Gretchen Morgensen calls the beast by its name: predatory loan servicing

Borrowers Face Dubious Charges in Foreclosures - New York Times --This is what I've been waiting for. Justice is now about to be served. The plundering of the equity of the American neighborhood can now wind down.

Finally, here is the description of the crux of the foreclosure problem: predatory loan servicing. Gretchen Morgensen delivers just in time. The pacing and timing on this couldn't be better. Everything is coming into alignment. The problem is near solution. The true causes are beginning to be revealed.

The question is now, who will be the one who begins, and presides over, the Spitzerization of the lending/foreclosing industries, and the attorneys who serve them?

I have lots of other questions:

1. Could this be the reason why the majority of foreclosures happened?
2. Could it be the reason that so many could not escape the endless loop, even though they tried?
3. Are these fees able to take the same position as the primary mortgage, and do they take priority over other, junior liens that were already in place at the time the servicer, the lender, and the attorneys who run the mills initiated foreclosure proceedings?
4. What are the rules for handling the money?
5. What are the fiduciary responsibilities?
6. How can we get our money back?
7. How can we begin to quantify the damages, as well?
8. How can we recover damages?
9. Who gets paid back first?
10. How can we prevent this happening again, and who was asleep at the switch?

If you thought asbestos was big for the plaintiffs' bar, just stay tuned on this one.

Here are a few excerpts from Gretchen's article, but read the whole thing. This is huge. Seminal. Long overdue. Invigorating.

. . . Because there is little oversight of foreclosure practices and the fees that are charged, bankruptcy specialists fear that some consumers may be losing their homes unnecessarily or that mortgage servicers, who collect loan payments, are profiting from foreclosures. . . .

. . . On Oct. 9, the Chapter 13 trustee in Pittsburgh asked the court to sanction Countrywide, the nation’s largest loan servicer, saying that the company had lost or destroyed more than $500,000 in checks paid by homeowners in foreclosure from December 2005 to April 2007. The trustee, Ronda J. Winnecour, said in court filings that she was concerned that even as Countrywide misplaced or destroyed the checks, it levied charges on the borrowers, including late fees and legal costs. . . .

there are givers, and takers

This morning, I am reading Stephen Post's new book and have come across the concept of "generativity" and how it promotes health and prosperity. Here's a section about David Sloan Wilson that I find especially a propos with regard to our local economy and the dialogue we've been having these past few years about casinos, the medical mart, and development in general. The following comes from pages 59 and 60:

...In particular, I've turned to the evolutionist (and my friend) David Sloan Wilson, author of Darwin's Cathedral. David is the brilliant thinker who resurrected Charles Darwin's idea of group selection to explain why we give and why we enjoy giving. He has pointed out that groups whose members are giving actually survive and flourish. Imagine a world, says David, that ranges from the most pristine giving to the most wanton selfishness. Winners survive and reproduce and truly "inherit" the earth, while losers pass out of existence. So who are the winners and losers? You'd think givers would lose in such a world, because they would constantly be taken advantage of. But givers thrive--as long as they interact with other givers. The band together in generous, caring groups and thrive. Over time, David suggests, evolution has slowly selected giving as a profoundly healthy trait in our very social species.

"the neighborhood's the victim"

Mason prosecutes mortgage-fraud schemes in Solon worth $2.6 million - cleveland.com -- Bill Mason strikes a chord that should resonate with all of us, and this idea may form the basis for communities to recover from the lenders, the investment bankers, the brokers, the servicers, the hedge funds, and all others who have made transactional, short-term profits churning our capital and using our legal system against us, as it suits them.

Mason praised Solon police for paying special attention to mortgage fraud, a crime that many police departments are just beginning to understand.

Countywide, the prosecutor's office has so far this year filed 12 cases involving 60 properties, $8.4 million in loans and more than 130 defendants. Mason, who has an assistant prosecutor and three investigators focusing on mortgage fraud and related offenses, promised to aid any cities that bring cases to his attention.

"We want to get the corporations and people who are doing these practices," Mason said. "The neighborhood's the victim."

these are the same people who bring you SB117

Wait a minute! Where'd my phone card time go? - cleveland.com -- Let's start putting two and two together for a change, around here. Here's a story of how AT&T cheats customers on their calling-card phone minutes, perfectly legally, using "the fine print." This is one of the ways they help transfer wealth out of our hands and into theirs, where they can then use it in a lobbying and advertising effort to get SB117 passed, ostensibly in the interests of increased competition which would benefit us, the consumers.

Basically, all we should know about AT&T is that they're not trustworthy, and on that basis, out of hand, we should have our legislators bounce SB117 right out of the legislative process. Make no mistake, these two issues are related; they speak to the character of a corporation that has a history of exploitation of the public and quibbling over legalisms.

Get ready to defend yourselves, if your legislators down in Columbus don't. Here's part of the PD article; the bold emphasis is mine:

AT&T sells a card good for 500 minutes of long-distance calling. But if you use it to call from Mayfield Heights to Cincinnati, your minutes will be used up three times faster than you'd expect.

The reason's in the very fine print on the back of the card.

"Minute value applies to state-to-state calls only. . . . For calls that begin and end in the same state, minutes are deducted at these rates . . ." What follows is a long list that says in-state calls are charged at the regular 60-second minute in a handful of places, including the U.S. Virgin Islands, but it's 3-for-1 in most states, including Ohio; 5-for-1 in many others, including Pennsylvania; and a blazing 8-for-1 in Missouri, New Mexico and North and South Dakota.

This time manipulation is beyond government regulation. State agencies have no jurisdiction over long-distance carriers. And the Federal Communications Commission doesn't regulate long-distance rates. AT&T says it's the FCC's fault. In June 2006, an agency ruling required AT&T to pay state access fees for in-state calls. It decided to pass those fees along by speeding up the clock.

A spokesman for the Ohio Consumers' Counsel said AT&T is the only company it knows is compressing time. But there are other kinds of hidden fees, and the Counsel's office offers fact sheets; call 1-877-742-5622 or check online at www.pickocc.org.

real-estate blinders

As Condos Rise in South Florida, Nervous Investors Try to Flee - New York Times -- There's a parallel here to Cleveland -- in both places, they keep building new, regardless of what the markets are telling them.

In Cleveland, they add the extra incentive of tax abatement. City Council recently voted 20 to 1 in favor of continuation of tax abatement, even though since 1997, the tax-abated properties have been directly offset by the number of unsold, vacant, abandoned, and foreclosed existing properties--the number is in the 10,000 to 12,000 range, and nobody has yet done a study that mentions this fact. It seems that the big picture is what we should focus on first but, hey, around here we ignore the numbers and focus on the hype, the feel-good proposition.

Our Ward 15 councilman Brian Cummins was the lone holdout, and we're proud of him for speaking out against an unfair imposition on long-time residents. But, to put him on notice, some sneaky little scuttling bureaucratic creep allowed a typically Cleveland+ "oops!" to happen, and a house Brian had lined up for renovation on Riverside Avenue was demolished, in a snafu, on a Saturday.

Anyway, here's the after-action report on the insanity in South Florida:

“I get two or three of these calls a day,” said James Ryan, a lawyer in Boca Raton who said he had 40 clients looking to get out of condo contracts. One, Mr. Ryan said, abandoned a $340,000 deposit rather than close on a $1.6 million unit that lost its appeal as the market faltered. The numbers suggest that it will only get worse. In Miami-Dade County alone, 8,000 new condo units will be completed this year and nearly 12,000 more in 2008. But demand has dropped markedly, and people who thought they could “flip” condos — buying, then selling for a steep profit before construction is done — are parting with that fantasy. After years of stunning price increases — 25 percent in the West Palm Beach-Boca Raton area, for example, from March 2005 to March 2006 — condo prices have started dropping.