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Jim Van Meerten
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Jim Van Meerten is an advisor to Marketocracy Capital Management and writes on financial subjects here and on Barchart Portfolio Blogs. He earned a BS in Accounting and Business Administration from Berry College; a Juris Doctorate from the Woodrow Wilson School of Law; and attended... More
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  • Banks still abusing borrowers 4 comments
    Oct 5, 2009 11:32 AM | about stocks: BAC, MS, C
    Over the weekend Chris Adams who writes for the McClatchy Newspapers had 2 powerful articles named Help with mortgages is difficult to come by and Some firms with spotty pasts get tax dollars. In these articles he exposes how firms like Bank of America, Citigroup and Morgan Stanley; firms who were bailed out from the brink of bankruptcy by TARP with billions of taxpayer dollars are now abusing mortgage borrowers who are in trouble. The Treasury is doing little, if anything to monitor the situation.

    In one case Ronnie Fruia was about to lose his home when he and his mother and son were all in the hospital. He was in the hospital recovering from a stroke, couldn't even talk but CitiFinancial sent a guy to his room to sign modification papers that didn't even cut his interest rate. State regulators had to step in to get his rate changed from 11.5% to a reasonable 5%.

    In another case, Countrywide a subsidiary of Bank of America, put a woman in default while she was being treated for breast cancer. Her church had raised money to keep her mortgage out of default but Countrywide refused to take a payment from the church.

    Saxon Mortgage Services, a unit of Morgan Stanley, was sued by the attorney general of Missouri when he found that Saxon failed to properly credit loan payments to accounts even after the borrowers had proved that the payments had cleared their bank accounts. They even charged late fees though the mortgages were current.

    The Government Accountability Office - GAO - in July found that the Treasury was short staffed and had hired only half of the employees necessary to monitor the loan modification program.

    Taxpayer dollars bailed out the banks from bankruptcy, now they're back on track to pay out big bonuses while at the same time they are foreclosing on the very taxpayers who bailed them out. They have only worked with 12% of the mortgage holders that qualify for the Treasury's mortgage modification program.

    Isn't it ironic that the bailout money goes to the very firms that invented these adjustable loans that got borrowers into this mess and now they turn their backs on the borrowers who were trapped in their predatory lending schemes?

    Jim Van Meerten is an investor who shares his opinions on financial matters on Financial Tides, MSN Top Stock Blogs and Seeking Alpha. Please leave your comments below or email FinancialTides@gmail.com.

    Disclosure: I hold no positions in the companies mentioned in this blog.
    Themes: tarp abuse Stocks: BAC, MS, C
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  •  
    Jim,
    Thanks for posting Chris Adams' fine pieces which underscore inequity of Treasury handing $27,065,760,000 in TARP funds as "incentive" for mortgage modifications to servicers who continue to engage in epidemic mortgage servicing fraud. Granted, 27 BILLION is a lot of money for Treasury to guarantee these servicers but it is a far cry from lucrative profits servicers and parent firms make in defaults and foreclosures through multiple nefarious channels. Let's just say that servicers are somewhat akin to "feeder funds" that supplied Billions to Bernie Madoff. Servicers manufacture defaults that feed CDS casinos, fabricating “credit events” for highly leveraged players to cash in on. Bogus “Manufactured mortgage defaults” became profitable with ABX Index and other CDS venues when insider knowledge of servicers’ fraudulent activities was utilized to rig these not so "speculative" CDS bets targeting specific RMBS tranches. An innocent homeowner whose mortgage payments are current, that gets dragged into this casino has a snowball’s chance in hell of ever emerging whole again. Fortunately, of late many judges are seeing some of the the fraud behind this scheme and taking appropriate action while Treasury continues its travesty of rewarding the criminals.
    6 Oct 2009, 03:46 PM Reply Like
  •  
    Chris does write some fine and well researched articles with good information
    7 Oct 2009, 12:05 PM Reply Like
  •  
    "Banks are still abusing borrowers."

    And always will, unless reined in.
    23 Oct 2009, 11:31 AM Reply Like
  •  
    Bankers have loyalty to money, nothing else. We can neutralize bankers by taking away their profits. The higher the bank profits go, the more Americans are becoming debt slaves. There is a direct connection between these two trends.
    23 Oct 2009, 11:45 AM Reply Like
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