The Foreclosure Crisis: Regulators show up late to the Funeral

Mark Winston Griffith

The Foreclosure Crisis: Regulators show up late to the Funeral

It doesn't happen often, but earlier this week a New York Times editorial took on a financial justice issue and got it right. Nailed it, in fact. On Monday, July 10, in an editorial entitled "Myths Spun by Lax Lenders", the Times took federal regulators to task for regulating the sub prime lending market long after the damage has been done, as foreclosures are leveling neighborhoods across the country. For those of us who have been trying to get regulators at all levels to get off their behinds and actually protect consumers, instead of lenders, the "too-little, too-late" action by the Feds, as the Times called it, is a bitter pill to swallow. In a way, the editorial is a bit "too-little, too-late" itself considering how long advocates have been trying to get the Times to flag this and other regulatory breakdowns, but, hell, we'll take it. And to be fair, the Times has been striking some of the the right notes on predatory lending for months now.

Perhaps the most useful assertion made in the editorial is the explosion of the myth that abusively priced mortgages are somehow a service to borrowers, as if making an adjustable rate mortgage underwritten to become ridiculously un-affordable in six months is an act of charity. The Times rightly pointed out that lenders need to be guided by regulators to make loans that the borrower can afford - duh! - and make loans that actually fit the needs of the borrower. In a tail-wagging-dog world, where the lending industry tells legislators and regulators what to do, this is a revolutionary idea.

Mark Winston Griffith: Author Bio | Other Posts
Posted at 7:10 AM, Jul 13, 2007 in Financial Justice
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Comments

AEGIS Mortgage - Lower then SCUM
Today I just got my first look at an Aegis Mortgage Forbearance agreement, and to say I was horrified would be an understatement. So in the process of someone trying to keep their home, under duress the lender in exchange for doing them this "favor," wants them to sign away all of their rights and remedies. Then I visited the Aegis web site and was hopping mad at what I found there. They ask borrowers to "find money" by robbing their 401K, cashing in stocks or insurance policies, or if nothing else they recommend somehow cutting back on electricity and other household bills. IF all fails they explain how you can simply deed the house to them. A_ _ Holes. I guess they failed to read Senator Chris Dodd's new outline for borrower workouts.
http://dodd.senate.gov/multimedia/2007/050207_Principles.pdf

Here is a specific paragraph from the forbearance agreement.

WHEREAS, The Borrower(s) acknowledge their default of certain terms of the Note and Mortgage and reaffirm their obligations there under. The Borrower(s) acknowledge by their execution and delivery hereof, that they have no defense, setoff or counterclaim with respect to their default, and their obligations under the Note and Mortgage. ( emphasis added)

I think execution is a good word. The borrower might as well just execute themselves.

WHEREAS, The Borrower(s) acknowledge that they voluntarily release, discharge, and covenant not to sue Aegis Mortgage Corp. for any and all claims, to the extent that any claims may exist now, that are related or connected in any manner, directly or indirectly, to the Note, Mortgage or the aforementioned premises. ( emphasis added)

I think voluntarily is more like under duress. Here the lender is using the situation to coerce the borrower to release all legal rights and remedies in exchange for the forbearance. I say just sue them and get it over with. This is tantamount to screwing the borrower the same way as the initial loan agreement did. Using legal documents to deceive and manipulate. It's the loan contract all over again. Nowhere in the six page forbearance agreement, which was obviously written by a lawyer to protect the lender in every way, does it recommend that the borrower have a lawyer review the agreement before signing it.

The last paragraph which really got my ire up was this:

Aegis Mortgage Corp. has agreed, so long as you are fully in compliance with your obligations under this Forbearance Agreement, to "take no affirmative steps to advance this foreclosure action." However, Aegis Mortgage Corp. specifically reserves the right, and you specifically understand and agree, that Aegis shall be entitled to postpone the sale, file notices with the Court, complete service of process, publish the pending foreclosure and to take any and all other action necessary to maintain the pending status of the foreclosure action, and the actions described in this section are expressly not considered to be affirmative steps.

What the HE-- is this? They don't consider publishing someone's home to be sold, or maintaining the pending status of the foreclosure action affirmative steps. What planet do they live on. In short this is just a few highlights of the six page document. More outrageous crap is in it. While our government is focused on Foreclosure rescue scams, the lenders are playing out their own version of how bad can we screw all these people who are in trouble and continue to protect ourselves.

I want the lenders to sign this agreement:

WHEREAS, we the lenders of America operating right under the noses of the Federal Regulators, did hereby steal millions of dollars from the American public. We created the artificial real estate bubble by sending hordes of buyers into the market with triple the amount of pre approved loan amount they could borrow and qualify for by using no doc and low doc loans, adjustable rate and teaser rates, negatively amortizing arms, and brokers who forged documents, appraisers who inflated values, and a myriad of other techniques.

WHEREAS, we the lenders of America and our partners and affiliated companies in crime, ie: the title companies, brokers, appraisers, Wall Street, and assorted other entities, did hereby steal funds on every transaction with overinflated fees, settlement costs, prepayment penalties, broker kickbacks, overcharging for recordation taxes, title insurance, float in escrow accounts, captive reinsurance, and many other nooks and crannies we hid fees and profits to us.

WHEREAS, we the lenders of America are now in trouble with everyone suing us are using the "ill gotten gains" to defend ourselves against the lawsuits and protect our CEO's and other executives who were the primary beneficiaries of the FRAUD.

WHEREAS, we the lenders of America are now walking away and closing up shop leaving everyone else to pick up the pieces of the mess we are leaving behind. We( the executives who profited the most) will be fine because we made so much money we could live the rest of our lives on what we already took out or these companies. You the borrowers, not so lucky.

In conclusion,

It's been a fun ride, thanks for coming along. Sorry it has made you nauseous in the end. Most good rides do that you know. No hard feelings. If you sign away all your legal rights we may let you keep your house. For awhile anyway. Eventually you may buckle under the pressure, and we will have to foreclose. I hope you understand. We should have never given you this loan to begin with.

Thanks a million, or should I say a hundred million,

CEO_____________________________________
1117 Sunshine Ave.
Cayman Islands

PS. Sorry to the IRS and the US government but you are so F_ _ _ed up we decided to go elsewhere. We didn't want all of our tax dollars going to bail out the borrowers or fight the war in IRAQ. Nevermind those young men and women are fighting and dieing so scum like us can do whatever the hell we please in America. After all you did participate by looking the other way as we ran amuck. So Thanks, so sorry to do this to you.
But - FAREWELL!