All In   |  April 09, 2013

Foreclosure settlement: a nationwide crime scene

Banks are foreclosing on military members, on people who had been approved for a loan modification, and even on people who were never behind in their payments--all part of an astounding settlement that shortchanged millions of homeowners and left hundreds of thousands wrongfully ejected from their homes.  Former Governor Elliot Spitzer; Alexis Goldstein, former Vice President at Merrill Lynch and Deutsche Bank, now an Occupy Wall Street activist ; and Faith Bautista, who was the victim of wrongful home foreclosure in 2009, join Chris Hayes and paint a stark picture of what happened, who is responsible and why there isn't more justice from the government.

Share This:

This content comes from Closed Captioning that was broadcast along with this program.

>>> big, surprising and welcome news on gun legislation today and a trial in philadelphia that could be the beginning of the end of football as we know it. but first, the most shocking piece of news today is this seemingly innocuous document. a print out of a spread sheet with numbers. boring. but what the numbers represent is a massive nationwide crime scene . no, i mean that. that document is a summary of widespread and systemic error , malfeasance and wreck.

>> alana: care on our banks . on military service members who are entitled to relief, of banks forclosing on homeowners who have been approve for loan modification, on homeowners behind in their payments. not on default. current. amazingly on that sheet of paper is the number 53 , which there are at least 53 documenting cases of homeowners who are current on their payments being successfully foreclosed on. not just having foreclosure proceedings against them, but people making their payments, paying their mortgage and have their homes taken from them for now no. reason. according to the find rgs posted today by federal bank regulator as part of a settlement agreement , between 2009 and 2010 , foreclosure proceedings that are wrongful or contained bank error commenced against nearly 4 million homeowners. 30% of foreclosures had to battle potentially wrongful efforts to seize their homes. more than 244,000 eventually lost their homes. the regulator who compiled these statistics and came to settle the banks , it was supposed to be announcing good news. it was supposed to be announcing money to those who had been victimized by the practices, but give tn scale and amount of money on the table for those who had been victimized is in most instances, cartoonishly small. a penitence compared to the billions of dollars they saved by getting this deal. there's the category of homeowners who were foreclosed on. successfully kicked out of their homes, even though the borrowers had worked out a new payment plan to stay in their home and stuck to it. there are 234,000 of them. another 865,000 of them were in the process of foreclosure even they, too, had gone to the bank and worked out a new payment plan. that by the way is known as dual tracking, where a bank is processing your loan modification while pursuing a foreclosure against you. a better term would be double viewing or double crossing. so the 1 million victims get $500 each. $500. it's a number so hilariously low it has spawned what can you buy for having your house stolen. which brings us to our next notable category, homeowners in which the servicer completed foreclosure on a borrower who was not in default. the foreclosure was completed on a homeowner who is not in default. $125,000. that is a lot of money. but that is $125,000 for taking your home away, from you, without any justification. these are people who did nothing wrong. they were not in default. current on their payments and their homes were taken. in other context, we would say they were stolen. they'll get $125,000 for their trouble. the outraged matched only by this one. servicer foreclosed on, borrower eligible for service member's relief act. translation. wrongfully foreclosing on active duty members of the armed forces . all the other awards in all the other category pay out mostly nominal amounts. many of the 3.5 million homeowners were supposed to get an independent review from the governor, but the federal reserve and the office of the comptroller of the currency punted because this review process to look into a system so deeply flawed and messed up that everyone around the country was scratching their heads. this deeply flawed system, instead, the occ engineered a mass settle. got halfway through it and said, no. let's come to the table. what should the banks pay and that is represent ed by this document. what it represents in any sense the evidence of a crime wave that once again the banks will not have to answer for. jo joining us from sacramento, california is faith, a vick testimony. eliot spitzer and alexis goldstein, now an occupy wall street activist. great to have you here. faith, i want to begin with you as someone who if my understanding is correct, would fa qualify, what is your reaction to this big news today?

>> well, as a victim, i'm happy to receive something. because i have applied since january of last year and it's now april. i have haven't gotten anything. and if i waited for their system without occ unplugging the plug, i probably would not get anything. so to me, whatever i would get, i will be very happy, but i'm hoping i would get more than $500.

>> are you looking at 5 $00? is that what you're looking at?

>> that time in 2009 , i was in award savings and i have a pick of pay type of payment and i lost my job, so i can only pay the minimum and then after a while, i really cannot pay, so i have like $12,000 in arrears. i ask savings to help me with the loan modification. in 2009 , there was no program, so i was wrongfully foreclosed because for $12,000 in arrears, 20% down on my house, always been a great borrower since 1986 , so take my house away, you know how devastating that was? being a single mom and having two kids and being taken my house away? tra that was pretty sad. i need to get more than $500.

>> alexis, how do we get here? there's, we have the housing bubble , okay. everybody goes out and gets mortgages and then the mortgages all blow up and the blow up makes the financial crisis . what blowing up looks like on the backside is that banks are foreclosing left and right and on so many properties they cannot deal with how many properties they have to fore close on, then what happens?

>> the occ who used to be responsible for mortgage servicing, giving you monthly payments --

>> i have a mortgage and there's someone i send a check to.

>> that's your servicer.

>> they look really bad because there are all these people being wrongfully foreclosed on. there was the robo signing scandal. so they're like what can we do to make ourses look better? make the banks look better and what can we do to restore faith to the mortgage markets, which was one of the stated goals of this thing called the independent foreclosure review we've just seen the settlement for.

>> it turns out the banks are saying we're foreclosing on you and the banks are saying do you have the documents, they say, yes, this adopt right here. that isn't the actual document you need. it's an affidavit that's been signed by a robot or someone they've been paying minimum wage to. huge scandal. blew everything up. was in the " wall street journal " and everybody looked embarrassed. the occ says we're going to conduct a review .

>> right, so they do this in april 2011 . the cfpb would have done this if they could just read it.

>> the new consumer financial protection bureau, which is part of the dodd frank legislation passed by president obama and the democrats in the house.

>> so, one could argue the occ did this because they didn't want the consumer financial production barrel under elizabeth warren to be in charge of this because they have been known to be very kind to the banks . they have been known to bury the banks bodies and known to lie on behalf of the banks , which they did in this independent foreclosure review . recently, they came out with a number that said 4.2% of bow rowers had an error.

>> we did this whole review and don't worry, it's only 4.2% of the people have an error.

>> just last week, the government had an auditor and they said the occ did not come up with the methodology. they didn't tell each bank how to figure out where they were errors and they basically found out there was no way you could have figured out one consistent error rate across the banks because there was no consistent methodology. it was like reverse methodology.

>> an amount of -- less than the treasury department to goldman sachs , over $12 million. nobody said anything. goldman just got a check for 12 billion. all the mess and wrongful foreclosures in the country only about two third of that. so the amount of money is insanely low, too. let's put the occ in historical context. it is the paradigm of a broken, faud lent regulatory body. it has been in the bank pocket of the banks . historically. one, precrash. in '03, i and all the other ags went to court to try to open up the subprime scandal. the occ came in on the side of the banks to stop us. we have to litigate all the way to the supreme court .

>> against the regulators. chapter two. the o krrcc opposed mortgage writedowns. the sort that would have benefitted faith, saved the economy. the occ said no, we're here to protect the banks , not the entirety of our economy. chapter three, their grotesque failure to do an appropriate review , so the occ should be eliminated.

>> to the american banker , do i think there were a significant number of people that were foreclosed on at this point in time, i don't think that was a significant number. i guess my question to you, faith, is do you feel there is anyone who has your interest at heart as one of the people who are represented on the spread sheet as one of the statistics, is there anyone in washington you feel has your interest at heart who is looking out for wrou?

>> yes and no. you know, tom curry , he inherited this problem, just like president obama inherited this problem. so, he only can do what he can do. to me as a homeowner that was a victim, i'm finally going to get something. my problem is $3.6 billion that will all go to all of us that were victim and the independent auditors are getting $2 billion. i really have a problem with with that. they're getting more than half?

>> these consultants hired to conduct this revie, they're walking away with $2 billion in fees for conducting it. the sum of cash going to the people --

>> so just really quickly, say you're going to get $500. there was a consultant hired by a bank paid $250 an hour to review your file and they walked away with $10,000 to look at your story of tragedy and they now get 500 to your consultants 10,000.

>> why do the banks skate away with paying money. what has to change in that?

>> we heard it from eric holder a couple of weeks ago. we can't b possibly bring the case to the banks . too big to indict, exact a meaningful penalty. the whole paradigm of prosecution has to change.

>> yeah and no amount of writing checks is going to change.

>> thank you.

>>> all right. what i'm about to say was viewed as an impossible pipe dream for months and now, listen to this, it looks like a senate vote on gun legislation will happen thursday and a filibuster threat appears to be on the ropes. why it happened and how it can still fall apart, next. i