Monthly Archives: October 2011

Nevada Makes Illegal Foreclosures Felony

 By Mike Colpitts

Responding to homeowner complaints, Nevada has become the first state in the nation to make illegally repossessing a home a felony, and 

cashmay send bankers to jail for doing such. The new law was enacted after tens of thousands of homeowners complained to lawmakers about their homes being foreclosed without proof of ownership.

The outcry of consumer complaints over illegal robo-signing tactics has produced a series of lawsuits against mortgage servicing companies and banks in Nevada, which has led the U.S. in foreclosures six straight years.

The Nevada law makes it a felony for a mortgage servicer or trustee of a mortgage to make false representations concerning a title such as claiming that they are an executive of a bank or mortgage servicer, which was the case in at least hundreds of thousands, perhaps millions of robo-signings. A $5,000 fine will also be assessed if fraud is found. The law requires mortgage companies to provide a new affidavit with the amount owed on the loan, the person who is in possession of the note and the individual with the authority to foreclose on the property.

Some 26 U.S. states conduct foreclosures through the courts, but the new law does not make Nevada a judicial foreclosure state. Foreclosures have been delayed in many cases since the law went into effect Oct. 1 st.

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Cathe Cole, vice president of default for Trustee Corps., and foreclosure counsel in Nevada for Freddie Mac said as long as trustees can show a clear chain of title, including the named servicer of the mortgage there would be nothing for companies carrying out foreclosures to fear. “They just want to make sure we’re doing things correctly,” said Cole.

Nevada’s state attorney general is attempting to halt illegal foreclosure practices such as robo-signing with the new law, which they believe are still taking place. Proof of ownership title is critical to the chain of title. If the proof has been lost or never forwarded to a mortgage servicing company the foreclosing party may have no right to formally foreclose and take the real estate.

Foreclosures Are Killing Us

By CRAIG E. POLLACK and JULIA F. LYNCH

After slowing down in the first half of the year, the rate of homes entering foreclosure is rising again. First-time default notices were served on 78,000 homes in August, a 33 percent increase from July. A $1 billion federal program to help jobless and underemployed homeowners ended Friday. Foreclosure notices were filed against a record 2.9 million properties last year, and an additional 1.2 million in the first half of this year.

Foreclosure is not just a metaphorical epidemic, but a bona fide public health crisis. When breadwinners become ill, they miss work, lose their jobs, face daunting medical bills — and have trouble making mortgage payments as a result.

But that is only part of the story. A growing body of research shows that foreclosure itself harms the health of families and communities. In our 2008 survey of 250 people undergoing foreclosure in the Philadelphia area, 32 percent reported missing doctor’s appointments and 48 percent said they let prescriptions go unfilled, significantly higher rates than others in their community. A paper released last month by the National Bureau of Economic Research found that people living in high-foreclosure areas in New Jersey, Arizona, California and Florida were significantly more likely than those in less hard-hit neighborhoods to be hospitalized for conditions like diabetes, high blood pressure and heart failure.

More than one-third of homeowners in our study had symptoms of major depression. The N.B.E.R. study found significantly more suicide attempts in high-foreclosure neighborhoods. For every 100 foreclosures, it found a 12 percent increase in anxiety-related emergency-room visits and hospitalizations by adults under 50. Losing a home disrupts social ties to neighbors, schools, jobs and health care providers — ties that under better circumstances promote good health. Neighborhoods suffer, not just homeowners.

Most programs to stem the tide of foreclosures rely on mortgage counselors at nonprofit groups supported by federal grants, who work closely with homeowners and banks to try to find a financial resolution.

These counselors have become, of necessity, crisis counselors — in a national survey of 395 mortgage counselors we conducted in January, 37 percent said they had worked with at least one homeowner in the past month who was considering suicide — but they need to be trained to quickly and efficiently screen for illnesses like depression. In fact, health care should be part of a comprehensive approach to foreclosure prevention; for example, mental health caseworkers should be embedded in mortgage counseling agencies.

Screening and treatment may actually help some families keep their homes. Studies of unemployed people have shown that treating depression can improve the chances of landing a new job. Such treatment might also help homeowners undertake the daunting documentation and financial planning that foreclosure prevention programs demand.

In a time of fiscal strain and rising need, where will the money come from? For one thing, the settlement negotiations with the financial services industry over mortgage fraud and abuse should include money for health care. Millions of Americans are locked into mortgages they can’t afford. If we can’t help them stay in their homes, the least we can do is help them stay alive.

BofA’s Boston Building Draws Protesters; 21 Arrests Are Made

By Tom Moroney

Oct. 1 (Bloomberg) — Twenty-one people were arrested as about 3,000 demonstrators converged on a Bank of America Corp. office building in downtown Boston yesterday, protesting the largest U.S. lender’s foreclosure practices.

Some participants were taken into custody after entering the building’s lobby and refusing to leave, said Boston Police Commissioner Ed Davis. Those arrested were charged with trespassing, according to Officer Eddy Chrispin, a police spokesman.

The crowd had marched a half-mile from Boston Common to the building at 100 Federal Street while chanting, banging on drums and toting signs that read “Stop Corporate Greed” and “Bank of America: Guilty as Charged.”

The rally was organized by Right to the City Alliance and follows demonstrations in Manhattan, known as #OccupyWallStreet, which began 14 days ago to protest the influence of Wall Street money on politics. A second Boston protest group, Occupy Boston, held a rally at Dewey Square later, and from there protesters from both events made their way to the statehouse, according to Chrispin.

T.J. Crawford, a spokesman for Bank of America, called the protests “aggressive public-relations stunts.”

“Bank of America has a lot to be proud of in Massachusetts, from modifying 18,000 mortgages since 2008 to lending nearly $400 million in the first half of 2011 to small businesses,” he said.

Charlotte, North Carolina-based Bank of America is the largest U.S. lender by assets.

–With assistance from Hugh Son in New York. Editors: Sylvia Wier, Pete Young

To contact the reporter on this story: Tom Moroney in Boston at tmorrone@bloomberg.net.