August 4, 2009
Now that the automakers have been further "stimulated" by the "Cash for Clunkers" program, who's next in line? The $75 billion earmarked for the "Homeowners Stability Initiative" is being whittled away by more handouts to everyone but homeowners. After many months, this program is inexplicably spinning its wheels and distressed homeowners wait for the assistance promised by the Obama administration. This is another example of the money set aside for the Homeowner's Stability Initiative program going to help other causes - namely, those with a stronger lobby in Washington (i.e., banks, brokers, insurance, automakers, etc.).
In areas hardest hit by the real estate collapse, especially in areas with historically high home prices, this program could provide significant relief. There has been no assistance provided to homeowners with "jumbo" loans, who now see their investments further and further underwater and who have suffered larger losses, percentage wise, than most. Is the Administration and Congress purposely ignoring the housing issue? They seem buoyed by recent increases in pending home sales and hesitant to take action.
The problem with the increased pending home sales figures is that they mainly represent foreclosed properties that are being sold far below market value. Not only does this not help homeowners trying to retain their homes, it further depresses comparative values of the surrounding neighborhoods making a real recovery of prices impossible.
There has been extensive reporting of the increase in "pending" home sales, but nothing is being said about the reason or consequences associated with this perceived recovery. An average of only 15% of eligible mortgagees have even been approached by their lenders to modify their loans, with some lenders only at 4%. These are the "big boys" of course, Citibank, Bank of America, Wells Fargo - well you know the players. And the "mortgage servicers" like Saxon Mortgage are simply a joke. They are simply shilling for "investors" who, for some strange reason, wish to remain anonymous. These companies are required to produce the actual names of the "investors" if requested by the mortgagee. However, we've heard of no one who has actually gotten a response. By ignoring this request, they should have all of their rights concerning foreclosure stripped. Furthermore, these "servicers" should be required to pay off each mortgage that they've ignored and the "investor" must then turn over the property to the homeowner with a clear title. Only by creating significant penalties will these crooks begin to play by the rules.
Principal reduction is an huge and important issue that lenders still refuse to address. They will not face reality, instead they are certain Washington will protect them from having to do the right thing. How can lenders expect homeowners to continue to pay property taxes on a home that is now worth 30%-40% less than the mortgage and the value listed on the tax rolls? Property taxes are a huge annual payment for homeowners living in States with excessive taxes and this tax can represent a difference of $10,000 or more between the inflated value of the home recorded on the tax rolls versus the current market value of the home. Again, these State governments are insisting that homeowners pay the inflated tax bill, so that culprits like California can continue to support illegals. Do we really want to give these clowns our money to simply play with as they please?
So what's the homeowner to do? Lenders would love to continue down the current path, foreclose on as many homes as possible and continue to ring their cash register. All homeowners who are currently underwater in their loans must insist that Congress address this issue immediately. Withholding property tax payments, while potentially hurting a home owner's credit rating, is the only way to get State governments to address the problem. We are advocating that all homeowners adopt this stance and demand State and Federal governments take action before more hostile approaches are taken by taxpayers. While we do not approve of civil disorder, our elected officials had better wake-up before they are faced with some very difficult decisions.
Distressed homeowners deserve the same attention that other troubled institutions have promptly received. Banks, mortgage companies, insurance companies, and the auto industry have enjoyed multiple injections of taxpayer money to keep them alive. Many of these recipients of taxpayer money are the same entities that caused the crisis, but they are strangely the first to find relief.
Speaker Pelosi, Chairman Frank, Secretary Geithner, Representatives and Congressmen from California (where property taxes and State taxes in general are totally out of control and unsustainable) are in positions to get some action for homeowners. For example, exactly what has House Representative Lois Capps, who represents some of the highest property value areas in Southern California, done for her constituents? The answer is NOTHING! She has meekly sat by as her District continues to see huge decreases in property values. We warned that we would begin calling out individual members of Congress that are doing nothing for their constituents. Unfortunately, it's beginning to look like I'll be listing quite a few names from both sides of the aisle.
These elected officials are totally in the pocket of banks and lenders and fear for their political lives. I can guarantee that this is not something they need worry about. If they do not take immediate action, voters will decide for them and the result is going to be very disappointing for them.
Showing posts with label Wells Fargo. Show all posts
Showing posts with label Wells Fargo. Show all posts
Tuesday, August 4, 2009
Friday, July 31, 2009
WHAT DID THE BIG BANKS DO WITH THE "TARP" FUNDS?
July 31, 2009
It was being described as "the brink of financial Armageddon" when America's largest banks and brokerages accepted billions of dollars in taxpayer money in late 2008 to rescue them from collapse. We now know that these financial concerns took advantage of loose governmental requirements for tracking the TARP funds and have now made a miraculous recovery.
The TARP funds were approved by Congress to allow the U.S. Treasury to purchase or insure up to $700 billion of "troubled" assets. "Troubled assets", in the legislation, were defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
Not only were mortgages and securities related to mortgages the main target of the legislation, strangely they were the only "troubled assets" NOT addressed following release of the rescue funds. Instead, the money went to big banks and brokerage firms, insurance companies, hedge companies and pretty much anyone else to use for anything but distressed mortgages.
It is now being revealed by N.Y. Attorney General Andrew Cuomo that nine banks and brokerages such as Chase, Merrill Lynch, Citibank, and the Bank of America received $175 billion in TARP funds after claiming over $100 billion in 2008 losses. The banks involved have seen an amazing turnaround and are now reporting huge profits. It's just incredible what you can do with "free" money! The banks were so happy that Chase (Jamie Dimon CEO), who received $25 billion in "rescue funds", gave away $33 billion to executives as bonus payments. Merrill Lynch (Stan O'Neal and John Thain CEOs) received $27 billion and rewarded their genius execs with $3.6 billion in bonuses and now are part of Bank of America; Citibank (Vikram Pandit CEO), a recipient of $45 billion were so thrilled with their executive's performance that they threw bonuses worth $5.3 billion at these super financiers.
Getting the message? It was more important to further compensate the criminal bankers who conspired to bring down the real estate market, while manipulating the entire process, than to provide some assistance to distressed homeowners. Billions in bonuses to crooks while nothing to the victims of these bloodsuckers, even when funds were specifically targeted for that very purpose.
Unless Congress brings down the hammer on these CEOs, their henchmen, their Boards and the heads of companies further down the food chain (mortgage brokers/servicers, hedge funds, insurance companies), the American voters are going to show their displeasure at the next election opportunity. Bankers should also take note, because bloggers will be relentless in exposing the names of all of the players who have profited at the expense of homeowners and all taxpayers.
A full report from the Cuomo investigation is available at:
http://www.reuters.com/article/ousiv/idUSTRE49S85720081029
It was being described as "the brink of financial Armageddon" when America's largest banks and brokerages accepted billions of dollars in taxpayer money in late 2008 to rescue them from collapse. We now know that these financial concerns took advantage of loose governmental requirements for tracking the TARP funds and have now made a miraculous recovery.
The TARP funds were approved by Congress to allow the U.S. Treasury to purchase or insure up to $700 billion of "troubled" assets. "Troubled assets", in the legislation, were defined as "(A) residential or commercial mortgages and any securities, obligations, or other instruments that are based on or related to such mortgages, that in each case was originated or issued on or before March 14, 2008, the purchase of which the Secretary determines promotes financial market stability; and (B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
Not only were mortgages and securities related to mortgages the main target of the legislation, strangely they were the only "troubled assets" NOT addressed following release of the rescue funds. Instead, the money went to big banks and brokerage firms, insurance companies, hedge companies and pretty much anyone else to use for anything but distressed mortgages.
It is now being revealed by N.Y. Attorney General Andrew Cuomo that nine banks and brokerages such as Chase, Merrill Lynch, Citibank, and the Bank of America received $175 billion in TARP funds after claiming over $100 billion in 2008 losses. The banks involved have seen an amazing turnaround and are now reporting huge profits. It's just incredible what you can do with "free" money! The banks were so happy that Chase (Jamie Dimon CEO), who received $25 billion in "rescue funds", gave away $33 billion to executives as bonus payments. Merrill Lynch (Stan O'Neal and John Thain CEOs) received $27 billion and rewarded their genius execs with $3.6 billion in bonuses and now are part of Bank of America; Citibank (Vikram Pandit CEO), a recipient of $45 billion were so thrilled with their executive's performance that they threw bonuses worth $5.3 billion at these super financiers.
Getting the message? It was more important to further compensate the criminal bankers who conspired to bring down the real estate market, while manipulating the entire process, than to provide some assistance to distressed homeowners. Billions in bonuses to crooks while nothing to the victims of these bloodsuckers, even when funds were specifically targeted for that very purpose.
Unless Congress brings down the hammer on these CEOs, their henchmen, their Boards and the heads of companies further down the food chain (mortgage brokers/servicers, hedge funds, insurance companies), the American voters are going to show their displeasure at the next election opportunity. Bankers should also take note, because bloggers will be relentless in exposing the names of all of the players who have profited at the expense of homeowners and all taxpayers.
A full report from the Cuomo investigation is available at:
http://www.reuters.com/article/ousiv/idUSTRE49S85720081029
Thursday, July 16, 2009
CLASS ACTION SUIT AGAINST BANKS & MORTGAGE COMPANIES PLANNED
July 16, 2009
In an attempt to force banks and mortgage companies to deal with distressed homeowners, we've learned that a class action suit against these organizations is being considered by a number of community action organizations. These suits would be the result of investigations that indicate low-mid income home buyers, especially loans made to minorities, were deceptive at best. Felony fraud charges are being considered against the top brass of many of these companies.
The coalitions we've spoken to prefer to remain quiet on many of the details concerning the suit, but some groups have said that they plan to consolidate their efforts. Initial targets will include virtually all major banks (e.g., BofA, Citibank, Wells Fargo, Chase, etc.) and mortgage companies (e.g., Countrywide). Also included will be a demand for mortgage servicing companies to immediately identify the "investors" they're representing for purposes of payment collection.
The identification of "investors" being represented by mortgage service companies has been at issue nearly since the real estate meltdown began. Even though required to provide this information by law when requested by the mortgagee, these "black holes" have refused to comply.
The failure to disclose the identification of "investors" makes us think there may be more to their refusals than simply arrogance and incompetence. Is it possible that by revealing these "investors" it will show that the whole CDO venture was a scam?
Since Congress is apparently not interested in saving the homes of taxpaying voters, it's great to see people taking things into their own hands! If Congress wants to this class-action suit to go away, maybe we'll see some action from them. But I would warn against thinking Congress would have home owner's best interests at heart, so watch what might be proposed. If it smells, throw it back!
In an attempt to force banks and mortgage companies to deal with distressed homeowners, we've learned that a class action suit against these organizations is being considered by a number of community action organizations. These suits would be the result of investigations that indicate low-mid income home buyers, especially loans made to minorities, were deceptive at best. Felony fraud charges are being considered against the top brass of many of these companies.
The coalitions we've spoken to prefer to remain quiet on many of the details concerning the suit, but some groups have said that they plan to consolidate their efforts. Initial targets will include virtually all major banks (e.g., BofA, Citibank, Wells Fargo, Chase, etc.) and mortgage companies (e.g., Countrywide). Also included will be a demand for mortgage servicing companies to immediately identify the "investors" they're representing for purposes of payment collection.
The identification of "investors" being represented by mortgage service companies has been at issue nearly since the real estate meltdown began. Even though required to provide this information by law when requested by the mortgagee, these "black holes" have refused to comply.
The failure to disclose the identification of "investors" makes us think there may be more to their refusals than simply arrogance and incompetence. Is it possible that by revealing these "investors" it will show that the whole CDO venture was a scam?
Since Congress is apparently not interested in saving the homes of taxpaying voters, it's great to see people taking things into their own hands! If Congress wants to this class-action suit to go away, maybe we'll see some action from them. But I would warn against thinking Congress would have home owner's best interests at heart, so watch what might be proposed. If it smells, throw it back!
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