Naked Capitalism | Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash


Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash

It is high time to describe the Obama Administration by its proper name: corrupt.

Admittedly, corruption among our elites generally and in Washington in particular has become so widespread and blatant as to fall into the “dog bites man” category. But the nauseating gap between the Administration’s propaganda and the many and varied ways it sells out average Americans on behalf of its favored backers, in this case the too big to fail banks, has become so noisome that it has become impossible to ignore the fetid smell.

The Administration has now taken to pressuring parties that are not part of the machinery reporting to the President to fall in and do his bidding. We’ve gotten so used to the US attorney general being conveniently missing in action that we have forgotten that regulators and the AG are supposed to be independent. As one correspondent noted by e-mail, “When officials allegiances are to El Supremo rather than the Constitution, you walk the path to fascism.”

Revealingly, one of the Administration’s allies said: “Wall Street is our Main Street.” And the worst is that this remark may not be a cynical Ministry of Truth pronouncement. Team Obama bears all the hallmarks of being so close to banks and big corporations that it has lost all contact with and understanding of mainstream America.

The latest example is its heavy-handed campaign to convert New York state attorney general Eric Schneiderman to a card carrying member of the “be nice to our lords and masters the banksters” club. Schneiderman was the first to take issue with the sham of the so-called 50 state attorney general mortgage settlement. As far as the Administration is concerned, its goal is to give banks a talking point and prove to them that Team Obama is protecting their backs in a way that the chump public hopefully won’t notice.

Be sure to read the rest here…


4 Responses to “Naked Capitalism | Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash”
  1. To Tell The Truth says:

    Fannie Mae fire sales dilute regional home values
    DETROIT – Aug. 22, 2011 – Fannie Mae and Freddie Mac are selling hundreds – perhaps thousands – of foreclosed properties in metro Detroit for far less than they appear to be worth, a practice that leaders say is driving down local property values and weakening neighborhoods.

    In some instances, homes listed by the government-financed mortgage giants are being snapped up by private investors, then re-sold within days or weeks for far more money.

    Local officials blame the federal government – which took control of Fannie and Freddie in 2008 at a cost to taxpayers of at least $141 billion – for doing little to stop the fire sales.

    “It’s an unconscionable practice,” said Oakland County, Mich., Treasurer Andy Meisner. “It’s fiscally irresponsible from their perspective because they’re getting pennies on the dollar, and it’s fiscally reckless from our perspective” because Fannie and Freddie “are almost single-handedly … killing our property values.”

    Meg Burns, chief of policy at the Federal Housing Finance Agency, which regulates Fannie and Freddie, acknowledged the two companies are eager to sell foreclosed homes as quickly as possible. But she said the aim is to prevent vacant homes and neighborhood deterioration, not to destroy property values.

    A Detroit Free Press investigation, including an analysis of more than 700 real estate transactions in the past year, finds that Fannie and Freddie are selling foreclosed homes, on average, for one-third less than the homes’ already-deflated market value in some areas, and at less than half of market value in other neighborhoods.

    Critics say the low list prices are part of the companies’ rush to get foreclosed homes off their books while U.S. taxpayers are still covering the mortgage giants’ losses, three years after the federal government bailout.

    In February and March, 34 Fannie and Freddie properties in Southfield, Mich., were sold by the mortgage giants for 55 percent of their market value, on average, property records show.

    In Farmington, Mich., and Farmington Hills, Mich., 30 homes sold at 66 percent of their market value.

    And 75 Fannie and Freddie homes in Warren, Mich., sold for an average of 45 percent of their market value.

    The price tags on some home sales were equally jaw-dropping. Take these examples in Oakland County:

    • A foreclosed Ferndale home with a market value of more than $70,000 was sold by Fannie for $11,100 in February.

    • A Waterford home valued at $73,000 was sold by Fannie for $8,619 in January.

    • Freddie sold a Milford Township home on 5 acres for $101,000 in 16 days. Its market value was nearly twice that: $194,300.

    Oakland County Deputy Executive Bob Daddow called the sales a “travesty” that have helped home values fall by a third since 2007, costing local governments tax revenues.

    “It crushes our budgets. … We’re completely revamping government as we once knew it,” Daddow said.

    Critics say Fannie and Freddie can sell homes far below their value because, under the terms of the companies’ 2008 taxpayer bailout, taxpayers cover the cost of their losses.

    Moreover, because the mortgage giants dominate the local market of distressed property sales, ordinary homeowners and other sellers of foreclosed homes are forced to compete with their prices, further driving down property values and local tax revenues.

    The situation is particularly acute in the region’s poorest cities. In Detroit, 49 Fannie properties sold this summer at 22 percent of market value, on average.

    And across Wayne County, Fannie Mae properties went at fire-sale prices, records show:

    • $2,500 for an Ecorse home that is valued at $60,000

    • $45,000 for a Livonia home valued at nearly $100,000

    • $11,000 for a home in Westland valued at $56,400.

    Wayne County Executive Robert Ficano said the U.S. Treasury Department, which is bailing out Fannie and Freddie, should investigate the sales and “hold people accountable for things that just don’t make common sense.”

    Similar complaints echoed from Macomb County, Mich.

    “It’s fundamentally clear to me that the federal government is … dumping them on the market,” Warren Mayor Jim Fouts said of the home sales and the blight that follows. “It’s creating some unacceptable problems for cities like Warren,” which is located in Macomb County.

    Across Macomb County, Fannie Mae appears to be selling on the cheap: $29,000 for a Fannie property in Harrison Township valued at $152,240; $18,000 for a Fannie property in Eastpointe valued at $64,120.

    Burns, the official at the Federal Housing Finance Agency, disputes that the mortgage giants are dumping homes, arguing they are merely trying to stabilize neighborhoods by keeping homes from sitting empty.

    “Our overarching concern is vacant properties sitting on the market for too long.”

    An FHFA spokeswoman, Corinne Russell, added that Fannie and Freddie have procedures to ensure that sales of foreclosed homes are “sound and that every effort is made to preserve the assets, helping to protect the community from destabilization and decline.”

    Fannie Mae spokesman Andrew Wilson said the company typically bases its listing price on an appraisal and the recommendation of a broker.

    “Once a value has been established … our marketing efforts are primarily focused on finding buyers for our properties at a price that promotes neighborhood stabilization,” he said. “Our No. 1 goal is to sell to owner-occupants who will move into the neighborhood and help to stabilize the community.”

    Wilson declined to answer other questions about Fannie’s practices or address the metro Detroit home sale data compiled by the Detroit Free Press.

    Freddie spokesman Brad German said he rejected “assertions that we’re selling at uncompetitive prices.”

    Nationally, during the first quarter of 2011, German said Freddie Mac properties sold at 92 percent of market value, as determined by market sales.

    “We stand by our pricing and marketing strategy, which is helping us minimize losses while being good stewards of taxpayer resources and supporting the housing market,” German said.

    German also took issue with the Free Press analysis, arguing that the assessed value of a home doesn’t always capture factors that can lower the price the home is eventually sold for, such as the current condition of the property and the market.

    But Dearborn, Mich., appraiser Jumana Judeh said assessed value – used in part to figure property taxes – remains “an excellent reflection of the market.”

    Wayne State University law professor John Mogk, an expert in real estate and urban development, also called assessed values a valid benchmark and “a reasonable standard to use.”

    In Michigan, the assessed value is supposed to be half the market value of a home. Independence Township, Mich., appraiser Louise Braun used twice a home’s assessed value as her benchmark to compare Fannie and Freddie sales of foreclosed homes against the sale of other single-family homes in several Oakland County communities.

    • In June, for example, Fannie and Freddie foreclosures sold at 67 percent of the market value in Berkley, on average. Non-foreclosed homes in Berkley sold at 96 percent of market value, on average.

    • Fannie and Freddie homes in Orion Township and Lake Orion sold, on average, for 70 percent of their value. Non-foreclosures sold at 114 percent of market value.

    • And in Independence Township and Clarkston, the Fannie and Freddie homes sold, on average, for 76 percent of market value, compared with the non-foreclosures that sold for 108 percent of market value, on average.

    Georgia Institute of Technology accounting professor Charles Mulford, who studies how companies report their finances, said Fannie and Freddie feel no compulsion to maximize profits now that they are controlled – and subsidized – by the government. The companies, he said, are more interested in getting troubled mortgages, including foreclosed homes, “off the books so they can start anew, making new loans, loans that are more profitable.”

    Dwayne McLachlan, president of the Michigan Assessors Association and the Pittsfield Township assessor, said the impact of depressed home sales on communities can be devastating.

    “All it takes is one low sale in a neighborhood to corrupt that market for that (subdivision) or site condo complex,” said Braun, the Independence Township appraiser.

    Time and again, area property records show, investors are snapping up low-ball listings by Fannie and Freddie and turning a quick and sizable profit, an indication that the mortgage giants are listing the homes for far too little, real estate experts said.

    Ted Phillips, executive director of the United Community Housing Coalition, a Detroit advocacy group for low-income housing, said he has seen Fannie Mae refuse to allow homeowners to stay in a home for less than what they owe on a mortgage – only to sell the property to an investor for far less than what the struggling homeowner had offered to pay.

    “Then you’ve got another slum rental property in the community. If they’re using tax dollars, why aren’t they using tax dollars efficiently?” he said.

    “Even the worst slum landlord understands that basic concept. Why wouldn’t you take the $10,000 from the homeowner? But they will take $2,000 or $3,000 from an investor?”

    Freddie Mac sold a Warren property on March 15 for $31,000. The home resold 10 days later for $45,500. The city says no building permits were pulled, indicating that it was unlikely the buyer made any big improvements before reselling the home at a 47 percent profit.

    Fannie Mae sold an Auburn Hills, Mich., home in June 2010 for $45,000. It was resold for $129,900 in January. No permits were pulled on that home, either.

    That home was among 38 Fannie and Freddie properties that were resold, or “flipped,” in Oakland County during the first four months of 2011. The homes fetched, on average, twice what Fannie and Freddie received for the homes.

    While resales by investors may help stabilize housing prices, critics say the U.S. taxpayers who bailed out Fannie and Freddie are the ones being shortchanged when these homes are listed for less than what they might fetch.

    “It’s another indicator the selling price is not representative of the market,” said Philip Mastin, director of assessments and equalization for Wayne County, who said Fannie and Freddie homes are being resold at nearly double the original price in his county.

    Listings of Fannie and Freddie homes show that the mortgage giants were prepared to sell some houses for less than what comparable properties in the same neighborhood fetched, records show.

    For example, Fannie listed a four-bedroom home in Troy, Mich., at $141,000 in March, even though four similar or smaller homes nearby sold for roughly $160,000. The Fannie home was on the market for three days before it had a buyer for $170,000 – nearly $30,000 above its list price.

    Freddie Mac was willing to take $153,900 for a property in South Lyon, Mich., last spring, even though there was a nearly identically sized home in that subdivision listed at the same time for $193,000 and a smaller house for $164,900. Freddie got $155,000 for its property; the other sellers got $179,000 and $165,500.

    German, the Freddie spokesman, said the mortgage giant’s properties sell in an average of 110 days nationally. But in metro Detroit, Freddie’s own numbers show that its properties are selling far more quickly – in roughly 50 days. Property experts say that indicates the homes are listed too low.

    Of the 72 homes that Freddie contracted for sale in Oakland County in April, 58 were on the market for less than a month before buyers signed contracts, according to data compiled by Braun.

    One of the Freddie foreclosures, in Springfield Township, Mich., was offered in the Multiple Listing Service at 9:19 a.m. on April 11 for $38,900 – even though its market value was $123,000. Within 24 hours, someone had a contract to buy it for $42,500.

    Judeh, the Dearborn appraiser, said homes typically need three to six months of marketing. “And if you don’t market them properly, it becomes dumping, not selling, and there’s a huge difference,” Judeh said.

    Through May, home prices in metro Detroit have fallen 38 percent since 2000, according to the S&P/Case-Shiller home price index. As Fannie and Freddie contribute to the downward spiral in property values, tax revenues fall, too.

    In Eastpointe, property values have dropped 54 percent since 2008, and Linda Weishaupt, assessor and deputy city clerk, blames foreclosures for much of that decline.

    Since 2009, property values have dropped 21 percent in Rochester Hills, Mich., and the city expects another 10 percent reduction over the next two years, said Keith Sawdon, city finance director.

    Erik Ambrozaitis, a Rochester Hills Realtor and mayoral candidate, said the decline in revenues is “the crisis. The roads in front of my house are starting to crumble. As a Realtor, I’m deeply concerned. As a homeowner, I’m really concerned. As a former council member, it is a disaster.”

    Mastin, the Wayne County official, said even if home prices recover, communities won’t recoup lost revenues quickly.

    “We will never be able to recover what’s been lost,” Mastin said. “What’s been taken away has been taken away.”

    © 2011 Detroit Free Press. Distributed by McClatchy-Tribune Information Services.

  2. Equity Free says:

    Until campaign finance laws are deemed bribery, the money flow will buy their rep, not yours .

  3. John Anderson says:

    Call Obama what you will, but remember that he did pocket veto that interstate notary act bill that would have had the same effect as allowing robo signing to go unchecked.
    There is no one running on the republican side who offers anything but “get out” to fraud victim homeowners.

    • rictic says:

      When will people get away from this nonsensical Democrat v Republican mind-set. Both parties are bought and paid for by the Banks and Corporate Elites. Just follow where the Campaign donations come from for all of them. THEY ARE ALL CORRUPT from top to bottom….

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