Los Altos Real Estate Blog

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The $25 Billion insult to the American homeowner

In case you hadn't heard, the banking industry and the Federal government settled the "robo-signing" fiasco that resulted in a significant number of improper foreclosures.  The bottom line is that people caught in this mess that haven't lost their homes will get a break and assistance with modifying their mortgages.  The folks who had their homes literally stolen through improper foreclosure procedures get...wait for it...$2000.  You can't even buy a decent car for that much, let alone a house.

How is this a "win" for the American homeowner?

Here's a bigger question - Why are we protecting the banks?  They literally stole property from hundreds of thousands of people and the only compensation offered is barely enough to cover rent.  The banking industry made money when all these loans were made.  They made money on the downturn and got a bailout.  The banks walked away from all this unscathed.  In fact, they still owe $133 billion to the federal government.  Who is looking out for the guy who lost his house?

Bryan's Scorecard on the Foreclosure Fiasco...

  • Banks - Winners!
  • Investors -Winners!
  • Existing homeowners - Winners!  (sort of)
  • Former homeowners - Shafted!  (royally)

This sort of "up yours" attitude from the banks and the Federal government is likely to undermine belief that homeownership is an important part of the American lifestyle.  It's also likely to widen the gap between the "haves" and "have nots".  How can we convince all these people who were improperly foreclosed on that they should EVER buy a home again?  Did we just lose 750,000 potential home buyers because they got burned by the system?

In my opinion, NAR should be all over this to speak on behalf of homeowners who otherwise have little voice.  This settlement will have a negative, long-term impact on the faith American homebuyers have in home ownership.

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 Bryan Robertson, CEO | T: 650.799.9951 | Email: bryan@catarra-re.com | Website: http://www.BryanRobertsonHomes.com |CA BRE# 01191946 | Catarra Real Estate, Inc  | 171 Main St #220 | Los Altos, CA 94022

 

 

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Comment balloon 36 commentsBryan Robertson • February 09 2012 07:14PM

Comments

Hi Bryan... very well said... I also hope that NAR jumps on this...

Posted by Phyllis Lerner call 914.438.7556, William Raveis Legends Realty Group (William Raveis Legends Realty Group LLC) over 6 years ago

The banks still have to agree to the refinance. They only get compensated a portion of the writedown, and only if the customer is current. What is the bank's incentive to lose tens of thousands of dollars per customer, if the customer is still current on their mortgage?

I'm going off of news reports of the basic terms of the short-refi. The settlement is only one day old, so the details have not yet hit 'Main Street".

We'll know in a about six months if this program is a success or just another dead-on-arrival experiment.

Posted by Dave Halpern, Louisville Short Sale Expert (Keller Williams Realty Louisville East (502) 664-7827) over 6 years ago

Wait a minute... $2,000 multiplied by an estimated 750,000 illegal foreclosures doesn't add up to $25 Billion... where is the rest going?

Posted by Hans J. Schindhelm, Realty Marketing, Web Site Designer & Virtual Assistant (HJS Web Design - New York, Westchester, Putnam & Rockland ) over 6 years ago

Nice to see someone wrote about this subject.  I have been thinking about it all day.  Quite frankly I need some time to calm down a bit before I can intelligently voice my opinion however I am happy to see the conversation starting.  Besides the homeowners who suffered unnecessarily there are many who suffered unheard which are never mentioned such as builders, developers, real estate professionals who lost their businesses and more.  From what I have read not many are speaking positively. 

Posted by Lisa Glowacki, Real Estate Broker - RI & MA (Lisa Glowacki - Rhode Island & Massachusetts) over 6 years ago

Tennessee's reputed 149 Million share in this agreement is a sham.

The losses are staggering and loan officials with Bank of America, J.P. Morgan Chase, Citi, GMAC/Ally Financial, and Wells Fargo are notorious for being intentionally vague, ambiguous with borrowers and consistently delay the mitigation process to suit the needs of the loan officials rewriting the mortgages while outrageous, usurious and uneccesary servicing fees are packed into the new financing documents.

If and when the courts approve the disbursement of the agreement hundreds of thousands of homes will have already entered the foreclosure process and the losses will increase.

Even with the assistance, stellar credit is needed and a consistent record of timely payment is mandatory to refinance any mortgage.

Claims that this program brings the loan current and continues paying the mortgage for up to 18 months with $25,000 total in this state, through a zero-percent loan that’s forgiven if the homeowner stays in the home for five years, will not prevent less-than-scrupulous borrowers from stealing the additional equity, and they will most certainly capitalize on the opportunity to skim the money violating the program within the five year residential requirements.

In addition to the fact that this questionable agreement with the banks hasn't been approved by the courts, the Federal Housing Finance Agency is suing all five of the banks in this agreement for underwriting billions of dollars in fraudulent mortgage backed securities.

This agreement and these 5 banks are both nothing more than a wolf in sheeps's clothing. They want to appear penitant and they're seeking exemption from prosecution for unconscionable, greed-driven, and egregious fraud schemes carried out by dirty loan sharks who swindled millions of America's homeowners.

And what's worse, the Realtor brand is becoming questionable with the recent resignations of hundreds of thousands of members.

Where was NAR when all this S$!@ hit the fan ?

Wining and dining their executives on your dime along with that bogus Political Party Survival Initiative blabber and on the road in their new NAR million dollar tour bus that you paid for ?

Posted by David Saks over 6 years ago

My suspicion is this deal will end up the way the rest of them have.  By the time the administrative fees are deducted and all the back room deals are done the homeowner that might have benefited from a refi or mortgage balance reduction won't see a dime.

Posted by Cindy Jones, Pentagon, Fort Belvoir & Quantico Real Estate News (Integrity Real Estate Group) over 6 years ago

What are the states doing with their share? Why should they get more than teh peeople? and... why should someone who took a cash out refinance of $100,000 get anythng? they already got $100,00... There are people who were actually harmed that should have been help but how do you tell the real people from those who dont deserve it? Too much government bs for me.

Posted by Scott Godzyk, One of Manchester NH's Leading Agents (Godzyk Real Estate Services) over 6 years ago

I really have to agree with Scott #7, those owners that used the their home as the proverbial ATM seem to be getting the best of the deal. 

Posted by AJ Heidmann ~ CRS, YOUR Alexandria & Arlington, VA Real Estate Expert (McEnearney Associates, Inc.) over 6 years ago

There has to be a better solution than this, but don't hold your breath waiting for NAR to help to find it.

Posted by Chris Lewis, I want to SELL your home, not LIST it! (Gracious Living Realty) over 6 years ago

we need more to help housing recovery than just this $2,000 I have spent most of the day trying to understand how this is going to help

Posted by Marilyn Boudreaux, Lake Charles LA Century 21 Realtor (Marilyn Boudreaux, Century 21 Mike D. Bono & Co.'s) over 6 years ago

Some attorneys . .somewhere. .have a great celebration party  this weekend.. .

Posted by Fernando Herboso - Broker for Maxus Realty Group, 301-246-0001 Serving Maryland, DC and Northern VA (Maxus Realty Group - Broker 301-246-0001) over 6 years ago

Don'f forget it is an election year. Expect more expensive, yet worthless legislation before November.

Posted by Doug Rogers, Your Alexandria Louisiana Agent (Bayou Properties) over 6 years ago

I still have yet to hear more than a handful of stories of folks who were still paying their mortgages or had homes that were paid off.   The two thousand dollars may initially seem like an insult, but it's akin to cash for keys, which is where most of these deals would have ended up eventually, just through a non-robo-signing route.

Posted by Chris Ann Cleland, Associate Broker, Bristow, VA (Long and Foster REALTORS®, Gainesville, VA) over 6 years ago

Bryan: My sentiments exactly! Thanks for the post!

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) over 6 years ago

Hi Bryan.  I don't believe that the banks "literally stole property from hundreds of thousands of people".

Not even close.  Robo signing was a quick way to handle the mass of paperwork.  Not property theft...

We are not protecting the banks.  We are protecting the taxpayers who back the banks.

Thanks for writing,

Ken

Posted by Ken Tracy, Helping clients buy and sell since 2005 (Keller Williams Realty Infinity) over 6 years ago

Hi Bryan, I read this yesterday.  Congrats on the feature.  The Suggest button works!

Posted by George Fanucci, Internet - Technology - Business - Solutions (CoreFact.com) over 6 years ago

In what ever form this finally hits the market, little will be available to the thousands of families uprooted by the collapse of the housing market.  Unfortunately in spite of apparently good intentions not much good will come out of this I'm afraid. 

In the states like California and Arizona where home prices in some areas dropped 75% and hundreds of home were foreclosed upon, where is the help for those families.  $2,000 just won't make much of a difference to those who have lost so much.

Posted by David A. Weaver, 24 years helping folks finance their dreams. (Peoples Bank & Trust Co.) over 6 years ago

Bryan: There's a question for you - why isn't NAR all over this protecting the consumer? The homeowners! Don't we protect America's homeowners? Because the bankers are the stronger lobby. Wouldn't want the consumer friendly (not!) banking industry at odds with the realtors.

There are still many states that did NOT join this suit because they thought it was a sham. I applaud all those AG's that thought it just wasn't right.

Posted by Lyn Sims, Schaumburg IL Real Estate (RE/MAX Suburban) over 6 years ago

The people who did lose their houses "shafted (royally)" now have poor credit and won't be buying for a long time. People who bought investment properties who had to decide to lose them lessened their credit from shortselling or foreclosure.  This still sound like it is favoring the lucky ones and screwing the not-so-lucky folks.

Posted by Wayne Raulin over 6 years ago

Byran

There seems to be no end to this mess. California just agreed to settlement based upon the possibility of suing the banks in federal courts and not state courts for additional liability. We all know how many lawsuits will be filed and won, probably near none.

I try to stay positive but the void in leadership and integrity in many in power sure makes it hard to do so.

 

 

Posted by Curtis Van Carter, Your Napa Valley Broker Extraordinaire (Better Homes & Gardens Wine Country Group) over 6 years ago

Really good analysis.  Thanks for posting.  Got to re-blog for my clients!

Posted by Sally English, Sally English Atlanta Real Estate Agent (The English Team) over 6 years ago

I might take some flak, but I dont think 'homeowners having their propertys stolen' is quite accurate-  the large majority of these people signed an agreement that said 'if I pay, I stay, if I dont, I wont'-  I dont think the banks screwing up the paperwork is really a reason for people who aren't paying their mortgage to avoid foreclosure.

Should the banks be punished for their shortcuts and disregard for the rules...absolutely.  But bottom line is everyone knows when they buy a home, if they dont pay, they'll lose the home. 

Posted by John Meussner, #MortgageMadeEasy Walnut Creek, CA 484-680-4852 (Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA,) over 6 years ago

Sounds like a great way for NAR to continue to stick their nose into things other than maintaining and promoting the professional image of their members. 

I would appreciate if you would document your statement that banks "literally stole property from hundreds of thousands of people."  Yes, I doubt that you can do that. 

Posted by Mike Carlier, More opinions than you want to hear about. over 6 years ago

You wrote: In case you hadn't heard, the banking industry and the Federal government settled the "robo-signing" fiasco

It wasn't the Federal Government, but the States' Attorney Generals that settled.  Anyway, yup the $1,500 - $2,000 is an insult and this is the price per person for fraud?!?  Slap on the wrist.  I don't know why people continue to bank with BofA, Chase, Citi, Ally, et al.  People feed the beasts.  I don't see how existing homeowners are winners (even sort of).  Most have lost a lot of equity.  

Didn't realize NAR has a dog in this fight.  NAR is a membership organization of Realtor(s) NOT mortgage brokers and/or bankers.  Since when did Realtor(s) "protect" the home owner when it comes to their loans??  And aside from mixing apples and oranges, loans and the aftermath of this mess is well outside my license.  This is a loan robo-signing fraudulent crime based on foreclosures . . . again I, and fellow NAR members had nothing to do with it and our licenses don't cover "protecting" home owners from what happened.   While we can, and should, voice our disdain, I don't get how NAR and NAR members are somehow slackers now for not doing more and protecting the consumers?

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) over 6 years ago

Just one more attempt to do "something" to help the homeowners who were screwed. I see another fail here with this one.

Posted by Eric Michael, Metro Detroit Real Estate Professional 734.564.1519 (Remerica Integrity, Realtors®, Northville, MI) over 6 years ago

Bryan,

This is terrible.

We didn't have this sort of meltdown in Canada. The result is that our local Torontro market has consistently been hot.

Brian

Posted by Brian Madigan, LL.B., Broker (RE/MAX West Realty Inc., Brokerage (Toronto)) over 6 years ago

Carla - I was under the impression the fed coordinated the settlement with the states.  Either way, it still seems wrong.  My point on NAR is that I think we're the "voice of the customer" in a fight light this.  We're always looking out for homeowners rights and this seems to me to be a situation where that applies.

Mike - My point on NAR is to fight for homeowner rights, which they do all the time.  The issue of "stealing" property by the banks is well noted in the media and the basis for the whole settlement.  The banks, via robo-signing, improperly foreclosed on people who should not have been foreclosed on.  That's why the settlement came about.

John - You're right, the people who don't pay should not be allowed to retain their homes.  The scandal came from banks forclosing on those who were paying or partially paying, working with their bank, and then suddenly foreclosed on.

RE:  COMMENTS REGARDING BANKS - Yes, robo-signing seemed necessary when the volume of foreclosures was increasing.  However, just as with trading curbs in the stock market, something should have been in place to halt the foreclosures so they could actually be reviewed.  As it was, nothing was done and we have the current situation.

RE:  NAR - Yes, NAR is a trade association for REALTORS but it also likes to position itself and it's members as advocates for homeowners.  That said, lobbying in Washington is routinely done to the benefit of consumers.  When all this came down, I feel that NAR should have done a better job stepping up "for the little guy".

Great comments so far and I appreciate that we're hearing several sides of the issue.

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) over 6 years ago

I leave such big thoughts to my association, the NAR. They take care of everything - LOL. All I do is pay my dues (I was actually deleted from the LinkedIn account). Is something wrong? 

Posted by Gregory Bain, For Homes on the Jersey Shore (Mezzina Real Estate & Insurance) over 6 years ago

Hi Bryan... Like the post, and the strong message. Hope that NAR takes action as well.

Posted by Adam Brett, The Adam and Eric Group, Fullerton's Finest (The Adam and Eric Group) over 6 years ago

Does anybody here know of even one single person who was making their payments and lost their house?

Posted by Jackie Hawley, Southeast Michigan Real Estate (Coldwell Banker Professionals) over 6 years ago

Bryan..I read too that you can still sue after you get your 2k which is supposed to be an added value. The whole thing mirrors Jessie James (this is a holdup) tactics. We were held up and robbed at gun house point in broad daylight. That takes power in high places...Michael Milken the junk bond king coolly and with precision illegally made 1 billion dollars and settled with THE LAW for 500 million. The math says well done. He has a plaque up at the L.A. Zoo listing him as a major supporter too..crime pays..it really pays...and it goes on

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) over 6 years ago

I agree with several of the comments here. The processing of foreclosures may have been flawed but if you are not paying your mortgage you lose your house.

Posted by Millie Lumpkin (EXIT Strategy Realty) over 6 years ago

Bryan - The whole housing mess is just a fiasco. It seems the ones to win to me are the banks because they're always too big to fail.  How does that make any sense anyway?

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 6 years ago

This is a good bottom line summary to explain the events in easy to understand format.

Posted by Cheryl Ritchie, Southern Maryland 301-980-7566 (RE/MAX Leading Edge www.GoldenResults.com) over 6 years ago

It is to say the least an 'interesting' settlement.  So many things, so wrong, from so many sides.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) over 6 years ago

And the American people (tax payers) bailed these banks out why??? It's an election year band aid to make the Dems look good.

Posted by Steven Beam, Parker Colorado Real Estate (RE/MAX Alliance - Parker Colorado Real Estate.) over 6 years ago

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