How a Couple of Citizen Investigators Brought Foreclosure Fiasco to Nations Attention

PALM BEACH, Fla. — More than a year before lenders, law firms and document companies began owning up to widespread paperwork problems with their foreclosure filings, Lisa Epstein and Michael Redman already knew that something was wrong — very wrong.

Redman, a former online automobile consultant, got his first taste of the problem in early 2008, when he tried to help a relative who was facing foreclosure.

As he tried to determine which of three or four supposed lenders held the note, Redman, 35, realized that not only did he not know the answer, neither did any of the companies that were asking for payment.

Epstein, a nurse who cares for cancer patients, also is going through foreclosure. She got her baptism in the world of shoddy foreclosure paperwork in the summer of 2009, however, when she tried to help a brain tumor patient keep her home.

Epstein helped draft a letter challenging the foreclosure because, as in Redman's case, it was unclear from court papers who owned the home's mortgage.

After arriving at the summary judgment hearing in her nurse's uniform, an emotional Epstein, 45, watched as the ill woman read their letter aloud in court. When the opposing attorneys never showed, the judge refused to finalize the foreclosure. The woman remains in her home as the legal wrangling continues.

For Epstein, who often helped her patients navigate disputes with their health insurance companies, the role of advocate wasn't new — but the thrill of a courtroom victory was.

"It was like something struck inside me, like this is what I'm compelled to do.

Read more from McClatchy


See Rikyrah's Previous Post on Foreclosures

The Foreclosure Scam Is Exploding Before Our Eyes

hat tips - a number of JJP Posters over the past few months.

Do you remember when the mortgage crisis first began, you had the pundits on CNBC and other places had the nerve to try and blame the crisis on loans to minorities and poor people, due to governmental pressures caused by the Community Reinvestment Act. You remember that garbage. Just trying to hide that the 'Masters of the Universe' on Wall Street were gambling, amoral conscienceless thieves.

I'm not an expert. I only know what I read from various sources and what I see on tv. I remember watching Congresswoman Nancy Kaptur on Bill Moyers telling folks in her district undergoing foreclosure to just stay in their homes. It was the first time that I had heard someone say this in all seriousness. That if you were being foreclosed upon, don't give up.

The next big thing that I heard from folks that had their finger on the pulse of this crisis, was to force the banks to PRODUCE THE PAPERS.

Simple concept, isn't it?

Sort of obvious.

To decent people like you and me, and plenty of the people who were getting foreclosed upon across the country. They just knew..

KNEW...

that nobody could be harassing them like the banks were..

or ignoring the letters and calls and please to sit down and renegotiate the terms of the mortgage..

NOBODY could be causing them the ulcer that they were getting..

WITHOUT HAVING THE ABSOLUTE PROOF that they controlled the mortgage..

because to do so would be absolute FRAUD.

...and the banks wouldn't do that. They wouldn't step into court, ready to destroy your financial reputation on lies.....

THE HELL THEY WOULDN'T.

Read more »

The President's Housing Plan

Text as posted for delivery:

I’m here today to talk about a crisis unlike any we’ve ever known — but one that you know very well here in Mesa, and throughout the Valley. In Phoenix and its surrounding suburbs, the American Dream is being tested by a home mortgage crisis that not only threatens the stability of our economy but also the stability of families and neighborhoods. It is a crisis that strikes at the heart of the middle class: the homes in which we invest our savings, build our lives, raise our families, and plant roots in our communities.

So many Americans have shared with me their personal experiences of this crisis. Many have written letters or emails or shared their stories with me at rallies and along rope lines. Their hardship and heartbreak are a reminder that while this crisis is vast, it begins just one house — and one family — at a time.

It begins with a young family — maybe in Mesa, or Glendale, or Tempe — or just as likely in suburban Las Vegas, Cleveland, or Miami. They save up. They search. They choose a home that feels like the perfect place to start a life. They secure a fixed-rate mortgage at a reasonable rate, make a down payment, and make their mortgage payments each month. They are as responsible as anyone could ask them to be.

But then they learn that acting responsibly often isn’t enough to escape this crisis. Perhaps someone loses a job in the latest round of layoffs, one of more than three and a half million jobs lost since this recession began — or maybe a child gets sick, or a spouse has his or her hours cut.

In the past, if you found yourself in a situation like this, you could have sold your home and bought a smaller one with more affordable payments. Or you could have refinanced your home at a lower rate. But today, home values have fallen so sharply that even if you made a large down payment, the current value of your mortgage may still be higher than the current value of your house. So no bank will return your calls, and no sale will return your investment.

You can't afford to leave and you can't afford to stay. So you cut back on luxuries. Then you cut back on necessities. You spend down your savings to keep up with your payments. Then you open the retirement fund. Then you use the credit cards. And when you’ve gone through everything you have, and done everything you can, you have no choice but to default on your loan. And so your home joins the nearly six million others in foreclosure or at risk of foreclosure across the country, including roughly 150,000 right here in Arizona.

But the foreclosures which are uprooting families and upending lives across America are only one part of this housing crisis. For while there are millions of families who face foreclosure, there are millions more who are in no danger of losing their homes, but who have still seen their dreams endangered. They are families who see “For Sale” signs lining the streets. Who see neighbors leave, and homes standing vacant, and lawns slowly turning brown. They see their own homes — their largest single assets — plummeting in value. One study in Chicago found that a foreclosed home reduces the price of nearby homes by as much as 9 percent. Home prices in cities across the country have fallen by more than 25 percent since 2006; in Phoenix, they’ve fallen by 43 percent.

Even if your neighborhood hasn’t been hit by foreclosures, you’re likely feeling the effects of the crisis in other ways. Companies in your community that depend on the housing market — construction companies and home furnishing stores, painters and landscapers — they’re cutting back and laying people off. The number of residential construction jobs has fallen by more than a quarter million since mid-2006. As businesses lose revenue and people lose income, the tax base shrinks, which means less money for schools and police and fire departments. And on top of this, the costs to a local government associated with a single foreclosure can be as high as $20,000.

The effects of this crisis have also reverberated across the financial markets. When the housing market collapsed, so did the availability of credit on which our economy depends. As that credit has dried up, it has been harder for families to find affordable loans to purchase a car or pay tuition and harder for businesses to secure the capital they need to expand and create jobs.

In the end, all of us are paying a price for this home mortgage crisis. And all of us will pay an even steeper price if we allow this crisis to deepen — a crisis which is unraveling homeownership, the middle class, and the American Dream itself. But if we act boldly and swiftly to arrest this downward spiral, every American will benefit. And that’s what I want to talk about today.

The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in subprime mortgages they can’t afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments.

At the same time, this plan must be viewed in a larger context. A lost home often begins with a lost job. Many businesses have laid off workers for a lack of revenue and available capital. Credit has become scarce as the markets have been overwhelmed by the collapse of securities backed by failing mortgages. In the end, the home mortgage crisis, the financial crisis, and this broader economic crisis are interconnected. We cannot successfully address any one of them without addressing them all.

Yesterday, in Denver, I signed into law the American Recovery and Reinvestment Act which will create or save three and a half million jobs over the next two years — including 70,000 in Arizona — doing the work America needs done. We will also work to stabilize, repair, and reform our financial system to get credit flowing again to families and businesses. And we will pursue the housing plan I am outlining today.

Through this plan, we will help between seven and nine million families restructure or refinance their mortgages so they can avoid foreclosure. And we are not just helping homeowners at risk of falling over the edge, we are preventing their neighbors from being pulled over that edge too — as defaults and foreclosures contribute to sinking home values, failing local businesses, and lost jobs.

But I also want to be very clear about what this plan will not do: It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans. It will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell. It will not help dishonest lenders who acted irresponsibility, distorting the facts and dismissing the fine print at the expense of buyers who didn’t know better. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford. In short, this plan will not save every home.

But it will give millions of families resigned to financial ruin a chance to rebuild. It will prevent the worst consequences of this crisis from wreaking even greater havoc on the economy. And by bringing down the foreclosure rate, it will help to shore up housing prices for everyone. According to estimates by the Treasury Department, this plan could stop the slide in home prices due to neighboring foreclosures by about $6,000 per home.

Here is how my plan works:

First, we will make it possible for an estimated four to five million currently ineligible homeowners who receive their mortgages through Fannie Mae or Freddie Mac to refinance their mortgages at lower rates.

Today, as a result of declining home values, millions of families are “underwater,” which means they owe more on their mortgages than their homes are worth. These families are unable to sell their homes, and unable to refinance them. So in the event of a job loss or another emergency, their options are limited.

Right now, Fannie Mae and Freddie Mac — the institutions that guarantee home loans for millions of middle class families — are generally not permitted to guarantee refinancing for mortgages valued at more than 80 percent of the home’s worth. So families who are underwater — or close to being underwater — cannot turn to these lending institutions for help.

My plan changes that by removing this restriction on Fannie and Freddie so that they can refinance mortgages they already own or guarantee. This will allow millions of families stuck with loans at a higher rate to refinance. And the estimated cost to taxpayers would be roughly zero; while Fannie and Freddie would receive less money in payments, this would be balanced out by a reduction in defaults and foreclosures.

I also want to point out that millions of other households could benefit from historically low interest rates if they refinance, though many don't know that this opportunity is available to them — an opportunity that could save families hundreds of dollars each month. And the efforts we are taking to stabilize mortgage markets will help these borrowers to secure more affordable terms, too.

Second, we will create new incentives so that lenders work with borrowers to modify the terms of subprime loans at risk of default and foreclosure.

Subprime loans — loans with high rates and complex terms that often conceal their costs — make up only 12 percent of all mortgages, but account for roughly half of all foreclosures.

Right now, when families with these mortgages seek to modify a loan to avoid this fate, they often find themselves navigating a maze of rules and regulations but rarely finding answers. Some subprime lenders are willing to renegotiate; many aren’t. Your ability to restructure your loan depends on where you live, the company that owns or manages your loan, or even the agent who happens to answer the phone on the day you call.

My plan establishes clear guidelines for the entire mortgage industry that will encourage lenders to modify mortgages on primary residences. Any institution that wishes to receive financial assistance from the government, and to modify home mortgages, will have to do so according to these guidelines — which will be in place two weeks from today.

If lenders and homebuyers work together, and the lender agrees to offer rates that the borrower can afford, we’ll make up part of the gap between what the old payments were and what the new payments will be. And under this plan, lenders who participate will be required to reduce those payments to no more than 31 percent of a borrower’s income. This will enable as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.

So this part of the plan will require both buyers and lenders to step up and do their part. Lenders will need to lower interest rates and share in the costs of reduced monthly payments in order to prevent another wave of foreclosures. Borrowers will be required to make payments on time in return for this opportunity to reduce those payments.

I also want to be clear that there will be a cost associated with this plan. But by making these investments in foreclosure-prevention today, we will save ourselves the costs of foreclosure tomorrow — costs borne not just by families with troubled loans, but by their neighbors and communities and by our economy as a whole. Given the magnitude of these costs, it is a price well worth paying.

Third, we will take major steps to keep mortgage rates low for millions of middle class families looking to secure new mortgages.

Today, most new home loans are backed by Fannie Mae and Freddie Mac, which guarantee loans and set standards to keep mortgage rates low and to keep mortgage financing available and predictable for middle class families. This function is profoundly important, especially now as we grapple with a crisis that would only worsen if we were to allow further disruptions in our mortgage markets.

Therefore, using the funds already approved by Congress for this purpose, the Treasury Department and the Federal Reserve will continue to purchase Fannie Mae and Freddie Mac mortgage-backed securities so that there is stability and liquidity in the marketplace. Through its existing authority Treasury will provide up to $200 billion in capital to ensure that Fannie Mae and Freddie Mac can continue to stabilize markets and hold mortgage rates down.

We’re also going to work with Fannie and Freddie on other strategies to bolster the mortgage markets, like working with state housing finance agencies to increase their liquidity. And as we seek to ensure that these institutions continue to perform what is a vital function on behalf of middle class families, we also need to maintain transparency and strong oversight so that they do so in responsible and effective ways.

Fourth, we will pursue a wide range of reforms designed to help families stay in their homes and avoid foreclosure.

My administration will continue to support reforming our bankruptcy rules so that we allow judges to reduce home mortgages on primary residences to their fair market value — as long as borrowers pay their debts under a court-ordered plan. That’s the rule for investors who own two, three, and four homes. It should be the rule for ordinary homeowners too, as an alternative to foreclosure.

In addition, as part of the recovery plan I signed into law yesterday, we are going to award $2 billion in competitive grants to communities that are bringing together stakeholders and testing new and innovative ways to prevent foreclosures. Communities have shown a lot of initiative, taking responsibility for this crisis when many others have not. Supporting these neighborhood efforts is exactly what we should be doing.

Taken together, the provisions of this plan will help us end this crisis and preserve for millions of families their stake in the American Dream. But we must also acknowledge the limits of this plan.

Our housing crisis was born of eroding home values, but also of the erosion of our common values. It was brought about by big banks that traded in risky mortgages in return for profits that were literally too good to be true; by lenders who knowingly took advantage of homebuyers; by homebuyers who knowingly borrowed too much from lenders; by speculators who gambled on rising prices; and by leaders in our nation’s capital who failed to act amidst a deepening crisis.

So solving this crisis will require more than resources — it will require all of us to take responsibility. Government must take responsibility for setting rules of the road that are fair and fairly enforced. Banks and lenders must be held accountable for ending the practices that got us into this crisis in the first place. Individuals must take responsibility for their own actions. And all of us must learn to live within our means again.

These are the values that have defined this nation. These are values that have given substance to our faith in the American Dream. And these are the values that we must restore now at this defining moment.

It will not be easy. But if we move forward with purpose and resolve — with a deepened appreciation for how fundamental the American Dream is and how fragile it can be when we fail in our collective responsibilities — then I am confident we will overcome this crisis and once again secure that dream for ourselves and for generations to come.

Thank you, God Bless you, and God bless America.

Republicans Attempting to Foreclose On The Right To Vote In Michigan

Talk about a double whammy. Voters in Michigan who have already gone through the difficulty of losing their homes, may now face the threat of losing their right to vote. This has to do with an effort by Republicans in Michigan to take advantage of the high numbers of foreclosures in the State. In order to register and vote, residents must have a permanent address. However, those who have lost their homes are obviously temporarily displaced. The Republicans are preparing lists of foreclosed homes.... in an effort to challenge voters on election day. They may also attempt to send mailings to these homes, knowing that the mailings will be sent back w/ "return to sender".... this could also be a pretext to disqualify voters. It should be no surprise that many of the targeted voters will be African Americans - standard M.O. for Republican strategists who use voter suppression to give Republican candidates an advantage.

However, there is no law requiring anyone to be a homeowner in order to vote. Many of these voters may not remember to re-register (with all the hectic and tragic events in their lives)....and Republicans may attempt to make it difficult for these voters to do so, even if they try. If these voters are temporarily living with family or friends, then that should suffice. But this is why we need national standards on voting... that would put an end to this kind of trickery. The current system of 50 separate and unequal voting systems is inadequate and leaves open too many opportunities for voter suppression, intimidation, caging, destroying ballots, disqualifying legitimate registrations and other trickery.

Democrats have had to file a lawsuit to stop Republican dirty tricks in Michigan.

Hear/Watch report from Democracy Now

Amy Goodman also talks with Professor Andrew Hacker about voter Suppression nationwide.

******************************

A Few Previous Posts On This Topic

Watch an Excellent Video On Caging

McCain Camp Sends Out Bogus Ballot Applications

Rikyrah Posts About Voter Suppression

Homeowners Get Little More Than "Hope" From Bush & Co.

In response to the mortgage crisis, Bush tells homeowners in trouble to call for "Hope". UNREAL! I couldn't believe what I was hearing when I was listening to the report over the radio about his "solution". But later that evening I listened a second time to the portion of his news conference where he discussed his plan. I had to make sure that I wasn't hearing things.

``The best you can do for your family is to call 1-800-995- HOPE,'' Bush said. ``That is 1-800-995-H-O-P-E".

And the above "Hope" line turned out the be the wrong number.
His puppet masters had to quickly correct the error.

John Edwards slammed the Bush Administrations' minimal plan to freeze interest rates for a few borrowers, saying that it did not go far enough. Many economists agree that the plan would only offer moderate relief to a small percentage of the borrowers who are at risk of losing their homes. See more information about who the plan covers and what it will do.

It's ironic that American borrowers are in over their heads and Bush is offering little to help them... Because he has been overextending the whole Country with too much borrowing. See Youtube videos here and here.
China and other foreign financial systems are holding more and more U.S. debt, giving other nations increased leverage over our economy. And the falling value of the U.S. dollar is increasing what we owe to other nations, and it is leading some Countries to consider switching to an alternative currency for their international business transactions.

Another Look at the Unfolding Housing Crisis

I came upon this diary on DailyKos, and thought it would be worth sharing. This is about the unfolding housing crisis in California, but to be honest, I think it could be extrapolated to any place in the country that has seen the huge rise in housing prices over the past five years.

The Rich Get Richer. The Poor? Maybe Homeless
by shanikka [Subscribe]
Fri Aug 24, 2007

Something that not too many folks are talking about in connection with the mortgage and market shakeouts is the divergent impact of this problem on communities, depending on the demographics.


At present, there still appears to be no meaningful harm to the upper end of the housing market in terms of either devaluation or a flattening sales curve. For the wealthy, real estate business (as opposed to mortgage-backed securities investment, anyhow!) appears to still be booming. Inventories in some of the more "upscale" (almost all white and Asian) places to live in the Bay Area are just around 30 days - which means that sales are beyond brisk.


shanikka's diary :: ::

While there is a temporary panic over the fact that jumbo loan financing (that which exceeds $417,000, the maximum loan amount that can be guaranteed by Fannie Mae and Freddie Mac) shut completely down two Fridays ago and thus, high end folks had to pony up even more money for closing home deals, the word on the street is that this was only temporary and now business is inching upward again already (no doubt because those who can come up with more cash are doing so.)


Would that the working and middle class had it so good. With plummeting values and sales non-existent, with some "not upscale" communities (like east and south San Jose, where there are lots and lots of Brown people) now faced with more than a 1 year inventory of homes up for sale, things are grim and California is facing the highest levels of foreclosure activity it has seen in a decade.


At the same time that prices for housing continue to go up - but only if you want to buy in the "right neighborhoods."


In other words, the rich continue to make each other richer, through their homes - median prices continue to rise for them, even as they plummet for those whose only real asset was the equity in their homes. It at times feels like well-off folks (not to mention the equity purchasers and foreclosure rescuers, for whom RealtyTrac continues to be valuable) are presently having an orgy, that they are driving prices up at the same time they know how bad it is out there for more modest homeowners whose struggle to become homeowners far more closely reflects the original meaning of the "American Dream" than the new money which followed the post-Reagan era of personal greed.

The frightening proof in the pudding about what we face here in California as a result of the "mortgage liquidity crisis" is seen in the number of trustee's deeds recorded - after homes were actually sold on the auction block, the ultimate failure of lending that historically both borrowers and lenders have done everything possible to avoid, such that they heretofore were a comparatively rare occurrence in life.


Not anymore.


The percentage increase in the most devastating event to occur in a homeowner's life -- one's home being sold at public trustee's sale -- in those California counties which house huge numbers of the poor/working/lower middle-class population in of our state -- particularly in the rural/farmworker counties -- in just one year should bring any decent person close to tears:


San Bernadino County: 986.9% increase

Contra Costa County: 1,154.8%

San Luis Obispo County: 1,200%

Stanislaus County: 1,350%

Monterey County: 1,825%

Yuba County: 2,000%

Kern County: 2,032%

El Dorado County: 2,125%

Merced County: 3,328.6%

Yolo County: 10,200%



(Source: DataQuick)


That the state's bottom line of trustee's sales is "only" 799.2% more than it was a year ago in light of the numbers I've listed above is something for celebration, only if you're in one of the neighborhoods whose average pulled the listed numbers down to "only" 799.2%.


This is occurring all over the country and while this diary won't post all the data, it isn't hard to find, and confirm. For those skeptics -- almost all employed by the real estate sales industry at this point -- who insist insanely that all this shakeout of low-income communities is either (a) just a fluke given the high cost of California housing or (b) a natural correction in the marketplace -- I urge them to review ALL of Dataquick's market reports that are publicly available as a starting place:


For Portland, Oregon (21% fewer homes sold, but at a 2.6% higher price);


Seattle, Washington (23% decrease in home sales yet prices rose 7.6%)


Miami, Florida (33.3% decrease in sales yet prices rose 5.1%)


Honolulu, Hawaii (in most expensive zip codes, price per square foot rose between 3.7 and 115.2% yet fell in less costly neighborhoods)


Nashville, Tennessee (sales decreased up to 11.8% in most expensive neighborhoods yet prices rose up to 13.3%)


Chicago, Illinois (many exclusive residential areas, such as Lake Forest, Hinsdale, Kenilworth, Glencoe, Oak Park, River Forest, Winnetka and Western Springs, saw sales decrease as much as 39.4% yet prices increase up to 34.3%)

Read the rest here:

We are just beginning to see the ramifications of the 'creative financing' in the housing industry. And, as the bubble bursts, and the market readjusts, I do believe that this will become one of the top three issues of the 2008 campaign by this time, next year.