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It is a case of clash of the titans – while the number of foreclosures is increasing daily, the federal government have been raising funds in order to meet the challenge foreclosures present.  On the other hand, the housing officials in Salinas are eyeing a larger share of money in order to repair and resell bank owned properties lying vacant after being foreclosed upon.

On July 14th, the Board of Supervisors approved a bid of nearly $16 million to be received as funds from HUD. It was intended to be distributed among the hardest hit regions in the county. Bank repossessed units were to be purchased at discounted prices and the houses made habitable before reselling them to those with modest incomes.

The buyers would have to meet certain conditions, such as having income being not more than 120% of the median income of that area. The program was to be named the Neighborhood Stabilization Program and was supposed to be managed by the county on behalf of the cities of Gonzales, Greenfield, King City, Marina, Seaside and Soledad.

However, Salinas was supposed to be charge of its own program due to a stipulation that those wanting a slice of the latest stimulus dollars would have to put in a minimum request of $5 million and 100 units to get assistance.

Not one of the local jurisdictions would have been able to qualify for the program. If the new grant is won, then nearly 195 houses would get help, according to the estimates by county officials. They are hopeful of getting nearly $2.1 million from the HUD-controlled federal stimulus fund. However, the money will be given gradually to the state according to a pre-set plan. Salinas had initially applied separately during the first round of grant applications. It is expecting $2.6 million in federal stimulus money.

The Director of the Redevelopment and Housing Offices of the county was recently seen commenting on the chance to vie for a large share of money coming from the federal government. He was reported saying that it “represented both an exciting and challenging opportunity.”

The odds would be against huge urban centers like Los Angeles, Philadelphia and Chicago, who also want a part of the $1.9 billion federal stimulus dollars. The director explained that their bid would stress on the status of the area being the ‘salad bowl’ and underline its importance in the economy. Their chances of receiving stimulus money are good considering that the county and several other cities are collaborating on this application.

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When the Bush administration came out with the $700 billion package after the failure of AIG, he received support for both Obama and McCain, who were both campaigning at the time. The situation was too grave to not have support.

But in the House, Republicans voiced their strong opposition. A theatrical drama played out in the Cabinet Room of the White House when Paulson took to his knees before the speaker of the House, Nancy Pelosi. When referring to the economy, Bush was quite straight-forward. He said, “If money isn’t loosened up, this sucker could go down.”

Despite the move of the bailout, aftershocks continued in the American banking system. On September 25th 2008, Washington Mutual was taken over by the FDIC. It was a record breaking bank failure. Whatever was left of the money funds was quickly swallowed up by JPMorgan and Chase.

Within four days, Citigroup took over the banking functions of Wachovia whom was discovered, like Washington Mutual, to have dealt in ARMs. Ultimately, the offer from Wells Fargo was better than Citigroup’s and they ended up purchasing Wachovia.

On September 29th 2008, the bailout issue entered the voting stage in the House. However, negative votes kept rising higher and higher. Wall Street barons became tense and their jaws began to lock. The bailout was voted out – 228/205. Dow fell by even more points.

Over $1 trillion of market value had vanished in a second. It was a record. The leaders in the Congress tried desperately to find a way out of this mess. Finally, it was passed and was quickly inked into law on October 3rd. The Republicans won on their stance, making it mandatory for more personal bank deposits to be covered by government insurance as well as bank accounting rules to be simplified.

But the bitter taste of the failing banks did not go away, however. From then on, stocks began to slowly but steadily go down.

On October 13th 2008, Treasury Secretary Paulson called for a meeting with the CEO’s from all the biggest banks in the country. He said to them that, rather than purchase their toxic assets, he had decided to pump in $125 billion into their banks.

It was meant to be a sign to the world that the government would not permit the failure of any of these banks. The federal government also put restrictions on pay packets to major executives and dividends, another sign of them taking control of the bad bank situation. Reluctantly, bank officials gave their signatures to the new law. Later, the measure was extended to many other banks but the problem of toxic assets continues to persist.

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In Oregon, the new House leader (Democrat) Tina Kotek said she is keen to see that the focus is on foreclosures and other small business ventures. She plans, in the future, to place these among her top priorities.

Speaking to the Associated Press she said, “Banks don’t want us touching those things, and we are going to have a conversation about that in February. Those two things, capital for business and people in foreclosure, are going to help the middle class”.

Kotek became the party leader when Republican Dave Hunt was ousted by the Democrats – it being a rare shake up in the middle of the term. For the first official business session since Kotek took over the reins, democratic legislators will return to Salem in order to conduct meetings. Committee meetings will be held to talk about suggested changes to the law of the state but no work on specific bills will be taken up as of yet.

The Democrats with Kotek had attempted to pass new bills that would mandate the banks to take care of foreclosed houses as well as slow down the foreclosure process for troubled homeowners, among other new regulations. But without support from the GOP, the bills languished.

The two parties are sharing power in the House after voting showed that 30 members had been elected from each side. The leaders of the parties came to an agreement that would require the members of each of the parties to sign off on any of the bills prior to voting.

Apart from foreclosure and other financial issues, Kotek has mentioned she is willing to hold talks with others in her party about focusing on priorities for a legislative session of 35 days that will kick off next February. She is hopeful that discussions on health insurance and the renovation of the Medicaid system will go smoothly. However, these discussions will take up much of the legislators’ time. They also need to make decisions about what direction the federal budget should take.

Forty four year old Kotek was elected in 2007 to the Legislature after having been engaged as a lobbyist pushing for reforms in the fields of social justice, education and social security net plans. She openly claims to be gay. She said, “I always try to put our most low-income families and kids first”.

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The business of foreclosure short sales, sometimes referred to as ‘pre-foreclosure’ sales is a complicated one to say the least. The processes involved are complex and time consuming, requiring those charged with initiating and assisting said procedures to hold vast knowledge and expertise regarding the subject. However, banks are increasingly putting realtors into a difficult situation where they must make a tough choice, which is to either cut their commission costs or be forced to walk away from the deal.

In the world of real estate, a short sale is a transaction in which a lender is compensated for a property which is nearing foreclosure with an amount less than is in fact owed. The bank agrees to a figure which falls short of the full amount, hence the term ‘short’ sale. Such sales are much more complicated and take a great deal more time than regular sales, meaning realtors often decide case by case whether or not to work with them. An increasing number of homeowners encountering difficulties due to health, employment or other factors are being forced to consider short sales as an alternative to foreclosure, therefore requiring experts to guide them through the process, including a trained realtor.

For the realtor, they accept the listing of a short sale property with the sole objective of helping the seller through the subsequent process to get their property sold. The realtor then has a great deal of responsibility to their client as the listing agreement is made entirely between these two parties. However, when a bank or other lender decides to inform a realtor that they will only consider paying them as little as 5% of the offer being presented to them, the realtor is forced into a difficult situation. He/she can basically stick it out and attempt to force higher commissions which would risk rejection of the offer by the bank. Or they can simply walk away from their initial intentions and agree to take the lower commission for the sake of helping out the client and ensuring the property sells.

Over recent years, the vast majority of short sales have allocated the buyer’s agent a commission rate of less than 3%. Homes that are approaching foreclosure and go for short sales instead do not get shown particularly often.

However, there are calls for legislation and subsequent changes of practice which will help create a level playing field for both parties and prevent this black and white ‘our way or no way’ attitude frequently adopted by the banks. Quite simply, under the rules, if a bank wasn’t happy with the numbers, they would be required to return to the buyer and ask for a higher fee for the home. The realtor therefore would not have to make the unpleasant decision as to whether they should walk away from the deal or accept a few that are way below their general worth.

Such would be of great benefit to agents across the business, though whether it is actually introduced and subsequently takes hold is another question altogether.

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In 2003, Freddie Mac was fined $125 million and was forced to restructure their management team. This was a result of under-reporting their earnings. They said that they earned $5 billion from the years 2000 through 2002.They suffered another fine in 2006 of $3.8 million as a result of illegal campaign contributions. Freddie Mac raised money for political candidates who would later use their influence in certain decisions that would affect Freddie Mac. U.S. law prohibits such practices by organizations, corporations, and businesses.

Freddie Mac was sued by a shareholder in 2007. This brought bad press on their company by their practices. They were accused of using false statements as well as misleading statements regarding their systems that were put into effect to protect themselves from the problems in the housing market. The many criticisms of Freddie Mac could not have happened at a worse time. While housing prices were dropping and defaulters were increasing, they could have argued that they were not completely responsible for what happened.

Freddie Mac was then placed into conservatorship. Unlike nationalization, this is only a temporary measure. However, it does limit the decisions they can make without prior permission. This happened in 2008, as there were a number of problems within the company and questions were being raised about the way that it was being run. There were severe losses that brought criticism of its accounting practices. Bailing them out cost the government $150 billion. Freddie Mac’s reputation was surely damaged by this event. There had always been the assumption that Freddie Mac was too big to be allowed to fail, so the government would have had no option but to find the money to help them. This had been the biggest bail out in American financial history. The company was given only a couple of years to sort the problems out as the government will pull back its support in 2012.

While there were many issues for Freddie Mac, homeowners were not put at risk in any way by these scandals. They seemed not be in danger of Freddie Mac foreclosures by these particular scandals.

Things are looking up for Freddie Mac however. They are now in a position to ask the government for much less financial help than they have in the past. It has still asked for $100 million in support, but this is lower than in the past.

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An investigation by the 50 US states into the U.S mortgage industry has started, amidst allegations of some banks improper handling of documents that may have resulted in homes being foreclosed in error. This is after Bank of America admitted finding a small number of cases with errors, or so they say, in their review process. What is alarming here is the existence of robo-signers within these large institutions, such as the Bank of America, who sign off on foreclosure affidavits without examining the documents. And on top of this, despite incorrect information and missing documents, some foreclosure cases were still being initiated.

According to the bank, these were minor mistakes, caught earlier on in the process, and did not affect the final documents submitted to the courts. These errors were discovered whilst preparing the first 10 to 25 files out of the first few hundred foreclosure cases. Some of the problems uncovered where misspellings of the borrowers names, lack of signatures, missing files and incorrect data. As a precautionary measure, Bank of America halted all foreclosure proceedings pending process review, in late September and early October, and has since lifted this ban as they have declared that their foreclosure processes are in fact intact.

Bank of Americas decision to re-initiate foreclosure proceedings has been seen as the banks attempt at getting past the recent commotions, which is expected, where the bank’s shares have taken a nose dive as investors are rattled by these spate of events. In addition, the bank’s renewed vigor in steaming ahead with their home repossession activities is in response to quelling public fears that the mortgage market is severely flawed. Their aim right now is to restore its public image, and patch up their relations with the government. Key players in the banking industry are closely following the progress of the bank, as Bank of America is one of the most important players in the America’s housing market.

The bank can expect a backlash from the public, as lawyers are now building their cases against the bank, based on robo-signers and missing documents. Based on this, lawyers from all over the Unites States have begun investigating misleading foreclosure proceedings at big banks. There has also been a lot of finger pointing in the media, blaming this foreclosure debacle on over-borrowing home owners and their overzealous lawyers.

Many have labeled this bank crisis as bureaucratic fraud, whilst many speculate that if this problem isn’t nipped in the bud now, it may cause widespread economic havoc. Suffice to say that such a large financial institution such as the Bank of America has now directly contradicted what was initially announced on the 18th of this month, where they noted that "the basis for our foreclosure decisions is accurate." Today however, the Bank of America has admitted that there have been a considerable percentage of errors in their review of pending foreclosures.

Those following this fiasco will be wondering whether there are other vital and potentially hazardous bits of information that this bank, and numerous others, haven’t released to the public yet.

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The bank has foreclosed on the house of George Tirpak, a Vietnam veteran and sold it. Tirpak has been compelled to camp in his front yard while the neighbours have come forward to help him survive. He is vainly trying to keep together his belonging and does not know what he should do next.

Thanks to the soured economy an increasing number of Americans have lost their jobs and often their houses. In August, in one month, about 340,000 properties have been foreclosed upon.

George Tirpak residing in Memphis was compelled to exit from the house that was his home. He could not go far but stayed in his front garden with his furniture, chinaware and other belongings. It looks as if a garage sale is on but in reality it comprises of all that Tirpak has in this world. He bemoaned that his parents and he himself should have got rid of many of the items sometime ago. Recently his locks were changed and his possessions were thrown out.

Tirpak is 64. He said that the lender took over his house when he became unemployed and defaulted on his mortgage as well as taxes. He said, “I got sick of everything I guess. I let it go too long”.

He is now camping on the driveway to guard his things while trying to sell whatever he can. After that he would think about the next step. He said it was extremely hard for him after having got used to the neighbourhood and nursing a feeling that this is where he would spend his last days and die.

He has got some offers for staying and the neighbours have helped him to sort out things. They have shifted some furniture items to a storage unit. One neighbour, Diane McKenzie said it was heartbreaking. She visits him every day bringing meals and just making sure that he was fine. Diane commented that he was a stubborn person and a survivor. She told him this.

The new owners have yet to tell him when he should free the porch of his belongings. Tirpak is making use of this time to sell as many items as he can before the city authorities haul it all off. Tirpak said he felt sorry for all those who were in the same boat as his. He also added that things would have been far worse without the cooperation of his neighbours.

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Foreclosures of houses transacted by firm named Marriott Mobile Homes, have been traced back to a family of frauds in Texas. A couple of Navarro County, Lynn and Kandace Marriott were lately ordered to be imprisoned for a long period. They were proved to be guilty of mortgage activities that were fraudulent. It resulted in the foreclosure of a good number of mobile houses in that region.

As per court record, the two together with others in their family seized opportunities to line their pockets seeing that there were a huge number of distressed properties for sale in Texas. They sold these dwellings to those who did not have affordability income.

After pleading guilty Lynn was sentenced to be jailed for 28 years. The hearing took place in the court of Kaufman County. He did not deny being involved in a plan chalked out to cheat clients. Most of them lost their houses to foreclosures initiated by the banks. Lynn took the help of his wife Kandace and Karn Hayes, his sister-in-law. The latter were accused of faking documents in these nefarious schemes.

Texas is besieged with foreclosure related problems. The government, banks and Fannie Mae are all active in foreclosing on defaulters. Fraudulent activity has become quite common in this atmosphere of chaos. The Marriotts may have got away scot-free if one of their former associates had not filed a complaint with the police regarding forgery of his signature.

David Martin, the previous associate, said that the pair had sold properties numbering thousands through many years. Many of these houses sold through Marriott’s firm ended up being foreclosed upon. Investigations by the police showed that the couple took recourse to illegal means to sell off these properties; one method was forging signatures and using false documents.

Martin alleged that his signature was used to forge cheques that were encashed by others. When few other buyers who had bought houses from the Marriotts heard about the investigations they too came came forward to show their documents that proved to be false.

False documents were used to sell a good number of units by Marriott Mobile Homes. The owners were Lynn and Kandace Marriott. Many of these houses ultimately were foreclosed upon. Majority of the former owners came forward to file complaints against the cheating couple. This led to initiation of investigations and the subsequent sentence.

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Age is not deterring an octogenarian widow from taking action against her previous lawyer alleging that he had cheated her out of her house worth $1.7 million and had entered into conspiracy to throw her out.

Connie Campbell had sought out Alfred Walendowski for assistance after she defaulted on the mortgage of her house in Carroll Gardens and was threatened with foreclosure. But instead of coming to her assistance where she had been staying for long 45 years the lawyer formed a conspiracy with her grand daughter and they persuaded her to get rid of it for a mere $2000,000.

Campbell said that she felt humiliated. She had trusted Walendowski for helping her but instead he took away the house that was her home for her.

She is now demanding that her house be returned to her together with damages worth $ 2 million. The suit has been filed Supreme Court of Brooklyn. She has also brought fraud and legal malpractices charges in a suit against Walendowski.
Susan Chana Lask is the new attorney engaged by Campbell. She has termed Walendowski as a heartless crook who specialized in preying on seniors. Lask said grimly, “I intend to evict Mr. Walendowski from the practice of law for his disgusting conduct”. She is aiming with the help of the lawsuit to get back to Connie her houses and damages for the period of acute suffering she had endured.

Walendowski failed to make any comments when requested.

Lask is also trying to take back the house from the old widow’s granddaughter Charise Scibelli residing in Suffolk County with Anthony Scibelli, her husband. At one time he had been in prison for crimes related to drug abuse and crime. Lask said, “It’s disgusting for a family member to take advantage of her own grandmother. She got a huge windfall”. Charise was not available for comments.

The nightmare for Campbell started from 2007 when she was defaulting for $14,000 in her mortgage repayments. She was presented with a notice intimating foreclosure by one of the most noted lawyers dealing with such cases – Steven Baum. Campbell alleged that the two – Walendowski and Anthony Scibelli compelled her to sign off the ownership of the home but said that she would be allowed to stay here till her death. But one year afterwards the granddaughter tried to throw her out.

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Unemployment is triggering foreclosures across America; the pace is picking up according to the findings of RealtyTrac. Foreclosures increased by 6% last July across the country.

However in North Shore it cannot be easily seen. Foreclosures take a long time. At the end of the process the house becomes empty but not till this happens in most cases the houses remain occupied. Remarking on North Shore, Tim Warren of The Warren Group (Boston) noted that this place has not been one of the worst hit regions. Even in those neighbourhoods where the house owners are struggling to be current on their mortgage payments the signs are not evident for all to see.

Warren said, “Foreclosures are everywhere. Even if you don’t have the problems associated with it, derelict, abandoned buildings – you still have problems with foreclosures”.

According the latest numbers from the Warren Group, in June when the market was still under the impact of the withdrawal of the federal tax relief programme the trend was worrisome. The number of foreclosure deeds in Salem dropped from 40 made in the first six months of 2009 to 35 for the same months this year. But in Beverly they doubled to 25 from 10 and in Danvers to 26 from 12. In Peabody it shot up by 50% to 51 from 36.

In the small towns foreclosures were beginning to pinch. In Marblehead it shot up to 13 from 5 and in Hamilton to 9 from one.

The withdrawal of the federal carrots is causing some to worry that the worst has not come as yet. It seems real estate prices will tumble for a second time. Warren said, “We hear from the realtors that things were much slower after the tax credit. But we don’t know the scope of it”.

It will be obvious when the changes will pick up with empty houses, untrimmed lawns, peeling paint and complaining neighbours. When families walk out of the houses it does not mean that the houses belong to none. It is the banks who are the new owners but they fail to see to the maintenance of their properties. This causes blight in the locality said Kevin Goggin the building inspector of Peabody. Three buildings in Tanner City have been marked out for demolition. The value of the property becomes nil when it is not habitable – the only worth is the land on which the house stands.

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