Black People : Broad Bailout for Wall st Crimies, but no Moratorium on Foreclosures?

Discussion in 'Black People Open Forum' started by Ankhur, Oct 11, 2010.

  1. Ankhur

    Ankhur Well-Known Member MEMBER

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    With a broad brush, corporate crimanals and financial frauds were rewarded with over a trillion dollars over TARP, last year, much of it still unacounted for.

    Now with the ability to weed out those who are in foreclosure de to their own neglegence
    a moratorium on foreclosures is rejected?

    White House Opposes National Moratorium on Foreclosures

    The White House is resisting calls for a national moratorium on foreclosures despite revelations that major lenders may have committed fraud while forcing thousands of people out of their homes. On Friday, Bank of America became the first bank to halt foreclosures in all fifty states. JPMorgan Chase and Ally Financial have suspended foreclosures in twenty-three states. But on Sunday White House adviser David Axelrod said a national moratorium is not needed.

    David Axelrod on Face the Nation: "We’re working with these institutions. I’m not sure about a national moratorium, because there are, in fact, valid foreclosures that probably should go forward."

    Federal Housing Administration Commissioner David Stevens also opposes a nationwide moratorium, telling the Washington Post it is not the "prudent step to take in this fragile housing market." Meanwhile, the Washington Post reports the attorneys general of up to forty states plan to announce soon a joint investigation into banks’ use of flawed foreclosure paperwork.


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  2. Ankhur

    Ankhur Well-Known Member MEMBER

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    The fact that millions of Americans were having their homes foreclosed on by a shadowy industry agency using robo signature machines without reviewing the details of the alleged default has become the scandal dujure. Committing this fraud is the Mortgages Electronic Registration System, (MERS) the company the big banks hired to do their dirty work with the appearance of computer-driven semi-official efficiency.

    As they churned out and executed foreclosures (while making more than a pretty penny in the process,) they, in effect, executed homeowners with the sanction and support of kangaroo courts. As soon as the Judges received their impeccably prepared documents—like Bernie Madoff’s meticulously written monthly statements fooling his investors—the orders went out to throw the deadbeats out.

    One day, and for a quick second, your home sweet homes’ fate is in court before some Judge that has received contributions from the industry, and, the next, the sheriff is outside your door with a goon squad to move your stuff into the street. It has been a cruel, stealth and systematic process.

    Explains Naked Capitalism:

    “banks have become so powerful in Florida that they have managed to get what amount to kangaroo foreclosure courts created. Not surprisingly, the assembly line imitation of justice railroads borrowers, and prevents legitimate grievances from being heard.

    It turns out that banks in that state are so confident of their above the law status that they’ve also taken to casually changing the locks on and entering homes they don’t own, meaning haven’t foreclosed upon. This has become sufficiently common that the local press has taken notice.”

    The only problem behind this flim-flam was that this practice violated the law in at least 23 states leading to big banks imposing long overdue foreclosure moratoriums, not to safeguard human rights but to protect their property rights. The banks fear massive and very costly lawsuits. Fortunately, homeowners at risk or in foreclosure could benefit. Some have been fighting back. Watch this

    This issue has been all over the media. MERS has been defending itself even as its ship is sinking. Economics writer Yves Smith denounced a statement by its CEO this way, “Wow, this is an almost perfect statement from the Ministry of Truth. Virtually every statement is a lie or very disingenuous. I’m seeing if I can get a lawyer with recognized credentials to shred it.”

    The Washington Post reports that the government had been warned repeatedly about problems among mortgage servicers.

    The facts here, alas, may not matter as much as an often-omitted fact: the mortgage scandal that triggered the financial crisis goes much deeper than what is happening on the back end, i.e. when a property finally goes into foreclosure.

    As Edward Harrison who writes the Credit Writedowns blog, points out,

    “The crisis in foreclosure documentation is much deeper than the specific issue of robo-signers which has precipitated the halt in foreclosures by major banks. The fact is the mortgage process in the US is broken because securitization has created a byzantine mess that is wholly unsuited for the large number of foreclosures now on-going.”

    And that process has been fudged, riddled with fraud and phony documentation provided by lenders who have been laughing all the way to the bank. There is has been a chain of criminality behind what the FBI has been calling a ‘mortgage fraud epidemic” that has not really been in the news. The press has avoided showing how three industries, real estate, finance and insurance worked together to rip off the American people.

    This process has been given political cover, as Mike Taibbi reminds us, that the Tea Party was formed with demagoguery on this very issue (even as many conservatives are also losing their homes):

    “This second-generation Tea Party came into being a month after Barack Obama moved into the Oval Office, when CNBC windbag Rick Santelli went on the air to denounce one of Obama’s bailout programs and called for “tea parties” to protest. The impetus for Santelli’s rant wasn’t the billions in taxpayer money being spent to prop up the bad mortgage debts and unsecured derivatives losses of irresponsible investors like Goldman Sachs and AIG — massive government bailouts supported, …

    “No, what had Santelli all work........
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  3. Ankhur

    Ankhur Well-Known Member MEMBER

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    And they know, by virtue of facts and figures,
    which community has been ripped off by predatory lending,
    so what's the beef?


    A Center for Responsible Lending Study estimates that almost $25 Billion dollars is generated yearly from predatory lending practices.

    Many such institutions often impose excessive fees and offer extremely high-risk based pricing. They may also suggest credit insurance and fail to clearly disclose terms and conditions of the loan agreement.

    According to Immergluck and Wiles, “the financial institutions that do exist in minority areas are likely to be predatory—for example, pawn shops, payday lenders, and check cashing services that charge high fees and usurious rates of interest—so that minority group members are accustomed to exploitation and frequently unaware that better services are available elsewhere.”

    A recent study by the American Sociological Review suggests that predatory lending does not only occur in the small cash lending locations of American communities which charge high interest rates, but also with larger mortgage companies. It’s no secret how terrible sub-prime mortgages were during the past and present foreclosure crisis in states like Michigan and Arizona.

    In order for a loan to be classified as sub-prime, the loan agreement originated when the borrower’s FICO score was below 640. Other factors such as auto loans and credit card accounts are considered in determining the sub-prime loan status. Sub-prime mortgages rose from 2% to 18% in minority neighborhoods from 1993-2000, according to the American Sociological Review. The Review concluded that “Hispanic and black home owners, not to mention entire Hispanic and black neighborhoods, bore the brunt of the foreclosure crisis.”

    In a fact sheet on loan discrimination, the NAACP states, “subprime lending is five times more prevalent in African American than white neighborhoods.”

    The U.S. Department of Housing and Urban Development provides on its website that “in upper-income African-American neighborhoods one is one-and-a-half times as likely to have a subprime loan as persons in low-income white neighborhoods.”

    Organizations like AARP, NAACP, and ACORN advocate for policies that stop predatory lending. ACORN targeted H&R Block and HSBC for their predatory lending policies, forcing them to change their lending practices.

    One of the larger lenders, Wells Fargo, is being sued by four former employees for engaging in discriminatory lending practices. One employee said the company’s thought process when dealing with African Americans was to target them for sub-prime loans because they were “less sophisticated and intelligent and could be manipulated more easily into a sub-prime loan.” She also says elderly African Americans were “thought to be particularly vulnerable and were often targeted for subprime loans with high interest rates.”
     
  4. Ankhur

    Ankhur Well-Known Member MEMBER

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    AMY GOODMAN: A coalition of as many as forty state attorneys general is expected to announce Wednesday a joint investigation into the recent revelations that major lenders may have committed fraud while forcing thousands of people out of their homes. Major banks and lenders are also backpedaling in light of these allegations. On Friday, Bank of America became the first bank to halt foreclosures in all fifty states. JPMorgan Chase and Ally Financial have already suspended foreclosures in twenty-three states.

    But both Wall Street and the White House are against the moratoriums. On Monday, the Securities Industry and Financial Markets Association warned that, quote, "It would be catastrophic to impose a system-wide moratorium on all foreclosures and such actions could do damage to the housing market and the economy."

    While senior congressional Democrats have joined the calls for a national moratorium on foreclosures, the White House is arguing against punishing the industry. On Sunday, White House adviser David Axelrod said a national moratorium is not needed.

    DAVID AXELROD: We’re working with these institutions. I’m not sure about a national moratorium, because there are in fact valid foreclosures that probably should go forward.

    AMY GOODMAN: Shaun Donovan, secretary of Housing and Urban Development, said Monday, quote, "Irresponsible banks need to be held accountable, but if we have not found a problem with a bank’s process we do not believe that we should impose a moratorium where that can hurt the market and hurt individual buyers."

    Federal Housing Administration Commissioner David Stevens also opposes a nationwide moratorium, telling the Washington Post it’s not the "prudent step to take in this fragile housing market."

    Well, for more, I’m joined now on the phone by a Democratic lawmaker who supports a nationwide moratorium on foreclosures and has called for the top ten mortgage banks and lenders to immediately and voluntarily suspend foreclosure proceedings in all fifty states. Congressman Edolphus "Ed" Towns is a New York Democrat, chair of the House Committee on Oversight and Government Reform.

    Congressman Towns, welcome to Democracy Now! Explain exactly what you’re calling for.

    REP. EDOLPHUS TOWNS: What I’m calling for is a moratorium on all banks and asking them to—let’s take a look at what the problems are, what went wrong, and to be able to reassure people that were taken out of their homes, in many instances already, and at the same time to let people that are going through the process know that we are going to look at this and look at it carefully, because we’ve been told that there’s this robot signing and of course the fact that there’s no real system in place or to see in terms of whether or not the foreclosures should move forward, people are confused, the fact that there seem to be a lot of discrepancies and outright fraud.

    And so, I just think that people who are saying that this is going to hurt—I think that it’s going to help, because once people gain confidence in the fact that they’re being treated fairly and that there’s no discrepancies in the records, then people will feel very comfortable in terms of trying to move forward. But until that happens, you’re always going to have these comments about the fact that that was not done right, it was done unfairly. And, of course, I think there’s enough here for us to stop and to pause and to say, let’s take a look here before we move forward. So a moratorium is definitely in order.

    AMY GOODMAN: And what about President Obama’s senior adviser David Axelrod saying "there are in fact valid foreclosures that probably should go forward"?

    REP. EDOLPHUS TOWNS: Yeah, but I think that even if you have one that should go forward, and you have ten that should not, then, to me, that also says let’s have the moratorium, until we can rectify the situation and make certain that what we are doing is not just hurting people, and at the same time, to look at the mistakes that we made and to be able to clear them up before moving forward. I think that’s the kind of attitude that we should have, not saying that a hundred people are being hurt, there’s one that should not be. I mean, that—I mean, I just think that that kind of thinking has no place in today’s market.

    AMY GOODMAN: Congressman Towns, Shaun Donovan, the secretary of Housing and Urban Development, said that a moratorium could "hurt the market and hurt individual buyers." Why? Because then fewer people would be able to buy cheaper foreclosed homes?

    REP. EDOLPHUS TOWNS: Yeah, Shaun Donovan, who I have great admiration and respect for, I think he’s a fine public servant, but I think he’s missing the point here. Many people are losing their homes and being put out of their homes because of the lack of paperwork or fraudulent activities that took place that put them into the bad situation. And we cannot ignore that. And, of course, I understand, in terms of his views, but the point is that it just does not make sense with this day and age, when we have the problems that we have encountered over the past few months. People have lost their homes that should not have lost them, because of the fact that the paperwork was done improperly. All these kind of things. And to walk the streets and to listen to people that the only thing they own is that home and then to lose it in this fashion, and sometimes it’s almost outright trickery—and, of course, I would hope that people like Sean would look at that, look at those situations, and say, "Look, time out. Let’s get this right. Let’s do it right."

    AMY GOODMAN: It’s very interesting, Congressman Towns. I mean, you’re in the leadership of the Democratic Party in the House. President Obama, the White House, is now finding itself together with the Republicans in opposing this. You have the White House that pushed through the bailouts of the banks, many of the same banks that have now admitted they foreclosed improperly, or they’re investigating foreclosures that they may have done improperly, of what? How many? Forty state attorneys general now going to launch investigations into fraud by these banks. You have Bank of America canceling how many? Halting foreclosures in all fifty states.

    REP. EDOLPHUS TOWNS: Fifty states.

    AMY GOODMAN: Yet the Obama administration, as Democrats go out around the country fighting for their seats in reelections, is saying no, they’re siding with the Republicans in siding with the bailed-out banks.

    REP. EDOLPHUS TOWNS: Well, let me say that when you have situations that it’s not clear, it seems to me that we should just back up, take a look and see in terms of what needs to be done to fix it. And I really applaud these banks who have stepped out and said, "Look, we’re going to have a moratorium. There’s something wrong here." They’ve acknowledged that. The fact that Bank of America says in all fifty states they’re going to call for a moratorium, you know, I really respect that, because anytime you have a situation where you take a person out of his or her home, and this is all they have, and, of course, it’s done in a fraudulent fashion, I think that really you cannot just move and say that, "Well, yes, there’s a few that might be hurt, but in the meantime, we’re going to look at it." I think that that’s not the kind of thinking that should go on in this day and age.

    We should now stop. Let’s correct this. Let’s make certain that we have this under control and that people are going to be treated fairly. Then I think the confidence will come back, and then that’s when the market will go. People will then begin to buy again. People will begin to understand how important it is to do things properly. Until that happens, I think that we’re going to have folks wondering whether or not I’m being treated fairly. And that’s an issue that we cannot have in this day and age. We need to make certain that if a person buys a home, that they’re going to be treated fairly, that the mortgage is going to be handled. And for the person that’s involved in a foreclosure, let’s make certain that all the paperwork and documentation has been checked.

    AMY GOODMAN: So, as President Obama says no, and Democrats are fighting for control—maintaining control of the House and finding people all over the country are seeing unemployment at unprecedented rates, foreclosures at unprecedented rates, what do you have to say to your leader, to President Obama?

    REP. EDOLPHUS TOWNS: I think the way to take back the House and to hold on to the House is to let people know that you’re about fairness. And once you show them that you’re about fairness, then I think the confidence will be there. I think that to say, "Let us look at the situation, and those that we think that should move forward should move forward, and those that should not should not"—and that, to me, is not the way to convince the American people that you’re concerned, that you’re dedicated, that you’re committed. No, I think the way to do it is to say, "Look, there’s a mess here, and we need to clean it up. And the way we clean it up is let’s have a moratorium now. Let’s look back at what happened and then move forward." And sometimes you have to go back before you can go forward.

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  5. Ankhur

    Ankhur Well-Known Member MEMBER

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    Wall Street, White House blame homeowners in foreclosure crisis


    By Tom Eley

    Global Research, October 18, 2010


    Wall Street has raised its voice against any government moratorium on foreclosures, even as evidence mounts that banks systematically and illegally falsified documents in order to expedite hundreds of thousands, or even millions, of foreclosures.

    Documented examples of abuse include banks hiring contractors and what one Goldman Sachs executive referred to as “Burger King kids” to process thousands of foreclosure documents per week, all the while declaring to courts they were familiar with the cases. Lenders also falsified signatures, notary stamps, and tossed legal documents into the garbage. Every major bank is implicated in the widening scandal.


    Yet to the barons of Wall Street these examples of law breaking—what a number of state attorneys general have called a “fraud on the court”—are immaterial, and those who were evicted deserved their fate.

    Jamie Dimon, CEO of JP Morgan Chase, whose bank is implicated in the scandal, said this week in a conference call that there have been no accidental evictions. “We’re not evicting people who deserve to stay in their house,” the multimillionaire banker declared.

    “If you didn’t pay your mortgage, you shouldn’t be in your house. Period,” Walter Todd of the investment advisory firm Greenwood Capital Associates, told Reuters.

    “Everyone’s responsible for following the law. If we all don’t have to pay our mortgage, should we just stop paying taxes, too?” said Anton Schutz, president of Mendon Capital Advisers. Everyone has to follow the law except the banks, that is. Schutz added, “Your mortgage didn’t get to a robo-signer by accident, it’s because you’re not paying.”

    As Paul Krugman of the New York Times notes, “In effect, they’re saying that if a bank says it owns your house, we should just take its word. To me, this evokes the days when noblemen felt free to take whatever they wanted, knowing that peasants had no standing in the courts. But then, I suspect that some people regard those as the good old days.”

    Krugman attempts to distinguish these claims by Wall Street with the position of the Obama administration, whose opposition to a moratorium on foreclosures the Times columnist suggests is a policy mistake. In fact, the White House is of one mind with the banks.

    In spite of mounting popular anger toward Wall Street—and the upcoming off-year elections—the Obama administration this week categorically ruled out any national moratorium on foreclosures, instead encouraging banks to review their own practices and carry through with foreclosures “as quickly as possible,” according to the Washington Post.

    According to Fox News reporter Charlie Gasparino, an administration official “bragged” to him that Obama “could have publicly supported the foreclosure moratorium, and unleashed Attorney General Eric Holder to join state attorney generals, investigating the alleged fraud in the foreclosure process—but Obama didn’t after hearing from banks that the vast majority of people being foreclosed upon aren’t the victims of fraud and have defaulted on their mortgages.”


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  6. Ankhur

    Ankhur Well-Known Member MEMBER

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    Employees at "Foreclosure Mill" Were Bribed to Alter Documents

    Meanwhile, the Florida Attorney General’s office has revealed new details about how workers at a so-called foreclosure mill were bribed in exchange for altering and forging key documents used to obtain foreclosures. The workers were given free houses, BMWs, jewelry and cell phones.

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  7. Ankhur

    Ankhur Well-Known Member MEMBER

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    AMY GOODMAN: OK, let’s start with foreclosures. What do you think needs to be done? If you were in that room today in Washington, DC, what would you say?

    JOSEPH STIGLITZ: Well, first, I’d begin with the problem of so many Americans owing more on their homes than the value of their homes. We have to put this in context. The mortgage companies, the banks, engaged in predatory lending practices. They weren’t asking what was the best mortgage for these homeowners; they were asking what was the mortgage that generated most fees for me. The way the mortgage system worked, they could take bad mortgages, sell them off to investment banks that would repackage them and sell them on to other people. That’s the other part of the story that you were talking about, where PIMCO, Federal Reserve, all these people who have wound up with these securities, say, "You gave us a lot of junk." So, it’s all the way along the pipeline that there has been fraudulent behavior, all the way from the foreclosures that you were talking about, but really going back to the creation. So, in my mind, what we should begin is trying to protect Americans.

    So, we ought to have a homeowners’ Chapter 11. Let me explain what that idea is. You know, when corporations have trouble paying what they have to pay, what we say is we can write down the debt. It’s so important to keep those enterprises going, keep the jobs, keep the suppliers going, that we allow them to write down the debt and restructure. Well, keeping American families going is even more important, I think, than keeping corporations going. So, that should be part of the philosophy, that we ought to say, look at, the banks were really derelict in the loans that they made. They should have known that there was a bubble going on. I certainly talked about it; other people talked about it. They were really engaged in predation. So let’s use a homeowners’ Chapter 11 that allows a speedy write-down of what is owed, converting some of the debt into equity, so that when they sell the loans sometime—when they repay—sell their house sometime in the future, if the market recovers, some of the capital gain will go to the bank. But meanwhile, the payments that the homeowners will have to make will go way down. And that will mean that they can stay in their home. And that will be good for the families. It’ll be good for the communities. When people are thrown out of their homes, it’s bad for the family, it’s bad for the community. And we have this, you know, real evidence that our market system isn’t working when we have empty homes and homeless people. That’s not the way a market economy is supposed to operate.

    AMY GOODMAN: Would you support a foreclosure moratorium?

    JOSEPH STIGLITZ: Well, I think probably the answer is yes. The fact is that they’ve generated so many bad mortgages, so many fraudulent mortgages. And by the way, this problem of fraud has been known for a long time. The FBI started reporting on this years ago. I talk about that problem in my book. It’s not just risky lending. It was fraudulent, predatory, all these—and so, we have a backlog now. And we shouldn’t be surprised that our legal system is not capable of processing the numbers of foreclosures that have to be processed. We’re talking about probably something in the order of magnitude of three million, three-and-a-half million foreclosures actions this year. Last year, the estimate was about two million lost their home; the year before, two million. Our system isn’t geared to do that.

    But there’s a more—there’s a deeper point that I’d like to raise, which is the following. You know, in a democracy like ours, people have to have confidence in the fairness of our legal system. And if they feel that the legal system is stacked against them, then voluntary compliance—our whole social fabric starts fraying. And I think a lot of Americans have come to the view that the system is stacked against them. It began, in a way, with the bankruptcy law that was passed back in 2005 that, in effect, reintroduced bondage in America. I mean, people haven’t realized how bad that law was. If you owe a hundred percent—you know, amount of money that’s equal to a hundred percent of your income—you have a $40,000 income, you wound up with a credit card debt and other debt of $40,000—for the rest of your life you may be working 25 percent of your time for the banks. The way it works is very simple. They can take 25 percent of your income—you know, it used to be easy that you could go bankruptcy and you get discharged of the debt. They made it very difficult. So, you can pay 25 percent of your income every year to the bank, but then the bank can charge you 30 percent interest. So, the end of the year, you owe more money than you did at the beginning of the year, even though you gave 25 percent of your income to the bank. Now, this is an example of something that is clearly socially unjust.

    AMY GOODMAN: This was passed when the Republicans were in control.

    JOSEPH STIGLITZ: That’s right.

    AMY GOODMAN: And this was 2005.

    JOSEPH STIGLITZ: That’s right.

    AMY GOODMAN: Now, we’re talking about foreclosures by banks, and which President Obama is not for a nationwide foreclosure moratorium. But even the government, it is the largest foreclosure entity out there, according to Bruce Marks of NACA, a housing activist. FHA mortgages, government-owned, are doing massive numbers of foreclosures; Fannie Mae, massive numbers of foreclosures, he said. So he said President Obama maybe doesn’t want to do a full moratorium. But why not make the government-owned entities, the ones that the taxpayers own and control, let’s start with them?

    JOSEPH STIGLITZ: It actually makes sense for our economy. And let me explain why that is, because when you dump all these mortgages, these houses, onto the market, it depresses the prices, and that means that the real estate market is destabilized. One of the advantages that the government has is that it can and should take a longer-term horizon. It should realize that if it holds onto these a little longer, provided it can maintain those homes, then it’s a lot better as an owner of the home. They don’t have to be shortsighted in the way the banks are so shortsighted. So, in a sense, it’s even good economics for the taxpayer. And again, it goes back to the point I made before. It makes absolutely no sense in our economy to be creating homeless people, throwing people out of their homes, disrupting the education of their children, undermining the communities, and at the same time, having these empty homes. What really happens, when you throw people out, very quickly the house debts starts to get wasted.

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