Foreclosure and Suicide

Suicides Doubled During Housing Crisis says article in the Atlantic:

In 2010, just as the U.S. was beginning to climb out of the global financial crisis, suicide was the second-leading cause of death for adults aged 25 to 34 in the U.S., and the fourth-leading cause of death for adults aged 35 to 54. With the Great Recession behind us, public health officials are now trying to measure the toll of the housing crisis in terms of lost life and psychological distress.

A new study released this month in the American Journal of Public Health offers one answer to this complex question. The report finds that suicides spurred by severe housing stress—evictions and foreclosures—doubled between 2005 and 2010.

The study is the work of researchers from the Division of Violence Prevention at the U.S. Centers for Disease Control and Prevention. Led by Katherine A. Fowler, five researchers analyzed suicide findings from 16 states that participate in the National Violent Death Reporting System. The NVDRS is an epidemiological surveillance system that abstracts data from a variety of sources, including death certificates, law-enforcement agencies, coroners, medical examiners, forensic laboratories, and other vital-statistics providers.

“This study was the first to our knowledge to systematically examine suicides linked with eviction and foreclosure,” the report reads.

. . .

The increase in suicides for homeowners (foreclosure-related) was much larger than the increase in suicides for renters (eviction-related). Foreclosure-related suicides more than tripled between 2005 and 2010. “This further suggests a relationship between these suicides and the housing crisis, which resulted in a national 389 percent increase in foreclosures between 2005 and 2010,” the report reads.

Disturbingly, the study suggests that the mechanism of foreclosure proceedings might actually lead to increased risk for suicide:

Foreclosure may be exceptionally stressful because of its protracted nature and multiple negative events that constitute the process, particularly given the evidence that situational depression may respond in a dose-response fashion to negative life events. In addition, depression is more strongly related to stressful life events for which individuals perceive personal responsibility and lack of control over outcomes. All of these factors are mechanisms that make the foreclosure process a potent psychological stressor.

Reports of suicides related to evictions or foreclosures began to surface in national media early into the housing crisis, of course; but details explaining the frequency or circumstances of housing-related suicides remain elusive, even today. No research explains directly the link between home eviction and foreclosure proceedings and suicide.

Recently, however, researchers have begun to describe this relationship. According to the CDC analysis, mortgage delinquency has been shown to be linked to serious psychological adversity, including major depression (two times greater odds) and “elevated depressive symptoms related to acute stress” (eight times greater odds).

Department of Justice Investigates Deutsche Bank for False Documents Presented to Court in Bankruptcy Foreclosure Case

This was reported by Reuters, in an article entitled US investigates Deutsche Bank in foreclosure case.  Excerpt below but read the whole case at the link (prior):

NEW YORK, Jan 28 (Reuters) – A branch of the U.S. Department of Justice is investigating whether Deutsche Bank (DBKGn.DE) filed false documents and attempted to mislead a bankruptcyjudge in a foreclosure action.

Although the investigation involves the case of only one homeowner in Connecticut, a court document filed on Jan. 26 by the United States Trustee’s Office said it wants to elicit information about Deutsche Bank’s practices in general in foreclosure cases.

The inquiry involves Deutsche Bank National Trust Co, the Deutsche Bank unit that acts as trustee for thousands of trusts that invested in mortgage-backed securities. The U.S. Trustees’ Office is a division of the Department of Justice responsible for overseeing administration of bankruptcy cases.

In recent months, the office has stepped up efforts around the United States to block banks and law firms from using false or fabricated documents in home foreclosure actions. The effort follows disclosures in October 2010 of large-scale “robo-signing”, the mass signing of foreclosure affidavits containing “facts” that had never been checked, and wide production of false mortgage assignments.

The Jan. 26 court motion stated that “The United States Trustee has reviewed the documents filed by Deutsche in this case and has concerns about the integrity of those documents and the process utilized by Deutsche in” filing to foreclose.”

(emphasis added).  Join the club U.S. Trustee.  “Concerns about the integrity of those documents” understates the problem but we’ll take it.

Wells Fargo Takes a Hit for Forged Foreclosure Documents

Federal Judge Slams Wells Fargo for Forged Mortgage Docs

http://nypost.com/2015/01/31/ny-federal-judge-slams-wells-fargo-for-forged-mortgage-docs/

Two Judges Who Get It About the Banks NY Times

http://www.nytimes.com/2015/02/01/business/01gret.html

(1) “Defendant Wells Fargo’s deceptive and intentional conduct displayed a complete and total disregard for the rights of David and Crystal Holm,” wrote R. Brent Elliott, a circuit judge in Missouri’s 43rd Judicial District, in a Jan. 26 opinion. “Wells Fargo took its money and moved on, with complete disregard to the human damage left in its wake.”

In addition to $2.9 million in punitive damages awarded to the Holms, Judge Elliot gave them clear title to their home and almost $96,000 to be paid by Freddie Mac, representing the difference between the amount it paid for the property in 2008 and its current value.

(2)  The Holms were also awarded $200,000 for emotional distress. Mr. Holm, who is 40, had heart problems that were worsened by anxiety over the case, the judge concluded. Finally, $33,000 of the couple’s legal fees must be paid by Freddie Mac and Wells.

The judge ordered these sanctions because lawyers for Wells and Freddie Mac “have demonstrated a pattern of contempt for the Missouri Supreme Court rules as well as this court’s rules and orders.”

In the other case, presided over by Judge Robert D. Drain at a Bankruptcy Court in White Plains, Wells lost a five-year-old foreclosure dispute involving a $170,000 property owned by Cynthia Carrsow-Franklin.

Her lawyers contended that the bank, after initiating foreclosure proceedings, had simply created a missing document that it needed in order to foreclose. That document, known as an indorsement, transferred the underlying note to Wells Fargo.

On Thursday, Judge Drain sided with the borrower. He wrote that testimony from a Wells Fargo manager in charge of the bank’s default documents and part of its assignment team “constitutes substantial evidence that Wells Fargo’s administrative group responsible for the documentary aspects of enforcing defaulted loan documents created new mortgage assignments and forged indorsements when it was determined by outside counsel that they were required to enforce loans.”

A Comparison Study of Prosecution of Bank Fraud vs. Prosecution of Unarmed “Suspects” in America

We have posted extensively on the lack of criminal accountability for the masterminds of the financial crisis, the crisis “profiteers” and engineers.   Save Lee Farkas, former CEO of Taylor, Bean & Whitaker, almost no financial executive has been indicted.  Instead, our “mortgage task forces” have turned to the “street level pushers,” prosecuting borrowers for so-called liar’s loan, despite scads of evidence that the Countrywides and EMCs of the era were filling in income FOR the borrower after phone interviews,  bank-owned brokers were inflating income figures to originate any loan that could help fill the securitization machine, and badly underwritten loans were knowingly put into mortgage-backed-securities, often with the issuing bank taking the opposite side of the trade on the side, via credit default swaps, or shorting CDOs.  In the new age of No-Prosecution, where Justice whines that prosecution is too hard (see Lanny Breur on 60 Minutes), although the reporters at 60 Minutes were able to interview several people and uncover significant evidence in a period of weeks.  Even when banking giants like Bank of America or Chase are “fined” in widely touted Justice Department cases involving “civil penalties” (anybody remember HSBC getting to pay a fine for money laundering drug cartel money, and the executives kept their handsomely paid jobs?), the banks don’t have to admit any liability, they can pay in all sorts of creative ways that amount to more government (aka taxpayer) subsidies and bailouts, and scant resources reach the homeowners actually affected by the harms.

But this old story becomes rage-inducing when starkly compared with the treatment of minorities and socially powerless individuals by police and the justice system.  This trend was highlighted in Matt Taibbi’s last book, “The Divide.”

Bill Black has also drawn comparisons to the treatment of minor crimes and criminals versus the well-heeled white collar crimes of the elite.  This is particularly compelling given the ongoing protests relating to police killings of unarmed black males.  On these lines, here is an excerpt of an article by Bill Black, criminologist, ex-S&L regulator, and law professor,  that I found on Naked Capitalism but that originally appeared on New Economics Perspective, full article at those links:

By Bill Black, the author of The Best Way to Rob a Bank is to Own One and an associate professor of economics and law at the University of Missouri-Kansas City. Originally published at New Economic Perspectives

New York City exemplifies two perverse criminal justice policies that drive many criminologists to distraction. It is the home of the most destructive epidemics of elite financial frauds in history. Those fraud epidemics hyper-inflated the housing bubble and drove the financial crisis and the Great Recession. The best estimate is that the U.S. GDP loss will be $21 trillion and that 10 million Americans lost their jobs. Both numbers are far larger in Europe. The elite “C Suite” leaders of these fraud epidemics were made wealthy by those frauds through bonuses that measured in the billions of dollars annually.

The most extraordinary facts about the catastrophic fraud epidemics, however, is New York City’s reaction to the fraud epidemics. Not a single Wall Street bankster who led the fraud epidemics has been prosecuted or had their fraud proceeds “clawed back.” Not a single Wall Street bankster who led the fraud epidemics is treated as a pariah by his peers or New York City elites. New York City’s elected leaders have made occasional criticisms of the banksters, but Mayor Bloomberg was famous for his sycophancy for the Wall Street banksters that made him wealthy. In 2011, Mayor Bloomberg attacked the “Occupy Wall Street” movement for daring to protest the banksters.

“I don’t appreciate the bashing of all the hard working people who live and work here and pay the taxes that support our city,” said Bloomberg, during a press conference in a Bronx library.

“The city depends on Wall Street.”

“Jamie Dimon is one of the great bankers,” said Bloomberg. “He’s brought more business to this city than any banker in (the) modern day. To go and picket him, I don’t know what that achieves. Jamie Dimon is an honorable person, working very hard, paying his taxes.”

Bloomberg also questioned why the protestors were picking on wealthy bankers and other corporate titans.

It is, of course, depraved to claim that because banksters are made wealthy through fraud and pays a small portion of that wealth in taxes they should not be held accountable for those frauds because they are important to local finances. The claim becomes all the more risible when we take into account that under Dimon’s leadership JPMorgan became infamous for engaging in and facilitating billions of dollars in tax evasion that cost many governments, including NYC, enormous amounts of tax revenues. As a final indignity, most of the purported amounts that JPMorgan paid in settlements with DOJ are actually paid by the U.S. Treasury because DOJ allowed JPMorgan to treat large amounts of those payments as tax deductible. DOJ’s senior leadership used this as one of their cynical means of making the settlements paid by the banks appear far larger than they actually were.

. . .

The crisis is marked by exceptional recidivism by these banks and banksters, the rapid progression of fraud in terms of severity and its spread through the elite banks, and the creation of a massively corrupt culture in banking and their political allies in which even the largest and most destructive frauds are ignored and the perpetrators are shielded from even the mildest forms of accountability. To sum it up, NYC exemplifies the moral depravity, endemic criminality, and resultant breakdown of the criminal justice system that “broken windows” theory predicts. “Broken windows” theory, however, is not applied by its conservative proponents to elite white-collar crime. When the SEC (purportedly) adopted the “broken windows”) theory, the same conservatives that give the theory rapturous support when it leads to the mass arrests of poor minorities for the most trivial of offenses become apoplectic in their rage against holding elites accountable for lesser offenses.

This class-based rush to shield elite white-collar criminals from even the mildest forms of administrative accountability (the SEC uses “broken windows” as a PR slogan, not a reality) while simultaneously adopting an ultra-aggressive policy of arresting mostly poorer Blacks and Latinos for the most minor of offenses (e.g., selling small numbers of cigarettes from broken packs). The proponents of using “broken windows” to arrest large numbers of minorities for minor property offenses almost never demonstrate any awareness of the obvious obscenity and disaster of allowing banksters to grow wealthy by defrauding with impunity. Eric Garner ends up dead because the police arrest him for selling goods without paying sales tax (amounting to several hundred dollars in lost government revenue over the course of a year). The fraud epidemics cost that drove the financial crisis and the Great Recession cost our Nation $21 trillion – and no senior banker who led the frauds in even arrested. (As I have explained, the Department of Justice and the FBI do target a tiny slice of the mortgage fraud “mice” – particularly those of disfavored minorities like Russian-Americans – for prosecution.)

Sausage Links

 

Thanksgiving

Lots of interesting links before Thanksgiving:

The Ferguson Lie — the Grand Jury was Kabuki Theatre at its worst:

That the grand jury did not indict Ferguson Police Officer Darren Wilson was a foregone conclusion.  To those of us who don’t have to look up a study or read a law review article to understand how indictments happen in the real world, the outcome was clear when St. Louis County District Attorney Bob McCulloch announced that he would present all the evidence to the grand jury.  Wachtler’s “ham sandwich” has grown trite in this discussion.

The Ferguson Lie is an appeal to our sense of fairness and transparency.  We were played.  McCulloch’s lengthy spiel before announcing “no true bill” was to spread the lie.  To the ear of the media, McCulloch’s pitch was appealing; the grand jury heard all the evidence.  The grand jury transcript will be disclosed to provide complete transparency.  Witnesses lied to the media, but the grand jury heard the truth. The grand jury saw the hard evidence. Nine whites and three blacks, so no one would think that the grand jury was denied the voice of people of color, sat on the grand jury, which met for 25 sessions and more than 70 hours of testimony.

The grand jury did the dirty work that America needed done.  The grand jury has spoken.

This is the lie.

The description of what happened with the grand jury, how it heard all the evidence, how it will be transparent, is intended to appease our innate sense of fairness. Americans love things that appear fair, even if we don’t quite understand what actual fairness means. This sounds as if it was done as well, as fairly, as it could possibly be done.  But it’s a lie.

“All the evidence” is a phrase that applies to a trial.  A trial is a procedure that happens in an open courtroom, where adversaries zealously present their case and challenge the other side’s case.  It is transparent because we can watch it unfold, develop, happen before our eyes. We hear the questions and answers, the objections and rulings. We hear the request to admit evidence and the voir dire and challenge to its admission.  We hear the opening arguments and summations.

McCulloch put on a play in Ferguson.  His press conference announcing the foregone conclusion was remarkably in many ways, not the least of which was how he sold the argument for “no true bill” rather than the position he, as prosecutor, was duty-bound to champion.  The man charged with prosecuting killers argued the case for not indicting Wilson.

McCulloch didn’t have to go to the grand jury at all. He could have prosecuted Wilson by fiat had he wanted to do so.  He did not.  He was not going to be the person who charged Wilson with any variation of homicide.  But in deciding to take the case to the grand jury, the lie was born.

Links to the Evidence Heard By the Ferguson Grand Jury

When you review the evidence in the link above, remember, this evidence was allowed to go unchallenged by other evidence.  The important evidence is the evidence that was NOT introduced because this was not an adversarial proceeding.

Student Loan Debt Explodes

Executive Order on Immigration: The  33-page legal memorandum by the Justice Department’s Office of Legal Counsel (OLC) concludef that the president’s policy is “a permissible exercise of [the Department of Homeland Security’s] discretion to enforce the immigration laws.”

Robo-Signers Substituted by Robo-Witnesses, but Florida Courts Start to Crack Down

“An ongoing criminal enterprise”: Why America’s housing disaster is back and wreaking terror”

You should read the entire article in Salon by David Dayen and linked above, but here are some interesting excerpts:

When servicers got caught robo-signing, they stopped. But they trained a new set of employees, best described as robo-witnesses. These low-level personnel work for the servicer’s litigation departments, and they fly around the country from courtroom to courtroom. Reading from a script, robo-witnesses claim to have personal knowledge of their employer’s practices, and that they can swear to the legitimacy of the foreclosures. “They’re trained to parrot a script, you could just bring a parrot in,” said Lisa Epstein, a foreclosure expert now working for a defense attorney.

But these robo-witnesses know pretty much nothing beyond the script; they have no insight into the individual cases in which they’re testifying. “They walk into court having read the documents of the case a moment before,” said Thomas Ice, a foreclosure defense attorney in Palm Beach, Florida. Ice argues that it’s no different than robo-signing, just moved into the courtroom. “They don’t give their signature now, they just perjure themselves in court.”

In one case last month, the 1st District Court of Appeals reversed a case featuring robo-witness Andrew Benefield. The court found that Benefield “had no personal information” about the authenticity of the documents he testified about in the case.  In another case, the appeals court ruled that the robo-witness swore to the correct loan balance based only on the review of computer printouts, “and she had no information about how and when those records had been prepared or where the data came from.” Other appeals courts in Florida have ruled similarly, effectively making robo-witnesses a failed tactic.

Defense lawyer Evan Rosen of Fort Lauderdale, Florida, decided to depose one of the signers of these verification statements: Lona Hunt, foreclosure specialist for Seterus, servicer for the mortgage giant Fannie Mae. In the deposition, Hunt admitted twice that she never read the complaint at all before she signed the document swearing that the facts were correct.

Hunt testified that she only scanned the foreclosure complaint, checking that the defendant’s name and date of default matched what was on a computer screen.  She misidentified key documents in the case, did not know the meaning of basic legal terms in the complaint, and basically showed little expertise about anything related to mortgages and foreclosures. You can read the deposition here.

So why is this important? If the verifiers cannot verify and the witnesses bear no witness to the facts, so what? Didn’t homeowners default on their loans? Why should they get a free pass? This is the familiar refrain of those who would minimize this misconduct. Some even blame the states for forcing the poor servicers to prove they own the homes they want to repossess.

Here’s the truth. False documents and mass perjury, both criminal violations, make a mockery of the judicial system. It means that the servicers have as much legal right to foreclose as I do. To say that the homeowner is guilty of not paying, so their lender can do whatever they want to force them out of the home, is like saying the murder suspect is obviously guilty, so the cops can plant false evidence. We have a system of law to defend the rights of everyone, and ensure equal treatment.

Moreover, as Jim Kowalski, executive director of Jacksonville Area Legal Aid and a longtime foreclosure attorney, told me, “when you have procedural defects in these cases, you will almost always have substantive defects.” Multiple reports and studies verify this. The inspector general for HUD, for example, took a sample of JPMorgan Chase loans andcould not find documented proof for the amount owed on 35 out of 36 loans. This gets worse when servicing transfers between several companies; the amount owed becomes subject to a game of telephone, with dollar amounts effectively made up.

New RICO-Fraud Class Action Against Ocwen for Abusive Fee Schemes Against Home Loans Serviced By Ocwen

fraud-fullWeiner v. Ocwen Fin. Corp. and Ocwen Loan Servicing, LLC, No 2:14-cv-02597 (E.D.Cal.), filed Nov. 5, 2014.

This new class action against Ocwen addresses the marked-up default services fees that Ocwen is charging homeowners, particularly distressed homeowners, as part of a scheme of self-dealing with companies such as Altisource, and with the involvement of William C. Erbey, Executive Chairman, who has a leadership role on the Board of Ocwen and Altisource:

Weiner v Ocwen Financial Corporation a Florida Corporation COMPLAINT.

52. Ocwen’s scheme works as follows: Ocwen directs Altisource to order and coordinate default-related services, and, in turn, Altisource places orders for such services with third-party vendors. The third-party vendors charge Altisource for the performance of the default-related services, Altisource then marks up the price of the vendors’ services, in numerous instances by 100% or more, before “charging” the services to Ocwen. In turn, Ocwen bills the marked-up fees to homeowners.

58.Thus, the mortgage contract discloses to homeowners that the servicer will pay for default-related services when reasonably necessary, and will be reimbursed or “paid back” by the homeowner for amounts “disbursed.” Nowhere is it disclosed to borrowers that the servicer may engage in self-dealing to mark up the actual cost of those services to make a profit. Nevertheless, that is exactly what Ocwen does.

….

[Ed.: Explanation of Modern Relationship Between Loan Servicers and Home Loan Borrowers]

America’s Lending Industry Has Divorced itself
from the Borrowers it Once Served
18. Ocwen’s unlawful loan servicing practices exemplify how America’s lending industry has run off the rails.
19. Traditionally, when people wanted to borrow money, they went to a bank or a “savings and loan.” Banks loaned money and homeowners promised to repay the bank, with interest, over a specific period of time. The originating bank kept the loan on its balance sheet, and serviced the loan — processing payments, and sending out applicable notices and other information — until the loan was repaid. The originating bank had a financial interest in ensuring that the borrower was able to repay the loan.
20. Today, however, the process has changed. Mortgages are now packaged, bundled, and sold to investors on Wall Street through what is referred to in the financial industry as mortgage backed securities or MBS. This process is called securitization. Securitization of mortgage loans provides financial institutions with the benefit of immediately being able to recover the amounts loaned. It also effectively eliminates the financial institution’s risk from potential default. But, by eliminating the risk of default, mortgage backed securities have disassociated the lending community from homeowners.
21. Numerous unexpected consequences have resulted from the divide between lenders and homeowners. Among other things, securitization has led to the development of an industry of companies which make money primarily through servicing mortgages for the hedge funds and investment houses who own the loans.
22. Loan servicers do not profit directly from interest payments made by homeowners. Instead, these companies are paid a set fee for their loan administration services. Servicing fees are usually earned as a percentage of the unpaid principal balance of the mortgages that are being serviced. A typical servicing fee is approximately 0.50% per year.
23. Additionally, under pooling and servicing agreements (“PSAs”) with investors and noteholders, loan servicers assess fees on borrowers’ accounts for default-related services. These fees include, inter alia, Broker’s Price Opinion (“BPO”) fees,appraisal fees, and title examination fees.
24. Under this arrangement, a loan servicer’s primary concern is not ensuring that homeowners stay current on their loans. Instead, they are focused on minimizing any costs that would reduce profit from the set servicing fee, and generating as much revenue as possible from fees assessed against the mortgage accounts they service. As such, their “business model . . . encourages them to cut costs wherever possible, even if [that] involves cutting corners on legal requirements, and to lard on junk fees and in-sourced expenses at inflated prices.”3

25. As one Member of the Board of Governors of the Federal Reserve System has explained:
While an investor’s financial interests are tied more or less directly to the performance of a loan, the interests of a third-party servicer are tied to it only indirectly, at best. The servicer makes money, to oversimplify it a bit, by maximizing fees earned and minimizing expenses while performing the actions spelled out in its contract with the investor. . . . The broad grant of delegated authority that servicers enjoy under pooling and servicing agreements (PSAs), combined with an effective lack of choice on the part of consumers, creates an environment ripe for abuse.4 (citing See Sarah Bloom Raskin, Member Board of Governors of the Federal Reserve System, Remarks at the National Consumer Law Center’s Consumer Rights Litigation Conference, Boston Massachusetts, Nov. 12, 2010, available at http://www.federalreserve.gov/newsevents/speech/raskin20101112a.htm (last visited Jan. 23, 2012).