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Quote:
NEW YORK (AP) -- In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.
"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them -- earning them the name "robo-signers."
In essence:
1. Write off bad loans as quickly as possible. Details don't matter. The mortgage market equivalent of "kill 'em all, let God sort 'em out"
2. Wait for a market recovery (whistling past the graveyard)
3. Dump the assets as quickly as possible.
It doesn't bode well for a market recovery. Realty Trac estimates banks are basically sitting on 600,000 foreclosed properties - they're not bothering to sell them since they think they'll get more if they wait a bit. However, when they're eventually dumped it will have a further depressing effect on the market.
It's almost a tautology - the housing market will recover once it's found its bottom. Many forces are in effect to prevent the market from hitting bottom.
As I understand it, the problem is that mortgages were bundled up, and then chopped into different security bundles. There were two pieces of paper with each mortgage - the title and the note, when the bankers were making up the MBS bundles they were careful to reassign the note (so that the MBS would get the stream of payments from the mortgage), but were not so careful with the titles.
So, as a result, it is not exactly clear who owns the houses, or if mortgage collectors can foreclose on houses where they don't hold the title (the note becomes unsecured, in other words, once it was carelessly transferred a few times then cut up into MBS bundles).
Then on top of that, the ex-McDonalds workers hired to process the massive number of mortgage defaults forged all kinds of documents once they realized that they could not legally foreclose on the homes.
I thought the robo-signers referred to the people being foreclosed on but it's actually the employees of the banks doing the robo-signing.
But also the issue is that the banks were lending to all kinds of people that weren't supposed to be borrowing so the banks had little incentive to get the paperwork right in the first place, let alone when foreclosing.
But also the issue is that the banks were lending to all kinds of people that weren't supposed to be borrowing so the banks had little incentive to get the paperwork right in the first place, let alone when foreclosing.
Spot on!
People tend to buy homes, or cars for that matter, not based on price, but what they can afford to pay each month. I always thought that was stupid, but now we're all paying the price of stupidity.
- FHA loans, government forced the banks to loan to poor people. However - in 2008 FHA loans were only 2% of the total mortgage pool (down from 10% a decade earlier). This is the part used as a libertarian argument, but the libertarians are wrong because FHA loans were an insignificant part of the problem. Defaults on FHA loans are roughly the same as defaults on non-FHA subprime loans, but most subprime loans were not FHA.
- deregulation of mortgage backed securities: Bank makes fraudulent loan and sells it taking none of the risk - this was the vast bulk of the problem mortgages.
IMHO, if the answer to this problem is deregulation, we can kiss our financial system goodbye and just hide in the mountains with gold and a vegetable farm. Deregulation caused the mess, and it scares the heck out of me that people are suggesting more deregulation as the fix.
- FHA loans, government forced the banks to loan to poor people. However - in 2008 FHA loans were only 2% of the total mortgage pool (down from 10% a decade earlier). This is the part used as a libertarian argument, but the libertarians are wrong because FHA loans were an insignificant part of the problem. Defaults on FHA loans are roughly the same as defaults on non-FHA subprime loans, but most subprime loans were not FHA.
- deregulation of mortgage backed securities: Bank makes fraudulent loan and sells it taking none of the risk - this was the vast bulk of the problem mortgages.
IMHO, if the answer to this problem is deregulation, we can kiss our financial system goodbye and just hide in the mountains with gold and a vegetable farm. Deregulation caused the mess, and it scares the heck out of me that people are suggesting more deregulation as the fix.
On the FHA issue you are only correct to a narrow point. Directly FHA is a tiny portion of the overall market, but indirectly it runs almost the entire market. Why? The FHA guidelines are looked at as the gold standard for lender liability avoidance, i.e. if your loan met FHA guidelines even if it wasn't an FHA loan the lending institution would not be liable for any government related sanctions due to overly-risky lending. Specifically because the government standard was treated as essentially a risk-free stamp.
We all know how that worked out. Anti-redlining legislation and legislation creating mandatory low income loan programs forced the FHA guidelines to where they were irresponsible, but legally required to be. That made the default-risk assessments utterly worthless. If you could sign documents you could pretty much get a home loan in any zip code that had government identified low income or disadvantaged buyers, and the bank would get congratulated for it. The VAST majority of the loans weren't fraudulent, they were totally underwritten in accordance with FHA guidelines. Guidelines that were horribly broken by the way the House Financial Services Committee wrote the laws the Congress passed.
Once that got into full swing the banks had to unload the loans from their books so they could make more loans. Again our favorite sons on the House Financial Services Committee set about language that made whacky things legal, refusing to allow full regulation of derivatives.
It's not de-regulation that's the problem, it's misguided regulation regulating the wrong things the wrong way. Remove the initial congressional push that forced FHA to create impotent standards and none of this could have ever happened.
So the banks loaned a bunch of money to unqualified buyers because they met FHA standards? Sorry, that does not fly - if the banks were not allowed to sell their worthless mortgages, they would not make these loans no matter what the FHA said about it.
And if we deregulate the banks and eliminate the FHA, they will start making worthless loans and selling them again, as long as they can find a buyer that believes Moody's lies about AAA. Deregulation was the whole problem - there is no aspect of this crisis that was not caused by deregulation (on mortgages, bond ratings, investment bank leverage ratios, CDS reserve levels, etc).
So the banks loaned a bunch of money to unqualified buyers because they met FHA standards? Sorry, that does not fly - if the banks were not allowed to sell their worthless mortgages, they would not make these loans no matter what the FHA said about it.
And if we deregulate the banks and eliminate the FHA, they will start making worthless loans and selling them again, as long as they can find a buyer that believes Moody's lies about AAA. Deregulation was the whole problem - there is no aspect of this crisis that was not caused by deregulation (on mortgages, bond ratings, investment bank leverage ratios, CDS reserve levels, etc).
You cannot have deregulation if something was never regulated in the first place. And the fact that you don't like the standard for "safe lending" being FHA standards is irrelevant. It flies because that is the standard. Period. Even if the banks held the mortgages and couldn't sell them, it would still be the standard. Mortgages are always underwritten to a standard, and those that meet the FHA standard are considered low risk. Then, contrary to what you seem to think, single bank reserve requirements aren't designed to handle a 50% loss on 20% of the held investments. Banks would still fold because of reserve deficiency triggers, and the whole problem would still exist.
When you ignore root cause you can propose whatever change you want, but it won't affect the end result over the long run. And the root cause was government forced regulation in the name of "opportunity" making mortgages available to those who had no business taking them. Eliminate that and no banks can be exposed to failure thresholds.
Your misplaced solution doesn't change that at all, and it eliminates the ability to efficiently generate well qualified mortgages, and that only artificially depresses housing due to over-regulation of the wrong thing.
The banks would not be having such high losses, because they would not have made the loans in the first place if they had to hold the loans and deal with the default risk themselves.
We didn't have these types of problems for decades after the great depression, because we had severe limits on what banks could do. We only started having banking crisises every 10 years or so once Regan started the deregulation train going in the 80s.
Just a manufactured controversy right before the election to stir some populist nonsense and increase voter turn out for democrats. Has a single foreclosure gone forward on someone that was up to date on their payments?
Just a manufactured controversy right before the election to stir some populist nonsense and increase voter turn out for democrats. Has a single foreclosure gone forward on someone that was up to date on their payments?
Yes - in fact, one of the banks foreclosed on a person who didn't even have a mortgage. This is not a manufactured controversy (at least not for political reasons, this was manufactured by banker idiocy), this is a serious mess that will cost billions and could push us back into an even deeper recession due to lower house prices.
What politicians do you think this benefits? This certainly does not benefit Obama (who only looks out for his two constituencies - union members and banking executives), his reaction makes him look like an even worse bank whore than normal.
Yes - in fact, one of the banks foreclosed on a person who didn't even have a mortgage. This is not a manufactured controversy (at least not for political reasons, this was manufactured by banker idiocy), this is a serious mess that will cost billions and could push us back into an even deeper recession due to lower house prices.
What politicians do you think this benefits? This certainly does not benefit Obama (who only looks out for his two constituencies - union members and banking executives), his reaction makes him look like an even worse bank whore than normal.
Is that the only one you got? Pretty low error rate.
Is that the only one you got? Pretty low error rate.
Vote Not Republican!
Are you blind? Deaf? Willfully ignorant? There are over 3000 cases before the courts with fraudulent paperwork already verified as fraudulent in the discovery process. The single most egregious was the foreclosure on a house with no mortgage on it. A foreclosure which only went forward with fraudulent affidavits documents testifying that missing documents actually existed once upon a time.
The error rate in Florida seems to be more like 85% according to a story this morning. 3000 cases, all with questions, 175 through discovery so far and 150 of those all robo-signed by a "BoA VP" who testified the only thing he verified was the spelling of his name before signing that he had personal knowledge of the sales and documents. And every one of those was before he was ever hired.
It's just as bad in California, only a judge isn't necessary, it's all administrative. The only folks that aren't getting completely screwed are the ones with enough $$ to sue, and almost all of them are winning.
I sat next to a gentleman on a flight a few weeks ago who received a foreclosure notice on his house, the reason was he hadn't made any payments in three months. He said they were correct - he hadn't made any payments recently, because he paid off the mortgage several months before.
He said he forwarded the payoff letter to them and hadn't heard anything since, but wondered what would have happened if he didn't keep the paperwork.
This was before all the foreclosure stories now coming forward, so he didn't think much of it and neither did I. The house was in Florida though.
Are you blind? Deaf? Willfully ignorant? There are over 3000 cases before the courts with fraudulent paperwork already verified as fraudulent in the discovery process. The single most egregious was the foreclosure on a house with no mortgage on it. A foreclosure which only went forward with fraudulent affidavits documents testifying that missing documents actually existed once upon a time.
The error rate in Florida seems to be more like 85% according to a story this morning. 3000 cases, all with questions, 175 through discovery so far and 150 of those all robo-signed by a "BoA VP" who testified the only thing he verified was the spelling of his name before signing that he had personal knowledge of the sales and documents. And every one of those was before he was ever hired.
It's just as bad in California, only a judge isn't necessary, it's all administrative. The only folks that aren't getting completely screwed are the ones with enough $$ to sue, and almost all of them are winning.
Slow down there Hiro. Are these technical violations or foreclosures that would have gone forward if all the "i" dotted and "t" crossed. Florida? Speculation, second "home" ground zero? Cry me a fucking river!
Slow down there Hiro. Are these technical violations or foreclosures that would have gone forward if all the "i" dotted and "t" crossed. Florida? Speculation, second "home" ground zero? Cry me a fucking river!
Foreclosures that have been actually halted in court for lack of proper documentation. Not i's and t's but outright no documents, so affidavits get made up that "once upon a document existed and it must have said ________" . The lawyers are showing the "must have said ________" is often pure fantasy.
I'm not crying any river, I'm pointing fingers at the industry that's screwing over the entire economy and foreclosing on almost 25% of the homes sold in my state over the past 5 years. They take no significant loss, but their errors continue to cost me, a paying mortgagor who has done nothing wrong, a veritable shitload.
Comments
http://www.youtube.com/watch?v=yXrkubSA2SA
Can someone explain what the heck is happening?
Need a job? No skills or experience? No problem. Mortgage default experts are in demand!
NEW YORK (AP) -- In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.
"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them -- earning them the name "robo-signers."
In essence:
1. Write off bad loans as quickly as possible. Details don't matter. The mortgage market equivalent of "kill 'em all, let God sort 'em out"
2. Wait for a market recovery (whistling past the graveyard)
3. Dump the assets as quickly as possible.
It doesn't bode well for a market recovery. Realty Trac estimates banks are basically sitting on 600,000 foreclosed properties - they're not bothering to sell them since they think they'll get more if they wait a bit. However, when they're eventually dumped it will have a further depressing effect on the market.
It's almost a tautology - the housing market will recover once it's found its bottom. Many forces are in effect to prevent the market from hitting bottom.
Problems feared if foreclosures halted in US
Robo-signers: Mortgage experience not necessary
http://www.mortgagenewsdaily.com/101...realtytrac.asp
http://www.washingtontimes.com/news/...ember-quarter/
So, as a result, it is not exactly clear who owns the houses, or if mortgage collectors can foreclose on houses where they don't hold the title (the note becomes unsecured, in other words, once it was carelessly transferred a few times then cut up into MBS bundles).
Then on top of that, the ex-McDonalds workers hired to process the massive number of mortgage defaults forged all kinds of documents once they realized that they could not legally foreclose on the homes.
I thought the robo-signers referred to the people being foreclosed on but it's actually the employees of the banks doing the robo-signing.
But also the issue is that the banks were lending to all kinds of people that weren't supposed to be borrowing so the banks had little incentive to get the paperwork right in the first place, let alone when foreclosing.
But also the issue is that the banks were lending to all kinds of people that weren't supposed to be borrowing so the banks had little incentive to get the paperwork right in the first place, let alone when foreclosing.
Spot on!
People tend to buy homes, or cars for that matter, not based on price, but what they can afford to pay each month. I always thought that was stupid, but now we're all paying the price of stupidity.
- FHA loans, government forced the banks to loan to poor people. However - in 2008 FHA loans were only 2% of the total mortgage pool (down from 10% a decade earlier). This is the part used as a libertarian argument, but the libertarians are wrong because FHA loans were an insignificant part of the problem. Defaults on FHA loans are roughly the same as defaults on non-FHA subprime loans, but most subprime loans were not FHA.
- deregulation of mortgage backed securities: Bank makes fraudulent loan and sells it taking none of the risk - this was the vast bulk of the problem mortgages.
IMHO, if the answer to this problem is deregulation, we can kiss our financial system goodbye and just hide in the mountains with gold and a vegetable farm. Deregulation caused the mess, and it scares the heck out of me that people are suggesting more deregulation as the fix.
And there were two things pushing this to happen.
- FHA loans, government forced the banks to loan to poor people. However - in 2008 FHA loans were only 2% of the total mortgage pool (down from 10% a decade earlier). This is the part used as a libertarian argument, but the libertarians are wrong because FHA loans were an insignificant part of the problem. Defaults on FHA loans are roughly the same as defaults on non-FHA subprime loans, but most subprime loans were not FHA.
- deregulation of mortgage backed securities: Bank makes fraudulent loan and sells it taking none of the risk - this was the vast bulk of the problem mortgages.
IMHO, if the answer to this problem is deregulation, we can kiss our financial system goodbye and just hide in the mountains with gold and a vegetable farm. Deregulation caused the mess, and it scares the heck out of me that people are suggesting more deregulation as the fix.
On the FHA issue you are only correct to a narrow point. Directly FHA is a tiny portion of the overall market, but indirectly it runs almost the entire market. Why? The FHA guidelines are looked at as the gold standard for lender liability avoidance, i.e. if your loan met FHA guidelines even if it wasn't an FHA loan the lending institution would not be liable for any government related sanctions due to overly-risky lending. Specifically because the government standard was treated as essentially a risk-free stamp.
We all know how that worked out. Anti-redlining legislation and legislation creating mandatory low income loan programs forced the FHA guidelines to where they were irresponsible, but legally required to be. That made the default-risk assessments utterly worthless. If you could sign documents you could pretty much get a home loan in any zip code that had government identified low income or disadvantaged buyers, and the bank would get congratulated for it. The VAST majority of the loans weren't fraudulent, they were totally underwritten in accordance with FHA guidelines. Guidelines that were horribly broken by the way the House Financial Services Committee wrote the laws the Congress passed.
Once that got into full swing the banks had to unload the loans from their books so they could make more loans. Again our favorite sons on the House Financial Services Committee set about language that made whacky things legal, refusing to allow full regulation of derivatives.
It's not de-regulation that's the problem, it's misguided regulation regulating the wrong things the wrong way. Remove the initial congressional push that forced FHA to create impotent standards and none of this could have ever happened.
And if we deregulate the banks and eliminate the FHA, they will start making worthless loans and selling them again, as long as they can find a buyer that believes Moody's lies about AAA. Deregulation was the whole problem - there is no aspect of this crisis that was not caused by deregulation (on mortgages, bond ratings, investment bank leverage ratios, CDS reserve levels, etc).
So the banks loaned a bunch of money to unqualified buyers because they met FHA standards? Sorry, that does not fly - if the banks were not allowed to sell their worthless mortgages, they would not make these loans no matter what the FHA said about it.
And if we deregulate the banks and eliminate the FHA, they will start making worthless loans and selling them again, as long as they can find a buyer that believes Moody's lies about AAA. Deregulation was the whole problem - there is no aspect of this crisis that was not caused by deregulation (on mortgages, bond ratings, investment bank leverage ratios, CDS reserve levels, etc).
You cannot have deregulation if something was never regulated in the first place. And the fact that you don't like the standard for "safe lending" being FHA standards is irrelevant. It flies because that is the standard. Period. Even if the banks held the mortgages and couldn't sell them, it would still be the standard. Mortgages are always underwritten to a standard, and those that meet the FHA standard are considered low risk. Then, contrary to what you seem to think, single bank reserve requirements aren't designed to handle a 50% loss on 20% of the held investments. Banks would still fold because of reserve deficiency triggers, and the whole problem would still exist.
When you ignore root cause you can propose whatever change you want, but it won't affect the end result over the long run. And the root cause was government forced regulation in the name of "opportunity" making mortgages available to those who had no business taking them. Eliminate that and no banks can be exposed to failure thresholds.
Your misplaced solution doesn't change that at all, and it eliminates the ability to efficiently generate well qualified mortgages, and that only artificially depresses housing due to over-regulation of the wrong thing.
We didn't have these types of problems for decades after the great depression, because we had severe limits on what banks could do. We only started having banking crisises every 10 years or so once Regan started the deregulation train going in the 80s.
Just a manufactured controversy right before the election to stir some populist nonsense and increase voter turn out for democrats. Has a single foreclosure gone forward on someone that was up to date on their payments?
Yes - in fact, one of the banks foreclosed on a person who didn't even have a mortgage. This is not a manufactured controversy (at least not for political reasons, this was manufactured by banker idiocy), this is a serious mess that will cost billions and could push us back into an even deeper recession due to lower house prices.
What politicians do you think this benefits? This certainly does not benefit Obama (who only looks out for his two constituencies - union members and banking executives), his reaction makes him look like an even worse bank whore than normal.
Yes - in fact, one of the banks foreclosed on a person who didn't even have a mortgage. This is not a manufactured controversy (at least not for political reasons, this was manufactured by banker idiocy), this is a serious mess that will cost billions and could push us back into an even deeper recession due to lower house prices.
What politicians do you think this benefits? This certainly does not benefit Obama (who only looks out for his two constituencies - union members and banking executives), his reaction makes him look like an even worse bank whore than normal.
Is that the only one you got? Pretty low error rate.
Vote Not Republican!
Is that the only one you got? Pretty low error rate.
Vote Not Republican!
Are you blind? Deaf? Willfully ignorant? There are over 3000 cases before the courts with fraudulent paperwork already verified as fraudulent in the discovery process. The single most egregious was the foreclosure on a house with no mortgage on it. A foreclosure which only went forward with fraudulent affidavits documents testifying that missing documents actually existed once upon a time.
The error rate in Florida seems to be more like 85% according to a story this morning. 3000 cases, all with questions, 175 through discovery so far and 150 of those all robo-signed by a "BoA VP" who testified the only thing he verified was the spelling of his name before signing that he had personal knowledge of the sales and documents. And every one of those was before he was ever hired.
It's just as bad in California, only a judge isn't necessary, it's all administrative. The only folks that aren't getting completely screwed are the ones with enough $$ to sue, and almost all of them are winning.
He said he forwarded the payoff letter to them and hadn't heard anything since, but wondered what would have happened if he didn't keep the paperwork.
This was before all the foreclosure stories now coming forward, so he didn't think much of it and neither did I. The house was in Florida though.
Are you blind? Deaf? Willfully ignorant? There are over 3000 cases before the courts with fraudulent paperwork already verified as fraudulent in the discovery process. The single most egregious was the foreclosure on a house with no mortgage on it. A foreclosure which only went forward with fraudulent affidavits documents testifying that missing documents actually existed once upon a time.
The error rate in Florida seems to be more like 85% according to a story this morning. 3000 cases, all with questions, 175 through discovery so far and 150 of those all robo-signed by a "BoA VP" who testified the only thing he verified was the spelling of his name before signing that he had personal knowledge of the sales and documents. And every one of those was before he was ever hired.
It's just as bad in California, only a judge isn't necessary, it's all administrative. The only folks that aren't getting completely screwed are the ones with enough $$ to sue, and almost all of them are winning.
Slow down there Hiro. Are these technical violations or foreclosures that would have gone forward if all the "i" dotted and "t" crossed. Florida? Speculation, second "home" ground zero? Cry me a fucking river!
Slow down there Hiro. Are these technical violations or foreclosures that would have gone forward if all the "i" dotted and "t" crossed. Florida? Speculation, second "home" ground zero? Cry me a fucking river!
Foreclosures that have been actually halted in court for lack of proper documentation. Not i's and t's but outright no documents, so affidavits get made up that "once upon a document existed and it must have said ________" . The lawyers are showing the "must have said ________" is often pure fantasy.
I'm not crying any river, I'm pointing fingers at the industry that's screwing over the entire economy and foreclosing on almost 25% of the homes sold in my state over the past 5 years. They take no significant loss, but their errors continue to cost me, a paying mortgagor who has done nothing wrong, a veritable shitload.
Help Us Name the Foreclosure Crisis!
This is a serious issue, which could take down the banks if it goes on long enough. Hopefully Obama does not bail out the thieves a second time.