Saturday, March 31, 2012

Searching shadows for end to foreclosure crisis

When Frank Verna pulls up to a battered, four-unit apartment building at lunch hour, he's just over a mile as the seagull flies from the gated, oceanfront palaces of South Florida's wealthiest.
But this stretch of 21st Street, pocked by homes with boarded-up windows and dead-ending at railroad tracks, is unlikely to make it to a tourism poster. Verna turns the car around in case he needs to make a quick exit and tucks a Smith & Wesson pistol into his jeans.
"Just watch your step," the real estate agent says, parting bushes grown across the building's entry path. Beyond is the darkened doorway to Unit 1 -- missing its door.
"I think there's a dead animal over there," Verna says, aiming his flashlight at brown fur in the center of a living-room floor blanketed in garbage. The stench of whatever's in there is potent. Nobody is home.
Verna is here because he specializes in distressed properties and Florida, thrashed by the mortgage crisis, has thousands. But figuring out just how many is not simple.
Each month, analysts issue reports detailing the number of homes nationwide in foreclosure or held by banks. The implication is that if we can match buyers with these houses or help borrowers stay put, the economy will be able to heal at last.
At ground level, though, it's more complicated. The building on 21st Street is a good example.
The last buyer paid $309,000 six years ago. But today the county appraiser says it's worth less than a quarter of that amount. A bank filed foreclosure papers in 2008, but it still belongs to the original owner, subject to fines and liens by the city. The bank sold the underlying mortgage note to a hedge fund for pennies on the dollar. That company has hired Verna to check the condition and occupancy status of its investment, on the way to making it profitable.
It's one thing to measure the crisis in the black and white of statistics. But here's a reminder that reality also comes shaded in gray.
People in the foreclosure trade have a name for buildings like the one on 21st Street: "shadow inventory." Broadly speaking, it refers to all the homes in the foreclosure pipeline that will eventually reach the market but aren't there yet. The definition, though, varies considerably from analyst to analyst and there is truth to be gleaned from each of their studies.
Numbers matter because figuring out how long the debacle will last requires knowing the extent of the damage. But if we're going to take stock, reading reports may not be enough.
The only way to fully comprehend what's going on out there is to move beyond the figures and charts, and venture into the shadows.
All rise and come to order. Judge Diana Lewis' court is now in session. On a Monday afternoon, Courtroom 4B's benches are packed. Lawyers and home owners cluster around the door and stand along the walls. On a board in the lobby, 16 sheets of paper list 136 foreclosure cases awaiting Lewis on this one afternoon.
Too late for a seat, Leanna Lalla, a lawyer representing homeowners, leans over to explain that today's crowd in 4A is merely the norm, reflecting all those houses piling up in the pipeline.
"Do you see the shadow yet?" she whispers.
Florida is one of 20 states that rely entirely on courts to deal with the crisis. A major reason cases drag on for an average of two years is that last year's robo-signing scandal forced banks to put the brakes on many cases with suspect documents. A settlement with state and federal officials has allowed the process to get moving again.
But proceedings in Lewis' courtroom hint at the confusion, as well as delaying tactics by lenders and borrowers, leaving scores of homes stuck.
One of the first cases is Wells Fargo v. Killgore. The lawyer for a condo association steps forward, pursuing $15,000 in unpaid dues and fines on a Boynton Beach apartment in foreclosure. But a woman named Sue Elmore objects. Elmore is the daughter of the man who lived in the condominium. She explains that her father is in a nursing home. Years ago, he took out a reverse mortgage and when he got ill, the family agreed to surrender the home, a deal they thought was long done.
"In our minds, we didn't own it any more. We gave it back," Elmore says later. "We just did what they told us to do."
Somehow, though, the condo is still listed in her father's name. It's not clear exactly how a home like this one should be classified or what it will take to figure out a solution.
Later, Lewis calls up the parties in another case, Nationstar Mortgage v. Sands. The homeowner tells the judge he thought a loan modification had been finalized, allowing him to keep the home, until a lawyer called to say it was back in foreclosure.
"That's ridiculous," Lewis tells the lawyer for the bank. "I'm not doing this thing two or three times. You're making my head spin."
From the courthouse, it's a 15-minute drive to a neighborhood called Eden Place. On alphabetically named streets, well-tended homes built a half-century ago snuggle amid tropical foliage.
"That one on the corner, he didn't pay his mortgage. He just moved out to Okeechobee and let it go," says Jimella McKeag, surveying her block of J Street. "This one here, he rented it a couple of times. ... He let it go and it went back to the bank."
Of 13 houses on McKeag's block in Lake Worth, two are owned by banks following foreclosure. Two more sit abandoned. One was bought out of foreclosure by a local doctor last fall, but appears uninhabitable. The other, boarded up, still belongs to its original owner.
Houses on this block once sold for $250,000 or more; they've lost at least half their value. Eventually, the vacant homes will come on to the market, affecting the worth of neighboring houses. Analysts pore over data trying to figure out just how many homes like this are hidden from view.
Economists at CoreLogic, a California company that analyzes mortgage data, chart 1.6 million homes in shadow inventory nationwide. They count homes not listed for sale, with loans at least 90 days overdue, in foreclosure or bank-owned.
Others say the shadow is much bigger. Laurie Goodman of Amherst Securities in New York says it covers from 8.3 million to 10.4 million homes. Goodman's analysis includes homes with loans at least 60 days overdue, those that were delinquent before and are likely to default again, and thousands whose owners are making payments but may give up because they owe more than homes are worth.
"The question is `how long is the shadow?'" Goodman says. "I think some people are definitely underestimating the seriousness of the problem."
Mark Fleming, chief economist for CoreLogic, says his analysis is a snapshot of the problem, while Goodman's is more of a forecast.
"In many ways, we can both be right," he says.
Measuring shadows grows more difficult continuing down J Street. A two-family house with a carport has gone through foreclosure and is owned by the Federal Home Loan Mortgage Corp., records show. But tenants say they are still paying rent to the previous owner. There are scores of homes like this, experts say, owned by lenders who haven't pursued eviction.
Lenders have good reasons to delay. Empty homes require upkeep and claiming ownership means shouldering taxes and fines. As long as a case in still in process, loan servicers continue to collect their fees.
A recent check of records in this one county found more than 10,000 cases in which a bank secured a final judgment more than a year ago, yet there has still been no change in title, says Michael Olenick, a West Palm Beach computer programmer who tracks the system.
Then there are houses like one where Peter Gardner answers the door. Gardner, a former laser technician, bought it for $44,000 in 1995. After a car accident left him disabled, he says he tried to catch up on payments, but couldn't meet demands to pay accumulated late fees. The lender filed foreclosure papers three years ago. Gardner, who says it's been years since he's made a payment, tried for a loan modification, but every three months was told to reapply. Last fall, the lender claimed his house at auction for $500.
It's now owned by Bank of America, whose representatives still call. "They want me to live in the house, mow the lawn, keep the air conditioning on so the fungus doesn't grow in it," Gardner says. He tells callers he no longer owns the place, but they don't believe him.
"Somebody went and sold my house and they're telling me I'm not even in foreclosure," Gardner says. "I was mad crazy with it and every time you just have to laugh. Otherwise, you'd just kill yourself inside."
The housing market is working through a riddle, determining what homes are worth given limited demand. But shadow inventory keeps part of the supply hidden.
"It goes deep and you have no clue," says Danielle Giunta, who checks on distressed homes for lenders. Giunta sold real estate until the market tanked. Now, a few days a week, she drives a 120-mile route through six Palm Beach County zip codes, knocking on doors and snapping pictures.
Giunta says it's troubling to see vandalized homes and talk with families worried about eviction. But she's also bothered by the difference between the number of homes listed for sale and all the others she sees.
"I go online and see what they're reporting and it's not the same," she says. "It's not going to be better for years ...and the reason I say that is the truth is not out yet."
There is, however, substantial demand for foreclosures at the right price. Driving through inland neighborhoods, agent Sharon Restrepo stops in front of a condo she bought for $30,000 a few months ago and resold to an investor for $40,000. After the investor paid $1,600 to fix it up, the place now rents for $950 a month. Restrepo says she's buying five to 10 homes like this a month, turning most around as profitable rentals. You can't build these houses for what they cost, she and others say.
But investors complain banks are not realistic about the prices they'll accept. Verna, the real estate agent specializing in distressed properties, says slowing the flow of homes into the market artificially lowers inventory in some neighborhoods, which can temporarily lift prices. At the same time, lenders are increasingly selling homes or the underlying loans in bulk to hedge funds.
That's where Verna comes in, tracking down borrowers to convince them to trade deeds for cash, and turning around homes for rent or sale. At this rate, Verna figures it will be three to five years before lenders let all the homes go. The risk is that going too slow could artificially raise prices in some areas, which might spur investors who bought homes as rentals to put them up for sale.
"The truth of the matter is we would have already gotten over it if they just let the properties get out there and get sold," Verna says. "So what are you doing? You're not stabilizing the market. You're creating more chaos."
When Lynn Szymoniak moved to Florida three decades ago as a lawyer for farm workers, dirt along Lantana Road was planted with cash crops. Today, what once was a U-Pick farm is a neighborhood of 262 homes called Strawberry Lakes.
"Sometimes you can't tell when a house is in foreclosure unless you go back two or three times, because the neighbors will do things like park their cars in the driveway, all in an effort to make things more secure," Szymoniak says, pointing to old newspapers piled on front steps and fabric hung across windows.
But "with all these foreclosed homes we've come upon, we've come upon zero `For Sale' signs," she notes.
Szymoniak hasn't counseled farm workers since the 1980s. But she found Strawberry Lakes after battling to keep her own house. In 2008, Deutsche Bank filed foreclosure papers against her. By then, Szymoniak had spent years representing insurance companies in fraud cases. She spotted suspect signatures on loan documents. Her detective work was instrumental in exposing the robo-signing scandal, reflected in $18 million awarded Szymoniak in the settlement between lenders and government officials.
She remains unconvinced banks are doing enough to resolve the crisis. Strawberry Lakes is Exhibit A.
Homes here sell for a third of the $275,000 or more they fetched at the top of the bubble. At least three dozen are in foreclosure, with many cases dating back three or four years. Of those, at least five are houses where lenders have won final judgments without moving forward.
In addition, at least 57 houses not in foreclosure are owned by people who paid far above what they're now worth.
Prudent Alcindor, who paid $253,000 for a house currently appraised at less than $112,000, says he wonders whether to give up.
"I still pay, but I will never have the house. I pay to stay in it. But it will never be mine. It's like I rent it," Alcindor says. The pressure on his neighborhood is "getting worse and worse every day."
Jeremy Vassalotti, president of the homeowner's association, says as neighbors fall behind, more responsibility lands on everyone else. Vassalotti, who owns a masonry company, lives in one of the neighborhood's most carefully tended homes. But he spends substantial effort keeping tabs on the houses around him. In Strawberry Lakes, 105 homeowners are behind on HOA dues, a hint more could be in trouble.
Uncertainty makes it difficult to gauge the duration of the crisis. But Szymoniak cautions against assuming that the problem is going away.
"When anybody tells me we're coming out of the foreclosure crisis," she says, "I always take them for a ride and let them see what's happening" in neighborhoods like this one -- bathed in South Florida sunshine, but set deep in the shadows.
Adam Geller, a New York-based national writer for The Associated Press, can be reached at features(at)

Friday, March 30, 2012

My reply Letter to Attorney General Kamala Harris

March 27, 2012

Kamala Harris - Attorney General
M. Nelson - Public Inquiry Unit
PIU: 454528
Re: Ocwen Loan Servicing

Since I received your reply dated January 17, 2012, I am feeling a change in my consciousness. You see, for the last nine years, each time I tried to gain a judicial hearing to inspect the banks violation of law, that cost my home of 26 years and the Residential Fire Sprinkler business I ran from that home, the appeals court would rule on the side of the banks and deny my hearing.

Both the facts and the law were on my side. It was crazy.  The judge claimed she lacked jurisdiction to hear my complaint. The appeal process took me to the Supreme Court, three times, and proved to be futile. There would be no hearing for this homeowner.
I lost my home and my business because of serious federal violations of law by the bank, yet could not gain a hearing to prove it. The BAP or bankruptcy appellate panel for the 9th circuit, did, however, reverse this same bankruptcy judge in 2006 when a storage operator violated the same law. 11 USC 362(a) in Ozenne v. Dollar Storage 9th Cir BAP Jan-17-2006.

In my latest attempt to gain a hearing, the bankruptcy court again ruled that they lacked jurisdiction to hear my complaint, which does not comport with published case law in the 9th circuit. In re Nathan Johnson July 7, 2006 9th Cir BAP.

Since I was not notified of the decision by the bankruptcy court claiming “no jurisdiction” until after the 10-day appeal period, I filed a petition for mandamus relief with the BAP. It turns out, however, that the Judge, the honorable Meredith Jury, is now a member of that seven-member panel and so three of the other jurists denied my petition, and now it is at the 9th Circuit Court of Appeals 11-60039. Ozenne v. Chase Manhattan

I understand that a civil litigant must engage his or her own prosecution of law violations that have caused injury. For over nine years, I have fought as best I could, with and without professional representation against this loan service juggernaut, but so far, I have been denied my civil right to due process. I hope, in this latest appeal, to finally be heard.  

You should be aware that the service agent, Ocwen, likely violated laws of a criminal nature, such as:

1.    Ocwen issued a deed to O’Neal on 5-17-2001, and O’Neal recorded that deed on 5-29-2001. When Ocwen conveyed title to O’Neal, they extinguished their power to hold another sale. Vista homes, an experienced real estate buyer, would not have paid the sale price at the July 2002 sale without some private assurance from Ocwen, that the trustee would rescind the O’Neal deed, which they did two days after the eviction trial. This gave Vista clear title to the property. Is this a criminal conspiracy?

2.    At the bottom of each “Proof of Claim” form that are filed by creditors, it acknowledges the criminal penalties for filing a false proof of claim. Since O’Neal was the legal owner from May 29, 2001, when they recorded their deed, until that deed was rescinded and recorded on September 26, 2002, Ocwen had no legal grounds to file these proofs of claim. They did, however, file several proofs of claim in my cases 01-18618 and 02-14014, asserting a full legal position, when they had none.

The details of my legal struggle for the past decade are documented in my Appellants Opening Brief submitted on January 5, 2012 and also on two of my blogs at and my personal blog

For this past decade I have waited patiently for the activities of Ocwen, and other unscrupulous loan service companies to come under inspection by the legal authorities. Forced insurance, and other deceptive tactics, designed to increase fees and keep the owner in default were used on me, in the late 1990's, and became standard tactics in the new century to many homeowners. Later, Ocwen violated bankruptcy law, which in my case led to my inability to refinance my home and only Ocwen could resolve it. Instead, they resold it.

As our country slowly recovers from this financial meltdown, it is important to prosecute those responsible for this orgy of greed that roiled the economy.

Our basic sense of justice is renewed, when after a period of lawlessness, a new sheriff arrives in town. For me personally, fighting my battle against these banksters, I feel like I have been fighting at a remote outpost and reinforcements have finally arrived!  

All my best wishes to you and your dedication to justice.

Gary Ozenne  

Thursday, March 29, 2012

Class Action Suit Against Wells Fargo for Freezing Accounts in Every Case

Class Action Suit Against Wells Fargo for Freezing Accounts in Every Case

On January 21, 2011 Christopher P. Burke, Esq. and Scott C. Borison, Esq. attorneys for Eric Mwangi and Pauline Mwicharo [Plaintiffs] filed case no. 11-01022-bam in U.S. Bankruptcy Court for the District Court of Nevada this Adversary, a class action.
Thanks to Christine Wilton for this news.  I will check the docket and update shortly.
Well, I’ve checked the docket.  Pretty interesting.  The case was before Judge Bruce Markell.  The complaint asked for $5 billion (with a “b”) in damages.  WFB filed two Motions to Dismiss, the second of which was granted with prejudice in September, 2011.  The debtors appealed to the BAP.  WFB transferred to district court (shocker there) since the BAP ruled that Wells violated stay.  The parties are waiting for the district court to rule.  Email for counsel for the debtor is

Wednesday, March 28, 2012

Will America's Growing Mountain of Private Indebtedness Lead to Another Windfall for Banksters, at Our Expense?

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Yes, it will be another windfall for them -- ifthey manage to get bailed out again by the US government, using the magic money created out of thin air by the US Federal Reserve.    
But how many times can the Fed bail out the banksters (who are getting ever more obscenely rich off this scam), as they continue to collect trillions in magic money from the Fed, . . before this racket cripples our economic system and flattens most of us financially?   In other words, for how much longer are the majority of Americans going to remain deaf, dumb and blind as regards this larcenous scheme that is slowly driving most of them out of the middle class and into poverty?   And as America becomes ever more debilitated as a result of this parasitical "crippling' and decimation of its middle class, at what point are the world's investors going to refuse to fund this larcenous scam any longer, by refusing to purchase the US Treasury bonds whose continuing sales make it all possible?  
As Richard Escow recently pointed out at the Huffington Post, we've spent hundreds of billions of dollars -- likely trillions -- to rescue big banks.   But instead of dialing back on the risky behavior that shattered the economy in 2008, they are instead doubling down on it.   And when that bill comes due, we won't just be asked to pay it again.   We'll be asked to take the blame for it again, too.
So who are the real deadbeats in this country?   Banks acted recklessly in the years leading up to the financial crisis -- and ran up a bill that the rest of us have been paying since 2008.   And guess what? They're doing it again.  
Take student loans.   Americans now owe more than a trillion dollars on their student loans, a figure that's growing by $50 to $60 billion every month!   And now we've learned that as many as 27% of these loans are delinquent, meaning they're more than thirty days past due.   That amounts to roughly $270 billion in troubled loans -- most of which have been guaranteed by the US taxpayer.   So who do you think is ultimately going to pay for this?   Three guesses.
We've already rescued American banks with hundreds of billions in public money, saving them from the consequences of their incompetent underwriting of mortgage loans.   Now we're about to do the same thing with student loans, which were part and parcel of a risk-free money-making scheme gifted to those same banks by our bought-and-paid-for Congress, which the banks and Wall Street essentially own.

Politicians "privatized" Sallie Mae, thegovernment-sponsored enterprise (GSE) created to help students borrow for their education.   Sallie's greed-crazed executives promptly went on a spending spree, using their lavish government backing to pay themselves inflated salaries and buy corporate jets so they could travel in luxury.   Yet, without irony, their backers and shills shrieked "socialism!" when wiser heads wanted to stop private-sector skimming at the expense of our nation's students.   (See " Sallie Mae's jets .")
And now that a shortage of decently paid jobs for most new grads are forcing most of these student loans to go bad, who do you think will pick up the tab?   Well, it won't be those high-flying executives.   And Wall Street certainly won't be held accountable for the fact that today's graduates face the worst employment situation in recent memory (even though that's a direct result of bank malfeasance).   Instead the public will pay this new cost of the banks' behavior, just as it has paid for so many others.
But student loans aren't the only burden young people -- and the rest of us -- are carrying today  
Today's college seniors are also graduating with an average of more than $4,000 in credit card debt -- and then entering an economy where only 46 percent of their peers in the 18- to 24-year-old age group have jobs.   That's the lowest percentage of employed young people since the government began tracking these figures in 1948.  
Plus, credit card debt is another exploding area of risk for America's too-big-to-fail banks -- and therefore for the federal government, i.e. the American people.   In this country there are nowmore than 50 million American Express credit cards in circulation, along with 176 million MasterCard credit cards and 261 million Visa credit cards.   That's nearly half a billion active credit cards from these three companies alone.  
Credit cards are unsecured debt, meaning that nothing has been put up as collateral if the borrower defaults.   Credit card holders owed a reported $771 billion -- more than three-quarters of a trillion dollars -- in the second quarter of 2011.   The average amount owed by a credit-card-holding household was more than $16,000.  
The debt train is picking up speed
Lenders wrote off about $250 billion in bad credit card debt between 2008 and 2011.   Credit card debt increased by more than $36 billion in the fourth quarter of 2011, which was 30% more than the increase in the same quarter of 2010 and more than twice the increase during the same quarter in 2009.   (Source: )
But banks aren't pushing this kind of risky debt on consumers anymore, are they?   They've learned their lesson, right?   No, actually they haven't.   Credit card solicitations were up in 2011.   And the worst offender was and is Citigroup, the too-big-to-fail superbank that only exists because of Washington's 'bipartisan' agreement to allow the merger that created it.   Last year Citi mailed out more credit-card solicitations than there are people in the United States (346 million credit card offers in a nation of roughly 308 million people, according to theWall Street Journal ).
In fact, the total number of direct-mail solicitations mailed out by credit card lenders in 2011 comes to nearly five billion!  
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Several years after receiving my M.A. in social science (interdisciplinary studies) I was an instructor at S.F. State University for a year, but then went back to designing automated machinery, and then tech writing, in Silicon Valley. I've always (more...)
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Sunday, March 25, 2012

Gretchen Morgenson - You Tube Interview

Woody at 100

By Jim Hightower
Where’s Woody when we need him?

This year marks the 100th anniversary of the birth of Woody Guthrie, and in these hard times of tinkle-down economics, we sure could use some of his hard-hitting musical stories and inspired lyrical populism.
He wouldn’t even need to write any new material. For example, just as in his day, our Wall Street banksters are getting rich, even as the victims of their narcissistic greed are getting pink slips and eviction notices. He already wrote about this outrage in his great old song “Pretty Boy Floyd,” including this verse:
“Yes, as through this world I’ve wandered, I’ve seen lots of funny men.
Some will rob you with a six-gun, And some with a fountain pen. And as through your life you travel, Yes, as through your life you roam, You won’t never see an outlaw Drive a family from their home.”
Guthrie unabashedly celebrated America’s working class, seeing in such people a strong commitment to the common good that lifts America up.
This drove The Powers That Be crazy (a pretty short ride for many of them back then, just as it is today). So they branded him a unionist, a communist and all sorts of other “ists” — but he withered them with humor that got people laughing at them: “I ain’t a communist necessarily, but I have been in the red all my life.”
Going down those “ribbons of highway” that he extolled in “This Land Is Your Land,” Guthrie found that the only real hope of fairness and justice was in the people themselves. Woody preached that, “There is just one way to save yourself, and that’s to get together and work and fight for everybody.” Indeed, that’s exactly what grassroots Americans are doing all across our country today. From Occupy Wall Street to the ongoing Wisconsin uprising, people are adding their own verses to Woody’s musical refrain: “I ain’t a-gonna be treated this a-way.”
Where’s Woody when we need him? He’s right there, inside each of us. To save ourselves and our country, we must all be Woody.
For more information on Jim Hightower’s work — and to subscribe to his award-winning monthly newsletter, The Hightower Lowdown — visit www.