Hope for Frances Gomez and Other Foreclosure Victims

New Orleans I have often quoted a line by a former Republican OMB director that we should “never suffer from premature certainty,” and given the disaster that banks, the Treasury Department, the Bush and Obama Administrations, and the servicers have made of the housing crises and its millions of homeowner victims, I almost hesitate to hope again that there might be some good news, so everyone is now duly warned, but reports now published in The New York Times and elsewhere indicate that the servicers are about to sign consent orders which would profoundly modify their evil ways.

Here are some of the likely elements of the deal:

  • Foreclosure staff will finally have to be properly trained which seeks to correct the problem of hiring, literally, from Burger King drive-by windows.
  • Third-party groups, including the shyster “mod-shops” and law firms.  I know Phoenix and there will be a lot of folks in this sub-industry looking for new jobs!
  • Every homeowner in default will have one “single point of contact” which would finally put an end to the anarchic madness and referral phone banks from Guatemala used by Bank of America for example.

All of that is nice and there’s an indication that there might be fines in the future for the scofflaws who don’t mend their ways, but there are two ingredients that made a profound difference for the victims and could be game changers if there is finally a fair deal for the beleaguered folks trying to hold onto their homes and in some cases having them stolen from them.

  • I’ve talked endlessly over the last year about the case of Frances Gomez in Phoenix.  While in the process of negotiating and being approved for a loan modification on her family home of 30 years, Bank of America foreclosed on her home and took it out from under her.  With pressure from the media, Advocates & Actions, and others, Bank of America admitted publicly that they had made a mistake.  They claimed that they bought the house back from foreclosure. They assigned it to a law firm in Phoenix to supposedly return the home to Ms. Gomez.  Now moving on almost a year later, Frances still does not have her home and has been caught in an endless “catch-22” which I have often shared with her as she has tried to get the “old deal” revived and seen Bank of America and its agents try to restore the original loan terms, pretending that this is a modification, that are almost three times the current value of the home.  Sure she could have the home back, but she would have to be crazy or rich, and she’s neither, so she continues to rent with her daughter and son-in-law and mourn the loss.  Well, this agreement may finally provide some relief, even if not her home!  The servicers will be required to employ an “independent consultant” who will review foreclosures over the last two years (why two?!?), and if homeowners were ripped off by predatory practices and fees or errors, incompetence, and theft as Frances experienced, then “they will be compensated.”  Let’s fight for that, Frances!
  • Furthermore, this agreement reportedly will prevent there being more “Frances Gomez” cases in the future.  It will bar servicers from being able to foreclose while home owners “are pursing loan modifications that might allow them to stay in their homes.”  That’s what we’re talking about, and that will make a difference in dealing with these scalawags.

At least maybe it will.  Nothing has worked so far and no promises have been kept to date by any of these bums from the street to Pennsylvania Avenue.

The difference could be that finally there may be some real weapons we have to fight with to force a fair deal and a little justice for homeowners trying to hang on, and that’s hope that can fuel a plan!


Widespread Fraud at Bank of America

Bank-of-America-300x285Orange Beach, Alabama Better late than never, the Attorney Generals of Nevada and Arizona sued Bank of America for “widespread fraud” on the bait and switch of promising that a loan modification is in progress and then foreclosing and selling the house out from under the homeowner at the same time.  The Times and the Wall Street Journal describe the complaints as harshly worded, but working in the Phoenix area with Arizona Advocates & Actions, my experience is that they understate the severity of the theft and deceit by a long shot.

Frances Gomez’s home still says it all for me, and is a continuing indictment of Bank of America’s horrible bad faith, because her case was a situation where Bank of America was caught red handed in exactly this kind of fraud.  She had been approved for a modification and then in the same week Bank of America foreclosed and sold the house.  We raised holy hell and Bank of America publicly admitted that they had made a mistake.  They had foreclosed on her because they had overlooked her income figures.  Bank of America representatives – the local lawyer they retained for this mess assured Ms. Gomez and me they were buying the house back and that they wanted to remedy the situation rapidly.  It all sounded great, but that was now six (6) months ago, and Frances Gomez is perhaps farther today from moving back into her home of 30 years than she was then.

The negotiation process has been Kafkaesque or in more American terms a classic situation of Bank of America and its lawyer never seeming to know who is on first and what is on second.  Months after we had gone back and forth, the lawyer would act like he was surprised that Frances was not back in her house, even though no terms or modification had been agreed and worse the only solid offer they made was to reinstate the original terms of her loan, meaning that she could start paying again on a $300,000+ note for a house that had been appraised at $125000 to $150000 and sold at foreclosure for about $165000.  That’s not a modification at all, but simply the same problem that led to the problem in the first place, and the modification that they had been working on at the point of foreclosure was completely forgotten, while the attorney pled, perhaps sincerely at some level, total ignorance.

Subsequently pushing for a real modification, and trying to make sure that Bank of America was not trying to pretend that Frances had reoccupied her old home and thereby try to argue that she was incurring more arrearage even as she tried to strike some kind of deal to come back home, everything stretched painfully along as Bank of America continued to once again pretend that they could not figure out Frances’ income.  Frances is self-employed as a stylist and hairdresser at her own salon with long time customers.  Surely before the recession and her husband’s death, the salon had been larger with 3 or 4 the number of workers, but she had never been out of work or bereft of income.  The problem is that in the “new” world, Bank of America doesn’t have “stated income” loans which make it very difficult for the self-employed.  Frances keeps submitting her bank statements and monthly cash flow on her business, and Bank of America and its lawyers keep pretending that they do not understand her income and that she is being unresponsive.   I don’t want to give the impression that the situation is going back and forth like this, because really the situation is going nowhere.  Bank of America clearly just hopes that this “fraud” goes away.

Meanwhile the house deteriorates.  Frances drives by and cries.  Bank of America does nothing to maintain the house.  Vandals have been about.  The pool is moving almost beyond repair.

In the Wall Street Journal spokesfolks for Bank of America claim that they are open to revisions in the “dual track process,” meaning the process that has a modification moving forward at the same time that a foreclosure is also moving ahead.  This is the situation that sank Frances Gomez and her 30-year family home in Phoenix.

Of course Bank of America is lying.  They could stop the dual track process in a minute and with a memo.  They prefer the shuck and stall process which in silence finally strips away the home and hope of people like my friend, Frances.

For six months we pled with the Arizona Attorney General’s office to do something about this.  We argued that it would even help Attorney General Goddard in his election campaign for Governor if he stepped up for foreclosure victims.  We are delighted that it is finally happening, but this is the 11th hour for Goddard with his term expiring in about two weeks.

This is how “widespread fraud” works and how it is allowed to continue bumping from one failed program to another from one scandal to another and still taking homes from people, destroying neighborhoods, and pulling down whole cities around the greed that echoes from Charlotte to Wall Street to San Francisco to Chicago and the other headquarters of the perpetrators leaving the victims to live with the ruins.


Frontlines in Phoenix Foreclosureville

Phoenix    under-water1 A block away there was one sign still standing that said Holiday Gardens – “covenant restricted” — while the other was nothing but brick since the sign was long gone.  A couple of blocks away an old neighborhood watch sign said this was Heatherbrae or some such neighborhood.  Side by side both areas spoke of in-city subdivisions built in the late 50’s and hard 60’s for working families with solid, lower middle class jobs, and hopes for the future in the City of Phoenix.  Brick bungalows with two and three bedrooms where little was pretentious and improvements might mean paving part of the front to park another service pickup or car.  The kind of area where when asked, people described it as “mainly quiet,” and where you knew a lot of families had been raised here over 50 years.   I lived for 10 years as a boy and teenager in New Orleans in a similar neighborhood in Oak Park that the Levee Board had reclaimed from swamp and sand, just as this land had probably been pulled from the desert.  These are good neighborhoods.  Not for everyone, but they work for a lot of people and a lot of places.

Within 100 yards of either direction of the folks I was visiting, there were perhaps 8 to 10 houses that had been foreclosed; including the house I was being shown.  There were a couple of “for sale” signs, but mainly the houses were dark and abandoned, big 80 gallon garbage cans rolled up in the front yards.

The house I visited had gone underwater and been lost on a “short sale.”  A brother-in-law of a friend had a wife’s cousin who had lost the home and my friends had rented as a favor.  There was talk of buying.  The price was almost ridiculous:  $22000!  The house was laid out nicely with new cabinets in the kitchen, paint only a year or two old in the bedrooms, and tile almost brand new.  The owners had had a notion to close in the back patio, probably as a den or family room, and it was almost finished.  Nothing is perfect.  The air conditioners were shot, so it had been a hot Phoenix late summer.  The water heater was out, so cold showers were the rule, but at $22,000 these were relatively small problems.

In saving neighborhoods this would be a good example of a house that would be a perfect match for people who wanted to love it.  Even at $22000 and a note with taxes and insurance that would be only a shade over $400 per month on the terms being offered, it would still be cheaper than rent, but with no subprime lending market or stated income loans, where would even that small sum be borrowed?

Risk investment pools had been created it seems.  For $6000 down and closing, my friends had been offered a loan at 9% — double the prevailing rate – for 5 years with a balloon payment at the end.  The investors probably didn’t really care what would happen to house or homeowners.  Given the 1 to 1.5% interest out there on money, they stood to recover quickly on such a modest loan at these rates or they could flip the house again and hope that in 5 years when the even the Phoenix housing market might start recovering that reselling would gain more.  The market is so far down now, anything might look like up, and only the families that have already lost their homes or who are begging for modifications along with their bankers have any real memory that 2 years ago the house might have been priced and mortgaged over $150,000.

Here in Foreclosureville it’s hard to see any happy endings yet for families, houses, or neighborhoods, and I don’t see one here yet either.  Banks are clueless and without a plan.  Cities and states are either broke or in Arizona’s case broke and disinterested in anything that might look like a helping hand.  Another 10 houses on this long stretch of block not far from Camelback and this area could be at the tipping point of a horizontal ghetto of broken and abandoned properties.

I don’t even think governments and banks really understand what is happening in Foreclosureville, but having visited once again and spent time here, I can guarantee it won’t  be pretty even with all of the hustle and bustle to try and start something fresh that I found in this one house along a dark stretch under the starlit sky of Phoenix.


Registration Down, Lower Income Votes Out

Phoenix Registration Down, Lower Income Votes Out

Phoenix Registration Down, Lower Income Votes Out

Phoenix We did the first direct action with Arizona Advocates & Actions yesterday as 20 Bank of America mortgage holders demanded that their modifications finally be fast tracked at the BofA Service Center in Phoenix yesterday.  That’s the good news!

The rest sucks, as we look around the country heading into the midterm elections.

A front page New York Times poll notes amazingly that lower income voters, families making less than $50,000 per year in an unheard of expression of alienation from the party in power, which happens to be the Democrats, has now moved to leaning towards the Republicans by a 5% positive from what was a 25% positive to the Democrats only 2 years ago.  Yes, it is the “economy stupid” in

James Carville’s inimitable words, and the Obama Administration’s continued footsie with Wall Street, inability to move the needle on jobs, and mishandling of everything with foreclosures has pushed lower income working families to desperation and abandonment of the Democrats.  The White House cynics will say, “well, they don’t vote that much anyway,” but low-and-moderate income votes, had there been a real GOTV effort, could also have made the difference in many close contests.

The day before, Ian Urbina, in a Times article seems at this late date (by a decade at least) realized that in the run-up to elections the Republicans always play the “voter fraud card” to dampen down the voting strength of newly registered and infrequent voters.  Even without ACORN, and surprisingly ACORN still is a robust target for the right even in Halloween ghost costumes since it’s dead a doornail, there is a desperate claim of fraud in the land.   Read this tragic couple of paragraphs about “democracy lost:”

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Palin, Assange, Project Vote, Toronto, and Foreclosures

0914-beck-palin-911_full_600New Orleans I’m on the predawn patrol to Phoenix to check again on foreclosure ground zero and how it can be possible with tens of thousands of people losing their homes that this is not a central issue in the Governor’s election?   When even the New York Times realizes from their lofty perch that the mortgage paperwork isn’t worth fish wrapper and there needs to be a moratorium, I understand why Wall Street can’t hear that, but how is it possible that the White House continues to miss the call?

Speaking of calls, flipping the channels before passing out last night, I saw the Media Matters guy talking head with an interviewer.  He first caught my ears with a phrase about the “innocent staffers at the Tides Foundation” being “targeted for assassination,” and knowing so many of them, I could easily visualize them reaching for their cell phones to call Mom back home and explain why this was really a good job! He was threatening to call Sarah Palin, if she didn’t respond to their request for her to denounce Glenn Beck and all of the right wing hate speech.  Yeah, right!  Grizzly mom sets the scene for slaughter in speech after speech.  This call won’t be answered, unfortunately.

Julian Assange of Wikileaks likes to speak for his program but he’s not getting much Media 101 advice from his volunteer team, and this may be why his German spokesperson got in a huff and resigned.  He seems to have somehow believed that he could walk off the set on news interviews when he doesn’t like the questions and did so on the other day on CNN.  Even with Mr. Softball Larry King and Daniel Ellsberg they had a minute where they thought he had buzzed off.  He seems to be offended that folks are going to ask him about the rape and molestation accusations in Sweden.  Well, hello, Julian?  Until it’s resolved, of course they’re going to ask, and you just answer, and then move on, don’t be an ass about it and think somehow that this is something diva antics can handle.  Come on, this is bush league.  Man up!

On the rabid right because an election is nigh upon us, there’s a spate of ACORN’s BACK articles on the whack-and-blog front proving once again that the right is now so atavistic that it has become necromantic.   Please friends and neighbors, keep away from cemeteries until after November 2nd.  ACORN is dead as a doornail and no amount of blowhard air is going to resuscitate it.  I got a couple of emails yesterday and forwarded links where someone was trying to conflate poor Project Vote’s meager efforts this round and argue Project Vote and ACORN were one and the same so let’s go to town.  I wouldn’t want to confuse anyone with the facts, but Project Vote is simply not the same as ACORN.  The facts are simple.  If ACORN were still alive and well, there would be a different calculus right now on the eve of the mid-term elections.  The outcome might not be that much different, but the contest would be closer and fairer if lower income and working people were registered and going out to vote in the numbers we have seen in the past.

Which also makes me think about Toronto, one of the shining progressive city lights of North America and has me head scratching to figure out the Mayor’s election this week?  How is it possible that a hard right conservative could win by over a 100,000 votes?   There’s no job in Mudville today.

So off to Phoenix!


No Appeals Process on Loan Modifications

Phoenix The relentless rise of foreclosures through metro Phoenix continues unabated, as borrowers try to hang on and many assisting beleaguered homeowners tear their hair in frustration in dealing with unaccountable and uncommunicative lenders and an inept government.  I spent a chunk of my day reading the handbooks and guidelines for the HAMP program (Home Assistance Mortgage Program), designed to make a difference and funded with billions, and its regulations for servicers as well as new laws in Arizona that were changing the environment for victims getting assistance.  It was difficult to find much hope for homeowners.

The best examples are in the HAMP guidelines for services.  I read the checklist with some initial hope on the column with the mandatory language for what they “must” do for borrowers, but the other column often diluted those requirements completely.  Worst, there are no penalties, even in the breach, because in a rarity for a huge, federal program, since Treasury and HUD allowed banks and investors to participate in loan modifications “voluntarily” at the end of the process all the discretion is left to the lender with no explanation necessary and no appeal available.

In effect the program was allowed to create a waterfall process of what looked like “requirements” and then pull all of the teeth later by not including any real enforcement for infractions.  The “appeal” process in effect becomes reapply for assistance.

Some of the advice becomes an exercise in a “catch-22” process.  To win a modification you have to be in arrears, so many homeowners have no choice but to stop payments to force consideration, but later not having continued or made later payments can also disqualify you for a modification!  In Phoenix we have run into some counselors who advise bankruptcy in order to stop the process, although bankruptcy judges do not have the power to force bank medications of a primary residence thanks to the US Senate’s failure to change this in 2009 on the Durbin Amendment.  A delay in the foreclosure becomes defined as a “win,” since increasingly real modifications that work seem impossible.  Others say “appeal” even though there is no appeal process.

Not surprisingly, the new Arizona laws were more on the side of trying to claim “consumer protections” than banker accountability, so these laws might take out some bad operators (which is good), but still leave homeowners by themselves up against the bankers with less and less home for their homes.

We need to rewrite the rules on this program to make it work, and an appeals process to correct bank errors and force the process to work would be a minimum first step.