatory Servicing Sea?
Moe Bedard

“I just want to let the world know that Wells Fargo, Wachovia (who they now own) try to hide behind thier servicing arm, American Servicing Company (ASC). ASC is one the worst predatory mortgage servicers that I and thousands of homeowners have ever experienced. I feel it is to the point where their operations are on the verge of criminal.

They screwed you coming and they will screw you going. First they charged you a bunch of questionable fees when you got your home loan and then quickly sold you on Wall Street . . . now that you need help, they are tacking on more fees.

Here is a real world example from an actual Wells Fargo representative of actual loan modification fees being charged by Wells Fargo to a homeowner that is down and out.

Thank you for your patience. To follow is the breakdown of your contribution amount $1,585.10:

10/22/08
Preliminary Title report – $125.00
Recording fee – $200.00
Funds in Suspense -($122.16)
(loan modification process)

04/30/08
Title policy – $266.00
(foreclosure process)

Statutory reg mail – $ 31.26
Attorney fee – $775.00
(set sale date 4/10/08)
*allowable by VA*

WFHM acquired loan 12/1/06 from Washington Mutual: Below costs assessed prior to WFHM servicing the loan.

1/12/06
(foreclosure process)
Title cost – $185.00
9/21/05

(modification process)
Title cost – $125.00
Total payment $1585.10

Any questions feel free to contact me. Again, sorry for the delayed response!

Welcome to the mortgage servicing business where millions of homeowners need help and they are paying dearly for it. Some may pay $2,000 in “loan modification help” fees a pop. Now multiply that by gazillions of loans that need a loan modification and you have a very lucrative gazillion dollar business that will last you into 2010.

If this business wasn’t so damn profitable, John Stumpf and Wells would have never bought Wachovia along with their hideously toxic and decaying mortgage servicing portfolio. In other words, if gouging homeowners in foreclosure wasn’t a great way to make money, Wells would have never bought a company like Wachovia, right?

I am sure anyone out there in the loan workout business will testify to the fact that the day Wells took over Wachovia, loan modifications became almost non-existent. There were quite a few times they even claimed to have stopped performing them intermittently over the last 6 months.

I think investors and maybe our State Attorney Generals should take a look at this. These are all facts that I and I am sure thousands of housing counselors and loan modification companies can verify.

My recommendation: Blog! Here is a link to Wells Fargo Corporate Blog

Let them know how you feel about their sloppy business practices. Also let them know that you will steer everyone you can away from them. I’m positive that I have lost $3 million in business for Wells Fargo by diverting people elsewhere. That is just through personal conversations and has nothing to do with what this blog is doing. You do have a voice. You can fight back.

The Plain Dealer, Cleveland, Ohio
June 16, 2008, 7:07PM
John Kroll
Foreclosure ‘hurricane’ left county devastated, congressional hearing told

Inside the crisis

The Plain Dealer’s reporting on the foreclosure crisis — including video, slideshows and graphics — is available at cleveland.com/foreclosure.

The foreclosure crisis in Cuyahoga County and other urban communities is now largely a matter of cleaning up a mess that one Cleveland official called “Hurricane Greed” during a congressional field hearing Monday at Cleveland State University.

“We are trying to recover from devastation . . . devastation from unchecked predatory lending practices,” said Chris Warren, chief of regional development for the city of Cleveland. “This has been a murderous, unnatural disaster. One that has wiped out decades of patient, community development work.”

During the session, members of Ohio’s congressional delegation listened to and echoed calls for investigations and prosecutions of mortgage fraud, the need for federal funds to help raze and rehabilitate vacant homes and for programs to help people with subprime loans get better terms and lower interest rates.

According to Cuyahoga County records, there have been foreclosure filings against at least 37 of the 123 properties on the half-mile block of East 144th Street between Kinsman Road and Bartlett Avenue since 2006. This Plain Dealer graphic shows the homes with foreclosure filings since January 2006. (Some homes shown in this 2006 photo have since been demolished.) Download the graphic as a PDF.The hearing was part of the Subcommittee on Housing and Community Opportunity, which is chaired by Rep. Maxine Waters, a California Democrat. Waters was joined at Monday’s hearing by Reps. Stephanie Tubbs Jones, Dennis Kucinich, Betty Sutton, Marcy Kaptur and Charles Wilson. All are Ohio Democrats.

Kaptur, who represents the Toledo area, called the subprime lending model a “Ponzi-like scheme.”

“I believe it incumbent that Congress authorize a full independent investigation of the roots of this crisis that traces back to the unstable period following the savings-and-loan crisis in the late 1980s,” she said.

High-risk, subprime mortgage lending has existed since the mid-1990s. The subprime lending boom began in 2002 as interest rates dropped to historic lows, leaving mortgage companies and Wall Street with excess billions to spend and invest. That boom went bust in 2007 as real estate prices plummeted, leaving people owing more than their homes were worth.

Subprime lending peaked in Cuyahoga County in 2005, federal mortgage data shows. Nearly $1.6 billion in subprime loans were originated that year in the county. The number dropped to $1.4 billion in 2006. Today, few subprime programs remain.

As subprime lending accelerated in Cuyahoga County, so did the foreclosure rate. More than 15,000 foreclosure lawsuits were filed last year in Cuyahoga County Common Pleas Court. About the same number are expected this year. Warren said 80 percent of the foreclosures on properties in Cleveland were tied to subprime loans.

July 10, 2009
A DOW JONES NEWSWIRES COLUMN
FOXBusiness
Al Lewis

You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself.

Yet I could not resist asking Wells Fargo Bank NA why it filed a civil complaint against itself in a mortgage foreclosure case in Hillsborough County, Fla.

“Due to state foreclosure laws, lenders are obligated to name and notify subordinate lien holders,” said Wells Fargo spokesman Kevin Waetke.

Being a taxpayer-subsidized, too-big-to-fail institution, it’s possible that one of the few ways for Wells Fargo & Co. (WFC) to know what it is doing is to notify itself with a court filing.

In this particular case, Wells Fargo holds the first and second mortgages on a condominium, according to Sarasota, Fla., attorney Dan McKillop, who represents the condo owner.

As holder of the first, Wells Fargo is suing all other lien holders, including the holder of the second, which is itself.

“The primary reason is to clear title and ownership interest in a property to prepare it for sale,” Waetke said in an email exchange. “So it really is not Wells Fargo vs. Wells Fargo.”

Yet court documents clearly label “Wells Fargo Bank NA” as the plaintiff and “Wells Fargo Bank NA” as a defendant.

Wells Fargo hired Florida Default Law Group., P.L., of Tampa, Fla., to file the lawsuit against itself.

And then Wells Fargo hired another Tampa law firm — Kass, Shuler, Solomon, Spector, Foyle & Singer P.A. — to defend itself against its own lawsuit, according to court documents.

Wells Fargo’s defense lawyers even filed an answer to their client’s own complaint.

“Defendant admits that it is the owner and holder of a mortgage encumbering the subject real property,” the answer reads. “All other allegations of the complaint are denied.”

This is even dumber than the lending practices that led to this foreclosure mess, yet this is what the court record says. I learned about this from “The Consumer Warning Network” Web site, which posted an article by Angie Moreschi titled, “Have The Banks Gone Crazy?”

“We’ve apparently reached the perfect storm for complete and utter idiocy by some banks trying to foreclose on homes,” Moreschi wrote.

McKillop, the condo owner’s attorney, told me he thinks Wells Fargo doesn’t know what it’s doing, and that its lawyers figure it is all billable hours to them.

“You can’t sue yourself,” McKillop said. “It’s just so ridiculous. .. It’s a waste of paper. It’s a bastardization of the legal process.”

Wells Fargo’s two law firms didn’t return messages to explain their filings.

The condo owner is belly up and hired McKillop to pursue a “friendly foreclosure,” attempting to escape any lingering liabilities after the foreclosure sale.

“It was a property they thought they were buying as a good investment as a lot of people did back in 2005 and 2006,” McKillop said. “All we want to do now is get this property taken care of as fast and as easily as possible for all parties.”

Rather than suing itself — a stunt that was never even attempted on the MTV show “Jackass” — wouldn’t it be easier for Wells Fargo to release one of the liens to itself? Or pursue some other internal accounting strategy rather than tie up the court with nonsense?

“This is just folks cranking out paperwork without conscious thought,” said Anthony Sabino, a law professor at St. John’s School of Law in New York City.

Sabino added that it is possibly more confirmation of the old saw that a lawyer is one who can speak from both sides of the mouth.

Still trying to comprehend this legal lunacy, I called the Florida Bar, which put me in touch with Florida mortgage foreclosure lawyers. One of them, Tampa attorney Kristofer Fernandez, said he’s seen several cases where a large bank has sued itself for foreclosure as the holder of both first and second mortgages.

“Four or five years ago, you would have never seen this,” Fernandez said. “Now, it’s very common.”

In the final years of the housing boom, banks were lending to homeowners with no money down. To do this, they often made 80/20 loans, giving homeowners an 80% first mortgage and a 20% second mortgage.

Now, it seems these moronic mortgages require moronic foreclosures.

Perhaps this strategy may speed up a summary judgment. Or maybe it preserves the position of the second lien holder so it is next in line to collect surplus funds after the first lien is satisfied, Fernandez said.

But fat chance of surplus proceeds in the Florida condo foreclosure market these days.

It takes some pretty shameless lawyers and a rich culture of corporate stupidity for a company to sue itself. I hope Wells Fargo loses this case and ends up having to drag itself all the way to the Supreme Court.