No-Mo’s: Stealing Homes through Foreclosure No Modification Programs in AZ and USA

New Orleans    Finally the fog is lifting around state and federal foreclosure modification programs and the real program is clear.  In the way of acronyms and abbreviations that abound in such programs like Fannie Mae and Freddie Mac, the largest of the mortgage guarantor agencies, the real program is called “No-Mo,” which stands for No Modifications Program.

It turns out according to letters released in Congress that the guardian of Fannie and Freddie, Edward DeMarco, missing yet another deadline for revealing any other program than No-Mo, had also presided over killing programs that would have accelerated foreclosure modification programs that had been approved by the agencies and were in testing trial runs with both Citibank and Wells Fargo.  DeMarco substituted the No-Mo program for these efforts to actually keep families in their homes.

In responding to two Congressmen, he gave as his rationale the following answer:  “These pilot programs…ended due to complex operational issues, involving system changes, accounting considerations and the interest level of Fannie Mae’s partners.”  Let me translate that into English.   “Accounting considerations” means that the banks did not want to restate their balance sheets to correctly reveal the current market value of their real estate portfolios which would have exposed them to be the “ghost” banks they are.  “Interest level of Fannie Mae’s partners” is a euphemism for saying that the banks did not want to modify the loans and Fannie was unwilling to push them to do so, despite that being the stated Obama Administration policy.   So, as many of us have known, the real policy has become No-Mo, no modifications.

Arizona Advocates and Action brought a good example to me the other day of how extreme the No-Mo program is being implemented in Arizona where foreclosures have risen to epidemic levels.  There the state government, which has pretty much been a bellwether of what NOT to do on most every program these days has even come up with the absurd proposal that $55 million of the money negotiated by the various state attorneys general for foreclosure modifications and principal reductions should in fact be used for prison construction.

Can you believe it?!?  Only in Arizona could the government have figured out a way to create No-Mo on steroids.

Possibly there is an even darker side emerging in the shadow of the subprime scandals that triggered so many of these foreclosures.  A message from the British Columbia headquarters of ACORN Canada came to me last night on a newly enrolled member in Kamloops who was facing foreclosure.  The mortgage, if you call it that, came from a company called Interior Equities, which is surely misnamed, and even in these days of 3 and 4% interest rates was carrying a 12% rate!  Reading their website it also became clear that signing up for one of these mortgages meant taking on a much discredited adjustable rate mortgage (ARM) and giving Interior In-equities the right to alter the interest rate every month.  This is a modern example of the old Wild West practice of claim jumping, where you simply steal someone’s property.

One there is No-Mo at the federal level it encourages states to steal relief monies and companies like Interior In-equities to steal property.  When can homeowners get a break?


Mortgage Mischief and the Need for A Moratorium

foreclosure free zoneNew Orleans An analyst believes the exposure for Bank of America on its foreclosure mess and incompetence could be as high as $70 billion USD.  Bank stocks fell across the board.  Other reports finally reveal what the slapdash servicing arms of the banks were hiring what they called “Burger King Kids” who insiders now admit hardly knew what a mortgage might be much less how to modify one of them to help the homeowner.  We said the same and included the documents at several weeks ago.

This would all be more tragic expect that we have been saying this for several years now.  The New York Times editorialists who have been apologizing regularly for the Treasury Department’s mishandling of this mess and its Wall Street bias finally came out today with a clear position that the banks should no longer be the foxes minding these millions of hen houses.  The White House needs to wake up and stop pretending they can run cover for their buddies at Chase in Chicago and the rest and fix this thing.

Steve Soifer of the University of Maryland and I had an op-ed published in the Baltimore Sun a couple of days ago that made the case for a moratorium and a lot more to help the homeowners:

A foreclosure moratorium and other fixes for the housing market

By Steven Soifer and Wade Rathke

3:06 PM EDT, October 12, 2010

Sometime in 2006, the U.S. housing market began to decline. By October 2007, the nation’s housing crisis was so bad that the U.S. treasury secretary called it “the most significant risk to our economy.” Until the housing crisis ends, the Great Recession cannot end. The same kind of bold government action that saved the banking system during the Great Depression is necessary to allow the U.S. economy to fully recover now.

The housing crisis not only continues, but it is worsening. The litany of housing disasters is astounding: record foreclosures, home sales at all times lows, proliferating underwater mortgages, housing abandonment and walkaways, and now the tax credits for buying a new homes have expired. There even seems to be no recognition that housing has been a key driver in many economic markets in places from California to Florida and certainly Las Vegas and Phoenix. If something drastic isn’t done soon, it may be too late.

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