Benchmark Institute is a training and performance development
organization dedicated to increasing the quality and quantity of
legal services to low-income communities.
June - July 2009
July 6, 2009 -
The Contrarian: Sheila Bair and the White House financial debate by Ryan
Lizza; The New Yorker.
Read about Sheila Bair, the head of the Federal Deposit Insurance
Corporation, who recently received a Profile in Courage Award. Each
year, the Kennedy Library Foundation presents the award to public
officials who it feels have exhibited political bravery. Bair was
recognized for her early, though ultimately futile, attempt to get the
Bush Administration to address the subprime-mortgage crisis before it
became a threat to the entire economy.
July 3, 2009 -
Litigation In Baltimore City's "Ghetto Loans" Case To Go Forward As
Judge Denies Wells Fargo's Request To Dismiss Suit: posted by the Home
Equity Theft Reporter
In Baltimore, Maryland,
The Maryland Daily Record reports:
• The city of Baltimore’s mortgage-lending discrimination lawsuit
against Wells Fargo Bank. may proceed to what will be a “time consuming
and expensive” discovery process, a federal judge ruled Thursday
afternoon. Chief U.S. District Judge Benson E. Legg rejected the bank’s
motion to dismiss the suit, four days after hearing arguments about the
city’s alleged damages. The decision means the city will get access to
more details about Wells Fargo’s lending practices since 2000; it had
previously relied solely on publicly available information and
information from a few industry insiders.
• The city claims the bank targeted black borrowers for subprime loans,
a practice known as reverse-redlining, and that the resulting
foreclosures have cost it tens of millions of dollars in lost property
revenues and police, fire, and rehab expenditures.
For more including Judge Legg’s ruling on Wells Fargo’s motion to
dismiss, go here.
July 2, 2009 -
Have the Banks Gone Crazy? Wells Fargo Sues Itself by Angie Moreschi:
Consumer Warning Network
“Wells Fargo sued itself,” said Foreclosure Attorney Dan McKillop.
“Then, Wells Fargo went out and hired a defense attorney to go ahead and
defend against themselves.” … “The banks don’t take the time to properly
file complaints. The same way they didn’t take the time to look at any
of the homeowners info. The same way they didn’t take the time to
properly assign the notes and mortgages. So, we’re basically in that
process now, but it’s the [lender’s] attorneys who are trying to push
through these foreclosures as fast as possible.”
July 1, 2009 -
Expands Making Home Affordable Eligibility (See
Watch - Homeowners March 6, 2009)
On July 1, 2009, HUD expanded the
Making Home Affordable Refinance Program to include borrowers who
are current but up to 125% underwater on their mortgage. Before this
expansion, only those borrowers whose first mortgage did not exceed 105%
of the current market value were eligible for the program.
HUD secretary Donovan also announced plans to deploy HUD Foreclosure
Rapid Response Teams to assess the areas hardest hit by foreclosure,
starting in Las Vegas. Over the next two weeks these team members will
be determining the need in Nevada and surrounding areas. HUD will commit
two full-time employees to implement the Foreclosure Rapid Response
Team’s recommendations. HUD also plans to deploy two Fair Housing equal
opportunity specialists to the Las Vegas HUD office.
July 1, 2009 -The California Foreclosure Consultant Act (California
Civil Code § 2945 through § 2945.11)
AB 180, operative July 1, 2009, amends the California Foreclosure
Consultant Act, Civil Code §§ 2945.2, 2945.3, and 2945.4 and adds §
2945.45 to more tightly regulate foreclosure consultants. The amendments
extend the owner’s right to cancel the contract from 3 to 5 business
days and to do so by mail, e-mail, or fax.[§2945.3(d)]; requires that a
contract be written in the language principally used by the foreclosure
consultant to describe their services or to negotiate the contract. (§
2945.3(c).The law also prevents the consultant from obtaining a power of
attorney from the owner for any purpose (§2945.4(f).
Section 2945.45 requires a foreclosure consultant to register with the
Attorney General and maintain a surety bond of $100,000.00. The AG may
refuse to issue, or to revoke a foreclosure consultant’s registration.
These changes give the Attorney General oversight over California
Find the Attorney General’s Press Release with links to the registration
The California Department of Real Estate has posted a list of persons
and entities that have been served with a Desist and Refrain Order
and/or Accusation by the Department resulting from a loan modification
and/or foreclosure rescue transaction. In some instances, the person or
entity has been ordered to stop providing loan modification and/or
foreclosure rescue services because the person or entity is not licensed
by the Department of Real Estate. In other instances, the person or
entity has been ordered to stop collecting advance fees.
California DRE Posts
List of Alleged Loan Modification Scofflaws
For the list of alleged loan modification rules violators, and links to
the orders issued by the Department, see
Desist and Refrain Orders
and/or Accusations for Loan Modification Activities.
On the basis of a written complaint of fraud or misrepresentation or
other violations of the
Real Estate Law or
Subdivided Lands Law,
the Department of Real Estate investigates real estate licensees,
subdividers and unlicensed persons who have performed acts which require
a real estate license. More information and complaint form are
Hat Tip: Home
Equity Theft Reporter
July 1, 2009 -
B of A pushes more homeowners into bankruptcy or foreclosure
BofA expanded its short-sale contract and added a clause that would make
homeowners liable for the difference between the short-sale price and
the mortgage loan amount. Housing advocates contend that the clause will
push more homeowners into bankruptcy or foreclosure. This decision could
force homeowners considering the short-sale option to change their minds
and just allow their houses to become foreclosed homes for sale.
BofA explained that it was asking homeowners to sign a promissory note
to protect its shareholders and investors who will suffer large losses
from the gaps between short sale prices and loan amounts. The bank also
insisted that other mortgage insurance firms and investors have been
requiring the promissory-note part of the short-sale agreement.
June 29, 2009 –
Supreme Court says New York prosecutors may investigate national banks
for lending discrimination by Brent Kendall: Dow Jones Newswire
The high court, in a 5-4 opinion by Justice Antonin Scalia, said federal
banking regulations didn't pre-empt the ability of states to enforce
their own fair-lending laws. The ruling was a win for the New York
attorney general's office, which had been seeking to investigate the
banks' residential real-estate lending practices since 2005. Scalia said
New York Attorney General Andrew Cuomo couldn't issue executive
subpoenas to the banks but could bring enforcement actions against them
Cuomo v. Clearing House Assn.
Hat Tip: Home Equity
June 29, 2009 -
Angelo’s Ashes: The man who became the face of the financial crisis by
Connie Bruck: The New Yorker
Read about behind-the-scenes at Countrywide Financial, at one time one
of the biggest subprime lenders in the country, and its ex-CEO, the Man
with a Tan, Angelo Mozilo. His driven personality eventually led him to
disdain risk management on the altar of market share. As the 2000s
progressed, his increasingly bad judgment and poor decision-making
skills led to the end of his reign in disgrace and now scandal.
June 28, 2009 -
Paper Avalanche Buries Plan to Stem Foreclosures. New York Times: Peter
Persuading American mortgage companies to lower payments for homeowners
who can no longer afford their loans is proving to be frustrating?
Futile? Read about what we’re sure - for those of you are helping
clients modify their loans – are very familiar situations.
June 26, 2009 -
Administration to Launch National Outreach Campaign in Support of Making
Home Affordable Program
“More than 50 percent of all foreclosures occur without servicers and
borrowers ever connecting,” said Treasury Secretary Tim Geithner. “With
this targeted campaign, we can reach in to the communities most in need,
bolster awareness of this program and help responsible homeowners take
the first step toward getting relief – all steps that will in turn help
to stabilize the housing market and get our economy on the path to
The campaign will engage local housing counseling agencies,
organizations, elected officials and other trusted advisors in the
target markets to build public awareness of Making Home Affordable,
educate at-risk borrowers about options available, prepare borrowers to
work more efficiently with their servicers and drive them to take
Los Angeles, Sacramento, Las Vegas, Phoenix, Boston and several more
areas are targeted with the possibility of expanding the tour to other
areas that have been hit hard by foreclosure in the coming
Specific dates and events in these markets will be made available in the
Hey, we’ll leave the porch light on for you!
June 26, 2009 -
Foreclosure to Homelessness 2009: the Forgotten Victims of the Subprime
This Report “makes clear that foreclosures are a major factor in the
increase of homelessness in the United States,”
National Low Income
Housing Coalition (NLIHC) President Shelia Crowley said.
Key findings include that those experiencing homelessness due to
• tended to be renters, not owners;
• whether renters or owners, did not seek legal advice in foreclosure
• most often stayed with family or friends or in emergency shelters.
June 15, 2009 —
California Foreclosure Prevention Act (See
Foreclosure Watch -
Homeowners February 20, 2009)
California Foreclosure Prevention Act modifies the foreclosure
process to provide additional time for borrowers to work out loan
modifications. Civil Code § 2923.52 requires an additional 90 day period
beyond the period already provided before a Notice of Sale can be given
to allow all parties to pursue a loan modification to prevent
foreclosure of loans meeting certain criteria identified in that
A mortgage loan servicer who has implemented a comprehensive loan
modification program may file an application for exemption from Civil
Code § 2923.52. Once approved, the loan servicer is exempt from the
additional 90-day period.
A list of exempted lenders as well as regulations and application for
Since most loan servicers have a loan modification program and will be
commentators say that this law is useless; e.g. “this bill is no
more likely to work than a bill declaring poverty to be illegal or the
sky to be green.”
June 11, 2009 -
Villaraigosa: Mandatory Mediation Needed Between Lenders and Homeowners
During a conference call with the U.S. Conference of Mayors, L.A. Mayor
Villaraigosa said he will ask the Legislature to "work on this on an
emergency basis, and replicate what (mandatory mediation program) they
have in Philadelphia."
May 20, 2009 -
Helping Families Save Their Homes Act of 2009
Title IV, Sec. 401(a) of the Act expresses the sense of Congress that
mortgage holders, institutions, and mortgage servicers should not
initiate a foreclosure proceeding or a foreclosure sale on any homeowner
until foreclosure mitigation provisions like the Hope for Homeowners
program, as required under title II, and the President’s “Homeowner
Affordability and Stability Plan” have been implemented and determined
to be operational by the HUD Secretary Treasury Secretary.
Among its provisions, the Act —
• Revives the little-used Hope for Homeowners FHA refinance program by
lowering program fees, streamlining borrower certification requirements,
and allowing HUD to make incentive payments to loan servicers and
originators who participate in the program.
• Creates a legal “safe harbor” for loan servicers who modify loans,
protecting them from lawsuits by investors in mortgage-backed
• Funds $130 million for foreclosure-prevention efforts such as
counseling and the hiring of fair-housing field employees.
• Provides foreclosure protections for renters living in foreclosed
homes providing 90 days’ notice. [See Foreclosure Watch June-July 2009,
Protecting Tenants at Foreclosure Act of 2009]
Full text of the Helping Families Save Their Homes Act of 2009 is
May-June 2009 –
Clearinghouse Review Journal of Poverty Law and Policy
Going to court to stop foreclosures may not be the answer.
Strength in Numbers: Legal Advocates and Community Organizers Partner
to Fight Foreclosures describes the collaboration between
Neighborhood Legal Services (LA County) and a community organization,
One LA-IAF, to help low-income homeowners facing foreclosure. Groups of
homeowners negotiate collectively with servicers to modify loans. Using
data gathered through negotiations, the LA City Council recently funded
a foreclosure prevention pilot project that grants “silent second”
mortgages to some homeowners.
Foreclosure Defense: Understanding TILA Basics Is Essential
Everyone working with clients facing foreclosure need to understand The
Truth in Lending Act, how it can be used, and its terms.
Make sure that your organization
subscribes to this valuable resource. In the meantime, you may
purchase articles online that will be e-mailed to you within 24
Fighting Foreclosure Through Legal Aid-Community Organization
This webinar, conducted on June 23, 2009, covers initiatives undertaken
in Philadelphia and Los Angeles by legal aid advocates in partnership
with community organizations to combat foreclosure of low-income
Slides are also available.
Basic Foreclosure Litigation Defense Manual (July 2008)
The Legal Advocacy Center of Central Florida and Community Legal
Services of Mid-Florida created these materials for LACCF’s training of
Volunteer Lawyers Program. Although geared to Florida practice (a
judicial foreclosure state), it describes in a straightforward way the
basic players, practical advocacy tips, and the federal laws and
regulations governing mortgage origination and lending. It’s worth a