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Republicans have spent the last three years attacking U.S Attorney General Eric Holder about issues related to national security and civil rights. Lately, it’s a screwed up gun-trafficking investigation known as “Operation Fast and Furious.” Many in the GOP are now saying he should resign.

This past week, something like 75 members of Congress co-sponsored a House resolution that said there was “no confidence” in Holder as AG, and according to the New York Times, no member of the Obama Administration has drawn more partisan criticism than Holder.

The Fast and Furious controversy involves agents for the Bureau of Alcohol, Tobacco, Firearms and Explosives, who were investigating an arms-trafficking network working for a Mexican drug cartel.  Apparently, these agents didn’t move quickly to seize the guns of some low-level suspects.  They say they were trying to build a larger case.  They misplaced a few hundred weapons and next thing you know, two guns linked to a suspect in the case were found near a Border Patrol agent that had been killed.  When Holder was asked about how this happened, he basically replied by saying, “Huh?”

Now, I don’t know whether Holder should resign over “Operation Fast and Furious,” but if he did it would be irony at it’s best, because if there are two words that don’t come to mind when I think of Eric Holder they’re “fast” and “furious.”

Insiders say that Holder has a “low-key demeanor.”  Apparently, he allows lawmakers to talk over him during hearings.  Other colleagues say he can be similarly mild in internal administration debates, which causes them to wonder if he’s capable of being tough enough for take-no-prisoners bureaucratic or political fights.  And Dick Thornburgh, who was AG under the first President George Bush, has said he’s concerned that Holder gets steamrolled by adversaries.

The New York Times recently quoted Thornburgh as saying: “I have worried from time to time about Eric’s being seemingly rolled by the administration and his political opponents.”  Add to that his background working for a firm that represents MERS and numerous other banking industry players, and everything starts to clear up.

I don’t know about you, but for me… that explains a lot.

You see, I’ve been sitting at my desk reading and writing about the financial and foreclosure crises for the last three years, and while I do understand why everyone didn’t see what was going on when our economic meltdown began, today anyone who doesn’t see this country as a giant crime scene, just doesn’t want to look.

Our current financial crisis has more than doubled the unemployment rate in this country.  It has destroyed roughly $11 trillion in consumer wealth so far, pretty much decimating the middle class, throwing more people into poverty than ever before, and increasing the number of Americans on food stamps from 11 million in 2005 to closing in on 50 million today.  And yet, not only have none of the Wall Street executives been criminally prosecuted or gone to jail, but I question whether any have even gotten a stern talking to.  Best I can tell, they all got bonuses and a Federal Reserve credit card with no limit, and close to no interest rate.

Quite a few people don’t even blame the bankers for the crisis… in their eyes, believe it or not, the bankers were somehow victims.  The poor bankers, sniff, sniff.  I miss Lehman Bros. and Bear Stearns, don’t you?  Perfectly good investment banks… and now their gone.  I’m overcome with… oh, I don’t know… what’s the word I’m looking for… oh yeah, I’ve got it… well, ambivalence fits.  Or, I suppose I could use… JOY!

In order to believe that the bankers didn’t cause this crisis, I’d have to believe that they made hundreds of billions of dollars… BY ACCIDENT?  Like, Lloyd Blankfein at Goldman Sachs and Jamie Dimon of JPMorgan Chase called each other when the meltdown happened and said:

Blankfein: ”Jamie… it’s Lloyd… you’re not going to believe this, but we just found out that we made a hundred billion last year that we had no idea was coming in.  It’s like Christmas in July over here!”

Dimon: ”You’re kidding me… Lloyd we just had the same thing happen over here!  I’m taking a bath in Crystal champagne over here.”
Blankfein: ”How the heck did this happen?  When they showed me the numbers, I was stunned.  And not only that, but going forward, Bernanke and Paulson just offered me as much money as I wanted… I mean, we’re talking trillions.”

Dimon: ”Lloyd, I have no idea.  One minute we were being taken advantage of left and right by borrowers who could barely speak English, and the next minute we’re making more than a hundred billion in cash.  It’s sweet, I’ll tell you that.  It’s like I always say, never look a gift-house in the mouth.”

It’s weird too, because after the Savings & Loan crisis of the early 1990s, there were 800+ financial executives that went to jail.  This crisis is global.  If the S&L crisis was a backyard swimming pool, then the current crisis is the Pacific Ocean… but it’s apparently no one’s fault?  The triple A-rated bonds weren’t even close to triple A, and investors including Fannie Mae are suing all over the place, but I suppose the whole thing was just an accident?  Ooopsie!

Goldman Sachs settled their Abacus suit for something like $550 million… of course, without admitting any guilt for doing anything wrong, but is it even possible that anyone would ever pay out more than half a billion dollars after doing nothing wrong?

Basically, the fraudclosure crisis has created millions of crime scenes in this country.  Literally, millions of crime scenes from coast to coast.  Jeff Thigpen, who is the Register of Deeds in Guilford County, North Carolina, has recently gone through the recorded documents in his office and so far found roughly 5,000 filed documents that are fraudulent or forgeries.  His counterpart in Massachusetts, John O’Brian, has had a similar outcome from an audit of his office.  If you or I did that a couple of times, we’d be in jail.  If we did it thousands of times, we’d never get out.

Bankers, however, get to call the practice, “robo-signing,” which sounds nothing like fraud or forgery.  I guarantee you that if you went to prison for that, and someone asked you why you were there, there’s no way you’re going to answer: “Robo-signing.”  No way… you’ll get your butt kicked for sure.  You’re going to say: “Me?  Oh, I’m here on fraud and forgery charges.”

Now, I have to believe that Eric Holder is reading the lawsuits that have been filed by various attorneys general, and if you haven’t yet read one, then you should.  I realize that they’re just allegations at this point, but they read like something out of a John Grisham novel.  Is Holder just thinking that maybe the whole thing will just blow over and go away?  And we’re only at the beginning of this crisis… yes, the beginning.  Sure as shootin’, we’re still going to be talking about the crimes bankers committed that caused our country’s downfall a decade from now.

Just consider the residential real estate market five years from now.  For prices to rise, demand would have to rise… right?  You need demand to make prices rise.  So, forget about the fact that there’s no securitization market, so the only lender is the federal government… from where would the demand come?

Roughly half the mortgages today are underwater, so we can assume those people aren’t buyers because if you can’t sell, you can’t buy.  Then there’s quite a few who won’t be able to come up with 20 percent down or satisfy the 700+ credit score requirement.  College grads coming out of school with tens of thousands in student loans will delay the formation of families and certainly reduce the number of first time buyers.  Aging baby boomers will just naturally move less.  And then there are those that will find it hard to buy as prices are still falling.

Now, I suppose there will be some investors buying, and some population growth and immigrant buyers, but no matter how you slice it, the size of the future pool of buyers is going to be a whole heck of a lot smaller than in the past, and that means… prices in the aggregate cannot rise.  Unless, I suppose, we’re expecting aliens to land here carrying suitcases filled with dollars and in search of residential real estate.  Or, maybe we’ll start advertising in other countries that if you’re a doctor or lawyer and you move here, we’ll send your kids to college for free… that might help, although I don’t think it’ll solve the problem en total.

So, if you haven’t realized it yet, this crisis is going to be dinner conversation for a long, long time.  The biggest difference between this one and the Great Depression is that during the 1930s people robbed banks and this time around, banks rob people.  Two additional differences come to mind… this one isn’t being filmed in black & white, and instead of soup lines, we’ve got food stamps.

It’s also interesting that in every country that has meltdown thus far, they fired their bank CEOs, replacing them with… oh, I don’t know… more honest people, one would hope.  But, here in the good ole’ USA, we haven’t changed a thing.  So, what’s up with Attorney General Holder?  Is he simply flaccid?  Is he afraid to file charges against anyone worth more than ten million?  Is he corrupt?  Is his boyfriend a banking industry lobbyist?

Come on… what’s the deal here?  We’re all at least starting to see what’s happened, aren’t we?  I mean, I know we can’t expect our regulatory agencies to do anything… after all, the Office of the Comptroller of the Currency, which regulates the national banks, refers to those it regulates as “clients.”  The Office of Thrift Supervision hasn’t referred a single case of fraud to the Justice Department since… well, since forever.  And the SEC… well, fuggetaboutit.  Bernie Madoff stole $60 billion and then turned himself in, remember?  We don’t even have regulators

So, since it all comes to down to our intrepid Attorney General, Eric Holder, we’re doing nothing about the crimes of the century.  The GOP refers to him as Mr. Fast and Furious.  Me?  I just call him this month’s giant rear end.

Mandelman out.

 YOU DID GOOD! 

Okay, DOERS… you’ve DONE IT again… but it’s not over yet, so if you’re one of the DOERS that hasn’t DONE anything yet, WE NEED YOU NOW!

I don’t usually do this, but with Holly’s permission, I’ve posted the three emails I received from her today.  I get a lot of very flattering emails from homeowners across the country, and I appreciate them all very much… but I don’t post them because it just seems weird and icky to do so… like, “look at how great I am.”  (Yuck.)

But, I’m posting Holly’s emails today for three reasons:

1. Because it’s not just about me… it’s about my DOERS too, and you DOERS deserve to feel like I do when I get an email like the ones you’ll read below.  I couldn’t DO it, without YOU.
2. Because not enough people have sent me an email to say they are a DOER… we NEED MORE… many more. So, I’m hoping by reading what Holly said and seeing the results DOERS get, more of my readers will become DOERS by sending an email to: mandelman@mac.com.  And DOERS… I need you to help recruit DOERS too!)
3. Because not enough DOERS have sent an email to John Stumpf at Wells Fargo as a result of the article I posted on Friday morning, and it’s a little disappointing.  I’m going to try to send everyone an email later to ask them to be the DOER they promised to be, but I assume the reason they haven’t sent their email is because they haven’t read my article yet.

So, if you’re already a DOER, but haven’t subscribed to Mandelman Matters please DO it now: SUBSCRIBE.  That way, you’ll get an email with each new article and if it’s a DOER ALERT, you’ll receive it that day.

I need DOERS to DO BOTH… SUBSCRIBE and send me your email.  The reason is that the SUBSCRIBE tab is through Feedburner, it sends an automatic email with each new article.  The emails you send me I’m putting in a private database of DOERS, so that when I need to tell DOERS about something but I don’t want everyone who reads Mandelman Matters to know… I’ll email everyone from that database.  Get it?  Cool.

So THANK YOU to all of my DOERS that did it… I just LOVE  the way you DO what you DO!  You DO it so well… BUT IT’S NOT OVER YET… It’s close though… you’ll see.

HERE’S THE 1ST EMAIL HOLLY SENT ME,

I READ IT EARLY THIS MORNING…

Mr. Andelman,

Thank you again for the great article. I cried through the entire thing. That someone would be so kind and do something for myself and my children to this magnitude is just heartwarming to me.

You know I didn’t mention this to you but it was the first time in 20 years that I did not go home to Erie with my family for Christmas. My children were really upset about it but with the eviction and house being in foreclosure I couldn’t take them there. My entire family was so disappointed because for my mom and dad their daughter and grandchildren weren’t there and for my brother and sister their sister and nieces and nephews were not there either.

Instead, I spent Christmas trying to pack everything up and do as much research as I could to stop the foreclosure from going through. I feel like I let my entire family down. Now though it was worth it because I got to you. I found someone who cared enough to stay up all night writing and trying to help me. It was a Christmas present I never expected. An early birthday gift (tomorrow is my birthday). I found hope.

Tonight an executive from Wells Fargo called me with her boss and Paula in her office. I wrote John Stumpf and the others today after reading your article. I let them have it. I told them I was going to fight til the end.

She said John Stumpf read my e mail and she wanted to talk to me about it. So, by the end of the conversation, she is calling the attorneys office and telling them that they are no longer doing an eviction or an inspection of the property.

They are going to let us live there until they can look into modifying our loan or something else to help make it affordable. She is putting this in writing and over nighting it to me. 

She also said that if they can not find a program that she would be the one contacting me and letting me know that we will be evicted. She said they want to work to see if they can work something out but she of course could not guarantee anything. She kept telling me how sorry she was that we had an eviction hanging over our head at Christmas time.

I also went down to the court house and got some documents and had them notarized. One is confusing to me as it was dated March 10, 2011 that the assignment transferred from Flick mortgage to Wells Fargo on that day. That isn’t true at all. Wells Fargo said it transferred title in 2007.

I am reading your blog and reading comments from your readers. The girl Beth something that called me to night said she is now the only point of contact for me and that she has escalated everything.

I will keep you posted on what happens,

Holly Niemic

AND HERE’S THE 2ND EMAIL FROM HOLLY TODAY…

Dear Mr. Andelman,

So, because of your article and your DOER’S my children may be able to stay in the only home they have known.

Another thing I didn’t tell  you is my daughter came home from PA where she was in college because she could not concentrate on school when all this was going on. She called me every day crying where are we going to live. Where are Kipper, miller and Sasha going to live (our dogs)?

I told her I don’t know. I’m going to fight to keep our home but other then that I don’t know. I will work ten jobs if I have to to put a roof over your head but she just wanted her home, her room and her life back. she wanted something stable as her parents are separated. She is now on cloud nine and filled with the same hope that I have thanks to you.

I honestly believe that we have won. I know it is all because of you! Thank you so much from the bottom of my heart. I will continue to do everything I need to do and then when my home is our home again without any banks coming after me I will help someone else that needs help. I now know where to go at the court house, I am learning so much that I will pass the knowledge on and I will point them to your blog and try to help them as much as I can.

I will also continue to be one of your DOERS. I will follow you forever.

Thank you so much for helping my children. You can not imagine how in awe I am at you and how much I appreciate everything.

I will keep you posted on what happens,

Holly Niemic

AND HERE’S HER 3RD EMAIL TODAY…

Mr. Andelman,

Yes, You can print anything I ever send you. If it helps just one person then it is so worth it to me.

I just recieved a letter by UPS from Beth Dorsett, Vice President, Office of Executive Complaints. It says that the subject property does not currently have a scheduled eviction date and that she will work with me in order to determine which workout options are available for the loan. 

She will also contact the attorney’s office to advise them of our intent to review the loan for retention options. ( I have been asking them to do this since before the Sheriff sale, but each department said they couldn’t do it and of course never did it).

She also gave me her personal cell phone number last night and her phone number at work which is (800) 853-8516  extension 40586.

I got that letter because of you! You are winning this not just for my children, myself but for everyone facing foreclosure. I have even had more people contact me who are offering advise and telling me not to give up hope.

Now I will never give up hope. You made me believe that there are truly good people out there who think of others and really not only thinks of them but does for them without even knowing them. That is so amazing to me.

All your DOERS, they have been so supportive. Like I said I am one of your DOERS for life now. I will have always lived my life helping others and now others are helping me. it is so touching I’m crying again.

Thank you once again and I will keep you posted on what Wells Fargo is doing.

I don’t know you but God knows I love you! 

Holly Niemic

###

SO, WHAT ARE YOU WAITING FOR?  IF YOU HAVEN’T DONE IT, DO IT NOW! AND BECOME A REGISTERED DOER TODAY BY SENDING AN EMAIL TO MANDELMAN@MAC.COM.

AND SUBSCRIBE TO MANDELMAN MATTERS HERE

Mandelman out.

“Integrity is not a commodity. It’s the most rare and precious of personal attributes. It is the core of a person’s — and a company’s — reputation.”

John Stumpf, Chairman and CEO, Wells Fargo Bank

Doug and Holly built their home in Raleigh, North Carolina back in 1994.  It’s the only home their four children… ages 12, 13, 15 and 18… have ever known.  For something like 18 years, they never missed a mortgage payment.  I spoke with Holly for a couple hours last night… she’s simply as nice a person as I can imagine exists.

In 2009, the recession hit Doug’s business pretty hard… but no surprise there right?  He certainly was far from alone.  And I would think that Wells Fargo should at least somewhat understand that situation.  After all, the federal government’s taxpayer funded bailout that year sent $38.6 billion Wells Fargo’s way, isn’t that right Mr. Stumpf?  No matter.

Holly wrote to me yesterday… her message began by saying:

“Time is of the essence. I am writing to you today for your help.”

Here’s how her message ended:

“We really need to be out of our house today but Freddie mac put it out in the public that we have until January 3, 2011.  I asked Wells Fargo and their attorney to put that in writing but they wouldn’t. They just agreed to it.

However, I am afraid that they will send the sheriff out today to lock us out of our home. We have not moved yet as we are still under review.  Can you help us by pointing us in the right direction?  We are so desperate.”

I’m going to tell you their story in a moment.  But, first I want to point something out to Wells Fargo CEO John Stumpf and the folks at Wells Fargo.

Holly asked you and the bank’s attorneys at Brock & Scott, if her family should expect to be evicted today or whether they had until the 3^rd of January and you agreed that it would not be until January.  You wouldn’t give her anything in writing, but that shouldn’t be necessary… you agreed.

But you see, Mr. Stumpf, as Wells Fargo’s CEO, at least one point should not be lost on you… she doesn’t TRUST you… she can’t trust you, and I don’t blame her.

She doesn’t believe your bank even when it comes to something like whether she and her four children will be evicted today or next week.  Just before New Years’ Day or right after.  She can’t trust your bank to answer a question like that and she has damn good reason… it’s because you and your bank have been proven to be entirely untrustworthy on so many occasions that she’d rather trust a convicted felon off the street than someone from Wells Fargo Bank.

And so would I, Mr. Stumpf, so would I.  And the same will go for her four children… someday.

Mr. Stumpf, you were one of the 100 highest paid CEOs in the country last year, with almost $19 million in total compensation.  That seems like a lot considering we don’t seem to be able to trust you to answer a question like the one Holly asked, does it not, sir?

Holly and her husband separated in August of 2009.  I didn’t ask why, it’s none of my business, but I could tell that they were very loving and caring parents because she explained how they’ve alternated staying in the home with the kids, 4 days on, 3 days off.  They didn’t want their marital problems to disrupt the lives of their children, so she stays at an apartment and he sleeps at his office.

Perhaps it was their financial difficulties that put too much strain on their marriage, it certainly couldn’t have helped.  Doug’s business was coming back slowly but in October of 2010, Doug couldn’t make the mortgage payment for the first time in over 16 years.  He didn’t tell his wife, I’m sure I know why… he couldn’t.  Like I would have done, he probably devoted all of his time to work so he could catch up as soon as possible.

Holly received a letter from Wells Fargo in February of 2011.  It said their home was in foreclosure.  She called the bank immediately to make payment arrangements that would bring loan up to date right away, but the bank wouldn’t talk to her.  She learned that she was not on the loan, she was just on the Deed of Trust.

She went to see Doug at his office, and the two of them called the bank on speakerphone to arrange to make up the back payments.  Holly had $12,000 in her IRA, and she owned a second home that had equity of roughly $60,000.  And wouldn’t you know it, that mortgage was with Wells Fargo too, and she had never missed a payment.

But, Wells Fargo said they couldn’t accept payments at that time, the couple would have to contact the bank’s foreclosure attorneys at the law firm of Brock & Scott.

SIDEBAR: I’m no banker, but I hear about this sort of thing happening all the time.  Why the hell can’t banks accept a payment… ever?  And don’t bother telling me there’s a rule or a law, because banks treat either like a speed bump when it suits them, that much is clear.  When a homeowner tries to make a payment, figure out how to accept it and get them back on track as quickly as possible.

Doug ended up asking Wells Fargo about a loan modification.  There were delays on Wells Fargo’s end, according to Brock & Scott, so for the purposes of our story, let’s fast forward.

On October 7, 2011, Doug received a letter from a Wells Fargo Preservation Specialist, Katerina Williams.  The letter said that all Doug had to do was have all of the required documents submitted to Wells by October 22, 2011 and he would be reviewed for a loan modification or some other program offered by the bank.

Here’s what the letter of October 7^th said:

“As your mortgage servicer we want to help you stay in your home.  If you do not qualify for a loan modification, we will work with you to explore other options available to help you keep your home.”

Doug submitted and Wells Fargo confirmed receipt of all required documents by October 19^th, three days before the deadline of October 22^nd.  (Holly has the fax receipts showing the date.)

So, the bank immediately started doing what Katerina Williams said the bank would do… they began reviewing Doug and Holly’s file for a loan modification?  No, I’m afraid they didn’t do that.

What Wells Fargo did do was sell their home at a Sheriff’s Sale on October 21, 2011… a day BEFORE THE DEADLINE FOR SUBMISSION OF THE REQUIRED DOCUMENTS.

I can only imagine the feelings of panic Holly and Doug were experiencing as they made call after call to their Wells Fargo Preservation Specialist who “wanted to help them stay in their home.”  They had been told that there would be no sale assuming everything was submitted by the 22^nd.  But, now Katerina couldn’t be reached.

I’m sure she was busy.  Perhaps friends had unexpectedly come in from out of town, or maybe she had a dentist appointment… that lasted for the next two months.  What?  It could happen.

Holly and Doug were finally able to reach the woman’s supervisor who said all she could do is submit their file for review after the sale because no one had bid on it and so it ended up going back to Freddie Mac.

So, the supervisor did exactly what she said she’d do and submitted the couple’s file for review?  No, I’m afraid not… once again.

Next thing the couple knew two letters arrived from the foreclosure attorneys at Brock & Scott.  One was an eviction letter, which said they had 10 days to get out of the home they had built in 1994 and for which they had paid without incident for 16 plus years.  The other was a cash-for-keys letter that said they could stay in their home until December 29, 2011.

They checked and were told that if they left the home it would be considered abandoned and any review of their situation would be over.  So, with no other choices apparent, they chose the cash-for-keys offer, hoping the extra time would allow them to fight the foreclosure and allow them to get an answer to their case, still supposedly under review.

The couple wrote to Wells Fargo, to Freddie Mac, and to Brock & Scott asking that the eviction date be postponed as their review was still pending. Not even one person even responded.

Out of desperation, Holly sent an email to the bank’s CEO, John Stumpf.  (Oh good… that’s you John.  Here’s your chance to help your customer stay in her home.  For almost $19 million a year, I’m thinking you can at least make sure the nonsense stops, right John?)

Holly and Doug heard from Paula Kingery, who said that Mr. Stumpf had forwarded Holly’s email and that she was now on the case.  And what a relief that must have been.  The bank’s CEO had taken action, and thank the good Lord for that.

Today is the 30^th of December… and still no response from anyone, even though Holly has called, faxed and emailed too many times to count them anymore.  The couple assumes that their originally assigned Preservation Specialist, Katerina Williams, must be dead, as they have been unable to reach her via phone, fax or email since before the date of the Sheriff’s Sale.

Here’s the situation in Holly’s own words, as I could not improve on them no matter how I might have tried…

“Paula Kingry called me last night to let me know that she has a phone call in to the lead investigator on our case to see if they can do anything to lift the eviction date. I don’t understand how they don’t know if they can do that and how they can ask us to leave our home when we are still under review. We were told that if we leave we will give up our rights to that review, but if we stay I’m scared that the Sheriff will forcibly remove my four children, and me… and any belongings in the home will be forfeited.”

That’s very nice John Stumpf… very nice indeed.  Have you ever felt like that?  Have you ever felt afraid that the Sheriff would soon be coming to forcibly evict you and your four children from somewhere?  Probably not, would be my guess.

By the way, I should have asked earlier… are you having a nice holiday, Mr. Stumpf?

I only ask because Holly’s living through her own personal hell because of your bank, Mr. Stumpf.  You foreclosed on their home illegally… and if it wasn’t technically illegal because your industry’s lobbyists have made it so, I don’t care one bit… it was WRONG.  And I am going to assume you know the difference between RIGHT and WRONG.

Your bank sold Doug and Holly’s home the day before the submission deadline for the paperwork required to apply for a loan modification.  Then your people told the couple that they were in review to see if the sale can be rescinded… and never called, nor could anyone involved be reached again.

Mr. Stumpf… I want you to know that I take absolutely no pleasure in any of this.  It is now 5:29 AM, and I’ve been up all night writing this article for Doug and Holly because I care about them.  I have a family and I could be doing other things, not the least of which is sleeping… if only Wells Fargo were able to treat its customers like anything above the way a state penitentiary treats its inmates.

You see… I’ve been writing about the financial and foreclosure crises for just over three years now… I’ve written over 600 articles on the subject.  Your bank, meanwhile, has not gotten any better at this whole loan modification thing during that time.  How is that even possible, Mr. Stumpf?  How can you not be any better at this after three years of doing it every day?

It seems, for example, that you still can’t answer the phone with any consistency.  What’s the problem?  Is it all those buttons?

Here’s what you were supposed to do in this situation, and trust me… although it may seem presumptuous, I feel safe speaking for EVERYONE in America…

As Holly has informed your people, she’s prepared to make the payments to prevent the loss of her home.  In fact, she tried to do just that on several occasions.  She has more than $10,000 in her IRA, and she owns another home on which Wells Fargo has the mortgage… it’s current, by the way… and there’s approximately $50,000 in equity.  She’ll sell it and use that money to pay for her home, if that’s what is required.

Also, she’s working, earning $4-5,000 a month on her own.  Doug’s insurance agency business is also doing better, and he’ll likely make close to $100,000 this year.  They remain separated, but he still supports the family.  Plus, they only have 10 years left on their loan.  If Wells could extend the term to a 30-year loan, there would be no problem making the payments as they always have.

I imagine that there could be some issues because she’s not on the loan, and only appears on the Deed of Trust, but they’re not divorced… and regardless, those are the sort of issues that a bank is supposed to help their customers with… what the bank is not supposed to do is screw around for months, lie, stop responding to calls, and then sell someone’s home the day before the bank told them to submit the paperwork required to apply for a loan modification.

In fact, I had a woman in Tennessee that I had to write about a couple of months ago… same problem, but Bank of America figured it out and got her mortgage modified… after I wrote about them too, of course.  (And if you’re not already familiar with me, feel free to ask Brian Moynihan about me, he’ll fill you in, I’m quite sure.)

Doug and Holly were excellent customers of your bank for over 16 years, and then they hit a rough patch.  They needed the bank’s help… some guidance to get them through difficult times.  You had a chance to earn the trust of a customer for life… (and the good news is you still do… but as Holly said in her message to me: Time is of the essence.)

Here’s an excerpt of what Mr. Stumpf wrote about his company’s Vision & Values…

“Our progress has not been perfect. We learn just as much from failure (perhaps more) as we do from success. Companies are made up of human beings who make mistakes. When we make them we admit them, learn from them, then we keep moving forward with even more understanding, guided by the same values toward the same vision.”

I like the sound of that, Mr. Stumpf.

Here’s what Holly said at the very end of our conversation:

“We went to the courthouse yesterday Dec 28, 2011 to file a TRO but they didn’t have forms there for us and we weren’t sure how to do it, but they told us we had to have a attorney file them. We are having a very difficult time finding an attorney here in Raleigh, NC on such short notice. I have called a few but they can’t help and am waiting for phone calls to be returned from others.”

You see, the thing is… I DO KNOW LAWYERS IN NORTH CAROLINA, lots of them, actually, and one in particular… a good friend… Max Gardner.  And I’m going to have to call Max later today and find out what can be done through the courts to stop you from sending the Sheriff to Holly’s to throw her children into the street.  I don’t want to, mind you… especially since you could so easily correct this.

See, and I’d like to think that what I’ve written here would be enough… but I fear it won’t be.  So, if you’ll excuse me for just a moment… I’m going to introduce you to some friends of mine…  Mandelman out.

 ~~~~

Ahem… Excuse me…Are there any DOERS in the house?

CALLING ALL DOERS!

 ~~~~

Doug & Holly Niemic

Raleigh, NC

Loan Number: 0157248618

 ~~~~

And look what I found… a whole list of Email addresses for Wells Fargo execs, but let’s start with letting Mr. John Stumpf know how littler we think of this situation his bank has created.  Let’s let him know we’re here and we’re paying attention… and that there are quite a few of us.

Chairman of the Board, President, CEO: John.G.Stumpf@wellsfargo.com

~~~~ 

John Stumpf (415) 396-7018
john.g.stumpf@wellsfargo.com
CEO: John G. Stumpf
420 Montgomery St.
San Francisco, CA 94163
1-866-878-5865

~~~

Sharon Cecil, Assistant to Both
WELLS FARGO HOME MORTGAGE
sharon.cecil@wellsfargo.com

~~~

Todd M. Boothroyd
Senior Counsel, Real Estate Division
Todd.M.Boothroyd@wellsfargo.com

~~~

**** Kovacevich (415) 396-4927
kovacedm@wellsfargo.com

~~~

John Stumpf (415) 396-7018
john.g.stumpf@wellsfargo.com
CEO: John G. Stumpf
420 Montgomery St.
San Francisco, CA 94163
1-866-878-5865

~~~

Mark Oman (515) 324-2035
mark.oman@wellsfargo.com

~~~

Cara Heiden (515) 213-4040
cara.heiden@wellsfargo.com
Executive number for members to use to escalate the mod process 1-800-853-8516.
Executive Communications
MAC X2302-02J 800 S. Jordan Creek Parkway
West Des Moines, IA 50266
515-324-3130
&
515-324-2872

~~~

Denise Erickson
Executive Mortgage Specialist, Office of the President, WF Home Mortgage
MAC X2302-019
1 Home Campus
Des Moines, IA 50328
denise.erickson@wellsfargo.com
1-515-324-2610 

~~~

Cara K. Heiden, CEO
WELLS FARGO HOME MORTGAGE
cara.k.heiden@wellsfargo.com

~~~

Mary Coffin, Vice President
WELLS FARGO HOME MORTGAGE
mary.coffin@wellsfargo.com

~~~

And a few more… just in case… 

Executive Vice President, General Counsel: James.M.Strother@wellsfargo.com

Executive Vice President, Controller: Richard.D.Levy@wellsfargo.com

Senior Executive Vice President – Wholesale Banking: David.A.Hoyt@wellsfargo.com

Senior Executive Vice President David.M.Carroll@wellsfargo.com

Senior Executive Vice President: patricia.r.callahan@wellsfargo.com

Senior Executive Vice President, CIO: kevin.a.rhein@wellsfargo.com

Senior EVP, Community Banking: Carrie.L.Tolstedt@wellsfargo.com

Senior Executive Vice President: AVID.MODJTABAI@wellsfargo.com

The Board of Directors, Wells Fargo Bank: BoardCommunications@wellsfargo.com

Originally posted in December of 2009… how tragic is that?  Read it and you’ll see why.

HO, HO, HOmeless!

The Real Story Behind the Crisis

We Still Don’t Want to Understand.

A 46 year-old single mother lies awake as night threatens to turn to morning.  She wonders how she’ll make it through even one more day.  She can’t cry… anymore.  Can’t look into the eyes of her two young children, age 7 & 9.  For a fleeting moment she wonders if her sister, 3,000 miles away, should take the kids, for a while anyway.  She pushes that thought from her mind, reaches for her prescription on the nightstand, swallows two without water, and rolls onto her side.  She’s a Registered Nurse; she knows sleep will soon come.

~~~~~

A father of three stands in the shadows made by the tree in the front yard of his home of 14 years.  It’s 2:30 AM.  He’s wearing a tee shirt and boxer shorts. The wind is audible and cold.  His eyes fixate on the flower box he built his first year as a homeowner.  His stare moves to the driveway… his driveway… and remembers pitching underhand to his youngest son.  He had thought they would live in this house forever.  He absent-mindedly scratches his chest with the barrel of the .38 Smith & Wesson Super he’s holding in his hand.  He wonders if insurance policies pay off after suicide.

~~~~~

An older couple, returning from a trip to the grocery store, pulls into their driveway.  They’ve been married for 38 years; bought the house in ‘72.  He opens the back door of the sedan and reaches in for the bags.  She admonishes him not to do so.  The doctor said not to lift anything heavy… might tear his stitches.  They walk inside together, close the door; neither speaks.  There is paperwork taped to the front door.  It says they’ll have to be moving soon.

~~~~~

A young child listens to her father talking on the phone as he makes her breakfast.  His voice doesn’t sound normal to her ear.  He sounds nervous… he’s being very polite. Like when he’s talking to the men at church.  He hangs up and even though she didn’t ask, he tells her everything is fine.  But the child doesn’t think so.  She looks at him.  Thinks he’s crying.  She wants to help.  He wipes his eyes.  He says cutting an onion made them water.

~~~~~

A mother is on the phone first thing one morning.  She reads my column on-line.  She calls to tell me that her son, 41 years old, hung himself in the basement of his home last night.  She found him yesterday morning.  He had been laid off and out of work for nine months. He tried to convince his bank to modify his mortgage since then.  Went through his savings.  Started spending hers. Her voice shakes.  “Now,” she says, “the bank will finally get what they’ve wanted all along… his house.”

~~~~~

Happy Holidays everybody…

This has been a very hard article for me to write.  It’s been hard for me this year during the holidays.  I want to be happy.  I want to make this holiday season even more wonderful than the last, for my daughter, my wife and my family.  But it’s just harder this year.  Harder to forget everything else that’s going on around me.

The foreclosure crisis that began in mid-2006 continues to destroy the wealth of American consumers and the financial strength of our nation’s banking institutions.  And, although it pains me to say it, the end is still nowhere in sight.

It now seems likely that, before the crisis is over, not just millions, but tens of millions of Americans will have lost their homes to foreclosure, and thousands of banks will have shuttered their doors for good.  The scars will be deep and we will be a nation forever changed.

In 2007, the number of foreclosures filed hit 1.3 million, a 79% increase over 2006.  In 2008, that number had risen to 2.3 million, an 81% increase over 2007.  It appears that this year we’ll have something in the neighborhood of 3.9 million foreclosure notices sent out homeowners, if not more.  And next year, absent some unexpectedly competent response from government, is all but certain to be even worse.

As of August 2008, 9.2% of all U.S. mortgages were either seriously delinquent or already in foreclosure.  Today, that number is 14.7%.  Forecasts predict a staggering 14-17 million foreclosures over the next five years, depending on their source.  And, according to Bloomberg, mortgages of $1 million plus are now defaulting at twice the national rate, so there’s no question that the water level is rising.

Meanwhile, unemployment… the real unemployment, known as U6… has reached 17.5%.  In October of this year alone, our country lost another 558,000 jobs, and most of those in manufacturing and other areas that may never return.  In Detroit, according to the city’s Mayor, the actual unemployment rate is fast approaching 50%.

By now it should be abundantly clear that foreclosures breed foreclosures and that the problems are spreading state by state.  And it should be equally clear that our nation’s economy cannot begin to recover until the free fall in the housing market, and the resulting foreclosures, have been brought to an end.

Perhaps you’re among those only interested in blindly optimistic thoughts, and if so, there’s certainly no shortage of those.  Now that our government has run out of things to actually do, and since they’ve run out of money with which to paper over problems, as this year draws to a close it seems they simply would like us to believe the worst is over.  That recovery is right around the proverbial corner.  Few do, though, at least not in earnest.  It’s like Ben Bernanke keeps saying in so many words, the recession is over, damn it… probably… I think… sort of… it’s a jobless recovery… yeah, that’s the ticket… a jobless and homeless recovery.

I’ve come to understand many things about this housing led, increasingly complex economic crisis as I’ve written more than 200 articles on related subject matter over the last year.  I now believe in every fiber of my being that we will remain incapable of finding meaningful solutions until we as a nation come to understand the problems we’re facing and why we’re facing them.  And in this regard we have a very long way to go.

We still don’t know… and maybe some of us don’t want to know.

I have never in my life seen anything like what’s happening in this country today.  I’m not just talking about the severity of the crisis; I’m talking about the amount of misinformation and utter confusion about its proximate cause.  It is truly stunning to behold.  I can barely get through a week without bumping into another armchair economist who’s got lots of opinions on AIG, but has no idea what a Credit Default Swap is, let alone how one works, or why they were sold or purchased in the first place.

It’s uncomfortable to be around, frankly.  When did we become a nation filled with people who feel the need to hold a view on everything?  A few weeks ago I wrote a piece in favor of judicial loan modifications… you know, bankruptcy reform… the “cram down,” if you must.  Quite a few people wrote in to say they disagreed with my position, every one of them based their argument on the identical position: “It will raise borrowing costs in the future for everyone.”

It’s a ridiculous presumption, you should realize.  The “cram down” bill that recently was once again killed by the banking industry has no significant measurable potential to raise borrowing costs in the future.  For one thing, it would only apply to loans on the books at the time of its passage, so no future loans would be affected.  And for another, it only applies to those filing bankruptcy, a statistical probability that investors already price into their models.  And for a third, when a judge writes down a mortgage to the market value, that judge isn’t costing the investor a nickel… which is why it’s called the “market value”.

The funny thing about judicial loan modifications is that we clearly need them badly at the moment, as we watch another 14-17 million homes fall into foreclosure, so some miniscule, incalculable, potential threat hardly seems a good enough reason to kill the amendment within hours.  And many of the people who hold onto views in opposition to changing the bankruptcy code, would all unquestionably benefit from such a common sense approach.  But, regardless… no one changes his or her view on much of anything these days.  I suppose only two factors result in real learning: age and pain.  We don’t have the time to wait for age to do it, but stand by, because the pain will be increasing each month that passes, so maybe there’s still hope as that pain increases.

As it stands, all we’re left with in terms of a plan to stop the free fall in the housing market, is… well… we don’t really have a plan to stop the free fall in the housing market, now do we?  Even if Obama’s loan modification program was working, which it is not, it’s not designed to stop the foreclosure crisis.  Remember, it’s only designed to help “responsible” homeowners, if there’s still such a thing.

My intention is that this article doesn’t beat around the bush, so I want to go directly at the question of why we don’t have a plan to stop the foreclosure crisis.  What is it that prevents our adoption of policies that would lead to our economic recovery?

We don’t have a plan for two reasons, and both are political as opposed to economic.  What I mean by that is that we could fix the problems we’re facing, but a lot of people won’t like what we need to do.  In other words, if we could just get over ourselves, we’d all be much better off.

Okay, so here goes:

1. Stopping the Foreclosure Crisis

In terms of fixing the housing market and stopping the foreclosure crisis, we’re going to have to write down the seriously underwater mortgages to their market value, and we can’t do that because politically it’s potential suicide.

There are still many people that view the homeowners losing their homes to foreclosure today as being “irresponsible,” and who could possibly want to bail irresponsible homeowners out of their underwater mortgages?

What people fail to realize is that the mortgages that are seriously underwater need to be… and will be… written down to their market value.  The only question is the mechanism we use to write them down.  If we continue to use foreclosure as the mechanism, then we’re going to be in for a lot of pain, as we take down everyone else’s home value at the same time.

As a country, however, we don’t want to write down mortgages, in fact we barely want to modify them, because we’ve still got a sizable percentage of our population that blames homeowners for the economic collapse and therefore believes they must be punished.  And by punishing them through foreclosure, we will punish everyone else as well.

The problem with this kind of thinking, besides it being untrue, is that it prevents our elected officials from looking at real solutions to the problem.  Eventually, people will change their views on this issue, but it may take several years for the pain to become intense enough and sufficiently widespread, before people are willing to look at the situation differently.

Until then, we’ll keep foreclosing, and those foreclosures will continue to drive housing prices down… which will in turn create more foreclosures.

2. Fix the Banks and the Credit Markets

In terms of fixing our insolvent financial institutions, the only plan with the potential to succeed, short of nationalization, of course, is to buy the toxic assets off of the bank balance sheets at 100% of their face value… something that’s simply not politically palatable.  We could pay some amount less than full face value but that would only leave giant holes in the balance sheets of banks and we’d have to pony up the difference anyway.

It looks to me like Geithner’s plan is to keep the banks propped up with federal slush money, provided under one wonky acronym or another, and the suspension of all accounting rules that would give away their insolvency… until the banks can earn enough by lending to Treasury and charging us exorbitant fees.  There’s a bit more to it than that, but those are the important points.

I’m not the only one who sees this plan not working.  Geithner isn’t just forecasting economic recovery in 2010… he’s depending on it.  When it doesn’t happen, he’s going to act surprised, I’m sure, but he’ll be acting because he knows now that he’s taking a huge risk.

The “toxic assets” that are still clogging up bank balance sheets aren’t getting any less toxic on their own.  In fact, the more homes that are lost to foreclosure, the more toxic they’ll become.  So far, we’ve papered over the problems, but that only fixes the problems in the short run.  Remember, if the banks believed their balance sheets today… they’d be lending.

Let’s look at today’s conventional wisdom pertaining to the economic meltdown:

1. It’s the fault of sub-prime borrowers…

No, it’s not.  Today’s crisis isn’t a sub-prime crisis, and never was a sub-prime crisis.  From the beginning, sub-prime and prime loans defaulted at the same proportional rate.  That’s not to say that there weren’t more sub-prime foreclosures than there were sub-prime foreclosures… there were.  But proportionate to prime loans, the problem was never a “sub-prime” problem.

2. It’s unemployment that’s causing foreclosures…

No, it’s not.  Unemployment and other life events don’t cause foreclosures.  Look at the spikes in unemployment that followed the dot-com crash that began in April of 2000.  Unemployment in places like Northern California and Massachusetts skyrocketed, as did mortgage delinquencies, but foreclosures remained low.  Why?  Because in flat or slightly appreciating real estate markets, when people get in financial trouble or lose their jobs, they sell their homes, they don’t start losing them to foreclosure en masse.

3. Borrowing too much and not properly qualifying for loans caused the crisis…

I’m sorry, but no.  Roughly 54% of the foreclosures are prime loans for which people did qualify, and as far as borrowing too much, well… it’s just beside the point.   In light of where things are today, it would seem that any borrowing was over-borrowing.  And when you look at the leverage employed by Wall Street firms, which was in some cases up to 100:1, the whole idea that homeowners could have caused the economic meltdown of this country becomes preposterous.

Think about the 40:1 leverage at Lehman Bros.  On one hand, you’ve got a homeowner taking out a 100,000 mortgage, and on the other you’ve got Lehman Bros. borrowing $4 million based on that mortgage.  In terms of de-leveraging, which is the problem… the $100,000 mortgage or the $4,000,000 in leverage.  And, by the way, while we’re talking about it… who was it that thought that housing prices would go up forever?

None of this is to say that lending standards weren’t far too lax, that more sub-prime borrowers didn’t initially lose their homes than others, or that today’s unemployment rate isn’t contributing to the number of loans in default.  All are true, but none are the proximate cause of the crisis we face today.

The Birth of a Crisis… and the Crises that Followed

First of all, we’re not having a crisis; we’re having multiple crises.  The foreclosure crisis is one.  The credit crisis is another.

We could go back many years to begin such a discussion, but I don’t see the point.  Many say that the Glass Steagall Act should not have been repealed.  At the moment, however, I don’t care one way or the other whether it should or shouldn’t.  I’m sure some combination of experts and political types will figure that out soon enough, and resolving the issue today won’t change anything tomorrow morning.

For the moment, I’m only interested in what happened in July of 2006, on a day when housing prices dropped by 30% or more… although we didn’t all realize it at the time.

Declining real estate values are what cause foreclosures, and on a day in July of 2006, a number of pension funds realized that the AAA bonds they were holding were not in fact AAA… and they dumped them in a hurry.  They might have been AA… they might have been junk… no one could be sure.  All investors needed to know is that they were not AAA, as they had been rated by the ratings agencies, Standard & Poors, Moody’s or Fitch, and that was enough for them to know that they didn’t want to hold them in their portfolios any longer than they had to… and the bond market froze solid.  Money stopped moving.  And wherever the mortgages were at that moment, that’s where they would stay.

Banks, like IndyMac, who had $40 billion in mortgages on their books that they had planned to sell to Wall Street, now had real problems.  Banks don’t have any money they can loan out for 30 years.  They originate mortgages, but then they sell them to recoup their cash… or at least that’s what they did prior to the day the bond market froze solid.  Now, unable to sell their mortgages, banks immediately began hoarding cash.  Lending dried up within days.  And all of a sudden, what had been a market plush with mortgage cash, was now dry as a bone.

At the same time, there was another force in play… interest rates had been rising.  In fact, by the summer of 2006, the Fed had increased interest rates 17 times in a row.  Those with adjustable rate mortgages had already started to default, and sales had already started to slow appreciably.

Now, however, since essentially no one could get a mortgage, no one could buy a house… and prices had nowhere to go but down.  As they dropped, refinancing became impossible, and foreclosures were the only option.  The crises had begun.

Treasury Secretary Hank Paulson saw the problem as being limited to the sub-prime market and believed it would be contained there, but he failed to take into account what had really happened.  The credit markets had been broken.  Banks didn’t trust each other.  And as housing prices fell, and more loans defaulted as a result, the bonds were downgraded, and Bear Stearns was the first to go.  Paulson wanted to act at that point, but the now Democrat controlled Congress told him not to come to Congress unless he could assure the legislators that “a crisis was at the door”.

There are always a certain number of homeowners that need to sell their homes each year for a variety of reasons, both personal and career related, and when housing prices are declining rapidly, many of those sales inevitably become foreclosures.  The bubble was deflating fast and the loans that were the worst of the bunch went first.  But as prices fell, people who had over-extended themselves, and everyone else for that matter, stopped spending, and it was only a matter of time before unemployment would start to rise.  It was the beginnings of the downward spiral that continues today, albeit at a slightly slower pace than was experienced at its beginning.

The response by our government has been to pump trillions of dollars into our financial institutions in order to prevent their insolvency and make investors whole, but as long as the flood of foreclosures continues unabated, economic recovery cannot occur and we will all increasingly suffer as a result.  Hank Paulson tried to buy some of the toxic assets off of the bank balance sheets using the now infamous TARP funds, but the banks needed him to pay face value, not some discounted amount, and that would not have been politically palatable.

Even with the evidence of our deepening problems all around us, there is still a significant percentage of our population that is preventing our politicians from taking the steps necessary to stop preventable foreclosures and start the economy back on the road to prosperity.  Those that make up this group, in large part, gained their inadequate understanding of what’s transpired since 2006 from government and banking lobby inspired sound bites.  And even more importantly, their views haven’t changed over the last couple of years, even though almost everything else has.

The bottom-line is that this group continues to blame the borrower… the homeowner… as opposed to the commercial and investment banks, and if you’d like, the government regulatory agencies that stood idly by as Rome burned.

It’s a bleak picture, and sadly it is also one whose duration could be easily be reduced significantly if we as a nation shared a common understanding of how our crisis began and what must be done to stop its continuing spread.  That’s right… I have seen the enemy and it is us.

President Obama, however, now places the blame for the recession on “the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences.”  He and others are trying to get us to change our view of what happened so he can do something about it, but we continue to resist… we continue to hold onto our desire to punish our neighbors for buying too much.  It appears that we’d rather go down with the ship then reduce the principal on our neighbor’s mortgage.

In Conclusion…

Look… I realize that there’s more to the crisis than I’ve described here.  I realize that the bonds I’m referring to were insured by AIG’s credit default swaps, which were unregulated and resulted in a systemic risk to our financial system.  I know that AIG went under because of collateral calls that came along with the downgrading of the bonds it was insuring.

I realize that the process of securitization played a major role in how banks viewed mortgages, and why they were underwritten so poorly.  I realize that Wall Street’s CDOs, collateralized debt obligations, and other derivatives were, if not instruments of destruction, then something in that neighborhood.  And most recently, I’ve come to realize that the investment banks like Goldman Sachs, that packaged these deceptively risky investments and sold them to investors all over the world, bet against their success without disclosing their positions to investors or anyone else.

Yes, I realize that what I’ve described here is a dramatic oversimplification of a very complex situation, and I plan to write more about each aspect of the crisis in simple terms in the hopes that more people will become comfortable with what is now part of our history, and as a result tell their elected representatives that they are not to do whatever the banking lobby wants them to do.

But for the purpose of this article, none of that matters.  For the purpose of this article, I only wanted to say in no uncertain terms:

A. It wasn’t the borrowers that caused this crisis.  Did some people buy too much house?  Sure, some did.  Did some act irresponsibly?  Sure, to varying degree some did.  But today’s foreclosure crisis won’t abate as long as many cling to the belief that they should somehow sit in judgment as to who was irresponsible and who was just caught up in the worst economic downturn since the Great Depression, a task that will be increasingly difficult as each day passes.

B. Water is wet, the sky is blue, children want candy, and people want houses and money.  Some knew what they were doing and some didn’t.  So what?  No one entrusted individual people to make sure our banking system was safe and well managed.  We trusted the banks and they, of one variety or another, let us down.

C. We would be experiencing a similar meltdown regardless of whether we had a real estate bubble.  As long as some group’s actions were going to destroy the secondary mortgage or credit markets, then house prices were going to fall and fall fast.  And that’s what causes foreclosures: declining home values.

D. Our government mischaracterized its cause in the beginning.  Or, in other words… it was never a “sub-prime” borrower crisis.  We know that now.  If you still think it was a sub-prime crisis, caused by those high-risk loans… well, it’s time to take another look at the data.  Your views are wrong.

And to the homeowners who feel ashamed… who have suffered the indignity of losing a home in silence… this wasn’t your fault.  You didn’t break the bond market and send housing prices into a free fall.  You didn’t fail to address the problem, or fall asleep at the switch as a regulator.  You didn’t securitize every payment stream in the country, or leverage untold billions of investments or create untold trillions in synthetic derivatives.  It wasn’t your belief that real estate would continue to go up that caused the problem, it was Wall Street’s belief that it would continue to do so that brought the financial markets to the brink of destruction.

All you did was buy a house you thought you could afford.  Now it’s worth half of what you paid for it… or it will be worth half soon.  No one saw THAT coming.  No one.

So, don’t be ashamed and afraid to speak about what happened here.  Your neighbor may seem to know what he’s talking about, but he more than likely doesn’t know any more than he heard on television or read in some Newsweek article.  Besides, he’s going to be drowning soon enough anyway.  The economic situation we’re in as this New Year begins doesn’t discriminate… everyone will feel its powerful bite as this year continues to see our economy spiral downward.

Unless you’re a banker, of course.  In which case… stop judging others, you jackass.  You want to have a debate someone about how it was borrowers who caused the meltdown, or pick on someone for being an irresponsible… have the debate with me… pick on me.  Go ahead… it’s easy… I’m at mandelman@mac.com.  And I respond to even the most idiotic of opinions.  Bring it.

In fact, next week I’ll be in Park City, Utah, debating this very issue with a bunch of lawyers that represent bankers at a conference of the American Bar Association.  I’ll let you know how it goes, but I think you have some idea already.

For everyone else reading this… let’s stop the madness and tell our politicians we want solutions for the homeowners in trouble, not punishment.  Because at this point, we’re only punishing ourselves… because it’s the right thing to do… because we smarter now and see the situation more clearly… because there, but for the grace of God, go us all.

~~~

(P.S. If anyone wants sources for any of the data presented, just email me and I’ll send you the links.  It’s the holidays and I didn’t feel like writing a term paper, but I’ve got plenty of sources for everything I’ve written.)

And, as always, the illustration of Santa coming down the chimney into a foreclosed home was brilliantly interpreted and then drawn by Richard Taylor.

I really don’t care how that headline sounds.  I’m going to make my point regardless, and I think it needs to be made bluntly.  I’m far too angry and way too upset to do anything else.  This is it for me.

I started this blog three years ago for ONE reason: Because the government and banking PR machine was blaming the crisis on “irresponsible borrowers,” and I KNEW then that would prove to be an ultimately destructive thing because, as I wrote back then… when they realize what’s really happened, that it’s not “irresponsible borrowers,” they will have destroyed  the political will to do what’s needed to fix it.  No one was going to support a bailout of the “irresponsible.”

I wrote all of what I’m about to say hundreds of times and in so many ways I couldn’t even count them all.  Recently, I wrote an article titled, “Our future depends on just one thing.”  Abigail Field worked on it with me.  I don’t know… maybe it was 15,000 words.  I was shocked at how many people actually read it… maybe 5,000, which is a lot when you consider how much time it required.

I knew what would come, but I also voted for Barack Obama and I believed that his administration would do something about the foreclosure crisis.  And as I’ve sat and watched this administration’s policies and performance, I have to admit that up until recently, I didn’t know why they were doing the abysmal, seemingly unfeeling and irresponsible job they so obviously have done.  The kind of job that led Neil Barofsky to make the comments he made this week… his comments you’ll read below.

Now, however, I know what’s happened and why it happened.  It happened because the Obama Administration continues to be afraid of being seen as bailing out irresponsible borrowers… quite a coincidence, right?  Actually, not so much.  (Here’s another of my past attempts to explain this situation in writing: “Why Americans Are Allowing the Foreclosure Crisis to Continue.”)

But, you’ve heard what I have to say, so try this on for size and see what you think.  The book, “Confidence Men,” by Ron Suskind, tells the inside story of the first three years of the Obama Administration, based on hundreds of interviews with insiders… including interviews with President Obama himself. It’s not pro or con… it just is.  Jon Stewart interviewed Suskind a couple of months ago… it’s fascinating and I’ve included part one and two of that interview below.  Watch it.  Please.

Is it becoming clear?

I’ve written 600 articles now, and I suppose if I could get anyone to read a few hundred of them it might change their mind… but that would take some time.  This is an election year, as I’ve pointed out many times lately, and we need to shatter the “irresponsible borrower” misperception now if we expect anything to change for the better any time soon.

Last summer, when I returned from a week working with people at the Hawaii legislature, I knew there was only one thing to do… produce an open and shut case in a broadcast quality documentary-style program… and make it entertaining enough that it would go viral on the Internet…. maybe raise a hundred grand and get it on cable television.  Anything else would take too long to influence the number of people that had to be reached.  Nothing is absorbed as fast as high-quality video programming.

I didn’t want to produce a documentary program… I’ve done it many times in my career and it’s a lot of work.  But there was no choice, I’d been trying to get everybody on board for two and a half years at that point, and it was simply taking too long.  And I knew I was probably the only person who could do it.  I spent 20 years in corporate America as a creative director and communications strategist and I know I’m the only person in that world that could do it, because I’ve successfully shattered similarly erroneous views many times.

But… and it’s certainly all my own fault… I just haven’t been able to promote it effectively enough to get others to fund it to any real degree.  And I didn’t want to seek an investor that would want to make it into a money-making proposition and not a viral Internet campaign.

The truth is, I’m not all that comfortable with self-promotion to begin with, and this space is packed with scammers and fast talkers, which makes it that much harder to get people to write checks no matter the purpose.  They don’t know who to trust, and I don’t blame them.  So, I resigned myself to the fact that I would have to fund it myself, and that would mean that it would take a lot longer to get it done… but, it was what it was.

I’ll probably do a book at some point too, but not now because it’s too time consuming and we have an election year in front of us.  If we’re going to succeed at influencing politicians on this key point… this would be the year.  If we fail… it’s over.  What will happen… will just happen… and it will be a tragic failure for me, and an awful period in our nation’s history.

Just last night, I was talking to a homeowner in Pennsylvania and he asked me what was stopping the administration from doing anything effective about the crisis and I said right away, “Oh, it’s Rick Santelli… it’s only one thing… the ‘irresponsible borrower.’  There’s simply NO SUPPORT to help people that the country largely perceives as having been irresponsible borrowers.”  I don’t really know if he believed that I was 100% right…. maybe he thought I was partially right, but not all the way, I really don’t know.

People want it to be more complicated that that.  They don’t want to think of our government as just a bunch of guys making decisions.  People want to imagine that there’s a puppet master pulling strings and that they just aren’t privy to the information.  It’s reassuring to think that way.  Last year, I remember saying about the Obama Administration:

“Tell me there’s a plan… I don’t care if it’s an evil plan… as long as there’s A plan, I’ll be fine.  Because this looks like a bunch of people not knowing what to do and doing at terrible job at whatever they try… and that is scaring me to death.”

I started calling bankers and servicers and those on the other side because I realized that no one was winning, and with so many people losing… someone SHOULD be winning.  But no one was or is… everyone’s losing… we’re literally circling the drain.  Oh, I know… there’s a handful of bankers still getting obnoxious bonuses, and that’s wrong… but in the big scheme of things… it’s nothing really.  In a world where losses are measured in trillions, even a $100 million bonus is a rounding error.

Very quickly I realized two things… that those on the other side of this fight weren’t all that concerned with us one way or the other… and that they had no idea what to do to improve things either.  Our politicians are obviously clueless… they’re not even afraid of people not voting them back into office.  My guess would be that most of the elected representatives in the Hawaii legislature didn’t even view what’s happening as a “crisis.”  And the jackass in Arizona, Harper, think the problem is people walking away that can otherwise afford the payments no problem.

No… we’re not winning.

By the way, it’s not like I’m not used to being right way ahead of everyone else when it comes to things like this… I’ve got a 20-year track record of being exactly that.  But I never wanted to come off like that to people as a homeowner advocate and blogger, and I knew no one knew of my professional career in this world of homeowners and their lawyers.

Now, it just doesn’t matter.  I don’t really care how I “come off.” It is what it is… and I’m not a person capable of deluding myself or others into believing something that’s not true.

Here’s the story from American Banker… it’s short, so I’m posting the whole thing… read it, please.

Barofsky Blasts Treasury, Obama for Housing Mess

Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, hammered the Obama Administration and Treasury Department Tuesday night at a panel discussion on the foreclosure crisis, saying fears of a political backlash led to the administration’s tepid response to the housing crisis and refusal to back principal reductions.

Barofsfky, a former assistant U.S. attorney who is now a senior fellow at New York University’s School of Law, said the administration’s Home Affordable Modification Program was “a failure” because the Obama White House feared being labeled as helping “undeserving homeowners.”

Asked if there was any hope for homeowners at risk of foreclosure, Barofsky said: “Um, no.”

The panel was organized by the non-profit news organization ProPublica. The other participants included ProPublica reporter Paul Kiel, Alyssa Katz, editor of Columbia Journalism School’s New York World, and this reporter.

“The crisis is an example of how people lose their faith in government, which has costs that are hard to quantify,” Barofsky said during the two-hour event at the Tenement Museum in New York’s Lower East Side. “Everything that has happened since [Tarp] has been something of a mess.”

When the administration introduced the Hamp program in 2009, Rick Santelli, an editor at CNBC Business News, went on a rant” calling defaulted homeowners “losers” and accusing the government of “promoting bad behavior.” Santelli is credited with sparking (and naming) the Tea Party Movement by suggesting that people opposed to the government form a “Chicago Tea Party.”

Barosky said the White House, out of concern that aiding homeowners would cause a political backlash, quickly backed away from its goal of helping 3 million to 4 million homeowners avoid foreclosure.

There was a fear of “moral hazard,” the idea that homeowners who were not financially strapped would default to get a principal reduction, Barofsky said.

He argued that the $28 billion left in the Tarp program should be used to modify loans, but he faulted the Treasury for never spending the money, calling it a “lost opportunity.”

###

Homeowners, lawyers and fellow bloggers… we ARE NOT winning.  And we won’t win.  I’ve tried to say this numerous times in more politically correct ways, but it obviously needs to be said in less uncertain terms.

The foreclosure crisis is has only affected less than 15 percent of America’s homeowners.  More than 85 percent aren’t having the problem… yet.  Ninety-five percent of homeowners just go through foreclosure without any representation.  And with at least 3,000 homeowners evicted every single day, seven days a week… we get all hip-hop-happy because a literal handful have some very moderate levels of success… we tell ourselves we are gaining on it… but we’re not.

We’re not gaining on it because there is no WE… so, WE can’t be fighting it.  At best we represent a speed bump to the banking industry, and that won’t change for several years when there will be so many more people swept under that there will be societal pain to a degree we’ve never even imagined.

Lawyers… fighting your cases one by one… in your own small universes, without any sort of data being reported… without any sort of association… you’ve had some great cases, but their impact is akin to a Bandaid on a severed limb.  Loan modifications are the only way people are staying in their homes in any number, but the banking industry has turned those helping homeowners get loans modified into something close to drug dealers, as they echo the familiar refrain… “Call your bank directly or call a (bank funded) HUD Counselor.”

And my fellow bloggers… we continue to limp along writing perhaps bravely and perhaps helpfully, but we’re trying to outrun a tsunami in our individual small canoes.  It’s never boring… it’s stimulating even.  But it’s just nowhere near enough.

I’m not saying we should stop what’s going on… in fact, we need to do more… we need about 10,000 more lawyers and that wouldn’t be near enough.  Maybe it’s all we can hope to do as the collection of individuals that we are, but I can’t not call it as it unquestionably is.  And I can’t just sit back, write my articles and pretend that I’m changing the world.

So… here’s the deal… I need to know how many DOERS are out there.

If you’re a DOER I need to hear from you by email.  If you’re a DOER, willing to support a campaign to strategically target and then attack chosen opportunities, I need to hear from you now.  My DOERS have saved three homes in a row by sending emails in a coordinated way.  Raise your hand now and tell me your on board, because I’ll need to be able to reach you to tell us what WE are doing via email, so as not to tip our hand.

We’re going to “OCCUPY,” but in a very different way than OWS… we’re going to OCCUPY without leaving our homes. It’s going to be a game of inches… it’s going to take 3-4 months before we reach the critical mass that moves the proverbial needle.  It’s not just about reading, it’s about doing.  But, we will gain momentum and WE WILL shatter the “irresponsible borrower,” stereotype.

We’ve already proven that we can inspire a bank to take immediate action by sending some number of emails in a coordinated and targeted way.  Imagine when I can write something that results in 1,000 or 10,000… or even 100,000… or maybe someday 1,000,000 people sending a letter and a bag of pretzels to a specific individual’s office.

• What do you suppose would happen if a senator or a governor were to walk into work one morning and find 30,000 bags of pretzels carrying one message?  And not once, but every month… or more often that that if need be.  Would it make the news?  Damn right it would… and others would join our ranks.
• Why couldn’t a group like that raise a fund to help with eviction defense for senior citizens or single moms?  Wouldn’t the existence of such a fund also make the news?  Yes it would.
• Why don’t we have one highly visible site with trusted lawyers listed on it, so no one ends up retaining sub-par legal representation?  Would that be newsworthy?  Yes.  My trusted attorneys tab gets more traffic than 90 percent of my articles each month.
• Why couldn’t such a group become its own PR machine, publishing viewpoints as part of a strategy, instead of the current passionate but disjointed efforts?  If we can’t get a documentary done, why couldn’t we produce a series of viral vignettes that we all help to distribute to the media, to politicians… to servicers… to other homeowners and that destroy the irresponsible borrowers stereotype?
• Why couldn’t we have our own bills being proposed in various state legislatures that provides solutions?
• Why don’t we make better use of headline risk by publishing the stories of injustice that go on each day?
• And much more…

We’re not wining the way we’re going.  I’m sorry to say it that way, but then again maybe I’m not.  We have to fight as a WE.  I’m not trying to be a king… in fact, I’ve never wanted to be a king.  I want to be a member of a team… but I just don’t see anyone else with any plan to inspire real change.  And yet the banking lobby is well-funded and relentless.

Raise your hand and be counted… and counted on.  Email me at mandelman@mac.com now.

No one helps those who don’t help themselves.  We need to be WE… and now.  Because as long as the country believes that irresponsible borrowers are the problem, nothing will change for borrowers… not enough lawyers will join the fight and as they say… we’ll see you in the soup line.

I need a core group from which we can build.  It shouldn’t be painful, there are many of us.

The country hasn’t changed.  The power of the people remains intact.

WHEN I POST A NEED FOR DOERS ARE YOU COMMITTED READING IT… AND DOING SOMETHING… SENDING AN EMAIL, SENDING A LETTER AND A BAG OF PRETZELS, OR WHATEVER?  LET ME KNOW NOW.

I HAVE A PLAN TO IMPLEMENT A SERIES OF TACTICS DESIGNED TO ATTACK THE IRRESPONSIBLE BORROWERS STEREOTYPE.  ARE YOU WILLING TO HELP FUND THAT INITIATIVE FOR THE NEXT 120 DAYS?  LET ME KNOW.

Any answer is fine… but I do need to know now.

Mandelman out.

Bankers in the U.S. are being warned as a result of confirmed reports that a letter bomb was sent to the CEO of Deutsche Bank in Frankfurt, Germany.  NBC in New York has reported that a warning issued by the NYPD to bank security officials in New York includes the following:

“We have received a report of a confirmed mail (package) explosive device that was addressed and sent to … Deutsche Bank in Frankfurt, Germany. The package was detected by X-ray technology inside the mail room. The package did not detonate.”

The FBI has issued a statement saying that the Bureau is, “working with German authorities to assess the incident in Frankfurt and any potential threat to facilities or people here.” NYPD has increased security around the Deutsche Bank locations in NYC, although the FBI says there have been no specific threats received against banks here in the U.S… yet.

One question comes to mind: Is anyone surprised?

Actually, I am surprised.  I’m surprised that it’s taken until now for this to happen.  I don’t have any idea from where this letter bomb was mailed, or what the motive of the sender was, but I do know that the banks have exhibited a wholesale disregard for regular people in this country, and I imagine elsewhere.  The 99% thing isn’t just a U.S. thing, right?  Right.

For example, the primary criticism of the new Greek government is how bank-friendly they are.  The new Prime Minister is a guy named Papademos, who is a former European Central Bank vice-president.  Imagine our president was Jamie Dimon, and you’ll get the idea.  It would seem that we’re not even close to cornering the oligopoly market.  And let them eat cake produces a predictable outcome, does it not?

Last year, roughly 76% of the unemployed in this country were receiving checks… next year that percentage is going to be roughly 48%.  And participation in food stamps in this country… it’s steadily rising… somewhere between one in seven, and headed towards one in six… in 2005 about 11 million… this coming year over 50 million, give or take.  Look it up for yourself, you’ll see.  But,  I know… some of you are thinking… well, that won’t affect me, I’m not on food stamps.  But that’s not the point.

What’s happening is going to impact EVERYONE, and if you think you’re somehow immune, perhaps you should consider learning more about what happened during the 1930s.  No one came through it unscathed.  And no one that did live through it ever recovered.

Of course, not everyone lived through the 1930s, and not everyone will live through this either.  A few days ago, 38 year-old Rachelle Grimmer shot her two children before turning the gun on herself inside a Laredo, Texas food stamp office.  She had been denied food stamps several times since last July, when she first applied.  The first time they turned her down the Texas Department of Health and Human Services said her application was incomplete, and later they said they weren’t able to reach her… I don’t know… maybe her phone had been turned off because she couldn’t pay the bill.  I’d imagine that’s happening a lot more these days, what do you think?

Intuitively, I think we all know that suicide rate are up, although it’s hard to find published data because no one likes to admit it.  The State of Vermont, however, has compiled and released figures as of November 4, 2011.  The state’s Department of Mental Health, says there has been a 15 percent jump in suicides in the last two years. I wonder why.

I wrote an article in May of 2010… We’re on the Brink of a New Age of Rage… maybe it will seem more relevant today.

Our stimulus spending is over, state budgets are going to be increasingly under pressure, state taxes will rise, services will be cut… unemployment will worsen… our standard of living will come down a few notches… foreclosures will steadily increase… and as we sit here today, we don’t even have anything on the drawing board that MIGHT start to turn things around.

It’s as if we can afford to worry about something else… like whether our neighbors at risk of foreclosure are irresponsible borrowers.  I hope those doing that are enjoying themselves because it’s a damn expensive hobby.

Mandelman out.

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There are two things I feel the need to say.  First, the economics profession sure has lost some points these past couple of years, wouldn’t you say?  Sort of like the intelligence community did during the Bush presidency just a few years back.  It pains me to see the entire economics profession relegated to being “The Pips,” to Barack Obama’s “Gladys,” if you know what I mean.

We’re never even told their names anymore, all we get to know is that when the news is bad, the “economists were surprised by the numbers.”  Not any of the economists that I either know personally, or frequently read, but a nameless and faceless band of economists who seem to forecast so poorly, they couldn’t even get hired as San Diego weathermen.

It’s like, “the number of jobs created last month came in lower than economists expected,” or… “Economists were surprised to learn that home prices have fallen for 70 months in a row, that water is in fact wet, and that the sky is blue.  Until that news was released today, the consensus answers to those three questions was: “really?”… “clean”… and “high.”

Then second thing I feel the ned to say is that while there’s no question but that Democrats do suck… they clearly suck less than anyone even remotely connected with the GOP.  The latest example of this comparative suckiness can be seen in the letter sent this week by 21 members of Congress to Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco that urges him to allow principal reductions on loans backed by Fannie Mae and Freddie Mac.

The text of the letter states:

“We do not urge that the enterprises reduce principal on mortgages as a kindness to homeowners.”  (Emphasis added.)

The letter, which cites data published by the GSEs themselves stating that 17.7 percent of Fannie borrowers are underwater, as are 19 percent of Freddie’s borrowers, goes on to explain that the representatives support principal reductions because they’ll save taxpayers from further losses, because these borrowers… “are obviously at great risk of eventual default.”

Of course, we are talking about DeMarco here, so I’d ease up on the use of the word “obviously.”  The letter continues…

“The performance of the enterprises’ mortgage modifications leaves much to be desired for homeowners, for the housing market, and for taxpayers.”

This is not even close to the first time that DeMarco has heard this pitch, in fact I covered it in an article several months ago.  But, DeMarco’s response to-date has been that the “short-term” impact to the GSEs is what prevents him from approving the principal reduction idea, which is refreshing, if you ask me.  I mean, if you’re going to be a short-term thinker, I appreciate it that you identify yourself as such.

The representatives, however, are now specifically asking that DeMarco disregard the short-term effects of principal reductions on the GSEs’ balance sheets ans instead consider the much more meaningful long-term positive effects that such reductions would likely have.  The letter also references a study conducted by Amherst Securities that negates the “moral hazard” theory, which idiotically hypothesizes that principal reductions actually encourage homeowners to default.  Sort of like saying that if you’ll reduce the balance of my car loan by a few grand, I’d be willing to let it get repossessed.

George Miller (D-CA), one of the representatives whose signatures appears on the letter signed the letter, says:

“Right now, the FHFA is preventing underwater homeowners with mortgages backed by Fannie Mae or Freddie Mac from receiving balance reductions, even when a principal modification would save the investor – in this case meaning taxpayer – money compared to foreclosure.”

I guess at this point I should state my opinion as to whether I think this letter will have any effect… and the answer is that I think it is likely to be about as effective as crawling under one’s school desk in the event of a nuclear attack.  Hard to believe, but word from inside the Beltway is that the most powerful man in the nation… and President Obama have both been asking DeMarco to green light the principal reductions plan for the GSEs for several months now.   And if Treasury Secretary Tim Geithner can’t get it done, then I’m thinking it can’t be done.  Still, I am glad to see 21 members of Congress writing a letter, because that’s more than I’ve seen them do in months.

So, I’m bringing all of this up because Mr. Edward DeMarco, who is just the “acting” director of the independent federal agency that placed both Fannie Mae and Freddie Mac into conservatorship in the fall of 2008, has actually become the single biggest impediment to a course correction in the housing market, by far, in the entire country.  And when you consider the GOP’s position on foreclosures, which is only that they need to happen faster, that’s really saying something.

With a Ph.D. in Economics from the University of Maryland and a B.A. in Economics from the University of Notre Dame… DeMarco’s an “economist.”  Prior to joining FHFA, he was COO at the OFHEO, where he provided policy advice for the FHA, before that he was Assistant Deputy Commissioner for Policy at the SSA, and before that he was the Director of the OFIP at Treasury where he oversaw analyses of public policy issues involving the GSEs… and before that he conducted economic and financial analyses of the GSEs at the GAO where he developed recommendations for improved safety and soundness related to the government’s exposure to the GSEs.

Read that last line again… “he developed recommendations for improved safety and soundness related to the government’s exposure to the GSEs?”  Well, did he now?  Obviously, that was some absolutely crackerjack work right there.  Considering that Fannie and Freddie, so far, have cost us taxpayers about $170 billion in “safety and soundness,” I’d have to say that I sleep better at night knowing that we’ve now got Ed watching out for us at FHFA.

Best I can tell that Ed’s never had a job that wasn’t a TLA (three letter acronym), and to give you a picture of what he looks like… hmmm… well, picture what might happen if Tim Geithner and Peter Orszag had a child… I mean, the man just screams Caucasian.  I’m not saying that to be a racist, I’m saying it because the combination of all of those factors makes me rock solid sure that this guy’s extensive knowledge of real people in this country comes from reading about them in policy reports.

So, even though last year, President Obama and Treasury Secretary Tim Geithner started asking Fannie and Freddie to start doing principal reductions for homeowners underwater and at risk of foreclosure, and even though Sec. Geithner testified that he believed there to be a solid economic case for Fannie & Freddie to participate in the principal reduction programs, such as the new HAMP PRA… DeMarco simply said no anyway.  Ed’s stated rationale was that principal reductions, while positive for Fannie and Freddie in the long run, he agreed, would be bad for GSE books in the short run.

This is the sort of thing that makes one long for the ghost of Lyndon Johnson to come back and kick DeMarco in the pants… I mean, telling the president to go fish is one thing, but saying no to the most powerful man in the world?  I don’t think so.

Geithner can snap his fingers and Ben Bernanke starts up the printing presses from the nightstand by his bed.  Even Lord Blankcheck over at Goldman Sachs takes his calls.  And Vikram Pandit over at Citi?  Yeah, well I heard he comes over and rubs Geithner’s feet in the evenings.  I swear… that’s what I heard.

Fannie & Freddie, in my way of thinking shouldn’t even be given a choice. They are both bankrupt… utterly failed mortgage banks.  They’ve already been NATIONALIZED, no matter what they want to call it.  For God’s sake, Fannie Mae stock is trading OTC right next to Blockbuster! And besides, Freddie and Fannie have been GSEs for years… “Government Spending Entities,” so why stop now?

And, since when does Fannie Mae base decisions on whether something is prudent in the short run, or the long run for that matter?  Because that’s certainly what comes to my mind when I think of the word “prudent”… Fannie Mae.

Hey, nice castle, by the way.

Regardless of all of this, DeMarco has not been willing to budge an inch.  It’s interesting… Obama does appoint the head of the FHFA, but apparently he can’t order him to do anything.  I’d look up the reason behind this idiocy, but I don’t want to hurt myself… check with Yves Smith over at Naked Capitalism, I’m sure she knows.  The bottom-line is that DeMarco is legally “independent,” he can’t be fired, and so far refuses to step down, so at this point he’s singlehandedly preventing our government from doing something to stop foreclosures, as if the Republicans alone weren’t enough of an obstacle in this regard.  So… fine… I say, someone have him shot at dawn… and viola!  Problem solved.  I’ll even go pay-per-view, how’s that?

Recently, Mr. DeMarco, in his testimony to congress over the $35 million in bonuses being paid to Fannie and Freddie executives, said that executive compensation at Fannie Mae and Freddie Mac has been appropriate as well as necessary to prevent taxpayer losses.  This is the kind of logic that’s obviously the product of a beautiful mind.

DeMarco defended the bonuses, saying that without them, there could be an exodus of talent, which could result in taxpayer losses.  And I have just two things to say in response to that:

• Fannie and Freddie have already cost the American taxpayer roughly $169 BILLION, and estimates are that we’re on our way to a $220 BILLION tab.  Last quarter, they needed something like $13 BILLION alone.  So, whatever talent you’ve got over there… for God’s sake, let them go.  Paying bonuses at the GSEs now is like closing the door after the horses have run out and then opening it back up and shooting the horses that remained inside.
• I’m absolutely positive that I could have saved the country a fortune here.  I’d bet anything that I could have bankrupted Fannie and Freddie for a lot less than $169 BILLION.  I would have been more than happy to run the two GSEs into the ground for a few hundred million.  Next time, pick up the phone… I’m here to help.

At this point Mr. Ed, a real horse’s behind, is standing right smack in the way of programs that could at least start turning around the housing market and that is making me insane.

On this topic, DeMarco recently told Politico.com:

“Sweeping plans to help homeowners ‘did not meet our responsibilities as conservator. That doesn’t mean principal forgiveness might not be appropriate… but it does not meet our mandate to return Fannie and Freddie to solvency and guard against another taxpayer bailout.”

He also said that the FHFA, “has exercised its responsibilities … to not undertake certain initiatives.”  Did I tell you he was an out of touch policy wonk?  I did?  Okay, just checking.

He was also recently quoted as saying:

“Americans, whatever their political stripe is, whether they are lawmakers or businesspeople or citizens, we all are frustrated.”

No, Ed… you’ve got that wrong.  I’m frustrated… homeowners are frustrated.  You?  You are FRUSTRATING.

And he also said:

“We are in a set of circumstances in the housing market we have not seen since the Great Depression. It has taken a long time to get to that point, and it’s going to take a long time to recover.”

And evidently, Ed is going to do everything in his unchecked power to make sure of that.  So, ladies and germs… I have seen the enemy, and he is Mr. Edward DeMarco.  To paraphrase the immortal Will Rogers… He makes me feel the way I do when the baby gets a hold of a hammer.

Mandelman out.

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ACT ONE – The shot across all bank bows

As the month of August came to a close, Nevada’s attorney general, Catherine Masto, filed her second amended complaint against Bank of America and friends.  Yves Smith provided the analysis in her post on Naked Capitalism, Nevada Lawsuit Shows Bank of America’s Criminal Incompetence, and all I can tell you is that it reads like a John Grisham or even a Robert Ludlum novel, I don’t know if it quite rises to the level of a John le Carre, but it’s a great read.  Oh, and spoiler alert… there’s going to be a sequel.

She says that the litigation by the attorney general is “significant not merely due to the damages and remedies sought, but because it paves the way for private lawsuits.”  So, that I like the sound of that… private lawsuits are good where Bank of America is concerned.  Here’s what she had to say about the complaint itself…

And make no mistake about it, this filing is a doozy. It shows the Federal/state attorney general mortgage settlement effort to be a complete travesty. The claim describes, in considerable detail, how various Bank of America units engaged in misconduct in virtually every aspect of its residential mortgage business.

The complaint describes abuses from the very outset of the securitization process: how borrowers were mis-sold mortgages (it describes how entire products were effectively predatory), how investors were misled as to their quality, how they were not conveyed properly to securitization trusts, how borrowers were subject to abusive servicing (as in charged improper and impermissible fees), how promises made under the old consent decree regarding mortgage modifications were violated (for instance, even though interest rate reductions were promised, instead modifications often resulted in HIGHER interest rates), and the filing of fraudulent paperwork to execute foreclosures.

Metaphorically, this complaint was a shot across all the bank bows.

ACT TWO – A robo-felony is born

Next, on November 7, 2011, the Wall Street Journal, in its article titled: Nevada Foreclosure Filings Dry Up After ‘Robo-Signing’ Law, described a new felony law that Nevada’s state Assembly passed and that took effect on October 1, 2011, that’s designed to crack down on “robo-signing.”  That’s what we call it when bank employees sign off hundreds of thousands of legal filings, lying about having personally reviewed each case.

The new law holds individuals criminally liable for such false representations and provides for civil penalties of $5,000 for each violation.

Early results say the law is working. In fact, during the first month after the law took effect, notices of default fell from 5,380 to just over 600, a drop of 88 percent, according to data tracked by ForeclosureRadar.com.

The new law also bans trustees from handling foreclosures if a subsidiary of the foreclosing bank, which means that Bank of America’s use of subsidiary, Recon Trust, in Nevada, is no longer allowed.  And ReconTrust didn’t file any NODs in October, about which a Bank of America spokesliar declined to comment.

Of course, the banking lobby is going with the SOP, claiming that the law is going to slow foreclosures, which we all know, hurts everyone.  And then I’m sure there was something about how there’s going to be no lending in Nevada in the future, and stuff like that.

Those behind the bill cleverly, if transparently, say that it’s not about stopping foreclosures, it about guarding against potential title defects that can lead judges to later invalidate foreclosures, as has happened in both Michigan and Massachusetts.  Tisha Black Chernine, a real-estate lawyer in Las Vegas who helped draft the bill, was quoted by the WSJ as having said the following when talking about healing the housing markets…

“This is not at all about preventing foreclosures. It is about helping end users.  We need to make sure foreclosures are done properly.  People taking title pursuant to a bad foreclosure run the risk of having no title at all.”

Okay, so that her story and she’s sticking to it, I suppose.  And if people are buying that, and it’s working with the bank, then I’m in favor of saying it.  Heck, I’d tell BofA scary bedtime stories about all sorts of thing every night all year if I thought it would get them to do a Scrooge-like turnaround as far as the foreclosure crisis is concerned.

So, while Nevada’s NODs dropped by 88 percent, foreclosures picked in the other 49 states.  Looking at loans bundled and sold as mortgage-backed securities without any government guarantees, Fitch ratings attributed the spike in foreclosures to making up for time lost pretending to investigate robo-signing, which started during the fall of 2010, and caused intermittent delays for several months.

ACT THREE – Let’s get criminal, criminal…

And now, for the first time, but likely not the last, … National Mortgage News is reporting that the State of Nevada filed its first criminal charges in conjunction with robo-signing against two individuals accused of filling tens of thousands of false documents.  John Kelleher, the state’s chief deputy attorney general, told National Mortgage News that he expects that more indictments in the future.

The defendants in the case allegedly allowed others to forge their signatures and then submit the fraudulent documents to the county recorder, but curiously the indictment doesn’t say for which servicer Gary Trafford and Gerri Sheppard worked.  Although, KLAS-TV in Las Vegas, after producing a lengthy series on robo-signing, reported that Trafford and Sheppard worked for Lender Processing Services (“LPS”) of Jacksonville, Florida.

If you want into the pool I’ve started it’s $25 per square, you can buy up to four, and the winner get’s half the pot, which is expected to be over $1 million, thanks to the use of leverage.  The contest’s loser will also win a purse expected to be almost $2,000,000, due not only leverage, but also because of the incorporation of synthetic derivatives, and credit default swaps, which is sort of like “loser insurance.”

Bail has been set at $500,000 each, with the two defendants facing over 600 counts including both felonies and gross misdemeanors.

No allegations against the actual banks are included.  Again, according to Kelleher…

“We simply don’t know if the major banks were aware of what these individuals were doing.”

Yeah, me either.  It was probably a rogue employee of LPS, taking it upon themselves to forge and record hundreds of thousands of fraudulent affidavits on behalf of the largest banks in the world because… well, whatever.  Regardless, I could certainly see why we might give LPS the benefit of the doubt, where there any doubt to be found anywhere near this case.

I’ll tell you the answer to this question: Yes the bank knew… all the way up to the CEO’s office they knew.  No one would ever open a document forgery department at JPMorgan or Bank of America without the blessing of the bosses, you can trust me on that.

ACT FOUR – ???

Well, believe it or not, how this act goes is going to depend on “us.”  Attorneys general, it should come as no surprise, are largely political beings… at least most are.  That’s one of the major reasons that no settlement has been… or perhaps can ever be, reached.  Kamala Harris in California has certainly been shone to be cognizant and reactive to public opinion.

In fact, the same thing is true about members of the House of Representatives.  If you’re skeptical, just consider the issue that actually motivates people to action… executive bonuses… just about anywhere, like most recently at Fannie Mae and Freddie Mac.  Hearings and held in a hurry, legislators ask tough questions and in many instances, things do happen.

For example, this week the House Financial Services Committee approved legislation to suspend executive compensation packages and halt future bonuses at Fannie and Freddie, only about a week since the news of the bonuses hit the headlines.

That’s not because those in congress all have a natural passion to deal with compensation issues, they most certainly do not.  But, the American people have become visible and vocal on this issue and congress both sees and hears them loud and clear.  And so things happen.

Remember a bill that was introduced right before the midterms in 2010 that would have made out of state notary okay?  Well, Obama decided to pocket veto it with a day or two.  It was here and then it was gone.  Why?  Because bloggers involved in the foreclosure fight all told their readers to write in now and enough did.

The fight over Elizabeth Warren is another example.  The powers that be were united that Warren was not going to be the one to head up the Consumer Financial Protection Bureau, and eventually they prevailed, but it wasn’t easy… and that’s because of the pressure of public opinion.

We may not realize it soon enough and may not take action in time as a result, but the truth of the matter is that were “we the people” to push today, we’d likely find that someone is already kneeling down behind them and they fall easier than anyone thought they would.  I’ve tried to say this before, but the answer lies in things like coordinated letter writing campaigns that are targeted, concentrated and laser focused as to their message.

Just imagine if 300,000 American voters all contacted their representatives in the House (i.e. targeted) at the same time (i.e. concentrated) and asked that congress take immediate action… let’s just say, to correct the country’s property records as a result of MERS… or more generally, to take immediate action to create jobs (i.e. focused).  The media would, of course, cover it… and pollsters would be dispatched around the country to determine just how many people shared the view.

If enough people were involved, and by enough I mean that representatives receive at least hundreds of like messages from constituents.  At 500 of such messages the resulting in them becoming concerned about their prospects for reelection, then things would happen.

I see the key obstacles today, at least as related to the foreclosure crisis, as being threefold:

1. People are overwhelmed with their own lives and want an answer, but the game is one where you win by hitting singles, not home runs, and because the things that are singles aren’t as exciting as would be home runs… it is therefore hard to get enough people motivated to take action on something when that thing alone is not perceived as capable of solving someone’s problems today.
2. People involved in the foreclosure crisis are ashamed of their situation and therefore they don’t tell anyone about their situation or share their views on the subject for fear of being branded “an irresponsible borrower.”  As a result, the grass roots efforts haven’t spread from person to person, because although individuals join, they don’t recruit their friends or family members.
3. Consider what’s missing from the foreclosure crisis.  Even with over 3,000 evictions going on seven days a week, 365 days a year… and 10,000 foreclosure notices going out every day as well… do you see even one Hollywood movie or rock star on public service messages talking about the tragic nature of the foreclosure crisis?  You don’t, do you?  No you don’t.  The “irresponsible borrower” stereotype, while changing slowly to be sure, continues to block progress and prevent people from learning more.

So, what happens in ACT FOUR is going to be a reflection of what we-the-people do… or don’t do.  We cannot change what’s going on in a macro sense if we are exclusively focused on our individual micro situations.  Individual fights do not win a battle, just as individually fought battles don’t win a war.

So, meanwhile… while we wait to see what’s behind the curtain that goes up on ACT FOUR… I give you Nevada’s Attorney General Catherine Masto!

… Faster than a NINJA loan originating at Wamu… More powerful than an unlimited warehouse line at Lehman Bros… able to see swaps and synthetics even when inside an SPE… Look, up in the sky… It’s a bird… It’s a plane… no it’s Nevada’s own, Catherine Masto… Super AG!

HEY WAIT… I HAVE AN IDEA!

My DOERS are used to writing letters and emails expressing frustration and anger to bankers who are doing things wrong and harming people.  And they’re very effective letter writers.  Well, now I’d like to suggest that we all send emails to Catherine Masto to tell her how pleased we all are to see her standing up for the people of her state and how we wish she was our AG too!  I’m serious, if enough of us do it, the media might even pick up the story because NO ONE ever sends nice letters to state AGs… I’ll bet you anything.

SEND E-MAIL IN SUPPORT OF NEVADA’S AG - CLICK HERE.

Obviously, in California our AG has not yet come to realize that the fraud and forgery of robo-signing in this state is something worth going after, perhaps because it’s not as concentrated a problem as it is in Nevada.  Harris hasn’t even talked about filing such a suit, as far as I can tell.

Frankly, I think we should do something about that obvious inequity.  Or, we could just wait a few years until California’s housing market looks closer to what Nevada’s does today, and then everyone will speak up as they have in Nevada, believe you me.

Here’s how you reach California’s Attorney General Kamala Harris… call or send letter telling her that you want and very much expect her to prosecute servicers for the fraud that is “robo-signing,” just as her counterpart in Nevada is doing.

Contact California’s Attorney General

Attorney General’s Office

California Department of Justice

Attn: Public Inquiry Unit

P.O. Box 944255

Sacramento, CA 94244-2550

Voice: (916) 322-3360 or

Toll-free in California: (800) 952-5225

Fax: (916) 323-5341

###

AND JUST TO MAKE SURE YOU’RE NOT MISSING MY POINT…

It goes to show you… all you have to do is make the crime of affidavit fraud a felony, and it immediately stops 88 percent of foreclosures.  What does that say about 88% of the past foreclosures in Nevada?  I guess it says that they were dependent on fraudulently signed documents, right?

Looks like that to me… but then the bankers all said the robo-signings were just isolated incidents.  Doesn’t seem right to me, in fact it looks to me as if foreclosing legally is the isolated incident.

I do know this for sure… we just need more like AG Masto… quite a few more.

Mandelman out.

I’m no expert, but I have had some experience with PTSD.  One of my closest friends was a helicopter gunner during the Vietnam War.  He had 19 confirmed kills, and was awarded the Purple Heart after his helicopter was blown up and he was thrown a hundred feet or more into a rice paddy.

He woke up with water being splashed in his face… bullets from a sniper nearby.  He ran, was shot in the back, and luckily later picked up and taken to an army base where he remained in the hospital for several months.  After that he was sent home… it was 1969, and he returned to a very confusing time.

He struggled with PTSD for the rest of his life.  We were friends for many years, he was a roommate of mine before I got married.  He passed away last year, it was cancer that finally got him, but the cause of that cancer, I’m quite sure was the PTSD that led him to a lifestyle that at many times, his friends knew was suicidal.

PTSD is a very real.  It can kill you.  I’ve seen it up close and personal.

During WWI it was called “shell shock.”  Ever since the Vietnam era we’ve known it as “post-traumatic stress disorder” (“PTSD”).  It’s a term that describes the psychological consequences of exposure to stressful, life-threatening and traumatic experiences.  PTSD is considered a chronic condition, whose symptoms can include nightmares, flashbacks, sleep abnormalities, depression, dizziness, fainting, emotional numbing, extreme distress, and anger outbursts, among others.

Individuals diagnosed as having PTSD are in general considered to be perilously close to a break from reality, usually by succumbing to any of several neuroses or psychoses.  PTSD changes the body’s response to stress.  It affects the stress hormones and chemicals that carry information between the nerves, called neurotransmitters.

A sub-category of PTSD is termed LAS… or Legal Abuse Syndrome.

I hear from homeowners all over the country every single day.  They are engaged in their own personal battles against banks and mortgage servicers as they try to save their homes from foreclosure.  Some cry to the point that they are sobbing… others are enraged, some have given up… some talk of ending their own lives.  One woman, who I think of often, told me she has become a shut-in, no longer able to go outside or answer the phone without overwhelming fear.

Homeowners who have been forced into litigation in an attempt to save their homes, whether choosing to represent themselves, or hire an attorney, are battling against the largest financial institutions in the world in a court system that’s anything but friendly or understanding.  Some have been fighting such battles for years.  Many feel they have been denied justice, and many have very good reason to feel that way.

I can’t even count the number of divorces that the foreclosure crisis has created.  Often one spouse blames the other for making some decision during the housing bubble.  I remember one husband and father who called me to say that after 18 months trying to get a loan modified, his wife had taken the kids and left.  He was a senior vice president at a major bank, and you c an guess which bank was giving him such a hard time over the modification… that’s right… his employer.

And I’ve felt the sadness when a call is made to tell me that someone decided to take their own life rather than endure the shock and/or shame that losing a home to foreclosure can mean.

I want to do whatever I can to help homeowners who reach out to me, and I certainly try to help if I can.  Sometimes I can write about their plight and it has helped.  But, too often all I can do is listen, explain that what’s happening is not their fault, maybe make them laugh… and perhaps refer them to an attorney who I know and trust.

I’m no expert at treating someone who to my way of thinking has PTSD from dealing with the banks and/or the courts as they try to save their home.  But Dr. Karen Huffer is the nation’s leading expert at helping those suffering from LAS, or Legal Abuse Syndrome.

She also offers Webinar training programs through which people can become Legal Abuse Advocates or ADA Advocates – court watchers and peer counselors.

According to an article By Karin Huffer, M.S., M.F.T. and Barbara Parrett, M.S., R.N., C.N.S. “PTSD/LAS is a traumatic reaction that follows a severe usually invisible impact event in the Court. The event is usually traced to the moment adjudication favors the side committing fraud on the court through misinformation used as strategy. There is no rational defense against a lie leaving the one defrauded helpless in the face of jeopardy, which is the formula for PTSD”.
(Judicial System Inaccessibility for Those with Psychiatric Injury Legal Abuse Syndrome as a Psychiatric Injury and Diagnosable Subcategory of Post Traumatic Stress Disorder By Karin Huffer, M.S., M.F.T. and Barbara Parrett, M.S., R.N., C.N.S. Published in part in Diogenes the magazine, Fall Edition, 2005 p.8 -10 and 34.)

Dr. Huffer is Associate Professor of Forensic Psychology at Kings University.  She is the author of “Overcoming the Devastation of Legal Abuse Syndrome,” and has devoted more than 20 years to researching, diagnosing and treating PTSD and other trauma disorders.  She is an ADA Title II and Title III Specialist, and has been an ADA Section 504 consultant.  She has worked with schools, businesses and the judicial system to provide effective accommodations for those who suffer from disabilities.

In 2008, Karin’s extensive work led to the acknowledgement by the ADA that our judicial system can and does cause traumatic stress in those who seek civilized, fair, due process of law and redress of grievances.

According to Dr. Huffer:

“LEGAL ABUSE SYNDROME (LAS) is a form of post-traumatic stress disorder (PTSD).  It is a psychic injury, not a mental illness.  It is a personal injury that develops in individuals assaulted by ethical violations, legal abuses, betrayals, and fraud. Abuse of power and authority and a profound lack of accountability in our courts have become rampant, compounding an already stressful experience.

This stress can and does lead to physical illness. AMA statistics show that around 85% of all physical illness is directly attributable to stress. Legal Abuse Syndrome is a public health menace in this country.  It leads to massive medical intervention costs, burdens insurance companies, and adds to Medicare and Social Security costs.  Most painfully, it crushes the brilliance and creativity of its sufferers.  Legal Abuse Syndrome is detrimental to all of society, and nobody is immune.

Whatever the court setting, whether it is regarding divorce, child custody, parental support, probate matters, personal injury, property disputes, legal or medical malpractice, criminal charges or other deeply personal issues, the frauds put forth in our courts add greatly to the trauma.

When litigants are unable to get fair resolution to their issues, when the court dysfunction further adds to the litigant’s burden, when no amount of actual case law compels an equitable outcome, litigants often suffer disabling levels of stress. When further attempts to achieve redress fail, litigants display the hallmark signs of Legal Abuse Syndrome (LAS).

Medical and psychological treatment for PTSD is compensable under most health insurance. To learn more about PTSD see http://traumacenter.org.”

Dr. Huffer’s head up an organization called Legal Victim Assistance Advocates (“LVAA”), whose main focus is helping disabled litigants under the Americans with Disabilities Act (ADA), as well as moving forward with the disabled community to ensure all civil rights are maintained.

Dr. Karin Huffer, M.S., M.F.T., is the accommodations designer. She works together with a patient’s physicians and court personnel to create a blueprint individualized to meet each litigant’s unique needs.  Dr. Huffer is the only nationally recognized expert witness within this field. She has appeared in numerous jurisdictions within this nation over the last twenty years and continues to advocate for not only disabled individuals but as well as women’s and children’s rights and fights to stop domestic violence and all abuses.

Dr. Huffer’s organization’s mission is stated as follows:

Litigants with disabilities feel that they are wrong or crazy when their best efforts do not succeed in court.  We at LVAA are advocates, consultants, and expert witnesses serving those who have suffered from ethical or legal abuses and who need rational assistance in facing what will feel like a system and life out of control.

• We design and communicate to the court ADA accommodations for litigants with special needs.

• We advocate for the functionally impaired in court.

• We specialize in post traumatic stress disorder / legal abuse syndrome.

• Cases involving traumatic stress related to domestic violence.

Dr. Huffer’s goal is to promote a fair court process with an attitude of inclusion and tolerance. Her firm’s advocates enhance security, dignity and respect for every person.  LVAA helps the courts to better assist and serve those with special needs according to ADAAA mandates.

Their mission is affirmed by the Universal Declaration of Human Rights, 1948, the Convention on the Elimination of Discrimination Against Women of 1979, The ABA Resolution of 2002, The Americans with Disabilities Act Titles II & III, of 1990, the ADAAA of 2008, and the International Treaty for the Disabled of 2009.

There are two videos below.  One is an interview with Dr. Huffer, and the other is someone who was helped by Dr. Huffer and her programs.

This crisis is not going to be over anytime soon… it’ll be many years before we will have put it behind us.  And if you feel you need help, there’s certainly no shame in asking for it.

Mandelman out.

Geauga County’s prosecuting attorney, David P. Joyce has filed a class action lawsuit on behalf of the county “and all other similarly situated counties in Ohio,” against MERS and everybody else who used the MERS “scheme,” alleging that they violated Ohio law requiring that, “each and every mortgage assignment must be recorded in the proper Ohio county recording office,” and that by doing so, they avoided paying the counties the attendant recording fees.

Former Ohio Attorney General Marc Dann says the case does accurately represent what he referred to as “black letter law” in the State of Ohio for the last 200 years.  He also described the case as being fairly narrow in that it’s really going after the recording fees that were not paid to each county when the defendants used the MERS system, but in doing so, the case is also going to have to establish the problems with the over all MERS operation.

Attorney Marc Dann

According to Dann, “Ohio law requires that transfers of beneficial interest be recorded in the appropriate county, so either they avoided paying the fees to the counties for what was otherwise a valid transfer, or perhaps the transfers were invalid, in which case many, many foreclosures should not have been allowed to happen.”

Geauga County is a small, rural county near Cleveland, Ohio, and Dann, who has his law office in Cleveland, has been fighting for the rights of Ohio homeowners since serving as the state’s Attorney General in 2007-08.  He says that if Geauga County’s prosecutor wins this case, he may be reopening thousands of foreclosures.

“This case asks court very directly whether the MERS system complies with state law.  If it doesn’t then I’m going to go back and reopen all of the foreclosures alleging that the transfers were invalid,” says Dann without hesitation.

The class action lawsuit, however, is about damages, and they could be substantial.  Dann says that the county recording fees are in the $30-$40 range, so in a state with over 80,000 foreclosures a year, and I have no idea how many mortgages that have been securitized over the last so many years, the amounts of fees avoided by easily reach into the millions.

The complaint alleges that the MERS system is a “scheme” designed to evade the required recording fees and the suit specifically seeks payment of those fees, saying that in the securitization process mortgages are assigned at least twice.

Also included in the complaint is the allegation that the defendants “systematically broke chains of land title throughout Ohio counties’ public land records by creating ‘gaps’ due to missing mortgage assignments they failed to record, or by recoding patently false and/or misleading mortgage assignments.  Further the complaint  states that the “defendants’ failure to record has eviscerated the accuracy of Ohio’s counties’ public land records, rendering them unreliable and unverifiable.”

I asked renowned consumer bankruptcy attorney Max Gardner what he thought would happen if the case were to be successful and he said it could put MERS out of business, or certainly make it a costly mistake for all involved.

O. Max Gardner III

“MERS INC. is a wholly owned subsidiary of MERSCORP and has no assets to speak of, and MERSCORP has some assets but it looks to me like a multi-million dollar judgment would be beyond their ability to pay,” Max said.

“So, I guess they’d need a bailout,” he quips.  “If it even looks like the prosecutor is going to be able to win this case, it’ll definitely be time for MERS to make a call to Houston, you know to say, we’ve got a problem… and it’s a big problem,” Gardner adds.

Max says that, although this case is somewhat similar to a case previously filed in Minnesota, he’s not aware of “any other case alleging this theory filed by a state or county to-date.”

The complaint states that the “defendant’s purposeful failure” to record the mortgage assignments in compliance with state law has caused “far-reaching, devastating consequences for Ohio counties and their public land records.”  And further, that those damages “may never be entirely remedied.”  (Emphasis added.)

The lawsuit, which was filed on October 13, 2011, names as defendants: MERSCORP, INC. and Mortgage Electronic Registration System, Inc., but also names:

Home Savings and Loan Inc., Bank of America Corp, CCO Mortgage Corp, Chase Home Mortgage Corp, Citimortgage Inc, Corelogic, Corinthian Mortgage Corp, Everhome Mortgage Corp, GMAC, Guaranty Bank, HSBC Bank, MGIC Investors Services, Nationwide Advantage Mortgage, PMI Mortgage Services Company, Suntrust Mortgage, United Guaranty Corp, Wells Fargo Bank, and Doe Corporations – names and addresses unknown.

So, obviously this is one to watch, both for the homeowners in Ohio, and elsewhere.  The ramifications, should the case be successful, could very well spread to other states, as the Ohio counties involved could receive hundreds of thousands or millions of much-needed dollars.

Once again, the arrogance of MERS and the industry that created it is astounding.  I mean, to simply disregard out of hand, 200 years of Ohio state law, without a second thought, is remarkable.  And when I read that it may never be entirely remedied, I can’t help but wonder what the ultimate cost of what was done will be and who will one day be forced to pay it.

From talking with Marc Dann and Max Gardner, it looks like this is a case that will cause great concern back at MERS headquarters, and all I can say is… it’s about time.

You can find a copy of the complaint below…

Mandelman out.

State of Ohio v MERS and Banks