Times Pieces on Foreclosure Crisis, Predatory Lending, and Wachovia Telemarketing Case

Yesterday the Times published an editorial on the Bush administration response to the foreclosure crisis, with the noteworthy headline, "Saying No to Everything."  An excerpt:

Even before the House passed a new plan last week to prevent foreclosures, President Bush threatened to veto the bill, calling it “overly burdensome.” The bill is not burdensome enough.

* * *

When Mr. Bush hasn’t been busy saying no to worthy efforts, he has been endorsing Orwellian-named programs that have failed to address the problem effectively. Hope Now, the mortgage industry alliance that pledged a big effort five months ago to modify subprime loans, has barely made a dent. Project Lifeline, announced last February, has yet to release any results. The Times reported last month that another program much touted by Mr. Bush, FHA Secure, has helped fewer than 2,000 homeowners at risk of foreclosure.

The Times has also published a number of other articles in recent weeks that we haven't yet linked to on the blog.  For example, on May 6, the Times reported on a speech by Fed Chair Bernanke in an article headlined "Bernanke Urges Flexibility in Mortgage Regulation."  Some excerpts:

The variety of factors leading to foreclosures makes it more difficult for mortgage lenders to help ailing homeowners, Mr. Bernanke said, noting that “lenders and services will have to develop new and flexible strategies to deal with this issue.”

In response, Mr. Bernanke recommended that government agencies take a more innovative approach to ensure that only qualified buyers take out loans. He urged Congress to provide the Federal Housing Administration, which insures mortgage loans, with “greater latitude” in setting appropriate standards for owners seeking to refinance their mortgages, and to adjust interest rates according to the level of risk of the applicants.

In "Countrywide Admit Errors at Hearing," published May 7, Countrywide acknowledged that its loan officers made mistakes "from time to time" but disputed other charges.  Countrywide promised to hire an outside auditor to review its actions.  Professor Katherine Porter of Iowa testifed:

that mortgage companies and servicers had improperly sought payments without fully disclosing or documenting fees.

In some cases, she said, companies have sought to foreclose on homes even after borrowers discharged their debts through the Chapter 13 bankruptcy process, which allows debtors to keep their homes while working out payment plans.

“The upsetting reality is that the current bankruptcy system routinely forces borrowers to pay bloated amounts and permits mortgage servicers to misbehave without serious consequence,” she told the Senate Judiciary subcommittee on administration oversight and the courts.

Federal law preempts state predatory lending statutes as to federal institutions, but what about when state institutions lend in other states?  Here is an article about a pact New York, New Jersey, and Pennsylvania signed last month providing that state institutions are subject to the predatory lending statutes of their home states when lending in one of the other states that is a party to the compact. 

We  previously blogged here about the case involving Wachovia's allegedly allowing telemarketers to use its accounts to steal millions from depositors. Wachovia and the OCC have now settled the case.  The report is here; Wachovia, while neither admitting nor denying wrongdoing, will pay as much as $144 million.  A case brought by alleged victims of the fraud is still pending.  The settlement's terms have drawn criticism, as reflected in the following excerpt:

Some critics of the settlement’s structure — including Representative Edward J. Markey, a Massachusetts Democrat and a senior member of the House Energy and Commerce Committee — complained that the agreement contained no guarantee that victims would be paid.

Under the terms of the settlement, victims will not automatically receive compensation from Wachovia. Instead, they will have to submit claims through a complicated bureaucracy. Because many of the victims are elderly or poorly educated, it is likely many of them will stymied by these obstacles, Mr. Markey said.

Comments

[health leads]

Their predatory telemarketing efforts often confuse people into signing up for uneccesarry products that increase their mortage payments.

[cris]

Everyone that has been a victim of predatory lending contact ACORN. They are currently targeting predatory lenders out there, including Wachovia, which is owned by Wells Fargo.Check out this article
http://www.predatorix.com/wfpredatorylending.htm

[cris]

Banks such as Wachovia should be sued for all the wrong doing they have caused for the forclosures that have occured. they knew what they were doing, they knew the loans were set up to fail. Wachovia misrepresented all of their clients and therefore should be liable for the clients that have foreclosed on their homes. Wachovia should, to the least modify clients loans to suit their income needs.

[Alexis McGee]

The FDIC said today they were implementing a plan to help 2.2M of the 4.4M of Homeowners in trouble. This means 50% will not qualify to get modified. They will need a way out of those properties. We have to help those who do not have the income to stay in their homes, we should allow for easier assumptions of existing loans.

This also means our window to buy REOs at unbelievable prices will not be here forever. The flow of new REOs will slow down and the housing market will stabilize once the excess inventory is absorbed.

[edith]

I got someone to do a loan modification for us but he told us to stop paying for the house. It has been almost 3 months and I have not heard from our modifier. He keeps sending me off and telling me that everything will be okay and that his lawyer will take care of it. Should I be concerned?

[Ellis Mott]

Hello,
I took a subprime loan from wachovia mortgage co.
the loan was for 170,000.00
we make 2200.00 monthly.
we have a 1257.00 monthly payment.
will any of this new money President Bush is giving help me?
As you can see, we are upside down.
I know, my fault but we still have the problem
signed, upset

[Foreclosure Questions]

You wonder just how ugly this thing is going to get. Yikes.