Worcester bank "fee" "backfires on struggling homeowners"

In response to Telegram and Gazette article

Worcester bank fee backfires on struggling homeowners
http://comments.telegram.com/assets/article_comments_html/104299945_ZA1.html
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The ordinance requiring banks to register with the City and post a $5000 bond when they file an Intent to Foreclose petition with the State has made a visible difference.  Properties foreclosed in the last few years that are going to ruin now seem less common around town compared to properly secured and weatherized ones. But the practice of passing this deposit on to the borrower needs to be outlawed. City Manager O'Brien deserves applause for his statements and for pursuing the banks on this. 

This is just one more example of an endless litany I hear from people. There often seems to be no logic, rhyme or reason - or decency - to the things these big banks do. Their behavior of toward their borrowers makes a mockery of all of our notions of fair dealing or even what banking is. 

For example, when people run into trouble on their mortgage payments due to some circumstance like a layoff or divorce and go to the bank for help - sometimes just with catching up - many report being told (illegally!) that they need to first be three months behind on their payments. So they let themselves fall three months behind and then find themselves in a nightmare world of negotiations often dragging on for years, leading almost inevitably to foreclosure. Fees and penalties pile up, days spent on hold or re-faxing paperwork the bank couldn't find. 

And just when the borrower thinks they have a deal, the bank invents a new rule - or just forecloses anyway! The example here of a bank foreclosing after having completed the loan modification is typical. 

This is not banking - or even capitalism - as you learned about it in school. These banks are mostly merely servicing loans that have been placed in a trust against which mortgage-backed securities were issued. They notoriously show little concern for recovering the investment. They get handsomely paid out of the trust fund, and their biggest payoff is for the foreclosure! Their victims include the borrowers, the City - and the investors who bought those securities! 

Now we need the City Council to pass Mandatory Mediation next week, which has been highly effective wherever it has been tried. 
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By the way, many of those hollowed-out and semi-fraudulant Mortgage Backed Securities have been purchased by the Federal Reserve Banks as part of their Quantitative Easing programs. The Fed is a private institution, fully owned by other mega-banks, but they issue our public money. Their buying of these securities contributes to a growing lack of confidence throughout the world in the stability of the dollar.

In the end we will all pay the price for this vast system of fraud. 

Why the pause in Foreclosures?

Kat23 (Telegram Comments) has it right about the prospects, why new home sales aren't about to rebound. 

Foreclosures are off because the banks are taking a drubbing in the courts and legislatures and are trying to figure a new way forward. This is because their blatantly unlawful ways are catching up with them - and because homeowners are losing their fear of them and learning how to fight back! 

At every step of the way, from their part in creating the "housing bubble" all the way through to their management of properties post eviction they have been ignoring local, state and Federal laws. From their shady and deceptive practices in selling mortgages that are bound to fail (and then betting against them) to their violation of common sense, decency and legality in their loan modification negotiations, the banks have treated their borrowers as chumps, marks and victims. 

From the dubious legality of their securitization process and all the mortgage-backed securities they've foisted on gullible investors, the sloppy and illegal way they've separated the ownership of the principal from the claim on the income flow and the claim on the fees for servicing the mortgage, and their wholesale failure to follow state laws in transferring ownership from one bank to another, to to the illegal way in which they've prepared, filed and pursued foreclosures (think rob-signing,) they've trashed our entire system of real property and treated the investors as chumps. 

Even in the conduct of the foreclosure itself they've systematically flouted the law. Now we find they have completely, systematically ignored their commitments to the Attorney General in the recent settlement to end the robo-signing. 

Now that this is catching up with them they're pausing, perhaps trying to figure out how to use their control of the Federal Government to bypass our state and local courts and laws. 

In the meantime we should take courage and congratulate each other - those stats tell us we are winning for now! 

Review of Main Street Smarts

Grace Ross’ book “Main Street $marts, Who got us into this economic mess and how we get through it …” is out. But why a book by Grace Ross?

A list of authors of other well-known books about the crisis includes seven professors, three heads of think tanks or consulting firms and two Nobel Prize winners, cabinet secretaries and advisors to Presidents, liberals and conservatives, all Very Important People.

But Grace Ross? Community and housing rights activist? First-time author? Sometime candidate for public office? No PhD? Not even a gig with the IMF or the Treasury Dept.?

First, not one of those other books was written by someone who knows firsthand what is going on, has been hearing what regular people are saying and seeing what they are going through. Not one of them has been working at our sides as we struggle for our rights and for our survival. And this special point of view - the “view from the shop floor”, our point of view – comes through on every page.

For example, in the middle of an analysis of what the banks are doing:

“The craziest thing is that in over two decades of housing advocacy I have never heard what I am hearing from people these days. You knock on their doors and they end up begging you to please make the lenders take their rent or their mortgage payments. Because they are willing to pay, but the lenders would rather foreclose and evict.” (p.85)

Hers is a voice from the boiler room telling us what all the sailors know but the Captain on the bridge doesn’t - or won’t admit: this ship’s in trouble!

The book is thoroughly footnoted, every fact triple-checked, but it is written for regular folk. She even makes derivatives and hedge funds understandable! Snobby people may not like it. Regular folk love it!

And hers is an angry voice. Not blind rage, but the controlled outrage of someone with 26 years of looking the victims in the eye, holding their hands and walking them through the steps of learning to fight back.

The section about the way the cost of living index (CPI) has been gimmicked over the years to hide the real rate of inflation starts with:

“How often do we go to the market and think: ‘How’d that get so expensive?’” (p.200)

Two easy-to-read pages, a well-explained graph and several footnotes later, it ends with:

“Not angry yet? For seniors reading this: Social Security payments would be almost 50 percent more than they are today if they had not messed with the math!”

But why now? Isn’t it almost over? The book itself makes clear why: this ain’t over baby! This mess is just beginning! Sorry, but it won’t end until we all get together to do something about it! The foreclosure crisis? It hasn’t even peaked yet, with 35% of homeowners nationally “underwater” now and the biggest peak of rate resets yet to come! Unemployment? She explains in detail how the real rate is two and a half times higher than the official rate, which mysteriously is dropping even though no new jobs are being created! And then there’s the “Federal Reserve” bubble, trillions of new dollars being created out of thin air to finance the banks, and why that has to end in a disaster that will dwarf the crash of 2008!

And yet, this book is full of reasons to hope. Woven through the book are stories about programs and policies that could turn our state around, and the struggles that have been waged to win them, including a devastating attack on the “Massachusetts Miracle Plan” that “Obamacare” was patterned on and concrete suggestions of how to replace it with a state single-payer plan that really works!

And it has rich proposals on how to work with the small business community to break our dependence on the international mega-banks and start building a new local green-energy economy. Not just why huge tax giveaways and subsidies for Cape Wind or Evergreen won’t work, but also why locally-owned projects like the hugely successful municipal windmills in Hull can and will!

Grace knows all the players on Beacon Hill, has worked with them, haggled with them and helped them craft policies and legislation, and she has a lot of inside-the-hub stories to tell, but there is never any doubt whose side Grace is on.
This is not a “how to get rich off the coming depression” book or a “they’re so stupid, they should have listened to me” book, it’s a book of ideas and tools for people who want to fight back, people who want to save our communities, save our jobs and our homes, take our democracy back.

They’ve got their books about the crisis. This is our book.

You can get Grace's book Main St. Smarts online at www.MainStreetSmarts.com or at independent bookstores listed on it, including Tatnuck Booksellers in Westborough. Paperback, $17.95.

The Foreclosure Issue

Foreclosures is the Elephant in the Room that most Council candidates are dodging.

Worcester has had one of the highest foreclosure rates in the state for the last 3 years. Banks are emptying buildings and leaving them to go to ruin. This blight brings rising crime and homelessness, plunging tax revenues, emptying schools and plunging property values, with a huge proportion of new homeowners throughout the City now “under water”.

Only Grace Ross has made this a central issue, organizing residents and shepherding bills through the Council to keep people in their homes and direct public money for home-buying to city residents rather than outside speculators.