naked capitalism

I’m going to tell one on myself, and since I suspect my reflexes are atypical, I suggest you watch this video by a realtor, Leigh Brown, before reading the balance of the post:

First, I regarded her story as entirely credible. Second, it’s not at all surprising to learn that her video got Bank of America’s attention when going through normal channels didn’t. The Charlotte Observer picked up on her story at about the same time the video and her tweets started getting traction (the bank has “social media monitors” on staff). And the Observer’s account adds some ugly details:

The sale closed on Jan. 27, and the first-time homebuyers, Kacie and Christopher Justice, began moving in. Six days later, on Feb. 2, they noticed unfamiliar men outside their home taking photos.

They wore black shirts with images of handguns on the front and the word “Agent” emblazoned on the back, Kacie Justice said. Their truck was black with tinted windows. “It was just scary,” Justice said.

The men said they were there to perform work on a foreclosed home — on orders from Bank of America. The tasks included removing furniture and capping some exposed wires. The Justices explained they were the new homeowners, and that the home had been a short sale, not a foreclosure.

Now admittedly, the homeowners were lucky enough to intercept the “agents” who are tricked out to look as intimidating as possible (I wonder if they prefer guys with tattoos, scars, and/or teeth missing).

Now why did I debate with myself a bit before posting this story? Some of it is that there are so many variants of servicer-created horrorshows happening in America that I could turn Naked Capitalism programming over entirely to this sort of thing and not even scratch the surface. Given the continued insistence by various banking regulators that banks never never make any mistakes (well, whoops except with HAMP mods and military foreclosures, but trust us, everything else is just fine), I’ve decided to feature more examples to illustrate how patently false the party line is.

But I realized I was weighing how media-genic Brown was. She did a fine job of outlining the basic facts, but her presentation was a tad theatrical, which undermined her credibility. And as someone who learned how to do TV without any media coaching, it takes some practice to get any good at it. Now in this case, that didn’t matter one whit in terms of her succeeding in her immediate aims; the fact that she was arguing someone else’s case, when she had nothing to gain financially from it, and that she wasn’t super polished might have added to her perceived authenticity. So already we see an obstacle for ordinary people, even ones who are pretty shrewd, to getting their stories heard: you need to be able to master the medium of YouTube. And as anyone who has done casting will tell you, it helps to “type out”, as in look and sound like the sort of person other people will trust. Those with, say, a speech impediment or wall-eye or a turban or a lower class accent need not apply.

It was noteworthy to see the chattering classes react to the woes of Washington Post columnist Dana Milbank in trying to undo some force placed insurance foisted on him by, one of the bad tricks servicers play to increase their fee income. And why? Because an organized, educated person (and one who presumably threatened to write about it in the Post before he did) could not get any satisfaction. As Milbank said:

My wife and I are reasonably savvy consumers – she has a brand-name MBA, and I began my career as a business reporter for the Wall Street Journal – but we were no match for a bungling bank. After five months of trying, we still haven’t been able to resolve all of Citibank’s mistakes – nearly all of them, curiously, in the bank’s favor [...]

That so much can go wrong with such a simple refinance doesn’t bode well for the 5.5 million homeowners in default (on top of the 3 million already foreclosed). It’s impossible to know for sure, but by some estimates, half of them are victims of some form of servicers’ errors.

“What happened to you,” Ira Rheingold of the National Association of Consumer Advocates told me, “happens to people every single day.” And it will continue, with its resulting drag on the economy, unless and until the big banks can be brought to heel.

So even though the Brown/Justice tale is a success story of sorts, it still points out the obstacles to abused homeowners getting any satisfaction from almost completely unaccountable servicers. On the one hand, Brown did get the immediate problem resolved for the stressed-out homebuyers. But has Bank of America changed conduct as a result of her video, or Citibank stopped force placing insurance as a result of Milbank’s story? Successful case-by-case strategies do not appear sufficient to get banks to change behavior.

Do I have any suggestions? I wish I did. The powers that be seem to care only about what stories break into the MSM, and local press does not cut it. They reacted with embarrassment and a bit of panic to the robo signing scandal. What is happening in America on a daily basis in servicing land is even more scandalous, but as long as they can pretend it does not exist, they believe they can stand pat.