I’ve been asked for this – things that can be done to mitigate the damage from Foreclosuregate that do not require legislative action (since Congress is out of session.)
In no particular order:
- Freeze all actions until we have proof that the documentation is in order. This can be done with regulatory action and requires no legislation. All of the big banks are under regulatory control of OCC. Force them to produce the wet-signature notes bearing assignments through to the trust in question – including Fannie and Freddie – before they foreclose. If they don’t have it, forbid them to foreclose until they do have it – period. No “lost note” affidavits, no nonsense, no games. One of the big issues in this mess is whether the foreclosing party has a right to the action at all. This is not about free houses, it is about due process of law and whether someone has intentionally destroyed their security interest and turned their note into an unsecured loan! We must not permit the truth in these matters to be covered up and those who demand to see proof that the security interest is still valid must not be frustrated in this demand.
- Initiate prosecution where any entity enters by force any property they do not have a lawful right of possession. In each and every case where an entity has hired someone to go “secure” a property without a right of possession and they break into that residence they have committed breaking and entering – a serious felony. Lawsuits are insufficient and when a conspiracy across state lines is involved in causing these acts to take place there is a federal issue at hand. Direct the FBI to arrest on conspiracy charges those who have committed these acts and those institutions who hire the firms doing so. This abuse must stop immediately and a few of these guys facing 10 years in prison will do exactly that.
- Provide an expedited method where those who are facing foreclosure actions yet claim they have submitted HAMP modification requests and have been stiff-armed can stay processing at a federal level until the propriety of their HAMP modification is sorted out. There are myriad claims that HAMP modifications have been frustrated by either negligent or intentional acts of the servicers – big banks all – related to HAMP modifications. Many people have claimed they were repeatedly told their loans were in modification proceedings only to be foreclosed on anyway. Perhaps foreclosure is the right thing to do, perhaps not, but HAMP and its successors contained non-optional short-sale, deed-in-lieu and processing constraints on the servicers that should have eliminated virtually all foreclosure activity in favor of one of those three outcomes. Again, we can stop this with regulatory action as existing black-letter requirements exist on these matters. Where it is shown that violations of these statutes have occurred the federal government must bring criminal charges as these homeowners due process rights have been violated. Make clear to the servicers that if such a claim is asserted (via the expedited process – e.g. a FHFA 800 number), the homeowner is foreclosed on anyway, and it is proved later that they indeed had a HAMP modification that was frustrated by improper procedure or delay by the servicer that the servicer will be sued by the government for the entire renegotiated principal balance on the house with the intent of restoring the homeowner to either their residence or a similar one – at the servicer’s expense.
- Demand that all current mortgages be proved up as correct with their intervening assignments. If the loan is in a Trust and not held in a portfolio, the homeowner has a right to know that the note is in fact held as was certified to the investors in that trust with all correct and intervening (and not backdated either!) assignments. Why? Because he has a right to know that when a payment demand is made each month, and he complies with it, that he is in fact paying the correct party – and nobody else. If the banking industry asserts that these notes are “all where they should be” then let them prove it.
This won’t solve all the problems, but as an immediate set of three actions that can be taken right here and now without further legislation, it’s a good start.