Boing Boing 

Realtors hire ruined millionaires to pretend to live in vacant megamansions


How do you imbue an empty mansion with the indefinable "energy" that comes from daily habitation? Find distressed rich people with nice furniture and precarious jobs at McDonald's to move in.

Read the rest

Thatcher's slow-motion housing timebomb


James Meek's essay "Where will we live?" is a detailed, passionate history of the housing timebomb that is detonating in England today. Thatcher set the time in the 1980s, when she sold off public housing to tenants and forbade local governments from building more with the proceeds, and subsequent governments have done everything they can to fuel and intensify housing speculation and bubbles. And now single moms, disabled people, and elderly people are being evicted, families can't afford housing on anything less than a banker's salary, and pensioners are being doomed to decades of poverty by low interest rates that can't be raised, lest they burst the property speculation bubble.

Housing in the UK is a microcosm for everything wrong with neoliberalism: corruption, cronyism, grinding human misery, and funny accounting to prove that it's all working, honestly.

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Meet Educational Credit Management Corporation, the arm-breakers of the student debt racket


A private contractor to student debt-holders has a special legal department that goes to bankruptcy court to argue that student loans shouldn't be discharged in bankruptcy, ever. The Educational Credit Management Corporation contracts to the Department of Education, on whose behalf it argues (for example) that debtors who go bankrupt fighting pancreatic cancer should still have to pay back their student loans in full, because "Survival rates for younger patients tend to be higher."

Student debt is the most pernicious kind of debt. It's debt that you take on when you're a teenager, and it's the only debt that can be taken out of your Social Security check. But as bad as the student debt racket is (and it's bad -- no, I mean really bad), I hadn't quite clocked how depraved its bagmen and enforcers could be.

They've been censured by courts for their strongarm tactics, bills have been introduced to make them behave, but they seem unstoppable. Why not? The precarious job-market has convinced Americans to go into $1 trillion worth of student debt, and when that collapses, it'll make subprime look like small change. So, realistically, who's ever going to stop thug bill-collectors from torturing people with terrible illness, or caring for severely disabled loved ones, or facing other unimaginable hardship, in order to bleed whatever they can for the debt-holders who're depending on that trillion bucks being repaid?

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After the Meltdown: tracking the fortunes reaped by the bankers who tanked the economy

The Center for Public Integrity's After the Meltdown series documents the fate of the regulators, executives, and firms that were most directly responsible for the subprime meltdown, and demonstrates that the top bankers for firms like Lehman got unbelievably rich due to their failures, and are still in business with lucrative consulting firms (for example, Lehman CEO Richard Fuld walked away with several hundred million in cash and now has homes in three states and a personal consulting outfit). Consumerist's Chris Morran has done a great job of summarizing the findings:

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Unsealed court-settlement documents reveal banks stole $trillions' worth of houses


Back in 2012, the major US banks settled a federal mortgage-fraud lawsuit for $95,000,000. The suit was filed by Lynn Szymoniak, a white-collar fraud specialist, whose own house had been fraudulently foreclosed-upon. When the feds settled with the banks, the evidence detailing the scope of their fraud was sealed, but as of last week, those docs are unsealed, and Szymoniak is shouting them from the hills. The banks precipitated the subprime crash by "securitizing" mortgages -- turning mortgages into bonds that could be sold to people looking for investment income -- and the securitization process involved transferring title for homes several times over. This title-transfer has a formal legal procedure, and in the absence of that procedure, no sale had taken place. See where this is going?

The banks screwed up the title transfers. A lot. They sold bonds backed by houses they didn't own. When it came time to foreclose on those homes, they realized that they didn't actually own them, and so they committed felony after felony, forging the necessary documentation. They stole houses, by the neighborhood-load, and got away with it. The $1B settlement sounded like a big deal, back when the evidence was sealed. Now that Szymoniak's gotten it into the public eye, it's clear that $1B was a tiny slap on the wrist: the banks stole trillions of dollars' worth of houses from you and people like you, paid less than one percent in fines, and got to keep the homes.

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Bank forecloses on wrong house, changes locks, steals tons of stuff, won't compensate owner in full


On Popehat, Ken details the astounding story of Katie Barnett, whose home was burglarized by agents of the First National Bank of Wellston, Ohio, who mistook her house for one that they were foreclosing upon. The bank broke into her house, changed the locks, and got rid of many of Barnett's possessions.

The local police refuse to get involved, and the bank's CEO, Anthony S. Thorne, is refusing to reimburse her in full for her possessions, which were stolen and destroyed by his company. Thorne says that because Barnett can't produce receipts for all of her goods (because who does that?) (and also, even if she had, they'd have been in her burglarized house), and because her recollection of her stuff doesn't match the "inventory" of the bungling bank employees who stole everything she owned, he will not pay her full compensation.

Read the rest

Spanish locksmiths won't help banks evict people from their homes

As the subprime bubble continues to burst in Spain, locksmiths find themselves complicit in putting families out on the street. In Pamplona, the local locksmiths have banded together and will not accept work from the banks changing locks or opening doors, even though it's costing them business:

Tired of accompanying court officials to evict unemployed people as banks foreclosed mortgages, De Carlos consulted his fellow Pamplona locksmiths before Christmas. In no time at all, they came to an agreement. They would not do the dirty work of banks whose rash lending pumped up a housing bubble and then, after it popped, helped bring the country to its knees.

"It only took us 15 minutes to reach a decision," says De Carlos amid the racks of keys in the family's shop in the centre of this small northern city best known for its annual bull-runs and the adoration heaped on it by Ernest Hemingway in The Sun Also Rises. "We all had stories of jobs we had been on where families had been left on the street. When you set out all you have is an address and the name of the bank, but I recall an elderly, sick man who was barely given time to put his trousers on."

The logic behind their decision was clear and simple. While Spain's banks mop up billions of euros in public aid, they are also busy reclaiming homes that in some cases they lent silly money for. At the height of Spain's housing madness, banks were, in effect, offering mortgages of more than 100%. They aggressively chased clients – especially among the immigrants who arrived from Latin America in their millions to build new homes – creating an uncontrolled spiral of self-fulfilling, but ultimately doomed, demand. Complex networks of guarantors were pieced together by middlemen among immigrants who often barely understood what they were doing.

Pamplona's locksmiths join revolt as banks throw families from their homes [Monica Muñoz and Giles Tremlett/The Guardian]

(via We Make Money Not Art)

17 year old builds a tiny house on wheels

Austin Hay began to build himself a tiny house when he was 17 and planning to move out his parents' place. He's planning to take it to college and park it in someone's back yard or side yard. It's a snug little ship-shape thing, too:

Now, Hay is done with his house, and it looks beautiful and well-made and very, very tiny. He’s been living in the house instead of in his childhood bedroom, and he has it registered as a trailer, so he can drive it to college if he has somewhere to park it. This video combines two tours — an early one before the project was done, and a recent open house showing the finished home and its features.

This teen built his own tiny home so he could move out of his parents’ house (via Naked Capitalism)

Billionaire timeshare CEO to employees: there'll be fewer jobs around here if Obama is re-elected


David Siegel, the billionaire CEO of the highly profitable Florida-based Westgate Resorts timeshare company, has sent a letter to all his employees implying that they'll all get fired if Obama is elected. Concerning Mr Siegel, ThinkProgress notes "Siegel earned national notoriety this year for his quest to build the biggest house in America, 'a sprawling, 90,000-square-foot mansion inspired by Versailles.'"

As most of you know our company, Westgate Resorts, has continued to succeed in spite of a very dismal economy. There is no question that the economy has changed for the worse and we have not seen any improvement over the past four years. In spite of all of the challenges we have faced, the good news is this: The economy doesn’t currently pose a threat to your job. What does threaten your job however, is another 4 years of the same Presidential administration. Of course, as your employer, I can’t tell you whom to vote for, and I certainly wouldn’t interfere with your right to vote for whomever you choose. In fact, I encourage you to vote for whomever you think will serve your interests the best.

However, let me share a few facts that might help you decide what is in your best interest.

[...]

So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, as our current President plans, I will have no choice but to reduce the size of this company. Rather than grow this company I will be forced to cut back. This means fewer jobs, less benefits and certainly less opportunity for everyone.

Billionaire CEO Threatens To Fire Employees If Obama Wins (via Wil Wheaton)

Wells Fargo mistakenly forecloses on the wrong house, destroys elderly couple's entire lifetime's worth of possessions

Wells Fargo mistakenly foreclosed on a home that had no mortgage, sending in a crew to steal all and throw out all the elderly homeowners' belongings. Alvin Tjosaas helped his father build the family home in Twentynine Palms, CA when he was a teenager, and the couple raised their own children there. The Wells Fargo crew destroyed their entire lives' accumulation of personal possessions. Wells Fargo says it is "deeply sorry" and that it is "moving quickly to reach out to the family to resolve this unfortunate situation in an attempt to right this wrong."

More from CBSLA:

Alvin, a retired mason, built the home with his father when he was a teenager.

“I know every inch, every rock…my mom mixed all the cement by hand,” he said...

“My little kids (would) come out here and their dresses were the same color as the wildflowers,” said Alvin...

“When you put your heart into something…it makes me real sad. I’m just glad I have my sweetheart. We’ve been together a long time,” said Alvin.

Owners Lose Possessions After Home Near Twentynine Palms Is Mistakenly Foreclosed (via Reddit)

Chinese-built ghost town in Angola - the first of many to come?


The BBC's Louise Redvers reports on the ghost town of Kilamba, Angola, a horrendously expensive high-rise enclave built by Chinese companies on a line of credit secured with Angolan oil, which has only seen 220 apartments out of 2800 sold. Kilamba is the most ambitious of several new towns being built outside of existing Angoloan cities by Chinese firms.

It's like a bizarro-world version of the Keynsian idea of getting the economy going by paying one group of laborers to dig holes and another to fill them in. But in this case, one group of workers are paid to pump oil, which is offshored to China. In exchange, a group of Chinese workers is paid to build a gate-guarded enclave for a non-existent pool of mega-rich locals that no one can afford to live in, and which gradually turns into a massive liability. Profit!

The place is eerily quiet, voices bouncing off all the fresh concrete and wide-open tarred roads.

There are hardly any cars and even fewer people, just dozens of repetitive rows of multi-coloured apartment buildings, their shutters sealed and their balconies empty.

Only a handful of the commercial units are occupied, mostly by utility companies, but there are no actual shops on site, and so - with the exception of a new hypermarket located at one entrance - there is nowhere to buy food.

After driving around for nearly 15 minutes and seeing no-one apart from Chinese labourers, many of whom appear to live in containers next to the site, I came across a tiny pocket of life at a school.

It opened six months ago, bussing in its pupils in from outlying areas because there are no children living on site to attend.

Angola's Chinese-built ghost town (via Super Punch)

Notes from the bankruptcy of Stockton, CA

The LA Times's Diana Marcum tells the story of the bankruptcy of Stockton, California, a city of about 300,000 people, which has just filed for bankruptcy. The city -- and its developers -- borrowed heavily in the past decade to build a series of follies: a luxury hotel, a marina, a promenade, in a bid to lure people down from the Bay Area. Stockton is a boom-and-bust poster-child, and has just gone through the new AB 506 arbitration procedures set out for municipal defaults in California law, a drawn-out "death of a thousand meetings," and is still headed into bankruptcy.

Although a city of almost 300,000, Stockton is a place where many families have known one another for generations. The most impassioned speakers argued on behalf of others, with the main rallying cry a plea to keep health insurance for retirees with illnesses. A high school student spoke of his aunt, a retired city worker with cancer, and a retired fire chief spoke of his former secretary who cares for her ill husband.

"People look at me and say, 'Well he can afford his own insurance,' and I can," said Gary Gillis, the retired chief. "But how about the ones who mowed the lawns, went in the sewers, typed my letters? We have to protect the most vulnerable among us."

Experts say there are no clear answers to what comes next for Stockton or how its fall will affect the rest of the state. Other cities hit hard by the housing bust and state budget crisis are negotiating with employee unions for concessions and are watching to see if municipal bankruptcy proves medicine or poison.

Stockton bankruptcy will make history; residents reeling (via Naked Capitalism)

(Image: Stockton, California, a Creative Commons Attribution (2.0) image from inman_news's photostream)

Chase exec: we tricked naive borrowers into taking out subprime loans

An award-winning Chase vice-president has gone public with accusations that his bank deliberately tricked naive borrowers into taking out high-commission loans they could never pay back (his team wrote $2B in loans during the subprime bubble), putting the lie to the narrative that subprime was about greedy borrowers taking money they knew they shouldn't:

One memory particularly troubles Theckston. He says that some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.

These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

Theckston, who has a shelf full of awards that he won from Chase, such as “sales manager of the year,” showed me his 2006 performance review. It indicates that 60 percent of his evaluation depended on him increasing high-risk loans.

In late 2008, when the mortgage market collapsed, Theckston and most of his colleagues were laid off. He says he bears no animus toward Chase, but he does think it is profoundly unfair that troubled banks have been rescued while troubled homeowners have been evicted.

A Banker Speaks, With Regret (via Naked Capitalism)

Judge exercises extreme sarcasm on US Bank

Georgia Judge Dennis Blackmon has rejected a petition from U.S. Bank to throw out a complaint from a homeowner whose mortgage the bank refused to modify, without explanation. The judge didn't mince words on his opinion of the bank's motion:

The order lays the case out like this: Phillips is in danger of foreclosure. U.S. Bank is among the "poorly run organizations" that recently received massive bailouts from the federal government and agreed to participate in the Obama administration's Home Affordable Modification Program. When Phillips applied for a modification, the bank denied his request "without numbers, figures, or explanation, reasoning, comparison to guidelines, or anything..."

"This court cannot imagine why U.S. Bank will not make known to Mr. Phillips, a taxpayer, how his numbers put him outside the federal guidelines to receive a loan modification," Blackmon continued. "Taking $20 billion of taxpayer money was no problem for U.S. Bank. A cynical judge might believe that this entire motion to dismiss is a desperate attempt to avoid a discovery period, where U.S. Bank would have to tell Mr. Phillips how his financial situation did not qualify him for a modification."

If Phillips didn't qualify, Blackmon wrote -- with apologies to folksinger Arlo Guthrie -- why didn't the bank say so with "mathematic equations, pie charts, and bar graphs, all on 8 by 10 glossy photo paper, with circles and arrows and paragraphs on the back explaining each winning number"?

"Maybe U.S. Bank no longer has any of the $20 billion left, and so their lack of written explanation might be attributed to some kind of ink reduction program to save money," Blackmon continued. "Clearly, U.S. Bank cannot take the money, contract with our government to provide a service to the taxpayer, violate that agreement, and then say no one on earth can sue them for it. That is not the law in Georgia."

Dennis Blackmon: Georgia Judge Mocks U.S. Bank Over Denied Mortgage Modification (via Lowering the Bar)

Occupy Atlanta encamps on lawn of house under foreclosure threat

An Atlanta police officer sent an email to Occupy Atlanta protesters asking for help with his house, which is under threat of foreclosure (when the family tried to refinance their mortgage, the bank responded with a foreclosure notice). Dozens of Atlanta occupiers shifted their camp to the house's lawn, erecting "This home is occupied" signs and promising to put their bodies between the house and the sheriff's deputies when the eviction comes. The neighbors are highly supportive.

Last week, Tawanna Rorey’s husband, a police officer based in Gwinnett County, e-mailed Occupy Atlanta to explain that his home was going to be foreclosed on and his family was in danger of being evicted on Monday. So within a few hours Occupy Atlanta developed an action plan to move to Snellville, Georgia on Monday to stop the foreclosure. At least two dozen protesters encamped on the family’s lawn, to the applause of neighbors and bystanders.

Occupy Atlanta Encamps In Neighborhood To Save Police Officer’s Home From Foreclosure (via Digg)

Canny fellow gets foreclosed $300K house for $16 adverse possession filing

A canny gentleman has taken adverse possession of a $300K McMansion in Flower Mound, TX. The house had been in foreclosure and the mortgage company that held its paper had gone under, so Kenneth Robinson spent $16 filing adverse possession paperwork with the county courthouse. He's living there without power or water, but if he stays for three years, the house is his. Predictably, his neighbors are upset because he figured out how to legally acquire a house without going into hock for the rest of his life.

But, Robinson said just by setting up camp in the living room, Texas law gives him exclusive negotiating rights with the original owner. If the owner wants him out, he would have to pay off his massive mortgage debt and the bank would have to file a complicated lawsuit...

Robinson posted "no trespassing" signs after neighbors asked police to arrest him for breaking in...

Lowrie and her neighbors continue to look for legal ways to get him out. They are talking to the mortgage company, real estate agents and attorneys. They're convinced he broke into the house to take possession, but Robinson told News 8 he found a key and he gained access legally.

"If he wants the house, buy the house like everyone else had to," Lowrie said. "Get the money, buy the house."

Stranger moves into foreclosed home, citing little-knownTexas law (via Consumerist)

House stolen


A man in Dundee, Ontario had his double-wide portable house ripped off:
It did not take long for police to find the home, as it was located only 10 kilometers north of police headquarters on a plot of land in Proton Station, Ont.

The property owner initially produced documents proving the home was his - although these were later found to be fraudulent.

The Southgate man has been charged with theft over $5,000.

Police find Brampton man's stolen house (via Lowering the Bar)

(Image: double wide trailer, a Creative Commons Attribution (2.0) image from pinkmoose's photostream)

Hilarious book reviews: realtor economist's bubble-inflating books on getting rich through real estate


David Lereah served as economist for the National Association of Realtors and published a series of books advising readers that there was no real estate bubble and that buying highly leveraged property would make them rich. The Amazon reviews sections for these books have become a kind of performance space for highly sarcastic commentary on the conmen who sold America on the idea of going into hock to buy real estate. Here's Mark M:
I agree with other reviewers who have pointed out that this is, in fact, an extraordinarily important book. In particular, it provides a classic example of the mentality that underlies every asset bubble. The author pulls out every trick in the book - demographic trends, financial innovation, macro trends, etc. - to argue that "this time is different." Alas, as we all have found out, this time was not different. What goes up for no discernible reason, must come down. If something seems to good to be true, it probably is. You can try to argue that the "fundamentals have changed", but they rarely do. And when things correct, it can be bloody. (Alas, the difference here was that the hucksters were also able to take the down the financial system, but that's another matter.)

But why this book is important, and why I'd suggest that every investor read it, is because it illustrates exactly the sentiments that lead to absurd behavior in asset markets. Silly assumptions. The belief that the price of some asset will continue to rise. Desperate rationalizations for those price increases. The resulting behavior is not necessarily illegal or unethical (as some other reviewers have suggested), rather it provides a classic case of the mentality that leads to excesses in asset markets. Read this book and learn from it. Because you don't want to get caught up in this kind of garbage.

Brilliant Amazon Reviews: David Lereah's RE Books (Thanks, Barry!)

The Monster: the fraud and depraved indifference that caused the subprime meltdown

Michael W Hudson's book-length investigative journalism piece on the subprime meltdown, The Monster, is both a brilliant example of skeptical business journalism done right, and a brilliant example of the storyteller's art.Read the rest

Jon Stewart on the cushy lives of teachers

As always, Mr Stewart puts it into perspective -- the same people who object to limiting the tax-funded bonuses of bailed out bankers because it would violate their contracts say that teachers' contracts should be torn up and their benefits slashed.

US house prices fall to 1890s levels (where they usually are)


According to Case-Shiller/S&P, US housing prices have fallen to levels not seen since the 1890s (adjusted for inflation, of course), in 11 of 20 markets. It looks like this is slightly skewed by the serious economic problems in rustbelt cities, which is not to say that things aren't pretty terrible -- and the same analysis predicts a further decline of 15-20%.
Some years back, Yale Professor Robert Shiller produced a long-run nominal home price index for the U.S. by fusing together data that had been gathered from a number of historical archives.

Shiller then adjusted the index for inflation revealing the very interesting fact that, in real terms, prices for U.S. homes changed very little over the span from 1890 to the mid-1990s.

This might come as a surprise to many since recent "common sense" notions held that homes were always a great investment carrying the implication that they must typically increase in value yet, the reality is that over the long run home prices must stay in-line with changes in the level of income (the source generally used to fund the home cost) or else typical households would not be capable of making a purchase.

Home prices falling to level of 1890s

Michael Lewis explains the Irish econopocalypse


Michael "Liar's Poker" Lewis has a fantastic, captivating piece on the Irish econopocalypse in the new Vanity Fair. Lewis ranges freely from slice-of-life observations about Dublin as a city occupied by foreign management consultants trying to figure out what to do with the disastrous worst-of-the-worst banks, to the history of the Celtic Tiger economy, to the ebb and tide of Polish workers in Ireland as an economic indicator, to the incredible and bizarre housing boom that, inevitably, turned into a world-class bust. It's vintage Lewis, gripping, savage, illuminating:
Even in an era when capitalists went out of their way to destroy capitalism, the Irish bankers set some kind of record for destruction. Theo Phanos, a London hedge-fund manager with interests in Ireland, says that "Anglo Irish was probably the world's worst bank. Even worse than the Icelandic banks."

Ireland's financial disaster shared some things with Iceland's. It was created by the sort of men who ignore their wives' suggestions that maybe they should stop and ask for directions, for instance. But while Icelandic males used foreign money to conquer foreign places--trophy companies in Britain, chunks of Scandinavia--the Irish male used foreign money to conquer Ireland. Left alone in a dark room with a pile of money, the Irish decided what they really wanted to do with it was to buy Ireland. From one another. An Irish economist named Morgan Kelly, whose estimates of Irish bank losses have been the most prescient, made a back-of-the-envelope calculation that puts the losses of all Irish banks at roughly 106 billion euros. (Think $10 trillion.) At the rate money currently flows into the Irish treasury, Irish bank losses alone would absorb every penny of Irish taxes for at least the next three years.

When Irish Eyes Are Crying (Thanks, Fipi Lele!)

(Image: Budget Day In Dublin - Useless Gobshites, a Creative Commons Attribution Share-Alike (2.0) image from infomatique's photostream)

11 percent of American homes are vacant -- UPDATED

UPDATE: Barry Ritholz sez,
In this case, what she wrote is not technically incorrect, but its very misleading. The lowest this rate has been over the past few decades is 8.5%. So while 11% sounds shocking, it is only somewhat elevated after the worst housing crash in the US since the Great Depression.

The typical data point used to describe vacant homes is the Home Ownership Vacancy Rate. In the US, that number is 2.7% for owner occupied houses and 9% for rental properties, apartments, etc.

The sensationalistic number referenced in the CNBC story (repeated by Consumerist) is not commonly used -- indeed, its towards the end of the Census Bureau release that reports such things.

What it references is the total number of structures that are unoccupied -- this includes a whole laundry list of empty properties -- abandoned old farm houses, (Not sure if vacation properties/second homes are included -- I need to check that). No one usually pays much attention to this number, as it provides very little useful insight.

Welcome to America after the housing bubble, where, according to the census, 11 percent of homes are vacant:
Now to vacancies. There were 18.4 million vacant homes in the U.S. in Q4 '10 (11 percent of all housing units vacant all year round), which is actually an improvement of 427,000 from a year ago, but not for the reasons you'd think.

The number of vacant homes for rent fell by 493 thousand, as rental demand rose. 471,000 homes are listed as "Held off Market" about half for temporary use, but the other half are likely foreclosures. And no, the shadow inventory isn't just 200,000, it's far higher than that.

Nearly 11 Percent of US Houses Empty (via Consumerist)

(Image: Doors, Vacant House, Spring, Texas 0329091251, a Creative Commons Attribution (2.0) image from nakrnsm's photostream)

Florida's dirty "rocket docket" courts are a gift to fraudulent lenders

Writing in next week's Rolling Stone, Matt Taibbi is incandescent on the fraud-riddled, corrupt, closed-door "Rocket Docket" courts set up in Florida to expedite the process of dirtbag lenders kicking people out of their homes without having to provide any real evidence that the banks own the note or that the homeowners are delinquent. Taibbi smuggles himself into the court and documents in ghastly, clinical detail the dirty process by which banks use (badly) forged documents and judges who don't give a damn about justice to steal peoples' houses, all the while making indignant noises about "people who don't pay their mortgages shouldn't be in those houses."
Now, months after its first pass at foreclosure was dismissed, the bank has refiled the case -- and what do you know, it suddenly found the note. And this time, somehow, the note has the proper stamps. "There's a stamp that did not appear on the note that was originally filed," Kowalski tells the judge. (This business about the stamps is hilarious. "You can get them very cheap online," says Chip Parker, an attorney who defends homeowners in Jacksonville.)

The bank's new set of papers also traces ownership of the loan from the original lender, Novastar, to JP Morgan and then to Bank of New York. The bank, in other words, is trying to push through a completely new set of documents in its attempts to foreclose on Kowalski's clients.

There's only one problem: The dates of the transfers are completely fucked. According to the documents, JP Morgan transferred the mortgage to Bank of New York on December 9th, 2008. But according to the same documents, JP Morgan didn't even receive the mortgage from Novastar until February 2nd, 2009 -- two months after it had supposedly passed the note along to Bank of New York. Such rank incompetence at doctoring legal paperwork is typical of foreclosure actions, where the fraud is laid out in ink in ways that make it impossible for anyone but an overburdened, half-asleep judge to miss. "That's my point about all of this," Kowalski tells me later. "If you're going to lie to me, at least lie well."

The dates aren't the only thing screwy about the new documents submitted by Bank of New York. Having failed in its earlier attempt to claim that it actually had the mortgage note, the bank now tries an all-of-the-above tactic. "Plaintiff owns and holds the note," it claims, "or is a person entitled to enforce the note."

Soud sighs. For Kessler, the plaintiff's lawyer, to come before him with such sloppy documents and make this preposterous argument -- that his client either is or is not the note-holder -- well, that puts His Honor in a tough spot. The entire concept is a legal absurdity, and he can't sign off on it. With an expression of something very like regret, the judge tells Kessler, "I'm going to have to go ahead and accept [Kowalski's] argument."

Matt Taibbi: Courts Helping Banks Screw Over Homeowners

(Image: no equity, a Creative Commons Attribution Share-Alike (2.0) image from thetruthabout's photostream)

Who owns your mortgage, the mind-croggling flowchart edition


This insanely complex chart represents securitization auditor Dan Edstrom's best attempt to figure out who actually owns his mortgage: "The following flow chart reverse engineers the mortgage on the Ekstrom family residence. It took Dan over one year to take it this far and it clearly demonstrates what happens when there are too many lawyers being manufactured."

Just When You Thought You Knew Something About Mortgage Securitizations (Thanks, Mr. Tough!)

Florida foreclosure mill owner who chucked out 70,000 families in 2009 is unspeakably rich

David J. Stern is a Florida lawyer who operates a foreclosure mill, a firm that foreclosed on more than 70,000 homes last year. According to a deposition from Tammie Mae Kapusta, a former employee, Stern's firm cut many corners, foreclosing on homes without serving notice, ignoring mortgage payments that would have prevented foreclosure, and "yelling at" employees who talked to homeowners on the phone, because that was "giving them too much time."

Apparently, it's working for Stern, who just bought the mega-mansion next to his mega-mega-mansion on a private island so he could tear it down and install a tennis court. Seriously, this guy sounds like the villain in a Carl Hiaassen novel, except Hiaassen's villains are more believable and less evil.

But while the banks are ultimately responsible, the root of the problem appears to lie with "foreclosure mill" law firms like Stern's. These operations process foreclosure cases on behalf of lenders, and their business model is based on moving the paperwork through as quickly as possible. That's why such firms have pioneered practices like "robo-signing" -- whereby their employees process thousands of court documents in pending foreclosures without ever actually reviewing them, as the law requires. Of course, it's in the banks' interest for their contractors to move quickly, because the faster a foreclosure moves, the less time a struggling borrower has to fight it...
And from Mother Jones:
His $15 million, 16,000-square-foot mansion occupies a corner lot in a private island community on the Atlantic Intracoastal Waterway. It is featured on a water-taxi tour of the area's grandest estates, along with the abodes of Jay Leno and billionaire Blockbuster founder Wayne Huizenga, as well as the former residence of Desi Arnaz and Lucille Ball. (Last year, Stern snapped up his next-door neighbor's property for $8 million and tore down the house to make way for a tennis court.) Docked outside is Misunderstood, Stern's 130-foot, jet-propelled Mangusta yacht -- a $20 million-plus replacement for his previous 108-foot Mangusta. He also owns four Ferraris, four Porsches, two Mercedes-Benzes, and a Bugatti -- a high-end Italian brand with models costing north of $1 million a pop.
Is David J. Stern the poster boy for the foreclosure mess? (via Lowering the Bar)

(Image: Sign Of The Times - Foreclosure, a Creative Commons Attribution (2.0) image from respres's photostream)