Another tradition at Casa del Andelman is our Academy Awards Party, held each year on the night the stars come out… for Oscar.  Yes, it’s the time of year when we instruct the staff to roll out the red carpet, polish the chandeliers, dust off the champagne fountain, my wife throws on an evening gown, I always appear in tux and tails… are you buying any of this?  No?

Okay, so would you believe my wife makes a huge amount of chili in the crock-pot along with some delicious cornbread… and I prepare my award-winning specialty… cocktail weenies in my secret, special barbeque sauce. (I’d tell you what’s in it, but then I’d have to kill you.)  They’re best when eaten with a toothpick, by the way… so tangy… mmmm, can’t wait.

The Andelman bar is always pretty much stocked, but everything else is potluck, so someone usually shows up with the ambrosia salad, and others bring whatever else.  We go ahead and spring for the paper plates and plasticwear, and we get the good stuff… you know the Chinette, with the forks and spoons that look like silver even though they’re not, and the red plastic cups.

I’ll tell you what… some years there’s been so much class oozing at our place that it gets to feeling like you’re at a real honest-to-Henry, Hollywood-type soiree.

But all of that is not what keeps bringing people back to our house on Oscar night year after year.  Nope, what everyone comes to our Academy Awards gala for is the gambling.  And we start ‘em young too… I think about 9 years old, if I recall correctly.  Never too young to have your money taken from you, that’s what I always say.  (Okay, so  I’m kidding about that last part.)

I’m not sure how the whole thing got started, it must be about 20 years plus now that we’ve been doing it, but we make up special ballots for a whole bunch of categories and as our guests arrive, they ask for their ballot right after they say hello… grab a pen and start making their picks.

That’s when the house really comes alive… it’s like that scene from “Guys & Dolls”…

“I got a horse right here, his name is Paul Revere, and there a guy who says that if the weather’s clear… Can do… Can do…“  Remember?

“I didn’t see ‘The Help’… did anyone see that?”

 

“Yeah, I did.”

 

“Was it good?”

 

“Yeah, I liked it… kind of sad at the end though.”

 

“Would I have liked it?”

 

“I don’t know, probably.”

 

“What are you voting for in the ‘Documentary Short’ category?”

 

“I’m not telling you.”

 

“Come on…”

 

“Nope, you’ll just have to guess like the rest of us.”

 

“Let me see.”

 

“No, get away from me.”

 

“Why did we include ‘Best Foreign Film’ again, I thought last year we said we weren’t going to do that anymore… who sees foreign films… no one.”

 

“I saw one of the foreign films last year.”

 

“You did not, you’re lying.”

 

“I am not.”

 

“What’d you see?”

 

“Jodaeiye Nader Az Simin.”

 

“You are so lying.”

 

“So what if I am?”

 

“Hey, does anybody remember what’s the difference between sound editing and sound mixing?  Didn’t we look it up or something last year?  I know someone told me last  year but I can never remember.  Honey, would you hand me my iPad.”

 

“No, you can’t use an iPad, you’ll cheat and look up who the favorites are.”

 

“Oh my God, I will not.  How could you say that about me?”

 

“Because I know you.”

 

“I hate you, did you know that about me?  Go sit over there with your friend.”

 

“Fine.”

Yep, it can get a little heated at times, but no one has physically harmed anyone to-date, and the kids have a ball helping the grown-ups guess at which movies are going to be this years’ Oscar winners… while they listen to their parents make idiots out of themselves.

Until mom or dad needs to pick a winner in the Animated Film category, and then all the parents start looking around for their kids… “Meagan, come in here please. I need you.”

It’s $10 to play, by the way and the one who gets the most right, splits the pot with the one who gets the least right… plus there’s usually a bonus category or two that each win ten bucks or something like that.  I won at least one year… took home $180, if I remember correctly… or maybe it was only $80… or maybe we split the $180… I don’t know.  The kids always win something too… it’s a real good time all around.  If you’re in my neck of the woods, come on by… there’s plenty of food and drink… and we’ll take your ten bucks and hand you a ballot, if you’d like.

Well, it seems to me that some years are better than others, when it comes to the Academy Awards, we usually show our age by engaging in a few discussions that lament the fact that they just don’t make movies like they used to very often… but this year we’ve got quite a list of Best Picture nominees… pretty compelling stuff, if you ask me.

I haven’t actually seen any of them, but I’ve gone ahead and described them, so you can see the candidates through my somewhat jaded perspective… and my list is likely a little different than the others you’ll run across… I don’t know why but other reviewers often miss what the movies are really about.  Me… why I see a little bit of the foreclosure crisis in everything, don’t you know.

There are 17 days to go, so you better get to the movies in a hurry if you want to be in the know come Oscar night… Sunday, February 26^th.

And now…

This year at the 84^th Annual Academy Awards, the nominees for Best Picture are…

“The Con-Artist”

The Scary Scummers story, filmed in black & white.  Growing up with prominent professors of economics at the University of Pennsylvania as parents, and the nephew of two Nobel laureates in economics, a young Scary Scummers realizes he can’t follow the conversations at the dinner table.  In one scene, after scoring a combined 480 on his SATs, he overhears his parents saying the family’s genes have obviously skipped a generation.

About to start a job sweeping up in a bagel bakery, his life takes a dramatic turn when a friend fakes his resume.  Because of his last name, no one thinks to check, and next thing we know, he’s chief economist at the World Bank.  When a charismatic, but inexperienced community organizer from Chicago’s south side inexplicably finds himself in the Oval Office, Scary convinces the new president, who knows nothing about economics, that he’s the one who should drive the nation’s economy.  And he does… straight off a cliff.  (Warning: May cause motion sickness.)

“The Defendants”

This fantasy-drama follows a dozen Bank of America senior executives as they are forced to travel from courtroom to courtroom all over the country defending hundreds of lawsuits of all kinds.  Each time the bank execs think things are going well, but invariably lower level employees are called to the stand, completely blowing the bank’s defense.

As the judgments mount into the billions, new suits are being filed each day.  Law school enrollment skyrockets as the country starts churning out lawyers all anxious to take their shot at BofA or any of the too-big-to-fail banks.  As the law firms and the companies that support the new industry grow, so much money is being made beating the banks, that the U.S. economy starts turning around and soon the middle class is debt free.  99% on Putrid Potatoes:  “It’s the feel good movie of the year!” 

“No HELP”

The story centers on attorneys litigating on behalf of homeowners in foreclosure throughout California where judges actually favor MERS’ assignments, sincerely do not care who owns which house, and believe that “securitization,” is what happens when having a home alarm system installed.

As their clients become more and more dissatisfied, they start blackmailing the lawyers, threatening to file bar complaints in order to get their money back.  The frustrated lawyers finally turn to their own state’s bar association for support, but when they do the bar promptly has them arrested.  Filmed in a hand-held style best described as “gritty realism,” the film is based on a true story.

“HUGE”

In this 3-D animated fantasy, Crazy Jamie Diamonds and Johnny Stumpedwells travel together to find Lord Blankcheck, in the hopes that he will do God’s work and tell them how to find King Angelo Mozillion, the one they call Too-Huge-to-Jail.  Along the way they come across all sorts of familiar characters including GS egghead, Fab Faberge, who keeps repeating, “I did nothing wrong, but I could have been more careful,” and Kenny Lewser, who roams the country wide belching as he says, “I can’t believe I bought the whole thing… twice.”  Rated PiG.

“2:00 PM in Paris”

When Frugal Williams lost his job as a loan officer in 2008, he knew he was in trouble.  But then one day, after a year spent living on his savings and a few loans from his parents, he’s about to put his Paris, Texas home up for sale, until he finds himself watching the country’s recently elected president describe a new federal program designed to help him save his home.

That night, he has the best night’s sleep in over a year, but he wakes up on a different planet.  His life is turned upside down from the moment he sends in the package of forms to his his servicer… First Infidelity Bank (FIB).   Theater owners across the country report audiences screaming out, “No!  Stop!  Don’t!” as he slides the package into the Fed-Ex drop-box.

Soon his life is entirely consumed by requirements of his loan modification.  Unable to keep up, his wife is forced to quit her job, as well, in order to help him, and soon the Kinko’s bills for faxing and photocopying drive the family into bankruptcy.  Now there’s a sale date.  But with Hitchcockian flair, no one knows what will happen for sure… tomorrow at “2:00 PM in Paris,” TX.  (NC-17 – Not for viewers over 17 yrs.)

“Moneyballers”           

This futuristic thriller stars ex-Morgan Stanley bond trader Howie Hubler, the man who lost Morgan $9 billion in a single trade, inadvertently kicking off the new favorite competitive-craze among the country’s wealthiest individuals.  The year is 2016, and every megalomaniac hedgefunder wants to be a “Moneyballer.”

In games of Moneyball, the whistle blows and seated at screens equipped with trading platforms, the uber-rich compete to see how fast they can irrationally pump up various stocks, bonds and/or commodities in order to wipe out the retirement savings of middle class Americans, referred to as “pawns,” who follow them as prices rise to disastrous ends.

In an opening scene, we see Hubler in his Central Park South penthouse.  He is laughing almost uncontrollably. “There’s no question, it can be expensive to play.  Last week, I had to throw away $4 million and change just to bankrupt this small business owner from New Rochelle.  He was quite guarded and pretty tenacious, but in the end he took the bait. When everything collapsed, I swear to God, I think he and his wife both soiled themselves… I’m not kidding… I almost choked on my foie gras.”

“The Free for Life”

In this reality-based comedy, John and Jane Q. Public are seen taking their shot at the lottery wheel of justice.  Couples appear before judges in courtrooms across the country hoping to wipe out their mortgage and walk away with a free house.  The laughs come from watching the pro per/pro se litigants go up against lawyers from JPMorgan Chase and Wells Fargo, attempting to explain to judges why it matters that the assignment of the deed of trust was illegally notarized, and why it doesn’t matter that they haven’t made their mortgage payment in 36 months.

“War House”

Brighton Badass and his son, Redneck, have lived in their home all their lives and they don’t plan on leaving it just ‘cause some bankster says so.  In an opening scene, we see and hear Bright talking on the phone, “Well, you just tell the sheriff… she comes out her looking for me and my boy to leave, she better be armed to the teeth, ‘cause I sure will be.  That’s all we invest in out here in the woods… guns and gold,” he laughs as he hangs up the handset.

The camera pulls back and we see that this home is more than just well fortified.  There are snipers in trees, and trenches dug six feet deep for 50 yards all around the property.  Bright pops a few pills in his mouth and washes them down with some white lightening whiskey.  Then he blows his whistle and the hundred or so men, women and children come out from their positions to receive their orders.

The “War House” trailer, voted #1 in 2011, ends when the camera zooms in on Redneck Badass as he says laughing, “Come on, ya’ll… sheriff’s a comin’ so get yourself some amo… time to show the law how we practice foreclosure defense round here. They robo-signing, so we robo-shooting.”

“Extremely Quiet & Incredibly Corrupt”

This semi-historical docudrama chronicles a year of negotiations between 50 state attorneys general and five bankers.  From the beginning we see that neither side knows what in the world they’re doing, as the discussion mostly consists of one side saying, “$20 billion,” and the other side yelling back, “$10 billion.”

Along the way rumors start to swirl as the senseless drama leads to enormous amounts of press coverage, only to end with nothing being accomplished and little being disclosed.  This film concludes Steve Stealbanks’ social commentary on meaningless media hype and corrupt, unfeeling politics, a quadrilogy that began with, “OMG IT’S Y2K,” followed by, “WMD & ME,” and then, who could ever forget, “Hope & Change, 2008.”

OMG, did you see what she was wearing?  See you on the red carpet!

Mandelman out.

Since 1999, Professor David Coates has been the Worrell Chair of Anglo-American Studies at Wake Forest University.  Prior to joining the faculty at Wake Forest he directed the International Centre for Labour Studies, and was Professor of Government at the University of Manchester in the United Kingdom.  He also writes a blog at www.davidcoates.com, and it’s absolutely a fantastic read in all cases.

I found Professor Coates’ blog last year on my birthday as I was searching the Web for like voices and when I came across his, I felt like I had been given a birthday present.  And I wrote to him at the time and told him exactly that.

David’s latest article, for example, is titled: Republican Truth and the Real Truth: GSEs and the Housing Bubble.

David and I have been communicating over the last year and I invited him to join me on a podcast because he offers points of view that are as fascinating as they are erudite and well-considered.  They are also not the same thing you’ve heard before, as they cover the foreclosure crisis both here in the U.S and in the UK.  He also talks about the global financial crisis and the political ramifications that are manifesting themselves in this country and frankly, what he says is important at every turn.

David has also written two books, both of which you can find on his blog.  One is, “Answering Back,” which offers “liberal responses to conservative arguments,” and the other, “Making the Progressive Case.”  Both are worth reading.

I’ve learned a lot from Professor Coates and I’m confident you will too.  So, turn up your speakers… click below… sit back and relax… and listen to an uninterrupted hour with Professor David Coates as he talks about the foreclosure crisis here and in the UK, why democracy and progressive politics are more important today than perhaps ever before…  and whole lot more… on A Mandelman Matters Podcast.

(Plus… I don’t know about you, but somehow the foreclosure crisis sounds better in a British accent… go figure.)

CLICK BELOW

Mandelman Out.

Hey DOERS… Good News Once Again, this time for

Tom Stover & Jeneane Traynor-Stover

(And that would be 8 out of 8 for the DOERS… but who’s counting?) 

Ooops, you did it again!  Yes, it’s true… Wells Fargo contacted Tom and Jeneane up in Granite Bay, California mid-day today to let them know that their SALE DATE of February 3, 2012 HAS BEEN POSTPONED.  This was the DOER ALERT posted late in the day last Friday, and today is Tuesday, so even though it wasn’t handled within 24 hours as we’ve gotten used to… I can live with 48 hours too.  (I don’t like it, but I can live with it… LOL.)

The truth is that although I did see that some DOERS sent emails in response to the ALERT on Friday, there weren’t nearly enough.  And then when we didn’t hear anything from Wells yesterday, Jeneane called me and mentioned that she thought that maybe the DOER ALERT got lost in people’s inboxes as a result of being posted late on Friday.

So, I reposted it yesterday and last night I sent out about 100 emails to DOERS, and sure enough… a lot more emails started flying towards Wells… and by today at 11:00 AM… it was a brand new day for Jeneane and Tom.  See how that works?  DOERS have got to stay up on this… you promised to for 120 days, right?  And I’ll try not to post late on Fridays… deal?  Cool.

Here’s the email I received from Jeneane at 11:00 AM today.

Dear Mandelman and the DOERS…

I wanted to let you know asap that I received a call from Michael Berg from the executive office of complaints at Wells Fargo.  He was very nice, the first thing he said was the sale was postponed and he is my single point of contact and he is getting a package out to me today and when I receive it tomorrow he wants me to call him back to go over it.    

WOW, that was great, you really are doing an amazing job at getting results, I will keep you posted!

You are a lifesaver, or shall I say a family saver, I do realized that there is not guarantee of a loan modification, but just being given the consideration of being informed is all I asked for!

Thanks again,  

Jeneane

Okay, well now that Wells has stopped the clock on the sale date… I for one have all the confidence in the world that Wells Fargo will find a way to modify this loan so Tom, Jeneane and their beautiful daughter will be able to stay in their home with payments they can afford.  And I’m sure all of our prayers are with Tom that he fully recover so he can get back to work on a full-time basis soon.

Thank you to all the DOERS who helped DO this! But there still aren’t enough of you DOING what you promised you would DO.  If we want to be able to affect bigger issues… national issues… then everyone’s going to have to turn up their game… get with the program… start taking this more seriously and continue spreading the word.

Sorry… it’s work I know.  But it’s not that much work.  You should all be very proud of what we’ve accomplished together and over a very short period of time… so you should be talking about it everyone you know… bragging even.

Stay tuned… unfortunately there are more DOER AlERTS to come!

Mandelman & Field OUT!

~~~

OFFICIAL DOER STATEMENT OF PURPOSE

BY MARTIN ANDELMAN & ABIGAIL FIELD

We, Mandelman & Field, are joining forces to end the foreclosure crisis. We’ve been writing about the crisis—Mandelman for more than three years and 600+ articles, Field for about half that—but frankly, writing’s not enough.

We need to DO more to solve the massive crisis our country is enduring. We must act now, because the crisis we’re in will get much, much worse.  This year is an election year… the time for decisive action is now.

But by ourselves we can’t do enough. We need YOU to DO too.

Mandelman has already inspired a core group of DOERS, people who have already solved the mortgage modification nightmares of six people. But to solve the problems faster than one mortgage at a time and to attack bigger problems, we need more DOERS… a lot more.

Here’s what we DOERS DO:

1. We take action.

We are knowledgeable, active and involved. We know that our actions make a difference because we’re all working together, multiplying our impact. That’s why we continue to take action, each and every day.

2. We know there’s no “try” in DO.

Either you DO, or you don’t.

3. We build big victories out of little victories.

We’re singles hitters with a really high on base percentage.   We scratch out the runs it takes to win every way we can. Our actions are simple, discrete, and quick to do, like sending an email, making a call, mailing a letter.

We work this way because swinging for the fences wastes lots of effort and results in more strikeouts than our country has time for. Besides, it took years to make the mess we’re in, and there’s no silver bullet that fixes everything all at once. We have to do many things, and collectively they will make the big changes we need.

4. We focus on our similarities, not our differences.  

We’re not about right and left… we’re about right and wrong. Frankly, our nation’s policies on housing and banks are so bad, we have plenty of solid common ground for everyone. Since we’re focused on fixing those two interrelated issues—housing and bank policy—our divisions on other issues are irrelevant.

5. We believe in “We, the People.”  

We join forces to make change because we are Americans. It’s our Constitutional birthright to be in charge, to make change together. And we know if we act together to make good policy, we all benefit.

6. We recruit more DOERS, because size matters.

To solve the big problems we need to be correspondingly big. We’re not playing games. We are DOING to win.

7. And we are in it to win it.

We are relentless.  We take our tasks seriously.  We do our best. We  never let down our fellow DOERS by not DOING our individual parts.

ProPublica is reporting that Freddie Mac has been placing “multi-billion dollar bets designed to only pay off when homeowners remain “trapped” in high interest rate loans, and that the government-owned mortgage monster began increasing such bets late in 2010, which they say is, “the same time Freddie was making harder for homeowners to get out of high-interest mortgages.”

Now, the ProPublica story goes on to say…

“No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.”

And I suppose ProPublica had to say that for whatever reason, probably because that’s what the Freddie Mac SpokesLiar said when they asked about this egregious, fraudulent, criminal behavior that is also AT BEST yet another FAILURE OF GOVERNMENT to protect the American people.

Now, let me be very clear here, so as not to leave any doubt in what we should all understand about this situation that has been uncovered by an investigation conducted by NPR and ProPublica…

1. Freddie Mac has essentially been nationalized. It is 100 percent funded by U.S. taxpayers because if it weren’t for U.S. taxpayers Freddie Mac would be bankrupt. 

2. As ProPublica also points out in its story, Freddie Mac’s charter “calls for the company to make home loans more accessible. Its chief executive, Charles Haldeman Jr., recently told Congress that his company is “helping financially strapped families reduce their mortgage costs through refinancing their mortgages.”  Really, Haldeman?  Or maybe, not so much.

3. The statement above about how Freddie’s traders are “WALLED OFF” from the people at Freddie who have restricted homeowners from getting lower rates so they could keep their homes is OFFENSIVE in so many ways I hardly know where to begin.

First of all, Freddie Mac… IT’S A BOLDFACED LIE.  Do you think you are dealing with a nation of 4 year-olds?  How dare you even try to make such a case to the American people?  Secondly, what right do you have to be “restricting homeowners” from doing ANYTHING?  You are a bankrupt mortgage company that failed so spectacularly that you have cost the American taxpayers incalculable and untold billions of dollars.  The way I see it, you have no right to “restrict” anyone from doing anything.

4. Mr. Charles Haldeman Jr. if you do not end up in prison for the rest of your life, it will be an abominable miscarriage of justice.  When you consider the state of the U.S. and even the world’s economy, and the fragile nature of our banking system, in which almost all trust has been destroyed… Freddie’s acts here constitute TREASON, and Mr. Haldeman should be considered nothing less than a TRAITOR to this country.

No, he didn’t declare war on the United States, or give aid and comfort to our enemies, but congress has, at times throughout our history, passed statutes creating offenses related to treason for acts that undermine the government or the national security, and in my mind, Mr. Haldeman as Freddie Mac’s Chief Executive, most certainly allowed such acts to occur in this case.

5. But Haldeman didn’t commit these acts alone… the others involved must be arrested and tried for these crimes so they may be brought to justice as well.  And where is Mr. Edward DeMarco, the head of the FHFA, the conservator of both Freddie Mac and Fannie Mae?

At an absolute minimum, and to avoid his own prosecution, if that’s even possible, we should all be calling for his IMMEDIATE RESIGNATION, and he should be delivering on national television his most profound apologies to the people of this country, for what he has overseen is a national disgrace at a level I’ve never even contemplated as being possible in this country.

6. Because you should make no mistake about this… the acts committed here have cost more than trillions of dollars in lost wealth, but beyond the incomprehensible monetary cost, they have cost American lives. 

There are children who will grow up without their loving parent or parents because of our foreclosure crisis, senior citizens who have lost all faith in our nation in the last years of their lives… families that have suffered in muted agony for months turned years… and to have used American taxpayer dollars to intentionally exacerbate the effects of the crisis, is so appalling… so contemptible… so utterly vile…  that it truly is unspeakable. 

Eric Holder & Lanny Breuer

Further, U.S. Attorney General Eric Holder should also immediately RESIGN in DISGRACE…

That these unconscionable trades of securities and derivatives, whatever they are, had to be uncovered by an investigation ProPublica and NPR illustrates the, at best laughable, and at worst  corrupt nature of Attorney General Eric Holder and his Department of In-Justice.

Not only has Eric Holder failed to prosecute any of the banking industry executives responsible for our catastrophic economic collapse, but he hasn’t even lifted a finger to do so, or even taken the time to tell the people of this country anything substantive about anything related to the crisis.

It should go with saying that he needs to be replaced, and perhaps this time we should not hire as our “top cop,” a lawyer from Covington & Burling, one of Washington’s biggest white shoe law firms, widely known to represent… WHILE HOLDER and BREUER WERE PARTNERS AT THE FIRM… some of the largest banks in the country, including Bank of America, JPMorgan Chase, CITIGROUP, WELLS FARGO BANK, MERS, one of the largest servicers, and yes… FREDDIE MAC too.

As reported by Huffington Post on January 19th…

“U.S. Attorney General Eric Holder and Lanny Breuer, head of the Justice Department’s criminal division, were partners for years at a Washington law firm that represented a Who’s Who of big banks and other companies at the center of alleged foreclosure fraud, a Reuters inquiry shows.

Covington represented Freddie Mac, one of the nation’s biggest issuers of mortgage-backed securities, in enforcement investigations by federal financial regulators.

A particular concern by those pressing for an investigation is Covington’s involvement with Virginia-based MERS Corp, which runs a vast computerized registry of mortgages. Little known before the mortgage crisis hit, MERS, which stands for Mortgage Electronic Registration Systems, has been at the center of complaints about false or erroneous mortgage documents.

Court records show that Covington, in the late 1990s, provided legal opinion letters needed to create MERS on behalf of Fannie Mae, Freddie Mac, Bank of America, JP Morgan Chase and several other large banks. It was meant to speed up registration and transfers of mortgages. By 2010, MERS claimed to own about half of all mortgages in the U.S. — roughly 60 million loans.

But evidence in numerous state and federal court cases around the country has shown that MERS authorized thousands of bank employees to sign their names as MERS officials. The banks allegedly drew up fake mortgage assignments, making it appear falsely that they had standing to file foreclosures, and then had their own employees sign the documents as MERS “vice presidents” or “assistant secretaries.”

And get this…

“Covington declined to respond to questions from Reuters. A Covington spokeswoman said the firm had no comment.”

Roger that.  I understand perfectly.  Let me see if I’ve got this straight…

• President Obama announces Making Home Affordable Program.
• Obama puts Treasury Secretary Geithner in charge of HAMP loan modification and HARP refinancing programs.
• Geithner appoints Fannie Mae administrator and Freddie Mac regulator of MHA programs.
• Obama puts Edward DeMarco in charge of FHFA.
• FHFA is responsible for oversight of Fannie and Freddie.
• Obama and Geithner say they want Fannie & Freddie to offer principal reductions to stem tide of defaults.
• But DeMarco says no to principal reductions, claims it’s because of “short-term accounting reasons.”
• In 2010, Obama nominates permanent replacement for DeMarco, but Republicans in Congress block nomination.
• Charles Haldeman Jr. is in charge of Freddie Mac.
• Late in 2010.Freddie starts making it much harder for homeowners to get out of high interest loans. 
• For example, during Thanksgiving week 2010, Freddie increases post-settlement delivery fees charged to borrowers refinancing.
• Also late in 2010, Freddie starts placing multi-billion dollar bets that pay off by keeping homeowners trapped in high interest loans.
• These investments are called “inverse floaters.” Instead of backed mainly by principal, these are banked by interest payments.
• Because inverse floaters are riskier, they pay much higher rate of return, if people remain in higher interest rate loans.
• Meanwhile, Sec. Geithner and President Obama continue to state publicly that they want loans refinanced and/or modified.
• It’s impossible  to believe that Obama, Geithner, DeMarco, and Haldeman haven’t interacted over the last two years.
• FHFA knew about Freddie’s purchase of $3.4 billion in inverse floaters in 2010.
• The Federal Reserve recently said Fannie and Freddie fees charged make it harder to refinance “difficult to justify.”
• And the U.S. Attorney General Eric Holder was a partner in the law firm representing Freddie Mac, along MERS and major banks.
• Freddie and Fannie need another multi-billion bailout in 2011… and will need more in future.

Does that about cover it?  Awesome.

And President Obama…

If you haven’t figured it out yet, and I think you have, you’ve hired the WRONG PEOPLE, or been given bad advice, because the way your administration has handled the financial and foreclosure crises is fast getting entirely out of anyone’s control.  Today’s crisis is very much like a tsunami in the middle of the ocean when it looks like a small bump on the water.  But it’s approaching the shore and when it arrives it is likely to be 1,000 feet tall and moving at 600 miles per hour.

You are where the buck stops, and ultimately it is your administration that has allowed Freddie Mac to commit these horrific acts against America’s distressed and vulnerable homeowners.  You are the one responsible for putting Covington and Burling lawyers in charge of the DOJ… you are the individual in which we placed our trust and you have let us down.

I wish I thought you were capable of redeeming yourself, but you can’t… can you?  You’re in too deep and can’t see a way out.  You allowed Washington’s powerbrokers and structure to take over your presidency and now you don’t know how to change the path you’re on… I can feel it.  I am truly sorry, as I’ve felt that way before in my life.

All I can say is that you are still the President of the United States and you can break what needs to be broken.  It’s all about inches, like the journey of 1,000 miles beginning with one small step.

ONE LAST THING… A NOTE TO PROPUBLICA and NPR…

Thank you for your work on this.  Now, if you haven’t already done so, would you mind sauntering on over to Fannie Mae to check out what’s trading places over there.  I’m pretty sure I already know, but I don’t want to say because frankly… I don’t want to be right.

And after that… maybe check out what’s trading at all the major banks… you know… just round up the usual suspects and that oughta’ do it, don’t you think?  Yeppers… I think you’ve just uncovered one of the reasons why it’s been so damn hard to get a loan modification.

Because it seems to me that the odds are outstanding that… just like “robo-signing” wasn’t… this ain’t no “isolated incident.”

Mandelman out.

ARE YOU A DOER, OR JUST A READER?

TO FIND OUT MORE CLICK HERE.

Please don’t delay.  It’s FREE, so DO it today  It’s easy to DO.  And to win, we need you.

Becoming a DOER and committing to our code of action is easy. Just send an email to either one of us:

Martin Andelman at: mandelman@mac.com

Abigail Field at: ACFRealityCheck@yahoo.com

And also don’t forget to subscribe here: SUBSCRIBE

All you have to write in the message is: Count on me to be a DOER.  Or,  just say: I’m in.  Tell me what to DO.

About once a week we’ll call on you to DO something important… something that matters a lot.  

It feels really good to be a DOER, ask anyone who is.

Mandelman & Field… OUT!

Look, Wells Fargo… we have to talk.  And frankly, I’d appreciate it if you’d jot down a few notes as we go because I really don’t want to have to repeat myself on this subject… and dear Lord, trust me when I say that you don’t want me to have to repeat myself either.

Here’s the deal…

When you’re dealing with a family that has lived in their home and been a part of their community for 15 years… who have raised four children in that home… and has contacted you because the father in that family who works for the school district has been seriously injured in a work-related auto accident and placed on workers comp… right after his wife lost her SECOND JOB (that’s right, she works two jobs), and they have a special needs child, a beautiful daughter who is autistic… you KNOW you are dealing with VERY RESPONSIBLE PEOPLE, right?

Because the parents I just described are the embodiment of the word “responsible,” you do see that, right?

So, when you say to them, “Let’s get you qualified for a loan modification.” you’re doing the right thing.  And when they immediately send you all of their information and documentation, including updated paystubs and bank statements every 30 days for six months, you shouldn’t be all that surprised.

Even so, their Wells Fargo representative was quite surprised, so much so that he actually expressed to them how surprised he was, saying that they had done an outstanding job getting together everything he asked for, right on time, and exactly as he had instructed.  Jeneane, the wife, explained that she used to be an escrow officer so she was quite familiar with preparing and submitting such paperwork.

Not that doing everything right and on time mattered all that much, because Wells still filed an NOD and now has scheduled a sale date for February 3, 2012.

Of course, Grant… their Wells Fargo representative, was very comforting when he explained that they should not worry about that pesky little sale date, because if a decision wasn’t made by the underwriting department, he would simply request that the sale be postponed.  Well, that certainly must have been a relief for these parents to hear, I’m sure.

A little more than a week before the sale date Jeneane called again to check on how things were going but wouldn’t you know it, her Wells Fargo specialist, Grant, was just transferred to a different department.  A department without phones, apparently.

She was told that she would have to wait to speak with her newly assigned specialist until he or she was assigned.   (That’s what your people said, Wells Fargo.  I’m not responsible for that sentence.)

So,  Jeneane called back again yesterday and was told that someone had been assigned but, darn the luck, they weren’t available, so she asked the person who answered the phone if her home’s sale date had been postponed or if there had been an answer on their loan modification.

Now, stay with me here because this is the sort of thing that you read… and it makes your hair hurt.

The Wells Fargo woman said that it appeared that they needed some additional documentation.  Jeneane is quite adamant that this was not true, because she had just sent Grant 36 pages last week.  He had said that everything was there and he even told her that he had scheduled the postponement while they were on the phone.

Are you getting confused?  Yeah, well aren’t we all.

(I have to tell you, when it comes to paperwork being together, I believe Jeneane 100 percent.  This woman knows her paperwork.  She’s a paperwork Queen, you might even say.)

Nonetheless, Jeneane asked what Wells needed and was told she needed to send in  her 2010 tax return.  Jeneane replied that she had just sent in her 2010 Tax Return last week and was quite sure that it was there.  The woman placed her on hold for 10 minutes (kind of a long time to be on hold, don’t you think) and when the woman returned she said: “”Yes, I have it,” which by the way is not the proper response in that situation.

Just so you know… in that situation you’re supposed to say, “Oh, I’m sorry… you were right… we do have it.”  Or something to that effect.  I’m not trying to be picky here, in fact my expectations of Wells people have been lowered to such a degree that if they don’t spit or throw up in the middle of a conversation, I consider it pleasant.

The Wells woman then explained that the delay is because… are you ready for this: How does the bank know that Mr. Stover will EVER return to work full-time?  Can you even imagine?  Jeneane pointed out that he is back to work half time, and everyone certainly hopes he ultimately recovers 100%.  They think he will… they’re prayers are… OMG.  Would someone like to explain to me how in the world Wells Fargo would go about answering that question.  Do they have a direct line to the Almighty… I mean, Lloyd Blankfein?  I mean… rude much?

Since the tax return thing didn’t stick… and the obnoxious unanswerable question didn’t seem to help… the next thing the Wells woman thought of to say was:  They won’t approve a postponement unless there was approval of the loan modification.

Come again?  Say what?  Ex-screws me?  Wells Fargo won’t approve a postponement of a sale… unless there’s approval of a loan modification?  Go over that sentence again for me… real slow.  Wells you are starting to make my hair hurt.  Does that make sense to ANYONE?  So, noodle me this:

If there was approval of a loan modification, why would there be a sale date to postpone?  

Jeneane then asked if there were any notes in her file from last week when good old Grant said that he had requested the postponement.  She said no… and I have no trouble believing that.  In fact, at this point I wouldn’t have any trouble believing that there wasn’t even a file in which to potentially put notes.

Then the woman said, “You can’t even request a postponement until one day prior to the sale date.”

I’m getting dizzy… is it hot in here?

Then the woman told her to contact the trustee… Jeneane had never heard of a trustee before, but she figured you guys needed the extra hands so she made the call.  Can you guess what happened next?

The trustee said they hadn’t received anything about a postponement from Wells Fargo, but that it could be with Wells’ liaison, whatever that means, and that “sometimes you can’t find out if a sale is being postponed until the day before the sale.”

That’s when in her email to me, Jeneane said: “Somebody is playing a game with me!”

A game?  I’m not sure about that.  I don’t think I’d call it a “game.”

So, here we are at the end of the day on January 27th… it’s a Friday, by the way… so Saturday is the 28th, Sunday is the 29th, Monday the 30th, Tuesday the 1st, Wednesday the 2nd… and voila’… Wednesday the 3rd will be upon us.

And still… no call from Wells Fargo. 

I know you guys must be wicked busy over there but can’t you feel what these parents must be feeling as they watch the clock tick-tock into the weekend.  They’re looking at a weekend in HELL because it’s going to be spent knowing that when it ends there will be only two days to do anything about losing your home.  And you’re dealing with an organization that can take two days just to receive a fax.

Memo to Wells Fargo CEO, John Stumpf…

You and I have been around this sort of issue before, and not very long ago.  And the last time, you were very gracious and attentive to the problem at hand, so I’m going to make the assumption… and I want very much to believe… that this is just another unfortunate slipped through the cracks sort of thing.

So, I’m going to assume that you’ll read this and feel the absolute unfairness of what Jeneane and her husband Tom are being forced to endure at the hands of Wells Fargo’s personnel and systems.

Because I just can’t believe that anyone would intentionally do this to the parents of an autistic 12 year-old girl… invite them to apply for a loan modification, and then after six months, leave them over a weekend with the uncertainty of losing the only home they’ve known for 15 years… in a matter of days… the home in which they have raised four children… all because the husband was injured while while working for the school district… and the wife lost her second job… it’s simply unthinkable.

Who will call first… underwriting to say they’ve been saved… or the investor that just bought their home?  It’s positively surreal, Mr. Stumpf.  It is very definitely a form of torture.  How can a consumer brand like Wells Fargo not feel less secure about its future every time something like this happens?  Short memories?  I think not.

And here’s the thing… I’ve looked at this couple’s numbers.  Their mortgage is around $320,000, and their income is right where it should be to qualify for a loan modification relative to that amount.  And not only that, but their home is 50% UNDERWATER, so not only do I believe they qualify, but I would bet you dinner at the Cliff House that they pass any NPV test you’ve got going at Wells.

Wells Fargo Beats Expectations… 

By the way, I couldn’t help but notice that your earnings showed the bank’s income was, “boosted by a release of $600 million from reserves.”  I’ll tell you what… that is some mighty flowery language considering what you really seem to be saying is that income was “padded by the recapture of a prior expense.”

 

So, I’m curious how was it done?  Was it booked as a negative expense provision, or just some kind of a reverse of an expense taken in a prior period?  Six of one half dozen of another, I suppose, but it’s still kind of cutting off the end of the blanket and sewing it onto the other end to make the blanket longer, right?  I don’t suppose we should we be expecting you to shift that amount back over during the next quarter or two, should we?

 

The only reason I ask is that Bloomberg said the following…

 

Slowing economic growth, low interest rates and volatile capital markets have sapped revenue at the largest U.S. banks, leading them to seek other sources and cut expenses. Stumpf, 58, reduced his staff by 3 percent to 264,200 and reaffirmed plans to trim $1.5 billion in quarterly costs by the end of this year.

I realize that I’m kind of the ultimate cynic about these things, especially when they happen in the fourth quarter… you know… bonus season.  So, what was it that led you to conclude that you wouldn’t need the $600 million in reserves for future losses in light of the fact that you reduced staff by three percent and pledged $6 billion in cuts by the end of 2012?  That sounds like you’re expecting the economy to contract this coming year, and that would seem to mean the potential for losses.

Never mind, it’s none of my business anyway.  Besides, net income up 20 percent to $4.11 billion… you beat earnings estimates by a penny a share, and best of all you made Jamie Dimon over at JPM Chase look like a piker.

Okay, back to the issue at hand…

So, Jeneane’s new Wells’ specialist is Albert at Ext. 60613.  I won’t print his last name here.  He’s the one who was just too busy to make a call before taking off for the weekend. So, is it that he just has to many people in the same position as Jeneane and Tom, so there’s not enough time to call all of them, and so what the heck… time to go?  Or if this couple’s situation is at least somewhat unique, and I sure do hope it is… then what kind of person is too busy to make a call in such a situation?  I’d have taken the number home with me… called over weekend.

But, I don’t blame Albert at Ext. 60613… well, or maybe I do… I don’t even know… honestly, the whole thing has me dumbfounded… flummoxed… you might even say that I’m completely STUMPFED?  I just do not know what else to DO…

Lucky for me, I know some people who DO know what to DO…

RIGHT DOERS?

Tom Stover & Jeneane Traynor-Stover

8216 Seeno Ave.

Granite Bay, CA 95746

Loan Number #0150299733

~~~ 

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

~~~

Howard.I.Atkins@wellsfargo.com

James.M.Strother@wellsfargo.com

Richard.D.Levy@wellsfargo.com

David.A.Hoyt@wellsfargo.com

David.M.Carroll@wellsfargo.com

patricia.r.callahan@wellsfargo.com

kevin.a.rhein@wellsfargo.com

Carrie.L.Tolstedt@wellsfargo.com

AVID.MODJTABAI@wellsfargo.com

BoardCommunications@wellsfargo.com
sharon.cecil@wellsfargo.com
Todd.M.Boothroyd@wellsfargo.com

john.g.stumpf@wellsfargo.com
cara.heiden@wellsfargo.com
denise.erickson@wellsfargo.com
cara.k.heiden@wellsfargo.com
mary.coffin@wellsfargo.com

BoardCommunications@wellsfargo.com

 ombudsman@fdic.gov

On Monday at 5:00 PM, as I was running to catch a flight to Phoenix to work with a state senator on a piece of legislation I’ll be announcing soon, I posted a DOER ALERT titled: “Dear Bank of America,” about an octogenarian by the name of Dale Wright.  He had been trying to get his loan modified for a couple of years… been turned down… reapplied, and was told he was under consideration as recently as December 23, 2011… and then Bank of America sold his home on January 3, 2012.  Mr. Wright found out when an investor showed up at his door saying that he would understand it he needed more than THREE DAYS to get out.

By mid-day on Tuesday, Bank of America had responded to say they were looking into it… and by 4:30 PM that same day Bank of America DID THE WRIGHT THING, and gave Mr. Dale Wright his home back… from a bonafide third party purchaser.  BofA has also notified me to assure me that the bank is also modifying the loan, and I’ll be talking with them tomorrow to get details, among other things.

The point is that there should be no question that my DOERS are very effective, and likewise there shouldn’t be any question as to why that’s the case.  In our democracy, there’s only one thing more important than money and that’s getting reelected.  If our elected officials understand that they are at risk of being voted out of office… they react.  Their loyalties to banking lobbyists dissipate quickly when they realize that no amount of money will overcome the will of the people.  We used to understand this to be the case.

In 1954, Brown v. The Board of Education didn’t end segregation.  It took ten years and hundreds of thousands of people marching in the streets before President Johnson signed the Civil Rights Acts of 1964-65.

In 1971, President Nixon saw from his White House windows, tens of thousands of people protesting the war in Viet Nam and became paranoid that he would lose the election in 1972.  It drove those around him to break into the Democratic headquarters and led to the Watergate scandal… even though he won reelection in 1972 by a landslide.

And more recently, in 2009, news of AIG bonuses totaling $160 million and a corporate retreat at the St. Regis luxury resort in Southern California, caused people to take to the streets, outraged that a company recently bailed out by the taxpayers would be allowed to pay out what appeared to be extravagant bonuses.  Within two weeks the House of Representatives authored and passed a bill that would have placed a 90 percent tax on those and other bonuses.  It was killed in the senate, of course, but that’s not the point.  The point is that our elected representatives can move quickly… if they are properly motivated.

We’ve got over a thousand DOERS… and we’ve saved 6 out of 6 homes, all of which were about to be sold within days or already sold as was the case with Mr. Dale Wright.  (6 out of 6 is NOT a coincidence, by the way.)  But, if you really want to stop the foreclosure crisis…

We’ll need at least 100x that number… 

To become a DOER you only need to DO 3-4 things and they’re all easy:

1. Click here to SUBSCRIBE to Mandelman Matters.  That’s the only way you’ll get an email whenever there’s a new post and when you see “DOER ALERT” in the headline, you know it’s time to DO something that will matter.
2. Send an email to me at mandelman@mac.com.  Just type: I’m a DOER or something close in the subject line.  I’ll add you to the database of DOER emails.  When we want the element of surprise I won’t post it, I’ll email you the plan.
3. Actually check your email from Mandelman Matters or from mandelman@mac.com and when you see the words DOER ALERT, open it and read it right away or certainly ASAP.  Not the next day… that day.  Then, assuming you want to help make a difference, read it and send an email to the CEO’s email while I always list at the bottom of the DOER Alert.  Of course, the more thoughtful the email the better, but it doesn’t have to be a long email if you’re pressed for time.  Just a few sentences is just fine and dandy.
4. Help recruit other DOERS.  Send others links to articles on Mandelman Matters and tell them you’re DOING it and it’s working.

That’s all there is to it, and all I’m asking for is a four month commitment.  After that, if you agree that it’s worth DOING, then give me another four months.  The more DOERS we have the larger the problem we can tackle.

Consider this… right now there’s all this controversy over the 50 state AG settlement.  A few days ago many people thought the deal was about to be announced and people were very upset.  Well, if we had 100,000 DOERS now, we could stop that deal from getting done for sure.

Just think of being a DOER as being a way to “occupy” without leaving your home, sleeping on the ground, getting arrested and sprayed with pepper spray.  It’s also more effective than doing those things.  I’m not saying you shouldn’t do them, but I’m telling you that DOERS can stop this mess in its tracks this year or next.

I have to be honest about something…

There are two things that really bother me.  One is that we only have a thousand DOERS.  That means that thousands of people are reading and not signing up as DOERS.  How can that be?  Hopefully it’s because Im haven’t promoted it well, which is something that’s going to change.  But, if its not that… if you’re reading my column and not signing up and subscribing so you can join forces with the rest of us… why the heck not?

How can you not want to help save someone’s home or influence the state legislature, or make congress in Washington D.C. take notice and hear our voice?  I really don’t understand… so please… if you’re not going to DO it, please at least let me know.  Maybe you have a good reason that I’m not thinking of, in which case fair enough.  But if you don’t, why wouldn’t you DO this?  How can you not DO this?

And two… if you’re a DOER and you didn’t send an email this last time around… and please don’t tell me you didn’t have time to send a 3 line email because if I had time to write it, you could send an email about it.  I missed my flight to write about Mr. Wright by the way.  Had to drive all the way back home, then worked until 2:00 AM and then back to the airport the following morning.  And you didn’t have 5 minutes?  Come on…

Not only that, but how could you let down your fellow DOERS… to say nothing of Mr. Wright?  What if BofA hadn’t done what they did, and Mr. Wright had lost his home?  And you didn’t send an email as you promised by being a DOER.  I’m serious about this… I couldn’t DO that and sleep at night.  Your email can be the one that matters.  But you were too busy… so now at 82 years old, a veteran loses his home… and you let down your fellow DOERS?  Not cool, people.  Really, not cool.

Time Matters… A Lot.

DO you not see that we are losing this war… because we definitely are.  More than 3,000 evictions a day, seven days a week.  Foreclosures not slowing a bit.  And interest rates are still low.  What’s going to happen when they are six percent or even higher?

And this is an election year… this is when politicians are the most concerned with reelection.  We have to act and it must be now.  Period.  We’re doing the wave and we need you and everyone else or it doesn’t look like a wave.  And even though it’s just begun, it’s unquestionably working.  What else is working even half that consistently… NOTHING, I’m sorry to say.

Sample emails from a few DOERS to Bank of America this last time around…

Some of the emails received by the bank show just how deeply offended Americans are by what’s being allowed to go on… I’ve excerpted a few paragraphs as examples… they are all addressed to Mr. Brian Moynihan, CEO, Bank of America…

“It seems more and more these days your Bank and the rest of the Banks that are involved in Mortgage backed secured investments are reaching criminal status 

 What has just happened to Mr Wright in Cloverdale, CA should at least bring a long jail sentence to your door. I am sending out as many e-mails as I have contacts and then I am going on every blog site I can find and pass this article to them as well. Then I am writing my congressman and then the Attorney General !!!!!”

###

“As if we needed any more proof that servicers have no clue who owns the loans or how to properly service them, now we have the nincompoops who worked on Mr. Wright’s foreclosure to illustrate the depths of BOA’s incompetence. This one will stick in everyone’s mind because an old man is being thrown out of his house after BOA repeatedly “lost” the papers or “misidentified” the investor in a series of memorably unfortunate events.

I work a lot of real estate buyers and if this mistake isn’t rectified immediately then I’m telling all of them about elderly Mr. Wright and cautioning them to stay away from BOA mortgages from Wednesday until I retire in 20 years. Hope we’re able to do business again in the next two decades Brian, but remember there’s lots of other lenders out there and I can’t recommend BOA with this kind of crap going down.”

###

“I have read the story about Bank of America’s foreclosure sale on January 3, 2012 of the home of Mr. Dale Wright of Cloverdale, California.  He is an 82 year old Veteran and a widower.  Your bank refused to convert his HAMP trial payment plan because of a false claim that he had failed to send you in IRS Form 4506-T.  This was a false claim.  Even if it wasn’t, for the lack of such a minor document, no institution with any moral sense would have allowed that to be a basis to proceed to take away this man’s home. The action of Bank of America feeds the public view of your institution as one which has no corporate responsibility or conscience.

I was recently told by Bank of America’s Maine Market President how Bank of America has improved its practices.   How can anyone believe that when a story such as Mr. Wright’s is exposed.

 Bank of America’s abuse of America’s homeowners has simply got to stop.  Would you please act like a responsible executive of one of America’s largest financial institutions and intervene in this case by telling your people to do what ever it takes to get the title to Mr. Wrights back into his hands, to give him the HAMP permanent modification to which he is entitled, and to compensate him for the enormous emotional distress that your bank has caused him to suffer.

 It would be unconscionable for you to fail to do this at once.”

###

“I’m not sure how much more egregious you can possibly get than to sell a home out from under an 82 year old veteran after 1) approving him for a modification and 2) admitting that after you screwed up the first time since he was making his payments and then 3) while he was “under consideration” a second time as recently as December 23, 2011 you sold his home? 

 And then you BLAMED WELLS FARGO?

It would behoove you to immediately rectify this situation with Mr. Wright.  Make it right!  I don’t really care how you do it, but to turn his home over to a “home flipper” when he not only qualified for a modification but was approved for one and made his payments on time is beyond disgusting. 

 I’m only e-mailing this because your offices are closed at the moment.  Wait until I call, then I’ll give all of your staff an earful.  This really has me steamed.  And they should be ashamed that you are their boss.

 I’m positive that I will not be the only one that will be contacting you on this one.  This is only the first wave of a coming tsunami.      

 Fix it, Moynihan.  We are all tired of you and your cronies shenanigans and the dam of outrage is about to break all over this country.  There will be way too many holes in it for you to plug up, and it will all come crashing down like the worthless paper you claim to hold on all these mortgages.”

###

“Regarding the above-referenced loan, please use your infinite powers to assist this elderly gentleman in the later years of his life to work through this difficult situation.  It is so atrocious the way in which distressed property owners in all age groups, of all ethnicities and from all socioeconomic strata are being treated by institutions that simply do not appear to care about the impact their industry has had on the citizens of this country.  But his particular story goes beyond the customary and usual.  This gentle man has served to defend those of us that are unable or unwilling to put our lives on the line for our country! 

When will you do something about the way in which Bank of America’s servicing departments botch up paperwork, lie to people in life-changing circumstances, and then blame it on others?  As a major institution within the financial realm, one would think that BofA would be on the cutting edge in the technology arena to keep paperwork intact; in hiring capable and ethical employees to problem-solve rather than lie, cheat, or delay, and in providing resources with whom customers can discuss their problems to get back on tract? 

More importantly, however, is when will Bank of America become the financial institution that deserves the trust of the people that keep you in business? 

It is time to stop the spiraling loss of wealth to the vast majority of homeowners that rely on the equity in their homes to enjoy a peaceful and well-deserved retirement. It is time to have compassion for those individual homeowners whose jobs have been cut out and now must move their entire families elsewhere in a real estate market that causes them to go into default.  It is time to develop a plan to actually work on customer service that truly assists (rather than bullies) homeowners in lieu of the almighty dollar. 

Mr. Wright’s story is, without a doubt, a very sad story that requires immediate measures.  Mr. Moynihan, let his story be the catalyst for extreme changes within your institution.  It is, after all, within your power to make these changes.  The bucks stops with YOU.”

###

Having read the story of Mr. Wright and his appalling treatment by Bank of America, I trust you will reverse the sale of this house and return it to its rightful owner.

I hope you are familiar with the details of this horrific treatment by your bank.  If not, then you can read about it here:

http://mandelman.ml-implode.com/2012/01/doer-alert-dear-bank-of-america/

###

OFFICIAL DOER STATEMENT OF PURPOSE

BY MARTIN ANDELMAN & ABIGAIL FIELD

We, Mandelman & Field, are joining forces to end the foreclosure crisis. We’ve been writing about the crisis—Mandelman for more than three years and 600+ articles, Field for about half that—but frankly, writing’s not enough.

We need to DO more to solve the massive crisis our country is enduring. We must act now, because the crisis we’re in will get much, much worse.  This year is an election year… the time for decisive action is now.

But by ourselves we can’t do enough. We need YOU to DO too.

Mandelman has already inspired a core group of DOERS, people who have already solved the mortgage modification nightmares of six people. But to solve the problems faster than one mortgage at a time and to attack bigger problems, we need more DOERS… a lot more.

Here’s what we DOERS DO:

1. We take action.

We are knowledgeable, active and involved. We know that our actions make a difference because we’re all working together, multiplying our impact. That’s why we continue to take action, each and every day.

2. We know there’s no “try” in DO.

Either you DO, or you don’t.

3. We build big victories out of little victories.

We’re singles hitters with a really high on base percentage.   We scratch out the runs it takes to win every way we can. Our actions are simple, discrete, and quick to do, like sending an email, making a call, mailing a letter.

We work this way because swinging for the fences wastes lots of effort and results in more strikeouts than our country has time for. Besides, it took years to make the mess we’re in, and there’s no silver bullet that fixes everything all at once. We have to do many things, and collectively they will make the big changes we need.

4. We focus on our similarities, not our differences.  

We’re not about right and left… we’re about right and wrong. Frankly, our nation’s policies on housing and banks are so bad, we have plenty of solid common ground for everyone. Since we’re focused on fixing those two interrelated issues—housing and bank policy—our divisions on other issues are irrelevant.

5. We believe in “We, the People.”  

We join forces to make change because we are Americans. It’s our Constitutional birthright to be in charge, to make change together. And we know if we act together to make good policy, we all benefit.

6. We recruit more DOERS, because size matters.

To solve the big problems we need to be correspondingly big. We’re not playing games. We are DOING to win.

7. And we are in it to win it.

We are relentless.  We take our tasks seriously.  We do our best. We  never let down our fellow DOERS by not DOING our individual parts.

Please don’t delay… DO it today… it’s easy to DO… and to win, we need you.

Becoming a DOER and committing to our code of action is easy. Just send an email to either one of us:

Martin Andelman at: mandelman@mac.com

Abigail Field at: ACFRealityCheck@yahoo.com

And also don’t forget to subscribe here: SUBSCRIBE

All you have to write in the message is: Count on me to be a DOER.  Or,  just say: I’m in.  Tell me what to DO.

And we’ll be in touch. Something like once a week we’ll call on you to DO something important… something that matters a lot.  It feels really good to be a DOER, ask anyone who is.

Mandelman & Field… OUT!

Someone recently wrote to me saying that instead of continually telling everyone what’s wrong, I should tell them how to solve the problems we’re facing and I thought to myself… okay, fair enough.  This just isn’t that hard.  We’re not solving things because we don’t want to, not because no one can think of how to solve anything.

So, you ready… I’m going to show you solutions in ONE MINUTE and one solution at a time.. so please try to keep up okay?

1. Problem: Forging documents and filing fraudulent documents in public records… or “Robo-signing,” if you’d prefer.

1. Either pass a law that says these documents don’t need to be signed at all… or stop the filing of forged and fraudulent documents in public records… and Nevada has shown us how to do that… it’s easy and doesn’t cost a nickel.  And foreclosure filings in Nevada dropped by more than 80% as a result of what they did in that state, which was simply to make the penalties criminal and the fines higher for filing a fraudulent document in the public record.  Because, I don’t care if they need to be signed or they don’t need to be signed… but they don’t need to be forged under any circumstances.

2. In simpler terms: If Mickey Mouse is going to sign it, and Donald Duck is going to notarize it… THEN DON’T SIGN IT… because we don’t need it signed.  BUT… if we DO need it signed, then don’t forge it and file a fraudulent document into the public record.  If you do that, it’ll cost you thousands and you could end up in jail.

3. We already have millions of forged and fraudulent docs in our public records thank you very much, and 30 years from now some lawyer will have occasion to pull title docs for whatever reason, he’ll find a forged or otherwise fraudulent document(s) and we’ll be litigating the whole damn thing all over again.  We certainly don’t need that situation exacerbated.  The documents may need to be signed… but they don’t NEED to be forged.

4. We also don’t need to wait until the situation shakes out or the scope of the problem is known… or whatever.  There’s no reason to wait for any of that because it doesn’t matter how we answer any of the unanswered questions… the solution to however you want to define the problem is NOT under any circumstances going to be: “Oh, just forge the signature and file a fraudulent document in the public record.”  NO… that’s not allowed to be the answer no matter how you want to define the problem.

5. I’ve never lost the pink slip to my car… but I’m sure there’s a process to follow if that ever happens.  I call the DMV and fill out some forms and then I… blah, blah, blah… it’s never happened to me so I don’t know what the process is.  But I know what it isn’t.  It isn’t: “Fake one on your Mac, sign Donald Duck’s name, and use it for whatever…”  That is definitely not how it’s done.

6. There shouldn’t be ANY push back to what I’m suggesting here… NONE.  To those who say that the banks will oppose what I’m saying because I’m trying to stop foreclosures I reply: No, I’m not.  I haven’t said a word about stopping foreclosures, I’m talking about stopping the forging of documents and the filing of fraudulent documents into the public record.  I have all the confidence in the world that BofA, Chase and our state/federal  governments are more than capable of coming up with some other process… either that or pass a law that says all you need to do is place a red X on the dotted line… or leave the damn things blank… I don’t care.  But, forgery and fraud are not going to be our chosen methodology for anything ever.

7. The reason for my efforts, as I’ve explained to several state AGs and state legislators, is that what is going on now, with forged and fraudulent docs being used every day all over the country to foreclose on homes, is already changing the nature of the foreclosure crisis.  What was a terribly unfair, incompetent, cronyism, banker friendly, messed up situation is being transformed into organized crime.  Homeowners look at their title documents, and very easily see that the assignments and other affidavits have been robo-signed.  They have tangible proof of a crime having been committed.  They show the judge, he doesn’t care… and they lose their house.

8. That is the definition of organized crime… 5 huge crime families we call banks… committing crimes in the public view… and state law enforcement and the court system refusing to enforce the law because of connections with the banks.  That’s organized crime, period.  And human nature dictates that when people see that their government is failing to uphold the rule of law or enforce the laws against certain individuals or groups… well, they take the law into their own hands.  That’s always been true… it is in fact a fundamental human instinct.

9. If your son or daughter is harmed or your store or home is robbed… and the law refuses to do anything about it because of who you are relative to who the perpetrators are… want to know what happens?  Ask the KKK.  Someone takes the law into their own hands and someone gets shot in the head, or ends up hanging from a tall oak.  Every single time… and any of us are capable of doing just that… taking the law into our own hands.

10. Allowing forgery and fraud to go on unchecked is a BAD idea, and everyone should understand and agree with that.  And aren’t we lucky that we know exactly how to stop it… the State of Nevada has shown us the way.  So, change the law, increase the penalties and problem solved.  Now isn’t that a relief?

And… DING!  

The foreclosure crisis has already been allowed to grow out of control and destroy the American middle class.  Standing by idly while we watch it get even worse, when it’s easy and free to prevent that from happening, is beyond unconscionable.  And if we do it, then we deserve whatever we get as a result.

See, that wasn’t that hard, was it?   ONE MINUTE SOLUTIONS by Mandelman Matters.  Why didn’t I think of that?  Next solution tomorrow, so stay tuned.

Mandelman out.

Dear Bank of America, and by Bank of America I mean CEO Brian Moynihan…

Brian, I’m running out the door at the moment.  I have to make a flight to Arizona so I can attend a meeting in the morning at the state capitol.  A state senator called me last week asking for my help promoting a bill related to the foreclosure situation there.  Were it not for my schedule, I’d be ripping you and your bank to pieces in this column, and then asking all of my DOERS to inundate you with emails and letters in support of yet another homeowner who’s life you have irrevocably, unconscionably and inconceivably harmed.

I’ll be back at my desk tomorrow, and I was just going to wait until then to deal with you, but you see… this story brought tears to my eyes asa I sat here checking in for my flight… I guess I’m just emotional (although I think “human” is the more appropriate word) about such things, while you perhaps are not.  Anyway, I decided that even though I didn’t have time to write the story in detail… I’d let you know what’s coming soon to a theater near you.

My thinking is, if you want to avoid me having to spend the eight or so hours it takes me to write all of the details into a piece that will be read and remembered by tens of thousands of people all over the country, you’ll address this situation before I get home tomorrow afternoon.  I hope you don’t view this as some sort of threat… I don’t mean it that way… I hate people that threaten, you know what I mean?  Either do it or shut up, has always been my motto.

I’m just giving you a heads up, if you will, of what tomorrow afternoon is absolutely certain to bring if you don’t do something about… hey, do you remember the Perry Mason television show from days gone by…

The Case of the Grieving Grandpa and the Lying Lender

Starring…

Mr. Dale Wright of Cloverdale, California

Loan Number 149664284

Brian, this one’s going to make a great story too, so if you can’t make time to handle it before I’m home tomorrow afternoon, you’re going to wish you had.  Here are a few highlights… think of it as the show’s preview or a movie trailer…

Mr. Dale Wright of Cloverdale, California turned to Bank of America for help in 2009 after being told by the President of the United States that Bank of America would help him, if at all possible.  Mr. Wright is an 82 year-old veteran who’s been a pillar of his community since before you were born, Brian.

He was approved for his trial modification under the Making Home Affordable program on March 23, 2010.  I’m told by several people involved in his case that he made all of his payments on time and as agreed and I have reason to believe they are correct.  He was denied for a permanent loan modification because of Bank of America claimed not to have received a new 4506T… even though you had received said 4506T, 30 days earlier and I’m told those things are good for 90 or 120 days.

No matter… he was told he was being reconsidered as of December 6, 2011.  In fact, he was told he was under consideration as of December 23rd.  You SOLD his house on January 3rd, Brian. He’s 82 years old, Brian.  December 25th is Christmas, Brian.  January 3rd is two days after New Years, Brian.  God damnit… Bank of America doesn’t need to do sh#t that week, Brian. (I’m sorry, for my language, but I can’t take much more of this without swearing, Brian.)

Of course, your bank didn’t tell him it was sold on January 3rd.  He found out when the investor knocked on his door on January 3rd and told him that it would be understood if he needed more than three days to move out!  The investor told Dale he was buying the property to “flip it.”

(SIDEBAR: You might want to mention to whoever that was that said that to him, that he’s damn lucky that it wasn’t me that answered the door that day because I don’t have any prior criminal record and I’d be willing to pick up a first offense charge for beating the crap out of someone for doing that to my grandfather. But, I don’t suppose he would have said it to me, now would he?  No, he only says things like that to 82 year olds, I’m fairly sure.)

So, Mr. Wright called and Bank of America was like…

“Wo, wo, wo… we don’t know how this happened… we were trying to postpone the sale, but Wells Fargo wouldn’t do it and they’re the investor that owns the loan. It wasn’t our fault… blah, blah, blah.”

Your bank sold the home of an 82 year-old veteran right after New Years so some investor could flip it, and couldn’t even be bothered to make a call to let him know?  No… instead you blamed it on Wells Fargo, saying they were the investor and they wouldn’t agree to delay the sale or modify the loan.  Hmmm… think that’s true, Brian?  I wonder…

But luckily, I didn’t have to wonder for very long… here’s the email from Wells Fargo from just a few days ago:

From: catherine.h.martin@wellsfargo.com

To: kristiesheets@hotmail.com

Date: Tue, 17 Jan 2012 14:01:19 -0600

Subject: Dale Wright

 Dear Ms. Sheets,

Wells Fargo Bank, N.A. received and reviewed your recent correspondence regarding your concerns as it relates to your Grandfather’s mortgage.

After researching this matter, we have verified that Wells Fargo Bank is not the Investor/Owner and does not have a direct role in servicing the loan.  That being said, I am forwarding your letter to the servicer, Bank of America, instructing that they subsequently respond in a timely manner to your concerns giving Mr. Wright every consideration allowed. 

I urge that you continue addressing Bank of America with concerns pertaining to this matter.  You may contact Ms. Nora Jones at 817-864-2293 at Bank of America to request that she escalate this matter within Bank of America. 

Wells Fargo Bank makes every effort to facilitate and inform servicers of such issues so they may properly respond. 

Respectfully,

Cathy Martin 

Client Service Consultant 

Wells Fargo Bank 

9062 Old Annapolis Road 

Columbia, MD  21045 

410-884-2161 FAX 866-493-7814 

Ooopsie!  I guess your system was wrong… or your bank’s wires got crossed.  Or maybe they were just feeding Mr. Wright “Lie Number 32,863,” from the Bank of America Handbook?

The man’s wife passed away in 2006.  They were married for 53 years.  Your bank explained that a request for postponement went in on the 23rd of December 2011 on a loan which Bank of America agreed to review for HAMP on December 1, 2011 and then you sold  the home on January 3, 2012… Brian, are you trying to punish this man?

Fix this, Brian.  Fix it so that it doesn’t happen to even one more elderly person.  Because if you’ve heard of karma, your later years are likely going to be a real bear if you don’t.

COME ON DOERS… DO SOMETHING ABOUT THIS…

I CAN’T SAY ANYTHING ELSE WITHOUT BREAKING MY KEYBOARD AND MISSING MY FLIGHT, AND BESIDES I CAN’T SEE AGAIN, THIS IS JUST TOO UPSETTING… I FEEL LIKE IT’S GROUNDHOG DAY…

BRIAN… Kristie Sheets is his granddaughter… HER NUMBER IS: 707-632-6101.  You can call her and ask how to make this right, if you have a mind to do so.  I’ll be home tomorrow afternoon, and I’ll check with her before I do anything else.  This, as I mentioned, was just a preview of coming attractions.  (Insert Perry Mason Music here.)

Mandelman out.

DOERS YOU KNOW WHAT TO DO!

Brian Moynihan, President, CEO & Chairman

Bank of America

Email: brian.t.moynihan@bankofamerica.com

Matthew Task, Executive Relations, 
Office of the CEO (At BofA)

Phone: 813-805-4873

Believe it or not, I’m not an easy person to shock or offend.  No one that knows me would ever say that I possess delicate sensibilities, or anything close.  For example, the only thing I found at all shocking upon learning that Newt Gingrich had asked his now ex-wife if they could have an “open marriage,” was that there were more than two women (or even one gay man), that would even consider having sex with Newt.

But, when I read Bloomberg’s headline yesterday, “Mortgage Principal Cuts Don’t Help Homeowners, Says Credit Suisse,” I have to admit that I found myself recoiling in total shock that, in view of what’s happening today in the housing market, anyone would put forth such an utterly preposterous argument.

Here’s the beginning of the Bloomberg piece, you can read the rest later.

Reducing mortgage balances is a risky idea that hasn’t been shown to keep borrowers who owe more than their property’s worth in their homes, according to Credit Suisse Group AG. (CSGN).

 

Of the 11 million of “underwater” homeowners, about 6.5 million have never missed a payment and 2 million more are making on-time payments after a delinquency, said Dale Westhoff, the bank’s global head of structured products research. Widespread principal reductions may drive defaults “much, much higher” as borrowers seek the aid, he said.

 

“We’ve never done this before; we don’t know what the risk is,” Westhoff, a top-ranked mortgage-bond analyst in polls by Institutional Investor magazine for 15 years in a row while at Bear Stearns Cos., said today at a briefing for reporters in New York. Along with creating so-called moral hazard, the step may also tighten lending by forcing banks to offer “price protection” to borrowers, he said.

 

Credit Suisse’s view puts it at odds with Federal Reserve Bank of New York President William C. Dudley; Amherst Securities Group LP analyst Laurie Goodman, a member of the Fixed Income Analysts Society’s Hall of Fame; and hedge-fund manager Greg Lippmann, who last year advocated principal reductions, citing data from his former employer, Deutsche Bank AG.

 

Pretty offensive stuff, don’t you think… as you sit there reading this in your home that’s underwater by six figures and going down further every day?  Feel a little like wringing the guy’s neck that said it?  Yeah, well… me too.

Instead, I’ve written a corresponding article that I’d like to see Bloomberg run in the interest of being… what should I say… fair and balanced?  If you want the full impact, however, go back and read the Bloomberg version above one more time, then continue…

Not Recognizing Losses and Unlimited 0% Interest Loans Don’t Help Banks, Says Credit Slush

 

Suspending accounting rules is a risky idea that hasn’t been shown to keep banks that borrowed more than their assets are worth from becoming insolvent, according to Credit Slush Fund PIG.

 

Of the 11 most bailed out banks, about 6 have never been able to make their payments, and 2 more are making on time payments after being allowed to become bank holding companies in name only so they could borrow unlimited amounts from the Fed’s discount window at zero percent interest, said Bail Worstoff, the consumer’s global head-case for unstructured thinking. 

 

Widespread zero interest borrowing and the ongoing suspension of accounting rules that allow banks to push off the recognition of losses far into the future may drive insolvency rates “much, much higher” as banks become entirely dependent on the unrealistic and inappropriate aid.

 

“We’ve never done this before; we don’t know what the risk is,” Worsthoff, a top-ranked banking behavior analyst in polls by Concerned Citizens with Common Sense for 15 years in a row, said today at a briefing for reporters in New York.  Along with creating so-called “moral hazard,” these steps are also likely to perpetuate the irresponsible risk taking and amounts of leverage taken on by banks, which is what caused the global financial crisis in the first place, and would force congress to once again be unable to offer “any protection” to taxpayers who will be on the hook when the bankers invariably become insolvent once again, he said.

 

Credit Slush Fund’s view puts it at odds with Federal Unreserved Chair Ben Bailsnakee, Treasury Secretary Skim Getmore, Scary Summers, a member of the Fixed Outcome & Opacity Legion (“FOOL”); and sludge-fund manager Greed Hittmann, who last year advocated unlimited and unreported zero interest borrowing, undisclosed backdoor bailouts, and the elimination of all bank accounting and reporting requirements, citing data from his former employer, Deushbag Bank PIG.

First of all, the idea that reducing the dollar amount someone owes on his or her mortgage isn’t helpful to the homeowner… well, it’s simply a goofy thing to say.  I mean, it has to be a question of degree, right?  Like, reducing someone’s $100,000 balance by $1 wouldn’t be terribly helpful, I understand.  It’s the Sorites Paradox, I suppose… which back in my debate-the-useless days as an undergrad we used to refer to as the “Paradox of the Heap.”

(Assuming you have no idea what I’m talking about, but would like to… the Paradox of the Heap deals with a heap of sand from which one grain of sand at a time is removed.  The first premise is that one million grains of sand is a heap of sand.  And the second premise is that a heap of sand minus one grain of sand is STILL a heap of sand.  With me so far?  Good. 

So, the question is… when a single grain of sand is all that’s remains, is it STILL a “heap of sand?”  If you answer yes, then you sound ridiculous because a heap is defined as a group of things placed or thrown on top of each other.” And if you answer no to that question, then the follow-up question is when did it stop being a heap… when it was two grains of sand… three… four… 100? 

I can’t remember exactly, it’s been too many years… but I think after that you either run screaming from the room, beat the crap out of your roommate for dragging you into this inane conversation, or take a hit off the bong.)

Am I getting my point across here?  Or am I being too subtle?

Because I often worry that my use of humor or sarcasm either goes over too many heads or is solely as thought of as being entertainment… instead of as the less-than-veiled threat to societal tranquility that was my actual intention.  (That was supposed to be funny, people… stay with me, okay?)

After reading the Bloomberg article, it occurred to me that this was not the first time I was being shocked at the hubris of Credit Suisse’s conclusions allegedly derived from some review of distressed homeowner data.  The last time it happened was more than two years ago, November 2009, when I wrote about it in an article titled: “Why Banks Are Better at Making Loans Than Modifying Them.”

Back then Credit Suisse in conjunction with UBS, published a statistic saying that loan modifications were re-defaulting in 60 percent of cases after just 10 months… the clear implication being that loan modifications didn’t work, so better for all involved to simply foreclose.  It took some digging as I recall, but in the end it came out that in 2008… 60 percent of the loans modified ended up with higher monthly payments than before they were modified… which would explain the 60 percent re-default rate quite handedly.

It’s been a while, but I remember having an exasperating conversation with a banker during which I was trying to make the point that when the payment amount increases, it should not be called or classified as a “loan modification.”  The banker I was talking to… bless his heart… was trying to patiently explain to me why in point of fact, it was a “modification” of the loan and therefore had to be classified and reported as a “loan modification.”  (Amazing I’m still alive, don’t you think?  Or that the banker is… I’m not sure which.)

I replied that it didn’t matter.  What mattered is that if I were to line up 10 million homeowners in this country, and ask them whether a loan modification makes your monthly mortgage payments go up or down, for the most part they’d all say down.  Therefore, the term “loan modification” should only be used when the modification results in a reduced payment amount.

“So, what should we call it if the loan gets modified but the payments go up,” he inquired.  His tone made it sound as if he was sure that he’d have me in one or two more moves on an imaginary chessboard.

“Well, I’m not sure,” I replied.  “I’m not a banker or anything, and I wouldn’t want to presume to know your job better than you do by any means, but you could give some thought to calling it… oh, I don’t know… A PAYMENT INCREASE?”

Unfortunately, our conversation had to wrap up quickly after that… apparently something unexpected had come up and he had to run.

Do Principal Reductions Help, or Are they the Poster Child for Moral Hazard?

Credit Suisse should be exposed and discredited for being banking industry propagandists more than willing to risk further destruction of America’s middle class economy and our reduced standard of living before they lift a finger to make things better economically speaking.  That much is certain… and all too obvious.

But, the question is: Would principal reductions help homeowners avoid foreclosure?  And I want to address the substance of Mr. Dale Westhoff’s/Credit Suisse’s arguments against, lest anyone think that I’m being purely snarky about this whole thing, and therefore am in any sense being non-responsive to the issue at hand.

It’s not a simple subject, by the way.  So, don’t expect me to offer an oversimplified and hence meaningless response.

Mr. Westhoff, the bank’s “global head of structured product research,” the term “research” being used extremely lightly… hinges his argument against principal reductions for homeowners as a means for preventing foreclosure on the same old argument: it will create a moral hazard.

Now, let’s take a look at what this “moral hazard” thing is all about.

Traditionally, moral hazard exists when a party can make decisions about how much risk to take on, while another party bears the costs of that risk going badly.  And if that’s how we were defining it here, the only moral hazard that we’ve got to be concerned about is the moral hazard resulting from banks taking on too much risk knowing that they are “too big to fail.”

That’s the type of moral hazard that’s gotten us into this mess in the first place, and since the bailouts of banks in 2008, it’s the most significant risk we bear as a nation because if banks think they’ll be bailed out no matter what because they are too big to fail… we can all count on them needing to be bailed out again… and again… and again.  So, that’s that.

Westhoff, however, is using the term moral hazard in a different sense.  He’s asserting that if homeowners know that there are principal reductions available to those in default, more and more homeowners will intentionally go into default in order to get their principals reduced.

Moral Hazard and Principal Reductions

It’s shocking how little the financial services industry understands about the people it serves.  One particularly telling example of this was seen in May of 2011, when one of the three major credit bureaus, TransUnion, published the results of a study that shocked the banking industry by concluding that many who have lost homes to foreclosure did so because of the downturn in the economy and not as a result of an inability to handle debt, as was previously thought.

“Lenders always try to distinguish a one-off, life-crisis event like divorce or a medical catastrophe versus people who are just ineffective at managing credit,” said Ezra Becker, TransUnion vice president of research and consulting, and one of the study’s authors.

 “Our argument is that this economy disproportionately affected certain people in a way akin to a one-time crisis. Those consumers have not in fact forever changed their personal philosophy on repaying debt. It was a one-time event because of the specific and personal circumstances of the recession, and they otherwise would be good credit risks.”

What’s most amazing about the TransUnion study is that they needed to conduct a study to establish that people losing homes to foreclosure in the last few years were not irresponsible deadbeats, as the financial services industry had been assuming, but rather… well, it was the economy, stupid.  That anyone in financial services needed a study to tell them that foreclosures were being caused by the credit crisis that their industry brethren created is either some distorted form of irony or disingenuous nonsense.

The banking industry’s abysmal knowledge of consumers is also readily apparent when looking at the issue of moral hazard as related to principal reductions, or the incidence of strategic default, which is when someone chooses to walk away from a mortgage even though they can afford to make their payments.  These are the two subjects from which one might write a book of scary bedtime stories for bankers.

To understand this topic, first you have to understand how regular people view their homes. 

The years 2003-2007 notwithstanding, homes are not seen by regular people as investments in the traditional sense, they are more like forced irrational savings accounts we inhabit.  We don’t care what interest rate we’re getting on our “home/account,” but we do know the balance will be significant if we pay it off, and so they are a key component of America’s retirement plan.

Most people save money for a down payment on a house during the early part of their lives when their costs of living are relatively low.  After that, if property values are rising, they become relatively more mobile because they use the equity in one home to purchase the next.  It’s true that our incomes rise as we get older, but life gets more expensive over the years too.

Because the costs and expenses of buying a home and moving, if property values are falling or flat, we do everything we can to hold on to the homes we have, which is why so many underwater homeowners have applied for loan modifications even though from a strictly financial perspective, it doesn’t appear to make any sense.

It actually does make sense, however, once you understand that most people know that their only hope of buying another home will come from equity they build up in their current one.  And even if they don’t build that equity as a result of market price appreciation, that’s okay because the forced savings account functionality will eventually kick in, and they’ll have the equity to move up, or an asset of significant value for unplanned emergencies or retirement years, or the foundation of an estate to leave to our children.

It should be obvious that this line of thinking is foreign to financial investment types who think in terms of comparing returns on different investments.  It would be easy to show someone why it would be advantageous to accumulate wealth through a diversified set of investment vehicles while renting a home, but regular people know that they can’t trust themselves to be disciplined about saving and investing, but they can make a mortgage payment each month for 30 years because not paying that payment means disrupting their family’s tranquility… and having nowhere to live.

As a result, to stop making one’s mortgage payments on a primary residence is in general a big deal… a huge risk… you may end up losing your home… you can’t tell a living soul about what you’ve done… and your credit score goes to pot within a couple of months.  It’s immensely stressful, and no one does it unless financially speaking it’s absolutely necessary, meaning that some significant life event has occurred… job or income loss, injury or illness, divorce… those are the big ones anyway.

The bottom-line is, if people can afford to make their mortgage payments… they make their mortgage payments, and this is most easily verified by looking at how low foreclosure rates have been historically, again these past few years notwithstanding, even though between 1950 and 2000, home prices nationally were flat if adjusted for inflation.

So, will homeowners in any meaningful number take the risk inherent to going into default on their mortgage in order to get their principal balance reduced?  The answer should be obvious… it depends on how far underwater the homeowner is, how does the homeowner view the potential and timeframe for home price appreciation to occur, how certain is it that by defaulting they will be granted the principal reduction, and what are their options if their principal isn’t reduced and they lose their home to foreclosure.

Obviously, someone $200,000 underwater who thinks it will be 20 years before the market price appreciates by that amount, is much more likely than someone less severely underwater who views prices as coming back in five years, to walk away… or to go into default in order to try to get their bank to reduce the principal balance of their mortgage.

The other question about the efficacy of principal reductions in foreclosure prevention, applies to homeowners who are already seriously delinquent and seriously underwater, who are applying for a loan modification.  Lowering this homeowner’s interest rate and extending his or her term can make the monthly payment affordable and therefore prevent a foreclosure in the short term, but the question is, by leaving the homeowner so far underwater, are we just creating a strategic default in the future?

A couple of years ago, there were a slew of articles in places like the Wall Street Journal among others, that claimed that there a rash of strategic defaulters, which are defined as people that can afford to pay their mortgage no problem, but choose not to because they owe more than the home is worth.  And a couple of years ago, I wrote that strategic defaults are nonsense because no one that can afford their mortgage payments gets up on Sunday and says to their spouse:

“Honey, I realize that we can afford our mortgage payments no problem, but I was just thinking how far underwater we are and thought now might be a good time to clean out our garage, ruin our credit scores, endure the hassles of moving, and go rent a place for a five years.”

That is not what’s been happening to-date.  Not that it never has or will happen, but it’s exceedingly rare.  Everyone that hasn’t made a mortgage payment in months or even years is in their current situation because of money.  They didn’t stop making their mortgage payment because they became upset about being underwater, nor was it because of an ability to handle debt.  They stopped, in the vast majority of cases, because the economy or a life event knocked them down financially, and after using whatever savings they had, there came a day when they simply couldn’t make the payment… it wasn’t because they didn’t want to.

Optimism is a hard thing of which to let go…

I think I can remember the exact day that the dot-com bubble popped… it was April 10, 2000… and I was watching it happen on a television screen showing CNN as I waited in line to board a flight home from San Jose where I had spent the day in meetings.  I remember saying to my assistant at that time, that’s it… it’s all over now, or something to that effect.

I also remember seeing the cover of Newsweek two months later; I think it was the June issue.  It suggested that the tech sector would be coming back by December of that year, the obvious message being, “Don’t sell.”  I laughed when I read it… but not as much as I did two years later when I was at my favorite local watering hole after work with a friend of mine.  Mid-sip of my martini, he told me he was still holding onto his shares in Cisco Systems, purchased at $84, causing me to spit out my drink, choking as I laughed.

At the time, I think Cisco was trading at around $9, but my innumerate and hopelessly optimistic friend was explaining that he was only hoping the stock would return to half of its $84 price so he could then get out, losing only half of his dough.  I tried to explain the math involved showing him why he should sell and take the loss on his tax returns, and he listened… but it was another year before he took the advice and I learned that optimism is a hard thing of which to let go and this crisis has been no exception.

In the early stages of the crisis, essentially everyone listened to the administration, other government sources, and financial industry PR, and as a result believed that we were experiencing a temporary downturn as had happened before… that the housing market would start to come back around in a few years.  The idea of a “lost decade” was something that only happened in Japan… and everyone was saying that we were not Japan, which made sense to most folks because we cooked our fish before eating it in most if not all cases.

Recovery, the so-called experts said, would come by the end of 2010… then it was 2011… and then 2012.  As the years passed and home prices continued falling, consumer spending followed, and people came to realize that any recovery in the housing market would take longer than it had after past downturns… maybe it would be five years… maybe seven, so maybe by 2014 or 2015?

As long as most people believed that what was happening had happened before they could remain grounded, go on with their lives, and await our return to national prosperity.  This was the way people felt through 2009, 2010 and some part of 2011.

Last year, the news started to change and for a large segment of the population hope for recovery within a decade started to seem overly optimistic.  A lost decade was now understood to be almost a certainty, and the idea of a 20-year downturn, unthinkable only a couple of years earlier, now seemed a possibility.

Of course, there will come a time when some significant number of people sans money problems walking away from their mortgages en masse, and if we continue on our current path, that time will be here soon enough.

For millions of homeowners today, their situation has deteriorated to the point that it has become close to paralyzing.  Government programs have in all cases, not only been spectacular failures, they’ve also been spectacular lies.  As a result people have lost both trust and confidence in those they elected as they have plainly misled and ultimately abandoned them.

Additionally, having been televised it’s now widely recognized that too many courts have been ambivalent to the flagrant forgeries and fraudulent documents banks have used in the foreclosure process.  And losing faith in the courts and rule of law, is leading millions of homeowners to increasingly view their future as potentially dire.

And you know what they say: Desperate people take desperate measures.  (Or is that… “Disparate people choose different pleasures.  I can never remember how these sayings go… LOL.)

So, the bottom-line is that today, the issue of moral hazard as it relates to principal reductions is an entirely different matter than it was even a year or two ago. Today, and looking forward, I’m sure there is increasing reason to be concerned about homeowners being inspired to intentionally default in order to have their principal balances reduced, but the banking industry should realize that those that do so… well, if they’re willing to take that sort of risk then they’re on their way to a strategic default anyway… so, it’s really just a matter of choosing your poison.

ENTER: Mr. Dale Westhoff of Credit Suisse…

Dale Westhoff, our insipid bond analyst from Bear Stearns, says that beyond the creation of moral hazard, offering to reduce principal may also tighten lending by forcing banks to offer “price protection” to borrowers.

Now, I have no idea what “price protection” is, but I would like to say something to Dale about the idea that offering to reduce principal balances may result in tighter lending standards… so if you’ll just excuse me for a moment… be right back.

Dale?  Hi there.  Mandelman here.  Listen, I want to be diplomatic about this… you know that pseudo-threat you made about tighter lending standards as a result of principal reductions?  Did someone tell you that if you run out of rationales for not reducing principal balances, hit them with the old “banks will tighten lending” line? 

 

Well, Dale… that would sure make for an interesting threat that I might actually care about… if banks were actually lending… or, I don’t know… maybe if anyone was interested in borrowing.  However, since neither is the case, nor is it likely to be the case anytime soon, I’d say the only thing that comes to mind in response to your empty and barely veiled threat about tighter lending in the future as a result of principal reductions is… Shut the front door, Dale.

 

Let me share a little something with you and your banking pals… it has to do with principal reductions.  Do them… don’t do them… stick them up your tailpipe… homeowners barely give a rat’s behind anymore what you do or don’t do… think or don’t think.

 

You see… I guess you could say that it’s wearing kind of thin, Dale my boy… and homeowners wouldn’t believe you if you said the sky was blue.  Loan modifications don’t work because of their re-default rate… and now it’s principal reductions aren’t worth a darn because they create moral hazard. 

 

Well, what would “work” for you and yours, Dale?  I think I have an idea of what you and Credit Suisse are all about actually… tell me if I’m getting warm…

Just a scant couple of days ago Credit Suisse won the bidding process and as a result bought $7.014 billion in face value RMBS (“Residential Mortgage-backed Securities”) from the Federal Reserve Bank of New York.  The New York Fed bought them from AIG and had them in their Maiden Lane II, which is the New York Fed’s… what do you call that sort of entity… shell company?

So, when Maiden Lane II bought the assets their face value was $39 billion… and they paid $20.5 billion.  Now their face value is just over $7 billion and Credit Suisse paid… oh dear, wouldn’t you know it… darn the luck… the NY Fed says the actual price you guys paid won’t be disclosed until April 16, 2012.

Why is that, Dale?  How about a little research on that issue?  Why can’t the Fed disclose how much the Credit Suisse bid was until April 16, 2012, when the sale was made on January 19, 2012?  I’m sure there’s a perfectly good reason don’t get me wrong… I’m sure it’s just something to protect the interests of us U.S. taxpayers.  Always looking out for us, aren’t you Dale?

So, I hate to even mention it, but does the fact that you guys at Credit Suisse are running around like vulture investors trying to scoop up distressed residential mortgage-back backed securities at bargain basement prices bother you at all… I mean, considering that at the same time you’re publishing supposed “research” under headlines like, “Mortgage Principal Cuts Don’t Help Homeowners, Says Credit Suisse?”

The only reason I’m asking is that Laurie Goodman of Amherst Securities was quoted in that same Bloomberg article and she said…

“Amherst’s Goodman says that principal reductions are needed to avoid 8 million to 10 million more distressed-property sales.”

See, she said that because she felt it would be a bad thing to have 8-10 million more distressed property sales, but it looks like Credit Suisse wouldn’t actually mind at all if there were lots more distressed property sales, since Credit Suisse is scampering about in the night buying them for pennies on the… no, that’s not right… for some undisclosed amount to be disclosed on April 16, 2012.

The suspense is killing me, Dale.  I wonder if Credit Suisse overpaid for the distressed assets they bought?  Any guesses on how it will turn out?

On January 6, 2012, Federal Reserve Bank of New York President William C. Dudley, had the following to say on this very subject…

“Analysis by my staff that looks at likely borrower behavior over an extended time horizon suggests that without a significant turnaround in home prices and employment, a substantial proportion of those loans that are deeply underwater will ultimately default — absent an earned principal reduction program.”

Yeppers… so absent principal reductions, looks like I was about right once again… a whole bunch of loans are going to default… which will create a whole bunch of distressed RMBS assets for sale at pennies on the… well, at undisclosed prices for three months.

And Credit Suisse would just HATE that, right Dale? Since it’s evidently the bank’s business model at the moment.  I wonder why the bank isn’t making it’s money LENDING, like banks used to do.  You know, lending before all that tightening that we’re supposed to be so afraid of, according to you, if we allow principal reductions.

I’m actually thinking that you’re the moral hazard here, Dale… because you certainly don’t seem to have a moral compass.  And besides, you’re statements are starting to make me dizzy.

I scanned that Bloomberg article over and over, and it must have slipped your mind because you forgot to mention the bit about Credit Suisse having bought the distressed RMBS assets from Maiden Lane II… two days before you gave the story… or rather the press release…. to Bloomberg… nicely done, Dale… very nicely done… in fact, I’d have to say crackerjack work, my slimy friend.

Don’t feel too badly about this whole thing coming out this way though… I have skills.

Oh, and one more key point… Laurie Goodman made it… it’s about the one place where principal reductions appear to be very effective in preventing defaults…

“We have shown that, even controlling for all other factors, principal reductions are more effective.  Realize also that banks are doing it on their own portfolios and have been for years. Why would they continue if it was not more effective?”

Got to hand it to her there… it’s a darn fine question, isn’t it Dale?  Why do you suppose banks offer principal reductions when it’s their own portfolio loans, but not when it’s the taxpayers who are on the hook, such as when the loan is owned by Fannie, Freddie, or insured by FHA?

Or, maybe the whole moral hazard thing doesn’t apply when it’s a portfolio loans on a bank’s balance sheet, is that what it is… or isn’t?  Or, whatever Dale… no need to reply…no one is listening to you anymore.

Mandelman out.

It’s time for me to have an adult conversation with the experienced practicing attorneys in this country.  Other grown-ups are welcome to sit in as well, but it’s time for children to be in bed or occupied elsewhere, okay?

Well, today we have a mammoth size foreclosure problem in this country, and it’s being talked about like it’s damn near an unsolvable problem… as if solving it would require determining the chemical origins of life, or figuring out whether black holes really do exist in space.

The foreclosure crisis, thank goodness, is not a black hole-type problem as many would have us believe.  It is a problem that, political constraints notwithstanding, exists at the juncture of economics and the rule of law.  In other words… it’s an oil spill… perhaps the worst oil spill of which the world has ever conceived… the Exxon Valdez meets Deepwater Horizon x 100, if you will… but it’s still just an oil spill.

It’s also important to note that as an economics problem alone, the foreclosure crisis is not a particularly challenging one to solve.  Some would rush to remind me that any proposed solution would be rife with “moral hazard,” and while that may be true, it doesn’t make the problem insoluble, by any means.

The elephant in the room is that what we’re facing in this country today is not just a foreclosure crisis, what we’re dealing with with is much better described as a FRAUDclosure crisis.

A couple of years ago, many would have said that my use of the word “fraud” before “closure,” is just hyperbole.  Today, however, anyone voicing that sort of opinion is selling something.  Even a cursory review of last year’s scathing “consent orders,” that federal regulators issued after months spent investigating mortgage servicers… or a quick perusal of the complaints filed against the servicers by attorneys general in Massachusetts, Nevada, Maryland, or Arizona… or by reading any number of published court decisions favoring homeowners… and one can only conclude that use of the word “fraud” is, if anything, understatement.

Additionally, this past year has been a turning point for the general public as far as FRAUDclosures are concerned.  Television’s most venerable news magazine, “60 Minutes,” along with newspaper-of-record, “The New York Times,” joined a long list of others documenting the many ways that banks and mortgage servicers are routinely breaking numerous laws in order to take advantage of homeowners in foreclosure.  It’s now widely understood to be something that’s occurring all over the country, and even though the banking industry continues to try to dismiss publicized instances as insignificant dalliances or “isolated incidents,” their sheer number has made such attempts laughable.  And the levels of wholesale anger and dissatisfaction with government felt among the populace are both palpable and rising fast.

Today, even forecasts from the likes of Goldman Sachs and Amherst Securities peg the number of foreclosures between 10.4 and 14 million by year-end 2014, and those numbers could easily go higher should home prices continue to fall… which they invariably will.  Add those numbers to the millions of foreclosures already water under the bridge, and were talking about a crisis that results in ONE IN FOUR Americans with mortgages losing their homes to foreclosure in the next handful of years.

What I’m describing will unquestionably devastate any hope for recovery in our broader economy for any number of reasons.  For one thing, as banks are forced to recognize their losses incurred on the mortgage-backed securities and CDOs that capitalize their balance sheets, they will become insolvent… and this time many will be forced to fail.  For another, home prices will continue falling pushing more and more homeowners underwater and consumer spending will continue to decline and that will lead to rising unemployment, which will in turn fuel further foreclosures.  And those hopelessly underwater will begin walking away en masse, which will further exacerbate the decline in prices and become impossible to combat.

All of these factors and more will combine to reduce future demand for residential real estate dramatically… perhaps by half, but in addition, with no secondary mortgage market… no ability to securitize debt… even those wanting to buy homes going forward will find credit to be tight and tighter, destroying any potential for recovery in the housing market.

And I’m no longer in a small group of people writing about this deteriorating situation as was the case three plus years ago.  Every day others are waking up to the fact that what we’ve been told about foreclosures to-date by our government and the financial services and related industries, has proven itself to be at best mistaken… at worst misdirection… or, not to put too fine a point on it, outright folderol.

As conservative columnist, Peggy Noonan, has pointed out recently, it’s simply impossible to imagine this sort of future without also seeing social unrest on a scale not seen in this country since at least the 1930s.  Writing recently about the Occupy Wall Street (“OWS”) movement, Noonan echoes my sentiments on the situation to a tee…

“OWS is an expression of American discontent, and others will follow.  Protests and social unrest are particularly likely if people feel they are unfairly losing their homes to support irresponsible, law-breaking institutions that have successfully disregarded the fundamental rules of capitalism and good citizenship.”

There should be no question in anyone’s mind… there are only two paths ahead from which to choose.  Both involve fighting a war… but on one path the battle is fought by lawyers in our courts… on the other, by citizens in our streets.

Make no mistake about it… if we are to mitigate any of the  damage being caused, uphold the rule of law, and protect the rights of millions of homeowners… it should be obvious to anyone that WE NEED TENS OF THOUSANDS OF LAWYERS trained in foreclosure defense, loss mitigation and bankruptcy.  And yet, more than four years into the FRAUDclosure crisis, we don’t have anywhere near the number of trained, ethical attorneys required to meet the demand.

We’re all adults here, so let’s not kid ourselves about why that’s the case.  

We all know why we don’t have the lawyers we need to marshall a more effective defense of homeowners engulfed by the FRAUDclosure crisis… it’s because THERE’S NO MONEY IN IT.  Or, at least that’s what lawyers have been told they are supposed to believe.  Not only that, but the message has been that there  shouldn’t be any money in representing homeowners at risk of FRAUDclosure. It’s as if attorneys profiting from representing homeowners at risk of FRAUDclosure is somehow a bad thing.

AND THAT’S JUST 100% BANKER-INSPIRED B.S.

Don’t you see what’s happened here?  We’ve allowed the banks, and the government that’s been bailing them out, to essentially criminalize the profit potential in representing homeowners at risk of foreclosure… and wonder of wonders, miracles of miracles… here we sit with what appears to be an unsolvable problem.

Consider this… bankers say that they’ve been overwhelmed by the millions of homeowners unexpectedly seeking loan modifications and that’s why applying for a loan modification has been such a nightmare.  But, what about the number of foreclosures occurring in the same time frame?  Haven’t there been an unprecedented and unexpected number of foreclosures too?  So,why is it that the banks have no problems accommodating the millions of unexpected foreclosures, but the millions of unexpected loan modifications represent an unsolvable problem?

It’s simple… because on the foreclosure side of the equation, banks allow lawyers to be profitably compensated for handling foreclosures, and sure enough those law firms have figured out how to handle any number of foreclosures that come down the pike… in fact, the more the merrier, as they say.  On the loan modification side of the house, however, profits are a dirty word… and wouldn’t you know it, the problem is unsolvable.  Why am I not surprised?

Over the TWO YEARS following the Deepwater Horizon disaster, BP spent $21 billion to clean up the Gulf of Mexico.  In the FOUR YEARS since the tsunami of foreclosures began, we’ve spent roughly ten percent of what BP spent cleaning up the Gulf… $2.4 billion… and the vast majority of that amount paid to mortgage servicers… and we’re wondering why the problem can’t be solved?

 A MESSAGE TO OUR NATION’S LAWYERS…

It’s the biggest financial opportunity for the legal profession

SINCE THE REAR END COLLISION. 

The fact is… there is a HUGE OPPORTUNITY today to build a very profitable legal practice based on the ethical and effective representation of homeowners caught in the FRAUDclosure crisis.

From the very beginning of the mortgage meltdown, banks have tried to make sure that homeowners were not represented by attorneys when trying to save their homes from FRAUDclosure.   The reason is now apparent: Banks knew it was a FRAUDclosure crisis before the rest of us did because they’re the ones who put the FRAUD into FRAUDclosure.  From the earliest days of the crisis, the banks and the Obama Administration have been reinforcing TWO LIES:

1. Homeowners at risk of foreclosure don’t need lawyers… they can just call their bank directly.  That’s like the police telling someone under arrest that he or she doesn’t need a lawyer because any questions can be answered by the District Attorney.  It’s a damn lie… homeowners DO NEED LAWYERS to help them save their homes because it’s not just a foreclosure crisis, it’s a FRAUDclosure crisis.
2. A lawyer who charges a homeowner at risk of foreclosure up front… is a “SCAMMER.”  That is not only a LIE, but it’s a lie to achieve two key bank objectives.  One – It stopped many homeowners from seeking legal representation, thus allowing the banks to do whatever they wanted as related to foreclosing on their homes.  Two – It stopped countless attorneys from building a profitable practice based on representing homeowners at risk of foreclosure.

The California Example…

In California, the efforts to stop lawyers from representing homeowners have been more extreme than in any other state.  Here the campaign to malign the legal profession has been driven by legislative committees and supported by the California State Bar Association.  In October 2009, California’s SB 94 created a law that has effectively prevented lawyers from offering to represent homeowners who are seeking to avoid foreclosure through modification of their loans.  Under the guise of “charging up front makes you a scammer,” SB 94 has made it illegal for a lawyer to charge a homeowner an upfront retainer for legal fees.

Quite predictably, the law has made it difficult or even impossible for California homeowners to find quality legal representation related to seeking loan modifications, forcing those at risk of foreclosure who want to be represented by an attorney into either litigation or bankruptcy.  Writing for The New York Times in December 2010, David Streitfeld’s article titled, “Homes at Risk, and No Help from Lawyers,” described the situation in California related to SB 94.

In California, where foreclosures are more abundant than in any other state, homeowners trying to win a loan modification have always had a tough time. 

Now they face yet another obstacle: hiring a lawyer.

Sharon Bell, a retiree who lives in Laguna Niguel, southeast of Los Angeles, needs a modification to keep her home. She says she is scared of her bank and its plentiful resources, so much so that she cannot even open its certified letters inquiring where her mortgage payments may be. Yet the half-dozen lawyers she has called have refused to represent her.

“They said they couldn’t help,” said Ms. Bell, 63. “But I’ve got to find help, because I’m dying every day.”

Lawyers throughout California say they have no choice but to reject clients like Ms. Bell because of a new state law that sharply restricts how they can be paid. Under the measure, passed overwhelmingly by the State Legislature and backed by the state bar association, lawyers who work on loan modifications cannot receive any money until the work is complete. The bar association says that under the law, clients cannot put retainers in trust accounts.

To make matters worse, SB 94 has recently become controversial.  In late September 2011, Suzan Anderson, who is the supervising trial council of the state bar’s special team on loan modifications, made an unscheduled appearance at the bar’s annual conference, presenting what she purported to be the bar’s new interpretation of SB 94.  Literally hundreds of attorneys and legal scholars disagree, however, and litigation has recently been filed against the bar seeking declaratory relief, so we’ll soon see the courts decide the issue.

The core issue is about when a lawyer who represents a homeowner trying to get their loan modified can be compensated.  The bar claims the law requires an attorney to wait until the very end of the case, however, the actual language contained in SB 94 doesn’t say that… it says lawyers cannot be paid until completing “any and all services (the lawyer) has contracted to perform…” Up until Ms. Anderson’s presentation at the annual meeting, lawyers were dividing services into separate contractual arrangements and accepting payments from homeowners as discreet sets of services were completed.

Regardless of which side of the debate you’re on, the issue highlights how far the banking lobby will push a state legislature and state bar association in an attempt to prevent homeowners from being represented by legal council when trying to to avoid foreclosure, and it should come as absolutely no surprise that SB 94 was born in the state’s Senate Banking Committee, sponsored by Sen. Ron Calderon, who chairs that committee.

Advocates of SB 94 claim that it was needed to stop “scammers” who were preying on homeowners in distress from accepting up-front fees.  As quoted from Streitfeld’s article in The New York Times…

A spokesman for the Mortgage Bankers Association said it simply wanted to protect homeowners from fraud. “Be very careful about anyone who wants you to pay them to help you get a loan modification,” said the spokesman, John Mechem.

The evidence of any sort of army of lawyers-turned-scammers ripping off homeowners has always been thin, and by “thin” I mean nonexistant.  In the two years since the bill became law, the bar has taken some type of disciplinary action related to the representation of homeowners in foreclosure against two dozen lawyers, give or take a few.  In a state with more than 200,000 lawyers and 2 million homeowners in foreclosure, two dozen lawyers disciplined would hardly seem justification for a law that effectively prevents lawyers from helping homeowners get their loans modified.

Last December, Suzan Anderson, who heads up the bar’s task force on loan modifications, told The New York Times…

“I wish the law had worked,” Ms. Anderson said.

It’s also telling that no other state in the country has a law anything like SB 94, in fact, the rest of the states follow the FTC’s Mortgage Assistance Relief Services rule, MARS, which was adopted on January 30, 2011, and it does allow attorneys representing homeowners seeking loan modifications to accept funds in advance into their trust accounts.

The New York Times article also offered the perspective of several California homeowners seeking legal assistance in a post SB 94 world…

Mark Stone, a 56-year-old general contractor in Sierra Madre, feels differently. A few years ago, he got sick with hepatitis C. Unable to work full time, he began to miss mortgage payments. The drugs he was taking left him “a little confused,” he said.

Mr. Stone knew that his condition put him at a disadvantage in negotiations with his bank. So he hired Gregory Royston, a real estate lawyer in Redondo Beach. It took Mr. Royston nearly a year, but he restructured the loan.

 Without the lawyer, Mr. Stone said, “I’d be living under a bridge.

”The legal bill, paid in advance, was $3,500. “Worth every penny,” said Mr. Stone, who is now back at work.

“This law,” Mr. Royston said, “took the wrong people out of the game.”

A Bleak Picture in California…

California’s approach to discouraging lawyers from representing homeowners at risk of foreclosure has not served the state or its residents well at all.  California is the “hardest hit” of all 50 states, accounting for one of every five foreclosures in the U.S.  Almost half of California’s homeowners are either underwater or effectively underwater today.  Since 2008, there have been 1.2 million foreclosures statewide, and that number is expected to exceed 2 million by the end of 2012.  And, according to the report published by the California Reinvestment Coalition…

The 2 million foreclosures expected by the end of this year are forecasted to cost the state and its residents $650 billion statewide.

Today, in California alone there are roughly TWO MILLION homeowners in foreclosure.  I don’t know exactly how many we have nationwide, estimates vary, but are in the 5 million range.  I do know that if two million people needed just 10 hours of legal assistance, it would take 20 million man hours.  Assuming a six hour work day and a 260 day work year… that’s just under 13,000 years assuming only one lawyer were involved.  To help two million people, assuming 10 hours each, at best would require more than 10,000 lawyers trained and working efficiently.

How many attorneys do we have  trained and ready to help loans get modified, represent homeowners in foreclosure defense matters and/or in bankruptcy.  Nowhere near 13,000 that’s for sure… in fact, we might not find 1300 either… and many would say the number could be closer to 130, and with the proliferating fraudulent documents… the abuses by servicers… the number of people who are foreclosed on illegally… its become easy to see the disease, and trained ethical lawyers would seem the only cure.

Mandelman out.

~~~

We need a literal army of experienced litigators, and Max Gardner’s Bankruptcy Boot Camp has trained close to 900 attorneys to protect the rights of homeowners in foreclosure.  I’ve attended Max’s Boot Camp… I could never recommend it strongly enough… and often do.  But, there’s more than legal training that’s required here… and if we’re going to attract the number of lawyers we need to fight this war…

The Answer is Money…

What Was Your Question?

Ohio’s former Attorney General Marc Dann is a highly experienced foreclosure defense attorney and a graduate of Max Gardner’s Boot Camp. He’s proven in his own successful practice that lawyers have the opportunity to DO GOOD… and DO WELL at the same time by learning the ins and outs of this, unfortunately, very fast growing and specialized field.  And he’s developed a comprehensive training and ongoing support program that allows experienced foreclosure defense attorneys to immediately access new clients and the right clients, improve operations within their firms, and yes… increase their profitability dramatically.

Marc understands our need for an experienced army of foreclosure defense lawyers, but he also understands the reality that lawyers have to make money in order to operate effectively.  In a phrase, a lawyer that can provide effective representation for homeowners at risk of foreclosure today, should not be worried about losing his or her own home to foreclosure because that benefits no one.

So, Marc has developed and employed best practices in building his own successful foreclosure defense practice, and now he’s teaching other attorneys how to make money in foreclosure defense so that ultimately he will have provided countless thousands of homeowners all over the country with access to highly capable, ethical and experienced attorneys.

Marc Dann’s LAW PROFITS program will take experienced and effective attorneys committed to foreclosure defense and protecting the rights of homeowners, and help transform them into vibrant, profitable firms or individual legal practices.  Some of the innovative solutions Marc will be delivering include:

• How to cut through the noise created by scammers, reaching out to homeowners in a very honest and compelling way.
• When and how to sue the bad modification company or bad lawyer.
• Suing the foreclosure mills for fun and profits.
• Using Fair Debt Collection Practices and State Consumer Protection.
• Learn about the new practices available under Dodd Frank.
• Harnessing TILA and RESPA inside and outside bankruptcy court.
• Unconventional approaches stay one step ahead of servicer practices.
• Billing structures, methodologies, and practice accounting.
• Designing compensation programs that balance the needs of homeowners with the needs of your firm.  
• Never lose clients – Ongoing communications program that’s turn-key and educates clients so they become fans.
• Fee agreements – for contingency and hourly clients.
• Become part of a highly visible network of top foreclosure defense attorneys, and strategic partners.
• Communications strategies and tactics proven effective and unavailable anywhere else.

Making little or no money in foreclosure defense isn’t doing your clients any favors because you cannot be your best without it.  Marc Dann’s LAW PROFITS is not a pot of gold, or a winning lottery ticket, but it is a proven process and suite of best practices that makes a law practice profitable… essentially immediately.  It’s work, no question about it, but it’s important and gratifying work.

I wholeheartedly support Mar’c Dann’s LAW PROFITS initiative.  And I strongly urge all of the lawyers reading this to take action now by clicking the link below, so you can find out more about what his LAW PROFITS program for foreclosure defense and bankruptcy lawyers can do for you and your firm.  The FRAUDclosure crisis and its ancillary topics, I’m sorry to say, are going to be with us for a long time… a decade plus, if we’re lucky.  Longer if we’re not.  It’s time to settle in and start capitalizing on being one of the best at solving on of the worst case scenarios.

Click below to find out more about…

Marc Dann’s 

LAW PROFITS