Since the beginning of the mortgage crisis, many experts have blamed the explosion in foreclosures on risky sub-prime loans. But USA Today reported recently that the rate of foreclosure for prime borrowers has been increasing, mainly because of rising unemployment rates. To read the rest of the article, CLICK HERE.
A few weeks ago This American Life aired an episode called “No Map.” One of the topics covered was the mortgage crisis, and the fact that many people who are facing foreclosure have “no map”–no past experience, no guidelines–for facing the mortgage crisis.
The podcast can be found in the Episode Archive–May 15, #380: “No Map.” The story begins around 9 minutes into the program.
Tonight from 8-9 p.m. KWMU–90.7 FM–will air “Hard Times in Middletown,” hosted by Kai Ryssdal of Marketplace. This will be the third of four documentaries from American RadioWorks®–the four programs help explain the current economic crisis we face today.
To learn more about tonight’s program and other Facing the Mortgage Crisis programs on KWMU, CLICK HERE.
Over the next few weeks KWMU will air four documentaries from American RadioWorks. The programs will help explain the economic crisis we’re facing.
Foreclosure City – Airs Tuesday, May 5th, 8:00 – 9:00pm
American RadioWorks looks at the roots and the fall-out of the Las Vegas foreclosure crisis, and tells the stories of residents trying to build new lives, now that their old dreams have failed. Hosted by Steven Smith.
A Better Life: Creating the American Dream – Airs Tuesday, May 12th, 8:00 – 9:00pm
As part of American Public Media’s “Next American Dream” project, this program chronicles the evolution of the American Dream since the Great Depression. Hosted by Steven Smith.
Hard Times in Middletown – Airs Tuesday, May 26th, 8:00 – 9:00pm
In 1929 the Rockefeller Institute published an intimate look at church, school, family and work in Muncie, IN. This documentary helps us understand how the economic crisis is affecting the people who defined the American middle class. Hosted by Kai Ryssdal of Marketplace.
Bridge to Somewhere – Airs Tuesday, June 2nd, 8:00 – 9:00pm
With the country’s economy in a tailspin, many Americans are calling for a new New Deal. This hour looks at whether repairing roads and expanding broadband Internet can help Americans back toward prosperity. Hosted by Steven Smith.
For more information, visit KWMU’s site dedicated to Facing the Mortgage Crisis, and tune in to KWMU – 90.7 FM.
October 20, 2008
I want to use this post as a way of soliciting some feedback, from you, about the direction of Facing the Morgage Crisis. While we have not created new content in awhile the work is still continuing here at KETC. The project team still gathers at 8:30 a.m. every morning to discuss how we move the work forward. We are still actively working with our community partners and we are still going out into the community making presentations. Recently, in our morning meetings we have been talking about how we can create content that will connect what has been going on in the financial system to St. Louis. In order to do this we are revisiting the focus of the project.
The current focus of Facing the Mortgage Crisis is to connect residents of the St. Louis community to trusted foreclosure prevention resources AND raise awareness about the impact of the mortgage crisis on the St. Louis region. Our current internal discussions are focused on expanding the work given how much the world has changed in the last few months. We are looking to create new content that serves a refined focus as we continue to connect people to resources. One of the many questions we are exploring is whether it’s time to expand to services beyond foreclosure prevention? What other types of social services are available for those struggling to make their house payments? These are some of the issues that we are exploring as we move forward.
One of the most important questions as we move forward is how do we continue to connect people to resources and expand the scope of the work? In expanding the scope we want to make sure that we are staying connected to what is going on in St. Louis. In order to answer these questions we are seeking your feedback. Please feel free to leave comments or send e-mails to firstname.lastname@example.org.
July 30, 2008
Originally published by The St. Louis Beacon on Wednesday, July 30, 2008:
By Mary Delach Leonard, Beacon staff
For American homeowners drowning in mortgage and consumer credit debt, here is a grim warning from law-enforcement agencies: There are sharks in the water.
* On Monday, Missouri Attorney General Jay Nixon announced “Operation Stealing Home” to crack down on mortgage fraud and financial predators taking advantage of homeowners facing foreclosure. Nixon’s office filed lawsuits against seven individuals and businesses accused of defrauding customers through refinancing, advance fee and foreclosure consulting scams.
* In May, a national alert against foreclosure scams was issued by the U.S. Treasury Department’s Office of the Comptroller of the Currency, which charters, regulates and supervises all national banks.
The alert warned against variations of lease-back and repurchase scams that promise financially distressed homeowners they can stay in their homes.
Basically, the schemer offers to pay the mortgage and rent your home back to you. Often, they may promise to sell the home back to you when you’ve recovered from your troubles. In the meantime, the homeowner is asked to transfer the property deed, often to a third party, who now has the power to sell your house, charge you sky-high rent, evict you and, most likely, steal whatever equity you had in the house. In the meantime, you are still responsible for the mortgage and if the schemer stops making your monthly payments, you still end up in foreclosure.
* Local FBI agents are actively investigating mortgage fraud in the St. Louis area, with the U.S. Attorney’s office prosecuting nine cases between March 1 and June 18. “Operation Malicious Mortgage,” a national FBI effort during that same time, netted charges against 406 defendants, responsible for $1 billion in fraud. Nationwide, the FBI has 15,000 mortgage fraud cases pending, up from 436 in 2003.
Maxwell Marker, assistant special agent in charge of the FBI’s St. Louis division, said that as funding dried up in the mortgage market, schemers began shifting to foreclosure-based scams.
“They’ll identify individuals who are in financial distress but have some degree of equity in their property. They essentially make an offer that can’t be refused,” he said.
Marker said the FBI has seen lease-back schemes in St. Louis but not to the degree that it has occurred in other cities, such as Atlanta, Las Vegas or on the West Coast, where the fallout from the mortgage crisis has been more severe.
The most common form of mortgage fraud in St. Louis is a form of flipping. Schemers purchase run-down properties and then resell them at huge profits, based on fraudulent appraisals claiming rehab work that was never done, said Alan Peak, supervisory special agent of the St. Louis FBI.
“They go into targeted areas and purchase vacant properties for $30,000 or $40,000. Sometimes, in as little as 72 hours, they will sell those properties to a straw buyer they have lined up, in some cases for $130,000 or $140,000 using a fraudulent appraisal report,” Peak said.
Ultimately, the mortgages are sold on the secondary market and the property ends up in foreclosure again, still in the same run-down condition and still worth only $30,000 or $40,000. In the short term, though, property values in the neighborhood go up, driven by the inflated sales prices. That, in turn, drives up property tax assessments. When the schemers pull out, property values plummet, and the neighborhood is left holding the bag.
“We’re all the victims,” Marker points out. “It affects every single one of us. It affects us in the fees we pay to get a mortgage. It affects us in our property values. It can affect individuals from $20,000 properties to multimillion-dollar properties. It affects the gamut.”
Mortgage fraud can take years to unravel, the agents say. In one of the biggest local cases, the FBI tracked 65 flipped properties to the same group.
Marker said the scammers usually target individuals who are unsophisticated in financial matters, or they work through places of trust, such as churches. They might co-op a church member who will then share his or her good fortune with others. And they are industry-savvy.
“They’re very good at exploiting any crack in the system. We’ll identify one of those cracks and work with the industry to close it, and they’ll move somewhere else,” Marker said.
Expect to see the Missouri attorney general’s office file more lawsuits against predators, said John Fougere, a spokesman for Nixon. Fougere would not put a number on pending investigations but said announcements of such legal actions often spur other consumers to contact authorities about similar experiences.
Fougere said predators take advantage of flood and tornado victims, so it is not surprising to find them at work during a financial crisis.
Even people who know better can fall for schemes when faced with financial troubles, the FBI agents say.
“When somebody is desperate and they see that life (preserver) ring out there, they’ll grab for anything,” Marker said.
The agents say they will be watching for new schemes after housing-rescue legislation is signed into law.
“Anytime there’s a big pool of money out there, there are bad guys lurking in the shadows trying to figure out how to get their hands on it,” Peak said.
Law-enforcement officials say fraud often goes unreported because the victims are either embarrassed, or they don’t think there is anyone who can help them.
“Folks often think, ‘Oh, this is just about me, and it’s not a federal matter,” said agent Maxwell Marker of the St. Louis division of the FBI. “We may not be able to address your individual case right now, but we will take all your information and data. It’s very important that we have that intelligence, so we can start connecting the dots.”
St. Louis FBI: (314) 231-4324
Missouri attorney general’s Consumer Protection Hotline: (800) 392-8222 or http://ago.mo.gov
Illinois Attorney General Consumer Fraud Hotline: (800) 243-0618 www.IllinoisAttorneyGeneral.gov
For more fraud advice, visit the St. Louis Beacon’s Web site.