Subject: Crime Victims of Predatory Lending

Note 31 July 2009

Our reference case tries to contact US Bank to resolve a mortgage modification, shares with a loan specialist that he was approved and was also obtaining assistance by the President's mortgage modification program and HOPE Hotine (consumer counseling).  The US Bank specialist shared that (1) President Obama's mortgage modification program and Hope Hotline was a worthless waste of time, that these programs have no influence upon operations within the bank and (2) he is responsible for the $2600 July payment for the Countrywide criminal predatory loan..

Meanwhile, Banks Paid $32.6 Billion in Bonuses Amid U.S. Bailout (Bloomberg, 30 July 2009), or $32,600 Million, while 1.5 million Americans crashed in foreclosure during the first 6 months of 2009.

But industry insiders and legal experts say the limited capacity of mortgage companies is not the primary factor impeding the government’s $75 billion program to prevent foreclosures. Instead, it is that many mortgage companies are reluctant to give strapped homeowners a break because the companies collect lucrative fees on delinquent loans. -- Mortgage Servicers Have Little Incentive to Help Homeowners, New York Times, CNBC, 30 July 2009.

The tragedy is that predatory lending, mortgage and appraisal fraud are considered to be the primary cause of the foreclosure crisis and these 1.5 million mortgages represent the underlying assets for unregulated OTC derivatives.

See: The real estate roots of the crisis in the US, Financial Times, posted by Willem Buiter: Professor of European Political Economy, London School of Economics and Political Science; former chief economist of the EBRD, former external member of the MPC; adviser to international organisations, governments, central banks and private financial institutions.
 
What percentage of profits and salaries during the last 8 years were driven by OTC derivatives fraud, representing a scam in the 100's of $Trillions making the $50 Billion Bernard Madoff scheme insignificant?   What percentage of those profits and salaries are recoverable through the Fraud Enf & Recov Act?  How many of these executives need to join Madoff?

Government's, states and municipalities are beginning to realize that deficits that cannot be met through conventional market mechanisms, during an economic crisis that continues on the grassroots level. But, no one is discussing compensatory adjustments for hyperinflation attributed to 100's of $Trillions of unregulated OTC derivatives that remain in financial markets.  Some argue that this is the only pathway to recovery and restoration of integrity to the global financial system, deficit reduction, etc., etc.

Disaster response and recovery is the only way to describe the task entrusted to the new U.S. administration.  Since the country exists in an economic state of emergency, perhaps FEMA disaster grants and loan assistance for corporations, small businesses and families need to replace dependence on banks. This would appear reasonable, since governmental agencies were directly responsible for the regulatory controls that were supposed to prevent such a crisis.

According to the article After 20+ years of lax consumer protection, should we trust the Fed?, Consumer Reports, 28 February 2009,a few examples of how the central bank, has dropped the ball:

•Put off oversight of predatory loans.
•Kept silent as credit-card debt ballooned.
•Helped banks avoid consumer protections.
•Has allowed a second-tier shadow banking system with missing consumer protections.

Note: 23 July 2009

Hope hotline contacted regarding the predatory loan now held by US Bank, escalating the case to the Consumer Credit Counseling Services for resolution.  Earlier today, US Bank calls the holder of the predatory loan and asks why he had not signed the $200 modification.  When the owner told the US bank representative that he had no intention of signing the contract and that he engaged the services of the HOPE hotline, he was told that he had the wrong contract and that his new payment was approximately $1700.  Since he did not have this new contract, the rep said that it would be sent express mail.  A few hours later, he was called back by the rep and told that the contract would not be sent until next month and he would be responsible for the full $2600 payment this month.

This family, in an economic emergency, does not have the resources to pay the $2600 predatory loan payment.  The inability to make the payment would be added to the administrative error (during takeover of Countrywide) that claimed that this family missed a payment.  

The question on the table is would this scenario that puts them 60 days behind in payment, allow US Bank to force foreclosure?  How many of the 1.5 million foreclosures in the first 6 months of 2009 were predatory actions against crime victims of predatory lending.

Related:

• Some Countrywide borrowers might get settlement: Under the terms of the settlement, Countrywide, a subsidiary of Bank of America, has established a nationwide fund of $150 million to provide loan modifications to assist as many as 395,000 borrowers. -- Business Journal, 23 July 2009.

Note: 17 July 2009

A Countrywide predatory loan crime victim, was told by US Bank (who took over Countrywide) that they were not a participant in the President's Loan Modification Program (www.makinghomeaffordable.gov). The President's site put payment at approx. $950/month, US Bank profiting off the Countrywide Predatory Loan is making approx. $2600/month.  They came through today (12 months late) and told the home owner that they came up with a modification of $200 (new payment: $2400/month).

 The homeowner proceeded to call the Connecticut State Attorney General and the President's Homeowners HOPE hotline: 888-995-HOPE.  The HOPE hotline specialist, alarmed by the story, immediately referred him to a credit counseling specialist (first step in facilitating bankruptcy protection).  

The scope of the problem, every United States county in all 50 states:

• Foreclosure Filings Hit 1.5 Million Homes in First Half of ‘09, Wall Street Journal, 16 July 2009.

Note: the 8.1 million foreclosures projected during the next 4 years (CRL Congressional District Foreclosure Projections - 2-17-09) appears to be low.  If the current national economic emergency continues to spiral out of control , at today's foreclosure rate, we could easily be looking at 12 million foreclosures.

The criminal activities associated with Predatory lending, mortgage and appraisal fraud encompass the mortgages that were packaged into securities through the unregulated derivatives market, that inturn facilitated the collapse of the global economic system.  The scope of these crimes have transitioned from the SEC and Federal Reserve to the Department of Justice, Interpol and International Bar Association.


-------- Original Message --------

Subject:	[National Bankruptcy Education Initiative]
Date:	Wed, 01 Jul 2009 17:27:57 -0700
From:	"Stephen M. Apatow" <s.m.apatow@humanitarian.net>
To:	Emergency Food and Shelter National Board Program <efsp.email@uwa.unitedway.org>

Dear Colleagues:

Nationwide, a vast number of states are in the midst insolvency (California's IOU Fever Is Likely To Spread To Other States: 24/7 Wall Street, 30 June 2009) projected at reaching 20 percent, impacting 30-50 million unemployed and their families.  

If laid-off workers who have given up looking for new jobs or have settled for part-time work are included, the unemployment rate would have been 16.4 percent in May...The Federal Reserve forecasts that unemployment will remain high into 2011, given an expectation of tepid recovery. Economists say the job market may not return to a 5 percent unemployment rate until 2013. -- Economy Sends Mixed Signals On Recovery: NPR, 5 June 2009.

In the context of the millions devastated by predatory lending, today 1 out of 5 mortgages are upside down (Zillow), as banks continue to refuse the President Obama's emergency mortgage modification initiative.  In May, a middle class family in Connecticut who was the victim of two predatory loans, served as a reference point for national discussion (Banks Facilitate Foreclosure not Modification: 19 May 2009).  The predatory loan issued by Countrywide, now owned by U.S. Bank is still tied up:

All paper work has been submitted and approved, but still waiting for the modification.  Efforts to move outside of U.S. Bank to refinance failed due to a so called missed payment, that was an administrative error made during the transition of Countrywide's takeover.  The family never missed a payment and continues to pay close to $3,000/month, in a scenario where the mortgage modification would have lowered the payment to approx. $900.00/month, close to a year ago.  

This is one of the lucky families who could make their payment and have not been crushed, unlike the 6000 per day who were forced into bankruptcy in March (one every 13 seconds, The New York Times: 3 April 2009). Today, bankruptcy protection is being viewed as the only pathway available for the unemployed, who cannot even cover their mortgage payment with unemployment compensation.  This crisis has prompted the call for bankruptcy education initiatives that will reach the grassroots level in all 50 states:

Chapter 11 bankruptcy is available to every business, whether organized as a corporation or sole proprietorship, and to individuals....As with other forms of bankruptcy, petitions filed under Chapter 11 invoke the automatic stay requires all creditors to cease collection attempts, and makes post-petition debt collection void. -- Chapter 11, Title 11, United States Code, Wickpedia.

• How to File for Chapter 11 Bankruptcy:  eHow Business Editor 
• Bankruptcy Attorneys & Free Legal Help
  

Looking forward to your assistance with this effort.

Stephen M. Apatow
Founder, Director of Research & Development
Humanitarian Resource Institute
Humanitarian University Consortium Graduate Studies
Center for Medicine, Veterinary Medicine & Law
Phone: 203-668-0282
Email: s.m.apatow@humanitarian.net
Internet: www.humanitarian.net