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Monday, January 3, 2011
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24 comments:
Bloomberg.com opinion piece:
"How I Missed the `Housing Recovery' of 2010"
http://www.bloomberg.com/news/2011-01-03/how-i-missed-the-housing-recovery-of-2010-commentary-by-caroline-baum.html
721 South Glebe Road
I think Ace or maybe Reecon suggested I catch a foreclosure auction.
So I went to see a foreclosure auction and instead I saw a crime.
I think we would call it a drive by, except it involved lawyers, bankers and greed, instead of bullets.
the property was purchased in 1997 by a spanish guy.
I think he was married. I didn't get all the facts but while his wife was in Salvador, he refis from
130K note to a $400K note.
(2 Years ago).
the note of course proves unsustainable.
and there is his wife on the courthouse steps crying.
i spoke to her briefly, and while I am not a Lawyer, it sure seems like a couple of things occurred.
1) You can't do a refi without her signature.
2) The refi was shocking and unconsciousable.
3) I suspect some sort of fairly heinous fees and interest was applied.
I suggested she see an attorney, in my poor spanish and sent her on her way.
in a decent society, you can't refi without both parties signatures.
In a decent society bankruptcy is allowed to cram down the rates and principal.
in a decent society you don't let these vultures in
BTW, it was quite interesting, there were 3 people representing vulture investors. They were standing there with cell phones pinging their investors to discuss
bids.
I was the only guy with Cash in hand.
The Trustees rep a very cute woman,
stands up and says "This is for a complete interest in the property and the opening bid is 468,000".
The investors reps snap their phones shut and march away, leaving me and the poor homeowner and one bystander to watch as the trustee called Going once,twice, Gone to the Note Holder.
I had to explain to her the bank had purchased her home, she thought one of us had.
pat,
tks for sharing.
Va_Investor once said to me to 'not believe anything you heard at courthouse steps auctions.' I wonder if that also include the 'victim's' story...
MM
True but my point is bnkruptcy and usury limits would keep the vultures in line.
http://franklymls.com/DC7433631
wow 60% down from Tax Assessment,
2 units, should cash flow.
Downside: Brentwood.
Upside 10 blocks from Metro.
http://franklymls.com/DC7389740
cute place, 10 blocks from Metro.
I don't like the area exactly, it's sort of this pocket zone of suck, but,
it's a good deal
pat-
Its actually good news for the women that the bank purchased the house. If an investor did it they would kick her to the curb very quickly. The bank may take months or longer giving her some extra free rent.
" I didn't get all the facts but while his wife was in Salvador, he refis from
130K note to a $400K note.
(2 Years ago)."
Pat,
Sounds like the husband cashed out $270K? If so, wouldn't this be similar to selling your house for $400K, pocketing $270K, and then living in it for another two years?
Nova,
That is exactly what happened. Wife was not on the title or signed something she did not understand. Hubby has huge $$$.
Jumping to blame lawyers and lenders is reckless.
Hey
I think her husband screwed her, but Cheryl as a lawyer, you know any contract must conform to Virginia law.
Virginia law specifies that "No married man may refinance without permission of the married spouse".
sounds like the mortgage violates state statutes.
Yeah, the bank will take a lot longer to foreclose then any investor, but the whole thing stinks.
"sounds like the mortgage violates state statutes."
Maybe, but more than likely, thats not the case.
You say these people are Salvadorean. I can almost guarantee you, so were the loan brokers.
Early to mid decade, a bunch of Salvadorean predators set up shop, preying on members of their community, saying in essence, "come on in, we will refinance you, & you get to cash in and live the good life".
The homeowners, largely housekeepers, laborers or other hardworking types with limited education and language skills would rely on the Salvadorean connection to give them the sweet hook up.
Of course corners were cut all over the place. Fradulent documents, forgeries, etc. etc. My guess is that the wife signed a power of attorney, coupled with an interest, in english, and the wife knew little or nothing about what she was signing, or what it was for. The husband too, may not have known truly what he was signing as he likely had little understanding of english, and was instead relying on what the brokers were telling him.
I know about this because when I was working with legal aid, we ran across 250-500 cases just like this. In every case, the true criminal was not the banks or the lawyers, but the loan brokers, using their shared ethnic heritage to prey upon their own. A more disgusing spectacle I cannot imagine.
Anonymous You described exactly what happened. I have been working with people like the woman on Glebe Rd. for the last 5 years. It grew out of my doing taxes for older people.
Pat The only good thing is that the woman is more likely to have or get a job than her husband. She might be able to at least rent an apartment when she is finally forced out of the house. Arlington Co is not so helpful when homeowners face these problems, but once they leave the house, Arlington has some reasonably good benefits to help them get into other housing.
"Of course corners were cut all over the place. Fradulent documents, forgeries, etc. etc. "
like i said, fraudulent mortgage practices.
The brokers were agents of the banks.
The banks saw profits and encouraged their agents to do what they could.
"The brokers were agents of the banks.
The banks saw profits and encouraged their agents to do what they could."
No - once the banks realized the guys were comitting fraud we would have them get a court order, go in with the sherriff, and sieze everything.
The problem is, you cant go in, guns blazing, the moment you think someone is comitting fraud - stupid 4th & 5th amendment prevent it. You have to have some sort of tangible evidence to get a court order. All too often the borrowers were complicit in the scheme - so long as prices were going up.
Still, the banks we worked with in this area had their suspicions, they knew it was gonna be their ass at the end of the day. Thus, the moment we had enough proof to convince a judge, they moved in and shut it down.
BTW - I am not talking about all banks here. I know that the countrywides, Wells and WAMU's of the world were encouraging the "pushing of the envelope". I still cant believe Mozillo hasnt been put in jail.
What I am talking about the banks out there who we got in touch with. Locals, regionals, & even a few nationals. I contacted a few where I had my suspicions, but by and large, as a group they were not all "evil banksters" as often portrayed in the blogosphere.
anon
The community banks weren't too bad.
Some sense of probity still resides with them. Also they didn't have access to Securitization, they were
on the hook if it went south.
The majors securitized and institutionalized fraud.
That's the sort of thing, that dominated.
The Banks were Greshams law.
Bad Money drove out the good.
"The majors securitized and institutionalized fraud.
That's the sort of thing, that dominated."
Pat -- im just telling you about my experience. And based on my experience, with probably several dozen "majors" the institutionalization of fraud was the exception rather than the rule.
Bottom line is this. You presented a fact pattern -- a classic example of what I dealt with several hundred times. More often than not, in fact I would go so far as to say 90-95% of the time, the facts revealed it was a case of Salvadoreans preying on other Salvadoreans.
Thus, in this particular instance, it is far more likely that you witnessed something akin to what Recon and I described, versus your "crime involving lawyers bankers and greed". Thats all I was trying to point out here.
Anon,
As far as people getting sold down the road by their countrymen; this was quite evident from the get-go.
The first "public" indication was the surnames in all the Trustee Notice's. Much later we saw arrests of groups of hispanic agents and loan officers. I don't mean to sound racist and I would be better informed to see an actual breakdown by race.
anon
i don't dispute your facts.
what i think you are missing is the big picture.
The sleazeball brokers are nobody without a WAMU or Countrywide or
first american to buy them.
WAMU, CW et al were nobodies without Goldman and Merrill and Wells and Citi to securitize and fund these.
The sleazeballs are just the bag men...
pat-
Personally I think the brokers are the most to blame. The banks didn't dig in hard to whether the brokers were being honest, because they were happy making profits, but the banks were not committing crimes for the most part. The brokers were far more unethical and did most of the illegal activities.
Should the banks have spent more time, energy and money seeing if the brokers were breaking the law? Probably, but most companies (not just banks) tend to overlook illegal behavior from contractors.
Also I am not sure why all blame always ends at Goldman. Using the same arguments you could easily push the blame to pension funds, endowments, sovereign wealth funds... You say that the broker is nothing without Wamu, Wamu is nothing without Goldman, well Goldman is nothing without pension funds. These clients were demanding higher returns and were willing to overlook risk. If the clients did any due diligence rather than just taking on the extra risk they would have refused to buy the MBS so Goldman couldn't continue to pyramid scheme.
My point is not that Goldman is not to blame, but rather that everyone is to blame and that the big banks really didn't do anything that wasn't going on in many other areas.
Pat - If you want to come here and rant about "banksters" and "greed" and "pigmen", and other big picture stuff, thats fine. I am unlikely to dispute whatever you are saying.
Still, dont come here tell us about what is almost certainly a crime of little guys ripping off other little guys (who are insantly shut down by the big guys when they find out about it), and tell us:
"So I went to see a foreclosure auction and instead I saw a crime.
I think we would call it a drive by, except it involved lawyers, bankers and greed, instead of bullets."
Your rant here is against the 1.5 generation immigrants who take advantage of the 1.0 generation immigrants, be they latino, korean, (or german or irish generations before).
In this case, the instrument of the crime was mortgages & finance, but it just as easily could have been a case where 1.5s set up a "pharmacia" yet are dilluting down prescription medicines to take advantage of first generation types.
Granted, if Merck, Eli Lilly, et. al. know about this, and decide not to take any action, then I agree they are as much to blame as the little guys. Still, if the big guys come in and shut down the illegal activity, it certainly isnt an example of "big pharma, greed, and corporate profits".
So again, I fully acknowlege that the "big picture mortgage fraud" happens all the time - this was probably one of the top 3 topics in the early days of this blog. However, that is not what you saw on the courthouse steps that day. What you saw was something different.
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