Just a quick note to let everyone know I will be appearing on Home Sweet Home: Owning the American Dream, a special production of KCTS 9 dealing with the problems facing Seattle-area homeowners and the housing market. I will be a guest on the segment of the program focusing on the sub-prime mortgage crisis, homeowners facing foreclosure, and the effect on the local real estate market. Home Sweet Home airs Monday night, June 30, at 10:00 PM, and repeats several times throughout the week. Set your TiVos!
June 2008
Gregoire Seeks to Revoke Countrywide’s License
This is big. Following the announcement of lawsuits against Countrywide Financial this morning by the states of California and Illinois, Governor Gregoire said the state is going to attempt to revoke Countrywide’s license to operate in the state of Washington after an investigation found that the company had engaged in predatory lending practices:
“The allegation that Countrywide preyed on minority borrowers is extremely troubling to me,” Gregoire said. “And I hope to learn eventually just how much this may have contributed to foreclosures in our state. The allegation offers evidence that Countrywide engaged in a pattern to target minority groups and engage in predatory practices.”
“That’s why we intend to bring the full weight of the state on Countrywide to rewrite home loans for minority borrowers who may have been misled into signing predatory mortgages,” the governor noted. “My job is to protect hard-working Washingtonians, and protect them we will.”
Countrywide is also being fined $1 million for discriminatory lending and will be required to pay $5 million in back assessments. You can read the charging document here 
. More on this as it develops.
Seattle Jazz Great Faces Foreclosure
Sad news today that legendary Seattle jazz musician Ernestine Anderson, 79, is facing foreclosure on the Central District home that she and her family have owned and lived in since 1946. The Associated Press reports that Anderson, who has largely retired from performing and lives on Social Security benefits of about $1,000 a month, has a loan on her home that asks for a payment of $5,000 every month. Counselors are trying to find out more about how Anderson got into the loan, but given the size of the monthly payment it certainly sounds predatory. (Elderly people with lots of home equity but low incomes are prime targets for predatory lenders and scammers.)
Anderson has to come up with $44,000 in back payments and taxes by Monday, June 30, or her home will be put up for auction. Donations can be made at any Bank of America branch.
John McCain’s 25.99% APR Credit Card
Even presidential candidates aren’t immune to high credit card rates. From Dan Ray (via Bob Lawless at Credit Slips): John McCain’s recent financial disclosure form revealed that he and his wife Cindy hold a joint credit card from Chase with an APR of 25.99 percent—which Dan says smells suspiciously like a penalty rate. Barack Obama has proposed a “Credit Card Bill of Rights” to rein in credit card issuer abuses; maybe Sen. McCain’s experience with Chase will prompt him to do something along the same lines.
Making Them Show You the Note
Following up on yesterday’s post about lenders being unable to produce the mortgage note in a shockingly high percentage of foreclosure cases, here’s a short video from the Consumer Warning Network about how you can make your lender prove in court that it has the right to foreclose on you in the first place.
It’s imporant to understand that challenging your lender on the note isn’t a “get out of debt free” card. What it can do is give you more leverage to bargain with an institution that may be treating you unfairly, and establish the true ownership of the loan so another party doesn’t try to collect the same debt from you in the future. Your creditors are trying to take your home to compel you to uphold your end of the mortgage contract. You have the right to insist that they uphold theirs.
Show Me the Note!
This CNN story from earlier today highlights something I’ve been seeing recently in my practice: in many foreclosure cases, the lender can’t even produce the mortgage note—in other words, they can’t prove they’re the holder of the debt.
During the credit bubble, these mortgages were traded and repackaged so many times in so many different ways that the banks and servicers got lazy and sloppy with recordkeeping. They simply never thought they’d be called on it, it seems. Now they’re being called on it, and they’re in a bit of trouble.
When I represent a client in a foreclosure proceeding, the very least I expect from the “lender” is that it be able to show that it is the lawful owner of my client’s debt. Increasingly, the lenders are finding out that bankruptcy judges get a bit irked if they can’t. Stay tuned.
David Brooks on the Culture of Debt
An astute column today about the institutions that have helped push so many Americans into unmanageable debt, from what one might consider an unlikely source: conservative New York Times editorial columnist David Brooks.
The agents of destruction are many. State governments have played a role. They aggressively hawk their lottery products…
Payday lenders have also played a role. They seductively offer fast cash — at absurd interest rates — to 15 million people every month.
Credit card companies have played a role. Instead of targeting the financially astute, who pay off their debts, they’ve found that they can make money off the young and vulnerable…..
Congress and the White House have played a role. The nation’s leaders have always had an incentive to shove costs for current promises onto the backs of future generations. It’s only now become respectable to do so.
A timely reminder that issues involving the indebtedness and financial health of the American taxpayer cut across political boundaries. Consider reading the whole thing.
“Foreclosure Rescue” Is a Scam
As a follow-on to my post last Wednesday about some good stories NPR has run recently on the credit crisis, here’s another good one from the May 26 Morning Edition about a scam I’ve seen far too much of in my practice: the so-called “foreclosure rescue” industry. These are companies that hoodwink people facing foreclosure into signing over the title to their homes under the guise of helping people refinance their mortgages and fix their credit:
The schemers promise the homeowners that they can live in their houses mortgage-free, and then buy their houses back after a year. What their victims don’t know is that the scammers work with straw buyers to take out a bigger mortgage that essentially cashes out any equity in the house.
“These cases are very difficult to undo,” [lawyer Jessica] Attie said, “because the people who get to take out the cash often disappear. You can’t find them you can’t find the money and the property is left encumbered by a huge mortgage.”
Please, talk to an attorney before signing on to any plan that promises to help you save your home. There are a lot of people making such promises right now, and not all of them have your interests in mind. A knowledgeable bankruptcy and debt attorney can help guide you through the minefield and plan the strategy that works best for you.