CEO of US Bank Forecloses On Woman Who Cleans His Office Then Has Security Harrass Her

Arthur Delaney, Huffington Post

At first, Rosalina Gomez of Minneapolis says she didn’t realize she was cleaning up after the CEO of the bank that bought her foreclosed home in a September sheriff’s sale.

“At the beginning I didn’t know he was the guy,” said janitorial services worker Gomez through an interpreter in an interview with HuffPost. “I didn’t know the relationship between my house and him. I saw him one time but never talked to him.”

The guy is Richard Davis, CEO of Minneapolis-based US Bank, the nation’s sixth-largest bank and recipient of $6.6 billion in TARP bailout funds. On Feb. 28, Davis was set to receive an “Executive of the Year” award from the Minneapolis/St. Paul Business Journal at a banquet — 11 days before Gomez and her family had to comply with an eviction order.

The Service Employees International Union, of which Gomez is a member, could not resist the opportunity to draw attention to the soon-to-be-evicted woman cleaning up after one of the bankers taking her home away (USBank is the trustee; Chase is the mortgage servicer). The SEIU began agitating for Gomez, an effort which dovetailed with a union campaign on behalf of area janitors fighting for a better contract.

“After they found out I was involved in the union activity, they assigned two security guards to follow me when I was cleaning,” she said, adding that the guards helped her clean.

Gomez earns $26,000 a year ($12.97 an hour) working for a janitorial services company cleaning up after Davis. He earns more than $2 million a year.

Read more here:  http://www.huffingtonpost.com/2010/03/03/janitor-facing-eviction-c_n_481057.html?ref=twitter

WSJ Says It May Be Okay To Walk Away From Your Mortgage.

Millions of Americans are now deeply underwater on their mortgage. If you’re among them, you need to stop living in a dream world and give serious thought to walking away from the debt.

No, you shouldn’t feel bad about it, and you shouldn’t feel guilty. The lenders would do the same to you—in a heartbeat. You need to put yourself and your family’s finances first.

How widespread is this? More than 11 million families are in “negative equity”—that is, they owe more on their home than it is worth—according to a report out this week by FirstAmerican Core Logic, a real-estate data firm. That’s a quarter of all families with mortgages. And for more than five million of those borrowers, the crisis is extreme: They are more than 25% underwater—the equivalent of having a $100,000 loan on a property now worth just $75,000 or less. That’s true for a fifth of mortgage holders in California, nearly a third in Florida and an incredible 50% in Nevada.

Are you in this situation? Are you still battling to pay the bills each month, even when it may make little financial sense to do so?

It’s time for some tough talk.

Stop trying to chase your lost equity. That money is gone. Don’t think like the gambler who blows more and more cash trying to win back his losses. That’s how a lot of people turn a small loss into a big one.

And do the math. Even if you hope the real estate market is near the bottom—it’s possible, but by no means certain—it may still take years to see any meaningful recovery. If you are 25% underwater, your home will have to rise by 33% just to get you back to even.

Is that likely? And over what time period? Even if home prices rose by 5% a year from here, that would still take six years. And during that time you could instead be building fresh savings elsewhere.

Read more here:  http://online.wsj.com/article/SB10001424052748703795004575087843144657512.html

Strategic Defaults In The US: A British Perspective

Aline van Duyn, Financial Times

Wayne B, a 62-year-old executive who works at an airport, and his wife Orapin, a dental assistant, are about to do something odd. The couple, with a pristine credit history, have decided to default on their $500,000 (£325,000, €370,000) mortgage on a townhouse in Livermore, a respectable city in California’s San Francisco Bay area.

It is not that they are unable to afford the $4,600 monthly mortgage outgoings: they have never missed a payment. But the house they bought for $582,000 in May 2006 – at the peak of the US housing boom – is now not likely to be worth more than $315,000.

“The process towards a default has started,” says Wayne, whose lender does not yet know it will soon be left nursing losses on yet another foreclosed house – and one whose owner, among the top-rated in terms of creditworthiness, is an implausible-sounding default risk. “We plan to retire in four years and will not be able to afford the mortgage payments then,” he explains. “The loss if we sell will be so large that, after doing a lot of research, we have made a business decision to walk away.”

The high level of foreclosures in the US – the handing over of homes to banks that lent people money to buy them – has been a huge burden on the economy, has kept house prices on a downward spiral and has resulted in misery and anxiety for millions of people. In some areas so many homes have been abandoned that the entire community has fallen apart as schools close, public services are cut and homes are ransacked for fittings or taken over by criminals. That has also sent property values plunging for those people still in their homes and paying mortgages.

Stemming foreclosures is a key policy objective of President Barack Obama’s administration. Various programmes are being worked on to modify people’s mortgages in an attempt to reduce payments so that the mortgages are not defaulted on, but so far with only limited success.

The US housing crisis and the foreclosure wave have also been the fuel behind hundreds of billions of dollars in losses for banks and investors around the world – owners either of the defaulted mortgages themselves or of securities linked to their value. Famously, the biggest source of losses came from subprime mortgages – loans given in cavalier fashion to people with poor credit histories. When those borrowers began to default, it triggered the most widespread collapse of housing prices across the US seen since the 1930s.

Prices are still falling. So the extent of losses banks and investors will have to take on mortgages that are still being paid every month, but may not be for longer, hangs large over the US economy. Without a recovery in house prices, consumer spending and confidence in the US is expected to remain muted, reducing the potential for economic growth.

Further losses on mortgages could result in more pain for banks, too, reducing the amount of new credit that they can make available to consumers and businesses. This, in turn, would have knock-on effects for the global economic outlook, as the US remains one of the biggest drivers of international trade and commerce.

The behaviour of people like Wayne could therefore be crucial. With a growing number of Americans facing negative equity – where the mortgage exceeds a property’s current market value – and becoming ever more pessimistic about the prospects of house prices recovering to make up that difference, they are surrendering to foreclosure even though they can still meet the repayments.

The trend is clear in recent rates of non-payment, or delinquency, on mortgages. In January, delinquencies on outstanding “jumbo” mortgages – big loans granted to people with good credit histories – rose to 9.6 per cent, according to Fitch Ratings. Many of these problem loans, which have gone unserviced for 60 days or more, were taken out after 2005. And non-payment is increasing not just in hard-hit states such as California: in New York, Florida, Virginia and New Jersey they are all on the rise too.

“These are all states where many of the mortgage holders are educated people and it is easy to connect the dots and conclude that these people are deciding it is no longer worth paying a mortgage if they are under water,” says Ivy Zelman, a housing market analyst.

She expects US house prices could fall another 10 per cent under the combined weight of the build-up of unsold foreclosed houses, cash-strapped people unable to keep paying mortgages and people facing negative equity deciding simply to hand over their home to their banks.

A close look at mortgage payment trouble spots shows that the higher the negative equity, the higher the rate of non-payments. Fitch has found that for all the mortgages provided in the private market, householders with no equity have a delinquency rate of nearly 40 per cent, double that of homeowners who have a stake in their property.

Read more here: http://www.ft.com/cms/s/0/a93abcea-1fe7-11df-8deb-00144feab49a.html

Palm Beach Judge Says You Can Now Strip Your House When Facing Foreclosure

 Eliot Kleinberg, Palm Beach Post

A judge today ruled prosecutors can’t prove eight men committed a crime when they stripped a million-dollar Loxahatchee Groves home under foreclosure.

The ruling could well lead prosecutors to drop charges against the eight, unless new evidence comes to light.

The decision focuses a spotlight on a growing problem: it’s taking a year on average for lenders to seize foreclosed homes through a formal sale, giving angry or desperate owners plenty of time to cart away goods and fixtures.

Or have someone do it for them.

“There is a problem with the system that’s going to plague our system for a long time,” Palm Beach County Circuit Judge Ted S. Booras said.

A Palm Beach County Sheriff’s report says a person had met a deputy Wednesday night at the home at 14094 43rd Road North. It’s valued at $1.1 million.

After the man showed the deputy a foreclosure document, the deputy found the eight men, seven of them from Broward County, removing major appliances, cabinets, and even toilets and tiles and copper wire.

Andrew H. Carr, 47, of Davie, told the deputy the men were in the house with the permission of a man named Gary Coulton, who was in Jamaica.

(Read More)

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