Florida Foreclosure Attorney Roy Oppenheim’s retrospection on the 10 year Anniversary of the Great Recession. Last Part: The Guilty Ones. As part of the 10 year retrospective, Roy Oppenheim will be republishing blogs from South Florida Law Blog. (Originally posted FRI DEC 14, 2018 on South Florida Law Blog)
“A Retrospective From the Trenches of the Great Recession-The Parties to Blame”
Welcome to the last part of my series of posts dedicated to reflecting on the ten-year anniversary of the Great Recession. I have talked about the changes prompted by the economic collapse, the things that did not change after it, and now it is time to talk about the parties to blame. 2018 is almost over and while we may be heading towards yet another economic crisis, reflecting on our mistakes should hopefully mitigate another economic disaster.
These are the parties I would blame and why:
Banksters Guilty As charged
1. The Banksters.
If you read my blog, you know why the banks are my first party to blame. They single-handedly created the perfect storm for the worst economic collapse since the Great Depression. First, by deliberately not adhering to their own underwriting guidelines, and secondly, for the lack of transparency in their dealings, particularly with residential mortgages. Back in 2015, I wrote about a decision from Judge Denise Cote, from the Federal District Court of Manhattan, who ruled that two banks had misled Fannie Mae and Freddie Mac in selling them mortgage bonds that contained errors and misrepresentations. Judge Cote brilliantly singled out the key question on the issue: “did the banks lie?” and her even more brilliant “drop-the-mic” answer: “they sure as heck did.”
As you already know, banks never took responsibility for their wrongdoing, nor changed their corporate values to prevent further wounds to the economy. For them, I coined an adaptation of the phrase Once a thief, always a thief: Once Wall Street, always Wall Street. A few years ago, a friend of mine Sheldon Cohen, former commissioner of the IRS, told me that if the banks were allowed to get away with the bad behavior THIS time, what would happen NEXT time. Oh, how right he was! The wrongdoing keeps happening and scandal after scandal the American public gets shocked for a few seconds, some minors laws are rapidly passed to stop the bleeding on the news, and we all move on…. I had said in the past: “shame on you.. you Despicable Banks”, but maybe, shame on us too, for when are we, as a Nation, going to start demanding banks to follow the rule of law?
2. Mortgage brokers for pushing faulty loans’ approval
In 2009 the New York times started its column Your Money, with the following statement: “It’s a bad time to be an honest mortgage broker”. The NYT was absolutely correct, 2009 was a disastrous time to be a mortgage broker, honest or dishonest, as the whole guild was publicly trashed by everybody and scolded by legislators. Many real estate companies, including mortgage insurers, declined servicing clients represented by mortgage brokers out of fear of faulty dealings. The public outrage was not fair to the many decent brokers that were doing their jobs, but sadly, the outcry was not unfounded.
A few years before the collapse, groups of brokers started pushing faulty loans to some groups of people, as well as pushing groups of borrowers with unworthy credit history to some lenders. In plain English, brokers were lying left and right. There were several lawsuits filed in Maryland claiming systematical singling out of black borrowers for high-interest subprime mortgages. Similarly, the NAACP filed a class action lawsuit in California in 2007, trying to get judicial action to stop brokers’ targeting of black families to market subprime loans. In those cases, a long chain of brokers’ misbehavior was unveiled. The records showed discriminatory and predatory lending practices, targeting of minority groups for certain loans, and misrepresentation of borrowers’ credit worthiness to lenders. The misconduct was so gruesome as to include characterization to the faulty loans offered to minorities as “ghetto loans” or loans for “mud people” in internal communications between brokerage firms’ employees. Those loans put hundreds of families on the verge of foreclosure since the first day of their homeownership, prompting economic devastation for the whole system.
Apart from discrimination and predatory lending, brokers hid important factual loan information to borrowers. For instance, brokers, whose services are retained to get the best deal for borrowers, hid prepayment penalties and negative amortization on the original loan agreements. Later, when borrowers where having difficulties during the crisis, those penalties prevented them from getting alternatives to foreclosure such as mortgage modifications. Hence, if the banks where pulling the trigger to kill families’ financial stability, brokers certainly made sure those families were not able to move to avoid the bullet.
3. Government actors that were supposed to act as regulators and slept over the banks’ dealings with mortgages.
In my last two posts, I talked about some of the ways the government failed the American people, to whom it owes zealous protection, during the 2008 collapse and the Great Recession that followed.
Continue Reading Full Article Part 4 through 6:https://southfloridalawblog.com/florida-foreclosure-attorney-roy-oppenheims-retrospection-on-the-10-year-anniversary-of-the-great-recession-last-part-the-guilty-ones/ Florida Foreclosure Attorney Roy Oppenheim’s retrospection on the 10 year Anniversary of the Great Recession. Last Part: The Guilty Ones.
From the Trenches,
Roy Oppenheim is a sought-after legal expert on issues relating to real estate, real estate litigation and commercial litigation. In 2009, he started the South Florida Law Blog to address the real estate market and foreclosure crisis. The Blog has been voted the best business and technology blog by the South Florida Sun-Sentinel. Mr. Oppenheim has been a contributor to Yahoo! Homes, featured on HuffPost Live, FOX News, and Lifetime TV, and quoted in prominent national publications, including USA Today, The New York Times, Huffington Post, WSJ, US News and World Report, The Financial Times, the National Law Journal,Florida Bar News, Sun Sentitnel and Miami Herald. Most recently, Mr. Oppenheim hosted an Ask Me Anything on Real Estate on Reddit. Mr. Oppenheim has also co-authored two law review articles: Deconstructing The Black Magic of Securitized Trusts, and The Emperor’s New Clothes.
Mr. Oppenheim founded Oppenheim Law, one of South Florida’s leading boutique law firms in Fort Lauderdale, Florida in 1989 with his wife Ellen Pilelsky, and, in 1994, he co-founded Weston Title & Escrow, a trusted South Florida real estate title company whose multilingual staff provides personal, concierge style service in the areas of real estate closings, title insurance, title searches and escrow services.
Weston Title: https://westontitle.com/
Tags: American Dream Down payment Initiative, banksters, fannie mae, Freddie Mac, Great Recession, Judge Denise Cote, mortgage brokers, National Homeownership Strategy, REMIC, Sheldon Cohen, the banksters, Uniform Commercial Code