When we talk about the foreclosure fiasco it stretches into families and friends lives and into many of our own lives as people struggle to keep their homes. The middle class has been built on home ownership, affordable education and just a few other things that used to be in so many more people's reach just a few short decades ago.
But that's crumbling before our very eyes. And when we talk about mortgage backed securities, transfer of notes and the terms that I barely understand I can't help but think, and what does this mean for the ordinary home owner?
Many here and elsewhere have outlined that the taxpayer is going to be left holding the bag for more bail outs for bad investment ideas but we also have to consider those people still fighting to keep their homes.
David Dayen has been doing some outstanding coverage of the foreclosure crisis at FireDogLake as has our own bobswern (I'm sure there are many others).
I am just starting to grasp the issues that abound through this nightmare. The big battle cry of late has been, "Show me the note!" The issue is, many times when mortgages have been bought and transfered, such in the case of Countrywide to Bank of America, the note was not brought through the proper channels and Bank of America can't even produce the damn note! (As it is explained here painfully, The Great Unravelling: Is Bank of America Done?
Those Mortgage Backed Securities are backed by nothing is my understanding and the Bank that supposedly owns your loan doesn't even have the promissory note that legal allows them to collect on the debt.
In other words, according to David Dayen, Deposition: Countrywide Never Sent Mortgage Notes to Trust; Mortgage-Backed Securities in Question).
Now we have documented evidence, beyond anecdote, that Countrywide, one of the largest subprime lenders, which securitized almost all of the loans they made, never sent the notes to the trust. In a deposition provided to a US Bankruptcy Court in the District of New Jersey, Linda DeMartini, a supervisor for Bank of America Home Loans (BofA bought Countrywide in 2008), admitted that the original notes never transferred from Countrywide into the trusts.
...
This is an enormous deal. If Countrywide never gave up possession of the note, then the trust has no standing to foreclose whatsoever. It also means that investors in the MBS don’t actually have securities backed by mortgages. The “allonge” appears to be an effort to clear up this situation, and it was signed years after the fact, well past the deadline of the pooling and servicing agreement, and not even affixed to the note as required by law.
No standing to foreclose, what so ever!
But guess what, people are still being foreclosed on and HAMP has still proven to be a failure, not the program itself but because the banks are doing everything possible to avoid actually having to use the program!
Bank of America is merely the example I know of. I personally sent in the request to see my note and was sent a ridiculous letter that started with...
You cite no legal authority that supports your claim that you are entitled to view the original Note, and we are not aware of the existence of any such authority. Accordingly, BAC Home Loans repsectfully declines this request. If you wish to pursue this matter further, please provide such legal authority.
They don't have the note, they don't have many of the notes since they acquired many loans when they bought Countrywide, the servicer of my loan, which actually acquired it from ANOTHER LENDER.
So sure, you miss payments and you default and there are a lot of people missing payments because of no fault of their own, they've been unemployed or underemployed for a long time, jobs are hard to find and they've encountered financial hardships that many Americans are facing.
The market crash hasn't helped either with many homeowners who are underwater, not just a little bit either. As of May, 2010 almost one in four homeowners under water. One in four homes. You can't even refinance if you have the money or the credit rating.
And then there was HAMP and the people who have attempted to modify and they still face foreclosure when they've done everything right. David Dayen has a story that makes my blood boil, but it's not uncommon.
I wanted to resurrect the Portrait of HAMP Failure series because of an interesting data point on HAMP modifications I recently came across. First, our story, which is so depressingly normal for a borrower seeking help with HAMP that it can almost be seen as a template. Todd Karwowski of South Plainfield, New Jersey, wrote in to tell me his story.
He first applied for a HAMP modification with Chase Home Finance in May of 2009, 18 months ago. He was approved for the 90-day trial period after being told not to pay his mortgage for two months to qualify for the program (this is just not true, and it’s a servicer-driven default that is a violation of not just HAMP guidelines but many state laws). Karwowski received a trial modification that lowered his payment by about $500 (which is the average reduction). At the end of the 90-day trial, he asked Chase about the outcome, and they just him to keep paying the reduced rate. This went on for 17 months, as Karwowski, who works for an electrical supply company, kept paying his modified payment and updating his income statements.
Here comes the bait and switch: Chase told Karwowski in a demand letter, after denying him a permanent modification, to either pay $14,000 to reinstate the loan, or to go on a “repayment plan” to pay it back. The only other alternative would be foreclosure. So the goal was to push borrowers into some sort of alternative payment schedule, if not to take the home.
Pay the agreed amount of the modification and then get denied a "permanent modification". You owe it all or you lose your house.
What do people do? They fight, they try to get the money together, they do everything in their power to save their homes. And many of them just lose their biggest and most important asset.
We're seeing the middle class erode before our very eyes even as US Corporations mark highest profits in decades amidst record unemployment. That's right, people can't find jobs but Corporations are making money like it's 1997 and we're still arguing over tax cuts for the rich nationally and raising corporate taxes in many States that are facing record budget shortfalls. The argument of course, but they can't create jobs if we tax them to death!
The nation’s workers may be struggling, but American companies just had their best quarter ever.
American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms.
That's right, corporate profits rise and people can't find jobs, can't keep their homes and we can't agree about tax cuts for the rich.
And there is something you can do. We can do something.
This is where you come in.
People need legal help to keep their homes. And many of those people don't have the means to pay for that help. But there are resources but they need funding.
I started here: Institute for Foreclosure Legal Assistance. The crisis of fraud has grown so large that we have a new kind of legal assistance focussed on just helping people keep their homes.
IFLA Mission Statement and Goals
As the nation's foreclosure epidemic continues to worsen, the Center for Responsible Lending has formed the Institute for Foreclosure Legal Assistance (IFLA) to support groups giving legal representation to families facing foreclosure and financial ruin because of abusive subprime mortgages. The National Association of Consumer Advocates will manage the project, which recognizes that one of the biggest barriers families face to avoid losing their homes is the lack of access to quality legal services.
The Institute, launched with a $15 million grant from investment management firm Paulson & Co. Inc., will provide funding and training to organizations that help homeowners negotiate alternatives to foreclosure. The majority of the funds will be grants to support direct legal assistance to borrowers in 10 or more states to fight foreclosure, predatory lenders and abusive loan servicers. It will do this primarily by providing money to top non-profit legal-aid groups and law school clinics.
The IFLA then lists the many Legal Aid Foundations in various states. They need money to hire more lawyers so they can help people keep their homes.
That's it. Donate to your local Legal Aid Foundation and if you have the legal ability to help, please do. If you know the law, get training to help people keep their homes.
As progressives we have a responsibility to help people stay in their homes, we can help them do so. So I'm asking you to help.