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The Best, Most Revealing Reporting on the Foreclosure Crisis

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Posted on Feb 18, 2012
woodleywonderworks (CC-BY)

By Blair Hickman, ProPublica

This piece originally appeared at ProPublica.

The housing crisis in the U.S. has been going on nearly five years, with still regular revelations about misdeeds by banks and others. Here’s our roundup of standout reporting on the crisis.

Lucrative fees may deter efforts to alter loans, The New York Times, July 2009

Banks and other mortgage servicers have made big bucks on the fees associated with delinquent loans, because of rules that one Federal Reserve Bank of Boston paper called a “perverse incentive to foreclose rather than modify.” This piece surveys the homeowners caught in purgatory 2013 and why the servicers seemed to want to keep them there.

Fannie and Freddie’s foreclosure barons, Mother Jones, August 2010

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One of the first stories to shed light on a “foreclosure mill.” A Florida law firm tore through cases as quickly as possible, while frequently signing off on dodgy documents. The firm has since been shut down.

Grave errors as undead rework loans, The Wall Street Journal, July 2010

Homeowner Sarah Larson, a 33-year-old acupuncturist, tried to get a break on her $1,055-a-month mortgage from Bank of America. The bank requested three important documents: bank statements, a utility bill and her death certificate. She replied: “I am not sending a death certificate because I am not deceased. I am currently still living.”

Mortgage mess: Shredding the dream, Businessweek, October 2010 How banks’ carelessness and underinvestment in back-end infrastructure contributed to paperwork errors and lost promissory notes that many argue worsened the housing crisis.

Ties to insurers could land mortgage servicers in more trouble, American Banker, November 2010

Here’s another way that mortgage servicers have profited from struggling homeowners: by forcing them to pay for expensive and unnecessary insurance policies.

The next housing shock, CBS’ “60 Minutes,” April 2011

This piece investigates the prevalence of “robo-signing,” focusing on one company where a number of employees signed one woman’s name to thousands of documents because her name was short. None of the major banks agreed to talk to “60 Minutes.”

Obama’s efforts to aid homeowners, boost housing market fall far short of goals, The Washington Post, October 2011

This in-depth, inside look shows the internal debate behind the Obama administration’s stumbling efforts to deal with the worst housing crisis since the Great Depression.

Raging against the foreclosure machine, iWatch News, The Center for Public Integrity, January 2012

From the beginning of the foreclosure mess, struggling homeowners often defaulted due to accounting and paperwork errors by the mortgage servicing industry. Servicers claimed they’d addressed the systemic problem. But as this piece shows, the “veterans of the foreclosure wars” tell a very different story.

A mortgage tornado warning, unheeded, The New York Times, February 2012

Years before the crisis, a wealthy Florida businessman, who had lost his home in a questionable foreclosure, unearthed and compiled a “dossier of improprieties” on Fannie Mae. In retrospect, it looks like a blueprint for today’s crisis 2014 and raises several questions about how deep and how far back our mortgage problems go.

We at ProPublica also have long been digging into the administration’s stumbling efforts and how Wall Street machinations ultimately super-charged the crisis.

If you have other great foreclosure reporting, email us at MuckReads@ProPublica.org or tweet it with the hashtag #muckreads.

 


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By John Steinsvold, February 20, 2012 at 7:21 pm Link to this comment

An Alternative to Capitalism (if the people knew
about it, they would demand it)


Several decades ago, Margaret Thatcher claimed:
“There is no alternative”. She was referring to
capitalism. Today, this negative attitude still
persists.


I would like to offer an alternative to capitalism
for the American people to consider. Please click on the following link. It will take you to an essay titled: “Home of the Brave?” which was published by the Athenaeum Library of Philosophy:

http://evans-
experientialism.freewebspace.com/steinsvold.htm

John Steinsvold

“Insanity is doing the same thing over and over and
expecting a different result.”
~ Albert Einstein

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By ardee, February 20, 2012 at 4:22 am Link to this comment

By bpawk, February 19 at 4:24 pm Link to this comment

Nobody can foretell the future - when you sign a legal contract you are obliged to pay up - there’s no guarantee that the interest rates will not go up (or down

Clumsy argument indeed. Are you not aware of the numerous and illegal ways in which the public was deceived by these mortgages? Appraisals were altered in order to increase commissions, mortgages with balloon payments were said to be fixed, people were lied to and tricked into signing.

Continue to shill for the illegalities committed by our financial community, I am certain that Goldman Sachs and BofA will include you on their Xmas list.

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By gerard, February 19, 2012 at 8:22 pm Link to this comment

It is obvious that every family needs a decent place to live and bring up a family.  As renting is not economical in the long run, and families need some security, it is obvioius that given the opportunity couples will want to buy a house.
  If times are good and they have a job or jobs, it is natural for them to tend to optimize the future (being young and relatively inexperienced). They tend to buy somewhat beyond their means.  It is therefore the obligation of the realtors and bankers to make sure buyers are not invited into taking more than minimum risk. 
  Bankers and real estate agents have no financial motivation to take cautionary measures and every invitation to encourage over-spending because their commissions are raised thereby. Thus the “system” draws them into exploiting customers.
  This is what is known as “capitalism” or “the market self-adjusts” and other such mythology that never asks the crucial questions:  Who wins? Who loses? How much, and why? And is it fair?
  Strict regulations have to be brought into the picture because humans are humans on both sides, and seem unable to “regulate” themselves.  Capitalists don’t want regulations because regulation cuts down on profits otherwise more accurately known as “exploitation of those less advantaged,” or, in French:  “Every man for himself and the Devil take the hindmost.” Therefore, buyers are “more to be pitied than censured,” as they are usually the more naive side in such deals, and easily overwhelmed by very mixed emotions. Realtors and bankers know this, which makes them totally responsible for what they do or don’t do.

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By thethirdman, February 19, 2012 at 7:57 pm Link to this comment

bpawk I have to disagree with you on this one.  Just because you signed your
name isn’t the end all and be all.  Both parties must fulfill their obligation and if
they cannot, they walk away.  It’s not like there are no consequences for someone
who doesn’t pay their mortgage.  They will suffer, but the suffering may still be
worth it.  If it is hurting you or your family to make payments on an upside down
house, especially if it is due to some shady dealings, you must walk away.  You are
a fool not to.  Because trust me, the other side can and will do the same.  Fuck
‘em, it’s not even real money anyway.

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By bpawk, February 19, 2012 at 5:24 pm Link to this comment

Nobody can foretell the future - when you sign a legal contract you are obliged to pay up - there’s no guarantee that the interest rates will not go up (or down) - people knew that when they signed - it’s called risk taking. In good times, you take a risk with good debt (buying a house) and you pay the lender. That’s what you’re supposed to do. But you knew when you signed that the interest rates can go up as well and you might not be able to pay.  That’s the risk - if you do okay, the other taxpayers don’t get your house, if you don’t do okay, the other taxpayers shouldn’t have to help you either.

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Blueokie's avatar

By Blueokie, February 19, 2012 at 5:09 pm Link to this comment

bphawk - When a Manhattan Real Estate company discovers its recent purchase of a $1 billion apartment building will not fill to the break even point, let alone profit, they can walk away from the note and are hailed as sharp business operators and rewarded with a rising stock price, with the taxpayer making
good on the loan and all the side bets made from it to Wall Street.  A home owner who was assured they had a fixed rate mortgage suddenly finds their payment jumping 300% or better after 3 years and has 2 or 3 entities claiming ownership of their property and racing to foreclose, equate?  Particularly when
the Government is on the side of the Real Estate company, the mortgage service and the banks?  Do you really think a large majority of home purchases over the last 10 years have quit paying their mortgages?  Are you really saying that the people who got in over their head and the people who were the victims of a system based on fraud are the source of our difficulties?  Are you saying the investment class who bought the Government, turned every piece of paper they could get their hands on into AAA rated investments and leveraged them out up to 70 times its face value victims. or on the same level of culpability as foreclosed homeowners?

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By bpawk, February 19, 2012 at 3:32 pm Link to this comment

In good times, nobody would say that people who signed on the dotted line weren’t responsible to the lender - so why is it different in a crisis?  People still signed on the dotted lines before the crisis and are accountable to the bank, crisis or not.

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By thethirdman, February 19, 2012 at 1:50 pm Link to this comment

And can we clear something up?  Trolling is when posters invade a serious or
somber forum to intentionally derail the conversation and cause maximum
disruption for self amusement.  I find that the good people of truthdig..ahem
ahem Ardee, simply label anyone they don’t agree with as a troll.  Trolling is an art
and if it’s done well, you wouldn’t know you were trolled.

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By thethirdman, February 19, 2012 at 1:37 pm Link to this comment

You’re not getting an argument from me that nefarious and illegal activities were
not committed at every level.  But it’s never the good people vs. evil corporations
situation that we love to hate.  Continuing with your roulette metaphor, the house
indeed wins, but it couldn’t thrive if it didn’t have a continuous flow of suckers
placing bets.  Who is evil in the casino v. people analogy?  They need each other
and feed off each other.  We are not right wing trolls because we believe people
suffer from the natural consequences of their actions.

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By ardee, February 19, 2012 at 12:59 pm Link to this comment

By Tesla, February 19 at 9:53 am Link to this comment

I really can’t believe the “people” (I am using this term very loosely) in this forum are so anal to place the blame on the “suckers” that got taken in by an organized crime syndicate (aka America’s banking system).

I am in wholehearted agreement here, excepting to note it is only certain people here who take this right wing position.

It is estimated that, before this crisis is finished, three million homes will be foreclosed upon. These agendized posters who seek, by extension, to absolve the financial community of its numerous and well documented illegalities and, instead, blame the millions of people who sought only to buy a family home, or take advantage of the rising value of their current home to move up to a larger one.

Certainly there were a percentage of buyers who “flipped” homes for profit, no one is arguing otherwise. But these folks were certainly far, far fewer than the great majority of those facing financial ruin and to suggest otherwise is specious at best. There is documented proof of fraud in mortgage lending, kiting the appraisal value of homes for higher commissions, lying about terms and payment schedules, etc.

I purchased my home quite some time ago for $37,999 and sold it, eventually, for $667,000 after my last child married and bought a home of her own. I guess, according to some, I am an arch villain in league with the very worst, while BankAmerica is an angelic and unfortunate victim of me and my ilk.

Right wing trolls ....

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Tesla's avatar

By Tesla, February 19, 2012 at 10:53 am Link to this comment

I really can’t believe the “people” (I am using this
term very loosely) in this forum are so anal to place
the blame on the “suckers” that got taken in by an
organized crime syndicate (aka America’s banking
system).

Since there usually is only bet placed per lender,
they were unable to determine that the roulette wheel
was rigged in favor of the House.

Mortgage lenders aren’t out a dime as they
manufacture the “money” they lend out of whole cloth.

Criminal activity took place on the part of lenders
not the borrowers. And if this was not the case, then
why was the recent “mortgage fraud protection act”
cobbled together by the Obama administration to
prevent the state’s attorneys-general from further
legal action against the criminal lenders?

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Blueokie's avatar

By Blueokie, February 19, 2012 at 10:37 am Link to this comment

When “Supply Side” economics were implemented in the early ‘80’s two concerns were obvious from the beginning.  The first was the pain that would be widespread in the population by concentrating wealth at the top in “Trickle Down”, and that the domestic economy was 70% based on consumer spending
which would naturally suffer.  Both problems were overcome, temporarily, with the expansion of credit.  As worker productivity went up, wealth was expanded at the top, credit was expanded for everyone else.  Finance is far and away the most profitable sector in the “new” economy.

When the income disparity became noticeable, the reason given was the success of deregulation and the innovations and new products given life by the “freedom of the market”.  Wages were stagnant, prices were higher, but the panacea was there, home ownership was the key to a secure middle class life, and attainment of the “American Dream”.  Part of the marketing always involved the first few years of paying a mortgage may take discipline, but was well worth it.  The housing boom was going to energize the American economy just as the G.I. Bill once had.  This perspective was heavily marketed by the Duopoly, and
the Corporate Media.

Two things had also happened.  Capital was allowed to treat Government oversight as another branch of their business, and individual mortgages were now part of “products” that had been leveraged out to unbelievable levels.  When the bill came due, who got taken care of?  In 2008-09 the Government could have spent $6 trillion to buy out every toxic mortgage in the country.  For good measure, they could have paid off every other outstanding mortgage balance, housed practically every American, and then given them a “Cadillac” Health Insurance Plan for a year.  Instead that is only 20% of what has gone to Wall Street so far, because they must be the injured party and where the moral imperative should be satisfied.

If you want to know where the money went besides Wall Street, add tax cuts for the rich, two long, expensive, undeclared wars of aggression on the credit card, and huge giveaways to Pharma, and Health Insurance, and you have your answer.  When a mortgage servicer is financially incentivized to foreclose and
the most they are looking at is a 1% fine for fraudulent foreclosures, its something that makes good business sense, not a morally deficient “homeowner”.  This is just part of the bill for “Supply Side”.

3rdman - Your second comment makes it seem as though you have some confusion.  There is a singular cause of rape; Lack of Consent.  Opportunity and rationalization have nothing to do with it.

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By bpawk, February 19, 2012 at 10:10 am Link to this comment

The bottom line, save for ‘robosigning’ Americans willingly signed on the dotted line to the lender - they should be on the hook for the money - it doesn’t matter whose fault it is - you signed your life away, you have to own up to it.  The whole problem is that the lenders aren’t owning up to their end of the bargain but that doesn’t mean the homeowner shouldn’t pay. The whole system is corrupt and there should never be bailouts for anyone - not wall street, not main street.

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By thethirdman, February 19, 2012 at 7:22 am Link to this comment

And the rape victim nonsense is so old.  Would we blame her for wearing revealing clothing? No.  Would we blame her for thinking it was a good decision to get drunk and high at the frat house at 2AM? Partially.

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By thethirdman, February 19, 2012 at 7:17 am Link to this comment

Not so fast Ardee.  While the crimes of both Wall St. and the White House were egregious during this crisis, the average American does lay at the heart of this mess.  You say don’t blame the victim, but I see the buyers more as “the enablers.” As a nation, we were infatuated with buying well beyond our means.  At the height of this mania, there were dozens of television shows with themes of flipping homes and cashing in on mega-profits.  You may protest that this was not the average American’s experience, and I would agree.  But this normalization took place and the average American was sedated into believing that home buying was not the life changing deal that it is.  Sure burrow as much as you can get your hands on, this magical investment will rise forever.  Little common sense was used on either side.  You say don’t blame the victim, but we would be negligent not to recognize that this mania was not simply vulture capitalists doing their thing. Rather, it is a symptom of our larger American sickness.  You want to blame the pusher, without acknowledging the shortfalls of the crackhead.

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By ardee, February 18, 2012 at 1:46 pm Link to this comment

Blaming the millions who have been foreclosed or are in the process of foreclosure seems to play into the hands of the real culprits here, the financial community and the government that failed in its regulatory responsibilities, and continues to fail us all by not investigating and prosecuting.

Certainly there was a small percentage of all those folks who saw profit in purchasing a too large home but they are a small number indeed. I cannot help but wonder at the motivation of someone who blames the victim for the crime. Does he also blame the rape victim for wearing revealing clothes ?

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By bpawk, February 18, 2012 at 1:21 pm Link to this comment

While I feel for the foreclosed homeowner, the homeowner also bears responsibility - barring robosigning which when caught is rectified - most homeowners spent well beyond their means and wanted to believe whatever a loan officer said in order to get that home. I don’t believe everything someone tells me, why should we absolve responsibility to the homeowner who choose to believe a loan officer that their house was increase in value?  Nobody knows and it’s wishful thinking and greed that got the homeowner into trouble so while the banks also took risks and got bailed out, so did the homeowner take risks.

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