In “Plunder,” Schechter makes the case that criminal acts of fraud and deception lay at the root of the financial crisis. The film argues that the scope of the fraud was huge, ranging from dishonest subprime lenders tricking unsophisticated borrowers into unaffordable loans, to the packaging of these risky loans into securities labeled risk-free, to the unknown parties who made millions betting against the U.S. housing market. “We need a jailout, not a bailout,” Schechter concludes.
Permanent modifications continue to grow increasingly slowly and trial modifications are still dropping, though October marked the end of the six-month streak of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 3.1 percent from September to October, compared to 6.6 percent growth from July to August and 4.1 percent growth from August to September (see charts A and B).
The fact that the current modification programs, such as the Home Affordable Modification Program, are voluntary means that homeowners have little power to force reluctant mortgage loan servicers to the bargaining table. While several “judicial foreclosure” jurisdictions (where foreclosures must be approved by a judge) are implementing mandatory or voluntary court-supervised mediation programs that bring homeowners and servicers to the table, such programs are too few to address the nationwide problem of ongoing foreclosures.
In Chapter 13 bankruptcy, a person who is deeply in debt undergoes a financial reorganization by completing a three- to five-year repayment plan to his or her creditors. The debtor generally retains all of his or her property, but he must devote all of his disposable personal income to repaying his creditors over the course of the court-supervised repayment plan.
Permanent modifications are increasingly slowing, while September saw the sixth straight month of double-digit decreases in active trial modifications. Chicago region permanent loan modifications rose by 4.1 percent from August to September, compared to 9.2 percent growth from June to July and 6.6 percent growth from July to August (see charts A and B). Regional trial modifications fell by 14.1 percent from August to September, which is less severe than the 21 percent decrease from July to August.
“If I try to sell this house,” Froylan Sr. says. “They won’t even give me a stick of gum for it.”
Some mortgage servicers have announced temporary moratoria on foreclosures in 23 states, while Bank of America announced a moratorium for the entire country. The moratoria were prompted by evidence of “robo-signers,” employees at some servicers who signed off on thousands of foreclosure documents a month without properly ensuring their validity, potentially in violation of state laws. The servicers announced the moratoria in order to review their foreclosure processes.