Zombeck.com

Article cross posted at Huffington Post

About a week ago, John O’Brien, Register of Deeds in Essex County Massachusetts, sent a letter to Massachusetts Attorney General Martha Coakley asking that she look into whether MERS (Mortgage Electronic Registration Systems, Inc.) failed to pay legally required recording fees in Massachusetts when a MERS-mortgage is assigned to another entity, like a trust or a bank.

MERS is a privately held company that operates an electronic registry designed to track servicing rights and ownership of mortgage loans in the United States.

MERS has seen a lot of attention of late because of the number of robo-signing cases popping up at banks and mortgage servicers. MERS has no employees, it simply assigns and designates an estimated 20,000 unpaid VPs and officers around the country as certifying officers to sign off on mortgage transfers, foreclosures, and assignments, according to R.K. Arnold, President and CEO of Mortgage Electronic Registration Systems, Inc., in a recent testimony before Congress.

The recording fees Essex County has missed out on as a result of MERS purportedly bypassing normal recording channels was O’Brien’s primary concern.

In his November 18 letter to Attorney General Coakley, O’Brien wrote, “I am writing to ask that you investigate and provide me with an official opinion as to whether or not the Mortgage Electronic Registration Systems, Inc. (MERS) has failed to pay the proper recording fees required under Massachusetts statute when a lender assigns a mortgage to another entity.”

O’Brien’s action in sending that letter, picked up by a local paper, was just the tip of the iceberg.

“As the keeper of the land records in Essex County, I take my job very seriously,” O’Brien told “The Marblehead Reporter”, a North Shore newspaper. “Every day, hard-working people come into the Registry to record their documents, and they pay the proper fees. It troubles me greatly that these major lenders may have devised a scheme to avoid paying what the average citizen is legally required to pay. In many cases, MERS has assigned homeowners’ mortgages dozens of times to various MERS-related entities, thereby avoiding recording the proper assignments in the respective registries of deeds.”

According to Kevin Harvey, 1st Assistant Register, who was fielding phone calls from media outlets for the better part of the day before Thanksgiving, MERS may have wrongfully bypassed Massachusetts recording requirements, making it difficult, if not impossible for the borrower to know who is actually collecting on the mortgage.

Massachusetts law requires a fee of $75.00 each time a mortgage is assigned. “Individually it’s not a lot of money,” Harvey said. “But do that a million times and now we’re talking about real money.”

To put that into perspective, between November 12, 2010 and November 26, 2010, MERS was involved in 808 mortgages that were recorded in Southern Essex County. That’s $60,600.00 in potential lost revenue, just from one week, just for recordation fees, just in one county. Assuming even an average of 500 mortgages per week, this year alone, Southern Essex County has lost a potential $1.95 million in recording fees because of the MERS system of “avoiding” recording assignments.

In a response to O’Brien’s letter, MERS posted a press release on its site. “In fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower, and not the lender, who ultimately pays the costs of recording assignments, either directly or indirectly,” the statement says.

So somehow stealing millions of dollars in potential revenue is justified by claiming it saves counties from having to pay someone – someone with a family and potentially a mortgage. But why stop there? Blaming the homeowner seems to be all the rage and the statement also makes the claim that the homeowner is somehow responsible for the lost revenue. In other words, if MERS were to transfer a mortgage from one mortgagee to another twenty times (not unheard of), in Massachusetts the homeowner would be on the hook for $1,500 in fees, according to MERS’ logic – a claim Harvey says is an “absolute falsehood”.

These fees, in many cases by the way, are used to fund the county offices and in most cases contribute to county and state revenue. Some counties use real property recording fees to fund their courts, police departments, legal aid offices, and schools – the apparent lower operating expenses.

With an additional $1.95 million in the Registry’s budget, Southern Essex County could easily afford to hire more employees to handle the extra work that MERS claims to have saved them. Hence, it could be argued that MERS has contributed to the job loss, economic downturn and deterioration of entire school systems in not only Massachusetts but the entire country as a result of lost recording fees to county Registries and Recorders of Deeds.

“If we had just a percentage of that money we could afford to re-hire the twelve people we lost as a result of budget cuts,” Harvey said.

If that weren’t enough, that’s not quite the whole iceberg.

There’s a lot wrong with MERS and plenty of arguments against it. If you’re interested in knowing more about MERS, I’ve provided some links at the end of this post to get you started, but the abridged version and what’s important for the purposes of this story is that somewhere in the mid-1980s securitization came along – a process of pooling piles of mortgages into a trust and selling it off in chunks on Wall Street.

In the mid-1990s, mortgage bankers (including the Mortgage Bankers Association, Fannie Mae, Freddie Mac, Bank of America, Nationwide, HSBC, American Land Title Association, and Wells Fargo, among others) decided that since they were flinging mortgages around like monkeys fling poop, they didn’t want to pay recording fees for assigning mortgages anymore, so they came up with MERS, a bogus company that would pretend to own all the mortgages in the country and bankers wouldn’t have to record assignments since all the mortgages were “owned” by the same company. Now, 66 million mortgages (nearly 60 percent of all mortgages in the country) are recorded in the name of MERS as opposed to a bank, trust, or company that actually has any interest in the debt being repaid.

Another gigantic potential issue is that roughly 90 percent of all residential mortgage loans originated over the last decade have been sold to either Fannie Mae, Freddie Mac, or to private securitization trusts, few of whom prepared, and none of whom actually recorded a complete unbroken chain of assignments of the mortgage together with the notes, so the mortgages (borrower IOU) have been separated from the note (proof of ownership, i.e. collateral).

This separation, known as bifurcation, means that the entity that purchased and allegedly holds the note does not have the legal rights contained in the mortgage.· The consequence of this bifurcation is that the debt has become unsecured. Unsecured debt is when a lender loans money without the security of an underlying asset – like a house.

Yves Smith of Naked Capitalism wrote:

“In 45 states, that position would seem to be a non-starter. In those states, the note (the borrower IOU) is the critical document; in these states, the mortgage is a mere “accessory” to the note and has no independent force. Indeed, in these states, you cannot be a mortgagee unless you are also the creditor. But in depositions, MERS has repeatedly acknowledged that it does not lend money and does not collect interest payments. But MERS effectively takes the position that you can separate the mortgage from the note and reunite them, a position that was rejected in an 1873 (no typo) Supreme Court decision, Carpenter v. Longan (Carpenter v. Longan, 83 U.S. 271, 21 L.Ed. 313 [1873])):

“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity. Case law in virtually every state follows Carpenter.”

This could potentially mean that 60 percent of homeowners in this country are currently paying on unsecured debt – which can be dealt with in bankruptcy.

Taking into consideration the number of loans currently under water (where the home is worth less than the money owed), that’s a gigantic iceberg.

If you’re interested in more information about MERS here are some places to start:

Mortgage Electronic Registration Systems, Inc.: A Survey of Cases Discussing MERS’ Authority to Act

Get D Shirtz

Cloud Titles

Where's The Note, Who's The Holder: ·Enforcement Of Promissory Note Secured By Real Estate - by Hon. Samuel L. Bufford & Hon. R. Glen Ayers

Christopher Lewis Peterson Professor of Law University of Utah - S.J. Quinney College of Law

MERS 101 at StopForeclosureFraud

This post is cross posted on Huffington Post

Once again, as another harebrained scheme unravels, the swinging dicks of Wall Street manage to appear impervious to reality and completely immune to the truth.

Nearly every·Attorney General in the country is now investigating what was not just simply serial fraud but a no-holds-barred crime spree affecting millions of mortgages across the country.

If you want to see an excellent explanation of the foreclosure fraud, check out the in-depth post, "Foreclosure Fraud For Dummies" by Michael Konczal's, a fellow at the Roosevelt Institute.

The Wall Street frat boys, in a propaganda blitz that would make Tokyo Rose and Joseph Goebbels envious, have come out in droves to blame the victims.

In a piece from the New York Observer, one guy who was most likely too gutless to be identified by name is described only as a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said, "You had people putting zero down to get massive houses they couldn't afford to be in, but now they want to stay. And the government wants to let them stay, because they're voters."

One example of these massive houses is the house in Maine that started the robo-signer investigations. Nicolle Bradbury bought her house seven years ago for a whopping $75,000. "A major step up from the trailer she had been living in with her family", the New York Times reported.

Propaganda isn't new to the Masters of the Universe. It started with the dream of homeownership and cheap loans. Alan Greenspan perpetuated the attitude by suggesting that people use their homes as ATM machines and praised the use of Adjustable Rate Mortgages (ARM). Wall Street ran with that and pushed ARMs at an alarming rate. At the height of the boom, during the four to five year period before the financial meltdown it was virtually impossible to get a conventional 30 year mortgage. When the financial crisis hit, banks quickly went into action and blamed the entire fiasco on subprime borrowers.

"If it weren't for the banks pushing these risky mortgages on brokers and agents with massive incentives, no one would have bought them. But when it's the only thing you can buy and you're looking at skyrocketing home values being artificially inflated, what choice do you have," said Steve Dibert a loan fraud investigator at MFI-Miami.

Bankers, of course, see it the other way around and prefer to blame homeowners -- who had nothing to do with creating, what bankers refer to as "complex financial instruments" when asked to explain credit default swaps, securitized loans, and derivatives as if the rest of us are too stupid to understand.

Citi chairman Richard D. Parsons told the Observer this summer in an interview, "The loans wouldn't have been there in the first place if American home buyers, driven by what The Weekly Standard calls immediate gratification without personal responsibility, hadn't overstepped their bounds."

Stories like Bradbury's are the majority. As opposed to the occasional ridiculous story of the cab driver with eight homes and the 14-year-old who bought a McMansion with paper route money, which the banks would like us to believe are the cause of the meltdown.

The majority are hardworking, honest people who simply want to stop being screwed at every turn. One homeowner who contacted me through ShameTheBanks.org had this to say:

For the past three years, my life has been on hold. All of my income goes right back to fix my mistakes. I don't have enough to eat but don't qualify for food stamps because I make too much money. I don't get free legal assistance to fight foreclosure because I make too much money. No help paying for my medicine because I have health insurance and make too much money.

I work two jobs and burn the candle at both ends. I sold almost everything I have, which is fine; probably shouldn't have it in the first place. Now I have two things left - my art house/foreign film movie collection and my childhood Lego sets that I wanted to give to my children someday. I shouldn't have to be making that choice. Not this close to the finish line.

Follow the money. I pay taxes. TARP gives that tax money to the banks. Some of it comes back to me to get me over the hump. I continue to pay taxes and my creditors. Everyone wins.

Try to explain that to an editor for the Wall Street Journal, also for some reason anonymous in the New York Observer article who joked, "The problem is they don't deserve to be in that place. They probably deserve to be there less than they used to," referring to incomes lower now than they'd been when the loans were made in the first place. "You do need to foreclose, and you need to go back to people living in houses that are consistent with their income levels."

That's right, let the serfs go back to their hovels. Cake anyone?

Anton Schutz, president of Mendon Capital Advisers said, "Your mortgage didn't get to a robo-signer by accident, it's because you're not paying."

"We're not evicting people who deserve to stay in their house," Jamie Dimon, JPMorgan Chase chief executive, said on a conference call with analysts on the company's third-quarter earnings last week.

John Carney, Senior Editor, CNBC.com, wrote, "It's actually a bit sickening to hear defaulted borrowers describing the misdeeds of banks as 'mortgage fraud.' What some banks have done might well be fraud--but the fact of that fraud doesn't erase the other fact that the borrower agreed to make payments or face the penalty of losing her home."

What Mr. Carney along with the rest of the foreclosure proponents, doesn't seem to understand, or has conveniently forgotten, is that millions of homeowners were convinced by the banks and servicers that defaulting on their loans would help save the very homes he seems to think they deserve to lose.

In many cases banks and servicers pushed people into default with false promises of modifying their loans. Banks were offered programs like Making Home Affordable and HAMP in an effort to negotiate interest and principal reduction with homeowners. The same banks and servicers told struggling and desperate homeowners that in order to qualify for the program they had to be in default. Once homeowners were behind on their mortgage, some were offered trial modifications that according to the program guidelines, were to last three months and then made permanent if the new payments were made on time. Over one million trial modifications were started, some lasting up to nine months. Inevitably, at some point in the trial process homeowners were denied a permanent modification - in most cases no reason was given for the denial. The banks and servicers took this opportunity to hold homeowners accountable for the difference in the payments, added fees and fines for default, legal fees, and a slew of other junk fees servicers have become notorious for, pushing them even further into default.

By managing to keep people paying for a little longer, tacking on fees, and stalling the foreclosures, loan servicers were able to suck out an estimated $4 billion from struggling homeowners - all by playing them for suckers. In addition they were also over charging investors extra fees for managing the loans.

Chandra Anand, 59, a telecommunications consultant from Germantown, told The Washington Post that he called his lender in the fall of 2008, before he missed any payments, to warn the company that his wife's open-heart surgery might cause the family financial difficulty. He was told that in order to qualify for a loan modification he needed to miss payments. So he did and applied for a modification. He never heard back from his lender until he got a foreclosure notice in January 2009.

Every time he calls his lender to resolve his situation an official tells him "to be patient, that it could take 60 more days to review things," Anand said. "It's now been a year and a half."

There are hundreds of stories like this, submitted by homeowners, at ShameTheBanks.org.

In response to attorneys general and lawyers questioning the paperwork around foreclosures a few of the banks have postponed foreclosures in an attempt to rectify the situation. To hear the banks tell it, it will be a quick fix.

According to a Wall Street Journal article, a bank spokesman for Chase said that its cancellations only cover foreclosure sales scheduled between Oct. 9 and Oct. 31 because it doesn't expect the review to take longer. Jamie Dimon, Chase's CEO made a similar statement.

These are the same bankers who told Congress nearly 2 years ago that it could take years to ramp up their infrastructure to handle loan modifications in order to help homeowners.

Maybe they're planning on another hiring spree like the one they had when they needed to foreclose on millions of homes.

To keep up with the rash of foreclosures, document processors and mortgage service firms rushed to hire anyone they could -- hair stylists, Wal-Mart clerks, assembly-line workers who made blinds -- and gave them jobs in their foreclosure departments without formal training, according to court papers.

Several of these employees have testified that they did not really know what a mortgage was, couldn't define "affidavit," and knew they were lying when they signed documents related to foreclosures, according to depositions of 150 employees for mortgage companies taken by a law firm in Florida.

Martin Andelman of MandelmanMatters interviewed a former Chase employee who told him, "A perfect foreclosure· was supposed to take 120 days and the closer you came to that benchmark, the better your numbers looked and higher your bonus would be."

The point is, foreclosure makes more money than modifications. It even makes more money than high interest rates. As Moe Tkacik, of Washington City Paper writes:

Banks do not just walk away from a cash cow like "mortgage servicing" without a good reason. Mortgage servicing is a $200 billion a year business and that is not because of the flat 0.25% fee mortgage servicers receive to process the timely payments of responsible homeowners. In the boom years, mortgage servicers raked in fees every time they convinced a homeowner to refinance--the more "adjustable" the better!--and in the bust years, late fees and foreclosures· are the cash cows. Like all things banks do, it is truly recession-proof! The catch is that because foreclosures sort of necessarily involve, you know, "laws" governing "property rights" and "trespassing" and whatever, they require someone acting on behalf of the theoretical new "owner" of the property (whoever that is) to sign an affidavit saying something along the lines of, "yes, I've thought about it and reviewed the documents and whoever the local sheriff is should know that definitely these people deserve to have their locks abruptly changed and all their shit ransacked by some contract team of meatheads, and whoever shows up on this property after that they should feel free to harass, arrest, and what the hell waterboard.

Andrea Bopp Stark, a lawyer with the Molleur Law Office in Biddeford, Maine, told The Washington Post, "that a number of her clients should be eligible for loan modifications through a Treasury Department program but that servicers are in such a state of disarray that they often can't give homeowners basic answers about the state of their loan modification request. Then a few weeks or months later, the same servicers evict homeowners as if those applications were never filed."

"Their whole bureaucratic procedure," Stark said, "is working against helping homeowners."

"There are several class actions pending for homeowners who allege that they are being foreclosed despite being eligible for HAMP modifications," said Alan White, a professor at the Valparaiso University Law School. "In a case where a homeowner should be approved for HAMP modification, but the servicer has lost the paperwork or just hasn't responded yet, the robo-signer will send the foreclosure documents to the court without checking to see whether in fact there is an alternative to foreclosure in the works."

"We waited and waited and waited for wide-scale loan modifications," said Sheila C. Bair, the chairwoman of the Federal Deposit Insurance Corporation, one of the first government officials to call on the industry to take action. "They never owned up to all the problems leading to the mortgage crisis. They have always downplayed it."

The latest development, uncovered by Huffington Post Investigative Fund, is about banks now collecting taxes. According to the article:

In many cases, the banks and hedge funds created new companies to do their bidding. They gave the companies obscure, even whimsical names and used post office boxes as their addresses, masking Wall Street's dominant new role as a surrogate tax collector.

In exchange for paying overdue real estate taxes, the investors gain legal powers from local governments to collect the debt and levy fees. At first, property owners may owe little more than a few hundred dollars, only to find their bills soaring into the thousands. In some jurisdictions, the new Wall Street tax collectors also chase debtors over other small bills, such as for water, sewer and sidewalk repair.

Pretty convenient arrangement considering they also collect those taxes in the form of escrow payments from borrowers. I have heard and read hundreds of stories from homeowners who have paid their taxes and insurance through escrow payments with their mortgage only to find that the servicer didn't actually pass those payments along to tax offices and insurance companies. Now the homeowner is behind on their taxes and the insurance has been canceled for non-payment. So, one department collects the escrow payments that should be going towards taxes, but doesn't pay it, then another department takes over the collection of taxes and fines the homeowner - who has been paying all along. In many cases the the servicer don't apply these payments to anything. They simply pocket the money, much in the same way they pocket trial modification payments.

By blaming homeowners, bankers are trying to harness the anger of ordinary people -- who are angered by the economic disaster that Wall Street itself created -- and give ordinary people a reason to turn on each other.

In a pervasive culture of greed, like the one that exists on Wall Street, the lack of ethics and compassion has permeated every corner of the industry. It has become more important for banks to simply make money at any cost than it has to take part and play a role in a flourishing and successful economy, as they are designed and expected to do. That being said, it almost makes sense that they would vilify the very people who they bilked, conned, and stole from, now that the jig is up.

In her book" Bird by Bird", Anne Lamott tells the story of a conversation with her pastor. In it she questions why she doesn't have an abundance of money. The pastor says to her, "If you really want to see what God thinks about money, just look at who he gives it to."

Senator Al Franken (D-Minnesota), who in my opinion should be wearing a cape to work every day, introduced an amendment to the Financial Reform Bill that would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP.

The Franken Homeowner Advocate Amendment,according to the press release, would be funded from existing sources and its focus would be to assist homeowners who believe their mortgage servicer is breaking the rules.

Prominent homeowner and consumer advocates from sites like Givemebackmycredit.com, MFI-Miami, 4closurefraud.com, and ShametheBanks.org, to name a few, have shown support for this amendment because it would add an obvious and much needed appeals process to a program that has been abused by lenders and loan servicers since its introduction early last year.

There is, however, a possibility that because of a push to move the Financial Reform Bill along before lobbyists manage to gut the thing with their toxic amendments that crucial amendments, like this one, may not make it into the bill.

In addition, since Franken's amendment on credit rating agencies was up for debate last week, it's unlikely that this amendment will make it to the floor in time. It could however make the cut for the Manager's package - particularly since it already has bi-partisan support.

Bloggers and consumer advocates are hoping to see this one make it. Most notably, White House communications director Dan Pfeiffer, who praised the amendment in his White House Blog post listing it as one of ten amendments that would strengthen the bill. "Simple, straightforward improvements that would further strengthen an already strong bill and really help American families. We'll call them the "Good Guys". Let's hope they prevail over the "Lobbyist Loopholes" as the debate moves forward," Pfeiffer wrote.

Back in January I wrote a piece called Loan Modifications: A $4 Billion Con Game. I noted that nearly one million homeowners had entered trial modifications and that the majority of them were denied permanent modifications. According to Propublica the total number of modifications that have been granted permanent status stands at less than 230,000. That would imply that nearly 800,000 were denied. None of them were given the opportunity to appeal the decision.

The reasons given by loan servicers and banks for denying modifications - after approving homeowners for a trial period and taking their money for several months - come in varying degrees of lunacy.

In one glaring example, after three months of receiving trial payments, GMAC told one couple they were denied a permanent modification because they made their payments early.

ShametheBanks.org has received hundreds of stories from homeowners who have been denied for equally ridiculous reasons. Kathleen Burt, from Fort Lauderdale, Florida was told by a Chase representative, "we're not obligated to follow the federal guidelines.True the numbers work, but the bank doesn't have to take you on if we won't make enough money."

Catherine and Brian D., of Paso Robles, CA were denied twice. Once for having too much income and another time for not having enough - their income never changed.

Other reasons homeowners have cited for being denied include, Brenda Reed, who was accused of forging survivor benefits awards; Staci K. was told she had equity in the house despite being $90k underwater; Martha W. was told that her address could not be verified; Michael L. was denied because "the investors wouldn't make money" after having taken his trial payments for nine months; Rick L. was told he didn't have sufficient income to make the payments he's been making for eight months - the bank subsequently increased his monthly payments by $500; and that's just a sampling.

In an interview with Huffington Post, Franken said, "One of the problems is that the servicers or representatives who talk to people on the phone don't seem to [have the necessary expertise]. That's sort of the problem that this [amendment] is addressing."

Once a homeowner has been denied a modification, they have no available resources to question or appeal the decision. There are no viable official channels available to them. They are, for the most part, left to the mercy of the arbitrary, unfair, and deceptive practices that were initially responsible for this mess.

According to a press release from Franken's office, "Lawyers report stories of contacting regulators about problems with the HAMP program, only to be told, 'If the servicer says this is correct, it must be correct.'" Are these the same regulators and servicers that didn't foresee the collapse of the housing bubble and created "liars loans"?

For anyone who's been through this process and in most cases ultimately been denied a modification, this idea of regulating and auditing this program makes so much sense that it should have been part of the program to begin with.

This amendment has already received impressive bi-partisan support . Keeping it from a vote would clearly not be in the best interest of the American people.

The decision to bring this amendment up for a vote or at the very least add it to the Manager's Package lies with Senator Dodd, whose constituents have also told their stories on ShametheBanks.org.

Those of you, like me, who have been through this process, are still in this process, or are about to experience this process know the crucial role an office like this would play. I urge you to reach out to Senator Dodd and let him know that this amendment must be considered and that without it homeowners are at the mercy of arbitrary and ridiculous decisions on the part of the banks.

Quashing this amendment would be tantamount to actively participating in the foreclosure and eviction of millions of families from their homes.

Chris Dodd's office number is (202) 224-2823. Let him know that Franken Homeowner Advocate Amendment is important to the success of the modification program and needs to be part of the bill. Tell him to go to ShametheBanks.org and read the stories from his constituents in Connecticut.

Call your GOP Senators too. Find out how they feel about the amendment ... then tell them how you feel. You can find their number here: http://senate.gov/general/contact_information/senators_cfm.cfm

Please leave a comment if you plan to call so we can let Senator Franken know.

Here's a summary of the amendment from Franken's office:

While the GOP is putting legislation in place to shove homeowners further underwater, Democrats are scrambling to throw them a lifeline.

Barney Frank (D-MA), Chair of the House Financial Services Committee, and Rep. Maxine Waters (D-CA), a ranking member of the Committee, sponsored an amendment to the Financial Reform Bill that would provide a two year bridge loan to struggling homeowners who have lost their job and can’t afford their mortgage. The creation of the loan program could help as many as 400,000 unemployed homeowners avoid foreclosure.

The provision has made it through the House and the House-Senate Conference Committee for the Financial Reform Bill will decide on or around the 22nd of June whether it makes into the final bill.

The program is based on a successful model used in Pennsylvania. The provision would make loans to unemployed homeowners to help them pay their mortgage for a maximum of two years or until they find new employment, at which time they would be expected to repay the loan amount in full. It would be paid for using federal dollars that have already been designated for foreclosure prevention and like the Pennsylvania model it is based on, could actually produce a profit for the federal government.

This program could be a win-win all around: Homeowners who have lost their jobs through no fault of their own would be provided a loan for two years while they looked for work and got back on their feet; banks would get their money for the next two years; and a portion of the funds allocated to the failing HAMP program wouldn't go to pay servicer salaries and bonuses.

The Obama administration has offered a forbearance of three months to unemployed homeowners, but considering the average unemployment averages 7.5 months, three months would only serve to sink homeowners deeper into financial and emotional despair.

The opposition to this amendment on the part of the GOP is astounding as they continue to hammer away at the middle class, side with the banks, and stack the deck in favor of Wall Street.

Last week Ryan Grim of Huffington Post reported that the House Republicans pushed legislation through the House to punish homeowners who are behind on their mortgages -- an ironic, cruel, and hypocritical use of big government to hold back the middle-class and already cash strapped homeowners. According to a GOP memo, sent last Thursday, "families that have chosen to stop paying their mortgage and instead use the extra money they are saving each month to "buy season tickets to Disneyland...take a Carnival cruise to Mexico...and go out to dinner more often."

"It [sic] disgusts me that the Republicans would use Big Government to interfere with the sanctity of contract," said Dean Baker, an economist with the progressive-leaning Center for Economic Policy and Research.

Of the hundreds of stories we’ve received at ShametheBanks.org from homeowners losing their homes I have yet to read one in which someone is recounting the fabulous time they had on their Mexican cruise or their fun filled trip to Disneyland.

"We started the loan modification process in July and were notified our three trial payments would be close to what the reduced payment would be once approved for final modification 2,800. The 3 mos turned into 7 mos. During this time I am still unemployed and receive the maximum 405.00 weekly in unemployment. We faxed and resubmitted the same documents time and again. Every month we received late statements with no record," writes Lisa Bielawski of Long Island NY in her story - far from a trip to Disneyland or a lavish night on the town.

In addition to wanting to punish homeowners in default, the GOP has also taken to attacking the unemployed, insinuating that they are lazy and shouldn't receive government assistance in the form of much needed and deserved unemployment benefits. Georgia Republican Rep. John Linder suggested Thursday that extended unemployment benefits keep people from looking for work. "And even when businesses are willing to hire, nearly two years of unemployment benefits are too much of an allure for some," Linder said.

Foreclosures across the country have escalated to an estimated 300,000 a month. The banks and many of their allies in Congress would like us to believe that foreclosures are the result of irresponsible homeowners who simply don’t want to pay their mortgage. The simple truth is that unemployment is now the main reason for foreclosure, accounting for 58 percent of all foreclosures according to NeighborWorks America – up from 49 percent in June of last year.

Massachusetts residents brought this problem to Congressman Frank’s attention when 600 people met with him in November. The meeting was sponsored by the community improvement organizations that are part of the PICO National Network of faith based community organizations; Brockton Interfaith Community and the Massachusetts Communities Action Network. Congressman Frank pledged to take action on this issue of unemployed homeowners facing foreclosure and has followed through by getting this amendment passed in the House bill – now its fate remains with the House-Senate Conference Committee on the Financial Reform legislation who will decide this month whether the provision becomes part of the final bill.

In the midst of a GOP tsunami against the middle class this is a buoy of sensibility. What can you do? Contact your member of Congress, particularly if they sit on the House-Senate Conference Committee, and tell them you want this amendment in the final bill. We've provided a listing and sample letter at ShametheBanks.org in this fact sheet provided by Massachusetts Communities Action Network. It contains more information about the amendment, a list of the House and Senate conferees, and a sample letter.

Last month I wrote a piece on ShametheBanks and in HuffPost about an amendment sponsored by Sens. Al Franken (D-Minn.), Olympia J. Snowe (R-Maine), and Patty Murray (D-Wash.) The amendment to the Financial Reform Bill would create an Office of Homeowner Advocate to assist homeowners who have been denied a loan modification through HAMP. This office would provide a much needed outlet for homeowner's who have been denied HAMP modifications, for whatever reason.

The piece generated a number of calls to legislators and was picked up by other notable bloggers and homeowner advocates like Givemebackmycredit.com, MFI-Miami, and 4closurefraud.com.

The hope, in May, was that the amendment would at least make it into the Manager's Amendment and would be part of the final bill. As it happened, there was no Manager's Amendment, but that didn't stop Franken and his allies on both sides of the aisle from making sure it wasn't overlooked. It passed Tuesday evening by a surprising and satisfying vote of 63-33.

True to form, Franken, not being content to give up after he didn't get the amendment into the financial reform bill pushed for it in the Tax Extender Bill (a bill separate from the amendment's original target that deals with unemployment insurance and other safety net legislation. It was passed by the House in March and is currently being debated in the Senate. A very impressive effort that shows Franken's commitment to homeowners and to foreclosure prevention.

"This victory means help for the many [homeowners] who are in danger of losing their homes through no fault of their own," Franken said. "These families are doing their best in a tough economy that they didn't create. And they need to know there's someone who has their back when they're trying to navigate the already stressful system of avoiding foreclosure."

"As Mainers and Americans know too well, these turbulent economic times, in which we have witnessed record high unemployment rates, have been confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation's families," said Sen. Olympia Snowe, once again showing her loyalties to the American people. A departure from her own party who prefers to believe that, "families that have chosen to stop paying their mortgage and instead use the extra money they are saving each month to buy season tickets to Disneyland...take a Carnival cruise to Mexico...and go out to dinner more often," according to a GOP memo sent out last week.

"By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system," Snowe continued.

It's well known that the servicers and banks have not been forthcoming in their reasons for denying loan modifications and in some cases have given outlandish reasons to home owners like, "early payments". That wasn't a typo. GMAC denied an Indiana couple a permanent modification because they made their trial payments early.

Anyone having tried to get a loan modified knows it can be a painful and frustrating process. After months of lost paperwork and jumping through hoops at the whim of the servicer, homeowners are left precariously paying trial payments that could go on for several months - well beyond the requisite three months. Once the trial payments are over (and of course collected) a staggering amount of them are denied permanent status with no reason offered by the servicer who still collects the servicing fees from investors, racks up fees and fines on the homeowner's account, and in some cases collects taxpayer subsidies for their "efforts." In many cases the homeowner is slapped with a lump sum of the accumulated difference in the adjusted payments, now making a tough situation even more daunting.

The proposed office would provide a much needed and long awaited means for homeowners to appeal the denial and would provide oversight to a program that up until now has allowed servicers and banks to continue gaming a system they helped destroy and fleece already struggling homeowners.

A former servicer employee and HuffPost reader, Richard Lindow commented on Crucial Help for Homeowners Could Never See the Light of Day about the proposed amendment last month, referring to the provision and defending the servicers:

"The persons speaking with the customers, unfortunately, do not appear to know why a particular action was taken, and, I assume, from articles such as yours and complaints I have received, that lenders do not do a very good job of explaining it either.

If this amendment will help to provide clarity and information to borrowers who really have no idea why they were denied a modification, then please sign me up as a proponent.

If, however, it is merely, another avenue for people to vent who were legitimately denied (e.g., because his pay stubs showed he worked in NY and the property was in FL, and his employer confirmed in writing that he has worked for that company in NY full-time for the last 10 years), then perhaps we should perhaps assess whether this fiasco is worth any more time or money."

I have to say, I agree. If homeowners are in fact to blame for the shoddy results of the HAMP program and the banks and servicers are really working in the best interest of the borrower, but the borrower isn't co-operating, then what better vehicle to prove that? Banks and servicers have been claiming for almost over a year now that denials are a result of uncooperative homeowners. The banks and servicers should be pleased to finally have a government office dedicated to exposing the real reason for 230,000 HAMP applications being denied in April alone. This should finally shed some light on where the blame should be cast and help everyone sleep better at night. After all, there is close to $4 billion in monthly charges, taxpayer subsidies, fees, and fines at stake.

Update: The Senate didn't pass the Extender Bill. This doesn't necessarily mean the amendment won't come back up. In fact  with the vote of 63-33 it got, there's a very good chance it'll be back.

As for the vote on Friday:

"Tonight, every single Republican voted to deny states critical aid that would keep firefighters, police offices and teachers employed," said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D-Nev.). "And tonight, every single Republican voted to tell the one in ten Americans who have lost their jobs that they are on their own."

By the end of this week, 903,000 people who have been unemployed for longer than six months will have missed benefits checks they would otherwise have received had Congress managed to reauthorize the stimulus bill provisions that expired on June 1. By the end of next week, that number will climb to 1.2 million....

"Tonight, every Republican voted to protect wealthy bankers, hedge fund and Wall Street CEOs from paying their fair share of taxes," said Manley. "Tonight, every single Republican voted to allow big businesses to continue to outsource American jobs, and get a tax break for doing it."

Republicans pushed earlier Thursday for an alternate bill that would have extended unemployment benefits but dropped the Medicaid assistance, which Sen. John Thune (R-S.D.) termed a "$24 billion state bailout." The Republican alternative would have reduced the deficit by, among other things, slashing spending at federal agencies. This bill failed by a vote of 41 to 57.

"Poll after poll demonstrates that the voting public wants Congress to protect and support the unemployed and it is time for them to stop playing dangerous games with people's lives," said Judy Conti of the National Employment Law Project, which recently commissioned a poll that showed 74 percent of registered voters think it's more important to preserve jobless aid programs than to reduce the deficit. "The Senate should not recess until HR 4312 is passed, and the House should treat it with the same urgency. The nearly million workers who have lost their benefits while these politicians have used them to score cheap poiints in an election year deserve much better than this."

Here's the rest of that story: http://www.huffingtonpost.com/2010/06/17/senate-jobs-bill-fails-again_n_616732.html?ir=Business

Here's the Press Release from Franken's office:

Franken, Snowe, Murray Homeowner Advocate Amendment Passes The Senate
Bipartisan Amendment To Safety Net Legislation Would Assist More Than 20,000 Minnesotans In Danger Of Losing Their Homes

WASHINGTON, D.C. [06/16/10] – The Senate passed an amendment offered by U.S. Sens. Al Franken (D-Minn.), Olympia J. Snowe (R-Maine), and Patty Murray (D-Wash.) to the safety net legislation now being considered on the Senate floor. The proposal will create an Office of the Homeowner Advocate, funded from existing sources, whose focus would be on assisting homeowners who believe their mortgage servicer is breaking the rules. Currently, these families have nowhere to turn when wrongly denied from the assistance program, or encounter difficulties in navigating the already stressful system of avoiding foreclosure.

The Franken amendment passed with broad bipartisan support, 63 to 33.

“This victory means help for the many Minnesotans who are in danger of losing their homes through no fault of their own,” said Sen. Franken. “These families are doing their best in a tough economy that they didn’t create. And they need to know there’s someone who has their back when they’re trying to navigate the already stressful system of avoiding foreclosure.”

“I could not be more pleased that the Office of Homeowner Advocate Amendment passed the Senate, and by a bipartisan vote. As Mainers and Americans know too well, these turbulent economic times, in which we have witnessed record high unemployment rates, have been confounded by the housing market crisis and certain mortgage servicers who are, frankly, taking advantage of our nation’s families,” said Sen. Snowe. “By creating an Office of the Homeowner Advocate, these Americans will receive the vital assistance they require when they are faced with the daunting foreclosure system.”

“Washington state families who have been hit hard by lost jobs and plummeting housing prices are fighting to stay in their homes,” said Senator Murray. “We need to make sure that the programs we put in place to help these families are actually working and that the big banks are being forced to play by the rules. Giving families a strong voice in this process is critical to preventing future foreclosures and speeding our economic recovery.”

The Office of the Homeowner Advocate is modeled after the successful Office of the Taxpayer Advocate at the Internal Revenue Service. It aims to help resolve problems with the Home Affordable Modification Program (HAMP), a program developed by the U.S. Treasury Department to help homeowners struggling to keep their homes. It would be funded from money that is available for the costs of administering the HAMP program, but is not otherwise committed.

18,800 Minnesotans currently participate in the HAMP program and stand to benefit immediately from the Franken amendment. More could participate in HAMP if the proposal goes through, as the Office of the Homeowner Advocate would be tasked with correcting the mistakes currently denying them eligibility. As the foreclosure crisis goes on, many more people are expected to join the HAMP program, which was originally expected to help three to four million homeowners nationwide.

The Office of the Homeowner Advocate would have three primary functions: To assist homeowners, housing counselors, and housing lawyers in resolving problems with the HAMP program; to identify areas where homeowners are having problems in dealing with the HAMP program; and to identify possible administrative and legislative changes to HAMP.

The Office of the Homeowner Advocate would:

• Have an independent director, appointed by the Secretary of Treasury in consultation with the Secretary of Housing and Urban Development. This director would have a background as an advocate for homeowners and have experience dealing with mortgage servicers. The director cannot have worked for a servicer or for the Treasury Department within the past four years.
• Make the Director available to testify in front of the Senate Banking Committee and House Committee on Financial Services at least four times a year, or at any time at the request of the Chairs of either committee, and issue a formal report to Congress once a year.
• Have staff designated by the Director to have the authority, on a case-by-case basis, to implement servicer remedies, subject to the approval of the Assistant Secretary for Financial Stability. This will help to ensure that the staff of the Office of the Homeowner Advocate actually have the ability to make servicers follow the rules.

This story can also be seen at HuffPost: http://www.huffingtonpost.com/richard-zombeck/finally-some-hope-of-hamp_b_615284.html

Cross posted in Huffington Post

When you're a bank and the facts aren't on your side, it's apparently perfectly acceptable to just lie.

No side-stepping, no spin, no double talk. Just flat out lie as if no one will ever check your facts or assume that by the time they do it'll all have blown over. It's a lot like a five-year-old covered in chocolate denying he ate the cake.

The New York Times on Tuesday had a piece about someone other than poorly funded non-profits and grassroots public interest groups stepping up for homeowners. New York City's comptroller, John C. Liu, and six large unions plan to begin a campaign to press the biggest banks to do more to prevent foreclosures in the New York area.

Liu unfortunately stopped short of threatening to pull union money out of the banks in retribution saying, "it's premature to talk about sticks, like moving city funds out of banks that are deemed unresponsive," according to the article.

The letter criticizes the banks for dragging their feet on modifying mortgages and urges them to do "everything possible" to avoid foreclosures. The letter also asks each of the banks to name a high-level official who would handle the appeals of homeowners who have been denied a modification.

The response by the banks was basically, to lie.

According to the New York Times article, in an e-mail sent by Citigroup, spokesman Mark Rogers said, "In the first quarter of 2010, our various modification and extension programs helped many families stay in their homes in New York State ... from Jan. 1, 2007, through March 31, 2010, Citi has helped more than 900,000 homeowners avoid potential foreclosure."

The HAMP performance report for May on Treasury's website, www.financialstability.gov , however shows Citi as having actually modified 34,675 mortgages nationally since the inception of HAMP in 2009. That's an exaggerating of over 860,000.

The same report shows Bank of America as having modified 62,969 loans. Yet in a separate-mail Richard Simon of Bank of America claims they've modified 650,000 loans.

In his letter to the banks Liu claims that 265,000 mortgages in New York State are in danger of foreclosure -that's 13 percent of all mortgages (about 2 million) in the entire state of New York.

So according to the two guys from Citi and Bank of America their banks have single handedly helped 1.5 million homeowners -nearly everyone in New York who bought a home.

One of the unions involved in Liu's campaign is the United Federation of Teachers. Lisa Bielawski, a teacher and school administrator from New York and one of hundreds of homeowners who have recounted their story on www.shamethebanks.org, has seen her monthly payments reduced by a measly $67, her principal increased by $21,000, and was told she had a past due amount of $39,000 despite having never missed a payment.  If this is considered a modification it's a profitable business for the banks.

Lying isn't new to these guys, nor should it be a surprise. Ocwen National Bank, who services over 600,000 loans nationally, mine included, has been making stuff up to Congress and the media for years.

In October 2009 Ocwen patted themselves on the back for singlehandedly modifying 45 percent of all the delinquent mortgages in the country. Their total to date is 13,384. There have been 340,000 nationwide in two years.

Earlier this year Ocwen's General Council Paul A. Koches was quoted in the New York Times as saying "We realized early on that if we don't include principal treatment, you just don't get the buy-in from the borrower to stay with it," referring to principal reductions.

Koches was also notably quoted as saying, "We roll up our sleeves; we talk directly with the borrower. We find out what their situation is and we provide counseling and basically a complete underwriting of the delinquent loan, perhaps the way it should have been done at the point of origination."

But in speaking with Jennifer Levy, an Ocwen Bank Loan Workout Specialist and Ocwen CEO Ronald Farris' own secretary, Linda Ludwig, about my own loan, both women stated emphatically that Ocwen never reduces principal, despite what their executives are quoted as saying. Ludwig even accused us of taking what they said out of context.

Considering the amount of fraud and blatant violations that were found on my original loan by Steve Dibert at MFI-Miami, it's hard to believe they're re-writing loans at all. In fact they tend to re-write them in the form of modifications that leave homeowners in more precarious financial straits then they were to begin with.

In addition, a former Ocwen employee and contributor to shamethebanks.org has made it clear that, "the powers that be at Ocwen will lie and tell Congress whatever they want to hear so that they can continue to rip people and investors off." Adding, "they figure nothing is illegal until a judge says it is."

In my case I've seen my principal increased by $13,000. Ocwen claimed an additional $12,000 to the IRS as a "charge off" (we'll owe taxes on that) and reported the value of our home to the IRS as $100,000 more than their own appraised value.  An appraisal they ordered and made us pay for. In addition they tacked on some late fees, a half dozen certified mail fees, a $315 title report fee, four property inspection fees, a Loan Document Copy Fee, and threw in another appraisal. No one came to the house, no appraisal was done, we received no certified letters, and requested no copies.

These are nothing more than tactics to keep homeowners underwater, in debt, and frightened. The modification process has been abysmal. Without more state officials like Mr. Liu stepping up for the people in their state millions of families in this country will continue to lose their homes.

Without oversight and regulation of the modification process the banks and servicers will make sure that this will not happen until entire savings and retirements are wiped out by continuing to fabricate numbers and offer homeowners false promises in the form of trial payments for the ever elusive permanent modification.

A complaint filed against Bank of America in Arizona says, "Rather than allocating adequate resources and working diligently to reduce the number of loans in danger of default by establishing permanent modifications, Bank of America has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted billions of dollars from the United States."  A similar one was filed in Seattle.

More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog. Nearly 528,000 families lost their homes in the first six months of the year. If foreclosures continue at that rate, the yearly number would eclipse the more than 900,000 homes repossessed in 2009, according to RealtyTrac Inc., a foreclosure listing service.

Part of the deal when taxpayers forked over nearly a trillion dollars to bail out the banks for their own stupidity and recklessness was that they would make things right. Instead, they've been allowed to continue to pillage with impunity. I'm hoping Mr. Liu will be successful in holding their feet to the fire and be an example for other states to follow.