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The Scandal Surrounding Bank of America and the “Robo” Signing Case

Kevin Simpson — Thu, 03 Feb 2011 19:49:42 +0000

Bank of America, although proudly being the largest financial institution in the United States and serving clientele from over 150 countries, came into the news yet again. Along with other money lending institutions in the United States, it was for what has commonly become known as the “robo” signing case.

Bank of America had already attracted itself enough negative publicity with the Meryl Lynch incident and the multi fraud accusations made against the institution by public services such as hospitals and schools in 2010. Now it has found itself in the top headlines again in the fall of 2010 for the “robo” signing case.

“Robo” signing has been used by many financial institutions besides Bank of America, such as JP Morgan Chase and Allied Financial. All of these companies being involved with the recent scandal.

“Robo” signing has taken place in hundreds of thousands of foreclosure property deals, where the bank, instead of in some cases going to court to legally acquire the foreclosed or REO property, have “robo” signed numerous documents. Hence stands the question of who do some of these properties from Bank of America foreclosures actually belong to and where do potential buyers stand who already made a deposit or down payment on a property before the scandal unfolded. The answer is that there is now a great shortage of foreclosure properties for sale. Also, there are hundreds of thousands of people who may potentially lose their homes because it was not the legal property of the bank or lending organization to sell.

The complications become endless, and the “robo” signing case has left a huge dent in the real estate market of the United States as well as a lot of uncertain property owners. Although Bank of America made a pledge to stop “robo” signing in all 50 states, it would physically be impossible to re-read and re-sign all of the already “robo” signed documentation for so many foreclosure properties. For the re-signing and re- reading of all the documents to take place, Bank of America would actually have to employ a great deal of personnel on a temporary basis just to complete this task. So although a pledge to stop “robo” signing has been given by Bank of America, it still does not help the unfortunate individuals who have unknowingly been caught up with this scandal while innocently trying to purchase their dream property. Quite a bit must still be done to resolve this issue of immense proportions. This all has caused more bad publicity for Bank of America that they don’t need.

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Foreclosures have Brought Together ACORN and Democrats Once More

Julie Parker — Tue, 03 Mar 2009 12:41:52 +0000

Foreclosures have once more brought together Obama and ACORN. Immediately after the signing of the trillion dollars bill in Denver Obama kicked off New Raw Deal – a jumbo-sized mortgage plan that will force lenders to modify loans and refinance. The initial cost stretches from $50 billion to $100 billion. This is on top of $50 billion in the stimulus bill to help those homeowners who are underwater. Another $2 billion is for “Neighborhood Stabilization” for dealing with vacant foreclosed houses.

This bailing out of bad borrowers has brought together old buddies – the Democrats and ACORN. The latter are kick starting a new campaign known as Home Savers. It has a radical leftist colour to it. Shock troopers will be out on the streets doing the bullying while the organizers in chief of the community will keep their hands clean.

The new strategy by ACORN will take the form of civil disobedience. The homeowners facing foreclosures will refuse to move out. In some instances they will forcibly return. ACORN volunteers will squat in the houses until a satisfactory, comprehensive solution materializes.

The infantry of ACORN funded by taxpayers money will shout, pound fists and fix themselves to buildings with chains. They will lock the doors and indulge in illegal behaviour until their demands are met. The move has all the ingredients for onset of anarchy.

Louis Beverly of the ACORN branch in Baltimore argues, “After you’ve used all your legal options, your last resort is civil disobedience. We’re talking about families who have been in their homes 20 or 30 years. People who are assets in the community, who look out for the elderly, who have community associations, and these are the people being kicked out of the community.”

While there is sympathy for those who cannot pay their bills this tactics will not solve the problem just like artificial propping up of the real estate market has not worked. The corporations that have failed deserve to fail. So too foolish and greedy borrowers who had an important role to play in the mess deserve the desserts.

The teams of ACORN ready to take on the law are mostly unemployed or full time workers of the organization. The taxpayer funds them. They are encouraged by Democrat Mercy Kaptur of Ohio who had thundered, “Stay in your homes. If the American people, anybody out there is being foreclosed, don’t leave.”

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Against The Background Of The Foreclosure Crisis

Julie Parker — Mon, 23 Jun 2008 13:46:12 +0000

Agents and appraisers are having the last say as against industry reports because against the background of the raging foreclosure crisis it is the locals who are the best judges of the real estate market.

For those living in a housing society the work is easy because one unit is similar to the other. But where there are up hills and down dales in housing variety involving not merely size but style, quality, condition and amenities, the gauging is a tough task. The ever-changing property and financial market further complicates matters.

Figures and statistics do not come of use in ground realities while calculating the value of a particular house. The National Association of Realtors or NAR makes use of the average sale price of existing houses. It has been noted that during a certain time span about half the houses were sold for more than the quoted average while the other half were disposed of at less. The increase in average indicates a rise in the overall prices of units or it may simply indicate that more costly houses costly houses were sold. For instance, last year in San Francisco more luxury properties were sold than starter houses. A drop in the median price shows that more inexpensive houses were sold, during that particular period. There are innumerable foreclosure properties in the lower price category. This may be the reason for the fall in the average in areas where the last mentioned houses are picking up sales.

Irrespective of the price of the house, the general tendency is for foreclosed houses to sell at 15% less than the other houses in the inventory according to Andrew LePage of DataQuick.

Thus changes in national average prices indicate little or nothing about the price in a particular locality. NAR reports that the national average fell by 7.7% in March from what it was in 2007. But reports from California Association of Realtors show that the average was less by 10.2% from March 2007. DatQuick numbers were different. According to it the average price of houses fell by 20.4% in the Bay Area in March from the previous March of 2007. But in Contra Costa County (in Bay Area) the average sale price fell by one third from the previous year. 44.7% of the sale transactions in March were related to foreclosures.

Foreclosures Colouring Elections

Julie Parker — Mon, 16 Jun 2008 14:23:30 +0000

Foreclosures continue to rule the roost despite much talk and hype about solutions. But what is self evident from numbers pouring in is that the Bush administration has failed to rein in the galloping foreclosure horse. Like myriad other problems this all-important one about foreclosures is going to be dumped on the new President and the succeeding Congress.

The lax lending of the previous bubbling years continues to ferment trouble and spread the rot. In May foreclosures were again on a running spree with many default numbers tagging behind, ready to be foreclosed. The pain today is not only the tears of individual families. It has spread its tentacles wide. House prices are falling, tax collection is declining while credit remains tight fisted. This is creating a vicious circle of continuation of the slump in the real estate market that is in turn telling on the general economic slow down. Lenders, borrowers, the ordinary citizen and politicians are now all boiling in the foreclosure stew. So far nothing positive has come forth from the Bush administration.

The sitting Congress may succeed in passing a foreclosure-help bill before 4th July. At best it will stop 5,00,000 foreclosures covering the forthcoming years. If it sees the light of day it will be something to trumpet about. But there are many ‘ifs’ – it has to be passed and then it has to be signed by Bush. Even then the weight of foreclosures that will be legated to the next administration will be gigantic.

At this juncture it is relevant to note what noises the two presumptive nominees, John McCain and Barack Obama are making on this all important foreclosure issue. Last March McCain had tagged along with those who blamed the borrowers for taking more loans than they could afford. He argued that they were not deserving of help. This led to a barrage of criticism. McCain came to be termed mean and ignorant of economic points. The argument was that there was no reason to make the entire economy suffer for the failings of few borrowers. From April, McCain began to sing another tune and supported administrative steps being taken to halt foreclosures.

Obama has more broad suggestions to offer – allowing bankrupt borrowers to have their loans modified via court protection route. This has been categorically dismissed by Bush group and the mortgage companies. Obama is also for local bodies to purchase foreclosed properties and thus help in easing the market.

Texas Foreclosures Slowing Down

Julie Parker — Wed, 11 Jun 2008 12:22:02 +0000

Texas foreclosures are going against the current foreclosure trend as recent reports show that the number of foreclosures are slowing down here. This report was released by a California based tracking firm, RealtyTrac, in April 2008.During March, there were 10,700 foreclosure postings in Texas – a decrease of about 16% from March 2007. It is also a drop of nearly 13% from the number of foreclosure listings in February 2008.

Across the country 234,685 units were foreclosed upon in March this year – a 57% jump from the number of foreclosure units in March 2007 and a 5% increase from February 2008. According to the year-by-year count of foreclosures (including defaults, auction and repossessions), they increased on the whole by about 129%. This indicates that a good number of defaulting borrowers are just walking away from their financial problems through deeding back their properties to the lenders. In comparison, auction notices have spiked by 32%. The deed-in-lieu permits the lender to take over the unit without arranged a foreclosure auction in the courtroom.

California and Florida continued to be the top rankers together with Ohio in of this year.

California ranked first with 64,711 foreclosures – an increase of about 20.66% from March 2007. California’s amount of foreclosed homes, when looking at its annual numbers, has risen by 106%. Florida came second with 30,254 foreclosure filings marking a jump of 112% from March 2008. But there was a drop of postings from February 2008 by about 7%. Ohio ranked third with 11,273 foreclosure listings in March showing a rise of 37% from March 2007. It was a 9% increase from February 2008.

According to this latest trend, figures alone cannot give a comprehensive picture of the situation. Although interest rates have been reduced, the number of foreclosures will continue to go up and up. This shows that the focus has shifted from the interest issue to other matters – unemployment, increase in food, fuel prices and fall in the real estate market. Even with reduced interest, it makes no sense to continue with the mortgage as the value of the house is more often than not less than the loan amount. Compounded with rising prices, the economic scenario has become toxic and dangerous. Many contacting counseling centers are worried about lowering income and increasing prices of essential goods. In the previous year, 22% complained of lowered income. This year the number is 28%. In April, many spent an average of $335 per month on groceries – an increase from $291 from April of the previous year. This year $242 is spent on gas while it was $181 in 2007. Thus, a mixture of problems has been included to the foreclosure mayhem.

South Bay Foreclosures Alarming

Julie Parker — Thu, 15 May 2008 14:29:45 +0000

South Bay foreclosure figures are alarming. The question is – how much more can this region take? Statistics show that on each average working day there are 1,038 foreclosure related auctions. In April Santa Clara County recorded 500 postings – this being a 47% hike from the previous month of March 2008 and a 585 jump from April 2007. The county now ranks 40th in March this year among the counties in California a regards foreclosures per capita. Loans worth $292.4 million were foreclosed upon last March.
Foreclosure is a judicial process. Of late it has hit the headlines because of the alarming increase in numbers. When a borrower defaults a notice is sent regarding foreclosure. The county records office is also intimated. If after about four months the borrower is unable to become current in mortgage dues then an auction sale is conducted at the courthouse. For last year or so the houses are not being sold at the public auctions and are reverting back to the bankers. The latter are offering huge discounts but even that is not letting the ball start rolling in the real estate market.
In Santa Clara on an average 15% discount is being offered at the auctions. It means that if the previous owner owed the bank $400,000 the bank isnow willing to settle the matter for $340,000. Increase in default notices point to escalation of the foreclosure crisis. It is definitely not petering off. In April there were 44,101 notices in the state. It was an increase of 14% from January 2008. The lenders are now more often agreeing to short sales for a quick settlement of the matter without going through the whole process of foreclosures. A short sale takes place when the lender allows the borrower to sell the house even though the value of the house is less than the loan amount. However the process of short sale involving approvals from the lenders is painstakingly slow. Invariably the borrowers complain that they have managed to find a buyer in these difficult days but the approval has not come through. So the deal is put off. The lenders complain that they are deluged with such requests and do not have the infrastructure to deal with it swiftly. Each one is a specific case and has to be handled accordingly. The best way is to seek refinancing and modification so that the borrower can continue to stay in the house that is the home.

More Free Seminars To Tackle Foreclosure Menace

Julie Parker — Mon, 03 Mar 2008 12:47:27 +0000

The New Year began on a bitter note: foreclosures jumped by over 100% in comparison to what it was in January 2007. Localized credit counseling agencies are becoming more active.
Consumer Credit Counseling Service is a non-profit organization that is reaching out to those in need of help in six counties of California including Ventura. It will hold sessions for free both in English and Spanish to establish contact with all communities affected by the debacle. The first morning session in English will be followed by another in Spanish in the premises of Camarillo offices, on Wood Road near Camarillo airport. Another similar group is Cabrillo Economic Development Corporation. It held similar sessions that had drawn over 100 participants. Both groups are planning to continue with more workshops and seminars.

Cabrillo has received $167,462 for its NeighborWorks Home Ownership Center, from a federal source that has been of late approved by the Congress. Demands for their services are going up and they are gearing themselves to meet it. Their spokesperson comments that the good work is beginning to show and changing the lives of the local people who want to continue to stay in the houses that are their homes.

Counseling is just one of the many measures taken up to stem foreclosures that are sucking dry not only the real estate market and telling on the economy. The sub-prime mortgage with adjustable rate mortgages was introduced to help those who could not avail of prime mortgages because of modest income and low credit ratings. The laudable purpose of the scheme was to make real the great American dream of owning a house fore everybody. Unfortunately the plan went awry. Hunting for quick returns and high commissions, speculators and agents jumped in flush with funds. All one needed was a pulse to get a loan sanctioned. This led to a frenzy of building causing spikes in the real estate. Unfortunately what goes up comes down. The people could not manage with the mortgages once the rates became realistic and began to rise. Like nine pins the houses rolled into foreclosures. The business concerns seeing the fall simply ran away from a bad deal leaving more abandoned houses. Divorce and illness too coupled with localized economic problems too had their say in the matter. A tsunami of foreclosures took over the country dragging down in its wake the entire nation.

Senator Durbin Advocates Change Of Foreclosure Laws

Julie Parker — Tue, 19 Feb 2008 11:58:48 +0000

The situation here is far worse than the national foreclosure picture. Carol Thomas is 69 years old. She has just been handed a foreclosure notice and wonders how long she can brew coffee in her own kitchen. She had fallen into a trap laid by a scammer who kept promising that things would work out fine. Today that person is in jail and Carol continues to boil in the hot foreclosure soup without any hope of reprieve. On the other hand she had lost precious time and money trying to work out a deal with a scammer. The con artist is now in Prison but that does not help Carol right now. Her mortgage payments have trebled because of ARM’s. From 6.4% it skyrocketed to 9.4% and there is no surety that it is going to stop there. There are hints that again it will go up in May.

Carol is just one among the many in the Foreclosure soup tureen. According to recent reports Peoria and Tazewell County foreclosure figures are far above the national average. This has led to a phenomenal rise in counseling related to house matters. There are many lagging behind in payments – 30 days to 120 days. President Bush has just given his nod to another fund for counseling services amounting to $180 million.

The fact that many will not be facing foreclosures does not mean that the problem is solved. Foreclosed houses sell at a low price and bring down the general real estate market. This in turn affects the tax kitty. Thus there is very little left for police and fire protection. Yet these last two are the two important pillars of a government.

Senator Dick Durbin says that it has a ‘negative ripple effect’ going down and down. He has come forward with some suggestions People in bankruptcy should also be allowed to refinance loans. So far this has not been allowed. The law does not allow modification of loans on the primary residence but only on vacation houses and farms. Durbin wants to change that law also.
Counselors feel that the best thing is to put a halt on foreclosures and find out ways for refinancing. If this is not done then thousands of houses will have ‘For Sale’ signs pasted on them – all because of foreclosures. It bodes ill for the socio-economic structure of the entire nation.

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Foreclosure Virus Spares None

Julie Parker — Mon, 18 Feb 2008 11:25:11 +0000

On Hendry Street, Dorchester heads of city government arrived in a futile attempt to stop the spread of the foreclosure virus. But when the mayor, police commissioner and the housing inspector arrived all was over. Mayor Menino standing in front of a boarded up three decker house on Hendry Street promised that he would do his level best to restore the health of the region. For this the city fathers will have to seize the property tax on grounds of delinquency. But unfortunately most of the houses are not encumbered with unpaid taxes. A different aggressive approach will have to be taken.

Nearly a dozen properties in Hendry, Coleman and Clarkson streets dotting a modest to low income locality that the Menino authorities had ear marked for public safety, playground facilities and economic upliftment were listed on foreclosure postings. This has been going on for the last five years.

This region is known for being a high crime area where money plays around. TV crews and troops withdraw simultaneously. But this time it seems that the mayor is deadly serious about his ‘foreclosure intervention team’. The chief attorney of the city, William Sinnott is trying to see if the banking officials of the state can freeze the assets or take off the licenses of the mortgage lenders who refuse to cooperate. Working with him are other city officials to find out if behind the scenes fraud or such activity is taking place.

In 2007 nearly 700 properties in Boston were clubbed down by foreclosures. A hot debate is raging whether greedy borrowers or predatory lenders are to be blamed. The apprehension is that another 2,000 house owners are about to face further mortgage rate rises. Thus many more will meet the same fate as those of Hendry street.

There are indications that efforts are paying off and more mortgage lenders are coming forward with a helping hand. One of them is the mortgage giant Wells Fargo. But there is a lack of communication between the servicers and the borrowers. In 1960 bad mortgages had sent out the same bad smells in Dorchester. It took decades for the mess to be cleared up. Menino understands this. Crime rise is associated with abandoned empty houses. The plumbing and electricity fittings are stripped off and the houses becomes dens for vagrants and prostitutes. This brings down the overall real estate market.

Real Estate Giant Macklowe In Danger Of Foreclosure

Julie Parker — Wed, 13 Feb 2008 11:28:03 +0000

Nothing has been resolved as of yet while talks are still going on between real estate giant Harry Macklowe and his lenders regarding Manhattan office buildings. Harry purchased several Manhattan buildings in the previous year. Technically, the inconclusive talks place Macklowe in position of default although, according to reports, none of the lenders are going on through with the foreclosure process as of yet. In the following week, there is a chance that talks will resume. Macklowe’s spokesperson did not comment on the issue.

In February 2007, Macklowe borrowed $5.8 billion from Deutsche Bank to purchase seven office buildings in Manhattan area – properties that previously belonged to Equity Office Properties. Last week Macklowe struck a tentative deal that would turn over the units which he had purchased for $7 billion. The bank declined to comment on the report.

It is alleged that Macklowe owes the bank $5.8 billion due to acquisition financing or non-recourse. This would give Deutsche control of the buildings but not rights over the rest of Macklowe’s empire.

Macklowe, it seems, put in $50 million from his own resources but he is still short of $1.2 billion to repay a bridge equity loan he had taken from Fortress Investment Group. Macklowe purchased the units together with Blackstone Group LP’s acquisition of the Equity Office in 2007.

The crux of the problem for Macklowe is that the ongoing foreclosure crisis has all but wiped out easy debt financing. Lending has become much more difficult and costly. Commercial mortgage backed securities from CMBS have dried up. Banks are being besieged by the foreclosure crisis in residential sub-prime mortgages. This has left Macklowe in the lurch.

With fears of recession looming over everyone’s head, the future looks bleak for the commercial real estate market.

The market cannot be studied in isolation. The economy is like a line of dominos; one thing leads to another. There is a current snowballing effect on the sub-prime mortgage crisis, which is being felt all felt in all spheres of the economy. There is a strong protest against lenders although there are indications that, even before the 9/11 catastrophe, indications of the downward economic trend were visible to those with an experienced eye. There were job losses, divorces and illness. All joined hands with rising interest to create the foreclosure crisis. The government at all levels, communities and politicians are all pitching in to salvage the situation and bring back the country on its rails.

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