Tuesday Report, October 19, 2010
Special to the Texas Low Income Housing Information Service
The megabanks resume foreclosures at breakneck speed and gobble up properties as 49 states start investigations into sleazy practices. GMAC, Bank of America and other corporations have not responded to growing criticism and potential lawsuits as their stocks drop.
In Texas, profiteering builders form neighborhood associations and write letters to HUD in support of their projects – and it’s legal.
For a pdf version of the full stories, plus contextual information on social, environmental and legal areas, contact Bo McCarver at firstname.lastname@example.org
Foreclosuregate’s Price Tag: $70 Billion?
By Andy Kroll Mother Jones October 15, 2010
The growing foreclosure debacle, involving a host of lenders caught filing dubious paperwork, has finally caught up with the stocks of major banks. This week, Bank of America’s stock sank by 5 percent, while JPMorgan Chase’s dipped 3 percent. More staggering, though, are financial analysts’ predictions on just how much the foreclosure disaster will end up costing Wall Street.
One analyst with Connecticut-based Rochdale Securities told the New York Times’ Nelson Schwartz that “Foreclosuregate,” as it’s being dubbed, could cost banks $1.5 billion a quarter.
Full story at: http://motherjones.com/mojo/2010/10/foreclosure-crisis-price-tag-70-billionk
The Bank of America Mortgage Settlement Fiasco
By Alex Ulam The Nation October 17, 2010
Just as the American housing market was starting to recover from its worst battering since the Great Depression, a new scandal, an epidemic of flawed or fraudulent mortgage documents, threatens to send not just the housing market but the entire economy back into a tailspin. As we go to press, forty-nine state attorneys general have announced an investigation of the mortgage-servicing industry, in the wake of decisions by Bank of America, JPMorgan Chase, Ally Financial’s GMAC and other banks to suspend some foreclosures, and amid demands by some lawmakers for a nationwide moratorium on all foreclosures.
It’s impossible to tell at this early stage how deep the new crisis extends, but as they begin their investigation, the attorneys general would do well to re-examine the deeply flawed 2008 agreement with Bank of America in resolving the Countrywide Financial scandal, the largest anti–predatory lending settlement in US history. If they do, maybe they’ll get it right this time.
On October 6, 2008, a scant three weeks after Lehman Brothers filed for bankruptcy, with the financial crisis in full swing, California Attorney General Jerry Brown called a press conference in San Francisco. He announced that day, to great fanfare, “the biggest loan modification in American history.”
Full story at: http://www.thenation.com/article/155380/bank-america-mortgage-settlement-fiasco
Bank of America plans to resume some foreclosures
By Alan Zibel Associated Press October 18, 2010
WASHINGTON — Bank of America plans to resume foreclosures on more than 100,000 homes in 23 states next week, saying Monday it has a legal right to seize them.
Bank of America Corp., the country’s largest bank, began halting foreclosures on Oct. 2 amid questions of faulty paperwork.
The company on Monday said it plans to resubmit documents with new signatures in states that require a judge’s approval to restart the foreclosure process.
It will continue delaying foreclosures in 27 states that do not require a judge’s approval.
The entire process will result in fewer than 30,000 foreclosures being delayed, the company said.
The company’s initial assessment shows that “the basis for our foreclosure decisions is accurate,” said Dan Frahm, a Bank of America spokesman.
Full story at: http://www.chron.com/disp/story.mpl/ap/business/7252521.html
Foreclosure problems “shameful”: Housing Secretary
By Caren Bohan and Thomas Ferraro Reuters Oct 17, 2010
President Barack Obama’s housing secretary said on Sunday “it’s shameful” that financial institutions may have made the housing crisis worse by improperly processing foreclosures.
Shaun Donovan, secretary of the Department of Housing and Urban Development, said in a column on the Huffington Post website that a comprehensive review of the foreclosure crisis was under way and that the administration would respond with “the full force of the law where problems are found.”
There have been allegations that banks failed to review foreclosure documents properly or submitted false statements when they foreclosed on properties.
In addition to inquiries by attorneys general in all 50 U.S. states, the Justice Department and banking regulators, the Securities and Exchange Commission has begun a preliminary investigation.
Full story at: http://www.reuters.com/article/idUSTRE69G10J20101017
From This House, a Foreclosure Freeze
By David Streifeld New York Times October 14, 2010
DENMARK, Me. — The house that set off the national furor over faulty foreclosures is blue-gray and weathered. The porch is piled with furniture and knickknacks awaiting the next yard sale. In the driveway is a busted pickup truck. No one who lives there is going anywhere anytime soon.
Nicolle Bradbury bought this house seven years ago for $75,000, a major step up from the trailer she had been living in with her family. But she lost her job and the $474 monthly mortgage payment became difficult, then impossible.
It should have been a routine foreclosure, with Mrs. Bradbury joining the anonymous millions quietly dispossessed since the recession began. But she was savvy enough to contact a nonprofit group, Pine Tree Legal Assistance, where for once in her 38 years, she caught a break.
Her file was pulled, more or less at random, by Thomas A. Cox, a retired lawyer who volunteers at Pine Tree.
Full story at: http://www.nytimes.com/2010/10/15/business/15maine.html?_r=1&hp
The echo of empty homes
Brady Dennis Washington Post October 18, 2010
IN FORT MYERS, FLA. The yellow stucco house at 1813 Oakley Ave. has blooming bougainvillea out front, a spacious yard out back and a buyer named Emilio Mamuyac who’s smitten with the place and ready to move in. But he can’t.
Since early last month, the sale has been postponed three times as the mortgage finance giant Fannie Mae, which seized the home from a delinquent borrower, has faced concerns about whether the foreclosure was properly carried out.
And as this deal and others like it languish, the effects are rippling across this community on Florida’s west coast. Mamuyac has to continue paying rent for an apartment six miles down the road. Mamuyac’s real estate agent hasn’t been able to pocket his commission, nor has the seller’s agent. Another home inspector loses out on work.
How Wall Street Hid Its Mortgage Mess
By William Cohan New York Times October 14, 2010
The conventional wisdom has it that the Financial Crisis Inquiry Commission — the bipartisan group of wise men and women charged with uncovering what caused our recent economic meltdown and telling us what should be done to prevent a recurrence — is woefully out-of-touch and out-of-date. A Times article last month suggested that “an exodus of senior employees” from the commission and “internal disagreements” among those remaining could hamper efforts to produce a meaningful and useful report, which is due to be published in December.
But the conventional wisdom is often wrong, and this time will be no exception. I predict that not only will the commission’s report — and accompanying documents — reveal numerous causes of the crisis that others have overlooked, but also that it will have a significant impact on the regulations that still must be written by the Securities and Exchange Commission and the Treasury as part of the implementation on the Dodd-Frank financial reform law.
State says city must rebuild public housing
By Ian White Galveston County Daily News October 13, 2010
GALVESTON — The Galveston City Council has been put on notice that it must soon produce a commitment to rebuild its 569 public housing units lost to Hurricane Ike or lose $1 billion pledged to southeast Texas counties. With a total of $271 million granted to the city at stake, Mayor Joe Jaworski learned Monday evening that crunchtime has arrived for deciding whether to rebuild the homes under Round 2 of the federal government’s Hurricane Ike recovery program. He received a state letter saying two groups have said they will not approve any funding for recovery projects in the Houston-Galveston Area Council region if the city council does not, “in a timely fashion,” commit to rebuilding all the lost homes. The groups are fair housing advocacy organizations Texas Appleseed and Texas Low Income Housing Information Service, whose complaints forced Texas into the conciliation agreement that governs expenditure on Ike recovery projects and governs the way in which $3.1 billion of Community Development Block Grant recovery funds are spent throughout the state.
Full story at: http://galvestondailynews.com/story/183066
Meeting on public housing draws packed house
By Ian White Galveston County Daily News October 14, 2010
GALVESTON — Galveston’s town hall meeting about public housing played out before a packed house at the Island Convention Center on Wednesday evening.
Mayor Joe Jaworski received 75 questions at the end of his 20-minute introduction, ostensibly leaving 100 minutes to answer them but said he would take as long as possible to do so.
Jaworski received an ovation after he outlined for the audience how the members of the panel became and remain involved in the question of rebuilding the city’s public housing in the wake of Hurricane Ike.
He said the catalyst had been the state’s use of a “weather model” to distribute the funds allocated to it by the federal Department of Housing and Urban Development in the first round of the hurricane recovery effort.
He said that generated objections by fair-housing advocacy groups Texas Appleseed and Texas Low Income Housing Information Service, leading to the HUD Conciliation Agreement that now governs the way in which the state and its sub-recipients spend their recovery dollars.
Ful story at: http://galvestondailynews.com/story/183354
GHA chair cites health, family for resignation
By Amanda Casanova Galveston County Daily News October 15, 2010
GALVESTON — The chairwoman for the Galveston Housing Authority Board has resigned because of family and health reasons, Mayor Joe Jaworski said. Sharon Strain submitted her resignation from the board effective Tuesday. “I reluctantly accepted the resignation after speaking with her on Oct. 13,” Jaworski said in an e-mail. “I applaud her service, and I am grateful for her leadership. She is a tireless advocate for Galveston and its progress, and she will be missed. “I look forward to timely appointing her successor. I look forward to the GHA Board’s continued progress.” Strain could not be reached for comment Thursday. She was appointed chairwoman of the board in January. She was the executive director of the housing authority for 10 years and is credited for helping to turn it around. She resigned as executive director in 2007. “I have been a student of Ms. Strain’s philosophy for many years,” said Harish Krishnarao, who replaced Strain as executive director. “She has been a great guru, mentor, friend and monitor. Ms. Strain has been a model citizen, a great mother, a wonderful wife and a true steward for the families who had no voice.”
[End of story: http://galvestondailynews.com/story/183562]
Investors form neighborhood groups to help get public financing for housing
Community support of projects designed for people with lower incomes has evolved into pre-eminent part of Texas process.
By Eric Dexheimer Austin Ameican-Statesman October 18, 2010
On paper, Blake Rue and Britt Benton appear to be among Central Texas’ most community-minded people. According to state corporation records, the two have formed four neighborhood associations in the past three years, in Leander, Hutto, Buda and Schertz though the men themselves live in Austin.
Rue and Benton are also executives in companies that in recent years have invested in publicly financed housing projects for low-income residents — in Leander, Hutto, Buda and Schertz. Each of the neighborhood groups they formed later wrote letters of support on behalf of the affordable housing developments in which the men had invested.
Such letters can literally be worth millions of dollars. That’s because in Texas, more than other states, neighborhood organizations play a make-or-break role in projects built with public money through tax credit financing.
Full story at: http://www.statesman.com/news/statesman_focus/investors-form-neighborhood-groups-to-help-get-public-976298.html
HUD Unveils Winners of Sustainable Communities Awards
By Yonah Freemark The Next American City October 15, 2010
The Obama Administration has been a major promoter of smart growth. Over the past two years, officials in numerous federal agencies have argued that the United States must do a better job to integrate choices about housing and transportation. Headlining this initiative was the creation last year of an interagency partnership between the Department of Housing and Urban Development (HUD), the Department of Transportation, and the Environmental Protection Agency.
Most of these efforts, however, have been made without much of a federal funding commitment, and the truth is that while speeches are nice, money is better.
Full story at: http://americancity.org/columns/entry/2680/