New Abuses in the Foreclosure Process Make the Dire… Dreadful

It’s as surreal as it is astonishing that any aspect of the foreclosure crisis being endured by homeowners in this country could possibly make things even incrementally worse.  How can the dire become dreadful, the harrowing become horrendous, or something ghastly morph into something positively gruesome?

It makes me think of getting attacked by a polar bear, while about to freeze to death at the North Pole.

Do you think I’m being overly dramatic?  I actually don’t, or at least not by much.

Although I’m not proud, I will admit that there are some aspects of our financial crisis to which I’ve become totally desensitized, entirely incapable of feeling anything but nonplussed pretty much regardless of the heinous nature of the “news.”

For example, the only response to emergent banking malfeasance, misconduct and corruption that I can muster has largely become… “oh, so what,” because getting all worked up about it has started feeling like getting upset at a dog for barking, or at the wind for blowing.

I think I stopped being able to feel much of anything when, at the end of last year, HSBC was fined almost $2 billion for “allowing itself to be used to launder a river of drug money flowing out of Mexico.”  All I could think to say was, “Oh well, don’t do the crime if you can’t pay the fine.”

It was a very different feeling than what I had felt two years ago when it was Wells Fargo that was apparently laundering Mexican drug money.  I remember feeling disgusted as I read about the more than 22,000 that had been killed in drug-related battles along the U.S. – Mexican border since 2006… that’s SINCE 2006.

But, then came the robo-signing scandal, the infamous consent orders, and the $25 billion National Mortgage Settlement, and by the time we got to the OCC’s Independent Foreclosure Review… I had no trouble just ignoring it completely.  And I knew it wasn’t just me that was getting tired when the ill-conceived review didn’t even explode into a scandal of senate investigations after being attacked by external forces.  Instead, one Monday morning it just fell apart all by itself.

I loved it when Goldman Sachs got fined $550 million over the Abacus transaction that I’ll never forget Sen. Cal Levin referring to as “a shitty deal,” when reading from the company’s internal emails.  But, after reading about Bank of America agreeing to pay $8.5 billion related to Countrywide claims, and over $3.5 billion to Fannie Mae for Lord knows what, and then another $1.7 billion to MBIA… I was getting dizzy.

Last week, I think, JPMorgan was fined almost $1 billion, and when it showed up in a newsfeed, I didn’t even click on the headline.

That morning someone said to me, “Did you see the news about JPMorgan?”

No, I said, but can I guess?

“Sure, go ahead…”

Hmmm… let me see… how about: “Giant bank takes advantage of miscellaneous others in shocking way in order to make huge profits?”

“I suppose that’s close enough.”

Yeah, I’m so proud.  For my next trick I’ll be guessing the weather in San Diego.

Shocked again, naturally… 
So, I found myself taken by surprise when I heard from two attorneys in Washington this past week and both relayed accounts of what had happened to homeowners that were being evicted after losing homes to foreclosure that I found both shocking and sickening.  When I asked one of the lawyers how often what she was describing was taking place and she replied, “three times a week,” I felt a combination of anger and sadness rising inside of me.

It’s the only thing I can think of to make the foreclosure experience endured by today’s homeowners worse.

It’s not enough to have been wiped out by the most destructive economy since the 1930s… not enough to be living in silence bound by shame as the number of months delinquent feels like it’s compounding based on the rule of 72… not enough to endure the torture and the pain, while being shunned by our society and ignored by one’s government.  No, on top of all that, it’s like getting, “Waterboarding for $300, Alex.”

I’m not exaggerating when I tell you that I’ve heard people say that they’d choose six months of chemotherapy over having to apply for a loan modification with SLS, Green Tree or Nationstar… or Wells Fargo, for that matter.  With these and plenty of other servicers, it’s damn near 2010 all over again… you get all the uncertainty with half the empathy.

Not that suing your servicer is any better, so sell that story somewhere else, sister.  For the most part, one’s a frying pan, the other’s a fire.  I know that I’ve said that Bank of America is much better at getting loans modified than ever before, and I stand by that statement… they definitely are.

I’d take my chances with Bank of America over the rest any day of the week, but that doesn’t mean that any of it is peaches and cream, or that BofA isn’t capable of making mistakes that end up making people miserable… the loan modification process even at its best, is still analogous to a high wire act performed without a net.

But, once it’s over… once its ended badly and someone has lost their home to foreclosure… their ordeal should be over and they should be afforded every courtesy.  They’ve lost… now help them get up, for God’s sake… to allow them to be kicked while their down is deplorable… like abusing a defenseless child, it’s the lowest form of abuse there is.

Eviction abuse…

It’s a struggle even to write these words… and I can’t think of what else to call it but “eviction abuse.”

After hearing from the two Seattle area attorneys, I immediately searched online to see whether others were writing about anything similar… and, of course, they were.  Jessica Silver-Greenberg, who writes for the New York Times, and who I’ve spoken with in the past, had written a piece very close to the topic just a few days earlier, and the Illinois Attorney General, Lisa Madigan, had filed a lawsuit that also was related to the stories I had been told.

After you’ve lost a home at a trustee sale, you have a certain number of days before you’ll actually be evicted.  Washington gives you 20 days, and I’m sure in the other states allow for a specific number as well.  Personally, I wouldn’t object in the least to that number being increased to 30 or even 45 days, if not longer… even if that meant imposing a requirement that people would have to pay some amount of rent for the extra time.

It’s a home, after all, presumably someone has lived in it for years… the home won’t sell next week anyway and probably not next month either… allowing someone a more humane amount of time to transition to me seems entirely appropriate.

But, in Washington, and it appears elsewhere, I’m horrified to learn… many aren’t even being given the 20 days the law allows, and that’s not even the worst of what’s happening.  Because we’re talking about an eviction after foreclosure, property preservation companies are showing up early and clearing out whatever they find there in the way of personal belongings.

A young couple living in the Seattle area lost their modest home after battling their bank for two years over a loan modification.  They were only in their mid-20s, and besides a baby, they didn’t have much.  They read the trustee sale notice carefully and checked the calendar… it was June 1st… and they figured they’d have until June 19th or 20th.

On June 3rd, they packed up the car and went to visit his parents for a few days, not even a week.  When they came home to pack up and move, they found their home empty and boarded up.  They had barely enough money saved to handle the move, they certainly didn’t have enough to replace everything they owned too.

They found a lawyer who would help them pro bono.  Emails showed that their servicer, GMAC had questioned First American as to why they didn’t wait 20 days.  First America replied that they didn’t see what the problem was… the home had been abandoned.  AllPro was the property preservation company… they only said something along the lines of, “Ooops, sorry about that.”

In the end, the couple’s lawyer was only able to get them $18,000 as compensation for… I don’t know what to call it… having been ROBBED?  And, AllPro returned their refrigerator.  I had nothing to do with it, of course, but I’m ashamed to be a member of a society where that’s the answer to what happened to them.

A divorced man was still living in the home he and his now ex-wife had shared for years.  He wasn’t handling it well and had to travel to California for personal reasons for a couple of weeks.  The home had gone back to Fannie Mae as an REO… but no eviction notice had been served.

While he was gone, Safeguard, the country’s largest property preservation company came and took everything… including his sail boat on which he had sailed here from Hawaii… so, not a little sailboat… it was stored in a barn on the property.

“No hearing, no writ, no due process, no notice… just self-help.” as his attorney phrased it.  Bonneville Construction was Safeguard’s sub-contractor that cleared out the home and the barn.  The owner, I’m told, had a felony conviction for forgery on his record.

A single man had lost his condo to foreclosure.  But instead of 20 days to move, he came home to find that the investor who had bought his condo just showed up while he was at work and had the place re-keyed… the DAY AFTER THE SALE.  He tried to explain that he had 20 days to move, but the new owner just laughed in his face.  He had a company remove his things, most of which ended up at the dump.  He lost almost everything… the investor did nothing.

“People are ashamed,” the attorney I was talking with told me, “and they don’t have the money to file lawsuits at a time like that… so the property preservation companies and private investors just get away with it most of the time.  It’s really heartbreaking and awful to see someone lose everything at the same moment they’ve lost their home.”

I cannot even imagine.

But, I want you to imagine this…

You start to feel the squeeze that comes with financial difficulty months in advance.  You tell yourself you can turn things around and believe you can.

The first month you can’t make your mortgage payment is stressful.  You tell yourself you’ll catch up, however,  and remind yourself that they’re not going to foreclose on you for a while… you’ve still got time to turn things around.  No one else in your life knows, because you don’t tell a soul.

After three months, it’s hard to sleep through the night.  You’re ashamed of being in the situation you’re in. You have a nightmare here and there but you don’t mention it to your spouse.  You get up in the middle of the night and search online to see if you can find out things like how long it will be before the bank might actually throw you out.

After four months, it’s hard to watch the television programs you’ve always enjoyed watching, and after five, you cut down on all social activities… even going to a movie isn’t what it used to be.

At six months you have moments that you know could grow into full blown panic attacks.  You can’t believe this is happening and you can’t see how you’ll ever catch up on your own because you can’t think clearly anymore.  Your friend or family member calls to say hello.  “Fine,” you answer, “everything’s fine, how are you?”  No way you can share your secret.

By the eighth and ninth month you start trying to envision what will happen if you lose the home without panicking over it.  How will you tell your spouse?  Neither of you wants to be the one to raise the subject, but it’s never far from the surface.  And children in the home can make the thought of having to move out very near unbearable.

Over nine months and you start to resign yourself to the reality that you’re actually going to lose your home.  Where will you go?  How will you move?  What will it cost?  Will you even be able to rent with your credit now trashed?  What will others think about you once they find out?

Desperate and looking for any port in a storm, you find someone… or rather that someone finds you.  Maybe it’s a law firm… maybe it’s some other kind of company, but whatever it is, you’re promised that they can help.  A few thousand dollars later, you’re no closer to a solution than you were before you hired your  helper.  But, you’re already looking for someone else to help you save your home.  You won’t be dumb enough to get ripped off twice, you know what to look for now.

And so you find one, and get ripped off again, while you’re reading everything online you can find about saving your home from foreclosure.  Maybe you try a state assistance program… and get nowhere.  You don’t know when you’ll come home to a notice on your door, so you look for it to happen every day.

You file bankruptcy to stop your first sale date.  Your lawyer says it will buy you at least 3-4 months, but maybe more.  Some delay for six months or even a year.  Talking to your lawyer makes you feel a little better, because he or she is the only human being you’ve talked to about the subject.
Today’s reality...

Maybe for some it’s a positive thing… for others it’s probably not, but the reality today is that this goes on for  countless homeowners for two years… three years… four years… and it’s sheer hell.  It’s always there and it’s a form of isolation.

We’re all capable of  feeling shame as a result  of outside influences, it’s perfectly normal… and a positive attribute.  As it relates to losing a home to foreclosure the shame can be intense — disapproval by our parents or peers over our being in the position to potentially lose our homes, or the opinions of our neighbors and of society-at-large that those losing homes are “irresponsible borrowers,” are all contributing factors.

Shame and non-disclosure has been the focus of researchers for decades, who not surprisingly have found that, “non-disclosure was related to the anticipation of negative interpersonal responses to disclosure (in particular labeling and judging responses) in addition to more self-critical factors including shame.”

Non-disclosure means a lack of human contact that comes from being unable to talk to anyone about something over a long period of time.  Shame-based isolation is actually considered a form of solitary confinement, and literally putting someone into solitary for more than a few weeks is considered a form of torture that can lead to certain mental illnesses including depression and permanent or semi-permanent changes to brain physiology.

Dr. Stuart Grassian, a Board Certified Psychiatrist and member of the faculty at Harvard Medical School for over twenty-five years has extensive experience evaluating the psychiatric effects of human isolation and solitary confinement, and he believes there is no question that minimal opportunity for social interaction—can cause severe psychiatric harm.  In his paper titled, “Psychiatric Effects of Solitary Confinement,” which appears in the Journal of Law & Policy, Vol. 22:325, Dr. Grassian states…

“It has indeed long been known that severe restriction of environmental and social stimulation has a profoundly deleterious effect on mental functioning.”

It’s important to note that, according to Dr. Grassian, it’s also a major concern for patients in intensive care units, spinal patients immobilized by the need for prolonged traction, those in certain military situations, those involved in polar and submarine expeditions, and those preparing for space travel.

So, you don’t have to actually be in solitary confinement to experience the negative psychological effects of isolation.  Shame is a powerful force that binds us all… we can’t talk to others about what we’re ashamed of, so we isolate ourselves… even with people all around us… shame can makes us feel alone in a crowd.

Craig Haney of the University of California at Santa Cruz, is also an expert on the effects of isolation.  His research has shown that some people, after a while, “lose their grasp of their identity, because who we are, and how we function in the world around us, is very much nested in our relation to other people.” 

The longer we’re isolated from human contact the more our ability to process information is undermined.  Some lose their ability to register and regulate emotion.  “The appropriateness of what you’re thinking and feeling is difficult to index, because we’re so dependent on contact with others for that feedback.”

More than any other single factor, shame has made it possible for this country to lose over six million homes to foreclosure… and relative to the number of homes lost, they’ve been lost without a peep uttered in protest.  But just because its stayed relatively quiet, doesn’t mean that untold thousands haven’t been deteriorating and damaged, both physically and mentally.

AND AFTER ENDURING ALL OF THAT… we’re even allowing for the slight possibility that a property preservation company might come along a tad early and FLAT OUT STEAL the only belongings that someone has left?  Someone’s musical instrument, like a treasured guitar or even a piano?  Costly electronics? Family photographs?  My memories of my daughter growing up in the home I’m now losing?  Are you out of your minds, banker-people?

You know that story above about the investor that reportedly laughed in the face of the man whose condo he just bought at a trustee sale.  Yeah, well at best it would be even money on whether he can use his fingers on either hand to put his key in that new lock if I’m that guy.  And if I stopped for a couple of beers on my way home that day, the odds tip dramatically and not in his favor.

I’m not kidding about that, someone is going to get hurt doing that kind of crap to someone in that sort of position, and I’m not at all sure you could find a jury in this country to convict.

Who’s responsible for this?

According to the New York Times Editorial Board…

“Despite happy talk about a housing rebound, nearly three million homeowners are in or near foreclosure, and many continue to be victimized by improper and possibly illegal practices.

It starts out innocently enough. The banks hire property management companies to determine whether homeowners who are behind on their mortgage payments have abandoned their homes and, if so, to secure the vacant property.”

Innocently enough, my Aunt Petunia.  Okay banker-people… you and I have been here before.  Is this going to abruptly stop or am I going to have to make exposing this egregious bullshit my new hobby?  Because if you think I was out of sorts over the loan mod to foreclosure thing, that was a day at the beach compared to this unconscionable behavior.

The largest company in the industry, Safeguard, is accused of “breaking into homes despite evidence of occupancy, damaging and removing personal property, changing locks, cutting off utilities, and bullying occupants into leaving their homes when they have the legal right to stay.”

“In several other states, private lawsuits and complaints to legal aid lawyers have alleged similar abuses.”

You don’t say?

Listen, Safeguard has gotten banks into enough trouble, don’t you think banker-people?  So, it’s not like you’ll be able to hide behind that, “We didn’t know what they were capable of,” sort of silliness.  You knew… ‘cause I’ve not only written articles, but I’ve even written songs about the insanity that Safeguard has done to homeowners in the past.  Remember… Safeguard is the company that routinely kept breaking into homes it wasn’t supposed to back in 2009 and 2010?

Again, excerpts from the Times Editorial Board story…

“Under the foreclosure settlement, banks are responsible for vetting, supervising and auditing contractors, a category that clearly includes property management companies. Profit and expediency, however, seem to have trumped due process yet again. 

Property companies and their subcontractors make more money on vacant homes than on occupied ones, because abandoned property requires more work, including changing locks, boarding up doorways and removing trash. And banks get some or all of the proceeds from the sale of vacant homes.

“Both state and federal laws are intended to ensure fairness in the brutal foreclosure process.”

Safeguard has said its work “meets the highest standards in the industry,” so absolutely no surprise there.  And of course, the response by banks has been to say that they “carefully monitor the property management companies.”

The Times Editorial Board said all of that was “hard to square in light of the allegations in the Illinois lawsuit.”  Aren’t they polite and dignified?  Well, I’d put it another way…

First of all, I believe them, because obviously we’re talking about “an industry” that looks up to the ethical standards of Colombian drug cartels.  And as far as banks, “carefully monitoring” anything… well, all I have to say to that is, “Hahahahahaha… my fat ass.”

The Illinois case has already been referred to the monitor of the foreclosure settlement, and it’ll be up to Mr. Smith as to whether banks will be held responsible for breaching the terms of the settlement.  The Times suggested that state and federal officials should start their own investigations, but I’d say the chances of that happening quickly or that it will be handled anywhere near effectively is somewhere between ZERO and NONE.

The Times closed with the best sentence I think I’ve ever seen written in the Newspaper-of-Record, as they are known…

“The failure of federal policy to ensure adequate mortgage relief to borrowers, even as the banks were bailed out, remains an injustice and a drag on the economy. Foreclosure abuses add inexcusable insult to injury.”

I could not agree more.  Let’s break with tradition and nip this one in the bud, shall we… and by “we” I mean “you.”  Capisce?

Mandelman out.

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Here’s a copy of the Illinois lawsuit against Safeguard Properties, the country’s largest property preservation company, and I obviously use that term loosely.

Illinois Attorney General Safeguard Complaint by Martin Andelman