Finally Fix Foreclosure Fiasco

Ideas and Issues

Loan ModificationDelhi        I may be walking at dawn with the elderly Indians in the M-Block welfare association park as they do their yoga, clap, laugh, and ommm or I can watch the bamboo frame for a puja tent going up for a coming celebration, but when I look at my email, it’s all still about foreclosures as the banks once again prevent any recovery.  The foreclosure crisis has taken a bad turn though, and despite the spin that this problem is all about some paperwork and filing problems, I think most people would call this fraud.

Thus far GMAC, Chase, and Bank of America have had to suspend foreclosures in the 23 states that require judicial review of foreclosures because a judge in one of them finally said he wasn’t satisfied with the signatures on the paperwork.  It has now become clear that there was “robo-signing” of huge numbers of documents and complete fabrication of many files and records connected to foreclosures.  Banks have argued over who had the correct paperwork and the right to foreclose.  The mystery behind the true ownership of properties between the banks and the investors in the securitization pools has finally shown all of these Wall Street emperors to be totally without clothes.  The irresponsible fabrications of the banks have not only collapsed the foreclosure and modification side of the market, but reports today indicate that the banks have also had to alert Fannie Mae and Freddie Mac

that properties foreclosed and turned over to them, might not have been in “good faith” and are now being withdrawn from the market even where there were completed sales contracts.  Attorney-Generals in non-judicial review states like Texas and others are now clamoring that they want the foreclosure suspensions extended to their states, since hey don’t like fraud either.

Wow!  Who is surprised when Treasury turns over a program of saving the chickens to the very foxes that prowl the properties, that it ends up such a fiasco?

Is this serious?  Yes indeed!  We may tell people in places like India or Peru that the Bill of Rights is the heart of the American declaration and constitution, but in truth it’s always been property rights and how to protect and extend them whether the argument was about land, chattel, or the crown.  After billions of dollars with of bailouts and almost singlehandedly crashing the economy, the banks may have finally even crossed a line that Congress and the President will not allow.  In fact Obama pocket vetoed a bill that was charging through Congress (passed Senate on a unanimous voice vote – who was asleep there?) that would have allowed the foreclosure process to be accelerated.

Stop the madness!  All of the records are bad.  Look at the sample case files from Phoenix compiled by Arizona Advocates and Actions ( for a shocking look at total incompetence by the banks and the servicers.

Some things need to be done now:
There needs to be a complete and total national moratorium on all foreclosures.
The government NOT the banks needs to take over the foreclosure modification process immediately.
Foreclosures and the TARP modification money need to be moved to HUD and away from the banks buddies and kissing cousins at Treasury for anything to work.
A special commission or authority needs to be able to review whether foreclosures already executed where based on valid or fraudulent paperwork,and void any that were not based on correct signatures and notarizations.
We need to devise an insurance program for homeowners to protect their mortgages against downturns and foreclosure risks so that citizen wealth is preserved, rather than just devising an insurance program for banks.  [Professor Steve Soifer, University of Maryland School of Social Work and I have been working on this program together.]

The  banks have to finally be made to realize that property means something to the working stiff, not just the Wall Street swell, and our rights must be protected by our elected representatives as well.  This is out of hand, and heads will continue to roll unless we finally start protecting people and their fight to hold on to their homes.