Americans Have Wages Garnished and Assets Seized over Homes They Already Lost

(graphic: Getty Images)

ALLGOV | Oct 16, 2014 | Noel Brinkerhoff, Steve Straehley

Thousands of Americans are being chased by zombies—zombie loans that is.

Many of those who lost homes in the housing crisis last decade are finding that their nightmare still is not over. That’s because banks are still pursuing them over the mortgages they defaulted on, according to Reuters.

Settlements that followed often did not cover the remaining balance on the loan. This has led to “deficiency judgments,” in which debt collectors are now hunting down the former homeowners. In many cases, the judgments result in frozen bank accounts, garnished wages and seized assets.

“The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago,” Reuters’ Michelle Conlin wrote.

From January 2010 through June 2012, Fannie Mae referred 293,134 foreclosure cases to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

“This is monumentally unfair and damaging to the economy,” Ira Rheingold, the executive director of the National Association of Consumer Advocates, told Reuters. “It prevents people from moving forward with their lives.”

Danell Huthsing of Jacksonville, Florida, wound up being pursued for her share of a mortgage after breaking up with her boyfriend, with whom she shared a house. “For seven years you think you’re good to go, that you’ve put this behind you,” Huthsing told Conlin. “Then wham, you get slapped to the floor again.”

If you went through foreclosure with Bank of America, Wells Fargo, JPMorgan Chase or Citibank, you may be in luck. Those institutions typically do not pursue deficiency judgments, although they reserve the right to do so, Reuters reported.

Why underwater homeowners won't be saved by Bank of America's $17bn deal

Under the latest settlement, Bank of America must
allocate a minimum of $2.15 billion to principal reduction.

Press TV | Aug 22, 2014

Since law enforcement officials first began pursuing banks for misdeeds related to the housing collapse, the stated goal has been the same. The objective, the Justice Department has said, is to hold banks accountable and to aid people most harmed by the financial crash that destroyed home prices and led to an epic wave of foreclosures.

Yet after more than two years of multi-billion dollar deals involving Wall Street's elite, including Thursday's $17 billion settlement with Bank of America, most distressed homeowners have no chance of obtaining the form of help considered the gold standard of borrower aid -- principal reduction, or the forgiveness of mortgage debt.

"Very rarely does principal reduction happen," said Ken Falvey, a housing counselor in Ft. Myers, Florida.
"We're not sure where all that money goes."

Though rising home prices have restored the lost value of millions of homes, about 9 million homeowners in the second quarter of 2014 were underwater, meaning the borrower owes more on the mortgage than the home is worth. For these homeowners, shedding excess mortgage debt can mean the difference between abandoning a house and investing in it again. Principal reduction also frees money for shopping and other purchases that can stimulate the broader economy, and relieves a huge psychological burden.

Under the latest settlement, Bank of America must allocate a minimum of $2.15 billion to principal reduction. Loan modifications will result in "numerous homeowners no longer being underwater on their mortgages and finally having substantial equity in their homes," the Justice Department said in a press release.

But there's little reason to expect that more than a few underwater Bank of America homeowners will receive a loan reduction. That's because the nation's top housing regulator continues to refuse to allow write-downs on loans controlled by Fannie Mae and Freddie Mac -- the vast majority of outstanding mortgage debt. In the past, Bank of America has chosen to offer big write-offs to relatively few homeowners with expensive mortgages, rather than give principal reductions to a larger number of homeowners with smaller loans.

Two leaders of the Federal Housing Finance Agency, which regulates Fannie and Freddie, have refused to allow write-downs. Former FHFA acting director Edward DeMarco said reducing loan principal would encourage other borrowers to intentionally default, so they, too, could take advantage of a reduction. DeMarco stuck to this "moral hazard" argument, even though independent studies found that writing off debt would save taxpayer money, because fewer people would default.

Because of this stance, DeMarco was vilified by housing activists -- and scolded by the Obama administration, which was pushing for principal reduction in a package of assistance included with the landmark $25 billion mortgage settlement reached with lenders in 2012.

At one point, housing groups picketed DeMarco's home in suburban Maryland.

Mel Watt, a former Democratic congressman from North Carolina, replaced DeMarco in January. Housing activists expected him to quickly reverse course on principal reduction.

That didn't happen. Watt has made other moves to aid low-income borrowers, but he hasn't changed on forgiving mortgage debt. Because Fannie and Freddie control well over half of all outstanding loans, this stance means that the majority of homeowners simply don't qualify for principal reduction -- no matter how many dollars are pledged as part of multi-billion dollar settlements like the one inked by Bank of America.

Housing groups have not complained about Watt as loudly as they did about DeMarco, though they still argue for a change.

"We are pushing for principal reduction because housing is still a drag on the economy and communities are still in distress," said Enrique Lopezlira, senior policy advisor at the National Council of La Raza, a civil rights group that advocates for low-income borrowers.

Loperzlira said that while the housing market has improved, the recovery hasn't been evenly distributed. Nationally, about 17 percent of mortgages are underwater. But that figure jumps to 30 percent for lower-cost homes.

The FHFA's restrictions have kept principal reduction from reaching most of these people. So, too, has Bank of America policy.

As part of the 2012 national settlement, Bank of America forgave $4.6 billion in outstanding homeowner debt, for 28,630 people. That averages $160,905 per borrower. By way of comparison, the median home price in the U.S. is about $188,000.

In Ft. Myers, where housing counselor Falvey lives, the median home price is about $160,000 -- the average amount forgiven by Bank of America under the last deal. To Falvey, the conclusion is obvious: "They aren't helping us."

Rick Simon, a Bank of America spokesman, said using national housing prices to evaluate the bank's efforts "provides a faulty analysis."

Most relief offered under the national mortgage settlement was provided in states with much higher average home prices, Simon said. For example, about 30 percent of the principal reduction was in California, where average home values are among the highest in the country, he said. "Obviously, that pushed up the national average."

The bank has agreed to offer other forms of assistance, such as restructuring mortgages, and aid for buyers, as part of the new settlement.

Simon said most of the assistance in the new settlement likely will target homeowners who didn't qualify under the national mortgage settlement. Simon said the bank will begin reaching out to customers who may qualify at the end of the year.

AGB/AGB

The US Housing Market's Darkening Data

WitthayaP/Shutterstock

Peak Prosperity | Jun 3, 2014 | Brian Pretti

When looking at residential real estate, we often tend to focus almost solely on recent price movements in assessing the health of the housing market at any point in time. But as both homeowners and income-earners in the larger economy, of which the housing market is an important component, to really understand what's going on, we need clarity into the larger cycle driving those price movements.

The more we look at today's data, the more it looks like that we are in a new type of pricing cycle -- one that homeowners and housing investors have no prior experience with.

And the more we learn about the fundamentals underlying the current cycle, the harder it becomes to justify today's home prices on any sustained level. Meaning a downward reversion in home values is very probable in the coming years.

Read more..

Housing: One Chart Says it All

Counterpunch.org | Mar 21, 2014 | Mike Whitney

Get a load of this chart from DataQuick’s National Home Sales Snapshot. It’ll tell you everything need to know about housing.

(Note: MSA=metropolitan statistical area) As you can see, prices are flatlining or drifting lower while sales are sinking like a stone. That’s the whole ball of wax, isn’t it?

Sure, sales will increase in the spring (as they always do), but judging by the sharp dropoff in last year’s hottest markets, this could be the crappiest spring selling season since the crash.

Why?

Because prices are too high, rates are too high, “organic” demand is too weak, credit is too tight, and the pool of potential buyers has shrunk to the size of a walnut, that’s why.

The banks have reduced the percentage of distressed homes (foreclosures and short sales) on the market to roughly 11 percent from 59 percent in 2009. Fewer distressed homes mean higher prices, but higher prices mean fewer sales. It’s a trade-off. The banks get their money, but the market goes to hell. That’s how it works. According to most estimates, there are roughly 4.5 million homes in some stage of foreclosure. That means that –at the present pace–we should get through this Housing Depression a few weeks before Judgment Day. But don’t hold me to that.

Did you catch this gem on Bloomberg last week? It’s about the big private equity guys exiting the market. Take a look:

“Blackstone Group LP is slowing its purchases of houses to rent amid soaring prices after a buying binge made it the biggest U.S. single-family home landlord. Blackstone’s acquisition pace has declined 70 percent from its peak last year, when the private equity firm was spending more than $100 million a week on properties, said Jonathan Gray, global head of real estate for the New York-based firm…

“The institutional wave has passed,” Gray, who oversees almost $80 billion in property investments, said in a telephone interview. ‘It’s at a much lower level than it was 12 or 24 months ago.’

Private-equity firms, hedge funds, real estate investment trusts and other institutional investors have spent more than $20 billion to buy as many as 200,000 rental homes in the last two years. They snapped up properties after prices fell as much as 35 percent from the 2006 peak…
American Homes 4 Rent and Colony American Homes, the second- and third-largest single-family landlords, also have been scaling back as bargains dry up…

“We’re going to have to probably slow down a little bit on our acquisition pace until we have a better view or actual certainty of the capital being available,” (Chief Executive Officer David ) Singelyn said.

Colony Financial Inc. (CLNY), a REIT that invests in Colony American Homes, slowed its funding for acquisitions last year to focus on improving operations, CEO Richard Saltzman said in a November conference call…

American Residential Properties Inc. (ARPI), a landlord with 6,000 homes, slowed acquisitions by almost half in its latest quarter ending Dec. 31. It invested $104 million in 633 homes compared with $204 million on 1,251 homes in the previous quarter, the Scottsdale, Arizona-based company said in a statement.” (Blackstone’s Home Buying Binge Ends as Prices Surge, Bloomberg)

Okay, so the speculators are getting out of housing. How’s that going to effect the market?

No one really knows yet, but it can’t be good, after all, all-cash deals amounted to nearly 50 percent of all homes sales in many of the hotter markets last year. That’s why prices went up even though the economy was still in the shitter, because the fatcats were loading up on cheap real estate. Now it looks like they’re headed for the hills. That’s NOT going to be good for sales.

Did you know that existing home sales have dropped for six months straight, dipping below trend to the same level they were at in 1998?

But how can that be, you ask, when everyone’s blabbing about the recovery? How can that be when the Fed has purchased more than $1.4 trillion in mortgage-backed securities (MBS) and rates are a measly 4.5%? How can that be prices have been climbing higher for more than a year?

Sales are dropping because millions of people are underwater on their mortgages and can’t afford to move. Millions more are stuck in their homes and aren’t paying anything at all. Millions more have student debt up to their eyeballs and will probably never own a home. And millions more still can’t find a job. That’s why home sales are plunging, because the economy stinks. It’s that simple. Sure, the market got a nice little bump from Bernanke’s $4 trillion liquidity-surge. Big whoop. Besides, that was 2012-2013. Today things are different. Today the Fed is winding down QE and there’s even talk of rate-hike. How do you think that’s going to impact sales?

Now get a load of this from Redfin:

“Home sales continued to be sluggish in February, and decreasing affordability is holding back would-be buyers, according to Redfin…. Slow sales have been largely attributed to low inventory for months, but many markets have now seen inventory rise while sales continue to fall. Several markets along the West Coast have seen sharp increases in inventory, yet home sales in the West fell 13.4 percent year over year, hitting their lowest point in five years in the first two months of 2014, while prices rose 19.1 percent year over year…

West Coast Sales Hit Lowest Point in Five Years

– In Redfin’s West Coast markets, sales fell 13.4% from February 2013, and hit a five-year low in the first two months of 2014. Sales fell most dramatically in Las Vegas (-22.7%), Sacramento (-21.8%) and Ventura (-20.8%). Across 19 markets, sales fell 10.3%, with markets east of the Rockies taking a less dramatic hit and a few even seeing modest increases.” (Redfin)

Did you catch that part about “inventory rising while sales continue to fall”?

For months, the media has been using the “low inventory” excuse for the rotten sales figures. Now they’ve moved onto “bad weather” to pull the wool over people’s eyes. Talk about a lame excuse. It’s been in the 70 and 80s in California for most of the winter and sales are down by a whopping 13 percent. Are potential buyers staying at home because they’re afraid of getting skin cancer? Is that it? (That’ll probably be the next excuse.)

So why ARE home sales tanking?

It’s because you can’t buy a house if you’re working graveyard at Freddie’s Burger Bar for $8.50 an hour. It’s because you can’t put together a 20% down-payment if you’re camped out on Mom’s sofa in the attic along with Uncle Murray’s trombone and your Dad’s photo collection of soup cans. It’s because you can’t qualify for a mortgage when 100 percent of your weekly paycheck goes to paying the VISA, filling the gas-tank, and buying a few groceries at Danny’s Discount Foodmart. It can’t be done.

That’s what’s really going on. That’s why the share of firsttime homebuyers is currently at its lowest level ever. That’s why purchase applications are at an 18-year low. That’s why the homeownership rate has slipped to levels not seen since 1995. And that’s why mortgage originations were down almost 60 percent year-over-year. It’s because the economy sucks. Everyone knows it.

Now take a look at one last chart. It’s by Logan Mohtashami at dshort.com. from an article titled, Mortgage Purchase Applications Running Out Of Time.

As you can see, there’s a pretty close connection between incomes (the green line) and the mortgage purchase applications index. (The people who can afford to buy homes.)
Surprised?

Of course not, because most people assume there’s a relationship between ‘what a person earns’ and his ‘ability to buy a home’. After all, we haven’t always lived in this bizarro credit-addled world where anyone who can sit upright in a chair and sign his name on the dotted line can buy a $450,000 rambler in Orchard Hills. That’s a fairly new development.

And that brings us to the point of this article, which is to show that all the monetary hocus pocus has achieved nothing. The Fed’s Koolaid infusions have been a dead-loss. The market is still flat on its back. Kaput. Which shows, that if you want to fix housing, you have to fix the economy. And if you want to fix the economy; you have to put people back to work and pay them a fair wage. It’s that simple.

So why can’t anyone in Washington figure it out?

(Note: As this article was going to press, the latest “existing home sales” data was released.) According to USA Today:

“Existing home sales slowed again in February, falling to the lowest pace in 19 months.”

So February was even slower than the coldest month of the year, January?

Unbelievable.
 
MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

Foreclosure Filings Jump as Investors Eye Exits

Image source: US Census Bureau, Housing Vacancy Survey.

Foreclosure Filings Jump as Investors Eye Exits
Feb 17, 2014 | It's Our Economy | Mike Whitney

“Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

-John Maynard Keynes, The General Theory of Employment, Interest and Money

It’s too bad Keynes isn’t around today to see how the toxic combo of financial engineering, central bank liquidity and fraud have transformed the world’s biggest economy into a hobbled, crisis-prone invalid that’s unable to grow without giant doses of zero-rate heroin and mega-leverage crack-cocaine. This is exactly what the British economist warned about more than half a century ago in his magnum opus, “The General Theory…”, that you can’t build a vital, prosperous economy on the ripoff, Ponzi scams of Wall Street charlatans, mountebanks and swindlers. It can’t be done. And, yet– here we are again– in the middle of another historic asset-price bubble conceived and engineered by the bubbleheaded crackpots at the Federal Reserve. Go figure?

Just take a look at housing, which is at the end of an astonishing 18-month run that was entirely precipitated by what?

Higher wages?

Nope.

Lower unemployment?

Wrong again.

Consumer confidence, bigger incomes, credit expansion, growing revenues, pent-up demand?

No, no, no, no and no. Economic fundamentals played no part in the so called housing rebound. In fact–as everyone knows–the economy stinks as bad today as it did 4 years ago when the government number-crunchers announced the end of the recession. The reason prices have been rising is because of the Fed’s loosy-goosey monetary policy (fake rates and QE), inventory suppression, bogus gov mortgage modification programs, and unprecedented speculation. (mainly Private Equity and investors groups) Those are the four legs of the stool propping up housing. Only now it looks like a couple of those legs are in the process of being sawed off which is going to put downward pressure on sales and prices. Take a look at this from DS News:

“A majority of experts surveyed by Zillow and Pulsenomics expect large-scale investors will pull out of the housing market in the next few years…

Out of 110 economists, real estate experts, and investment strategists surveyed in Zillow’s latest Home Value Index, 57 percent said they think institutional investors will work to sell the majority of homes in their portfolios “in the next three to five years.” These investors are largely credited with propping up housing during its recession, helping to keep sales volumes from plummeting too far.

While their withdrawal will most certainly affect today’s still-fragile market—79 percent of those surveyed said the impact would be “significant or somewhat significant” should investor activity curtail this year.”

Experts Predict Level Playing Field as Investors Withdraw, DS News

This is what we were afraid of from the very beginning, that the big PE firms would pack-it-in and move on once they’d made a killing, which they have, since prices soared 12 percent in one year. Now they want to get out while they getting is good, which means that–in some of the hotter markets where investors represented upwards of 50 percent of all purchases–there will have to be a new source of demand. Unfortunately, the demand for housing has never been weaker.

Sales are down, purchase applications are down, and the country’s homeownership rate has slipped to levels not seen since 1995, 18 years ago. The Fed’s $1 trillion purchase of mortgage backed securities (MBS) and zero rates have done nothing to stimulate “organic” consumer demand. Zilch. No “trickle down” at all. All the policy has done is generate a temporary surge of speculation that’s distorted prices and created conditions for another big bust. Get a load of this article from Housing Perspectives:

“Although household growth is the major driver of housing demand, getting an accurate picture of recent trends in this measure is difficult…In its recent release, the HVS reported annual household growth of just 448,800 in 2013. This represents a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession (Figure 1).

Repeat: “…a 48 percent drop in household growth relative to that from 2012 and marked the lowest annual household growth measure since 2008, in the depths of the Great Recession.”

Do you really think there are enough firsttime homebuyers in out there in Mortgageland to fill that gap?

In your dreams! Keep in mind, that a lot of firsttime homebuyers are collage grads who want to start a family and put down roots. Regrettably, nearly half of those potential buyers have been scrubbed from the list due to their burgeoning student loans which now exceed $1 trillion. These kids will probably never own a home, let-alone have a positive impact on sales in 2014. Ain’t gonna happen.

Maybe this is why the banks are suddenly speeding up their foreclosure filings, because they want to offload more of their distressed inventory before prices fall. Is that it? Check out this article on Housingwire:

“Monthly foreclosure filings — including default notices, scheduled auctions and bank repossessions — reversed course and increased 8% to 124,419 in January from December, according to the latest report from RealtyTrac.

This marks the 40th consecutive month where foreclosure activity declined on an annual basis, with filings down 18% from January…

As a whole, 57,259 U.S. properties started the foreclosure process for the first time in January, rising 10% from December…

…this month’s foreclosure starts increased from a year ago in 22 states, including Maryland (up 126%), Connecticut (up 82%), New Jersey (up 79%), California (up 57%), and Pennsylvania (up 39%).

Scheduled foreclosure auctions jumped 13% in January compared to the previous month.” RealtyTrac: Monthly foreclosure filings reverse course, rise 8%, Housingwire

Like most articles on housing, you have to sift through the bullshit to figure out what’s really going on, but it’s worth the effort. The banks have been dragging their feet for 40 months now, slowing down the foreclosure process (and adding to the shadow supply of distressed homes.) in order to push up prices hoping to ignite another boom. Now–after 3 and a half years of blatant collusion–they’ve done a 180 and started speeding up foreclosures. Why?

It’s because they agree with the above-mentioned “110 economists, real estate experts, and investment strategists” who think that “institutional investors” are going to call-it-quits and move on to greener pastures. That’s going to push down prices, which means they’re going to lose money. So they want to get ahead of the curve and dump more houses on the market before the stampede. That way, they lose less money.

Keep in mind, the banks are up-to-their-eyeballs in distressed inventory. Even conservative estimates of shadow backlog puts the figure of 90-day delinquent or worse, above 3 million homes. But if you review the gloomier prognostications, the sum could easily exceed 6 million homes, enough to suck the entire bleeding banking system into a black hole of insolvency. There was an interesting article on the topic in Bloomberg last week. It seems that, “bond king” Jeffrey Gundlach has been warning mortgage-backed security purchasers that they should to pay more attention to underlying collateral in MBSs (vacant homes, that is) which have been “rotting away” for “six years” or more. Here’s a clip from the article:

“The housing market is softer than people think,” Mr. Gundlach said, pointing to a slowdown in mortgage refinancing, shares of homebuilders that have dropped 13% since reaching a high in May, and the time it’s taking to liquidate defaulted loans…

About 32% of seriously delinquent borrowers, those at least 90 days late, haven’t made a payment in more than four years, up 7% from the beginning of 2012, according to Fitch analyst Sean Nelson.

“These timelines could still increase for another year or so,” Mr. Nelson said, leading to even higher losses because of added legal and tax costs, and a greater potential for properties to deteriorate.”

Gundlach Counting Rotting Homes Makes Subprime Bear, Bloomberg

Let me get this straight: The number of “seriously delinquent borrowers” has actually gone up in the last year? Not only that, but many of these people “haven’t made a payment in more than four years”?

That’s a mighty fine recovery you got there, Mr. Bernanke. Sheesh.

Keep in mind, the backlog of unwanted homes could be a lot bigger than most people think. Way bigger. I was reading an article by Keith Jurow the other day, (“The Coming Mortgage Delinquency Disaster”, Keith Jurow, dshort.com) that paints a pretty grim picture of what is really going on behind the faux inventory numbers. Jurow–who has done extensive research on pre-foreclosure notice filings in New York state– says: “The number of monthly foreclosure filings in Suffolk County on Long Island …(were) more than 180,000 (while) fewer than 1,000 foreclosure filings had been served each month in (the last 4 years). By this calculation, Jurow figures that there should have been 1,192,000 foreclosures in New York state while the actual percentage of homes that have been repossessed remains in the single digits. (Read the wholearticle here.)

Chew on that for a minute. So, that’s a total of 180,000 homeowners who would have faced foreclosure under normal conditions, while less than 48,000 have actually been foreclosed. That’s 132,000 fewer foreclosures than there should have been IN JUST ONE COUNTY IN ONE STATE ALONE.”

The reason the prodigious shadow stockpile continues to balloon is quite simple, as Jurow points out in his piece: “Servicers do not foreclose on seriously delinquent borrowers throughout the entire NYC metro area. Completed foreclosures have actually declined rather dramatically throughout the nation in the past two years. The difference is that in the NYC metro, the servicers have not been foreclosing since the spring of 2009.”

So, there you have it; the banks haven’t been foreclosing because it hasn’t been in their interest to foreclose. Foreclosure sales push down prices which batters balance sheets and scares shareholders. Who wants that? So the game goes on. Only now, the dynamic is changing. Skittish investors are eyeing the exits, QE is winding down, and housing prices have peaked. The recovery has reached its zenith, which is why the bankers want get off on the top floor before the elevator begins its bumpy descent.

People who are thinking about buying a house in the near future, should watch developments in the market closely and proceed with extreme caution. No one wants to get burned in another bank swindle.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at fergiewhitney@msn.com.

Originally published in Counterpunch.

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet

The Vampire Squid Strikes Again: The Mega Banks' Most Devious Scam Yet
Feb 12, 2014 | Rolling Stone | Matt Taibbi

Call it the loophole that destroyed the world. It's 1999, the tail end of the Clinton years. While the rest of America obsesses over Monica Lewinsky, Columbine and Mark McGwire's biceps, Congress is feverishly crafting what could yet prove to be one of the most transformative laws in the history of our economy – a law that would make possible a broader concentration of financial and industrial power than we've seen in more than a century.

But the crazy thing is, nobody at the time quite knew it. Most observers on the Hill thought the Financial Services Modernization Act of 1999 – also known as the Gramm-Leach-Bliley Act – was just the latest and boldest in a long line of deregulatory handouts to Wall Street that had begun in the Reagan years.

Wall Street had spent much of that era arguing that America's banks needed to become bigger and badder, in order to compete globally with the German and Japanese-style financial giants, which were supposedly about to swallow up all the world's banking business. So through legislative lackeys like red-faced Republican deregulatory enthusiast Phil Gramm, bank lobbyists were pushing a new law designed to wipe out 60-plus years of bedrock financial regulation. The key was repealing – or "modifying," as bill proponents put it – the famed Glass-Steagall Act separating bankers and brokers, which had been passed in 1933 to prevent conflicts of interest within the finance sector that had led to the Great Depression. Now, commercial banks would be allowed to merge with investment banks and insurance companies, creating financial megafirms potentially far more powerful than had ever existed in America.

All of this was big enough news in itself. But it would take half a generation – till now, basically – to understand the most explosive part of the bill, which additionally legalized new forms of monopoly, allowing banks to merge with heavy industry. A tiny provision in the bill also permitted commercial banks to delve into any activity that is "complementary to a financial activity and does not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally."

Complementary to a financial activity. What the hell did that mean?

"From the perspective of the banks," says Saule Omarova, a law professor at the University of North Carolina, "pretty much everything is considered complementary to a financial activity."

Fifteen years later, in fact, it now looks like Wall Street and its lawyers took the term to be a synonym for ruthless campaigns of world domination. "Nobody knew the reach it would have into the real economy," says Ohio Sen. Sherrod Brown. Now a leading voice on the Hill against the hidden provisions, Brown actually voted for Gramm-Leach-Bliley as a congressman, along with all but 72 other House members. "I bet even some of the people who were the bill's advocates had no idea."

Read more: http://www.rollingstone.com/politics/news/the-vampire-squid-strikes-again-the-mega-banks-most-devious-scam-yet-20140212?utm_source=dailynewsletter&utm_medium=email&utm_campaign=newsletter#ixzz2tGPpFDsG
Follow us: @rollingstone on Twitter | RollingStone on Facebook

WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET

WARPED, DISTORTED, MANIPULATED, FLIPPED HOUSING MARKET
Feb 3, 2014 | Washington's Blog | JimQ

The report from RealtyTrac last week proves beyond the shadow of a doubt the supposed housing market recovery is a complete and utter fraud. The corporate mainstream media did their usual spin job on the report by focusing on the fact foreclosure starts in 2013 were the lowest since 2007. Focusing on this meaningless fact (because the Too Big To Trust Wall Street Criminal Banks have delayed foreclosure starts as part of their conspiracy to keep prices rising) is supposed to convince the willfully ignorant masses the housing market is back to normal. It’s always the best time to buy!!!

The talking heads reading their teleprompter propaganda machines failed to mention that distressed sales (short sales & foreclosure sales) rose to a three year high of 16.2% of all U.S. residential sales, up from 14.5% in 2012. The economy has been supposedly advancing for over four years and sales of distressed homes are at 16.2% and rising. The bubble headed bimbos on CNBC don’t find it worthwhile to mention that prior to 2007 the normal percentage of distressed home sales was less than 3%. Yeah, we’re back to normal alright. We are five years into a supposed economic recovery and distressed home sales account for 1 out of 6 all home sales and is still 500% higher than normal. 

The distressed sales aren’t even close to the biggest distortion of this housing market. The RealtyTrac report reveals that all-cash purchases accounted for 42% of all U.S. residential sales in December, up from 38% in November, and up from 18% in December 2012. Does that sound like a trend of normalization? There were five states where all-cash transactions accounted for more than 50% of sales in December – Florida (62.5%), Wisconsin (59.8%), Alabama (55.7%), South Carolina (51.3%), and Georgia (51.3%). In the pre-crisis days before 2008, all-cash sales NEVER accounted for more than 10% of all home sales. NEVER. This is all being driven by hot Wall Street money, aided and abetted by Bernanke, Yellen and the rest of the Fed fiat heroine dealers.  

Read more..

Wells Fargo Forecloses on Breast Cancer Victim, She Loses Home, Life

Wells Fargo Forecloses on Breast Cancer Victim, She Loses Home, Life
Dec 2, 2013 | Opposing Views | Michael Allen

This year Marsha Kilgore, 62, lost her condo and her life.

According to the the Fresno Bee, Kilgore was diagnosed with breast cancer back in 2005 and underwent a double mastectomy.

Even though she could not work any longer, Kilgore was still making the mortgage payments on her Fresno, Calif. condo on time via her Social Security payments and disability money.

However, that all changed when World Savings offered her a “pick-a-payment” loan, which would supposedly allow Kilgore to pay less on her mortgage if she chose to.

Kilgore thought she had signed a fixed-rate loan when she was ill, but in reality the “pick-a-payment” loan hooked her in with a "teaser rate." Her monthly loan payment started at $656 in 2006, but went up to $1,012 in 2012.

Thanks to this “pick-a-payment” loan, Kilgore would owe $177,000 on the same condo that she borrowed $66,000 to buy in 1990.

Wells Fargo bank bought the Wachovia corporation, which included World Savings, in 2008, according to the Wells Fargo bank website.

Lilgire and other customers, who had been burned by World Savings' “pick-a-payment” loans, filed a class action lawsuit, which Wells Fargo settled in 2010.

According to BizJournals.com:

Under the agreement, Wells Fargo will offer affordable loan modifications to about 14,900 borrowers in the state with pick-a-pay loans approved by Wachovia or World Savings. Many of the loan modifications will include principal forgiveness, according to Attorney General officials. The agreement is expected to reach more than $2 billion.

Wells Fargo will also pay $32 million in restitution to more than 12,000 borrowers who used pick-a-pay loans and lost their homes through foreclosure. Payments will average about $2,650.

While that "sounded" good, Wells Fargo told Kilgore that she had to miss three house payments and get evicted from her home before getting a loan modification.

“We did provide a modification, but unfortunately, we could not find an option after that to allow her to stay in her home,” Wells Fargo spokesperson Tom Goyda told the Fresno Bee.
By this time Kilgore was diagnosed with chronic obstructive pulmonary disease. Kilgore had to have a permanent address in order for Medicare to help pay for her oxygen machines and other medical equipment.

Kilgore was evicted in June and lost her Medicare benefits. She lived in hotels, in her car and with friends.

On Oct. 16, Kilgore died in a Fresno hospital where she had been admitted with "a bad case of asthma."

Now, her attorney has filed a wrongful death lawsuit against Wells Fargo for $250,000.

“The bank made a conscious decision that their profit meant more than her life, and that’s despicable,” said Lenore Abert, who was Kilgore's lawyer. “They knew with 100 percent certainty that she would lose her home.”

Pastor Bill Knezovich, of Our Savior's Lutheran Church in Fresno, says the same thing happened to other people in the area.

"Two families in my congregation say the same thing happened to them," Pastor Knezovich told the Fresno Bee. "Because they wanted to make payments and were told to skip three."

Sources: Fresno Bee, WellsFargo.com, BizJournals.com

Walmart: The High Cost Of Low Prices FULL MOVIE

© Brave New Foundation

Walmart: The High Cost Of Low Prices FULL MOVIE
May 6, 2012 | Krazyjesus

WAL-MART: THE HIGH COST OF LOW PRICE is a feature length documentary that uncovers a retail giant's assault on families and American values.

The film dives into the deeply personal stories and everyday lives of families and communities struggling to fight a goliath. A working mother is forced to turn to public assistance to provide healthcare for her two small children. A Missouri family loses its business after Wal-Mart is given over $2 million to open its doors down the road. A mayor struggles to equip his first responders after Wal-Mart pulls out and relocates just outside the city limits. A community in California unites, takes on the giant, and wins!

Producer/Director Robert Greenwald and Brave New Films take you on an extraordinary journey that will change the way you think, feel -- and shop.

The People Speak Out: JP Morgan Tries Its Hand at Social Media … Gets Absolutely Lambasted By Angry Americans

© LA Times

JP Morgan Tries Its Hand at Social Media … Gets Absolutely Lambasted By Angry Americans
Nov 17, 2013 | Washington's Blog

Twitter Fail 

JP Morgan launched a social media campaign with the hashtag “Ask JPM” the other day.

Given JPM’s criminal behavior and manipulation of markets, Twitter users absolutely lambasted JPM, asking such questions as (via Buzzfeed):

• “Has the raw cunning of the electricity bid-rigging scheme … been unfairly overshadowed by the scale of the mortgage settlement? “

• “How do you decide who to foreclose on? Darts or a computer program?”

• “Every time another person loses their home to an illegal foreclosure, does a bell ring? “

• “If it came out Jamie Dimon had a propensity for eating Irish children, would you fire him? What if he’s still “a good earner”? “

Read more..

Look Out Below: Home Sales Plunge: “Biggest Drop in 40 Months”

Look Out Below: Home Sales Plunge: “Biggest Drop in 40 Months”
Oct 28, 2013 | SHTFPlan | Max Slavo

Last week the Sacramento Bee published a report indicating the foreclosure rates had returned to “normal” levels and that the, “foreclosure crisis that overwhelmed the greater Sacramento area for the past seven years has ended.” The Sacramento, California area was one of the hardest hit by the recession and foreclosures, with average home price declines reaching 50% in some areas.

If foreclosure rates were dropping, suggested analysts, it means that home sales must be rising again.

Except they didn’t.

According to a report from the National Association of Realtors home sales plunged significantly in the month of September. So much so that it is the single largest drop in signed home sales in 40 months.

The National Association of Realtors said Monday that its seasonally adjusted pending home sales index dropped 5.6 percent last month from August to a reading of 101.6. That also pushed the index below its year-ago level, the first time that’s happened in nearly 2 ½ years.

There is generally a one- to two-month lag between a signed contract and a completed sale. The drop suggests final sales will decline in the coming months.

Via Sac Bee

…

The pending home sales data collapsed in September (and remember this is before the shutdown and was heralded at the time as buyers rushing to buy before the risk of the shutdown slowed acceptances). Affordability, argued by some serial extrapolators as still being ‘relatively’ positive – has drastically weighed on housing at the margin just as we argued previously. This is the first annual drop in 29 months, the biggest drop in 40 months, and the biggest miss against expectations in 40 months.

Via Zero Hedge

There are a variety of factors that may be at play here. Officially, the NAR reports that the drop in sales is a result of higher mortgage rates and the government shutdown.

Of course, the shutdown didn’t happened until the month after the drop, so there’s that.

Rising mortgage rates certainly play a role, and those rates only declined to begin with because of massive Fed monetary intervention.

In fact, the Federal Reserve has made so much money available, that many economists believe the debt party is back.

We are very closely approaching 2007 levels of personal and business debt. Likewise, we’re reaching new highs on stock market exchanges and home prices seemed to be recovering to boot.

But the real question is… how can we possibly be in a recovery when millions of Americans remain unemployed and underpaid?

How is it possible that home prices were rising and sales increasing while a record 107 million Americans received government distributions?

How can we be out of a recession when nearly 50 million Americans – fully 23 million households, or about 20% – are dependent on food stamps?

The answer is simple.

The entire economy is now a complete sham.

The CPI economic growth index indicates our economy is growing at a rate of about 2.5%. Simultaneously, however, the official rate of inflation is 2.5% (nearly 6% if we look at the real numbers). What this means is that not only is the economy not growing, we are actually in a growth decline of at least 3%.

By economists’ definition, a recession is a period of time in which we experience negative economic growth for two quarters. Given we’ve seen a real decline in economic growth for at least the last five years, does anyone still believe we’re out of the recession?

Or is it possible that we are in a greater depression that continues to chip away at Americans’ wealth?

When experts say we’re out of the recession because the economy is growing, it’s important to understand that the purported “growth” is simply inflation making it’s way into the system.

It’s the very same reason for why stock markets have once again reached record highs (none of these company’s earnings justify their outrageous stock prices!), and why home prices didn’t continue to collapse.

They injected the system, literally, with trillions of dollars to keep prices afloat and avoid a deflationary depression.

The consequence, however, will be continued inflation – likely hyperinflation – in years to come.

The only other option is to scale back the Fed’s monetary expansion – in which case we see a complete collapse in prices.

The bottom line is that all roads to true recovery will be extremely painful.

Keiser Report: Working Class Debt Slaves (E506)

Keiser Report: Working Class Debt Slaves (E506)
Oct 5, 2013 | RT

In this episode of the Keiser Report, Max Keiser and Stacy Herbert, discuss David Cameron as a Special Purpose Vehicle (SPV) which causes the wealth of the nation to drop. They also discuss Continuous Payment Authorities as a metaphor for our financial systems continuously taking toll payments, whether via interest fees or inflation. Max also notes that David Cameron claims 'profits' is not a dirty word; and yet, to every major, successful corporation on Earth "profits' is, indeed, a word to be avoided at all costs. In the second half, Max interviews Dr Michael Hudson of michael-hudson.com about the global economic policies turning the UK into Greece and the U.S. into Latvia and a world in which only the little companies make profits.


FOLLOW Max Keiser on Twitter: http://twitter.com/maxkeiser

WATCH all Keiser Report shows here:
http://www.youtube.com/playlist?list=... (E1-E200)
http://www.youtube.com/playlist?list=... (E201-E400)
http://www.youtube.com/playlist?list=... (E401-current)

Matt Taibbi: U.S. Student Loan Bubble Saddles a Generation With Debt and Threatens the Economy

Matt Taibbi: U.S. Student Loan Bubble Saddles a Generation With Debt and Threatens the Economy 1/2
Aug 20, 2013 | democracynow

http://www.democracynow.org - On the heels of President Obama's signing of a measure keeping federally subsidized student loans at a relatively low rate through 2015, Rolling Stone political reporter Matt Taibbi joins us to discuss how the high price of U.S. college tuition and the federal expansion of student debt to pay for it pose a major threat to the economy. In his new article, "Ripping Off Young America: The College-Loan Scandal," Taibbi writes: "The dirty secret of American higher education is that student-loan interest rates are almost irrelevant...[...]

The Resident: Evil Monetary Fiction

The Resident: Evil Monetary Fiction
Aug 18, 2013 | RTAmerica

If you listen to market reports on the financial industry, it sounds like we've pulled ourselves out of recession. Morgan Stanley, Bank of America, Goldman Sachs, Citigroup, JP Morgan Chase, and Wells Fargo all announced huge earnings this quarter. We're back baby, right? Not nearly. Not even close. Because those earnings are a reflection on what our money really is. The Resident (aka Lori Harfenist) explores the nature of evil monetary fiction.

Follow The Resident on Twitter at http://www.twitter.com/TheResident

Unsealed court-settlement documents reveal banks stole $trillions' worth of houses

Blacklisted News: Unsealed court-settlement documents reveal banks stole $trillions' worth of houses
Aug 12, 2013 | Boing Boing

Back in 2012, the major US banks settled a federal mortgage-fraud lawsuit for $1B. The suit was filed by Lynn Szymoniak, a white-collar fraud specialist, whose own house had been fraudulently foreclosed-upon. When the feds settled with the banks, the evidence detailing the scope of their fraud was sealed, but as of last week, those docs are unsealed, and Szymoniak is shouting them from the hills. The banks precipitated the subprime crash by "securitizing" mortgages -- turning mortgages into bonds that could be sold to people looking for investment income -- and the securitization process involved transferring title for homes several times over. This title-transfer has a formal legal procedure, and in the absence of that procedure, no sale had taken place. See where this is going?

The banks screwed up the title transfers. A lot. They sold bonds backed by houses they didn't own. When it came time to foreclose on those homes, they realized that they didn't actually own them, and so they committed felony after felony, forging the necessary documentation. They stole houses, by the neighborhood-load, and got away with it. The $1B settlement sounded like a big deal, back when the evidence was sealed. Now that Szymoniak's gotten it into the public eye, it's clear that $1B was a tiny slap on the wrist: the banks stole trillions of dollars' worth of houses from you and people like you, paid less than one percent in fines, and got to keep the homes.

Now that it’s unsealed, Szymoniak, as the named plaintiff, can go forward and prove the case. Along with her legal team (which includes the law firm of Grant & Eisenhoffer, which has recovered more money under the False Claims Act than any firm in the country), Szymoniak can pursue discovery and go to trial against the rest of the named defendants, including HSBC, the Bank of New York Mellon, Deutsche Bank and US Bank.

The expenses of the case, previously borne by the government, now are borne by Szymoniak and her team, but the percentages of recovery funds are also higher. “I’m really glad I was part of collecting this money for the government, and I’m looking forward to going through discovery and collecting the rest of it,” Szymoniak told Salon.

It’s good that the case remains active, because the $1 billion settlement was a pittance compared to the enormity of the crime. By the end of 2009, private mortgage-backed securities trusts held one-third of all residential mortgages in the U.S. That means that tens of millions of home mortgages worth trillions of dollars have no legitimate underlying owner that can establish the right to foreclose. This hasn’t stopped banks from foreclosing anyway with false documents, and they are often successful, a testament to the breakdown of law in the judicial system. But to this day, the resulting chaos in disentangling ownership harms homeowners trying to sell these properties, as well as those trying to purchase them. And it renders some properties impossible to sell.

To this day, banks foreclose on borrowers using fraudulent mortgage assignments, a legacy of failing to prosecute this conduct and instead letting banks pay a fine to settle it. This disappoints Szymoniak, who told Salon the owner of these loans is now essentially “whoever lies the most convincingly and whoever gets the benefit of doubt from the judge.” Szymoniak used her share of the settlement to start the Housing Justice Foundation, a non-profit that attempts to raise awareness of the continuing corruption of the nation’s courts and land title system.

Your mortgage documents are fake! [David Dayen/Salon]

(Image: Foreclosure, a Creative Commons Attribution (2.0) image from andrewbain's photostream)

Obama’s Housing Program: A Windfall for Wall Street

© Global Research

Global Research: Obama’s Housing Program: A Windfall for Wall Street
Aug 8, 2013 | World Socialist Website | Nick Barrickman and Andre Damon

US President Barack Obama spoke Tuesday at a high school in Phoenix, Arizona, where he outlined a series of proposals that would lead to a windfall for mortgage lenders, in the name of a “better bargain for the middle class.” Obama called for the elimination of Fanny Mae and Freddie Mac, the government-backed mortgage lenders.

The proposal to eliminate the mortgage lenders represents yet another concession to the demands of Wall Street and the Republican right, which have for decades derided Fannie and Freddie as impinging on the “free market,” and blamed them, as a proxy for government intervention in the private economy, for the 2008 financial crash.

Obama said that his proposal would “end Fannie and Freddie as we know them,” adding that, “For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was ‘heads we win, tails you lose.’ And it was wrong.”

Obama said, “I believe that our housing system should operate where there’s a limited government role and private lending should be the backbone of the housing market,” adding “I know that sounds confusing to folks who call me a socialist.”

The call for eliminating Fannie Mae and Freddie Mac is entirely of a piece with every other action taken by the Obama Administration in response to the housing crisis, which has been aimed entirely at expanding the profits of the Wall Street financial institutions responsible for the 2008 crash.

The US home ownership rate hit its lowest level in nearly eight years in 2013, according to a report released in June by the Harvard University Center for Housing Studies.

In his speech, Obama presented a fraudulent overview of his administration’s record on the housing crisis, seeking to present his policies as aiming to “foster homeownership” and protect the “middle class.” Obama said that, “less than a month after I took office, I came here to Arizona and laid out steps to stabilize the housing market and help responsible homeowners get back on their feet” through a program which “helped millions of Americans save an average of $3,000 each year by refinancing at lower rates.”

Obama was referring to the Home Affordable Modification Program, which the White House initially claimed would help up to four million families avoid foreclosure. In fact, less than half a million people received permanent modifications to their mortgages as a result of the program, half of whom were still expected to default.

Neil Barofsky, the former Special Inspector-General for the Troubled Asset Relief Program (SIGTARP) described Obama’s mortgage modification program as a “failure,” which left home-owners in a “far worse place than they would have been had this program not existed.”

Barofsky characterized the program in his book, Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street, as follows: “[Treasury Secretary Timothy] Geithner apparently looked at HAMP as an aid to the banks, keeping the full flush of foreclosures from hitting the financial system all at the same time.” At one point, Geithner told Barofsky that the intended function of the program was to “foam the runway” for the banks in order to avoid being hit by too many mortgage defaults all at once.

Obama likewise praised the settlement that his administration mediated last year with the five largest mortgage lenders, saying, “we worked with states to force big banks to repay more than $50 billion to more than 1.5 million families—the largest lending settlement in history.”

The terms of this mortgage agreement were entirely favorable to the banks, while doing little or nothing to aid the millions of people who have been devastated by the collapse of the US housing market. In exchange for the settlement, the banks were released from liability for their fraudulent activities, including the widespread illegal practice of “robo-signing,” in which the banks had employees sign hundreds of thousands of foreclosure documents without any knowledge of the underlying mortgages.

Wall Street officials responded positively to Obama’s speech. “Washington has suddenly come alive on housing finance reform,” David Stevens, president of the Mortgage Bankers Association, told the New York Times. “We saw nothing substantive prior to this year, but now we’re in a housing recovery and the odds have clearly improved given that both the House and Senate have weighed in.”

As with all other initiatives Obama has undertaken, from healthcare, to immigration, to education “reform,” the basic parameters of his policies have been tailored to suit the interests of Wall Street and big business, while couched in the language of helping the “middle class,” combating inequality, and creating jobs.

DOJ sues Bank of America for fraud

DOJ sues Bank of America for fraud
Aug 7, 2013 | RTAmerica

On Tuesday, the Justice Department filed a lawsuit against Bank of America. The department is accusing the financial institution of defrauding its investors by understating the risks behind its residential mortgage backed securities. Anthony Randazzo, director of Economic Research for the Reason Foundation, weighs in on the latest lawsuit against BOA and explains the fraud allegations.

Why Another Great Real Estate Crash Is Coming

Why Another Great Real Estate Crash Is Coming
Aug 2, 2013 | ECB | Michael Synder

There are very few segments of the U.S. economy that are more heavily affected by interest rates than the real estate market is.  When mortgage rates reached all-time low levels late last year, it fueled a little "mini-bubble" in housing which was greatly celebrated by the mainstream media.  Unfortunately, the tide is now turning.  Interest rates are starting to move up steadily, even though the Federal Reserve has been trying very hard to keep that from happening.  A few weeks ago, when Federal Reserve Chairman Ben Bernanke suggested that the Fed may start to "taper" the rate of quantitative easing eventually, the bond market had a conniption and the yield on 10 year U.S. Treasuries shot up dramatically.  In an attempt to calm the market, the Fed stopped all talk of a "taper" and that helped settle things down for a brief period of time.  But now the yield on 10 year U.S. Treasuries is starting to rise aggressively again.  Today it closed at 2.71 percent, and many analysts believe that it will go much higher.  This is important for the housing market, because mortgage rates tend to follow the yield on 10 year U.S. Treasuries.  And if mortgage rates keep rising like this, another great real estate crash is inevitable.

This wasn't supposed to happen.  Federal Reserve Chairman Ben Bernanke said that he could use quantitative easing to control long-term interest rates.  He assured us that he could force mortgage rates down for an extended period of time and that this would lead to a housing recovery.

But now the Fed is losing control of long-term interest rates.  If this continues, either the Federal Reserve will have to substantially increase the rate of quantitative easing or else watch mortgage rates rise to absolutely crippling levels.

Three months ago, the average rate on a 30 year mortgage was 3.35 percent.  It has shot up more than a full point since then...

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan rose to 4.39% from 4.31% last week. Rates are a full percentage point higher than in early May.

And as the chart below shows, mortgage rates have a lot more room to go up...

As mortgage rates go up, so do monthly payments.

And monthly payments are already beginning to soar.  Just check out this chart.

So what happens if mortgage rates eventually return to "normal" levels?

Well, it would be absolutely devastating to the housing market.  As mortgage rates rise, less people will be able to afford to buy homes at current prices.  This will force home prices down.

To a large degree, whether or not someone can afford to buy a particular home is determined by interest rates.  The following numbers come from one of my previous articles...

A year ago, the 30 year rate was sitting at 3.66 percent.  The monthly payment on a 30 year, $300,000 mortgage at that rate would be $1374.07.

If the 30 year rate rises to 8 percent, the monthly payment on a 30 year, $300,000 mortgage at that rate would be $2201.29.

Does 8 percent sound crazy to you?

It shouldn't.  8 percent was considered to be normal back in the year 2000.

And we are already seeing rising rates impact the market.  The number of mortgage applications has fallen for 11 of the past 12 weeks, and this has been the biggest 3 month decline in mortgage applications that we have witnessed since 2009.

Rising interest rates will also have a dramatic impact on other areas of the real estate industry as well.  For example, public construction spending is now the lowest that it has been since 2006.

And I find the chart posted below particularly interesting.  As a Christian, I am saddened that construction spending by religious institutions has dropped to a stunningly low level...

So what does all of this mean?

Well, unless interest rates reverse course it appears that we are in the very early stages of another great real estate crash.

Only this time, it might not be so easy for the big banks to swoop in and foreclose on everyone.  Just check out the radical step that one city in California is taking to stop bank foreclosures...

Richmond is the first city in the country to take the controversial step of threatening to use eminent domain, the power to take private property for public use. But other cities have also explored the idea.

Banks, the real estate industry and Wall Street are vehemently opposed to the idea, calling it “unconstitutional” and a violation or property rights, and something that will likely cause a flurry of lawsuits.

Richmond has partnered with San Francisco-based Mortgage Resolution Partners on the plan. Letters have been sent to 32 servicers and trustees who hold the underwater loans. If they refuse the city’s offer, officials will condemn and seize the mortgages, then help homeowners to refinance.

If more communities around the nation start using eminent domain to stop foreclosures, that is going to change the cost of doing business for mortgage lenders and it is likely going to mean more expensive mortgages for all the rest of us.

In any event, all of this talk about a "bright future" for real estate is just a bunch of nonsense.

You can't buy a home if you don't have a good job.  And as I wrote about the other day, there are about 6 million less full-time jobs in America today than there was back in 2007.

You can't get blood out of a stone, and you can't buy a house on a part-time income.  The lack of breadwinner jobs is one of the primary reasons why the homeownership rate in the United States is now at its lowest level in nearly 18 years.

And we aren't going to produce good jobs if our economy is not growing.  And economic growth in the U.S. has been anemic at best, even if you believe the official numbers.

We were originally told that the GDP growth number for the first quarter of 2013 was 2.4 percent.  Then it was revised down to 1.8 percent.  Now it has been revised down to 1.1 percent.

So precisely what are we supposed to believe?

Overall, since Barack Obama has been president the average yearly rate of growth for the U.S. economy has been just over 1 percent.

That isn't very good at all.

But remember, the government numbers have been heavily manipulated to look good.

The reality is even worse.

According to the alternate GDP numbers compiled by John Williams of shadowstats.com, the U.S. economy has continually been in a recession since 2005.

And now interest rates are rising rapidly, and that is very bad news for the U.S. economy.

I hope that you have your seatbelts buckled up tight, because it is going to be a bumpy ride.

Bank of America whistleblowers say they were told to lie about mortgages

© Natural News

Bank of America whistleblowers say they were told to lie about mortgages
July 30, 2013 | Natural News | J. D. Heyes

Americans still reeling from the collapse of the U.S. housing market and who lost homes or tens of thousands of dollars in equity are going to be especially upset by news that one of the lenders at the heart of the collapse, Bank of America, is guilty of fleecing borrowers and rewarding foreclosures.

According to BoA employees-turned-whistleblowers who have signed sworn statements attesting to the validity of their accusations, "Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure," investigative journal ProPublica is reporting.

The statements were filed in mid-June in a Boston federal court as part of a multi-state class-action lawsuit brought by homeowners who attempted to avoid foreclosure via the Home Affordable Modification Program (HAMP), a government program, but say their cases were botched by BoA.

Homeowners denied en masse 

As expected, BoA is officially denying any wrongdoing, with a spokesman telling ProPublica that to a person, the former employees' claims are "rife with factual inaccuracies," adding that the bank planned to address the accusations more fully in July.

The spokesman, who was not identified by name, went on to say that BoA was responsible for modifying more loans than any other U.S. bank, and that the financial institution is continuing to "demonstrate our commitment to assisting customers who are at risk of foreclosure."

A half dozen former employees actually worked for BoA, while one worked for a contractor. "They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government's program," ProPublica reported.

When HAMP was launched by the Obama Administration in 2009, the housing collapse was still ravaging the U.S. economy and homeowners. At the time, BoA was, by far, the largest mortgage servicing institution in the program, with twice as many loans eligible as the next largest institution.

According to the former employees, BoA - besieged with a rush of panicked homeowners - the bank would often either mislead them or deny their applications for bogus reasons.

William Wilson, Jr., an underwriter and manager for BoA from 2010 to 2012, said at times large groups of homeowners were denied at once via a procedure called a "blitz." Per Pro Publica:

As part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, Wilson said, the bank ordered that all files with documentation 60 or more days old simply be denied.

"During a blitz, a single team would decline between 600 and 1,500 modification files at a time," he said in his sworn statement. In order to justify such mass denials, employees devised fictitious reasons for the rejections, such as claiming that the homeowner had not filed the appropriate paperwork when they really had.

Mass denials like these may also have occurred at other financial institutions, the report said.

Chris Wyatt, formerly of Goldman Sachs subsidiary Litton Loan Servicing, told Pro Publica last year that the firm sometimes conducted "denial sweeps" of applicants, to reduce backlogs. At the time, a Goldman Sachs spokesperson denied Wyatt's claims but offered nothing to refute him.

Still 'too big to fail' 

Of the whistleblowers, five said they were encouraged to mislead customers.

"We were told to lie to customers and claim that Bank of America had not received documents it had requested," said Simone Gordon, an senior collector at the bank from 2007 until early 2012. "We were told that admitting that the Bank received documents 'would open a can of worms,'" she added, noting that BoA was required to underwrite applications within 30 days of receiving homeowners' documents, but that the bank did not have adequate staff for the task.

"Wilson said each underwriter commonly had 400 outstanding applications awaiting review," ProPublica reported.

Added Salon.com:

In reality, Bank of America used [the program] as a tool, say these former employees, to squeeze as much money as possible out of struggling borrowers before eventually foreclosing on them.

Despite so-called financial reforms passed in the wake of the housing scandal, BoA and others remain "too big to fail" (http://www.ft.com).

Sources for this article include:

http://www.salon.com

http://www.propublica.org

http://www.ft.com