Wall St. wins Capt Obvious award

[pauldun170]

Wall St. pins foreclosure fiasco on homeowners
‘Your mortgage didn't get to a robo-signer by accident’

By Joe Rauch
Reuters

CHARLOTTE, N.C. — Wall Street's reaction to the allegations that some banks cut corners while foreclosing on 3 million homes since 2007: Pay your mortgage in the first place.

The building furor over whether the largest U.S. mortgage lenders used so-called robo-signers and incomplete paperwork to force delinquent borrowers from their homes has mushroomed into a probe by the attorneys general in all 50 states, with U.S. Congressional hearings not far behind.
Story: States' probe of foreclosures could force reforms

Those on Wall Street, however, are largely unsympathetic, insisting that possible errors in the foreclosure process are beside the point, that the process begins only when a borrower starts missing mortgage payments.

"If you didn't pay your mortgage, you shouldn't be in your house. Period. People are getting upset about something that's just procedural." said Walter Todd, portfolio manager at Greenwood Capital Associates.

Some said the issue is one of personal responsibility for one's own debts.

"Everyone's responsible for following the law. If we all don't have to pay our mortgage, should we just stop paying taxes, too?" said Anton Schutz, president of Mendon Capital Advisers. "Your mortgage didn't get to a robo-signer by accident, it's because you're not paying."

Robo-signers is the term for bank employees who signed hundreds of foreclosure documents daily without reviewing them.

The lack of review is why officials investigating the issue say that some homeowners may actually have been unfairly evicted from their homes.

Lawmakers in California, in a letter to federal authorities last week, said reports from thousands of homeowners in their congressional districts show an "apparent pattern" of practices that led to foreclosures that could have been avoided.

Thousands of people reported that despite efforts to seek loan modifications or other relief many financial institutions "routinely fail to respond in a timely manner, misplace requested documents, and send mixed signals" about what is required to avoid foreclosures, the lawmakers said.

Who's to blame?
Homeowners and consumer advocates also disagree with Wall Street's characterization of who is to blame.

"We think this is the smoking gun that illustrates widespread problems in the process," said Kathleen Day, spokeswoman for the Center for Responsible Lending, a Durham, North Carolina-based consumer advocate. "No one's saying that foreclosures should stop forever, but lenders need to be abiding by the law."

The executives for the largest lenders and others on Wall Street have downplayed the worries over foreclosures as nothing more than a technical speed-bump in a process that's still accomplishing its main objective of removing delinquent borrowers from their homes.

"We're not evicting people who deserve to stay in their house," Jamie Dimon, JPMorgan Chase chief executive, said on a conference call with analysts on the company's third-quarter earnings on Wednesday.

JPMorgan, the second-largest U.S. bank by assets, said it is reviewing 115,000 foreclosure cases, after suspending foreclosure sales in 23 states last week, and expects the review to be completed in a few weeks.

Dimon said he ultimately expects the review will have little impact on pending foreclosures sales, though JPMorgan's chief financial officer said during the call the bank amended some of its processes.

On Friday, the chief executive of Bank of America Corp, the largest U.S. bank by assets, described the process as clearing the air around the bank's foreclosures, and the lender stood by its work.

"We'll go back and check over our homework one more time," CEO Brian Moynihan said after a speech at the National Press Club in Washington on Friday.

BofA has temporarily suspended foreclosures and sales of foreclosed properties in all 50 U.S. states, pending a similar review.

Finance executives conceded that while mistakes are being made in the foreclosure process, borrowers are often delinquent for years before being removed from their homes.

In announcing its nationwide foreclosure halt, Bank of America disclosed the average borrower missed payments for 18 months before their home was repossessed.

JPMorgan, in its third-quarter earnings presentation, disclosed that the average delinquency at foreclosure was 448 days, with as many as 40 percent of foreclosed homes vacant at the time of the seizure.

In New York and Florida, the bank disclosed, foreclosures can take as long as two years.

[goof2]

I lay the blame for the issues in the article on homeowners for not paying their mortgages in the first place, on "Wall St." for doing a poor job maintaining proper documentation, and on the courts for rubber stamping "Wall St.'s" poor documentation when people challenge it pretty much equally.:shrug:

[Captain Morgan]

For the most part, I side with the banks on this one about foreclosures. However, a friend of my parents was foreclosed on recently by B of A. The story, as he tells it (I'm sure there's more to it), is that B of A bought his mortgage from another bank. In the process, he had mailed a payment to the previous bank. He states he's paid every month, but B of A claims the last payment that went to the old bank should have gone to them. B of A told him he would have to pay them and try to get his original payment back from the other bank. In the midst of the fight (about 1.5 months into it), B of A foreclosed. Technically, the guy was never behind and had been making every payment. There was just confusion over one of the payments because it went to the old bank. That's his story, anyway. Will probably never know the whole story.

[nhgunnut]

The BOTTOM line is that People Borrowed money They KNEW they couldn't afford. I am so sick of the whining about Banks. Lenders are Predators you knew that when you went to them. If I play with a predator and it bites me I have no right to whine.

[t-homo]

It isn't even that they are predators. It's called business, they gave you money and expect to get it back. When you don't give back to them over a 20 year period what they gave to you in an hour, they get a little pissed. Heaven fucking forbid, right?

[EpyonXero]

:lol: @ Wall St. telling people to fulfill their obligations.

[goof2]

:lol: @ Wall St. telling people to fulfill their obligations.

"Wall St." didn't start having problems fulfilling their obligations until wholesale lots of their borrowers stopped fulfilling their own. The stability of those financial institutions do depend on people paying back what they have borrowed.:shrug:

[Homeslice]

For the most part, I side with the banks on this one about foreclosures. However, a friend of my parents was foreclosed on recently by B of A. The story, as he tells it (I'm sure there's more to it), is that B of A bought his mortgage from another bank. In the process, he had mailed a payment to the previous bank. He states he's paid every month, but B of A claims the last payment that went to the old bank should have gone to them. B of A told him he would have to pay them and try to get his original payment back from the other bank. In the midst of the fight (about 1.5 months into it), B of A foreclosed. Technically, the guy was never behind and had been making every payment. There was just confusion over one of the payments because it went to the old bank. That's his story, anyway. Will probably never know the whole story.

They foreclosed after only 1.5 months? That makes absolutely no sense. It's rare to find ANY bank that forecloses within the first 6 months after the borrower stops paying.

[101lifts2]

The problem with these banks is that they are very relucant to help people who fell on hard times as for the reason why there are so many foreclosures. People's rate adjusted, lost their job or had a reduction in pay and cannot meet the current mortgage payment. So then they dick you around for a year and nothing comes of it. Then you fail to pay and they take the house. BUT...now the house isn't worth nearly as much as you owe on it and instead of working with these people with government funding, they just let them go because guess what? Investors are taking most of the hit, not the banks.

[101lifts2]

They foreclosed after only 1.5 months? That makes absolutely no sense. It's rare to find ANY bank that forecloses within the first 6 months after the borrower stops paying.

After 30 days you are techinically in default, but you will not recieve a Notice of Default letter until 90 days. Then you have an additional 20 days which to settle the debt with the bank or they foreclose. And if you rent to someone, they have an additional 90 days. Remember, B of A stopped foreclosures because shit is so fucked up. I've heard they are doing more short sales and modifications instead. Short sale FTW!

I've known people to stay in their house 2 years before the sheiriff comes and gives you a 3-day notice.

[smileyman]

Who created the problem. I mean really. People cant pay because they cant find work that pays. Who can blame our economic collapse on people who took a shot at getting what they wanted? Who can blame banks for making money lending? Or investors for buying up blocks of it.


The real issue as I see it is corporate America outsourcing every facet of their production to overseas entities for the sake of short term profit.

it's been going on 3-4 decades and there had to be a day of reckoning. All the other shit is just symptoms. cover them up if you want, stimulate them all you can, but it doesnt fix the problem. That is really gonna run its course until someone wises up and invests in America for the long term.

[pauldun170]

They foreclosed after only 1.5 months? That makes absolutely no sense. It's rare to find ANY bank that forecloses within the first 6 months after the borrower stops paying.

Yup...story definitely sounds fishy.
Foreclosure is big expensive process and generally is something a bank wants to avoid.

[pauldun170]

Normal people should not be offered complex mortgages.
Normal people should not be offered a mortgage unless they have a reasonable down payment and meet stringent criteria.

However, we are a capitalistic society. If institutions figure out way to make a buck by taking a little risk and offering certain products to consumers we should be supportive.
People have had it easy for so long that they have forgotten the meaning of the word risk.

[OneSickPsycho]

Who created the problem. I mean really. People cant pay because they cant find work that pays.

Who can blame people for signing their life away without considering how they were going to pay for it down the road? I can.

Who can blame our economic collapse on people who took a shot at getting what they wanted? Who can blame banks for making money lending? Or investors for buying up blocks of it.

Who can blame the banks for taking advantage of the system our government set up and encouraged? I can't. The banks did what was smart business to do at the time, with Uncle Sugar coaxing them along the way.


The real issue as I see it is corporate America outsourcing every facet of their production to overseas entities for the sake of short term profit.

it's been going on 3-4 decades and there had to be a day of reckoning. All the other shit is just symptoms. cover them up if you want, stimulate them all you can, but it doesnt fix the problem. That is really gonna run its course until someone wises up and invests in America for the long term.

I'm not buying it. While I think we do need to be more competetive with manufacturing in the global market, I don't see the corporations as the ones holding the sole responsibility. It's not about short term profit, it's about being competitive when the shit that's made overseas costs considerably less... Unions are part of the issue making it very difficult for company's to compete with cheap labor abroad... and the other part of it is a lack of innovation in US companies.

[t-homo]

Hell, higher minimum wages are what creates more unemployment than anything. Most of the mass production jobs are minimum or just above it, and if the companies have to spend more for each employee, they can't hire as many people. Simple economics.

[EpyonXero]

Who can blame people for signing their life away without considering how they were going to pay for it down the road? I can.



Who can blame the banks for taking advantage of the system our government set up and encouraged? I can't. The banks did what was smart business to do at the time, with Uncle Sugar coaxing them along the way.




I'm not buying it. While I think we do need to be more competetive with manufacturing in the global market, I don't see the corporations as the ones holding the sole responsibility. It's not about short term profit, it's about being competitive when the shit that's made overseas costs considerably less... Unions are part of the issue making it very difficult for company's to compete with cheap labor abroad... and the other part of it is a lack of innovation in US companies.


Oh, its the Government's fault. I see.

[goof2]

Normal people should not be offered complex mortgages.
Normal people should not be offered a mortgage unless they have a reasonable down payment and meet stringent criteria.

However, we are a capitalistic society. If institutions figure out way to make a buck by taking a little risk and offering certain products to consumers we should be supportive.
People have had it easy for so long that they have forgotten the meaning of the word risk.

I agree about the public's view of risk. If someone wants a "safe" investment they can go down to their local bank and pick up an FDIC insured Certificate of Deposit. It will pay about .3% interest over a year or about 3 bucks for a thousand dollar investment. People want investments with a larger return with no more risk and don't understand it just isn't available.

At the same time "Wall St.'s" evaluation of risk also got way out of whack. They used flawed assumptions about the real estate market which lead them to the conclusion that there was no way to lose in mortgage lending. They found out the hard way that wasn't the case.

I do disagree with not offering complex mortgages to consumers. I believe it is incumbent on borrowers to understand the obligation they are agreeing to. If a borrower is incapable of doing so they should either get help or not sign the document. That also includes the depressing number of people who don't understand a 30 year fixed mortgage. The mortgage market shouldn't be restricted to catering to the lowest common denominator.

Who can blame the banks for taking advantage of the system our government set up and encouraged? I can't. The banks did what was smart business to do at the time, with Uncle Sugar coaxing them along the way.

This goes to what I was saying about "Wall St.'s" evaluation of risk. If they had stuck to risky mortgages only when they were federally insured (FHA loans) that would be one thing. Instead they offered high risk loans to everyone. The only reason "Wall St.' thought it was smart business at the time was based off some seriously messed up assumptions. If I invest in an FDIC insured CD and the bank goes under it doesn't matter because my money is insured by the government. Alternatively, if I invest in a stock thinking it can't lose, but it tanks anyway, I'm the one to blame. I hold "Wall St." to the same standard.

[pauldun170]

I agree about the public's view of risk. If someone wants a "safe" investment they can go down to their local bank and pick up an FDIC insured Certificate of Deposit. It will pay about .3% interest over a year or about 3 bucks for a thousand dollar investment. People want investments with a larger return with no more risk and don't understand it just isn't available.

At the same time "Wall St.'s" evaluation of risk also got way out of whack. They used flawed assumptions about the real estate market which lead them to the conclusion that there was no way to lose in mortgage lending. They found out the hard way that wasn't the case.

I do disagree with not offering complex mortgages to consumers. I believe it is incumbent on borrowers to understand the obligation they are agreeing to. If a borrower is incapable of doing so they should either get help or not sign the document. That also includes the depressing number of people who don't understand a 30 year fixed mortgage. The mortgage market shouldn't be restricted to catering to the lowest common denominator.



This goes to what I was saying about "Wall St.'s" evaluation of risk. If they had stuck to risky mortgages only when they were federally insured (FHA loans) that would be one thing. Instead they offered high risk loans to everyone. The only reason "Wall St.' thought it was smart business at the time was based off some seriously messed up assumptions. If I invest in an FDIC insured CD and the bank goes under it doesn't matter because my money is insured by the government. Alternatively, if I invest in a stock thinking it can't lose, but it tanks anyway, I'm the one to blame. I hold "Wall St." to the same standard.

Its a little more complex.
Years ago (1960's)...in order to make an extra buck so that they could raise capital to offer more loans Freddi Mac started selling mortgage backed securities.
Nothing wrong with it.

Year later some folks decide to maybe up their game a bit, make a lot more money with the risk that goes along with it by taking some products normally offered to low risk high wealth clients and offering them to lower income folks.
Nothing Wrong with it as long as you manage the risk.

Meanwhile some asshole decides "We're holding all these mortgages and thats a risk. Lets sell them off to those dudes putting together mortgage backed securities. We'll get some dough and we'll get this risk off our lap."
Nothing wrong with selling off some of your risk.

Soon...assholes didn't give a fuck about what kind of mortgage the put together and who they offer it too because "Hey...we're just gonna sell the fucker off anyway...no risk to us"

While this is happening jerk offs are buying and selling bundles of these off. Bundles of Mortgages packaged up as happy little money makers.
Ratings agency's having spent years dealing with all the freddy mac bundles figure...fuck it this shit is historically good so we just mark it as triple AAA funbagtastic.

Other assholes have the idea to insure these little bundles and sell insurance on em. Sell insurance on these bundles to anyone...even those with no stake in it.

I could go on for an hour and ten pages so I'll stop there. Lets just say its a complex issue.

My original post that most people shouldn't be offered complex mortgages still stands in the way that teens shouldn't be given "big people" credit cards.

[OneSickPsycho]

Oh, its the Government's fault. I see.

Not exclusively... I hold the homebuyer more responsible than anyone... Just because you can, doesn't mean you should...

[pauldun170]

Not exclusively... I hold the homebuyer more responsible than anyone... Just because you can, doesn't mean you should...

In your opinion who should be able to buy a house?(of those that can)

[t-homo]

In your opinion who should be able to buy a house?(of those that can)

Anyone. Maybe they should use enough personal responsibility to not try to get the biggest house they could afford if they made 10-15K a year more than they do.

[pauldun170]

Anyone. Maybe they should use enough personal responsibility to not try to get the biggest house they could afford if they made 10-15K a year more than they do.

Agreed.

Unfortunately...there will always be idiots and there will always be defaults.
Unfortunately they have removed the human element from the process...the person who had the freedom to say "Your an idiot and I'm not gonna loan you any money"

[OneSickPsycho]

In your opinion who should be able to buy a house?(of those that can)

Anyone who can afford it... REALLY afford it. If you're buying a house with zero down and starting payment near the top of your budget, you shouldn't be signing a loan with payments that double a few years down the road. It's common sense...

"I didn't know" or "I expected to be in a better place" and any of the other whiney bullshit excuses I heard in sob stories on the 6 o'clock news when the whole thing was collapsing just about made me sick.

There are plenty of other less extreme scenerios, but the bottom line is... if it weren't for people being irresponsible in the first place, the whole housing crisis wouldn't be at all what it is today.

[pauldun170]

Anyone who can afford it... REALLY afford it. If you're buying a house with zero down and starting payment near the top of your budget, you shouldn't be signing a loan with payments that double a few years down the road. It's common sense...

"I didn't know" or "I expected to be in a better place" and any of the other whiney bullshit excuses I heard in sob stories on the 6 o'clock news when the whole thing was collapsing just about made me sick.

There are plenty of other less extreme scenerios, but the bottom line is... if it weren't for people being irresponsible in the first place, the whole housing crisis wouldn't be at all what it is today.

Unfortunately a big chunk of foreclosures nowadays are by folks who, at the time of signing were solid candidates for the mortgage they got into.
As they say...shit happens.

[goof2]

Its a little more complex.
Years ago (1960's)...in order to make an extra buck so that they could raise capital to offer more loans Freddi Mac started selling mortgage backed securities.
Nothing wrong with it.

Year later some folks decide to maybe up their game a bit, make a lot more money with the risk that goes along with it by taking some products normally offered to low risk high wealth clients and offering them to lower income folks.
Nothing Wrong with it as long as you manage the risk.

Meanwhile some asshole decides "We're holding all these mortgages and thats a risk. Lets sell them off to those dudes putting together mortgage backed securities. We'll get some dough and we'll get this risk off our lap."
Nothing wrong with selling off some of your risk.

Soon...assholes didn't give a fuck about what kind of mortgage the put together and who they offer it too because "Hey...we're just gonna sell the fucker off anyway...no risk to us"

While this is happening jerk offs are buying and selling bundles of these off. Bundles of Mortgages packaged up as happy little money makers.
Ratings agency's having spent years dealing with all the freddy mac bundles figure...fuck it this shit is historically good so we just mark it as triple AAA funbagtastic.

Other assholes have the idea to insure these little bundles and sell insurance on em. Sell insurance on these bundles to anyone...even those with no stake in it.

I could go on for an hour and ten pages so I'll stop there. Lets just say its a complex issue.

I understand the complexity and that is why I put "Wall St." in quotes. There are so many different types of organizations involved it goes far beyond the location or traditional definition of Wall St. I don't consider the FHA or Fannie/Freddie a part of Wall St. but they are both involved in this problem up to, and beyond, their eyeballs.

I also bundled the transactions you describe because they are based off the same flawed evaluation of risk. The ratings agencies, AIG, and those who bought the mortgage backed securities were all making decisions based on the theory that, even if a borrower stopped paying, the property was held as security and was only increasing in value. They all believed that property couldn't be overvalued, based their decisions on that construct, and got bit in the ass big time because of it.

My original post that most people shouldn't be offered complex mortgages still stands in the way that teens shouldn't be given "big people" credit cards.

OK, but how do you determine who should have their options restricted? Is there a test they have to pass or do they have to prove they hired an attorney before they can view the full "menu"? If the same restriction on options is put in place for everyone then it is nothing more than I stated, catering to the lowest common denominator.

If I were a real estate investor an interest only adjustable rate mortgage would be a very attractive option. Should that option not be available to me simply because other people don't understand that the payment will change substantially in 5 or 10 years?

[pauldun170]

OK, but how do you determine who should have their options restricted? Is there a test they have to pass or do they have to prove they hired an attorney before they can view the full "menu"? If the same restriction on options is put in place for everyone then it is nothing more than I stated, catering to the lowest common denominator.

If I were a real estate investor an interest only adjustable rate mortgage would be a very attractive option. Should that option not be available to me simply because other people don't understand that the payment will change substantially in 5 or 10 years?


2 people sitting at a desk.
One, the person that wants to money to buy something
The other with the money.

In the big rush to standardize and streamline and automate everything, they have eliminated judgment.

There is no test or cheat sheet or standard. Its judgment and common sense of someone with experience.

[goof2]

Unfortunately a big chunk of foreclosures nowadays are by folks who, at the time of signing were solid candidates for the mortgage they got into.
As they say...shit happens.

It sure doesn't seem that way down here. That impression isn't helped by practically every short-sale/foreclosure house I've been in being completely destroyed. That includes a scary number of houses that were lived in less than a year or two.

What really makes me nervous about the real estate market is the current record number of foreclosures even with interest rates at historical lows. I am increasingly incredulous about the claim there has basically been no inflation over the past 2 years. What is going to happen with all the ARMs that are currently in good standing once interest rates increase by 4%+? I foresee bad stuff coming down the road.

While "Wall St." is starting to claim profits again, I believe there are a whole lot more write-offs coming for supposedly "good" mortgages when they do go bad.

[OneSickPsycho]

Unfortunately a big chunk of foreclosures nowadays are by folks who, at the time of signing were solid candidates for the mortgage they got into.
As they say...shit happens.

You're right, but by and large those folks weren't what caused the bubble to pop.

[goof2]

Anyone who can afford it... REALLY afford it. If you're buying a house with zero down and starting payment near the top of your budget, you shouldn't be signing a loan with payments that double a few years down the road. It's common sense...

"I didn't know" or "I expected to be in a better place" and any of the other whiney bullshit excuses I heard in sob stories on the 6 o'clock news when the whole thing was collapsing just about made me sick.

There are plenty of other less extreme scenerios, but the bottom line is... if it weren't for people being irresponsible in the first place, the whole housing crisis wouldn't be at all what it is today.

I agree with this to a point. That point is crossed with some of the ridiculously low standards that were set for some loans.

Say you have a methed out relative who wants to borrow money. He says he can pay you back but can't demonstrate how (stated income loans) and hasn't paid back other people you know (poor credit history), yet you loan him the money anyway. When he doesn't pay you back a lot of the responsibility falls on you for making the loan in the first place.

2 people sitting at a desk.
One, the person that wants to money to buy something
The other with the money.

In the big rush to standardize and streamline and automate everything, they have eliminated judgment.

There is no test or cheat sheet or standard. Its judgment and common sense of someone with experience.

There are two problems I'm aware of off the top of my head with that system.

First, large organizations get scared of loosing oversight when it ultimately comes down to two people at a desk. The worry is that their representative at the desk is going to make a stupid decision the organization is ultimately responsible for. As it turned out the organization was making stupid decisions anyway, but that still doesn't change the fact that an organization is going to want to depend on its own judgment rather than that of one of their individuals.

Second, without a demonstrable system that removes judgment from individuals an organization opens itself up to discrimination suits. That system gives the organization something to point to showing that the standards are the same for everyone, regardless of race, color, or creed. I'm sure you are aware that lenders get sued all the time for discrimination. Their race, gender, and creed neutral systems function as a defense. Once the system becomes the mind of an individual that defense is lost.

[pauldun170]

There are two problems I'm aware of off the top of my head with that system.

First, large organizations get scared of loosing oversight when it ultimately comes down to two people at a desk. The worry is that their representative at the desk is going to make a stupid decision the organization is ultimately responsible for. As it turned out the organization was making stupid decisions anyway, but that still doesn't change the fact that an organization is going to want to depend on its own judgment rather than that of one of their individuals.

Your looking at it wrong.
The person at the desk is the entry point..not the whole system.


Second, without a demonstrable system that removes judgment from individuals an organization opens itself up to discrimination suits. That system gives the organization something to point to showing that the standards are the same for everyone, regardless of race, color, or creed. I'm sure you are aware that lenders get sued all the time for discrimination. Their race, gender, and creed neutral systems function as a defense. Once the system becomes the mind of an individual that defense is lost.

Absolutely correct.
Financial institutions have to be able to report that they are complying with state and federal laws. However that doesn't deny the institutions to ability to mitigate risk. The key thing is documentation.

[smileyman]

Unfortunately a big chunk of foreclosures nowadays are by folks who, at the time of signing were solid candidates for the mortgage they got into.
As they say...shit happens.

Thanks for that. Not everyone had an adjusting or sub prime loan. Some of these folks are victims of the whole mess not the cause.

[goof2]

Your looking at it wrong.
The person at the desk is the entry point..not the whole system.



Absolutely correct.
Financial institutions have to be able to report that they are complying with state and federal laws. However that doesn't deny the institutions to ability to mitigate risk. The key thing is documentation.

Both problems boil down to the issue of standardization. My impression is the view from the top of these institutions is the best way to prevent either problem is through demonstrable standardization in lending practices. Right or wrong I think they see more standardization as better which removes their guy at the desk from the equation.

[smileyman]

2 people sitting at a desk.
One, the person that wants to money to buy something
The other with the money.

In the big rush to standardize and streamline and automate everything, they have eliminated judgment.

There is no test or cheat sheet or standard. Its judgment and common sense of someone with experience.

As a professional banker of over 18 years there is little of the second part to draw on. Alot of bank officers at that level lack both judgemtn and common sense.

[smileyman]

Your not going to be ale to legislate and regulate enough in a 'free market' banking system to eliminate stupidity. You could however keep the govt guarantee standards high enough to avoid this sub prime business. However one administration thought it was party duty to put everyone into home ownership.

Still i am thinking only part of this mortgage housing mess is mtg defaults.

What about the SEC and their investment standards? Played a part I am sure.

The trickle down is whole industries were effected and all those wage earners suffered, piling onto the problem...

[pauldun170]

As a professional banker of over 18 years there is little of the second part to draw on. Alot of bank officers at that level lack both judgemtn and common sense.

Keep in mind that my view is that those in the branch are the point of entry not the whole process.

Going to your comment...
Is that inherent in the position or is that a result of market forces aka the dumbing down of the process (and the people) due to technical innovation?

[pauldun170]

Your not going to be ale to legislate and regulate enough in a 'free market' banking system to eliminate stupidity. You could however keep the govt guarantee standards high enough to avoid this sub prime business. However one administration thought it was party duty to put everyone into home ownership.

Still i am thinking only part of this mortgage housing mess is mtg defaults.

What about the SEC and their investment standards? Played a part I am sure.

The trickle down is whole industries were effected and all those wage earners suffered, piling onto the problem...


Ratings agencies played a huge role.
"We're not sure what ya got in there but traditionally we gave em a high marks so we'll just do the same for you. Have a nice day..."

Its like border patrol letting all Toyota Camrys cross the border without inspecting or checking ID because traditionally they never had problems with people driving Camrys.

[pauldun170]

http://finance.yahoo.com/real-estate/article/111040/from-a-maine-house-a-national-foreclosure-freeze?mod=realestate-buy

[goof2]

Ratings agencies played a huge role.
"We're not sure what ya got in there but traditionally we gave em a high marks so we'll just do the same for you. Have a nice day..."

Its like border patrol letting all Toyota Camrys cross the border without inspecting or checking ID because traditionally they never had problems with people driving Camrys.

While the result is the same I disagree on the thought process involved. In my view it was more of a "We don't need to see the details, house values never ever go down so if your securities is backed by real estate the investment is safe."

To use your metaphor it would be like someone having years of trouble free Camry ownership getting another Camry based on that reputation.

http://finance.yahoo.com/real-estate/article/111040/from-a-maine-house-a-national-foreclosure-freeze?mod=realestate-buy

So a bank can't get their shit together enough to foreclose on an essentially worthless shotgun shack that the borrowers haven't made a payment on in over two years. Sounds like a lose-lose to me.:td:

[smileyman]

Keep in mind that my view is that those in the branch are the point of entry not the whole process.

Going to your comment...
Is that inherent in the position or is that a result of market forces aka the dumbing down of the process (and the people) due to technical innovation?



Technoligically speaking L.O.s have so much more data to play with they should be able to make a good sound loan. Cash flow analysis software, credit scoring models, regional trend analysis.

What it seems to boil down to is the human element is easily distracted and seduced. Originating for bonuses, doing solids for your frat boys, inter bank rivalries, ego, got coked up and was doing the secretary while I was approving loans...On and on. And internal audit and review gets told to look the other way when the board likes the bottom line.

[Captain Morgan]

They foreclosed after only 1.5 months? That makes absolutely no sense. It's rare to find ANY bank that forecloses within the first 6 months after the borrower stops paying.

After 30 days you are techinically in default, but you will not recieve a Notice of Default letter until 90 days. Then you have an additional 20 days which to settle the debt with the bank or they foreclose. And if you rent to someone, they have an additional 90 days. Remember, B of A stopped foreclosures because shit is so fucked up. I've heard they are doing more short sales and modifications instead. Short sale FTW!

I've known people to stay in their house 2 years before the sheiriff comes and gives you a 3-day notice.

Yup...story definitely sounds fishy.
Foreclosure is big expensive process and generally is something a bank wants to avoid.

I agree, it sounded fishy to me, too. From my understanding, he had been arguing with the bank for several months, had never truly missed a payment, was in the process of taking the bank to court and about a month and a half after filing was when they decided to foreclose. Like I said, I don't have all the details so don't really believe it all.

[pauldun170]

Technoligically speaking L.O.s have so much more data to play with they should be able to make a good sound loan. Cash flow analysis software, credit scoring models, regional trend analysis.

What it seems to boil down to is the human element is easily distracted and seduced. Originating for bonuses, doing solids for your frat boys, inter bank rivalries, ego, got coked up and was doing the secretary while I was approving loans...On and on. And internal audit and review gets told to look the other way when the board likes the bottom line.

If those originating the loan took ownership of the product (in other words, instead of selling it off they owned the relationship) do you think those screwballs would clean up their act?

[goof2]

If those originating the loan took ownership of the product (in other words, instead of selling it off they owned the relationship) do you think those screwballs would clean up their act?

I know the question wasn't directed to me but if you look at the financial problems Countrywide, and by extension BoA had the originators appear to have been holding on to more than enough loans to screw themselves up and that did nothing to check their decision making.

[pauldun170]

I know the question wasn't directed to me but if you look at the financial problems Countrywide, and by extension BoA had the originators appear to have been holding on to more than enough loans to screw themselves up and that did nothing to check their decision making.

From what I recall...prior to the buy out BOA had its hands clean of the mortgage mess. They bought Countrywide because it was a good deal (it has paid off for them and in the long run was a good buy)

Countrywides issue was they were kings of the "give mortgage to anybody" and then sell the loans off. In the end...they could dump them anymore and were stuck with them.

I guess the reality of it is that taking ownership (of the debt/obligations) would only work with smaller banks. Stringent lending practices without the pressure to turn the mortgage business into a cash cow.

[101lifts2]

.....What really makes me nervous about the real estate market is the current record number of foreclosures even with interest rates at historical lows. I am increasingly incredulous about the claim there has basically been no inflation over the past 2 years. What is going to happen with all the ARMs that are currently in good standing once interest rates increase by 4%+? I foresee bad stuff coming down the road......

This is exactly what is going to happen. The ARMs are in adjustment and the homeowner cannot refi because their house is still too upside down, regardless of the down payment. If these banks want to keep these people, they need to fix their primary mortgage rate or there will be a second wave of foreclosures.

[nhgunnut]

A contributing factor to this is American public has no memory. We been through this before on a smaller scale in the late 80's and early 90's. We saw what was then "Record Foreclosures" and people acting like it was the banks fault then. Yet by the end of the 90 and the beginning of the new millennium the public was back to signing ARM's and assuming a level of risk that would break them. We are going to repeat this mess if the public in general doesn't get off the credit pipe!
I am old enough to remember when buying something on credit was considered something to be a little ashamed of.
The public was and largely still is the Un-named Co-conspirator in this latest economic meltdown.

[Kaneman]

Legalize pot!!

[goof2]

From what I recall...prior to the buy out BOA had its hands clean of the mortgage mess. They bought Countrywide because it was a good deal (it has paid off for them and in the long run was a good buy)

Countrywides issue was they were kings of the "give mortgage to anybody" and then sell the loans off. In the end...they could dump them anymore and were stuck with them.

I guess the reality of it is that taking ownership (of the debt/obligations) would only work with smaller banks. Stringent lending practices without the pressure to turn the mortgage business into a cash cow.

That is why I put the "by extension BoA" part. BoA was in good shape but they didn't buy Countrywide because it was a good deal, they bought them because the government begged (some allege threatened) them to. It was a horrendous deal and took BoA from being financially healthy to being one of the largest recipients of TARP.

Smaller banks haven't faired much better. This is a list of banks that have failed in the 2000s along with when they failed. Notice the list is almost exclusively small banks. There is no reason given for the failure of each bank but I think it is safe to say mortgages played a large role for the majority of them.

http://www.fdic.gov/bank/individual/failed/banklist.html

[pauldun170]

That is why I put the "by extension BoA" part. BoA was in good shape but they didn't buy Countrywide because it was a good deal, they bought them because the government begged (some allege threatened) them to. It was a horrendous deal and took BoA from being financially healthy to being one of the largest recipients of TARP.

Smaller banks haven't faired much better. This is a list of banks that have failed in the 2000s along with when they failed. Notice the list is almost exclusively small banks. There is no reason given for the failure of each bank but I think it is safe to say mortgages played a large role for the majority of them.

http://www.fdic.gov/bank/individual/failed/banklist.html

No...BOA bought Merrill Lynch under government pressure.
Countrywide was by choice and the long term gains outweighed the losses.
BOA was more than capable to absorb all the losses and captilize on Countrywides market presence.
When Merrill Lynch was in talks with BOA (initially) for a rescue it looked promising because Lewis was not happy with the performance of BOA's investment house for some time. Merrill had a lot of expertise to bring to the table. However once they looked closely at it they'd backed off. That's when the administration pulled their bullshit.

You have a point with small banks. I guess I was thinking more local banks like credit unions.

[smileyman]

If those originating the loan took ownership of the product (in other words, instead of selling it off they owned the relationship) do you think those screwballs would clean up their act?

No. In the system producers are rewarded, only a mountain of defaults and write offs would sink an officer, relegate him to admin only kinda duty. And at higher dollar levels it is committee approval, so in effect zero individual accountability.

[smileyman]

Our society has become a consumer spending crack pipe. Consumer buy all they can period. Consumers have adjusted to the income/inflation deficiencies over the years. Revolving credit, crunch down mortgage consolidations, went from 24 mo auto financing in the 70s to 72 mo finances and leases today. Mortgages from 10 yrs to 30, then adjustable rates to afford even longer effectual amortization.

this has been brewing for decades fellas. The middle class aged and shrank. Corporations turned out profit at the expense of long term viability. And I dont buy the global market crap. We started the global market by becoming huge importers, allowing a huge trade deficeit, closing off our natural resources for cheaper foreign alternatives, oil dependency, policing the world while fighting communism with trade deals that dealt us out...



shit I am tires of thinking about it.

[Captain Morgan]

Our society has become a consumer spending crack pipe. Consumer buy all they can period. Consumers have adjusted to the income/inflation deficiencies over the years. Revolving credit, crunch down mortgage consolidations, went from 24 mo auto financing in the 70s to 72 mo finances and leases today. Mortgages from 10 yrs to 30, then adjustable rates to afford even longer effectual amortization.

this has been brewing for decades fellas. The middle class aged and shrank. Corporations turned out profit at the expense of long term viability. And I dont buy the global market crap. We started the global market by becoming huge importers, allowing a huge trade deficeit, closing off our natural resources for cheaper foreign alternatives, oil dependency, policing the world while fighting communism with trade deals that dealt us out...



shit I am tires of thinking about it.

yep. It's an ebb and flow. Right now, I think our society is starting to swing back toward a slight fear of debt (or maybe simply a respect of debt). We had been in a buying frenzy for awhile and I think we may be starting to swing the other direction. Our memories will be short and we'll then get back into the debt cycle and go through all this BS again. For some reason, we humans are incapable of learning from our mistakes over the long term. And we have great difficulty learning from the mistakes of others. Which is why history has a tendency to repeat itself.

[goof2]

No...BOA bought Merrill Lynch under government pressure.
Countrywide was by choice and the long term gains outweighed the losses.
BOA was more than capable to absorb all the losses and captilize on Countrywides market presence.
When Merrill Lynch was in talks with BOA (initially) for a rescue it looked promising because Lewis was not happy with the performance of BOA's investment house for some time. Merrill had a lot of expertise to bring to the table. However once they looked closely at it they'd backed off. That's when the administration pulled their bullshit.

You have a point with small banks. I guess I was thinking more local banks like credit unions.

You are right on the BoA/Countrywide and BoA/Merrill deals, my mistake.

[smileyman]

Wisdom seemsto die with each generation no matter how we try to preserve it. Maybe without the pain of first hand experience it isnt quite as meaningful or memorable. Maybe it is just our nature to push the limits and never be satified.

[Homeslice]

Why the foreclosure delay is BS, and a misguided attempt by the government to muddle in private affairs

Oct 15, 2010 09:46am EDT by Peter Gorenstein in Investing, Recession, Housing

The so-called foreclosure-gate scandal might be much ado about nothing.

Banks repossessed a record 102,000 homes in September, and foreclosure filings rose 4% in the third quarter, with nearly 1 million properties added to the list. Foreclosure-gate won't end that cycle, nor will it amount to a "get out of jail free card" for struggling homeowners.

The temporary freeze of foreclosure proceedings in much of the country and by the biggest lenders in the game just delays the inevitable, says RealtyTrac Senior Vice President Rick Sharga. "Right now, what we're talking about are paperwork issues that are largely procedural in nature, and have almost no bearing on the ultimate disposition of a foreclosure," Sharga tells Aaron in this clip.

"The real question becomes whether a procedural problem trumps the fact that somebody hasn't been paying the mortgage," he says. Sharga doesn't think it does. The vast majority of foreclosures in question that will be delayed, are "destined to be foreclosed" eventually, he contends.

Make no mistake, foreclosure-gate will hurt the housing market. About one-third of all sales are foreclosures sales, Sharga estimates. That can't help but create a "chilling effect" on the market.

The delay also will likely prevent properties from hitting the market in time for the all-important spring buying season. "What that will do is add to the glut of distressed properties in the shadow inventory, which has the effect of driving down home prices," says Sharga.

[z06boy]

You loan $$ to people that can't pay it back...it's your fault and you should have known better than to loan it to them...you're labled a predator.

Turn people down for loans...you're descriminating.

I pretty much hear that everyday.

What a crock of $hit.

There's plenty of blame to go around and it definitely should be shared.

[pauldun170]

You loan $$ to people that can't pay it back...it's your fault and you should have known better than to loan it to them...you're labled a predator.

Turn people down for loans...you're descriminating.

I pretty much hear that everyday.

What a crock of $hit.

There's plenty of blame to go around and it definitely should be shared.

Yup...spot on.

[pauldun170]

Why the foreclosure delay is BS, and a misguided attempt by the government to muddle in private affairs

Oct 15, 2010 09:46am EDT by Peter Gorenstein in Investing, Recession, Housing

The so-called foreclosure-gate scandal might be much ado about nothing.

Banks repossessed a record 102,000 homes in September, and foreclosure filings rose 4% in the third quarter, with nearly 1 million properties added to the list. Foreclosure-gate won't end that cycle, nor will it amount to a "get out of jail free card" for struggling homeowners.

The temporary freeze of foreclosure proceedings in much of the country and by the biggest lenders in the game just delays the inevitable, says RealtyTrac Senior Vice President Rick Sharga. "Right now, what we're talking about are paperwork issues that are largely procedural in nature, and have almost no bearing on the ultimate disposition of a foreclosure," Sharga tells Aaron in this clip.

"The real question becomes whether a procedural problem trumps the fact that somebody hasn't been paying the mortgage," he says. Sharga doesn't think it does. The vast majority of foreclosures in question that will be delayed, are "destined to be foreclosed" eventually, he contends.

Make no mistake, foreclosure-gate will hurt the housing market. About one-third of all sales are foreclosures sales, Sharga estimates. That can't help but create a "chilling effect" on the market.

The delay also will likely prevent properties from hitting the market in time for the all-important spring buying season. "What that will do is add to the glut of distressed properties in the shadow inventory, which has the effect of driving down home prices," says Sharga.

Can someone catch me up on this and how is the government involved with moratorium? How is this "foreclosure-gate"?
I could have sworn that this was a voluntary action by a few banks to ensure they dont end up wasting time and money in the courts.

From what I found the Adminstration has stated that it is against any moratorium.
http://michiganmessenger.com/42676/obama-administration-opposes-foreclosure-moratorium

Is the author implying that FFET investigation into mortgage fraud is the reason why 3-4 banks are doing a document review.

Could it also be said that during the investigation, info came to light that discrepancy's in documents presented risk to banks and the banks are now doing a review in the process of mitigating that risk?


this article blows as much as the articles I usually post up.

[goof2]

Can someone catch me up on this and how is the government involved with moratorium? How is this "foreclosure-gate"?
I could have sworn that this was a voluntary action by a few banks to ensure they dont end up wasting time and money in the courts.

From what I found the Adminstration has stated that it is against any moratorium.
http://michiganmessenger.com/42676/obama-administration-opposes-foreclosure-moratorium

Is the author implying that FFET investigation into mortgage fraud is the reason why 3-4 banks are doing a document review.

Could it also be said that during the investigation, info came to light that discrepancy's in documents presented risk to banks and the banks are now doing a review in the process of mitigating that risk?


this article blows as much as the articles I usually post up.

It doesn't have anything to do with the government, outside the fact that foreclosures have to go through the courts. The "-gate" thing isn't indicating government involvement, it is just a way for lazy authors to evoke "scandal". To be fair the author never indicates these moratoriums are government-directed either.

These moratoriums/document reviews are nothing more than a response to the courts. For the last couple of years the courts have functioned as nothing more than a rubber stamp in the process. Up until recently they were letting foreclosures go through without a bank even having to produce the paperwork demonstrating that they held a loan on the property that was being foreclosed. Some courts are actually starting to look for proper documentation and it has occasionally hurt the banks legally and publicly. The moratoriums are being put in place while banks voluntary attempt to revise their procedures in order to ensure they don't get smacked down in court anymore.

As for the effect on homeowners, this only institutes a delay. If they aren't paying their mortgage they will still get foreclosed on, just a little later than has been common. My guess is the administration opposes the moratoriums because once they are lifted the fear is it will create a statistical "foreclosure bomb" down the line. People are paying attention to the foreclosure rate and using it as a factor to indicate whether economic recovery is occurring. The administration would like to avoid a big jump in that number a few months from now.

[101lifts2]

.... Foreclosure-gate won't end that cycle, nor will it amount to a "get out of jail free card" for struggling homeowners. .....


Maybe not, but it will give them another 2-3 FREE months to live there while not paying any rent. Can you say a new big screen TV?:lol

[goof2]

BoA is already lifting their moratorium in 23 states.

http://money.cnn.com/2010/10/18/news/companies/BOA_resumes_foreclosures/index.htm?hpt=T1