Daily Archives: June 6, 2014

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Distressed Homeowners Need Lots of Help

Distressed Homeowners Need Lots of Help

“The government’s response to the foreclosure crisis is the equivalent of trying to put out a forest fire with an eye dropper.” — Senator Elizabeth Warren

While the foreclosure crisis continues to ravage communities around the country there’s a pressing need for homeowner education and empowerment. Maegan Nikolic, a single mom in Whittier California, can attest to that. Since 2010 she’s been run through the foreclosure wringer. She’s woken up to find notices of default tacked on to her door, hired a succession of lawyers to try and find some way to resolve the mess but at every turn ran into a brick wall. After the tears, the stress, the overwhelming anxiety Maegan with her small boy in tow and threatened with a forcible eviction left her house of 17 years.

Maegan’s story has been distilled down to a statistic; one that shows up on industry data bases like CoreLogic and Realty Trac but like all statistics they don’t reveal the faces behind the numbers. While trillions were lost in housing values the human cost, measured in lost dreams, dislocation, divorce, depression, suicide, addiction, is incalculable. Since the housing bubble burst in 2007 there are upwards of five million stories similar to Maegan’s, and if you’re watching too much Fox Business News and CNBC you might think that this just an old bad dream and we’re now back on the royal road to economic prosperity.

Well think again.

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EXCLUSIVE: Nearly 30,000 city homeowners in danger of losing properties to foreclosure: report

EXCLUSIVE: Nearly 30,000 city homeowners in danger of losing properties to foreclosure: report

ALBANY — Nearly 30,000 city homeowners — most of them in minority communities — are in danger of losing their properties to foreclosure, an alarming new report by Senate co-leader Jeffrey Klein says.

Even while most of the country is recovering from the 2007-2008 housing crisis and has watched foreclosure rates go down, New York City homeowners are suffering, according to the report, which will be released Friday.

“Not only are foreclosure notices up 15% from the previous year, but foreclosure activity in the region experienced an annual increase in 21 of the past 23 months,” the report says.

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Louisiana’s mortgage servicers now required to be licensed effective June 30

Louisiana’s mortgage servicers now required to be licensed effective June 30

Starting June 30 Louisiana’s mortgage servicers will be required to obtain a license to operate in the state.

Louisiana House Bill 807, signed into law by Governor Bobby Jindal on May 28, amends state law to require mortgage servicers to be licensed by the state. Previously, only residential mortgage lenders, brokers and originators were required to be licensed to do business in the state.

Under the newly adopted law, mortgage servicing is defined as “collecting or remitting payment for another, or the right to collect or remit payments for another, of any of the following: principal, interest, tax, insurance, or other payment under a mortgage loan.”

The text of the law says that it was designed to protect the citizens of Louisiana. “The Legislature of Louisiana does hereby declare that it is in the best interest of the citizens of the state to protect consumers in the most important financial investment most will make, the purchase of a home, by requiring the licensing and regulation of residential mortgage lenders, brokers, originators and servicers,” the text reads.

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Memo to DOJ: Iceland had no problem jailing banksters. Take note.

Memo to DOJ: Iceland had no problem jailing banksters. Take note.

12 December 2013 Last updated at 13:32 ET

Four former bosses from the Icelandic bank Kaupthing have been sentenced to between three and five years in prison.

They are the former chief executive, the chairman of the board, one of the majority owners and the chief executive of the Luxembourg branch.

They were accused of hiding the fact that a Qatari investor bought a stake in the firm with money lent – illegally – by the bank itself.

Kaupthing collapsed in 2008 under the weight of huge debts.

For years, Kaupthing and other Icelandic banks had aggressively pursued overseas expansion plans, but when they went into administration, they brought the country’s economy to its knees.

Just a few weeks before the collapse, Kaupthing announced that Sheikh Mohammed Bin Khalifa Bin Hamad al-Thani had bought a 5.1% stake during the financial crisis in 2008.

The move was seen as a confidence boost for the bank.

Legal costs

Hreidar Mar Sigurdsson, the former chief executive, received five and a half years, while Sigurdur Einarsson, former chairman of the board, was sentenced to five years in jail.

These are the heaviest sentences for financial fraud in Iceland’s history.

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Banksters Pretend that Prosecuting Wall Street Crime Will Blow Up the Economy

Banksters Pretend that Prosecuting Wall Street Crime Will Blow Up the Economy

Banksters Pretend that Prosecuting Wall Street Crime Will Blow Up the EconomyThe Department of Justice is “considering” initiating criminal charges against 2 banks.

In response, the normal cast of characters is saying – as they have for years – that prosecuting banks will cause ameltdown of the economy.

The U.S. attorney for the Southern District of New York recently mocked the silly claims of gloom and doom:

Companies, especially financial institutions, will do almost anything to avoid a tough enforcement action and therefore have a natural and powerful incentive to make prosecutors believe that death or dire consequences await,” he said. “I have heard assertions made with great force and passion that if we take any criminal action, the skies will darken; the oceans will rise; nuclear winter will be upon us; and the world as we know it will end.”

As we’ve repeatedly noted, this is wholly untrue.

Indeed, prosecuting the individual Wall Street executives who knowingly committed criminal fraud won’t harm the economy.  After all, the main driver of economic growth is a strong rule of law. And numerous Nobel prize winning economists have said that prosecuting Wall Street white collar is necessary for a prosperous economy.

Proof that prosecuting criminal fraud doesn’t hurt the economy  comes from Iceland:

[The U.S. and Europe have thwarted white collar fraud investigations … let alone prosecutions.] On the other hand, Iceland has prosecuted the fraudster bank heads (and here and here) and their former prime minister, and their economy is recovering nicely … because trust is being restored in the financial system.

In response to the sky-is-falling spouting banking apologists, professor of law and economics – and chief S&L prosecutor – William Black  explains:

First, no banker is “too big to jail.” They are easily replaceable and removing a fraudulent bank CEO from power is the single most productive act that regulators and prosecutors can accomplish. [The Department of Justice’s chief of criminal prosecutions] Breuer and Attorney General Eric Holder were involved in a con when they claimed that their failure to prosecute the senior bank officers leading the frauds was in any way related to “too big to fail.” Hilariously, they even applied the “rationale” for non-prosecution to former bank officers – as if a bank would fail “because” its former officers were prosecuted. It is a testament to the weakness of the reportage that this claim was not treated with ridicule.

Second, valid fraud prosecutions do not “cause” a business to fail. The fraud causes them to fail. They should fail when their “profits” arise from fraud. In particular, they should fail in the case of accounting control fraud because their “profits” are the fictional product of accounting fraud. The markets and the economy are greatly improved when fraudulent enterprises are destroyed. ***

Third, very little is actually “destroyed,” when we place a fraudulent bank in receivership, fire the crooked CEO, and sell the bank to an acquirer of integrity and competence. The new bank will, net, be greatly improved because it has been freed from control by the fraudulent leadership that was “looting” the bank (George Akerlof and Paul Romer, 1993, “Looting: The Economic Underworld of Bankruptcy for Profit”).

Fourth, there is rarely a need to prosecute a bank. In virtually every case in which the bank’s frauds cause serious harm senior officers of the bank will have led the fraud and profited from it. Everyone in law enforcement realizes that any effective deterrence will come from prosecuting those officers and not only removing their fraud proceeds but also imposing fines that will leave the officers bankrupt.

Fifth, the bank’s controlling officers are in an immense conflict of interest when their frauds are detected. They control the bank and its resources. Their first priority is to prevent their own prosecution. Their second priority is to prevent any substantial “claw back” of their compensation. Their third and fourth priorities are to do the same for less senior officers. This isn’t altruism (though it certainly has an aspect of class-based affinity). Fraudulent CEOs realize that it is risky to allow the prosecutors to gain any leverage over more junior officers who may “flip” and testify against the CEO. The fraudulent officers controlling the bank, therefore, will gladly trade seemingly huge fines in exchange for obtaining their top four priorities.

[Finally, the government’s policy of not prosecuting Wall Street criminals] produces what Akerlof and Romer warned was the “sure thing” of CEO “looting” through accounting control fraud plus the assurance that the CEO will not be prosecuted, forced to surrender his fraud proceeds, or forced to pay fines that bankrupt him.Unsurprisingly, the result has been unprecedented accounting control fraud by elite banksters.***

None of this explains why they don’t prosecute bankers (much less ex bankers)

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General Motors : GM dismissed vice president, two directors in recall probe: sources

General Motors : GM dismissed vice president, two directors in recall probe: sources

General Motors Co dismissed several high-ranking executives, including at least one vice president and two directors, for their roles in the still-unfolding drama over deadly ignition switches in older GM cars, people familiar with the matter told Reuters.

Michael Robinson, vice president for environmental, sustainability and regulatory affairs; Gay Kent, general director of vehicle safety and crashworthiness; and M. Carmen Benavides, recently reassigned as director of product investigations and safety regulations, were among 15 employees dismissed from GM, according to the sources.

They said others dismissed were William Kemp, a senior attorney responsible for engineering and safety issues; Lawrence Buonomo, head of product litigation in GM’s legal department; and Jennifer Sevigny, an attorney who heads GM’s field product assessment group.

GM Chief Executive Officer Mary Barra on Thursday said GM had dismissed 15 people, including engineers Ray DeGiorgio, designer of the defective switches linked to at least 13 deaths, and Gary Altman, chief engineer for the Chevrolet Cobalt and Saturn Ion, which used those switches.

Barra said “some were removed because of what we consider misconduct or incompetence. Others have been relieved because they simply didn’t do enough: They didn’t take responsibility (and) didn’t act with any sense of urgency” to investigate causes of fatal crashes and inform senior management.

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N.Y. Bank Employee Pays for Homeless Man’s Funeral

N.Y. Bank Employee Pays for Homeless Man’s Funeral

A New York City bank employee is in the news for going the extra mile to ensure that a local homeless man was given a proper goodbye.

For more than a decade, Juanita Vega served as Richard Coleman’s alarm clock, waking him up each morning in the vestibule of the bank where she worked. They grew fond of one another over the years, exchanging a few friendly words in the morning; he called her “sis” and would give her small trinkets he found.

Earlier this year Vega stopped seeing him in the vestibule every morning, and she became concerned. Last month she learned from a police officer that Coleman, 62, had died and, with no known next of kin, would be buried on Hart Island, New York City’s potter’s field, where thousands of unknown or destitute people are interred each year by inmates from the local prisons.

“I know about [the] potter’s field and I didn’t want him to end up there,” Vega told local news site DNAInfo. “He was a nice person. He didn’t deserve that.”

So she organized a proper burial. With the help of her boyfriend, a funeral director, she arranged for Coleman to be buried in a cemetery in New Jersey. The funeral cost Vega $2,000.

Vega’s kindness toward Coleman has been widely publicized after it was first reported by DNAInfo’s Lindsay Armstrong. None of the reports name the bank where Vega works or what position she holds.

Two charts show where Americans stand on housing

(source: MacArthur Foundation: click image for larger view)

More than two in five adults believe that the housing market continues to be a serious problem, according to a recent survey from the MacArthur Foundation on people’s attitude toward the housing crisis.

The survey polled a sample of 1,355 people in April 2014.

“While economists and housing experts say that the housing crisis is behind us, large proportions of the American people are not feeling the relief. Very high proportions of the public continue to believe that we are still in the midst of the housing crisis or that the worst is yet to come,” the report stated.

And this is not the only negative news for the market.

Two-thirds of the public believes that it is less likely today than it was 20 or 30 years ago for a family to build equity and wealth through homeownership.

Read on.

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NY regulator Benjamin Lawsky just made it easier to be a mortgage banker in New York: a new streamlined licensing process

NY regulator Benjamin Lawsky just made it easier to be a mortgage banker in New York: a new streamlined licensing process

That’s because Lawsky announced Thursday that New York’s Department of Financial Services is implementing “a new streamlined licensing process for mortgage banking in New York.”

The release announcing the measures said, “These measures – which include allowing the online submission of application materials, conforming to certain national standards, reducing outdated regulatory barriers, and other initiatives – will improve efficiency and reduce unnecessary wait times, while at the same time ensuring consumers remain protected.”

Here’s how Lawsky’s office is making it easier for mortgage bankers:

1. Adopted the Uniform State Test for mortgage loan originators

New York will adopt the Uniform State Test for mortgage loan originators on September 2, 2014, joining dozens of other states that have adopted the test, which is designed to make it easier for loan officers to obtain licensing in multiple states.

2. Simplified the process for moving to New York to be a mortgage loan originator

Currently, when a mortgage loan originator working in another state or for a federal bank wants to move to a New York-licensed mortgage banker or broker, that person can’t apply for a license until after he or she gets a new job and is unable to work at that new job until his or her license is processed.

The new procedure makes a lot more sense. Individuals can now apply for an MLO license before being hired by a New York-licensed entity. DFS will process the application and will send a letter to the applicant once it is satisfied that the applicant has met all of the requirements to become an MLO, other than affiliation with a New York-licensed entity. The applicant can then take this letter to potential employers, get a new job, and as long as the new employer is disclosed to DFS within 30 days of this letter, DFS will promptly license the MLO.

3. Made the application process much less complicated

The DFS has reorganized its internal process to “eliminate excess layers of review of license applications and approvals.” This process has been in place for four months and according to the DFS, “The Department’s mortgage licensing team worked through a significant backlog (in the last four months) and reduced the number of pending banker and servicer applications by more than 25%. Over the same period, the unit’s rate of application processing more than doubled.”

4. Mortgage bankers, mortgage brokers, mortgage loan servicers and mortgage loan originators with a question now have an e-mail address just for them

License applicants and licensed entities no longer have to search for the appropriate person if they have questions. New, encrypted inboxes dedicated to particular topics will be staffed daily, and the DFS will find the appropriate person to answer a given question within one business day.

For mortgage bankers or mortgage banker applicants, the address is mortgage.banker@dfs.ny.gov; for mortgage brokers or applicants, the address is mortgage.broker@dfs.ny.gov; for mortgage loan servicers or applicants, the address is mls@dfs.ny.gov; and for mortgage loan originators or applicants, the address is mlo@dfs.ny.gov.

5. Those e-mail addresses are for more than just questions

The DFS will now accept application materials at the dedicated e-mail addresses above. “This should nearly eliminate documents being lost or delayed in the mail,” the DFS announcement said. “Where DFS needs originals of certain documents, it will accept online submission first so that mail delays do not hold up processing of the application, and the original can follow by mail.”