Foreclosures Skyrocket

Repair Your Credit
Improve. Monitor. Protect.
Save $50 off Credit Repair Service - Applies to first-work fee for each spouse sign-up.
Need a Lawyer? LegalMatch allows you to present your case, and respond only to lawyers who want to help you. It's Free & Confidential.

Foreclosures Skyrocket

By Marcus Day
21 June 2012

A report published last Thursday by foreclosure listing firm RealtyTrac revealed that foreclosure activity in the state of Illinois jumped 29 percent between April and May and was up 54 percent from a year ago.

Lenders issued 16,318 foreclosure filings to Illinois properties last month. Filings include default notices, auction sale notices, and bank repossessions. The state had at least 113,680 homes in foreclosure, nearly 10 percent of the national total.

According to the report, Illinois had the fifth highest foreclosure rate in the country, with 1 in every 325 housing units seeing some sort of foreclosure activity. The state’s foreclosure rate was only slightly less than that in California, which had 1 in 324 housing units seeing foreclosure activity. Georgia shot up several spots to the top of the list, after its foreclosure rate increased 30 percent over the last month. The Southwest also continued to suffer harshly from the housing crisis, with Arizona and Nevada bearing the second and third highest foreclosure rates, respectively.

The report found that Chicago’s foreclosure rate increased 56 percent from one year ago, giving it the fourth highest foreclosure rate of the 20 largest metropolitan areas in the US. The Chicago area had a foreclosure filing on 1 in every 252 housing units. Metro areas with a higher foreclosure rate were Phoenix, Atlanta, and the Riverside-San Bernardino area in Southern California, which bore a foreclosure rate of 1 in 179.

However, with 15,066, Chicago had the highest overall number of properties with foreclosure filings of any major metro area; the second highest was Los Angeles, with 10,816. Foreclosure activity was reported as increasing in half of the 20 largest metro areas in the country.

Nationally, there were 109,051 foreclosure starts in May, in which default or scheduled home-auction notices were filed for the first time. This marks a 12 percent increase in foreclosure starts since April and a 16 percent increase from a year ago. Some states saw huge increases in foreclosure starts, such as New Jersey (118 percent), Pennsylvania (97 percent), and Florida (83 percent). The report also noted that May marks the first month in almost two and a half years that foreclosure starts increased on an annual basis, and the first time in three months that overall foreclosure filings rose above 200,000.

Seventeen states saw an increase in bank repossessions of homes, including Illinois, where the rate increased an incredible 65 percent from a year ago. Nationwide, banks repossessed 54,844 homes in May, up 7 percent from April.

The Associated Press (AP) noted in its coverage of the report that if the last five years are any indication, as many as half of the homes now entering the foreclosure process could end up being repossessed. Banks started the foreclosure process against nearly 9 million US homes between January 2007 and last month; of those, they have repossessed nearly 4.5 million.

Contradicting the many claims made by major media outlets and the Obama administration that the country is slowly recovering from the housing crisis, RealtyTrac noted that the jump in new foreclosure filings could mark the beginning of another wave of foreclosure activity, which would depress home values and the housing market.

The sudden increase in home foreclosures and bank repossessions is in no way accidental or unforeseen. It is in fact the result of a deliberate policy pursued by the Obama administration on behalf of the financial elite. In the fall of 2010, a scandal erupted when it emerged that many of the major banks were relying on forged and incomplete documents in order to foreclose upon homes. As the AP noted, “Foreclosure activity, as measured by the number of homes receiving foreclosure-related notices, slowed sharply last year as banks grappled with allegations that they had been processing foreclosures without verifying documents.”

However, in February of this year, the Obama administration orchestrated a settlement between state governments and the big banks that “has since cleared the way for banks to move against homeowners who have fallen behind on their mortgage payments.”

The deal reportedly required the banks to pay $5.9 billion, a pittance, in cash to the states and to commit another $25 billion ostensibly to assist those homeowners whose mortgages are underwater. However, it was soon revealed by the Financial Times that as much as two thirds of the latter amount would in fact be provided by taxpayers, by way of the preexisting federal Home Affordable Modification Program (HAMP) (see “Bank foreclosure fraud to be rewarded at taxpayer expense”).

In addition, the settlement halted all investigations into the banks’ mishandling of foreclosures, provided immunity from future prosecutions and financial liability for criminal practices related to the foreclosure crisis, and did not even require an admission of wrongdoing.

Not a single family who had their house illegally seized by the banks were returned to their home. If a family successfully pursued the onerous process of proving that they were illegally evicted, they were to be offered the contemptuous sum of $1,500.

The settlement, which at the time Obama claimed would “speed relief to the hardest-hit homeowners,” has in fact had quite the opposite effect. Now that the major banks no longer have to worry about the fraud investigation, they are aggressively and ruthlessly pursuing homeowners who can no longer afford their mortgages. The result is that the Obama administration has delivered yet another windfall to the financial oligarchy through the immiseration of a large section of the working population.

Source: http://www.wsws.org/articles/2012/jun2012/illi-j21.shtml

The author also recommends the following:

The foreclosure fraud settlement: An amnesty for Wall Street Criminals

13 February 2012

Last Thursday, the Obama administration announced its latest windfall for Wall Street—a settlement of charges of rampant law-breaking committed by major banks in their rush to foreclose on families and seize their homes.

The agreement, largely dictated by the perpetrators, quashes investigations by state governments that threatened to expose a cesspool of corruption and crime. It frees the banks from future prosecution or financial liability for forgery, lying to the courts and illegally evicting homeowners.

In return, the firms—Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial—are required collectively to pay a relative pittance in cash ($5 billion) to the states and the federal government and allocate $20 billion more, over three years, to ease the terms for a small fraction of the 11 million homeowners who owe more on their loans than their homes are worth.

Not a single family whose home was seized (4 million since 2007) will get a new house. Instead, an estimated 750,000 foreclosed homeowners will receive a check for $1,500 to $2,000, if they can show that they were improperly evicted. This derisory sum—assuming it is ever paid out—provides a measure of the contempt of the banks and the government for working people.

In what has become his trademark, Obama presented this amnesty for lawlessness and predation by the financial aristocracy as a boon to the people. He called the deal a “landmark settlement” that will “speed relief to the hardest-hit homeowners.”

“Today’s settlement,” he declared, “is all about … standing up for the American people, holding those who broke the law accountable…”

As always, Obama proceeds from the assumption that the American people are infinitely gullible and suffer from collective amnesia. Since coming to office, Obama has done nothing to halt foreclosures or provide relief for distressed homeowners.

When the scandal over “robo-signing” and forged foreclosure documents erupted in the fall of 2010, the 50 state attorneys general launched a coordinated investigation. Some called for a halt in foreclosures to prevent families from being illegally thrown out of their homes.

The Obama administration vociferously opposed this demand and privately urged the banks to speed up the foreclosure process in order to clear out the backlog of non-performing mortgages that was depressing the housing market. With financial stocks plunging and fears mounting that the banks would be unable to withstand untold billions in damages from private and state lawsuits, the White House intervened to preempt any serious investigation and block a public airing of the crimes.

It spent 16 months in secret talks with the banks and attorneys general, devoting most of its efforts to bullying recalcitrant states to drop their own lawsuits and join a federal-state settlement favorable to Wall Street. The result was the deal announced Thursday.

The administration’s role in the foreclosure scandal is an extension of its single-minded focus since taking office on protecting the interests of the financial oligarchy. The assembly-line forging of foreclosure documents was itself the outcome of the practices that produced the housing collapse and foreclosure crisis in the first place.

Between 2004 and the Wall Street crash of 2008, the banks lured millions of Americans into overpriced sub-prime mortgages, often involving low “teaser” interest rates that jumped sharply after a set time. Wall Street knew full well that the loans could not be repaid. It was a colossal Ponzi scheme, and as in all such schemes, the perpetrators were intent on milking the racket for as long as possible. The major banks proceeded, moreover, with full confidence that, in the end, the government would step in to cover their losses.

The toxic loans were bundled, securitized and sold, creating a massive structure of debt resting on fraudulent and legally dubious foundations, from which bank executives and top shareholders secured dizzying levels of personal wealth. When the Ponzi scheme collapsed, the federal government bailed out the banks to the tune of trillions of dollars. As a result, the banks are now flush with cash and their executives and big shareholders are richer than ever.

In their rush to sell predatory home loans and turn them into instruments for financial speculation, the banks and mortgage companies paid little attention to trifles such as documentation. As a result, when the housing bubble burst and mortgages began to default en masse, there were no reliable records and no way for the banks to even establish their claim to ownership of the homes they wanted to foreclose.

Two government investigations into the financial collapse—one by the Financial Crisis Inquiry Commission and the other by the Senate Permanent Subcommittee on Investigations—have produced thousands of pages detailing fraudulent practices by the banks and the collusion of the rating agencies and federal regulators. These reports have remained dead letters. Not a single high-level Wall Street executive has been criminally prosecuted, let alone sent to jail.

With the blessings of the Obama administration and the entire political establishment, the speculation and swindling continue unabated, sowing the seeds for an even more cataclysmic financial crash and depression.

This culture of blanket impunity is the hallmark of a decaying aristocratic society. The corporate and financial elite is so embedded in criminal activity that the issue of responsibility cannot even by broached, for fear that it will begin to unravel the entire stinking edifice.

Only the mass mobilization of the working class in opposition to the Obama administration, the two big business parties and the corporate-financial elite can halt the evictions and provide relief for the victims of the mortgage racket. The Wall Street criminals must be investigated and tried, their ill-gotten fortunes seized and the money put toward the creation of affordable housing for working people.

All those victimized by the mortgage lenders and banks must be made whole.

The Socialist Equality Party insists that access to decent housing is a social right. We call for the restructuring of all mortgages to affordable levels, indexed to income and employment status. As our program states: “The right to decent housing for all can be assured only by placing the home building and financing industry under public ownership and pouring hundreds of billions of dollars in public funds into the construction of new homes and apartments and the renovation of existing buildings.”

Barry Grey

Documents in US foreclosure settlement highlight Lawlessness of the Banks

By Barry Grey
16 March 2012

On Monday, the settlement between five major banks and the federal and state governments of foreclosure-related fraud charges was filed in federal district court in Washington, DC. The agreement must be approved by the court to take effect.

The settlement, reported to be worth $25 billion, was announced February 9 and hailed by President Obama as a serious rebuke to the banks and boon to distressed homeowners. (See: “Obama administration brokers pro-bank mortgage fraud settlement”).

It is nothing of the kind. It quashes investigations by 49 state attorneys general into wholesale fraud and illegality committed by the five biggest mortgage servicers in their rush to foreclose on homeowners and seize their houses. The abuses first surfaced in the fall of 2010, amid reports of “robo-signing” of foreclosure papers and court submissions.

It was revealed that bank employees and contractors routinely vouched for the accuracy of documents affirming the banks’ title to targeted homes without having ascertained the facts or having even read the documents they were signing. The process was rife with forgeries, fraudulent notarizations, inflated job descriptions of the signers and other violations of the law.

The federal complaint against the banks filed Monday as well as audit reports on the five institutions posted Tuesday by the Department of Housing and Urban Development (HUD) inspector general show that the illegal actions covered by the now-suppressed probes went well beyond the fraudulent processing of documents.

The government charged the banks with eight counts of violating federal and state foreclosure and lending laws, including levying improper fees on homeowners who fell behind on their payments, failing to provide proper documentation on foreclosures, losing paperwork after consumers asked for loan assistance, and wrongfully denying consumers who asked for help.

The complaint alleged that the five mortgage servicers’ malfeasance “resulted in the issuance of improper mortgages, premature and unauthorized foreclosures, violation of service members’ and other homeowners’ rights and protections, the use of false and deceptive affidavits and other documents, and the waste and abuse of taxpayer funds.”

The inspector general’s reports documented the fact that the “robo-signing” of foreclosure documents was ordered by top management at the banks. They also accused all five banks of impeding the government investigation into their practices.

Far from a blow to the banks—Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial—the settlement filed Monday is a whitewash designed to shield them from potentially tens of billions in fines and damages arising from the state investigations. The banks largely dictated the terms of the settlement in the course of 16 months of negotiations, during which the Obama administration pressured recalcitrant state governments, particularly California and New York, to sign onto the deal. Under the agreement, the banks do not admit to any wrongdoing.

In return for the ending of the state probes, the banks have merely to pay a combined fine of $5 billion. Of this, $1.5 billion is to be set aside to pay some 750,000 illegally foreclosed homeowners a token sum of $1,500 to $2,000 each. Not one of the families whose homes were effectively stolen by the banks will be made whole.

The remainder of the reported $25 billion in the agreement is in the form of relief to be provided by the banks to “underwater” homeowners—those who owe more on their mortgages than the market value of their homes. Of this, $10 billion will supposedly go to reducing the principal on home loans, $3 billion to lowering monthly interest rates, and the other $7 billion to short sales and other measures to allow delinquent borrowers to avoid foreclosure. The latter procedures are already being carried out by the banks, so they will receive $7 billion in credit for what they are already doing.

The Financial Times reported last month that the bulk of the cost of the settlement will be covered by taxpayer funds. At the insistence of the Obama administration, the banks will be allowed to make use of an existing federal program, the Home Affordable Modification Program (HAMP), which provides public funds to banks that agree to reduce the principal on troubled home loans. Nearly two-thirds of the value of any write-downs the five banks make will be recompensed with funds from this program, the Financial Times reported.

Even if all of these measures are carried out, less than 5 percent of the nation’s 11.1 million underwater homeowners will be eligible for aid, according to an analysis by Ted Gayer, co-director of economic studies at the Brookings Institution.

The HUD inspector general’s reports show the undisguised contempt of the banks for the government investigation. Bank of America, for example, refused to provide complete files and documents and refused to provide some of its foreclosure policies to HUD investigators. It failed to fully comply with subpoenas. It also limited employee interviews and ordered employees not to answer certain questions.

JPMorgan would not provide certain records, while other records were incomplete. Wells Fargo did not allow the inspector general to interview some employees and failed to provide information in a “timely manner,” the inspector general reported. Ally Financial put up similar roadblocks, according to the inspector general’s report on that bank.

Despite these attempts at sabotage, the HUD reports document the systematic fraud carried out by the banks, providing damning examples. One notary reported his workload going from 60 to 200 documents per day to more than 20,000. Another employee reported signing 18-inch stacks of documents at a time.

Wells Fargo employees reported signing as many as 600 documents per day. When employees told upper-level management they could not handle the workload, the bank shortened the turnaround time for document signatures.

Citigroup’s mortgage unit “regularly signed foreclosure documents when not in the presence” of a notary public, as required by law, the inspector general said.

The report on Ally Financial said that an employee “routinely” signed 400 foreclosure affidavits per day and 10,000 a month without reviewing the supporting documentation.

JPMorgan Chase supervisors told HUD officials they often signed affidavits as an “assistant secretary” or “vice president,” when those were not their official titles. They had simply been given those titles by Chase to allow them to sign legal documents.

That the government rewarded the banks for breaking the law and then refusing to cooperate with investigators by giving them a sweetheart deal underscores the complete impunity with which the American financial aristocracy carries out its acts of social plunder. Like the French Ancien Regime, they are a law unto themselves and not subject to the rules that apply to the “mob.”

Bank foreclosure fraud to be rewarded at taxpayer expense

By Andre Damon
20 February 2012

Earlier this month, the White House announced that it reached an agreement with five major US banks quashing investigations by the state governments into rampant fraud related to home foreclosures. On paper, the banks agreed to pay a $5.9 billion in cash to the states and make mortgage modifications totaling $25 billion.

But last week, Shahien Nasiripour of the Financial Times reported that much of the $25 billion would in fact be subsidized by taxpayers through an earlier mortgage modification program. Conveniently for the banks, the settlement comes less than one month after this program, called the Home Affordable Modification Program (HAMP), tripled its subsidy to banks for lowering the principal on mortgages.

This means that taxpayers will be funding up to 63 percent of the $25 billion in mortgage modifications promised by the five banks.

Even without the government’s subsidies, the write-downs are often in the banks’ interests as they prevent costly home repossessions and keep borrowers paying their monthly mortgages.

Thus, far from punishing the banks for their violations of state and federal laws, the settlement is merely another means of handing taxpayer funds to the biggest banks.

Neil Barofsky, the former special inspector general of the Troubled Asset Relief Program, the $700 billion federal bank bailout program, called the revelation “scandalous” in an interview with the Financial Times last week, saying, “It turns the notion that this is about justice and accountability on its head.”

“If the banks are doing something under this settlement, and cash flows from taxpayers to the banks, that is fundamentally an upside-down result,” he added.

Despite the flagrancy of the revelation, the news went largely unreported in the US media, with neither the New York Times nor Wall Street Journalcarrying the story.

The settlement shuts down state lawsuits against the five banks: JPMorganChase, Wells Fargo, Citigroup, Bank of America (which bought mortgage firm Countrywide), and Ally Financial Inc. (formerly GMAC, the financial arm of General Motors).

As a result of the deal, the banks will be immune from future government prosecution and investigation into fraudulent foreclosure practices such asrobo-signing, a widespread practice in which bank employees swore that mortgage documents were sound despite never having seen them.

The banks resorted to these measures because, for hundreds of thousands of homes sold during the housing bubble, they and their collaborators never bothered to obtain documentation. This was partly attributable to the fact that the borrowers did not qualify for the mortgages they were conned into taking out, and partly because banks knew that the mortgages would be sold off to other investors, leaving none of the liability with the original issuer.

Even aside from the government subsidy, a portion of the losses from the write-downs will simply be passed on to pension funds and other investors who had nothing to do with the bankers’ fraudulent actions.

“This was a relatively cheap resolution for the banks,” Scott Simon, the head of the mortgage division at PIMCO, the world’s largest bond trader, told Bloomberg News. “A lot of the principal reductions would have happened on their loans anyway, and they’re using other people’s money to pay for a ton of this. Pension funds, 401(k)s and mutual funds are going to pick up a lot of the load.”

The Home Affordable Modification Program was created in 2009 as part of the bank bailout, nominally aiming to prevent foreclosures by lowering borrowers’ monthly payments.

The White House claimed that the program would keep four million people out of foreclosure. But so far only 750,000 homeowners have received permanent mortgage modifications. Of these, only 36,000 have had their principal lowered, with the vast majority of settlements leaving the amount that borrowers actually owe unchanged.

Barofsky, acting in his official capacity as inspector general for the bank bailout, last year called HAMP a “failure” whose results have been “nothing short of abysmal.”

Since 2006, nearly seven million homes have been foreclosed, and another four million homeowners are “seriously delinquent,” according to the Mortgage Bankers Association.

The plan to have the government subsidize the bank settlement would kill two birds with one stone. Obama could claim that his mortgage modification program has helped millions of people, and while publicly chastising the banks, let them get away scot-free with fraud and unlawfully evicting hundreds of thousands of homeowners.