Showing posts with label equity. Show all posts
Showing posts with label equity. Show all posts
Tuesday, October 31, 2017
Sometimes a White Sheet is Just Laundry: A reflection on the possibility racism may loosen its grip
Being committed to civil rights, and living in a hyper-segregated area, I am used to seeing the ravages of racism. A drive a few blocks from my home leads to a dividing line where a new town was established, requiring a change in state law to deprive a particular city of its right not to have new municipalities created within a three-mile buffer zone of its boundaries. A few more blocks takes me to a new dividing line, where suburban white flighters demarcate the area of their specially-created town that is no longer lily-white enough for them. A few blocks more, and I see the area they would classify as "changing."
These lines are not subject to imagination--the economic ravages of white flight bear out in census data and economic reports. In contrast, other images are subjective. On a recent drive through the (all-too-purposefully) "white" area of my city, I saw white robed figures and burning objects. Convinced I had just seen a KKK rally out of the corner of my eye, I persuaded my companion to take another pass around the block. He protested, himself having seen a wedding. Our second pass proved he was correct: it was a beach-front, summer wedding, replete with white attire and tiki torches (months before the latter took on a sinister meaning). Willing to laugh at myself, I realized my perceptions sometimes do not bear out.
In the middle between subjective and objective are the social attitudes that shift with time, even if the shift toward equality (much less equity) is a bit too glacial for my taste. Near my home is a pizza place bearing the name of the staunchly "white" neighborhood in which it sits. I do not particularly care for the place--its name and the fact new branches are located in white-flight areas leave me uneasy. To make matters worse, it is one of several establishments that has long refused delivery in my predominantly African-American city. An owner of another pizza place, located in the same intentionally-isolated pocket of the city, bragged about her refusal of delivery service to my neighborhood--on the grounds that "they" would pull a gun and shoot her delivery drivers. I have previously written about my inability to get simple amenities like pizza delivery: my inability to get pizza delivery and other services at http://www.kellidudley.com/2017/06/30/the-woman-in-the-shoe-and-i-would-like-one-large-veggie-pizza/.
Soon after my post about lack of delivery services, I began noticing delivery cars in my area. I was tempted to believe someone had read my blog. I was also skeptical that a hate-based practice dating back twenty years would simply give way overnight. However, the delivery cars (with magnetized signs bearing the name of the pizza joint) continued to show up around my area.
Leary of the never-too-worn-to-pull-out-again comments from racists and dreading another hate-filled exchange, I continued to eschew the pizza as well as the new service. I anticipated reluctant and limited service to my area, an unwarranted up-charge, or other unfair treatment that has threatened to infect my view of normalcy for over twenty years of living in my city and its surrounds.
Circumstances collided: a hungry friend delivering and setting up my dryer, the need to supervise a high-spirited dog, and limited time led me to try the delivery. There was no up-charge identifiable as associated with my neighborhood's demographics, and hot food came--with a smile--within an hour.
Perhaps change--real, gooey, delicious change--is nigh.
May the woman in the shoe fare as well.
Sunday, April 10, 2011
Feds Determined to Deny Due Process to Foreclosure Defendants
As I have pointed out before, the banks need to do some time. Perjury is a jailable offense, and it is perjury to sign a false affidavit. The banks have admitted to signing false affidavits, a large part of the robosigning scandal. Instead, the Federal regulators are determined to let the banks escape punishment and to not even require any meaningful change in practices.
After the robosigning scandal became public, the states' attorneys general began an investigation that has resulted in a weak draft settlement. I have written about the proposed settlement and its problems on this blog before.
Around the time of the weak proposal by the attorneys general, the Fed stated it had performed a cursory review of a few foreclosure files and concluded that there was not problem. The Fed maintained that no foreclosure was done where there was not a "substantial default." As I mentioned in a previous blog post, this was a mischaracterization of the evidence--foreclosure in the absence of any default by the homeowner is extremely common. Moreover, the Fed ignored due process. Even if one is in "substantial default," one is entitled to legal protections. These include the right to notice and the opportunity to be heard about the alleged default (due process) and the right to cure the default and save the home (redemption).
Now, it appears that Federal regulators will let the banks off the hook with a settlement even weaker than the proposed attorney general settlement. The settlement is in the form of a consent decree (court order), making it more likely that the banks will try to use the settlement to say that homeowners have lost their rights to any legal action for the banks' wrongdoing.
The settlement allows banks to appoint their won "monitor"--a committee chosen by the Board of Directors of each bank. The bank's committee will tell the Fed what needs to be done.
The primary duty of the banks under the settlement is to comply with existing law. Problems like assignments from Mortgage Electronic Registration Services (MERS) are handled on a business as usual basis--with banks promising to get the documents required to do a foreclosure from MERS this time. This is a legal requirement that should have been followed in every foreclosure.
The banks can retain an independent consultant to conduct reviews of completed residential foreclosures. The review will only cover those with judgments or foreclosure sales (auctions) from January 2009 until December 2010.
The independent consultant will set criteria for evaluating the reasonableness of fees and penalties set during the foreclosure process. This circumvents another requirement that the review will include evaluating whether fees and penalties were consistent with the loan documents.
In the end, the bank can give a "reasonable" sum of money if mistakes were made in a foreclosure.
These procedures, under control of the banks, further circumvent due process by placing a stamp of approval on foreclosures that were already completed. This indicia of legitimacy may be invoked to stop actions by the states or by individual homeowners to redress the mistakes made by the banks.
The provision for payment of money shows perhaps the greatest disregard for the special position of homeowners and the right of redemption. Law in the United States recognizes that real estate is non-fungible. For example, one cannot be compensated for losing the opportunity to own one house by substituting another or with payment of money. This is true even if one is buying a McMansion in a tacky subdivision--if the buyer selects the McMansion on Lot A, he or she cannot be forced to instead accept the identical McMansion on Lot B. This is because the law recognizes that real estate is unique, the opposite of money--where one $1 bill is generally as good as the next.
Because of this special status, additional barriers exist before real estate is taken away. One of the most notable of these in the foreclosure area is the right of redemption. This is the right to pay off the sum owed and save the property. Preventing someone from doing this--for example, by refusing to take the money or making it impossible to pay--is called "clogging the equity of redemption."
If homeowners in foreclosure were charged too much in fees and penalties that had to paid to redeem the property, then the right of redemption was clogged. A home was lost where it might have been saved through exercising the right of redemption if the extra fees and penalties had not created a "clog." The mere payment of money is not sufficient to make these homeowners "whole," or in the same position as they would have been had the equity of redemption not been clogged.
It is upsetting that many consumer advocates bemoan the possibility that the settlement will be used to prevent future lawsuits or actions, but do not grasp the harm that has been done to the concepts of due process and redemption. These ideas protect the rights of every litigant, and the concept of redemption helps guarantee a home can be saved in many circumstances. Actions that undermine these concepts make it more likely that a home will not be a good investment in the future--it will remain subject to being taken in an arbitrary and unjust way.
The rush of the Fed to bargain away your rights is one more reason to consult with a HUD-certified housing counseling agency or reputable lawyer right away if you are in foreclosure. If it becomes more difficult to vacate (set aside) wrongful foreclosures, it will be more important than ever to fight each foreclosure carefully when it is initially filed in court.
The entire proposed settlement is here: http://cdn.americanbanker.com/media/pdfs/040111CandD.pdf
After the robosigning scandal became public, the states' attorneys general began an investigation that has resulted in a weak draft settlement. I have written about the proposed settlement and its problems on this blog before.
Around the time of the weak proposal by the attorneys general, the Fed stated it had performed a cursory review of a few foreclosure files and concluded that there was not problem. The Fed maintained that no foreclosure was done where there was not a "substantial default." As I mentioned in a previous blog post, this was a mischaracterization of the evidence--foreclosure in the absence of any default by the homeowner is extremely common. Moreover, the Fed ignored due process. Even if one is in "substantial default," one is entitled to legal protections. These include the right to notice and the opportunity to be heard about the alleged default (due process) and the right to cure the default and save the home (redemption).
Now, it appears that Federal regulators will let the banks off the hook with a settlement even weaker than the proposed attorney general settlement. The settlement is in the form of a consent decree (court order), making it more likely that the banks will try to use the settlement to say that homeowners have lost their rights to any legal action for the banks' wrongdoing.
The settlement allows banks to appoint their won "monitor"--a committee chosen by the Board of Directors of each bank. The bank's committee will tell the Fed what needs to be done.
The primary duty of the banks under the settlement is to comply with existing law. Problems like assignments from Mortgage Electronic Registration Services (MERS) are handled on a business as usual basis--with banks promising to get the documents required to do a foreclosure from MERS this time. This is a legal requirement that should have been followed in every foreclosure.
The banks can retain an independent consultant to conduct reviews of completed residential foreclosures. The review will only cover those with judgments or foreclosure sales (auctions) from January 2009 until December 2010.
The independent consultant will set criteria for evaluating the reasonableness of fees and penalties set during the foreclosure process. This circumvents another requirement that the review will include evaluating whether fees and penalties were consistent with the loan documents.
In the end, the bank can give a "reasonable" sum of money if mistakes were made in a foreclosure.
These procedures, under control of the banks, further circumvent due process by placing a stamp of approval on foreclosures that were already completed. This indicia of legitimacy may be invoked to stop actions by the states or by individual homeowners to redress the mistakes made by the banks.
The provision for payment of money shows perhaps the greatest disregard for the special position of homeowners and the right of redemption. Law in the United States recognizes that real estate is non-fungible. For example, one cannot be compensated for losing the opportunity to own one house by substituting another or with payment of money. This is true even if one is buying a McMansion in a tacky subdivision--if the buyer selects the McMansion on Lot A, he or she cannot be forced to instead accept the identical McMansion on Lot B. This is because the law recognizes that real estate is unique, the opposite of money--where one $1 bill is generally as good as the next.
Because of this special status, additional barriers exist before real estate is taken away. One of the most notable of these in the foreclosure area is the right of redemption. This is the right to pay off the sum owed and save the property. Preventing someone from doing this--for example, by refusing to take the money or making it impossible to pay--is called "clogging the equity of redemption."
If homeowners in foreclosure were charged too much in fees and penalties that had to paid to redeem the property, then the right of redemption was clogged. A home was lost where it might have been saved through exercising the right of redemption if the extra fees and penalties had not created a "clog." The mere payment of money is not sufficient to make these homeowners "whole," or in the same position as they would have been had the equity of redemption not been clogged.
It is upsetting that many consumer advocates bemoan the possibility that the settlement will be used to prevent future lawsuits or actions, but do not grasp the harm that has been done to the concepts of due process and redemption. These ideas protect the rights of every litigant, and the concept of redemption helps guarantee a home can be saved in many circumstances. Actions that undermine these concepts make it more likely that a home will not be a good investment in the future--it will remain subject to being taken in an arbitrary and unjust way.
The rush of the Fed to bargain away your rights is one more reason to consult with a HUD-certified housing counseling agency or reputable lawyer right away if you are in foreclosure. If it becomes more difficult to vacate (set aside) wrongful foreclosures, it will be more important than ever to fight each foreclosure carefully when it is initially filed in court.
The entire proposed settlement is here: http://cdn.americanbanker.com/media/pdfs/040111CandD.pdf
Tuesday, March 22, 2011
Won't Get Fooled Again?
My husband is a huge fan of Pete Townsend. The Who's song (properly titled without the question mark) is about how things sometimes do not change after a revolution.
It appears this is true in the case of housing. Though we are supposed to be rebuilding after a crash, the fraudsters who brought you the housing bubble are at it again.
Unlike my husband, I am a fan of John Mellencamp. It is my job to keep you in your little pink house. In this case, I agree with The Who, however: the housing market appears to have gone through a radical change, but the fraudsters are still about the business of stripping your equity (wealth).
I have long said that those of us interested in helping consumers stay in their homes need to watch out for the next wave of fraud. My very first blog post here was about unethical practices among those who say they "defend" foreclosure.
Today, MSN has a link talking about "alternative" ways to finance the purchase of real estate. The premise is that many consumers have decimated credit ratings, little savings, and no hope of getting a mortgage. I have conspicuously not posted a link to the horrible article offering "hope" that these dispossessed people can again be installed in a little pink house.
The MSN article, replete with trust-inducing symbols like something that says "investopedia" on it, urges consumers to wipe out further wealth to "invest" in property without involving any risk to banks. No analysis of the long-term risk to the "investor" is presented. As in the past housing bubble, we are to believe that real estate ownership is an end in itself. We are asked to disregard recent developments showing that our legal system, ever so quick to complete a foreclosure, no longer values real property as unique and subject to great scrutiny before ownership is taken away.
Looking back at the bubble that just burst, consumers took out unafforable loans. Lenders and investors put up some money for the housing purchase or to pay off debts or pay the borrower cash in a refinance. In most cases, the loan was quickly sold so the first lender got paid regardless of whether the loan was ever repaid, converting the loan into an investment gamble for the new purchaser of the loan. If the loan did not get repaid as planned, the purchaser of the loan could foreclose on the home, get a judgment against the homeowner, and collect on a mortgage insurance policy that guaranteed loan repayment. This sometimes resulted in a payment that, in the end, exceeded anything contemplated by the terms of the original loan.
A great deal of wealth was stripped from communities through this process. Homeowners who went through foreclosure lost their downpayments, their sweat equity, their expectations of home ownership, and their credit rating. In some cases, they were subject to a deficiency judgment, meaning their home, after foreclosure, was not worth enough to satisfy the mortgage debt and they were liable for the difference. Despite these risks to homeowners, the lenders' attorneys often decry people who are unable to pay their mortgage loan as miscreants who have "no skin in the game" (presumably, meaning the homeowners have nothing to lose--except their home, credit rating, financial security, and dignity).
Although these losses are enormous, the new wave designed to revive the buying/financing frenzy could be even more disastrous to homeowners. The worst case scenario for a homeowner in the situation above would be to declare a Chapter 7 bankruptcy. Certain assets would be protected from creditors in this situation, but the house subject to the mortgage would be lost in exchange for the opportunity to wipe the slate clean as to monies owed in the future--the deficiency judgment could be eliminated.
The new options will further rip wealth from the community. The MSN article urges people to take rob their retirement accounts and life insurance policies to buy homes.
These two savings vehicles are often exempt from creditor action and are often not taken during bankruptcy proceedings. I am sure a topic of many closed-door meetings has been: "How do we take those retirement and life insurance assets?" So far, the primary way this money has been stripped from consumers is through bad investments on Wall Street. However, even with bad investments, some people retain significant retirement savings.
If, as the MSN article urges, consumers are induced to voluntarily withdraw their secure savings and "invest" in real estate, it will benefit the banking community tremendously. First, those troubling, unreachable assets will be converted into a reachable asset: real estate. The homeowner can be induced to take a mortgage in the future, and pledge the home as collateral. Alternatively, the home can be taken to satisfy other debts if a lien is attached or if the homeowner declares Chapter 7 Bankruptcy.
Another benefit to lenders is that those who use their own funds to purchase homes will reduce the available housing stock, restore value currently drained out of neighborhoods as the banks that foreclosed allow the homes to rot, and increase the appraised value of surrounding homes. This will fuel another surge of mortgage lending and inflate the next bubble--one that will leave consumers with even less when it bursts.
Hang on to your savings! The foreclosure crisis has shown us that it is the intent of the lending industry to turn us into a nation of renters--people who can be dispossessed with almost no due process. "Investing" our retirement funds in a market that has been shown to work against our interests, absolving the banks of the need to put any "skin in the game" is a clear way for us to get fooled again.
It appears this is true in the case of housing. Though we are supposed to be rebuilding after a crash, the fraudsters who brought you the housing bubble are at it again.
Unlike my husband, I am a fan of John Mellencamp. It is my job to keep you in your little pink house. In this case, I agree with The Who, however: the housing market appears to have gone through a radical change, but the fraudsters are still about the business of stripping your equity (wealth).
I have long said that those of us interested in helping consumers stay in their homes need to watch out for the next wave of fraud. My very first blog post here was about unethical practices among those who say they "defend" foreclosure.
Today, MSN has a link talking about "alternative" ways to finance the purchase of real estate. The premise is that many consumers have decimated credit ratings, little savings, and no hope of getting a mortgage. I have conspicuously not posted a link to the horrible article offering "hope" that these dispossessed people can again be installed in a little pink house.
The MSN article, replete with trust-inducing symbols like something that says "investopedia" on it, urges consumers to wipe out further wealth to "invest" in property without involving any risk to banks. No analysis of the long-term risk to the "investor" is presented. As in the past housing bubble, we are to believe that real estate ownership is an end in itself. We are asked to disregard recent developments showing that our legal system, ever so quick to complete a foreclosure, no longer values real property as unique and subject to great scrutiny before ownership is taken away.
Looking back at the bubble that just burst, consumers took out unafforable loans. Lenders and investors put up some money for the housing purchase or to pay off debts or pay the borrower cash in a refinance. In most cases, the loan was quickly sold so the first lender got paid regardless of whether the loan was ever repaid, converting the loan into an investment gamble for the new purchaser of the loan. If the loan did not get repaid as planned, the purchaser of the loan could foreclose on the home, get a judgment against the homeowner, and collect on a mortgage insurance policy that guaranteed loan repayment. This sometimes resulted in a payment that, in the end, exceeded anything contemplated by the terms of the original loan.
A great deal of wealth was stripped from communities through this process. Homeowners who went through foreclosure lost their downpayments, their sweat equity, their expectations of home ownership, and their credit rating. In some cases, they were subject to a deficiency judgment, meaning their home, after foreclosure, was not worth enough to satisfy the mortgage debt and they were liable for the difference. Despite these risks to homeowners, the lenders' attorneys often decry people who are unable to pay their mortgage loan as miscreants who have "no skin in the game" (presumably, meaning the homeowners have nothing to lose--except their home, credit rating, financial security, and dignity).
Although these losses are enormous, the new wave designed to revive the buying/financing frenzy could be even more disastrous to homeowners. The worst case scenario for a homeowner in the situation above would be to declare a Chapter 7 bankruptcy. Certain assets would be protected from creditors in this situation, but the house subject to the mortgage would be lost in exchange for the opportunity to wipe the slate clean as to monies owed in the future--the deficiency judgment could be eliminated.
The new options will further rip wealth from the community. The MSN article urges people to take rob their retirement accounts and life insurance policies to buy homes.
These two savings vehicles are often exempt from creditor action and are often not taken during bankruptcy proceedings. I am sure a topic of many closed-door meetings has been: "How do we take those retirement and life insurance assets?" So far, the primary way this money has been stripped from consumers is through bad investments on Wall Street. However, even with bad investments, some people retain significant retirement savings.
If, as the MSN article urges, consumers are induced to voluntarily withdraw their secure savings and "invest" in real estate, it will benefit the banking community tremendously. First, those troubling, unreachable assets will be converted into a reachable asset: real estate. The homeowner can be induced to take a mortgage in the future, and pledge the home as collateral. Alternatively, the home can be taken to satisfy other debts if a lien is attached or if the homeowner declares Chapter 7 Bankruptcy.
Another benefit to lenders is that those who use their own funds to purchase homes will reduce the available housing stock, restore value currently drained out of neighborhoods as the banks that foreclosed allow the homes to rot, and increase the appraised value of surrounding homes. This will fuel another surge of mortgage lending and inflate the next bubble--one that will leave consumers with even less when it bursts.
Hang on to your savings! The foreclosure crisis has shown us that it is the intent of the lending industry to turn us into a nation of renters--people who can be dispossessed with almost no due process. "Investing" our retirement funds in a market that has been shown to work against our interests, absolving the banks of the need to put any "skin in the game" is a clear way for us to get fooled again.
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