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Posts Tagged Foreclosuregate

Bank of America and ForeclosureGate: They don’t care because they don’t have to

Jun 15

Posted by Michael Collins in Big Money | Comments off

Michael Collins

At the moment, things look bad for Bank of America but this too shall pass.

Yves Smith wrote a nice summary of the latest on ForeclosureGate (Naked Capitalism, June 13).   This includes just released information concerning HUD assistant regional inspector general William Nixon.  Supposedly, he is after BofA for “significantly hindering” an investigation into wrongfully filed claims on failed mortgages (about $6 billion worth).

Smith reminds us that she saw the BofA purchase of Countrywide as a real loser.  Her reference to a prescient column by Gretchen Morgenson from August 27, 2007 contains this gem:

“Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrower … One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.”

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Bankruptcy Hell – The Sequel to ForeclosureGate

May 2

Posted by Michael Collins in Big Money | 2 Comments

Michael Collins

You’re headed for bankruptcy court tomorrow.  It’s been a long and difficult road.  You and your husband both worked.  You made decent money.  Then your husband became ill.  There was no sick leave because he worked for himself.  His disability insurance had a six-month delay and only covered half of the lost income.  That was all you could afford.  (Image Wikimedia Commons)

His condition was critical and required medication three times a day at a monthly cost of $2500.  Your company plan covered your husband but it didn’t cover the medication because the insurance company termed it experimental.  It was the sole option for the crippling illness according to the three specialists consulted.

Your husband contributed 40% of the family income.  The loss was a big hit but you persevered.  You couldn’t sell the house, even if you wanted to.  It was $150,000 upside down.  There was no federal or bank program to relieve that burden.  After four months of cashing in a modest 401(k), it became obvious that you couldn’t make it.  You needed relief and time for your husband to get well.

You consulted your accountant.  On his advice, you decided to file for bankruptcy.
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Beyond ForeclosureGate – It Gets Uglier

Apr 21

Posted by Michael Collins in Big Money, Corruption, Financial Crisis | 2 Comments

Michael Collins

The ForeclosureGate scandal poses a threat to Wall Street, the big banks, and the political establishment.  If the public ever gets a complete picture of the personal, financial, and legal assault on citizens at their most vulnerable, the outrage will be endless.  (Image)

Foreclosure practices lift the veil on a broader set of interlocking efforts to exploit those hardest hit by the endless economic hard times, citizens who become financially desperate due medical conditions.  A 2007 study found that medical expenses or income losses related to medical crises among bankruptcy filers or family members triggered 62% of bankruptcies.  There is no underground conspiracy.  The facts are in plain sight.

ForeclosureGate represents the sum total illegal and unethical lending and collections activities during the real estate bubble.  It continues today.  Law professor and law school dean Christopher L. Peterson describes the contractual language for the sixty million contracts between borrowers and lenders as fictional since the boilerplate language names a universal surrogate as creditor (Mortgage Electronic Registration System), not the actual creditor.  Other aspects of ForeclosureGate harmed homeowners but the contractual problems that the lenders created on their own pose the greatest threats.

When the Massachusetts Supreme Court upheld a lower court ruling that the actual creditor must named in the mortgage agreement (a legal requirement that the banks forgot to meet in their contracts), there was consternation on Wall Street.  What would happen if a class action lawsuit challenged these flawed mortgages?  Isn’t the Massachusetts decision the latest of many attacking the legal basis of the shoddy business practices and boilerplate industry contracts?  What if homeowners started walking away from their underwater mortgages based on the legally flawed contracts? If there were a viable prospect of a class action suit against financial institutions threatening to invalidate these contracts, wouldn’t that crash the stock values of the big banks and some Wall Street firms?
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