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.

Resources:

Still Not Safe From Bank Robbers

It’s 2015 and Wells Fargo & Friends are still robbing homeowners every way they can. So much about the way these banks treat mortgage borrowers has not changed since I started writing about the topic back in 2009 as the foreclosure feeding frenzy was starting to get out of control.

Seems I can just dust off blog posts from several years ago, update the links and re-run them as relevant to what’s still happening.

warningdoor2I wrote a tongue-in-cheek Warning to Wells Fargo’s Burglars in early 2011 when I was still had hope my diligence would win me a mortgage loan modification. But six months later, fully understanding the banksters were rampaging unchecked and honestly fearing to leave my home unattended to go out of town even overnight, I took a more serious tone. “Bank Robbers” Takes on New Meaning

Nothing is sacred to these people, either the bank executives or the companies they hire to “trash out” foreclosed (or not) homes. Consider this case, which is just hitting the courts nearly three years after the incident:

When the Bank Robs You: Wells Fargo Contractors Allegedly Stole Family Heirlooms Rescued From Nazis

Big surprise. The bank robbers are still sending in their minions to steal from people.

March 2015: Bank ‘breaks into man’s home,’ won’t say why

A former Chicago police officer, Mike Tomasovich, filed a lawsuit claiming that his own mortgage bank, Fifth Third Bank, sent contractors to break into his Estero, Florida, home via a drill through the door lock.

The two intruders then posted a note on the front window that could be read from the outside that warned the residence had been “found to be unsecure or vacant,” the Fort Myers News-Press reported.

Tomasovich, who splits his time between Chicago and Estero, said he’s kept up with payments and has never been in foreclosure. Lee County public records confirm that, the newspaper reported.

“There was food in the refrigerator, a car in the garage,” he told the paper. “Every room is furnished. The electricity was on, the pool was crystal clear.”

And when it becomes clear to them that they’ve made a colossal mistake and screwed up the life of some completely innocent person, do they apologize abjectly and work tirelessly to right their wrong? Not exactly.

Bank Issues Statement About Home It Wrongfully Foreclosed Upon, Balks At Paying Up

But the bank has balked at paying the $18,000 Barnett is asking for.

“(They) demanded that I had receipts for all my stuff that they threw away,” Barnett said. “And I said, ‘Well, you know first of all, I don’t have receipts for all of my stuff. I wasn’t expecting a bank to come and to accidentally repossess my house and throw it all away. And second, if I did, where do you think it would be? In my house with all my belongings?’”

She said that everything from clothes to patio furniture to pool supplies was disposed of.

“This is the basketball hoop. They actually gave it to one of our neighbors, and the neighbors ended up giving it back to us. That is the only thing we’ve gotten back.

stumpyrobberI actually ran across several references to banks trashing out the wrong house and then demanding devastated homeowners produce receipts in order to have their belongings replaced. Any normal human being working at a bank would think, “Wait, that’s not logical. I don’t keep the receipts for every single thing I buy. That would be CRAZY.”

But the poor bankster-brainwashed automatons in the phone queues certainly aren’t paid to think (but they are paid to provide an impenetrable firewall between the great unwashed public and the exalted executives.) They’re just paid to do their master’s bidding. Like the people who are still still stealing from homeowners at the behest of Wells Fargo and its bank-robber buddies.

In Case You Thought the Mortgage Mod Process Had Improved

While I was clearing out some old news items to make way for my website’s more up-to-date and topical News page, I ran across this February 2011 clip from MSNBC’s now-defunct The Dylan Ratigan Show.

Listening to Ratigan and his guests describe the way banks were scamming homeowners with HAMP trial modifications, it struck me that I’m reading about some of the same practices from commenters to my blog posts in 2015.

This PBS NewsHour segment I dug up from October 2010 also tells a story familiar to my readers, including homeowners’ reports of spending endless hours on the phone, sending paperwork over and over, dual-tracking and multiple (and often unresponsive) assigned contact people.

“You get put under a lot of stress, trying to get help. And it’s not there.”

Wow! The more things change, the more the big banks have been screwing over honest, hard-working people for years with the collusion of the Obama administration, Congress, the courts and every regulatory agency that’s supposed to look out for consumers.

And, while we’re on the subject, this headline from intrepid (and prescient) blogger Martin Andelman might just be my favorite:

THE JURY IS IN: Obama’s Foreclosure Program Run by Morons… and Trial Modifications are the Biggest Loan Mod Scam Ever

If I knew then what I know now – and what Martin Andelman correctly predicted – I would have saved myself a whole lot of work and anguish and walked away with a bigger bank account and a smaller waistline. (That stress eating while sending out your 90th set of loan mod docs really adds up!)

Well, the morons are still in charge and thanks to the way campaigns are financed now, they will continue to be. And trial mortgage loan modifications are still a big scam.

I’ve found a few other information gems I had forgotten about – including updated facts and figures from sites I haven’t looked at in years – that I’ll be sharing in the coming weeks.

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?