In not-surprising-but-still-enraging news, it turns out that Countrywide kept its mortgage fraud racket alive by silencing whistleblowers. Like I said, not surprising. What is (a little) surprising is that this “legacy of corruption” still goes on at Bank of America, which bought Countrywide after it collapsed.
The pair of articles by mortgage industry watchdog and investigative journalist, Michael Hudson, exposes the past and present fraud in the Countrywide-Bank of America mega lender.
Last week I wrote about the various ways that consumers can afford a foreclosure defense attorney. New York has passed a law allowing consumers to recoup attorney fees and at least one attorney in Florida is allowing clients, under certain conditions, to take a mortgage with his firm.
That practice might be short lived—he is now under investigation by the Florida bar.
Even before a number of big banks stopped foreclosure proceedings because of issues with robo-signers, consumers with money were fighting foreclosures across the nation. New York recently passed a law (effective next year) that allows consumers to recoup their attorney fees if they fight a foreclosure and win.
Not every state has a similar law, however. As a result, some consumers are agreeing to a new mortgages with their foreclosure attorneys.
Millions at Risk of Foreclosure Fraud | The Red Tape Chronicles
In case you have been living in a box for the last 12 months, mortgage fraud is a big problem. It is very hard, sometimes impossible to help the defrauded consumers, since fraudsters tend to refuse to cooperate in civil lawsuits, and judges are reluctant to compel them to do so. Uncollectible default judgments are common.
But since mortgage fraud is a crime, it seems logical that the state should start enforcing its laws and holding mortgage fraudsters accountable through the criminal justice system, right?
As for mortgage fraud, “We don’t have the staff or funding to address it,” [Edina Police Chief Mike] Siitari said. “We have hundreds of cases of backlog.”
So they are giving up. Giving up on the crime that is driving the country into recession, and making Minnesota a haven for mortgage fraud! If there was ever a time to call your representative, that time is now. Mortgage fraud hurts everyone, from those defrauded to honest realtors and mortgage brokers. It needs to stop. Call your representative and demand funding for mortgage fraud investigation.
[via Behind the Mortgage]
It is getting time for a complete overhaul of the whole housing market in the US, rather than just messing with edges. Two different stories in the Minneapolis StarTribune this morning illustrate why.
First is the story about all the people applying for Section 8 assistance. Recently about 3,700 people took applications, for one of the 300 voucher to be drawn in a waiting list lottery for housing in Plymouth.
The turnout is a sign of a growing metro-area problem: a shortage of affordable housing. In fact, experts had predicted it. Each time a housing authority opens its Section 8 wait list, applicants overwhelm it.
Experts and housing advocates say the long lines point to a larger crisis in affordable housing: Paychecks have not kept pace with housing costs, and the supply of affordable housing pales in the face of growing demand. In 2006, one in eight Minnesota households was paying half of its income on housing, according to a census analysis by Minnesota Housing Finance Agency. That’s up from one in 15 in 2000. Renters in Minnesota are worse off. In 2006, nearly one in four renters was paying half her income on housing.
Second, we have a story about the trouble and costs of vacant foreclosed houses in the City of Minneapolis. The number of boarded properties has swollen from about 250 in 2005 to more than 800 now.
The NYTimes has a piece on the 5th Annual Conference of the American Securitization Forum held in Las Vegas. These are the guys who played a major role in bring us the current foreclosure mess. Well while the rest of the country and the world for that matter mucks its way out of the mess in a gilded ballroom at the Venetian, the revelers sipped cabernet, dined on surf and turf and crowed as the Blue Man Group put on a private show. Need I say more?
The StarTribune reported today on another criminal investigation of mortgage fraud. While it is a good thing that someone is going after these people for the fraud they have committed, it would have been much better if someone had been guarding the hen house in the first place. The eggs are now gone and a lot of people won’t be eating eggs for breakfast in the comfort of their own home. Trapping a fox or two won’t change that.
We saw what enormous damage the Enron debacle did to our economy, not to mention all the individuals whose savings were wiped out. The entirety of the mortgage mess, while not quite as dramatic a fall, ultimate may impact more lives and do greater harm to the economy.
So will we learn that regulation is needed? Probably not. There maybe a few band-aids put on until the wounds heal, but band-aids either fall off or are taken off. There is a large segment of society that believes that government regulation is evil, that it stifles the free market, so they do everything they can to de-regulate the market and inhibit the regulators. Those same people also are the leaders of the Tort deform movement. They wish us to forget that lawsuits and the resultant jury awards are part of the marketplace. Lawsuits are the marketplace, in the form of a jury, punishing reprehensible conduct. One must not forget that especially in the consumer marketplace many of the laws against deceptive trade practices are meant to be used by one business against another to prevent conduct that deceptively externalizes a cost, thereby under cutting competition.