Banks behaving badly

Cora Currier: “Banks Colluding with Insurers to Rip Off Homeowners, Lawsuit Alleges

A federal judge in Miami on Tuesday opened the door to a class action against Wells Fargo. More than 20,000 Florida homeowners can now sue Wells Fargo and an insurance company, QBE, for allegedly overcharging for insurance. More than $50 million in insurance premiums are at issue, according to American Banker.

The suit itself, filed last year, is sealed, but the judge, Robert Scola, laid out the allegations against Wells Fargo. The judge didn’t rule on the case but allowed it to go forward as a class action. In his decision, the judge cited the plaintiffs’ claims that Wells Fargo and QBE “colluded in a scheme to artificially inflate the premiums charged to homeowners.”

The judge also said Wells Fargo has actually threatened to retaliate against homeowners who join the suit.

Gretchen Morgenson: “Audit Finds Broad Irregularities in Foreclosures

Commissioned by Phil Ting, the San Francisco assessor-recorder, the report examined files of properties subject to foreclosure sales in the county from January 2009 to November 2011. About 84 percent of the files contained what appear to be clear violations of law, it said, and fully two-thirds had at least four violations or irregularities.

Simon Johnson: “Too Big to Jail

Among the fundamental principles of any functioning justice system is the following: Don’t lie to a judge or falsify documents submitted to a court, or you will go to jail. Breaking an oath to tell the truth is perjury, and lying in official documents is both perjury and fraud. These are serious criminal offenses, but apparently not if you are at the heart of America’s financial system. On the contrary, key individuals there appear to be well compensated for their crimes.

Aarti Shahani: “With Banks as Landlords, Some Tenants Neglected

Across the country, big banks and other large investors are buying up tens of thousands of foreclosed rental properties. They’re not always model landlords, according to tenants and regulators. Some banks are failing to follow local and state housing codes, leaving tenants to live in squalor — without even a number to call in the most dire situations.

Jonathan Weil: “New Citigroup Looks Too Much Like the Old One

Citigroup agreed to pay $158.3 million to settle a civil complaint by the U.S. Attorney’s Office in Manhattan, accusing the company and its CitiMortgage home-loan unit of defrauding the U.S. Department of Housing and Urban Development. By itself, that wouldn’t be big news. The payment is small for a company with $1.9 trillion of assets. And the government has accused Citigroup of fraud many times before.

What makes this case different — and so galling — is that some of the alleged misconduct was ongoing as recently as last year, well after the company’s 2008 taxpayer bailouts.

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  • friendly reader

    I’ve wanted to post this for ages, and I may not be the first, but here it goes:

    Crooked banks around the world
    Would gladly give a loan today
    So if you ever miss a payment
    They can take your home away

    (White gal who just discovered Lupe Fiasco this year)

  • http://www.metagalacticllamas.com/ Triplanetary

    Among the fundamental principles of any functioning justice system is the following: Don’t lie to a judge or falsify documents submitted to a court, or you will go to jail. Breaking an oath to tell the truth is perjury, and lying in official documents is both perjury and fraud. These are serious criminal offenses, but apparently not if you are at the heart of America’s financial system. On the contrary, key individuals there appear to be well compensated for their crimes.

    Recently I was writing a sci-fi story that was intended as a satirical extrapolation of our current social climate, in which justice could be bought and sold. It appears reality beat me to it. Ah, capitalism.

  • http://nitecaravan.blogspot.com/ Br. Jay

    In this age of superpower businesses, I hope the common man/woman can find justice.  Modern day David and Goliath stories for sure.

  • Lori

    The Obama administration and its allies have worked hard to sell its
    roughly $20 billion settlement with the banks as one that will have a
    meaningful impact on the housing market. But nothing could be further
    from the truth.

    I think that Simon Johnson is wrong about this. I think the settlement will have a meaningful impact on the housing market—-it will make it worse. The government has given bankers the go-ahead to steal with no fear of real consequences. Taking out a mortgage with a TBTF bank is now not substantively different from going to a payday lender or a loan shark. You’re volunteering to be ripped off, so it’s something that no one with an sense should do unless there is absolutely no choice. Very few people have to buy a house. People want to, but they don’t have to.

  • http://www.metagalacticllamas.com/ Triplanetary

    Ah, home ownership, an integral part of the American Dream (right up there with being a WASP). Those lower-class rabble may have to worry about shitty landlords and the possibility of getting kicked out of their home, but not me! In a mere 25 years, I will no longer be slowly buying my house from a bank which could, admittedly, kick me out of my home. But in 25 years, I’ll be totally, completely, 100%-

    *receives eminent domain notice*

    Shit.

  • Anonymous
  • Mary Kaye

    Wow, Wells Fargo really has some nerve.  In the course of trying to establish that they couldn’t be subject to a class-action suit, they made the argument that certain people would have to be excluded from the plaintiff class because, since those people owe WF money, WF would be able to retaliate against them (via foreclosure) if the suit went forward.  They actively threatened to remove people from the plaintiff class via retaliatory actions.

    Cast-iron balls, that takes.  The judge didn’t buy it.

    The full judgment (allowing the class-action suit to proceed) is worth reading.

  • Lori

    I’m not a fan of landlords. Not by any means. All other things being remotely equal I lean toward the “It’s A Wonderful Life” speech. The problem is that all other things aren’t remotely equal. At this moment banks have been given carte blanche to screw you and steal from you even more than landlords can and the things the banks do to you can destroy your credit in ways that landlords can’t even dream of. That doesn’t add up to a relationship a lot of people are going to want to enter into. People should be really, really pissed about this terrible settlement and it frustrates me that more folks don’t seem to care. The assholes are winning just by wearing us all down.  

  • http://www.metagalacticllamas.com/ Triplanetary

    Landlords can be good or bad. My current landlady is fantastic. I understand that I’m lucky in that regard. I’ve also had ones who fancied themselves little slumlords, so I know how it can be. But either way they have far more capacity to be human beings than banks do.

    I mean, in my ideal world you wouldn’t have banks or landlords, but here in the real world I’m actually pretty happy not having to deal with the former.

  • Lori

      But either way they have far more capacity to be human beings than banks do. 

    As a renter I rarely dealt with the landlord. Instead I dealt with a property manager working for the landlord. Those people were mostly nice enough, but they were limited in their ability to change things that were screwed up because they were just employees.

    My two experiences dealing with landlords directly were terrible, but they were unique in that I lived in the landlord’s house. Basement apartment in one case, renting a room in a house in the other. My advice is that both of those situations are to be avoided if at all possible.

  • http://www.facebook.com/people/Alan-Alexander/502988241 Alan Alexander

    Since you are constitutionally entitled to just compensation for your home in the event of eminent domain takings, that’s not quite the same. If the landlord or the bank kick you out, you don’t normally get reimbursed for what you’ve spent on rent or mortgage payments, but if your house has appreciated in value above what you paid for it, you can make money on an eminent domain sale.

  • http://apocalypsereview.wordpress.com/ Invisible Neutrino

    Still, if you get kicked out via eminent domain, and you have a mortgage, that just means you’ll have to give most of the $$ to the bank and then get back on the fucking treadmill all over again on your next house.

  • Alicia

    I get what Triplanetary is saying though in that, outside of the some large complexes, you usually have the opportunity to interact with the landlord or someone empowered to act on the landlord’s behalf. If you had a problem with Bank of America, even a problem that they didn’t create on purpose to screw you, you would find it difficult to even reach the person at the top. I don’t think I’ve ever lived in a complex whose bureaucracy was as tall and thick as that of a huge corporation.

    (I think it’s just pathetic that the landlord felt the need to hire “property managers” to deal with someone who actually lived in his/her basement. I mean, yikes, it’s one thing to hire someone for some huge complex but if someone’s renting a room in the same house as you, would it kill you to just interact with them directly? They seem like the kind of people who would only interacted with their college roommates through passive-aggressive sticky notes left on the kitchen fridge.)

  • BaseDeltaZero

    I don’t think it was the same landlord…

  • http://www.metagalacticllamas.com/ Triplanetary

    Quite! Nonetheless, middle class financial security remains an illusion. This recession should demonstrate that pretty conclusively.

  • P J Evans

     The problem is that those asserting eminent domain may have a much different idea of what adequate compensation should be.

  • Lori

    (I think it’s just pathetic that the landlord felt the need to hire “property managers” to deal with someone who actually lived in his/her basement.

    Different landlords. The only two landlords I dealt with directly were the ones I basically lived with. In all my regular apartments I dealt with managers. I never lived in really huge complexes, the largest only had about 35 apartments, but all the owners had more than one rental property so they didn’t deal with any of them directly.

  • Anonymous

    I’m not sure as to how it works in the US, but here in Australia there’s a very unfair manner of valueing a property.

    For example – if a freeway if planned to go by a route that requires some people sell up, then the properties are valued lower.

    The process kind of goes:
    1) Land is rezoned.
    2) Propety values in the area drop
    3) Properties are bought.

    It’s very catch-22:
    1 “But why is my property suddenly worth so much less?”
    2 “Because there’s a great stinking freeway coming through here!”
    1 “But – it can only come through after our properties are sold! Shouldn’t that mean an increase in value?!!”
    2 “An increase *lotsa laughter* – no no no. Don’t you understand … all that traffic noise and such lowers the value of all properties in the area.”
    1 “But MY property won’t BE here anymore!”
    2 “Exactly. Glad you finally understand”
    1 “Wha …”

    Yeah …

  • JohnK

    Invisible Neutrino’s point is even more worrisome for most homeowners, however.

    If you’re underwater on your mortgage, condemnation might actually leave you — if not quite ahead, at least not as bad off as you would have been in foreclosure or after you finished paying 300 for a house that’s now only worth 100. A good attorney can probably negotiate with the condemning authority to get you the maximum compensation amount.

    The thing is, as Invisible Neutrino pointed out, most mortgage contracts include a provision in which, in the event of condemnation, the lienholder (that is, the bank) gets to take the compensation for the property. Most people never realized this; back in the bubble years, the option was almost never exercised since banks were so flush with cash. In recent years, however, that scenario is becoming more and more frequent: the government condemns your house, and the bank collects the cash.

    It’s kind of a mess. The interplay of condemnation and mortgages is kind of a tricky subject — since it involves one party (the government) “buying” property from another party (the homeowner) even though title belongs to a third party (the bank). In cases like that, homeowners get screwed twice — first they lose their home to the government, then some or all of the money that they were supposed to be given to make up for that goes to the bank. They don’t even necessarily have to be behind on their mortgages or anything; they could be making their payments on time with no hiccups and still get hurt.


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