According to Family Court Judge Dennis Bailey of Broward County, Florida, ZOOM hearings have become way too casual. This, according to a recent ABA article (here) by Debra Cassens Weiss. It seems Judge Bailey, in a letter to the Weston Bar Association (here), had grown tired of seeing attorneys during Zoom hearings appearing in decidedly inappropriate dress: Continue reading “ZOOM Couture”
Background – 3Q 2007. Looking back, August 2007 was a memorable month, filled with good news and bad. Based upon RMLS™ numbers, it was a statistically impressive month for closed residential transactions in the Portland Metro area. The bad news was that it was the last such month we were to see. From that point forward, in almost every meaningful category, the local housing stats just kept getting worse.
The Credit Crisis – 3Q 2007.[1] Quietly, and with little public fanfare, in the third quarter of 2007, worrisome cracks began to appear in the country’s financial system. They were first noticed by those who monitor these things, such as the Federal Reserve. They were also noticed by some who actually had a hand in causing the cracks to occur.[2]
In short, the credit markets began seizing up; access to short term borrowing engaged in by companies was drying up. Normally, large businesses financed their daily operations through the sale of commercial paper, i.e. secured and unsecured short term loans. The Federal Reserve recognized the crunch, and in September 2007, cut interest rates by 50-basis points, or one-half of one percent. The purpose in so doing was to provide liquidity for financial institutions and investment houses so they could continue to survive. Bloomberg explained it well in its September 27, 2007 article titled “U.S. Commercial Paper Drop Slows After Fed Cuts Rates (Update5)”: Continue reading “Portland Metro Housing Prices – The Last Five Years [Part One]”
“To the dismay of many of Obama’s supporters, nearly four years after the disaster, there has not been a single criminal charge filed by the federal government against any top executive of the elite financial institutions.” Daily Beast, May 6, 2012.
The Story. A few days ago, an interesting post appeared on the news and opinion website, Daily Beast. It was taken from a Newsweek article, a magazine that is trying valiantly to remain both relevant and solvent in the digital age. With Tina Brown at the helm of both, many of Newsweek’s cover stories have become decidedly controversial and unrepentantly left-leaning. And with the assistance of the Beast, this news aged magazine – one year short of becoming an octogenarian – gets more attention than it would if it just ended up at your local dentist’s waiting room. But, I digress…. Continue reading “Big Banks – Too Big To Jail?”
“Wells Fargo’s conduct is clandestine. Rather than provide Jones with a complete history of his debt on an ongoing basis, Wells Fargo simply stopped communicating with Jones once it deemed him in default. At that point in time, fees and costs were assessed against his account and satisfied with postpetition payments intended for other debt without notice. Only through litigation was this practice discovered. Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery.”
Honorable Elizabeth W. Magner, U.S. Bankruptcy Judge, In Re: Jones v. Wells Fargo Home Mortgage, Inc.
Introduction. In understanding what happened in this case, it is important for the layman to understand the following: All bankruptcies in the U.S. are governed by federal law. The concept – though not necessarily the process – is simple: The moment one files for bankruptcy, an “automatic stay” is imposed. This means that immediately upon filing a petition in bankruptcy, no creditor may attempt to recover any monies or seek other relief against that person [called the “debtor”] without court approval. A trustee is appointed to administer the bankrupt’s estate. Creditors, such as Wells Fargo, must then file a “proof of claim” with the court, setting forth the amount the debtor owes them as of the date he or she filed their petition. A bankruptcy proceeding in which a “reorganization plan” or “plan” is filed with the court is known as a “Chapter 13” bankruptcy. If the plan is opposed by any creditors or the trustee, it must be worked out, or resolved by the Bankruptcy Judge. Once “confirmed” by the Court, the debtor and all creditors must adhere to it.
Typically, a reorganization plan will identify who, what, when and how, creditors are to be repaid by the debtor. Any variance from the plan has to first be approved by the bankruptcy court. Some actions and events in bankruptcy lingo are occasionally referred to “post-petition” in order to signify that they occurred after the debtor filed for bankruptcy. Events occurring before the debtor’s bankruptcy filing are referred to as “pre-petition.” The trustee is in charge of overseeing the operations of the final confirmed plan.
In the following case, Wells Fargo was one of the debtor’s creditors, and as such, had participated in, and was bound by, the confirmed plan. As demonstrated below, the courts jealously guard debtors who seek federal bankruptcy protection. Any deviation from a confirmed plan by the debtor’s creditors, especially intentional deviations, can result in severe sanctions.
Discussion. The Memorandum Opinion written by the Honorable Elizabeth W. Magner, U.S. Bankruptcy Judge, could have been completed in a few pages. Instead, she decided to take 21 pages, setting out in detail, the conduct of Wells Fargo, that you sensed was not going to end well for this Big Bank. Continue reading “Slapdown! – In Re: Jones v. Wells Fargo Home Mortgage, Inc.”
“All things considered, I think I’d rather be a poor lawyer than a rich banker. At least the legal industry has ethical rules and disciplinary sanctions. Big Bankers have nothing. Money is their Holy Grail.” Anonymous (sort of….)
In reviewing several mission statements for Big Banks, the reoccurring theme seems to be that we are “Bigger, Better, Stronger.” Noticeably absent from any discussion of core institutional values are the words “morals” and “ethics.” And where these words are [rarely] found, the bank’s own conduct belies its statements. Let’s look at some prominent displays of the moral vacuity that exist at some of the Big Banks:
Sacking Sachs! Let’s start with a look at a recent story about one of Goldman Sachs’ former employees, Greg Smith. Mr. Smith (like Howard Beale in the 1976 movie “Network”) was “mad as hell, and wasn’t going to take it anymore.” So he decided to leave his position[1] at Goldman Sachs in a very public way; he published his resignation in a New York Times editorial piece entitled “Why I Am Leaving Goldman Sachs.” Herewith are some of the reasons for his departure[2]: Continue reading “Ethics For Dummies [Big Bank Edition]”
“In Roman mythology, the god Janus, for whom each year’s first month is named, was the deity of beginnings and endings. According to legend, the titan Saturn gave the two-faced god the power to see both the future and the past. Romans carved both of Janus’ two faces on gates and doorways to solemnize momentous transitions. Most notably, in the Roman Forum, the Senate erected the ritual gates called the Janus Geminus, which the Romans opened in times of conflict. At war’s outset, priests made sacrifices here to curry favor from the gods and forecast the prospects of success. No deity better symbolizes what financiers hoped to create when they founded the Mortgage Electronic Registration System (MERS). MERS sits as a dichotomous, enigmatic gatekeeper on the vestibule of our nation’s complex and turbulent mortgage finance industry. Financiers invoked MERS’s name at the beginning of millions of subprime and exotic mortgage loan transactions and again invoke its name as they attempt to terminate so many of these loans through foreclosure. Like Janus, MERS is two-faced: impenetrably claiming to both own mortgages and act as an agent for others who also claim ownership.” Professor Christopher Peterson, “Two Faces: Demystifying The Mortgage Electronic Registration System’s Land Title Theory”
In a stunning rejection of the earlier Beyer and James cases [severely criticized by yours truly here, here, here, here, here and [satirically] here – PCQ] holding that MERS and Big Banks may ignore the plain language of the mandatory recording law found at ORS 86.735(1), recently appointed U.S. Federal District Judge Michael H. Simon, issued a 41-page Opinion and Order [here] that should be required reading for all lawyers and laypersons interested in the current MERS issues bouncing around in Oregon’s state and federal courts. Quoting Lake Oswego attorney Kelly Harpster’s statement to the Oregonian, Judge Simon’s ruling is “the most thorough and thoughtful analysis of the MERS issue that has yet been published ….” Continue reading “Another MERS Slapdown! The Recent James Case Analyzed (Part One)”
Well, the stealthy lending lobby is up to its old tricks. Just as they did in the 2011 Oregon Regular Session, they prefer to work quietly in the cloak room. But should we be surprised? Honest work can be conducted in the open, only those fearing detection, confrontation, and truth, operate in the shadows.
Senate Bill 1552 requires lenders and their henchmen, the servicers, to formally offer mediation to borrowers as a means of foreclosure avoidance. It has passed the Oregon Senate by a resounding 26-4 vote.
Senate Bill 1564 would outlaw the lenders’ use of “dual tracking” i.e. commencing a foreclosure and offering to discuss modification at the same time. It passed the Senate by a 20-10 vote. Dual tracking is a tactic akin to holding a gun to the head of a borrower and saying “OK, let’s talk.” As the foreclosure date looms, and the bank/servicer continues to lose paperwork and demand new records, the homeowner franticly tries to get the foreclosure date postponed so discussions can continue. Of course, the modification negotiators at servicers like Bank of America, politely demur, saying they cannot postpone until five days before the sale date. “No early commutations here! You have to be on the steps of the scaffold before we’ll consider stopping the show.”
As a reception for these two bills, House Co-speaker Bruce Hanna (R-Roseburg) and Rep. Gene Whisnant (R-Sunriver) have, according to the Oregonian’s Editorial Board, “…shown no willingness to give the Senate Bills a hearing. Echoing the question asked by the Oregonian Editorial Board on February 18, Why not help people keep their homes? How about it, guys?
What is incredible is that Rep. Whisnant represents the folks from Sunriver in Central Oregon – ground zero for the Oregon housing crisis. Rep. Whisnant’s webpage contains the following declarative:
“It is an awesome responsibility to serve as a State Representative and great honor. My job is to represent you and I will do that to the best of ability. I hope you will use the web page to monitor how I am serving the citizens of District 53.” [My italics. – PCQ]
OK, Rep. Whisnant, I’ll tell you how you’re doing for your constituents. Lousy! You’re throwing your own people under the bus for the sake of Big Banks. You represent thousands of people at the epicenter of the housing crisis – no single area has suffered more than Central Oregon – but you block these two humane efforts to help folks – to lighten their load. Instead, you take your orders from the Big Banks and the attorneys carrying their water. Perhaps you should knock on a few doors of the folks you serve. Ask them if they think your political maneuvering is in their best interest.
And if this was not enough, we learn in Monday’s Oregonian that Republican leaders are pursuing a“gut and stuff” effort in the House, designed to emasculate Senate Bills 1552 and 1564. For a look at the entire “gut and stuff” bill, go to this link.
In presenting the “gut and stuff” proposal, Rep. Whisnant told the Oregonian that “Mediation isn’t for everyone *** My purpose is to make sure that we help as many distressed homeowners as possible.”
Riddle me this Batman: In making mediation voluntary for the banks, how does that change the status quo? As you know, it changes nothing. The Big Banks do nothing voluntarily. Your scheme will hurt – not help – “as many homeowners as possible”. You should be ashamed.
Here’s a “back of the napkin” summary of what the Big Bank lobby and their toadies’ efforts would do:
- It would deprive Oregon homeowners of the ability to meet face-to-face with their banks’ representatives to mediate the terms of a loan modification before the foreclosure sale can be completed. Under SB 1552’s pre-foreclosure mediation requirements, a real live representative would have to be in the same room with the borrowers. And yes, the executioners would have to remove their hoods as they enter the room.
- It would permit “dual tracking” which results in keeping homeowners at the mercy of the Big Banks as they seek modification.
- Rep. Whisnant’s “gut and stuff” solution to dual tracking is to require lenders to contact borrowers whom they haven’t heard from before, and tell them whether they would “qualify” for a modification. If they don’t qualify, then, quoting the Red Queen “Off with their heads.” Rep. Whisnant has apparently never engaged in the banks’ sham modification games. If he had, he would know that it is a fool’s errand. For years, the banks, concealed behind the curtain of anonymity, have toyed with thousands of homeowners, denying modifications for little or no reason – all with no accountability. Requiring that a bank representative actually look a borrower in the eye would at least bring some accountability and explanation to the modification process.
- Rep. Whisnant’s “gut and stuff” would roll back Attorney General Kroger’s emergency regulations issued last month that sought to bring loan servicers under the Oregon Unlawful Trade Practices Act – a useful legal tool for borrowers who have been treated deceptively by Big Banks.
- And amazingly, the “gut and stuff” would resurrect the banking industry’s efforts of last year designed to retroactively legalize MERS, thus preventing foreclosing lenders and servicers from having to record the chain of trust deed assignments that led up to the current bank conducting the foreclosure. I have addressed these efforts in a prior post, here.
So what’s behind the banking lobby’s 11th hour efforts to kill pro-borrower legislation? The answer is simple: They prefer to operate in the shadows, anonymously, quietly, and behind closed doors. This “gut and stuff” is a perfect example; not having the honor to formally draft and present a real bill that says what they want, the banking lobby slithers behind the scenes, looking for a pro-borrower bill that it can “relate to” then quietly inserts its own venomous language. A quote from C.S. Lewis comes to mind:
“The greatest evil is not done in those sordid dens of evil that Dickens loved to paint but is conceived and ordered (moved, seconded, carried, and minuted) in clear, carpeted, warmed, well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices.”
It has recently been reported that Big Banks must have ‘living wills’ in place by July, 2012. In estate planning circles, a “living will” is a document one creates in the event they should later become incapacitated or incompetent, and are unable to make important decisions for their long term care. More to the point of the article – apparently the FDIC had unanimously voted to require banks with $50 billion or more in assets to prepare and submit these so-called “living wills” to “…ensure comprehensive and coordinated resolution planning for both the insured depository and its holding company and affiliates in the event that an orderly liquidation is required….” This, according to FDIC chairman Martin Gruenberg.
In the case of the Big Banks, the idea here is to avoid a repeat of the Bear Stearns and Lehman Bros. debacles that occurred in 2008, setting off a chain reaction and causing credit to seize up to the point of nearly collapsing our country’s entire financial system. Several weak banks were either absorbed by more stable ones, filed bankruptcy, or taken over by the FDIC. Today, some of the country’s largest banks are still struggling.
I guess the thinking is that some Big Banks are still viewed as “systemically important” – using the currently accepted term – rather than those nasty pejoratives “Too Big To Fail” or “TBTF” [an acronym that could refer to any number of expletives about Big Banks. – PCQ]
I find the use of the term “living will” an interesting choice of words, as it tends to humanize Big Banks – a task of Herculean proportions – even Dr. Frankenstein failed on that count. On the other hand – put yourself in the bankers’ shoes; this whole idea must raise some uncomfortable feelings at the highest executive levels. I mean, how would you feel, if every time you turned around, someone wanted to perform a “stress test” on you – digitally poking around in one orifice or another? And then after performing the tests, the examiner promptly suggests that you might want to make arrangements for the time when you can no longer care for yourself. It’s like facing the Grim Reaper mano a mano. Does the Fed know something the Big Banks can see but refuse to admit? After reading his patients’ charts, does Dr. Bernanke fear the end is near? Does he foresee these symbols of wealth and power now becoming “Zombie Banks”? Mere shells of their former selves, soulless, disembodied creatures, aimlessly lurching across the financial landscape, frightening everyone, as they hemorrhage the last vestiges of their life-sustaining cash reserves – this sounds like a scene out of Thriller. Well, if that’s what’s in store, “Yes!” – By all means, Living Wills are definitely in order!
In an effort to discover what plans some of the Big Banks have made toward drafting their Living Wills, I recruited a trusted associate to see if he might quietly find me a copy of one such document. I am happy to report that the mission was hugely successful and I am now in possession of one of the few known Living Wills that has been drafted for submission to the FDIC this July. What appears below is a redacted copy of the original: Continue reading “‘Living Wills’ For Big Banks?”
As we move into the New Year, our friends in the banking, servicing, and title industries have hastily convened a conference call to deal with the latest MERS setback in court. It seems that when Fannie Mae sought permission to evict some folks from the home it had recently foreclosed, the local Jackson County Circuit Court Judge said “Fannie May Not.” As usual, Belial Bank’s devilish President and CEO, B.L. Zebub, moderates. He is joined by his trusted cronies to consider what to make of this decision coming out of sleepy Southern Oregon. In attendance with B.L. is his honest but naïve legal intern, Les Guile, who, of late, has developed a tendency to speak more freely. Could it be that a conscience stirs within this young novitiate, and that he is tiring of the Machiavellian personalities on these calls? Also in attendance is title industry hand-wringer Liz Pendens and her nemesis, Dee Faulting, of the default servicing industry. Damian Faust, Belial’s lead counsel and hatchet man is present, as is the Bank’s chief schemer and PR man, Kenneth Y. Slick III (aka “KY”). B.L.’s loyal secretary, Lucy Furr, has dutifully transcribed this conversation, although she apparently forgot to “scrub” it, as instructed by B.L. As before, I am unable to disclose the source of this purloined post. – PCQ
B.L. Zebub: “I just read the decision in Federal National Mortgage Association vs. Goodrich. Well, the timing couldn’t be more prophetic; December 7, 2011 and we find out we just got bombed in court. Folks, I want to know what happened here! This was a little garden variety eviction. It can’t get much simpler than that. All the bank has to prove is their superior right of possession. We have our high-powered bank attorney flown all the way down to……..where is it “Jackson County” Orygon? Where the hell is that? Quick, someone, see if you can locate it on an AAA Trip Tik! I doubt it. Do they even have an airport there? Did we have to pay to have our attorneys chauffeured to court again?! That’s the problem – all those backwater bleeding heart liberal judges feeling sorry for the little guy! I had a bad feeling about this case the minute I found out it wasn’t going to be tried in Portland. It seems the farther away from the city you get, the more risk there is that some wild-eyed lib is gonna take issue with MERS. Remember what happened in the Flynn case? Where was that, Columbia County – wherever that is? Damien, enlighten us. What went wrong? I assume our lawyers take off their Rolex watches and Tiffany jewelry before they go to court. We don’t want these hayseeds thinking that we actually make a pretty good living foreclosing Oregonians out of their homes.” Continue reading “Belial Bank Conference Call Discussing The Goodrich Decision & MERS”
Hypocrisy: [c.1200, ipocrisie, from O.Fr. ypocrisie, from L.L. hypocrisis, from Gk. hypokrisis “acting on the stage, pretense,” from hypokrinesthai “play a part, pretend….” Online Etymology Dictionary]
Example: When banks lend money today, they demand absolute transparency of their borrowers. Every “T” must be crossed and “I” dotted. Signatures, income, credit, employment, all must be verified and re-verified to the nth degree. But when banks foreclose their borrowers today, they throw transparency to the wind. Everything becomes opaque. The banks move into the shadows, transferring obligations behind the scenes, employing lackeys to sign their most important foreclosure documents, and using servicers to do their dirty work, all the while whispering “We Care” to beleaguered homeowners, when that is the farthest thing from their mind. – PCQ
Background. On July 23, 2004, Mr. and Mrs. Sharpe borrowed $194,750.00 from their lender, Washington Mutual Bank (“WaMu”). They signed a Promissory Note and Trust Deed. Here’s what these documents said:
- The Note informed them that their lender could transfer it to a third party, which would entitle the new entity to receive the Sharpes’ payments;
- The Trust Deed stated that the Note could be sold without prior notice to them;
- The Trust Deed stated that the “Loan Servicer” [i.e. the entity to whom they were to make all Note payments – PCQ] could change;
- The Servicing Disclosure Statement [a separate lender-created document – PCQ] informed them that WaMu was to initially act as servicer of their loan – but that could change in the future;
On September 16, 2004, WaMu sold the loan to Fannie Mae, although it [WaMu] retained all servicing rights. This means that while Fannie Mae owned the Trust Deed and was the holder of the Note, WaMu acted as the collection agent and was thus earning servicing fees on the Sharpes’ loan even after they had sold it to Fannie Mae. Continue reading “Sharpe vs. Wells Fargo Home Mortgage – A Critical Analysis”
