Bank Of America Agrees To Slash Mortgages For 200,000 Borrowers! Principal Reduction!

BofA to slash mortgage balances by $100,000 or more


Bank of America will significantly slash mortgage balances for as many as 200,000 borrowers.

As part of the $26 billion settlement reached between the five major mortgage servicers, the federal government and the attorneys general of 49 states and District of Columbia last month, Bank of America (BAC, Fortune 500) customers who qualify could see their mortgages reduced by an average of $100,000 or more, according to bank spokesman Rick Simon.

Those principal reductions are much deeper than the ones originally announced as part of the robo-signing settlement deal.

When the settlement was first announced, the average principal reduction was expected to reduce mortgage balances by an average of about $20,000. Among the five biggest lenders, the reductions are expected to help roughly 1 million homeowners who owe more on their homes than they are worth.

Multi-million dollar foreclosures

The other four banks, JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500), Wells Fargo (WFC, Fortune 500) and Ally Financial, are expected to reduce qualified borrowers' principal to between 115% and 125% of the value of their homes. Bank of America, meanwhile, is aiming to reduce the amount owed on a home to 100% match the current market value.

Bank of America's deal only applies to the mortgages it owns and some that it services for private investors. Loans backed by government-controlled agencies like Fannie and Freddie or insured by the Federal Housing Administration are not eligible for the program.

Many of the mortgages Bank of America plans to refinance came to the bank through its 2008 acquisition of Countrywide Financial, which issued many high value loans called jumbo mortgages that exceeded the loan limits of Fannie Mae (FNMA, Fortune 500), Freddie Mac (FMCC, Fortune 500).

A large percentage of those loans were issued in some of the country's hardest hit housing markets, including California, leaving many of Bank of America's mortgage borrower's deeply underwater on their mortgages, said Simon.

The bank has already identified the 200,000 or so borrowers that it will offer modifications to and will start to reach out to them as soon as a D.C. federal court approves the settlement.

"We expect to get off to a fast start with this program," said Simon.

There are incentives to do that. If the bank is able to demonstrate that it faithfully carried out the provisions of the attorneys general's foreclosure settlement -- as well as a separate settlement in which it agreed to reimburse HUD $1 billion to cover problems originating FHA loans -- over the next three years, it can be forgiven $850 million in penalty payments, said Simon.

The bank has also agreed not to pursue foreclosures against any delinquent borrowers who might be eligible for a mortgage modification as part of the settlement.

It will also reform its foreclosure processing to avoid repeating robo-signing abuses, in which bank employees signed hundreds of documents a day, testifying to statements they had no knowledge of.

Million-dollar foreclosures rise as rich walk away

The deal is one of a series of government-led initiatives aimed at tackling the foreclosure crisis. The latest effort came on Tuesday when the Obama administration announced a plan to reduce refinancing costs for FHA-insured loans.

The U.S. Department of Housing and Urban Development (HUD) advises borrowers who believe they were subjected to foreclosure abuse and may be eligible for a mortgage modification under the settlement to call their servicers and ask for a review of their cases.

HUD said once the agreement was submitted to a court for approval, which was expected to happen on Friday, it would hold a press conference to go over the details.


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Sources: Bank Of America, CNN, Wikipedia, Google Maps

America Rapidly Spiraling Into GOP Engineered Double-Dip Recession

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10 signs the double-dip recession has begun

Friday's news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

The U.S. has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29 percent of those queried thought the economy was in a “depression” and 26 percent said that the original recession had persisted into 2011.

It is any wonder that many Americans believe that the economic downturn is still in progress? Home prices have fallen to 2002 levels. Values have dropped nearly 50 percent in parts of Florida, California, Nevada and Arizona. Property values are also down that much in parts of troubled big cities like Detroit. Estimates are that as many as 11 million homes have underwater mortgages. Banks have inventories of as many as 2 million foreclosed homes which have not even been released to the market. Home prices could fall another 10 percent if current trends persist.

Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs. Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.

There are several signs that a recession is firmly in place again and that the downturn could last for several quarters. Most are already easy for the average American to see.

1.) Inflation

There is almost nothing that damages consumer confidence as badly as a rapid rise in prices. Starbucks recently increased the price of a bag of coffee by 17 percent because wholesale prices have risen by almost twice that rate in the last year. Cotton prices nearly doubled in 2010 but have fallen this year. But, apparel is made months in advance of when they reach store shelves. Summer clothing prices are up as much as 20 percent. That may change in the fall, but for the time being, the consumer’s ability to buy even the most basic clothing has been undermined. Consumers today pay more for sugar, meat, and corn-based products as well.




2.) Investments have begun to yield less

Part of the recovery was driven by the stock market surge which began when the DJIA bottomed below 7,000 in March 2009. The index has risen above 12,000 and the prices of many stocks have doubled from their lows. As result, American household nest eggs that were decimated by the collapse of the market have rebounded and enabled people to splurge on themselves. However, the market has stumbled in the last quarter. The DJIA is up only 1 percent during the last three months and the S&P 500 is down slightly.

Americans, though, have few other places to put their money. Ten-year Treasuries yield about 3 percent. Gold was a good investment over the last year, but it has begun to falter as well. The market may not be a friend to investors for quite some time.

3.) The auto industry

The auto industry has staged an impressive comeback, although its profitability is based as much on the layoffs it has made over the last five years as generating new sales. GM and Chrysler have emerged from bankruptcy. Year-over-year monthly sales improved late last year and through April. May sales stalled. GM’s revenue dropped by 1 percent compared to May of 2010. Ford’s sales were down about as much. There are many reasons for this trend including high gas prices and the constrained manufacturing capacity of the Japanese automakers because of the earthquake. Consumers also may be deferring big purchases because they are worried about their economic prospects. Slow car sales are not just a sign of lagging consumer confidence. They also may be a harbinger of tougher times ahead. These companies shed several hundreds thousand jobs before and during the last recession. Car firms have only just begun to hire again, but that trend will die with a plateau in sales.

4.) Oil prices

Oil prices are supposed to drop as the economy slows as they did in 2008 and early 2009 when crude fell from over $140 to under $50. That drop at least allowed consumers and businesses like airlines to more easily afford fuel. Recently, crude has moved back above $100 and appears to be stuck there regardless of the economic situation. American budgets have been hurt by the rising cost of gas. Americans of more modest means have been particularly affected. A slowdown in driving usually also leads to a decline in the retail sector as consumers reduce unnecessary travel to stores. The impact on other businesses is just as great. Airlines suffer and so do firms which rely on petrochemicals. OPEC, for now, has signaled it will not increase production.

5.) The federal budget

The federal budget deficit has decimated any chance for another economic stimulus package which many prominent economists like Nobel Prize-winner Paul Krugman say is essential to create a full recovery. His theory has become more of an issue as GDP growth slows to a rate of 2 percent. The first $787 billion Obama stimulus package may have saved some American jobs, but it is long over and did not work if a drop in unemployment and a sharp improvement in GDP were its primary goals. The deficit has caused a call for severe austerity measures which have already become part of the economics policies of countries from Greece to the U.K. to Japan. Job cuts in the U.S. will not be restricted to the federal level.



A recent UBS Investment Research analysis predicted that state and local governments will cut 450,000 jobs this year and next. That process is already well underway. States like California and New York currently run massive deficits and the rates they must pay on bonds has risen accordingly. Newspaper headlines almost daily report on battles between state unions and governors over employment and benefits.

6.) China economy slows

A slowdown in the Chinese economy is usually seen as a cause of global commodity price inflation, but the effects cut two ways. China’s appetite for energy and raw materials may fall. But, the demand for goods and services by its very large and growing middle class drops as well. Chinese purchaser manufacturing and export numbers have fallen as the central government has tightened the ability to borrow money. US exports to China are key to the health of many American businesses.

John Frisbie, the president of The US-China Business Council, recently said, "Over the last decade we have seen exports to China rise from $16.2 billion to $91.9 billion — a 468 percent increase.” As that rate slows, it has a profound effect on tens of thousands of American companies and their employees. U.S. firms with large operations in China are also effected. GM is one of the two largest car firms in China along with VW. Large U.S. corporations like Wal-mart and Yum! Brands rely significantly on China to boost global sales. Without vibrant consumer spending in China, American companies will suffer.



7.) Unemployment

Unemployment creates two immediate problems. People without jobs drastically curtail their spending, which will ultimately affect GDP growth. The second is the need for tens of billions of dollars every year in government aid to keep the unemployed from becoming destitute. That support has increased deficits and the domino effect is that cash-strapped governments need to make more spending cuts. It may be the biggest challenge the economy faces.

Unemployment has worsened because people over 65 to continue to work because the values of their homes — which they once counted on as the financial basis of their retirements — have dropped so sharply. Older Americans also fear that cuts in Medicare and perhaps Social Security are inevitable which increases the cost of their golden years. The jobs that older Americans have taken are often ones that younger Americans might have. People in their 20s must accept low wages to enter the workforce. This has delayed their prime consuming years well into their 30s which will damage GDP recovery now and for another decade.

The worst of the unemployment problem is the roughly 5 million Americans who have been unemployed for over a year. Their unemployment benefits have run out in many cases. The burden of their care falls to their families, friends, community organizations and non-profits. A family which has to support an unemployed person may be a family which cannot spend beyond its basic needs. To the extent that the federal or state governments can support the unemployed, the cost to run support programs increases.

8.) Debt ceiling

The United States debt ceiling, currently at $14.294 trillion, will probably be raised before the government has to cut back essential services on Aug. 2. It might seem that the economic and employment effects of the debt cap are the same as the deficit, but they are actually more insidious and longer term. The first by-product of debt reduction, or at least a slowdown in its growth, is a combination of higher taxes and a lower level of government services. Higher taxes usually slow economic improvements, particularly when they are not coupled with stimulus measures.

A number of economists have pointed out the expense reduction alone will not sharply improve the United States balance sheet. The increase in Medicare and Social Securities costs, brought on by an aging population, are also likely to trigger a need for higher taxes. Tax increases could keep the economic growth of the US on hold for years. The taxation of companies decreases and often eliminates profits, particularly during an already troubled economic period. Profits which disappear usually cause cuts in purchasing and jobs. Taxes on wages and inheritance undermines consumer spending. And, a growth in national debt from already all-time highs will increase the borrowing costs of the U.S. That, in turn, drives up interest rates for everything from mortgages to credit cards.

9.) Access To credit

The lack of access to credit has hurt the economic activity or both individuals and small businesses. Many very large companies can borrow money at rates as low as 2 percent because of their strong cash flows and balance sheets. Banks have been much less willing to loan money to companies with under 100 workers because these firms often rely on a few customers for revenue and usually have very little money on hand.

Early in June, the House Small Business Committee held hearings and among its findings were that concerns about risk and a slow economy has made financial institutions reluctant to lend to small businesses, the main driver of economic growth. Committee Chairman Sam Graves (R-Mo.) said Congress will need to “bridge the gap” between the two sides. There is no plan to accomplish that. Individual borrowers find themselves in a similar position. The cost of credit cards debt is still above 20 percent in many cases although the Federal Reserve loans money to large financial firms for interest rates close to zero.

Potential home buyers, who might help break the gridlock of slow house sales, often find that banks want down payments as high as 20 percent. The median down payment in nine major U.S. cities rose to 22 percent last year on properties purchased through conventional mortgages, according to an analysis done for The Wall Street Journal by real-estate portal Zillow.com. That percentage doubled in three years and represents the highest median down payment since the data were first tracked in 1997. Homes which are not sold often put such great burdens on owners that they are barely consumers of the goods and services that drive GDP. Home builders have continued to struggle. Construction jobs, which were a huge amount of the employment base in states like Florida, have not returned.

10.) Housing

Housing is considered by many economists to be the single largest drag on the American economy, and the housing market has gotten much worse in the last two months. A report from The New York Federal Reserve published early this year said: “When home prices began to fall in 2007, owners’ equity in household real estate began to fall rapidly from almost $13.5 trillion in 1Q 2006 to a little under $5.3 trillion in 1Q 2009, a decline in total home equity of over 60 percent.”

Real estate research firm Zillow reported on more recent developments. “Negative equity in the first quarter reached new highs with 28.4 percent of all single-family homes with mortgages underwater, from 27 percent in Q4.” Many homeowners who want to sell their homes cannot do so because they cannot afford to pay their banks at closing. Whether for good or ill, the American home was the primary source for money used for retirements, college educations and the purchases of many expensive items such as cars.

Economists point out the this leverage helped contribute to the credit crisis as people could not cover the costs of home equity loans as real estate values collapsed. This may be true, but the drop in value happened so quickly that the balance sheets of millions of Americans were destroyed. Their ability to consume was severely damaged, further harming GDP. High mortgage payments bankrupted or nearly bankrupted people who have lost jobs or have found that their incomes had stagnated. The building industry became a shambles overnight. And, whatever the effects have been over the last three years, they are getting progressively worse as home values drop to decade lows. There is no relief in sight because potential buyers worry that price erosion has not ended.


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Sources: CNBC, MSNBC, Russia Today, Youtube, Google Maps

Credit Reporting Agency Monopolies Destroy Lives! Millions Held Hostage! (Videos)

Credit Error? It Pays to Be on V.I.P. List

The credit rating bureaus, whose reports influence everything from credit cards to mortgages to job offers, have a two-tiered system for resolving errors — one for the rich, the well-connected, the well-known and the powerful, and the other for everyone else.

The three major agencies, Equifax, Experian and TransUnion, keep a V.I.P. list of sorts, according to consumer lawyers and legal documents, consisting of celebrities, politicians, judges and other influential people. Those on the list — and they may not even realize they are on it — get special help from workers in the United States in fixing mistakes on their credit reports. Any errors are usually corrected immediately, one lawyer said.

For everyone else, disputes are herded into a largely automated system. Their complaints are often electronically ferried to a subcontractor overseas, where a worker spends, on average, about two minutes figuring out the gist of the matter, boiling it down to a one-to-three-digit computer code that signifies the problem — “account not his/hers,” for example — and sending a dispute form to the creditor to investigate. Many times, consumer advocates say, the investigation translates to a perfunctory check of its records.

“The legal responsibility of the credit reporting agencies and of the creditors is well established,” said Leonard Bennett, a consumer lawyer in Newport News, Va. “There is a requirement that they do meaningful research and analysis, and it is almost never done.”

Consumers who have trouble fixing errors through the dispute process can quickly find themselves trapped in a Kafkaesque no man’s land, where the only escape is through the court system.

“You are guilty before you are proven innocent in a situation like this,” said Catherine Taylor, 45, of Benton, Ark., who said she had been denied employment and credit because her filing was mixed up with a felon who had the same name and birthday.

Judy Johnson of Bossier City, La., was confused with a less creditworthy Judith Johnson, with a similar address and Social Security number. For nearly seven years, Judy Johnson, a 63-year-old credit manager for a building supply company, said she tried to remove the black marks from her credit report. But when she was denied a credit card, she knew the problem had returned — a third time. “This time, I was livid,” she said.

She ultimately brought a suit against one of the bureaus, and recently settled for an amount she cannot disclose. But the problems still linger. A deputy sheriff recently came to her door to serve her papers for a debt she says she does not owe.

The credit rating bureaus, private-sector companies that each attempt to track all American consumers’ credit use, have grown much more powerful over the last couple of decades as credit has become a crucial cog in the nation’s financial system. Their reports are used to formulate the all-powerful credit score, which lenders use to determine creditworthiness.

But as the bureaus’ work has become more important, consumer advocates say, regulation has not kept up, in large part because their overseer, the Federal Trade Commission, lacks broad authority. That could change once responsibility for the credit bureaus shifts to the new Consumer Financial Protection Bureau, which will be able to write rules and examine the credit agencies’ policies.



The bureaus, meanwhile, do not have an economic incentive to improve the system, consumer advocates say, because their main customers are the creditors, not consumers.

“There is no neutrality in the credit reporting agencies,” said John Ulzheimer, who has been an expert witness in more than 80 credit-related cases and is president of consumer education at SmartCredit.com. “They work for the lenders who buy credit reports from them, and anyone who suggests otherwise is not being intellectually honest.”

When asked about the V.I.P. category, TransUnion said all consumers “have the ability to speak to a live representative.” Equifax said consumers who received a free copy of their credit report were provided with a number for customer service.

Experian denied that it had V.I.P. lists. But a spokeswoman did say that prominent people deemed high risk — like politicians in an election year — might have their credit files taken offline so that creditors or other companies making inquiries could not get access without the bureau’s permission. Experian said those people did not receive any other special handling.

David Szwak, a consumer lawyer in Shreveport, La., who has handled dozens of credit cases, said that the V.I.P. designation and preferential treatment did exist at Experian, and he provided sworn testimony from former Experian employees that the category existed.

Estimates of credit reports with serious errors vary widely, anywhere from 3 to 25 percent. A recent study, paid for by the Consumer Data Industry Association, the trade group for the bureaus, found potential errors in 19.2 percent of reports, but said that less than 1 percent of them had disputes that, when settled, resulted in a meaningful increase in scores. Even 1 percent translates into millions of consumers, since there are at least 200 million files at each of the bureaus.

The F.T.C. is expected to deliver a nationwide study on credit report accuracy next year that could provide more clarity. It could also include recommendations for legislative action.



The volume of disputes has been rising as consumers borrow more and gain greater access to credit reports. The automated system was a response to that. A spokesman for the trade group said most consumers received an answer within 14 days.

Experian is the only bureau that still processes disputes in the United States, experts said, though most complaints wind their way through the same online system — unless the dispute involves a V.I.P.

“They get a lot more high-end treatment,” said Mr. Szwak, the lawyer, who has read the bureaus’ internal procedure manuals and deposed or cross-examined employees. The biggest difference at TransUnion and Equifax, lawyers said, is that V.I.P.’s disputes are specially handled domestically. Regular consumers’ files, meanwhile, may get priority treatment if they involve a time-sensitive issue, like a mortgage pending, or if the consumer is represented by a lawyer or dealing with fraud.

Last year, new rules went into effect to strengthen existing regulations on the accuracy of reports. The rules also allow consumers to dispute errors directly with the creditor. But critics say the rule lacks any teeth because consumers don’t have the right to sue the companies. (Individuals can, however, sue the bureaus and creditors after lodging a dispute through their system.)

But the problem, advocates say, is that consumers cannot vote with their feet. “They cannot remove their information from the bureaus,” said Chi Chi Wu, a staff lawyer at the National Consumer Law Center, who wrote a report on the automated dispute process in 2009, “or take their business elsewhere.”


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Sources: NY Times, Wikipedia, Youtube, Google Maps

Bank Of America & Countrywide's $8.5B Settlement Jeopardizes Homeowners (More Foreclosures)

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy

Bank of America settlement could speed foreclosures


Investors who bought bonds backed by shaky loans scored a major victory Wednesday with the announcement that Bank of America will pay more than $8 billion to make up for some of their losses.

Homeowners on the other end of those shaky mortgages — especially those most at risk of foreclosure — may have less to cheer about.

In the largest settlement to date related to the rogue mortgage lending wave, Bank of America said Wednesday it would pay $8.5 billion to settle claims with investors holding about $100 billion worth of mortgage-related securities sold by its Countrywide unit. The winners include 22 large investors such as Pimco, Metropolitan Life and BlackRock, as well as the Federal Reserve Bank of New York.

Aside from their claims that Countrywide sold them bonds backed by faulty loans, the investors argued that by continuing to service bad loans rather than speeding up foreclosures, the Bank of America unit ran up servicing fees, profiting at the expense of investors.

As a result the settlement includes a promise to hire additional “subservicers” to speed up the foreclosure process for high-risk loans. That means Bank of America borrowers whose foreclosure have been on hold may now see the process accelerated.

“Living with the uncertainty of foreclosure can’t be a pleasant experience,” said Bank of America spokesman Jerry Dubrowski. “The sooner we can deal with that overhang the better for the economy.”

Bank of America also faces considerable uncertainty as it continues to try put its mortgage woes behind it.

While the bank said its settlement would resolve "nearly all" its exposure related to mortgages issued by Countrywide, only holders of about a quarter of the securities have agreed to support the deal. Hundreds of investors holding an additional $300 billion worth of securities have yet to agree to the settlement, which also is subject to court approval. There are no guarantees that the remaining investors will go along.

“It is not possible to predict whether and to what extent challenges will be made to the settlement or the timing or ultimate outcome of the court approval process,” Bank of America said in its press release announcing the settlement.

At the height of the boom, rising home prices allowed mortgage originators to replace failed loans with freshly written performing mortgages. Lenders, investors and borrowers all assumed that there was little risk in churning out new mortgages — even if they were based on flawed information — because even if a loan defaulted, the rising value of the home securing it would minimize any potential losses.

But when home prices began falling, many of those bad loans came back to haunt the companies that had underwritten them. With demand for new mortgages drying up, there weren’t enough new loans to replace the ones that were going bad.

Now investors holding bad mortgages are demanding that lenders buy them back. Those investors include government-controlled lending giants Fannie Mae and Freddie Mac. In January, Bank of America paid $2.8 billion to Freddie and Fannie to buy back mortgages.

Bank of American concede in its press release Wednesday that that it “is not currently able to reasonably estimate” how much more it may have to pay to the two entities for losses on mortgage investments.

It’s also still not clear just how big the mounting losses on mortgage investments will be. With home prices still falling and mortgage defaults rates high , losses on foreclosed homes are hitting even those investors holding top-rated bonds. The ultimate cost of the claims will depend on how many more homes are lost to foreclosure and how much further home prices fall.

Bank of America also faces a potentially large payout to all or some of the 50 state attorneys general, who have been investigating abuses by the biggest mortgage servicers. The state officials are pressing the largest banks, including Bank of America, to pay up to $30 billion in fines and penalties. If a unified settlement can’t be reached, Bank of America could face multiple legal challenges from states that decide to pursue claims on their own.


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Housing Slump & Foreclosure Remedy? Section 8 Voucher Renters!

Housing vouchers a golden ticket to pricey suburbs

It was clear that Liza Jackson’s luck had changed when she drove her pearl-white Dodge sedan, the one with the huge pink plastic eyelashes over the headlights, into Pinebrook, an eight-year-old subdivision where residents tend to notice cars with huge pink eyelashes.

“There goes the neighborhood,” one homeowner said when she heard that her potential new neighbor had a federal housing voucher known as a Section 8.

But Jackson could well be Pinebrook’s salvation, a means by which landlords can rent an empty, crime-magnet of a house to a tenant with a steady, government-backed check.

From Jackson’s point of view, the dismal housing market appeared as a glorious reversal of fortune: Fresh swaths of suburbia were opening up to the very people it has so often excluded.

She had seen one house, and now she rolled up to another, a tan three-bedroom with red shutters. She got out and looked around, a vaguely glamorous vision crossing the grass in a long, leopard-print dress. She peeked into the windows, making out what appeared to be vaulted ceilings.

“Dang,” Jackson said approvingly.

She put the house, a foreclosure turned rental, on her list of possibilities.

The reasons for this irony are mostly familiar. A steadily dropping homeownership rate, 5 million to 11 million more foreclosures in the pipeline, and a raft of investors buying them up have led to a proliferation of rentals in the land of lawns and cul-de-sacs.

But as housing prices keep slipping and the economy remains shaky, there’s been another shift as more landlords view the approximately 2 million American families with a Section 8 voucher — which essentially subsidizes fair-market rent for people who can’t afford it — as among the best ways to fill an empty house.

“It’s guaranteed money,” said David Benham, who owns several rental properties and is a founder of the Benham REO Group, which sells bank foreclosures to investors in 35 states. “It has a great accountability program with the renters. I love Section 8. I wish every one of my properties was Section 8.”

So for a group of Americans previously blocked from certain neighborhoods by “not in my back yard” politics, high prices and a lack of rental options, this is a minor bonanza. Those with a Section 8 voucher, a key federal program for the poor, are a fraction of those who need it; waiting lists are full and years long. But they are a lucky fraction. In the recession-era economy, the voucher is becoming a golden ticket to almost anywhere, a point hardly lost on Liza Jackson, whose cellphone was now ringing Lil Wayne.

“Yes?” she said, answering in the prim manner she described as her “white voice.” “I had called about the four-bedroom, two-and-a-half bath? Yes. Liza. Like Minnelli.”


Jackson and her daughter Sheena, 24, were saying goodbye to a cramped two-bedroom townhouse in Honolulu, a city she described as “not all it’s cracked up to be, if you’re black,” and “all high maka maka,” which is Hawaiian slang for unduly expensive.

Jackson had planned the move for months, perusing rentals on Section 8 Web sites that offer everything from chic new condominiums in Miami to four-bedrooms in Phoenix, Las Vegas and Atlanta. Jackson decided on Charlotte, where she could get more square footage for her family, which included Sheena, Sheena’s 5-year-old son, Shamahrie, and her two dogs, Coco Chanel and Mamacita. She saved up from her job as a baker, shipped the car and booked a room at a cheap hotel off the Billy Graham Parkway.

Now it was early June, and she and Sheena were at a briefing at the Charlotte Housing Authority office, a normally dreary place that was bustling like a booming real estate firm.

By 8 a.m., more than two dozen hopeful people were streaming in, having taken overnight buses from New York, Baltimore, New Jersey and elsewhere, where they lived in public housing, or run-down neighborhoods, or places they hoped to escape.

“I want to be around all this fresh air,” said Evelyn Lifsey, who was moving from a Staten Island public housing project. “My moving truck is on standby.”

A housing counselor ended the briefing by handing out a list of Zip codes.

“These are areas with better amenities, more jobs, better schools,” she said, encouraging people to scout them.

Jackson received a folder with her voucher, a prized possession that people spend years on waiting lists to acquire. Jackson’s was $1,032, possibly more if utilities were included or if she found a place in a pricier Zip code. Her contribution was about $200 a month.

She looked over the list of houses she’d compiled: a few older homes and others in subdivisions such as Linda Vista, Running Deer and Pinebrook, a tidy if slightly fraying neighborhood where some homes once sold for $180,000.

“I don’t want to live in some ghetto,” Jackson said in the brawny tone of her native Boston, and it seemed she would not have to. Soon, she and Sheena were zipping down Interstate 85.

It was a sunny afternoon in Charlotte, an ambitious city of mirrored skyscrapers and green suburbs whose last big wave of house hunters was full of bank employees, high-tech workers and other professionals.

Now there was Jackson, who receives unemployment, and Sheena, who gets child support for Shamahrie. Riding along, they fielded calls from agents, some of whom seemed quite eager.

“Yes, hello, Debbie!” Jackson said into her phone.

“Yes, I did receive my voucher,” she said to another agent.

“Yes, I did get my voucher,” she said to another.

Their list of possibilities was growing.

“Just look at all these trees!” Sheena said as they sailed past a blur of highway forest.

“Here you can just drive and drive,” Jackson mused, imagining a better life.

If she was cramped in Honolulu, here she had higher standards. At least three bedrooms. Hardwood floors, preferably. An open kitchen.

They wound their way to the first address, which turned out to be the sort of Section 8 offering typical of the boom years: a small, 1970s-era brick number with dirt patches in the front yard.

“I’ll put ‘[Heck] no’ next to this one,” Jackson said, making a note.

She hit the gas, passing two young men in shorts and tank tops.

“Uh-oh, street punks,” Jackson said, further disqualifying the area.

She steered back onto the interstate, and after a while exited onto Sunset Road, a winding, semi-rural stretch with a run of white split-rail fencing.

“Oooh,” Sheena said, impressed.

They passed a couple of young men in shorts and T-shirts walking along the road.

“Uh-oh, street punks?” Jackson said, unsure which class distinction applied.

“Nah, they look like some going-to-school street punks,” said her daughter, who claimed a finer social radar.

They pulled into Linda Vista, a winding maze of 2,000-plus-square-foot homes.

“This is quiet livin’,” Jackson said, rolling along. “I’d hate to see something ghetto in here.”

Most yards were well kept, though a few were weedy, and here and there, vinyl siding was curling off houses. There was a Mercedes-Benz in one driveway, and old trucks and minivans in others. There were some vacant homes.

They pulled up to one, a gray three-bedroom with a white picket fence. They walked around the house, gold sandals in the clipped grass, and looked through the windows. Sheena was sure neighbors were staring.

Jackson knew that despite stereotypes people might have of Section 8 tenants, she would be an ideal neighbor for these economic times. She had cleared up her credit. She had savings, enough to pay her share of the rent in advance. She was upstanding, planning to attend school to become certified to draw blood. And once she moved, she would stay.

She was what Linda Vista needed, she realized: stability.

If Jackson decided to apply for it, she would contact the owner, Sabre Value Asset Management. The house, which the firm bought in a short sale for $90,000 last year, is one of about 150 it has acquired across Charlotte and Atlanta. All are rentals.

“Our goal is to try to provide a win for everybody,” said the firm’s president, Aaron Edelheit, describing the enterprise as a stabilizing force.

Jackson’s possible Linda Vista neighbors were warming up to that idea.

“I have nothing against Section 8,” said Cassandra Coleman, a homeowner. “Rich, poor, anyone can be a good or bad neighbor.”

She had been laid off from Bank of America for three years. Her mortgage was in trouble. She spoke with the sense that she could probably use a voucher herself.

Jackson realized that her own good fortune was partly due to such misery, but mostly, she and Sheena were thinking about a huge walk-in closet they’d seen.

“You know how many shoes you can put in there?” Sheena said. “I’m trippin’.”


After several days of looking, Jackson had seen at least a dozen houses that were supposed to represent the rewards of middle-class betterment but that were beginning to strike her as a bit shabby or “peasy.”

She did not want some of the peasy carpet she’d seen, or peasy refrigerators or dented, peasy front doors.

She drove again along Sunset Road, which she had decided was not peasy, at least not yet.

She drove by Elizabeth Oaks, one of the newest and most upscale subdivisions, where the builder had recently pulled out. The model home was now a rental.

She drove into Pinebrook, where one resident had dreaded the notion that a Section 8 tenant might move in. Others took a more practical view.

“If you don’t let go of your hang-ups, you’re going to be stuck with an empty house,” said Crystal Campbell, a homeowner who got laid off from Bank of America and recently found a job in the corporate offices of the Family Dollar discount chain.

By now, Campbell had accepted the revised facts of her existence. She could not move because her home’s value had dropped by half. Section 8 renters were not the enemy of Pinebrook but the friend. The house next door needed a tenant.

But Jackson was ever more discerning, and she wasn’t sure about Pinebrook. There were other places to consider. She had so many choices, including a renovated 2,500-square-foot “gem!” beyond I-485. With her Section 8 voucher in hand, she got in the sedan with the pink plastic eyelashes and headed there next.


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Sources: Washington Post, Youtube, Google Maps

Florida Activists Exposes Banking Industry Foreclosure Docs Scam

Florida Activists Read Between The Lines On Foreclosure Paperwork

Nearly a year before the national furor over foreclosures began, Lisa Epstein, a nurse, ran into three other amateur sleuths who separately were investigating shoddy practices at mortgage companies.

While meeting for the first time in November at an old one-story law office in this city, the four strangers compared notes and began to piece together the scope of the problem: All over the United States, big financial firms might have been using fraudulent paperwork to evict struggling borrowers from their homes.

Now tight-knit, the group is largely responsible for setting off the growing firestorm over foreclosures.

Epstein, a Fairfax County native who became an activist after she lost her job and became unable to pay her mortgage, launched a grass-roots movement against the country's largest banks, which are facing the prospects of billions of dollars in soured loans and legal expenses.

Joining her were Michael Redman, whose foreclosure blog drew the White House into the controversy, and Thomas and Ariane Ice, who run a boutique law firm that was the first to depose "robo-signer" Jeffrey Stephan of Ally Financial's GMAC mortgage unit in December.

In addition to trying to educate the public about the issue, the group had also been quietly passing along stacks of problematic documents to state and federal regulators, lawmakers, judges and law enforcement officials.

They pointed out that document processors such as Stephan had admitted in sworn depositions that they had signed off on up to 10,000 foreclosure documents a month, even though they had not reviewed them as legally required. They also shed light on foreclosure cases in which the paperwork appeared to have been backdated, forged or improperly notarized.

Now, at least five major mortgage companies have frozen some foreclosures. Attorneys general from each state have joined forces to investigate, and a federal task force is considering criminal charges in the matter. Some bank stocks have fallen on concerns that the issue of flawed paperwork could be a coverup for something even more serious. And economists worry that the fragile housing market, where one in four houses on sale is in foreclosure, could take a devastating hit.

Although the uproar over foreclosures might seem sudden, for the activists, it was a long time coming.

Epstein, 45, a George Mason University graduate who moved from the Washington area to Florida for the sunshine 13 years ago, first began to suspect something was wrong in February 2009 after she was served foreclosure papers without any acknowledgment that she had applied for a loan modification.

Redman, 35, said he knew there was a problem as early as January 2008, when he was trying to help his fiancee fight foreclosure and noticed that one of the key documents that proved ownership of the loan had suspicious signatures.

The Ices' eureka moment came late one night in early 2009 when Ariane was looking at the 700 cases in their database and noticed that a lot of the problematic paperwork had been signed by the same people.

As the four of them continued to investigate the issue, the months became filled with self-doubt.

"Plaintiffs' attorneys were scoffing at us; judges were laughing. You get to the point where you think, 'Maybe I'm the crazy one,' " said Thomas Ice, 50.

The group members, who are on the east coast of Florida, where nearly half of the homes on the market are in foreclosure, was soon joined by like-minded lawyers, homeowners and activists on the west coast. Together, the growing movement began to organize events at bar association meetings, host happy hours for distressed homeowners, and follow prominent public officials wherever they were speaking to get their attention. They launched Web sites to get the word out to homeowners' attorneys around the country.

Larry Schwartztol, a New York-based staff lawyer with the American Civil Liberties Union, has been working with Epstein's group to investigate whether Florida courts violated due process by short-circuiting normal procedures in foreclosure cases. He said the research the group is doing is "extremely impressive" and "indispensable."

Although there was no formal organization behind their effort, each of the activists took on distinct roles.

The Ices and seven other lawyers at their firm began deposing "robo-signers" at major mortgage companies, and, in an unusual move in the competitive legal industry, they began distributing the transcripts online.

Homeowners' lawyers nationwide began using the documents to defend their clients. Thomas Cox, a lawyer in Maine, saw Ice Legal's deposition of Stephan, the Ally robo-signer, and decided to depose him again for a case in his state in June. Cox was able to get his client's foreclosure judgment vacated.

Redman, who had been working in marketing for the online department of a local car dealership, set up a Web site, 4closurefraud.org, where he aggregated and analyzed key court documents related to faulty foreclosures. It was an instant hit - the Huffington Post of foreclosures - with Redman's snarky commentary, use of large pictures and graphics to explain complex subjects and his apparent glee - signified by an animated laughing "Jerry"- when he discovered a new way to attack the banks.

It was Redman's Web site, which is now being funded by a local lawyer, Carol C. Asbury, that took the lead in drawing President Obama into the foreclosure controversy this month by making a major issue out of a little-known notary bill, several lawyers around the United States said. Redman said that a reader had e-mailed him about the bill that had sailed through the Senate and was sitting on Obama's desk. The bill would make it easier to foreclose because notary signatures would be valid across state lines.

Epstein, a single mom who once worked as a cancer nurse, became the group's liaison to homeowners, setting up an online discussion site for them to vent their frustrations and debate strategies.

For months, she fired off up to five letters a night to officials, judges or anyone she could think of after her daughter went to sleep. Her letters were prone to hyperbole, but her explanations of the potential for fraud in various steps of the foreclosure process were laid out. In one, she wrote to the Florida Supreme Court: "I am outraged by the perfidious harvest poisoning the financial and emotional well being of individuals worldwide due to the appalling opportunism of Wall Street's historic, unrequited love affair with mortgage backed securities."

The first major lender to take corrective action on foreclosures - Ally Financial, which is majority-owned by the U.S. Treasury - has declined to comment about what prompted it to freeze foreclosures Sept. 20, but Epstein, Redman and the Ices say they and others who are defending homeowners applied so much pressure on the company that it would have been difficult for it not to act.

On April 28, one week after the four activists had staged a rally at the courthouse in the state capital, they had their first major breakthrough: The Florida attorney general's office announced an investigation into a "foreclosure mill" law firm called the Florida Default Law Group for allegedly presenting misleading or false documents to courts.

Knowing that the law firm had been hired by some of the nation's largest lenders, Epstein and Redman went to the local courthouse and began delving into its filings.

It wasn't until last month that their work began to draw national attention. The Florida Default Law Group confirmed in court filings Sept. 7 that the foreclosure documents that had been signed by Stephan, the robo-signer, "may not have been properly verified."

Redman posted the news on his Web site on Sept. 14. "ALL OF THESE AFFIDAVITS FROM THESE CHARACTERS ARE INVALID IF CHALLENGED!!!," he wrote, predicting it would affect "HUNDREDS OF THOUSANDS OF CASES!!!"

One week later, Ally Financial announced that it would halt foreclosure sales in nearly two dozen states. At least four other major mortgage companies followed suit.


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Sources: Fox News, Washington Post, Youtube, Google Maps

BOFA Foreclosures Resume; Ignores Fraudulent Docs Investigation

Largest Bank Will Resume Foreclosure Push In 23 States


Bank of America announced on Monday that it would resume home foreclosures in nearly two dozen states, despite the running controversy over how banks handled tens of thousands of cases of homeowners facing eviction.

Bank of America, the nation’s largest bank and the servicer of roughly one in five American mortgages, insisted that it had not found a single example where a foreclosure proceeding was brought in error.

The move is also likely to encourage other giant lenders, like JPMorgan Chase, to resume the foreclosure process that threatens two million homeowners.

Meanwhile, GMAC Mortgage, whose procedures helped prompt the controversy when one its executives testified that he had signed 10,000 documents in a month, is also proceeding with foreclosures.

“We announced a temporary suspension of evictions and foreclosure sales in the 23 judicial states several weeks ago so we could commence the appropriate review,” said Gina Proia, a spokeswoman for GMAC. “As cases are being reviewed and, when needed, remediated, the foreclosure process moves forward as appropriate.”

Guy Cecala of Inside Mortgage Finance, an industry publication, said: “This draws a line in the sand that the banks expect this problem will be over in relatively short order and it will be back to business as usual. If Bank of America can do it, certainly the smaller ones will follow suit.”

Bank of America plans to begin filing new paperwork for 102,000 foreclosures by Monday.

Consumer advocates and lawyers for homeowners expressed skepticism that Bank of America could complete a review of the paperwork so quickly. But the banking industry has come under increasing pressure from investors to resolve the problem.

Investors have fled bank stocks in recent days, worrying that the foreclosure halt would cost banks billions of dollars and inflict further harm on the nation’s struggling housing market. Bank of America is scheduled to report its latest quarterly results on Tuesday. Its shares have suffered more than those of other big banks, so any sign that the crisis is easing is likely to be greeted favorably by shareholders.

Reports of improper procedures at mortgage servicers, like having officials sign thousands of documents a month — so-called robo-signers — also have set off a political furor. On Wednesday, all 50 state attorneys general announced an investigation of mortgage servicing.

Bank of America said it would resume foreclosures in the 23 states where judicial approval was required after an internal review turned up no evidence that cases were filed in error.

However, Bank of America’s suspension will remain in effect in the 27 other states that do not require a judge’s approval to foreclose, as the bank’s paperwork review proceeds state by state. It was the only bank to initiate a nationwide freeze.

“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” said Barbara J. Desoer, president of Bank of America Home Loans. “We paused while we were doing that, and now we’re moving forward.”

In the other 27 states, Ms. Desoer said, she expects foreclosures to resume within weeks.

Bank of America was careful to note that the major holders of mortgages — Fannie Mae and Freddie Mac — as well as private investors had signed off on its decision and had been consulted during the review. Of the 14 million mortgages it services — about $2.1 trillion worth — about half are owned by Fannie Mae and Freddie Mac, the giant mortgage holding companies now controlled by the Treasury.

About 30 percent are owned by institutional investors, like hedge funds, pension funds and insurance companies, while Bank of America holds 20 percent.

“We voluntarily paused our process in the 23 judicial states, not because there was evidence of problems — there was not — but because we wanted to ensure our customers they are being treated fairly,” said Dan Frahm, a bank spokesman.

Even as Bank of America and GMAC signaled their resumption of foreclosures, a Citigroup executive said the company was confident in its procedures. “The integrity of Citi’s foreclosures process is sound,” John C. Gerspach, Citigroup’s chief financial officer, said on a conference call.

In Bank of America’s case, the foreclosures are resuming in the 23 states where judicial procedure is required because the halt was initiated there first, on Oct. 1. It was extended to the other 27 states on Oct. 8.

From the beginning, Bank of America signaled that it did not expect the review to go on for an extended period. On Oct. 8, its chief executive, Brian Moynihan, promised a quick conclusion.






Countrywide’s Former Chief In Settlement Of Fraud Case



Angelo R. Mozilo, the founder and former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, agreed to pay $67.5 million Friday to settle a civil fraud case brought by the Securities and Exchange Commission last year.

The settlement came just days before the case against Mr. Mozilo and two former colleagues was scheduled to go to trial before a jury in Los Angeles.

The two colleagues settled their cases Friday as well. David Sambol, the former president of Countrywide, agreed to pay $5.52 million, and Eric Sieracki, the former chief financial officer, consented to $130,000.

Under the agreement, the three men did not admit wrongdoing.

Mr. Mozilo’s agreement with the government represents a humbling moment for one of most audacious and flamboyant chief executives in the financial industry. The son of a Bronx butcher, Mr. Mozilo started Countrywide in 1969 with David Loeb, a business partner; together the men built the company into a behemoth with $11.4 billion in revenues at its peak in 2006.

But Countrywide’s foray into subprime lending and other risky loans led to its downfall, and in early 2008, hobbled by mounting losses on loans, the company was purchased by Bank of America in a fire sale. Mr. Mozilo left the company shortly thereafter.

In its complaint filed in June 2009, the S.E.C. had accused Mr. Mozilo, Mr. Sambol and Mr. Sieracki of hiding from investors the growing risks in Countrywide’s operations. The complaint also contended that Mr. Mozilo and Mr. Sambol improperly generated profits on insider stock sales even as they were alerted to the company’s widening woes.

Mr. Mozilo was not present for the court hearing.

Mr. Mozilo’s trial had been widely anticipated because it represented one of the few public prosecutions of a case against a major participant in the mortgage crisis. Still, both the defense and the prosecution faced big risks if they lost at trial, legal experts said, and this may have propelled the recent negotiations to bring about the deal. The settlement was approved by John F. Walter, the federal judge overseeing the case.



Had the S.E.C. won the case, it would have helped the agency re-establish its reputation as an investor advocate, which was badly damaged by inaction in the years leading up to the Madoff Ponzi scheme and the mortgage debacle. A loss would have been another black eye for the S.E.C.

A victory would also have been crucial for Mr. Mozilo, who would be concerned that a criminal prosecution might follow a loss in the civil case.


Sources: AP, CBS News, CNN, NY Times, Countrywide, BOFA, Youtube

Angelo R. Mozilo Agrees To Settle Countrywide Fraud Case With SEC

Countrywide’s Former Chief In Settlement Of Fraud Case



Angelo R. Mozilo, the founder and former chief executive of Countrywide Financial, once the nation’s largest mortgage lender, agreed to pay $67.5 million Friday to settle a civil fraud case brought by the Securities and Exchange Commission last year.

The settlement came just days before the case against Mr. Mozilo and two former colleagues was scheduled to go to trial before a jury in Los Angeles.

The two colleagues settled their cases Friday as well. David Sambol, the former president of Countrywide, agreed to pay $5.52 million, and Eric Sieracki, the former chief financial officer, consented to $130,000.

Under the agreement, the three men did not admit wrongdoing.

Mr. Mozilo’s agreement with the government represents a humbling moment for one of most audacious and flamboyant chief executives in the financial industry. The son of a Bronx butcher, Mr. Mozilo started Countrywide in 1969 with David Loeb, a business partner; together the men built the company into a behemoth with $11.4 billion in revenues at its peak in 2006.

But Countrywide’s foray into subprime lending and other risky loans led to its downfall, and in early 2008, hobbled by mounting losses on loans, the company was purchased by Bank of America in a fire sale. Mr. Mozilo left the company shortly thereafter.

In its complaint filed in June 2009, the S.E.C. had accused Mr. Mozilo, Mr. Sambol and Mr. Sieracki of hiding from investors the growing risks in Countrywide’s operations. The complaint also contended that Mr. Mozilo and Mr. Sambol improperly generated profits on insider stock sales even as they were alerted to the company’s widening woes.

Mr. Mozilo was not present for the court hearing.

Mr. Mozilo’s trial had been widely anticipated because it represented one of the few public prosecutions of a case against a major participant in the mortgage crisis. Still, both the defense and the prosecution faced big risks if they lost at trial, legal experts said, and this may have propelled the recent negotiations to bring about the deal. The settlement was approved by John F. Walter, the federal judge overseeing the case.



Had the S.E.C. won the case, it would have helped the agency re-establish its reputation as an investor advocate, which was badly damaged by inaction in the years leading up to the Madoff Ponzi scheme and the mortgage debacle. A loss would have been another black eye for the S.E.C.

A victory would also have been crucial for Mr. Mozilo, who would be concerned that a criminal prosecution might follow a loss in the civil case.


Sources: CBS News, NY Times, Countrywide, BOFA, Youtube