Wells Fargo's Sleight of Hand

[Hashi Lebwohl]

There wasn't a thread about the housing bubble and/or foreclosures and what those did the economy unless I want to resurrect one from 2012, so I'll just start a new one.

Democracy Now had a segment with Linda Tirelli, a partner at the Garvey, Tirelli & Cushner law firm in White Plains, New York, who recently uncovered documents from Wells Fargo where they outline how, almost in step-by-step form, how to make up documents they needed for the foreclosure process. Some of the details are in the article but is essence it boiled down to two methods: 1) if a WF underwriter or foreclosure specialist needed a document then they could request one from the legal department and use the request as permission to sign certain documents and 2) if form A would not suffice they could get permission to substitute form B. Either way, the foreclosure could then proceed without having all the i's dotted and t's crossed.

The Justice Department, under the guidance of Eric Holder, has filed lawsuits on behalf of wrongly-foreclosed homeowners to the total of $95 million, a mere pittance compared to the actual losses from the housing collapse. Ms. Goodman fills us in a little of Mr. Holder's career before being named Attorney General:

AMY GOODMAN: Before Eric Holder was attorney general, he was a senior partner at Covington & Burling. Among the banks they represented, the four largest: Bank of America, Citigroup, JPMorgan Chase and Wells Fargo.

It isn't surprising, then, that Mr. Holder has not targeted Big Banks. He knows that his tenure as AJ won't be forever and he cannot afford to burn any bridges--I suspect he will return to representing large banks after leaving Justice and if he earns a reputation for prosecuting them he won't have any clients to represent.

Yes, the Big Banks are partially to blame for the housing collapse--they were writing mortgages to anyone with $50 in their pocket and a smile on their face but I also blame many homeowners, themselves, especially the ones who thought they could make quick money flipping houses and got caught holding the bag. Yes, on the one hand owning a home is a good thing because you are paying rent to yourself. No, on the other hand a home should not be your primary or sole source of equity and you shouldn't think of it as "an investment" even if its value is your single largest asset.

[Vraith]

No, on the other hand a home should not be your primary or sole source of equity and you shouldn't think of it as "an investment" even if its value is your single largest asset.

Yea, I've said that before...there are lots of reasons for owning a home. But as an investment? Adjust for inflation, on average, the return is not even 1%...even that isn't really true, once property taxes and simple maintenance [let alone improvements] and such are taken into account.
OTOH: if you research and plan well, even if it isn't a good gains-generator, it CAN be a loss-preventer compared to renting...but the research and planning is essential to make it work.

[Cail]

I hope they fry.

I've written at length about the housing collapse. Yes, there were a few cases of out-and-out fraud, but the primary reasons everything went to hell were that the government monkeyed with the market and homebuyers were greedy and stupid (wanted more house than they knew they could afford and didn't read their loan documents).