Homeowner Activists: We Told You So

Over the past few weeks many of us with skin in the game have watched as the media finally started covering the foreclosure fiasco. Some homeowner activists saw it as the beginning of a long string of investigative reporting. The rest of us knew that it was only a matter of time before the next fluffy squirrel ran through the media's backyard, in the form of another one of the Palins dancing or fishing, and they gave a tail-wagging chase forgetting all about the half eaten homeowner carcass that looked so good five minutes before.

Some of us have stayed conspicuously quiet while more popular and salaried "professionals" took the reins, covering and uncovering banks and servicers behaving badly. In some cases it's proved to be a painful exercise in self-restraint to not get out the soapbox and megaphone and shout, "We told you so," or at the very least littering the articles with self-affirming comments.

18 months ago, I had dinner with several staff members of the House Finance Committee. When I told them about all this they gave me the deer in headlights look. I remember approaching the mainstream media then who acted like I was nothing more than a Che Guevara wannabe. I had associates in the mid-west doing short sales and modifications who couldn't figure out why they were getting nowhere with their files for 9-12 months, they finally came to me out of desperation. Within 3 weeks, I had the servicer begging to give the homeowner a modification because I was able to prove they lacked legal standing to foreclose and could face a fraud lawsuit.

Steve Dibert - MFI-Miami

"I still had to get used to being looked at like a guy standing out in a cornfield describing how the lights came down out of the sky and stole my cow. As devastating as this level of fraud has been, it was nice to finally get that confirmation that I really wasn't crazy," Dillon said in a recent interview, referring to the rash of articles and testimonies proving his claims.

Dillon was recently featured on WMUR in New Hampshire discussing the basic case of legal standing a bank needs in order to foreclose and how many of them simply don't have that legal standing.

In January I argued that HAMP (the administrations failed modification program) was nothing more than a way for banks and servicers to suck more money out of strapped homeowner under the guise of hope.

In truth, a disturbingly large percentage are denied permanent modifications and given no reason why they are denied. These people will most likely face foreclosure, ruined credit, and shame, despite their best efforts and their proven ability to afford and pay the new mortgage. Bank of America for example, in what I can only assume is their "friends and family plan", permanently modified 98 mortgages of the 156, 864 trial modifications they started.

Many of the trial modifications have been extended unreasonably beyond the requisite three month period. The banks attribute the delay to questionable claims of lost paperwork and a lack of effort on the part of homeowners. Some homeowners have been stuck in a modification limbo for five or six months only to be denied a permanent modification after making the required payments.

"Taibbi is among those who will be saying I told you so," Robin Young of "Here and Now" said while plugging her interview with Matt Taibbi on Tuesday's NPR "Morning Edition".

Taibbi, whose main focus for the past couple of years has been Wall Street, recently turned his attention to the mortgage and foreclosure mess in his recent Rolling Stone piece "Courts Helping Banks Screw Over Homeowners" he manages to lay out, in one spectacular article, what the rest of us have been writing about for the past several years and have been emailing reporters and government officials about relentlessly.

Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history -- an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.

The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 cases per hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.

Courts Helping Banks Screw Over Homeowners - Rolling Stone

The exposure in the mainstream will hopefully help shed some light on the situation and draw attention to the fact that this was more than just deadbeat homeowners. It's certainly more than a handful of crazy bloggers with skin in the game can accomplish.

That's not to say that the press has been completely remiss in covering the mortgage and foreclosure mess. Arthur Delaney and Shahien Nasiripour of HuffPost; Gretchen Morgenson, The New York Times; Felix Salmon, Reuters; Denise Richardson, givemebackmycredit.com and Sun Sentinel, and Bob Sullivan, MSNBC to name a few have all been vigilant and relentless in their coverage since the economic implode.

William Black, former Senior Regulator during the S&L debacle has also been writing several posts in HuffPost about the mortgage fraud and about Bank of America's possible insolvency.

This is something Steve Dibert of MFI-Miami wrote about back in July, in "Is Bank of America Hiding an Insolvency Problem From The Public?"

Black has also made a much needed argument for homeowners and has argued vehemently against the tired argument on the part of banks, servicers, and sanctimonious, self-righteous blog commenters who blame homeowners.

"It is even more absurd to believe that honest lenders, finding themselves the victims of an epidemic of mortgage fraud by these clever working class Americans, responded by (1) massively expanding the number of liar's loans they made, (2) spreading them to subprime borrowers with severe credit defects, (3) made defaults on the loans, and the loss upon default, far greater by layering risk and inflating appraisals, and (4) slashed their allowances for losses (ALLL) to trivial levels to ensure that the inevitable fraud losses would cause catastrophic losses."

Lenders Put the Lies in Liar's Loans, Part 2

While Black's measured and reserved snarkiness and sarcasm shows empathy to homeowners being targeted for having caused the meltdown, Taibbi takes it to a level only he can and nicely sums up the way we've all been feeling for years.

The way the banks tell it, it doesn't matter if they defrauded homeowners and investors and taxpayers alike to get these loans. All that matters is that a bunch of deadbeats aren't paying their fucking bills. "If you didn't pay your mortgage, you shouldn't be in your house -- period," is how Walter Todd, portfolio manager at Greenwood Capital Associates, puts it. "People are getting upset about something that's just procedural."

Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street. "We're not evicting people who deserve to stay in their house," Dimon says.

There are two things wrong with this argument. (Well, more than two, actually, but let's just stick to the two big ones.)

The first reason is: It simply isn't true. Many people who are being foreclosed on have actually paid their bills and followed all the instructions laid down by their banks. In some cases, a homeowner contacts the bank to say that he's having trouble paying his bill, and the bank offers him loan modification. But the bank tells him that in order to qualify for modification, he must first be delinquent on his mortgage. "They actually tell people to stop paying their bills for three months," says Parker.

During his interview on "Here and Now" Taibbi drove that point home and was adamant in clarifying, "A lot of the [homeowners] I ran into in Florida actually were current on their payments," referring to the accusations that people deserved to be foreclosed on and that the paperwork - accurate or not was irrelevant.

It is however, bittersweet to see stories popping up two, sometimes three years later, confirming and corroborating what we've been saying all along. While it's nice to be right and certainly satisfying to have heavy hitters like Taibbi and Black finally agree with those of us in the bush leagues and confirm our theories and speculations, who wants to be right about this?

What's most disturbing in all of this is most of us came to our conclusions by asking one simple question ... "What could possibly go wrong?"

Remember: You can post your own mortgage horror story at www.ShametheBanks.org