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Bumbling Financial Services Real Estate  Freclosures Halted Economic

3103 -
3103 -    ..
3104 - Summary/Objective
3105 -
310501 - Follow up
310502 -
310503 -
310504 -
310505 -
310507 -  ..
3106 -
3107 -
3108 - Progress
3109 -
310901 - Economy Falters Failure Perform Paperwork "Connecting the Dots:
310902 - Well Ordered Record Links Documents into Paper Trail Takes Extra Time
310903 - Time People Overwhelmed Mixed Up Cannot Find Anything Complex Records
310904 -
310905 - Article reported by Associated Press in the news today...
310907 -     ..
310908 -    Foreclosure freeze could undermine housing market
310909 -
310910 -    Follow up ref SDS 3 V54M, ref SDS 1 V54M.
310911 -
310912 -    By MICHELLE CONLIN, AP Real Estate Writer
310913 -
310914 -    Mon Oct 11, 8:48 am ET
310916 -         ..
310917 -    1.  NEW YORK - Karl Case, the co-creator of a widely watched
310918 -        housing market index, was upbeat three weeks ago.  Mulling the
310919 -        economy while at a meeting at a resort near the Berkshires,
310920 -        Case thought the makings of a recovery were finally falling
310921 -        into place. ref OF 1 0001
310923 -         ..
310924 -    2.  "I'm a 60-40 optimist," he said at the time. ref OF 1 J35H
310926 -         ..
310927 -    3.  Today, Case's mood is far more subdued.  In scarcely two weeks,
310928 -        he and other housing analysts have watched as the once-staid
310929 -        world of back-office bank procedures has spawned a scandal that
310930 -        threatens to further unhinge the housing market. ref OF 1 V35K
310932 -         ..
310933 -    4.  Allegations of possible mortgage fraud against financial giants
310934 -        GMAC, JPMorgan Chase and Bank of America read like a corporate
310935 -        thriller: forged documents, faked Social Security numbers,
310936 -        phantom titles, disappearing paper trails, "robo-signers" and
310937 -        mortgages sliced and diced so many times that nobody really
310938 -        knows who owns them. ref OF 1 M46G
310940 -  ..
310941 - Another real estate crisis in financial services precipitates more
310942 - pressure collapsing the economy toward recession.  Financial meltdown
310943 - due to poor management reported on 090320 0857, ref SDS 3 IQ6I, now
310944 - falters again because of poor management performing foreclosures to
310945 - fix problems caused by initial crisis.
310947 -  ..
310948 - Similar to problems on 010911, when US attacked because nobody had
310949 - time to "connect the dots" for working intelligently, ref SDS 2 UP5K;
310950 - and earlier on 001207, when economy crashed, because too many people
310951 - having too many problems using bad management that seems fast and easy
310952 - to work by conversation, rather than "connect the dots" to maintain
310953 - audit trail. ref SDS 1 V54M
310955 -  ..
310956 - Foreclosure freeze...article continues...
310957 -
310958 -    5.  On Friday, PNC and mortgage servicer Litton Loan Servicing
310959 -        joined those three financial institutions in suspending some
310960 -        foreclosures while they review how documents were handled.
310961 -        Bank of America, which had already announced a halt for 23
310962 -        states, expanded the suspension to cover the whole nation.  If
310963 -        other banks follow suit, it raises the specter of a national
310964 -        foreclosure moratorium. ref OF 1 T46N
310966 -         ..
310967 -    6.  In all, the banks will have to review the paperwork for
310968 -        hundreds of thousands of mortgages.  On top of that, class
310969 -        action lawyers and state attorneys general have filed lawsuits
310970 -        and called for foreclosure moratoriums. ref OF 1 157K
310972 -         ..
310973 -    7.  In the near term, the freezes could actually benefit both
310974 -        homeowners and the housing market.  Homeowners would have time
310975 -        to live rent-free and chip away at their debt.  Prices might
310976 -        stabilize because so many homes are penned up. ref OF 1 E58F
310978 -         ..
310979 -    8.  But the long-term implications are grave.  Only a month ago,
310980 -        housing watcher Mark Zandi, chief economist at Moody's
310981 -        Analytics, predicted that a housing recovery would be under way
310982 -        by the third quarter of next year.  Now he believes the
310983 -        foreclosure scandal could prolong the housing depression for at
310984 -        least another few years. ref OF 1 J58K
310986 -         ..
310987 -    9.  The alleged document fraud could open up the entire chain of
310988 -        foreclosure proceedings to legal challenge.  Some foreclosures
310989 -        could be overturned, others deemed outright fraudulent.
310990 -        ref OF 1 U59H
310992 -         ..
310993 -   10.  Before a housing recovery can occur, all those foreclosed
310994 -        properties have to be re-scrutinized by the banks and then
310995 -        sold.  With any foreclosure-related deal open to legal
310996 -        challenge, that inventory could be taken off the market while
310997 -        the legal challenges make their way through the courts.
310998 -        ref OF 1 S59M
311000 -         ..
311001 -   11.  That's not to mention the questions being raised about missing
311002 -        paper trails on mortgages owned by people who have never missed
311003 -        a payment.  What started as simple paperwork bungling in a
311004 -        Pennsylvania office park now threatens to bring to a standstill
311005 -        the nation's entire foreclosure machinery. ref OF 1 764I
311007 -         ..
311008 -   12.  The development is especially troubling given how large the
311009 -        foreclosure market is.  Before the scandal erupted, forecasters
311010 -        at John Burns Real Estate Consulting predicted that 41 percent
311011 -        of residential sales this year would be on distressed
311012 -        properties.  Typically, distressed properties account for 7
311013 -        percent. ref OF 1 474O
311015 -         ..
311016 -   13.  Since housing is the engine that in the past seven recessions
311017 -        has pulled the economy out of recession, any further damage
311018 -        couldn't come at a worse time. ref OF 1 G75L
311020 -         ..
311021 -   14.  "As far as I'm concerned, anything that slows the foreclosure
311022 -        process is a bad thing," Case said this week. ref OF 1 J76F
311024 -         ..
311025 -   15.  The debacle injects yet more uncertainty into a frail recovery
311026 -        that is still trying to find its strength. ref OF 1 S76J
311028 -         ..
311029 -   16.  "This is definitely one of the last things anyone needed to
311030 -        have to deal with," says Diane Pendley, managing director of
311031 -        Fitch Ratings. ref OF 1 586N
311033 -  ..
311034 - Nobody likes to "deal with" devestating consequences of failure to
311035 - perform good management, because "paperwork" to link critical details
311036 - documenting accurate performance of objectives, requirements and
311037 - commitments seems like unnecessary overkill, so nobody had enough time
311038 - to do the work correctly constructing an "audit trail" that connects
311039 - cause and effect; there is only enough time to fix the collosal
311040 - problems that take 10 times longer than doing the work correctly in
311041 - the first place.
311043 -  ..
311044 - Foreclosure freeze...article continues...
311045 -
311046 -   17.  The news that GMAC, recently renamed Ally Financial, and
311047 -        JPMorgan Chase and Bank of America were stopping foreclosure
311048 -        proceedings in 23 states was merely the beginning.  Federal
311049 -        lawmakers are calling for a federal investigation, saying the
311050 -        excuses from the industry are not credible, and on Wednesday
311051 -        the Ohio attorney general filed a fraud suit against GMAC,
311052 -        calling it "the tip of an iceberg of industrywide abuse." GMAC
311053 -        denies the allegations. ref OF 1 A93H
311055 -         ..
311056 -   18.  In at least six states, attorneys general are calling for
311057 -        foreclosure moratoriums and launching their own investigations.
311058 -        And this week, the attorneys general of up to 40 states are
311059 -        expected to announce a joint investigation into banks' use of
311060 -        flawed foreclosure paperwork. ref OF 1 L94F
311062 -         ..
311063 -   19.  A person briefed on the investigation said over the weekend
311064 -        that an announcement of the 40-state investigation could come
311065 -        as early as Tuesday.  The person spoke on condition of
311066 -        anonymity because the investigation was not yet public.  Iowa
311067 -        Attorney General Tom Miller will lead the investigation.
311068 -        ref OF 1 744L
311070 -         ..
311071 -   20.  The Obama administration is studying the situation.  Problems
311072 -        with foreclosure procedures were discussed during two recent
311073 -        conference calls involving officials of the Treasury
311074 -        Department, Department of Housing and Urban development, White
311075 -        House and other agencies, an administration official said on
311076 -        condition of anonymity. ref OF 1 D45H
311078 -         ..
311079 -   21.  A top White House adviser questioned the need Sunday for a
311080 -        blanket stoppage of all home foreclosures, even as pressure
311081 -        grows on the Obama administration to do something about
311082 -        mounting evidence that banks have used inaccurate documents to
311083 -        evict homeowners. ref OF 1 O45O
311085 -         ..
311086 -   22.  "It is a serious problem," said David Axelrod, who contended
311087 -        that the flawed paperwork is hurting the nation's housing
311088 -        market as well as lending institutions.  But he added, "I'm not
311089 -        sure about a national moratorium because there are in fact
311090 -        valid foreclosures that probably should go forward" because
311091 -        their documents are accurate. ref OF 1 Z46K
311093 -         ..
311094 -   23.  Axelrod said the administration is pressing lenders to
311095 -        accelerate their reviews of foreclosures to determine which
311096 -        ones have flawed documentation. ref OF 1 Y47H
311098 -         ..
311099 -   24.  "Our hope is this moves rapidly and that this gets unwound
311100 -        very, very quickly," he said. ref OF 1 757L
311102 -         ..
311103 -   25.  Lawyers who have already filed class action lawsuits in Maine
311104 -        and Kentucky are now signing up entire neighborhoods as new
311105 -        clients.  They're hiring private eyes to track down former
311106 -        industry employees and holding marathon conference calls to
311107 -        strategize on how to get every speck of dirt on the banks that
311108 -        they can. ref OF 1 B58F
311109 -
311111 -  ..
311112 - Time Not Enough for Good Management Paperwork Unnecessary Overkill
311113 -
311114 -
311115 -   26.  The low-level bank employees in question were supposed to have
311116 -        reviewed mortgage documents in detail.  Instead, they say they
311117 -        never so much as glanced at the papers.  Nor did they even know
311118 -        where the papers were. ref OF 1 M58M
311120 -         ..
311121 -   27.  "They were just so haphazard and so gloriously incompetent to
311122 -        save a few pennies here and there," says Barry Ritholtz,
311123 -        director of equity research at Fusion IQ. "But a few pennies
311124 -        times millions of documents is a billion dollars." ref OF 1
311125 -        T59H
311127 -  ..
311128 - People overwhelmed by complexity documenting the work with links to
311129 - show accuracy.  Everybody gives up causing the economy to collapse
311130 - into chaos with too many people having too many problems that paralyze
311131 - productivity, reported on 001207. ref SDS 1 V54M
311133 -  ..
311134 - Ironic that economy is now threatened by poor management performing
311135 - asset management to recover from economic recession ("meltdown")
311136 - caused by the same poor manageent the past 5 years,
311138 -  ..
311139 - Foreclosure freeze...article continues...
311140 -
311141 -   28.  The banks insist that most of the people involved in the
311142 -        foreclosure deals were legitimately behind on their payments.
311143 -        But even so, if the procedures that put them into foreclosure
311144 -        are deemed fraudulent, it will nullify the deals and require
311145 -        that the entire process start all over again. ref OF 1 769N
311147 -         ..
311148 -   29.  The financial institutions insist that, in most if not all
311149 -        cases, there was no fraud, the borrowed missed their payments
311150 -        and the foreclosures are justified.  Delays may occur, they
311151 -        say, but the outcomes will be the same.  Moreover, they insist
311152 -        they are strengthening their procedures.  They are chalking up
311153 -        much of the controversy to possible shoddy paperwork.
311154 -        ref OF 1 J64J
311156 -         ..
311157 -   30.  But the pronouncements have done little to assuage those
311158 -        connected to the mortgage industry, and the uncertainty is
311159 -        spreading fast. ref OF 1 W65G
311161 -         ..
311162 -   31.  On Sept. 23, Standard and Poor's warned of a possible downgrade
311163 -        on GMAC.  The next day, Moody's Investors Service also placed
311164 -        GMAC on a watch.  On Sept. 29, Fitch Ratings said it was
311165 -        reviewing the mortgage servicers' practices. ref OF 1 1E5K
311167 -         ..
311168 -   32.  Perhaps most worrisome was the news on Oct. 1 that title
311169 -        insurer Old Republic National - which provides protection to
311170 -        the homebuyer and mortgage provider in case any unpaid taxes,
311171 -        questionable ownership or other problems turn up - had ordered
311172 -        its agents to cease offering policies on foreclosed properties
311173 -        owned by GMAC or JPMorgan Chase.  On Oct. 7, another title
311174 -        insurer, Stewart Title, issued an internal memo making it
311175 -        incredibly difficult - if not impossible - for an agent to
311176 -        write a policy for any foreclosure property connected to any of
311177 -        the now-tainted banks. ref OF 1 EE6F
311179 -         ..
311180 -   33.  "Right now everyone in the industry is trying to understand the
311181 -        scope and breadth of the problem, and is looking to lenders to
311182 -        get their paperwork in order so that sales can resume," says
311183 -        Kurt Pfotenhauer, chief executive of the trade group American
311184 -        Land Title Association. ref OF 1 JF3F
311186 -         ..
311187 -   34.  Meanwhile, real estate agents who specialize in selling
311188 -        bank-owned properties say the market is locking up.  Dorothy
311189 -        Buse, a Coldwell Banker agent in the Orlando, Fla., area, said
311190 -        that out of the 200 foreclosures she has listed for sale, 40
311191 -        are now in the foreclosure freeze.  Of the 40, 12 that were
311192 -        already under contract are now on hold. ref OF 1 NF3L
311194 -         ..
311195 -   35.  "There's nothing within my power - or my staff's power - that
311196 -        we can do, except try to reassure them that we're working on
311197 -        this," Buse says. ref OF 1 1G4I
311199 -         ..
311200 -   36.  In addition, legal challenges are mounting.  On Sept. 24, a
311201 -        district court judge in Maine threw out a ruling in favor of
311202 -        GMAC to foreclose on a house owned by an unemployed mother of
311203 -        two.  Now that case will go to a bench trial in Portland.
311204 -        ref OF 1 GG4M
311206 -         ..
311207 -   37.  The court also sanctioned GMAC about its paperwork process,
311208 -        noting that "this case is not the first time that GMAC's
311209 -        high-volume and careless approach to affidavit signing has been
311210 -        exposed." ref OF 1 VH5I
311212 -         ..
311213 -   38.  Michael Holmes is one of the thousands of mortgage holders
311214 -        whose house was put into foreclosure by the now infamous
311215 -        "robo-signer," the GMAC employee who signed 10,000 foreclosure
311216 -        affidavits a month.  On Oct. 1, GMAC informed Holmes that the
311217 -        foreclosure on his Belfast, Maine, home had been put on hold.
311218 -        The bank didn't say for how long. ref OF 1 5A5N
311220 -         ..
311221 -   39.  The temporary halt has done little to subdue Holmes' stress.
311222 -        He spent the past year and a half fighting to get a loan
311223 -        modification from GMAC, a process he says yielded a file the
311224 -        size of a Manhattan phone book and virtually no response from
311225 -        the bank.  He also claims he received no written notice of a
311226 -        foreclosure. ref OF 1 FA6K
311228 -         ..
311229 -   40.  Now Holmes, a former hospitality executive at such Boston
311230 -        hotels as the Ritz-Carlton and the Copley Plaza, says he wants
311231 -        to fight to keep the Victorian he grew up in.  But from one day
311232 -        to the next, he doesn't know what will happen. ref OF 1 WA7H
311234 -         ..
311235 -   41.  "The one safe place you have is your home," Holmes says. "It's
311236 -        your comfort zone, and to have that in limbo, it feels like the
311237 -        wolves are on my porch." ref OF 1 8B7N
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