“This is deadly serious,” Sheila Bair said in a speech Downtown. “Foreclosures are too high in Pittsburgh and around the country.”
The FDIC chairman seems to speaking out more and more in regards to the efforts of lenders and servicers to perform loan workouts and loan modifications. Bair spoke at a downtown Pittsburg, Pa. to more than 100 community-development and mortgage officials. The event was sponsored by the Pittsburgh Community Reinvestment Group, or PCRG, and First Commonwealth Bank, Indiana, Pa.
The federal government will “step up the pressure” on the lending industry to work out America’s mortgage mess so fewer people lose their homes, the chairman of the Federal Deposit Insurance Corp. said Thursday.
The FDIC chairman said mortgage lenders should modify unaffordable, subprime home-loan rates or loan amounts if borrowers are “reasonably current” on their mortgage payments.
“It’s always better for everyone to modify the loan than to foreclose,” Bair said. “It makes economic sense.”
Yes it does, doesn’t it?
But Sheila Bair needs to understand that she can talk about this all day and it will not help too much unless actions is taken and standards enforced. These lenders and servicers are already bottle necked with too many calls and too many faxes and it is getting worse. Yes, many lenders and servicers have stopped playing games on the phone, but that doesn’t mean that hundreds of needless foreclosures are still not happening and going to happen. Even if they started modifying these loans all day long.
They do not have the man power to handle the struggling borrowers that need assistance and are dying from toxic mortgage poisoning. People are getting lost in the mortgage mess and loss mitigation system of frustration and -0eadaches daily. Some servicers are downright predatory and abusive to many people who reach out for help. Causing many to just give up and throw in the foreclosure towel after about the tenth call and sixth fax into phone hell..
I can only imagine how may people that could have been helped that gave up after being hung up on, faxes lost and the rudeness they experience from their servicers.
This all lip service unless we make lenders and servicers hire the necessary man power to properly serve American homeowners that call and need help.
There needs to be standards and guidelines, policies and procedures for borrowers, non-profits, lawyers and the lending industry to work in concert with one another to perform these loan workouts. Right now it’s like we are operating back in the 1980’s in how many of these departments are ran.
“Some borrowers knew what they were doing” when they took such loans, Bair said. “But that’s not the majority. Most are honest, working-class families that have been in their homes many years.”
I have been saying this since day 1 and many of these same people can afford their homes, just not their exploding loans.
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ameriquest is now citilending at least mine is and they are not easy to get intouch with and have there own agenda to foreclose have a company like meridian realty kleen them up and put them back on the market for the magic no. of 239,000 no auction just private behind the scenes presales and private auctions are going one right from preforeclosurebut it is the lawyers that do shady things for these big lender and should be held accountable i personally am going into foreclosure with a ever increasing mortgage and i had filed bankruptcy and made it even worse to really afford all the crazy amount to pay totally not sensable in any way the system is set up that if your credit rating is low because you already connot afford what you got credit on then you usually pay double for your loan making it harder for thelower rating person to be held down by societies standards our government new and is crooked and bankruptcy lawyers are scammers to get you to fail if they can mine did and is going to be investigated when i sue good credit or bad we still have rights i know take a deep breath but i”m just saying wow!
RC – Great post. But my question to you is “Who the hell gave grandma the money to pay for the cruises to Hawaii and pretty things while on Social Security?”
The problem we have isn’t because of grandma, it was the people that allowed grandma to get this money and profited immensely off of grandma. They knew all too well that grandma would never be able to afford this loan long term.
Bottom line is that these loans were made to fail and the people that made these toxic mortgages need to fix grandmas cancerous tumor of a loan. Grandmas happy and Moe’s happy.
Just my 2 Gazillion cents……………………………..
F.B.I. Opens Subprime Inquiry
Philip Shenon and Jenny Anderson contributed reporting.
“The Federal Bureau of Investigation has opened criminal inquiries into 14 companies as part of a wide-ranging investigation of the troubled mortgage industry, F.B.I. officials said Tuesday.
“The F.B.I. said it was looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit.
“The agency declined to identify the companies under investigation but said the inquiry, which began last spring, involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities. It is unclear when charges, if any, might be filed.
“As part of its investigation, the F.B.I. is cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged, and how securities backed by them were valued. State prosecutors are also investigating various areas of the mortgage industry.
\’e2\’80\’9cIt\’e2\’80\’99s significant firepower, depending on how far along the investigation is,\’e2\’80\’9d Carl W. Tobias, a professor at the University of Richmond Law School, said about the F.B.I. investigation.
“The F.B.I. has been warning for years that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 suspicious-activity reports related to mortgage fraud, up from 22,000 the year before and as few as 7,000 in 2003.
“Many of the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.
“State officials have been active in bringing mortgage cases. The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Ohio, Massachusetts, Illinois and Connecticut have also been looking into the industry.
“Earlier this decade, a group of attorneys general reached settlements totaling more than $800 million with two large lenders: Household International, now part of HSBC, and Ameriquest.
“State and federal officials share jurisdiction over the mortgage industry and have often squabbled over who should police it. Many lenders that specialize in making loans to people with blemished credit have state charters, but some of them are owned by or affiliated with federally regulated banks.
“Mortgage companies and Wall Street banks have said they are cooperating with numerous federal and state investigations. The firms have also sued each other and have been accused of various infractions by investors and borrowers in numerous cases.”
http://www.nytimes.com/2008/01/30/business/30fbi.html?_r=1&th&emc=th&oref=slogin
mortgage brokers made a killing, putting people in these sub prime loans. They should be, thrown in jail and be forced to pay back the homeowners money.
I agree with you, Richard, some SOME of the mortgage brokers are criminals, CRIMINALS — but get ready to get jumped on en masse as they rush to defend themselves.
JacMac/Richard,
I’m a broker and let me lend a little light on who should go to jail first. And yes, JacMac is right; you will be attack for your comments before the day is over.
Get ready
You have to jail the source. Wall Street, then the Banks/Lenders, then the brokers and maybe some consumers. It goes down hill. Richard you have to be cognoscente on using that broad statement. For the brokers who outright committed fraudulent acts……..yes they need to go to jail and some are and will. But you have to appreciate the ones who are originating per guidelines, these bad deals. They won’t ever go to jail nor will they be responsible for buying the loans back. For mortgage bankers, the rules are slightly different and they are responsible to some degree for the deals they originate.
Brokers don’t create the rules, they execute them. For that you won’t ever see a broker go to jail because the guidelines have been approved far up the latter before they reach the streets.
The violators are the ones who created income, i.e. w-2 and fake check stubs. Mind you, this should not be mistaken for stated deals. Two different problems.
However, the sad part is that bad advising and suggestions won’t incriminate a broker or a mortgage banker. As it stands brokers are protected by not having a fiduciary relationship with the borrower. It sounds crazy but I can suggest to you whatever and if you do it and it doesn’t work out, then oh well. I don’t agree with it. Not because it’s not a legal rule but its bad for general business.
You also have to appreciate that with the bad products, comes the borrower that wants more than what they can afford and won’t settle for anything less. The industry’s biggest problem is who’s to blame; the product that can legally give the borrower what they want or the borrower not heeding good consul and taking the crazy deal.
Go to the 60 minutes website and view last Sunday’s telecast on the mortgage crisis. They have two couples facing a losing situation on their homes. Who should go to jail on these two deals?
The first couple didn’t read anything nor double check the information they were told or signed at the closing. The husband went as far as to say he didn’t even consider the note adjusting because he wasn’t paying attention to his paperwork. Never mind what the L.O. may have told him, he didn’t even try to protect himself. At the closing table they saw the change up on the paperwork and signed it anyway. They wanted what they wanted. Everyone is wrong here including the borrower.
The second family admitted to knowing exactly what they were doing. They knew exactly what the loan terms were and since the market values went down and paying the note made no sense to them, they said f**k it and will just walk away from the house.
Mind you, they told the reporter that they could afford the note and wasn’t late on the bill. They just didn’t like that their value diminished. Are they wrong? Yes. They wanted what they want and since they couldn’t get it they will walk. The L.O. got them what they wanted but the market changed. Should they go to jail? They knowingly reneged on an agreement they can afford. They just don’t like the outcome. So who is to blame?
I’d say if the industry manipulated the market to create false values than they are to blame. Paying a half a million dollars for a 1850 square foot home is STUPID, from my financial perspective anyway. So I bought one, in Southern California, as an investment as I only planned on holding on to it for 5 to 7 years TOPS! This whole thing was misleading and I feel subject to a CRIMINAL ACT. I need to vacate this website I suppose, because I certainly ain’t paying 500 grand for a house that’s going to be worth 350k next year. THAT IS STUPID! But then again, I guess buying the damn thing to begin with was also. Although, I knew I could afford a 5 -7 year ride in this loan I did not invest or save as heavily as I would have because I thought I would end up with the accruity on my APPRAISED asset at the end of the deal. Even if the market went flat, I would have at least broke even. Subsequently, I have paid twice as much to RENT from Wall Street over the last four years than I would have to just have rented.
Now my credit is RUINED, I may owe these idiots 100 Grand or more for THEIR mistakes. Even if I’m partially to blame, I’m ready and willing to take my share.
This is a fiasco.
Can you tell I’m angry as hell!
Well, I guess I’m gonna go and continue on my free ride – ya right!
By the way, I’ve never been late on my mortgage payment, or any other payment for that fact. I’ve been trying to call my mortgage company for the last four months – relentlessly. They don’t return my calls and they don’t answer my letters – they send my replies to contact their loss mitigation department – who also doen’st answer my calls or my letters.
I have a feeling they’ll be calling now, because I’m not sending them another dime.
Great post but Moe’s response goes back to pointing fingers. As the OP acknowledges, there is plenty of blame to go around but now is the time to figure out what to do about it.
Moe, I bet she had fabulous credit and she went NO DOC. You imply that it was a conspiracy of the lender ’cause they knew she couldn’t pay it.
How would the lender “know” if she is going NO DOC? The only one here to blame is grandma, the only person that knew she couldn’t pay was herself.
Mitchell,
What does it matter if she went no doc, low doc or full doc? if Gramma’s house were actually worth what she was allowed to borrow against it, there would be no housing slump. Isn’t that why you order an appraisal on a home before funding?
Verifying the value of the asset and the risk involved in funding the loan is the lender’s job to ensure they are covered if she doesn’t pay. They sell the home and rover the loss.
Artifically inflate prices on the collateral of loans via hocus pocus and here we are. Unfortunately, they now sell the home and cannot cover the loss. You can’t tell me they didn’t see this coming.
Hello, here goes my first ever post. Wow, someone is not in tune to all of the problems going on here. It is not just grandma, but my husband has had a time of it getting a job. J-O-B!!! One week after we closed on our loan, he and the whole night shift lost their jobs. Now what, no problem, get another one. Right! Where? He has regerstered with 5 temp services and ran out of unempolyment. We have cashed in all we have to make our payments on time. We never have used credit cards, thank the lord. We don’t use paid tv. We don’t go on trips. We can’t make our house payments. I called to be pro-active with no late pays yet. All they could do was a pay plan that was 500.00 more a month. This is with no lates yet. Excuse me, now we stand to loose our home because HomEq won’t work with us. We have been in this house for six years. Where’s the vacation and all of the gold.