SIGTARP: Banks Fail Miserably at HAMP, Treasury Does Pretty Much Nothing

The most recent quarterly report from the special inspector general of the Troubled Asset Relief Program (SIGTARP) shows the terrible truth that taxpayer-bailed-out banks have rejected nearly three-quarters of applications for a government-backed and much-touted mortgage loan re-structuring program.

The third-quarter report for fiscal year 2015, released in July, shows that the banks turned down 72 percent of those seeking foreclosure through the Home Affordable Modification Program (HAMP). That figure certainly comes as no surprise to those of us who have been fighting a maddening battle with our banks’ “loss mitigation” departments, which seem to be on a mission to increase that denial rate instead of help homeowners restructure their loans in the face of ongoing economic challenges often not of their own making.

When the Making Home Affordable initiative was launched in early 2009, it was supposed to help up to 9 million homeowners keep their homes. HAMP itself was supposed to help 3 million to 4 million homeowners by extending their loan terms, decreasing their interest rates and reducing principal. (The first two sometimes happened; the third, not so much.)

In spite of having its drop-dead date extended three times, most recently through December 2016, HAMP has utterly failed to meet this goal. U.S. Treasury Department statistics kept since January 2009 – about seven months after President Obama announced HAMP’s launch – show of 5.7 million homeowners who applied for mortgage relief through the department’s “cornerstone” mortgage relief program, more than 4 million were rejected as of April 2015.

tarpgraphicAnd SIGTARP reports that an April 2015 Treasury survey of banks that service mortgage loans shows as many as 5.8 million HAMP applications were denied in total.

Odd, isn’t it, that those statistics don’t show up headlined in Treasury’s press archive? Nothing but sweetness and light there. Not unlike the department’s most recent quarterly report on Making Home Affordable, the umbrella under which HAMP operates. The headline tells such a positive tale: More than 2.3 Million Homeowner Assistance Actions have taken place under Making Home Affordable (MHA) programs. Nary a mention of those 5.8 million denied HAMP applications. Can’t you feel your head spin?

My state, Arizona, which was consistently counted among the top three “hardest-hit” foreclosure states, had a 68 percent denial rate. Of just over 172,000 applications, fewer than 55,000 homeowners were granted “trial” modifications – assigned a three-month reduced payment plan that, if successfully completed, was supposed to lead to a permanent modification.

That in spite of being granted an extra $125 million federal allocation from the Hardest Hit Fund intended to “provide assistance of up to $50,000 to qualified homeowners to create an affordable and sustainable mortgage payment through a permanent principal reduction modification.” (Sadly, the program proved just another farce.)

Three of the top seven servicers participating in MHA, Citi, Chase and Bank of America, all had staggering HAMP trial plan denial rates – above 80 percent. My servicer, Wells Fargo, did better with “only” 60 percent denial.

Note that for the first quarter of 2015, the Treasury Department’s mortgage servicing survey found that Chase and BofA needed only “minor improvement” and Citi and Wells Fargo needed “moderate improvement” in their compliance with the quite specific HAMP servicing standards supposedly administered by the department. Such a gift for understatement those Treasury officials have. Not, however, a gift for ensuring that banks act to make programs like HAMP actually work for the people they’re supposed to serve.

According to the SIGTARP quarterly report:

“Congress created SIGTARP to prevent vulnerabilities for fraud, waste, and abuse in TARP, improve TARP’s efficiency and effectiveness, and enforce the law where fraud has seeped in.

“SIGTARP’s 176 recommendations are designed to protect TARP programs and dollars. But they can only provide that protection if Treasury implements them. Treasury, however, has failed to implement 104 of SIGTARP’s 176 recommendations, losing opportunities to make a difference.”

Later in the report, this conclusion that will come as no surprise to anyone who has tried to secure a loan mod: “Some of SIGTARP’s most significant unimplemented recommendations to Treasury address problems in HAMP …”

The HAMP guidelines, most of which have been in place since shortly after the MHA programs were launched in early 2008, were reiterated four years later as detailed standards specified in the much-touted National Mortgage Settlement. But, Treasury seems to deliberately avoid making the MHA programs work effectively an efficiently, a fact that clearly frustrates current TARP Special Investigator General Christy Romero as much as it did the first SIGTARP, Neil Barofksy. Plenty of American homeowners – and former homeowners – know just how you feel, Ms. Romero.

No wonder I’m seeing an up-tick in traffic on my blog, website and facebook page. I’ve heard from people in their fifth year of fighting the bank and no matter how much paperwork they submit or how much research they have done to confirm that they do, indeed, meet the publish criteria for a HAMP mod, the bank keeps faking reasons to refuse.

Not surprising that people are seeking outlets to tell their stories, if only to confirm that they 1) aren’t losing their minds and 2) aren’t the only ones being totally jerked around by huge corporations that should operate with some level of professionalism and ethics

Consider this post on a seemingly inactive foreclosure prevention company’s site. The original complaint against Wells Fargo was posted in February 2008. Scroll down and you’ll find 112 comments posted over four-and-a-half years – an eternity in Web time. You’ll see most of those 112 posters tell similar tales: either same story, same bank or same story, different bank.

The the two SIGs have been reporting many of the same things we’ve all been saying since 2008, and doing it in clear, readable documents backed up with clear statistical analysis illustrated with informative graphics. So it’s not as if anyone who wanted to understand the problems and get sensible advice on effective fixes doesn’t have access to the necessary information.

The truth remains: the big banks have no intention of dealing fairly with distressed homeowners seeking to restructure their mortgage loans and nobody with the power to stop the banks has any intention of changing this.


An Unlikely Sponsor of Legislation We Need: John McCain & 21st Century Glass-Steagall

Maybe nobody was more surprised than I was to hear that Arizona Sen. John McCain teamed up with my hero, Massachusetts Sen. Elizabeth Warren, to sponsor legislation that would rein in our nations bloated “too big to fail” banks.

After all, despite his seniority in Congress and visibility in the 2008 presidential campaign, McCain did damn-all for Arizona residents victimized by those banks’ overzealous foreclosure frenzy. In language typical of the big banks’ spin doctors, he actually had the nerve to blame consumers for the foreclosure crisis – a particularly callous position considering his home state was repeatedly ranked one of the top three hardest hit by the economic crash.

The staff of a hospitalized Rep. Gabrielle Giffords did more for me during my fight with Wells Fargo than the presumably quite healthy McCain despite the fact that I wrote him a very candid letter describing my experience of being strung along over seven months in the bank’s first of several reviews of my loan for modification.

It’s not as if he were a stranger to financial crises – he was one of five senators investigated for his ties with Charles Keating, a key figure in the late 1980s savings and loan collapse. Yet, he went on to establish a reputation for opposing financial regulation.

Perhaps his inaction in the face of the banks’ foreclosure frenzy has something to do with the fact that securities and investment companies remain among his top financial supporters. Which, of course, makes it even stranger that he’d be seen in public with Sen. Warran, let alone co-sponsor legislation that would rein his bankster benefactors.

Whatever his reasons for now siding with supporters of financial reform, McCain gives a pretty comprehensive review of the issue in the clip above. But he’s not  exactly a riveting speaker, more a monotone reader of his notes in this instance. If you want more background on the history of post-Depression banking reform, try this well-written Washington Post blog from 2013: Elizabeth Warren and John McCain want Glass-Steagall back. Should you?

The 21st Century Glass-Steagall will no doubt face stiff opposition by Wall Street and the banking industry. Bank shills rant and gnash their teeth when the subject of breaking up the “too big to fail” banking empires arises. Like McCain, they point their fingers at consumers – those greedy, lazy people who “bought too much house” and then refused to pay their mortgages.

Those few people who made bad financial decisions have to stand in line behind a whole lot of financial services industry insiders when the blame is handed out though. I think hedge fund manager James Rickards gets it right in his 2012 US News op-ed Repeal of Glass-Steagall Caused the Financial Crisis.

“It is true that the financial crisis has enough blame to go around. Borrowers were reckless, brokers were greedy, rating agencies were negligent, customers were naïve, and government encouraged the fiasco with unrealistic housing goals and unlimited lines of credit at Fannie Mae and Freddie Mac.

Yet, the fact that there were so many parties to blame should not be used to deflect blame from the most responsible parties of all—the big banks. Without the banks providing financing to the mortgage brokers and Wall Street while underwriting their own issues of toxic securities, the entire pyramid scheme would never have got off the ground.”

Since 2008 there have been some nominal attempts to stave off future economic disasters, including recent action by the Federal Reserve to increase capital reserve requirements for the eight biggest banks.

Reinstating some version of Glass-Steagall has been discussed since Congress (with McCain voting against) passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. Part of the law was supposed to limit risky speculation by banks whose primary business involves holding consumer deposits.

But, of course, the banks sent their lobbyists to influence already complicit regulators and legislators in watering down and generally obfuscating this provision into a mostly meaningless mess. Economist Dean Baker explains that in a 2013 op-ed Glass-Steagall now: Because the banks own Washington:

“The Volcker Rule provision in Dodd-Frank was an effort to re-establish a Glass-Steagall-type separation, but the industry is making Swiss cheese out of this regulation in the rule-writing process. Serious people cannot believe that this will keep the Wall Street banks from using their government-guaranteed deposits as a cushion to support their speculative game playing.

If anyone questions how this story is likely to play out in practice, we need only go back a few years to the financial crisis of 2008-2009. At that time, most of the major banks, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley, almost surely would have failed without government support.”

Those banks are still spending billions to fund political campaigns and then influence elected officials to thwart attempts to limit their seemingly insatiable appetites. And it has worked. Instead of getting smaller, the biggest banks have gotten bigger since 2008, though the growth rate of at least the four largest has slowed somewhat compared to pre-crisis, according to a May 2015 report by The Brookings Institution.

Sadly, it seems small local and regional banks have been the biggest casualties since the economic bust. Some have failed but many have – you guessed it – been gobbled up by big banks to make bigger banks.

Why should you care?

Is that enough information for you to contact your senators and representatives to urge support for Warren and McCain’s 21st Century Glass-Steagall?


Don’t Blame Homeowners Whose Mortgage Mods Didn’t Work

“A government auditor has warned that the U.S. Treasury Department doesn’t understand why distressed homeowners are re-defaulting at an “alarming” rate on government-aided mortgages …”
                     Obama’s HAMP Initiative Struggling To Help Homeowners

If the Treasury Department ever actually asks these homeowners why they ended up defaulting on their modified mortgages, I’m guessing I know what one of the big reasons will be.

No, not the tired chant of the narrow-minded and the bank shill, who insist that stupid, lazy people “bought too much house.” That may have been the case for some people, but those are the ones who walked away in the first wave of foreclosures. The rest of us got caught up in circumstances beyond our control, an economic crisis brought about by the very banks we were turning to for assistance.

I believe a huge contributing factor was the way those banks screwed around playing games to drag out the loan mod review process, driving people to the financial and emotional edge and then getting them to agree to terrible deals because they were, by then, so desperate to avoid foreclosure.

Take my case in point. In March 2010 when I wrote to Wells Fargo to tell them that my business had taken a huge hit and my sig-other who was paying half the household had skipped out on me, things weren’t that bad. I was current on my mortgage; I had excellent credit and very little other debt; and I had some money in savings. If my erstwhile mortgage servicer had looked at the information I provided and done the math, had looked at my credit history and had given me some consideration for being a decades-long customer, my mortgage loan would have been restructured while I was still well able to easily make a lower payment. I would have carried on paying my mortgage every month and all would have been well.

Contrary to what the ignoramus people would tell you, I would not have been getting a “free house.” For the privilege of paying a lower monthly payment, I would, in fact, end up paying MORE for my home than my original mortgage called for.

The bank would re-structure my loan to stretch the payments out over a longer time and temporarily decrease the interest rate, providing me with a lower monthly payment. But they wouldn’t end up getting paid less for the house. Usually the difference between my old payment and my new, lower one would be tacked on to the end of the loan as a “balloon payment.” That means that instead of having my house free and clear after the last monthly incremental payment, I’d still owe several thousand dollars.

Banks restructure debt all the time for companies, even countries. No big deal. Market conditions change and their customers’ ability to pay can change, too. Better to modify the loan now to help the client keep paying than to face a loss later when he defaults or goes into bankruptcy. Seems like a no-brainer, doesn’t it?

But restructuring only works if it’s done in a timely manner, while the entity – person, company, utility, country – is financially fit to keep paying the new, lesser payment. Wait until the client is on financial life support and of course you’re setting yourself up for a redefault. Doesn’t take an economic genius to predict that.

So, back to Wells Fargo and my experience. I sent my request for a mortgage loan modification in March. I didn’t get an answer (denial) until October! By that time I had depleted my savings as much as I dared to keep my mortgage paid each month. I stopped paying and reapplied for a loan mod. I was on the HAMPster wheel with Wells Fargo until February 2012, when they offered me a loan mod just ONE HOUR before my house was slated to be sold on the courthouse steps. Two years. Twenty-four document submissions. Eighteen “single point of contact” people.

They waited until the 11th hour and what they offered me was a terrible deal. I would have ended up paying about $500,000 for a house worth about a fifth of that. Meaning I would have been stuck with it forever. And the “home preservation specialist” who I was dealing with at the time reminded me of a used-car salesman, trying to get me to agree to the terms over the phone, with nothing in writing, while I was standing on the curb next to the courthouse steps. She called me and pressed me over and over. Think Wells Fargo wasn’t banking on my emotional distress over the foreclosure sale to get me to make a bad bargain? That’s just slimy business practice.

I opted out. I had already resigned myself to the fact that Wells Fargo wanted the house waayyy more than I did. I had found another place to live – cheaper, newer, much closer to my work – and was in the process of moving.

Wells Fargo’s offer was way too little and came way too late. They had already driven me over the edge. If they had offered me a sensible restructure within a couple months of my request, I would have taken it and I would have successfully kept on paying.

But if I had taken the terrible deal they offered after jerking me around for two years and if my business hadn’t rebounded, I might have ended up in a situation where I would have lost the house anyway. Not because I bought too much house, but because the bank waited too long to acknowledge what I said in my first communication – that I was on the verge of default and I wanted help to keep paying my debt.

So don’t blame the built-in failure of the modification program on homeowners. The blame rests with the companies who created the need for so many mortgage loans to be modified in the first place – the big greed-powered banks.

What’s Up With Stumpf?

Holy facelift, Batman! What’s up with Wells Fargo CEO John Stumpf’s face?

No, the burning question of the day about Wells Fargo isn’t what lawsuit has the company settled for mega-bucks (without any admission of guilt, of course) or how many families did its Home Mortgage division foreclose on to date.

I’m wondering whether the bank exec bought himself a facelift with some of the millions he makes overseeing a company that has tormented, cheated and lied to tens of thousands of homeowners? Or did some artist get a little crazy with PhotoShop?

I happened across the scary stretched Stumpf pic in an editorial posted in the Fall 2012 issue of the online LATINO, where he was writing about how much Wells Fargo values diversity. (This in the wake of a $400+ million settlement in a lawsuit alleging the bank routinely steered minority borrowers into more expensive sub-prime mortgage loans.)

There’s no photo credit and it’s not the same pic that’s used on Stumpf’s bio page on the Wells Fargo website, though that one also looks pretty different from the hopefully unedited news pics available online.

In contrast, here he is earlier in 2012 on the cover of the February  issue of Forbes, illustrating a rather nauseating puff piece all about how wonderful and clever and honest Wells Fargo is compared to all those other big banks.

And this is how he appeared in a 2011 Fortune piece all about how to fix the mortgage crisis – ultimately how to ensure the banks keep making billions on home loans.

Here’s Stumpf in a Bloomberg/Businessweek article “The 50 Most Powerful People in U.S. Real Estate 2010” published in March of that year.

And here’s a 2009 San Francisco Business Times article on California’s financial woes.

Looks like the bank exec is getting younger every year. What is he, a modern Dorian Gray? Does his face stay young and smooth whilst he has hidden away somewhere a hideous portrait disfigured by the ravages of all the damage he and his company perpetrate? Yikes! Imagine what such a picture would look like post 2008 financial bust.

Gov. Brewer, AG Horne Steal Hope & Dollars From AZ Homeowners

Geez, If you’re an Arizona homeowner trying to fight your way through the big banks’ foreclosure feeding frenzy, you’re really fighting on your own. You already know the federal government has sold you to the highest campaign contributor.

The Arizona Legislature won’t help you. They belong to the bank lobby and failed to pass legislation that would have forced banks to prove they actually own the properties they’re seizing in non-judicial foreclosures.

The Arizona Department of Housing provides no help, because it designed its Save Our Home AZ program, which is supposed to distribute federal funds to homeowners in the states hardest hit by the foreclosure crisis, actually NOT to help the vast majority of homeowners.

The Arizona Supreme Court can’t help you. Apparently there just aren’t any enforceable laws left that rein in the excesses of the big banks that routinely complete non-judicial foreclosure without having to prove they hold the original note.

Now Gov. Jan Brewer and Attorney General Tom Horne have allowed the state legislature to appropriate $50 million that was supposed to help people cheated and lied to by their mortgage loan bankers and servicers.

Need I mention this outright theft was fully sanctioned by the ever-helpful (to the banks) Arizona judiciary in spite of the efforts of various homeowner advocacy groups and against the advice of mainstream media , federal legislators and even real estate professionals.

Seems AG Horne wasn’t really working for Arizona’s homeowners when he took part in a 49-state non-investigation of the banks’ wrongdoing. He was really trying to pad the state general fund, even though his own information page on the settlement doesn’t seem to mention that part.

“One of the legacies of the housing crisis is a failure to provide meaningful assistance to the millions of homeowners across the country who lost big on their homes. We bailed out Wall Street, but did nothing for borrowers, who often waited for loan modifications that never came. That’s one reason we strongly disagree with the diversion of $50 million from a fund that was supposed to be applied to foreclosure assistance, but instead is being used for the state budget.”  ~Arizona Daily Star op-ed

If misery really does love company, at least Arizona isn’t alone. Looks like only 23 states are using all or most of the settlement dollars for the purpose they were intended – to keep people in their homes. The rest are taking some to most of the money to balance their budgets for the year.

“The Arizona Housing Alliance estimates that $50 million could “provide 75,000 troubled homeowners with housing counseling and 10,000 homeowners with legal assistance.” That’s just a sampling of the kind of things that could be done with these settlement funds if they were put to their actual purpose.”  ~ David Dayen, Firedoglake

Sorry Arizona homeowners. Ever since Terry Goddard left office, we’ve been pretty much been thrown under the bus by all the officials who are supposed to be acting in our best interest. All I can say is good luck trying to keep your home against all the odds. And please vote more wisely next time.


Happy Independence Day!

And may we all soon be free from the corporate interests that have taken over our democratic system and are threatening to bring down this country.

Hope all the freedom fighters have a great day of rest and celebration today and come out tomorrow with renewed dedication to reclaiming our government, re-establishing the rule of law and restoring morals and ethics to the practice of business and politics in this country.

Brewer is Embarrassing; Warren is Empowering

A well-known, “powerful” woman who makes my head hurt every time I hear her speak:

A well-known, powerful woman who makes my head nod in enthusiastic agreement every time I hear her speak:

Respite … And Allies in the Mortgage Mod Fight

For the first time in nearly a year, I feel like someone is on my side in this whole mortgage modification nightmare. And it’s none too soon. I’m determined to keep fighting, but boy was I getting worn out.

Now, I have allies. And one, in particular has made a big difference. That would be the dedicated and very determined staffer who works on mortgage and foreclosure issues for Congresswoman Gabrielle Giffords. Ever since Amanda got involved, the whole tone of my interaction with Wells Fargo Home Mortgage, my loan servicer, has changed.

For the first time since I initiated a mortgage modification review back in March 2010, WFHM employees do all kinds of great things. They return phone calls. They answer questions. They even call to update me on the progress of the review. Just like real, live professionals.

Until now, my impression of Wells Fargo’s corporate culture might best be described as “The Keystone Kops Run a Bank.”

Lost paperwork. Simple documents nobody seemed to be able to read and comprehend. A different answer from every person you talk to. Misdirection. Misinformation. And lies … lots and lots of lies.

But, thanks to the intervention of the staff of my convalescing congresswoman, I finally have had one stable contact person who has performed all the basic tasks one expects from professional, adult human beings. For several weeks in a row.

(If you’re in this process, you know how big a deal this is. If you’re not, I’ll just mention that since June 2010 I have had nine people who at one point or another professed to be my “permanent” contact person who would see me through until the end of the modification review process. And only two of those would return calls; the others pretty much blew me off after the initial contact. Strange way to run a business.)

Thanks to Gabby’s dedication to her constituents, her interest in the mortgage/foreclosure crisis and her wisdom in choosing a hard-working woman as her point person on the issue, I now have the direct phone number of a very helpful member of WFHM’s Congressional Support team.

Yep, that’s just what you think it is. The company gets enough inquiries/complaints from members of Congress on behalf of their constituents that there is a department just to deal with that. (I’d be pretty embarrassed to need that if I were the CEO; wouldn’t you?!)

I don’t have a modification yet – I was turned down on my second attempt to qualify for the scam known as HAMP. I do have a three-month forbearance agreement that buys me some time to get back on my feet financially. And I have my congresswoman in my corner should Wells Fargo try any funny business with that agreement or with my eventual third shot at a modification.

If that wasn’t enough, the past week brought two other welcome developments. First, I was contacted by a helpful Fannie Mae employee who represents the Treasury Department’s recently-initiated inquiry into my complaints about Wells Fargo. That connection was made because of a letter to President Obama I wrote one sleepless night back in November when it started to become clear to me that the loan servicers have turned the mortgage modification process into a complete scam.

Second, I had an enlightening conversation with an intelligent, experienced and extremely nice lawyer from Southern Arizona Legal Aid. She is an expert in mortgage modification and really knows the ins and outs and all the unwritten “secret” bits the banks don’t tell borrowers or ever want us to know. It is such a relief to have that resource to back me up in my fight. (Thanks to Giffords’ aide Amanda for this referral!)

I’m still living in uncertainty, knowing that WFHM could pretend the forbearance agreement doesn’t exist and foreclose tomorrow. I still face the possibility that even after all this work, I might still lose my home. But, at least, I am standing up and saying, “No!” What the big banks are doing to millions of people is not right and I, for one, will not go quietly.

For my fellow homeowners fighting against the big fraud-factory mortgage loan servicers to hold on to your homes, the moral of this story is: Make Noise! Write a reasoned, articulate letter to everyone you can think of – legislators, government agencies, consumer-protection organizations, media. Tell your story. Ask for help. You might just get it. Good luck!