Friday, June 15, 2012

A Wells Fargo Horror Story -- and an Update On The Van

Rousseau House in California, plundered by a series of banksters
I came across this story over at Naked Capitalism the other day, then I read that the homeowner had killed himself just days before the scheduled eviction in May. And I read the linked amended complaint.

And I thought "JFC on a merry go round, this is the most outrageous WF horror story yet." Almost beyond belief, and yet given all the other horror stories I've read, it's only unusual in that the homeowners had/have decent legal advice, and that the poor guy was driven to suicide.

Notice that the house above is quite a modest little house, similar to many I've been inside during parts of my working career. That the final refinance in 2007 was for over $350,000 is somewhat shocking, but that's what was still happening to real estate values in California at the time. In fact, I was dealing with a lot of builders, brokers and construction contractors during the boom before the crash, and by 2007, the warning signs were very clear that the crash was about to come, indeed had already come, in some cases that I can't detail here, but people were still refinancing and some were able to take cash out of their homes until well into 2008.

I say $350,000 is somewhat shocking for this house because in a realistic market it wouldn't be worth much over $200,000 if that. It's probably appraised for under that now, though WF ultimately acquired the house for a trustees sale bid of over $400,000.

So the homeowner was being screwed, whether or not there was fraud in the final refinance.

Nevertheless, according to the story, the homeowners were diligent in making mortgage payments. The problem came because they made those payments in person with cashier's checks at a Wachovia branch.

That and grossly false, misleading and predatory lending practices by World/Wachovia.

From the narrative in the amended complaint, the homeowners presented a cashiers check at the bank in April, 2009, in the amount of $1615, the stated mortgage payment amount. The check was handled by an employee who -- apparently -- entered a keystroke wrong during the transaction so that the check was not properly credited to the correct account. The homeowners received a receipt for the check and went on their way.

The next day, the check cleared, but what happened to the money is a mystery. There is also the mysterious claim of a stop payment being ordered on the check, which is simply not something that can happen on a cashiers check.

According to the complaint:

On or about May 5, 2009, while making the monthly payment at the WACHOVIA branch, Plaintiff O. ROUSSEAU the teller confirmed that their account still showed a missing payment for April. At Plaintiff’s request, Branch Manager PERI KERMANI called the corporate office to inquire about the disputed payment. Plaintiff was given a facsimile number to send a written dispute and proof of payment.
Which Plaintiffs (the homeowners) did.

From then on, the situation deteriorated alarmingly. While the homeowners continued to be diligent about making payments until the bank refused to accept them, they were dicked around and lied to by bank personnel constantly throughout a torturous process of trying to rectify the erroneous April "delinquency." They submitted all the documentation necessary to clear the supposed "delinquency" and never once did the bank actually clear it, though they were told it had been taken care of. They were assessed more and more collection fees, NSF fees, a constant tidal wave of fees while they not only tried to straighten out the mess the bank had caused, they were attempting to get their loan modified because of loss of income due to unemployment.

 As has so often been the case, while they were attempting to get the loan modification, the bank was proceeding with foreclosure, which the homeowners tried to get them to stop but were unsuccessful. Meanwhile, even as the bank was refusing to accept offered mortgage payments, they were constantly calling and dunning the homeowners for payment.

As has so often been the case, while attempting to secure a loan modification, the homeowners were repeatedly told that required documents had not been received -- though they had been sent over and over again -- and thus they could not get the modification, and then, apparently, the missing documents would somehow be found and the modification process would supposedly continue only to stop again.

Meanwhile, the foreclosure process churned along, oblivious.

Finally, from what I gather, the homeowners were denied a modification and told to pay up the arrears or get out. By the time they found out how much they had to pay to satisfy the largely bogus debt that was caused by a bank error in the first place, they had one hour to meet a deadline to deliver more than $26,000 demanded to the bank's collection agency in Texas. They had the money, but they couldn't meet the deadline because they couldn't access that much at one time given cash withdrawal restrictions on the account in question.

Wells Fargo acquired the property at a trustees sale purportedly held November 22, 2010, five days after the homeowners were told how much to pay and given a deadline they couldn't meet to satisfy the alleged default. At the time of the court filing, dated January 11, 2011, WF was under temporary injunction from enforcing an unlawful detainer against the Rousseaus. Apparently the injunction was lifted in May of 2012, and the Rousseaus were informed that they would be evicted on May 15, 2012; two days beforehand, when Norman Rousseau was unable to complete repairs on the engine of a motorhome that the couple intended to move into once they were evicted, Mr. Rousseau fatally shot himself.

All because a teller at Wachovia failed to credit the correct account for a payment made in April of 2009 and no one at any of the participating financial institutions and collection agencies between then and the date of Norman Rousseau's suicide had the courage or the brains to recognize that the bank had made a simple -- and not uncommon -- mistake that could have been and should have been easily corrected years before Norman Rousseau took his own life.

That and all the appalling fraud and deceit that went into the Rousseau's final refinance.

And all the lies they were told and the promises that were broken.

And the many tens of thousands of dollars that were being pillaged and looted all along the way.

This is a snapshot of a completely brainless and totally out of control modern banking practice. I'm sure that none of the institutions or people involved on the banking end believe they actually did anything wrong or that they are in any way responsible for the Rousseau's agony and eventually for Norman Rousseau's suicide. They never think that way. They can't. There are no personal relationships at all in these situations. Everything is objectified and scripts and flowcharts rule. "If this, then that." There is no provision for acknowledging or correcting errors, even simple ones such as mis-keying a payment.

As has long been obvious, all of the incentives for banks and mortgage servicers are aligned toward pushing homeowners into foreclosure. Despite ostensible programs to prevent foreclosure, the financial and corporate-bureaucratic incentives are still toward foreclosure. Consequently, millions of people are still losing their homes every year when it is highly likely that foreclosure is actually the least desirable outcome not just for the homeowner but for everyone involved including the banks and servicers who are incentivised to foreclose.

How many of these cases are due to fraud at the outset, errors along the way, and corporate-bureaucratic blindness is anybody's guess, but I am sure the Rousseau's situation is not unique. I've read too many similar stories.

It's one reason I was an advocate long ago for the nationalization of the banks; they are simply too hidebound, blind and dumb to function on behalf of even themselves let alone on behalf of the People in the current financial climate.

They should be run strictly in the public interest for the duration.  But until somebody with clout picks up that cudgel, we'll continue to encounter tragic stories like that of the Rousseaus.

None of this has to happen.

As for the van, I spent part of the morning in Atwater discussing options with repair folks face to face instead of on the phone. I also drove the van for a short distance, and it was obvious that it wasn't going to make it much farther at all. I got it to the repair shop across the street from where I had left it last Saturday, and when the proprietor saw me drive up and said: "You've got a transmission problem." He explained how he had come to that conclusion when Omar at the first shop had brought the van over for a diagnosis on Monday. I asked about the differential. He said he didn't drive the van, but all the sound he heard when the van was on the lift was coming from the transmission and he thought there was metal on metal (oh yes) requiring a rebuild. I asked him whether he could do it, how soon he could have it ready, and how much he'd charge. He said he most certainly could do it; probably take until until Wednesday of next week, and it would cost X number of dollars (a good deal less than I was anticipating.)  I said, "Let's do it."

The vans that I had been considering as replacements were either sold before I could get to them or they were inappropriate for my needs; as I've said, this red Astro van has been a very good friend on the road for a number of years now. I bought it specifically for the trips back and forth between New Mexico and California, and despite the occasional mechanical problem and infrequent breakdown, it has been a godsend and a jewel. And then I think how lucky I am to be able to write that last sentence at all.

So many Americans don't have the option to just go out and "buy a van" or have it repaired as needed let alone to have a second home in New Mexico to go back and forth to. Those are just a few of the examples of the privileges we have. And when I think about the real struggles so many Americans are facing, struggles that are so far beyond my minor inconveniences (in perspective a broken down van or stalled refinancing are minor inconveniences, yes) I'm humbled.

The Rousseau's story is devastating. That sort of thing is happening to way too many Americans, and there seems to be nothing to thwart the demons of destruction abroad in the land.

Rise up, resist, refuse. It's a start!

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