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OneWest Bank / IndyMac Horror Story: Lender Approves Loan Modification For Couple Several Months After Foreclosing & Giving Them The Boot

Family Approved for Loan Modification After Eviction

Posted: Mar 16, 2010 6:43 PM EDT Updated: Mar 17, 2010 3:45 PM EDT

LAS VEGAS — Gary and Paulette Stelton look through the mortgage paperwork of their old North Las Vegas home.

Last year, Paulette fell ill. Medical expenses swamped them. They tried to renegotiate their home loan with IndyMac Mortgage Services. Instead, IndyMac began foreclosure.

The Steltons now rent a home.

What they didn’t expect was a call from IndyMac this week congratulating them on being approved for a loan modification several months after IndyMac changed the locks.

“I wish the guy would have been here. I would have beat the living hell out of him — I’m sorry. They played games with us each and every month,” said Gary Stelton.

Ian Hirsch, with Fortress Credit Services, says IndyMac is one of the worst banks doing business in Nevada.

“Specifically with IndyMac Bank, I tell people that they have a loan with the devil,” he said.

IndyMac’s parent company says they never evicted the Steltons. They changed the locks after the Stelton’s refused to talk to the bank anymore. After repeated calls by 8 News Now, IndyMac Bank says they will look further into how they can help the Steltons keep their home.

IndyMac’s parent company OneWest Bank also calls the comments from Hirsch “inflammatory” and “confused.”

AP IMPACT: Gov’t bank auditors got big bonuses: Just like the Banksters

Last updated March 18, 2010 5:38 a.m. PT

AP IMPACT: Gov’t bank auditors got big bonuses

By MATT APUZZO
ASSOCIATED PRESS WRITER 

WASHINGTON — Banks weren’t the only ones giving big bonuses in the boom years before the worst financial crisis in generations. The government also was handing out millions of dollars to bank regulators, rewarding “superior” work even as an avalanche of risky mortgages helped create the meltdown.

The payments, detailed in payroll data released to The Associated Press under the Freedom of Information Act, are photothe latest evidence of the government’s false sense of security during the go-go days of the financial boom. Just as bank executives got bonuses despite taking on dangerous amounts of risk, regulators got taxpayer-funded bonuses despite missing or ignoring signs that the system was on the verge of a meltdown.

The bonuses were part of a reward program little known outside the government. Some government regulators got tens of thousands of dollars in perks, boosting their salaries by almost 25 percent. Often, though, rewards amounted to just a few hundred dollars for employees who came up with good ideas.

During the 2003-06 boom, the three agencies that supervise most U.S. banks – the Federal Deposit Insurance Corp., the Office of Thrift Supervision and the Office of the Comptroller of the Currency – gave out at least $19 million in bonuses, records show.

Nearly all that money was spent recognizing “superior” performance. The largest share, more than $8.4 million, went to financial examiners, those employees and managers who scrutinize internal bank documents and sound the first alarms. Analysts, auditors, economists and criminal investigators also got awards.

After the meltdown, the government’s internal investigators surveyed the wreckage of nearly 200 failed banks and repeatedly found that those regulators had not done enough:

-“OTS did not react in a timely and forceful manner to certain repeated indications of problems,” the Treasury Department’s inspector general said of the thrift supervision office following the $2.5 billion collapse of NetBank, the first major bank failure of the economic crisis.

-“OCC did not issue a formal enforcement action in a timely manner and was not aggressive enough in the supervision of ANB in light of the bank’s rapid growth,” the inspector general said of the currency comptroller after the $2.1 billion failure of ANB Financial National Association

-“In retrospect, a stronger supervisory response at earlier examinations may have been prudent,” FDIC’s inspector general concluded following the $1.8 billion collapse of New Frontier Bank.

-“OTS examiners did not identify or sufficiently address the core weaknesses that ultimately caused the thrift to fail until it was too late,” Treasury’s inspector general said regarding IndyMac, which in 2008 became one of the largest bank failures in history. “They believed their supervision was adequate. We disagree.”

-“OCC’s supervision of Omni National Bank was inadequate,” Treasury investigators concluded following Omni’s $956 million failure.

Because most bank inspection records are not public and the government blacked out many of the employee names before releasing the bonus data, it’s impossible to determine how many auditors got bonuses despite working on major banks that failed.

Regulators says it’s unfair to use those missteps, seen with the benefit of hindsight, to suggest any of the bonuses was improper.

“These are meant to motivate employees, have them work hard,” thrift office spokesman William Ruberry said. “The economy has taken a downturn in recent years. I’m not sure that negates the hard work or good ideas of our employees.”

At the OCC, spokesman Kevin Mukri noted that the national banks his agencies regulate generally fared better than others during the financial crisis.

“In making compensation decisions, the OCC is mindful of the need to recruit and retain the very best people, and our merit system is aimed at accomplishing that,” Mukri said. “We also believe it is important to reward those who worked so hard and showed such great professionalism throughout the crisis.”

David Barr, a spokesman for the FDIC, which handed out two-thirds of the bonuses during the boom, had no comment.

In government, as on Wall Street, bonuses are part of the culture. Federal employees can get extra pay for innovative ideas, recruiting new talent or performing exceptional work. Candidates being considered for hard-to-fill jobs may be offered student loan reimbursement or cash bonuses to get them in the door and keep them from leaving.

The bonus data released to the AP does not say specifically why each person received a bonus. For instance, one person in the OCC’s financial examining division got a $41,000 recruitment bonus on top of a $179,000 salary in 2005. In 2006, the last boom year for banks buying risky mortgages, the FDIC gave out more than 2,000 bonuses to financial examiners.

In 2008, the year the market collapsed, OTS gave 96 financial examiners bonuses of up to $3,000 for exceptional work.

At the three regulatory agencies, the value of the bonuses stayed roughly constant from before the banking boom, through the good times and into the collapse. While the total pales in comparison with the billions spent on Wall Street perks, the justification was similar.

“Bonuses were determined based upon the performance and the retention of the people,” said John Thain, the former CEO of Merrill Lynch, the troubled brokerage firm that paid out $3.6 billion in bonuses just before selling itself to Bank of America. “And there is nothing that happened in the world or the economy that would make you say that those were not the right thing to do for the retention and the reward of the people who were performing.”

To be sure, Washington policymakers eased regulations and encouraged banks to write risky loans. Families bought homes they couldn’t afford. Brokers found them mortgages. Bankers quickly snatched them up, never asking whether they could be repaid. And rating agencies certified it all as safe.

But regulators were part of the problem, and the bonuses were a symptom, said Ellen Seidman, a research fellow at the New America Foundation think tank and the former head of OTS from 1997 to 2001.

“Is it probably the case that the standards for evaluating how well people in the regulatory system were doing were not as high as they should have been? Probably,” Seidman said.

But the bigger question, she said, is why government regulators thought they were doing so well: “Why did the system fool itself?”

Countrywide Class Action Suits: Chink In The Armor

Countrywide Class Action Suits

At one point in my life I was a small logging contractor.   Being a wordsmith,  I wrote our original boilerplate contract.  When we started out,  I was quite proud of the fact that I managed to fit it all onto one page … including room for signatures.  I do this for you,  two,  three,  four,  and you do this for me,  two,  three,  four.   Seven years and a couple of lawsuits later when I finally got out of the business,   our contract had been crafted by an attorney and totaled 8 pages.  I used to joke with my partners that if you ever wanted to see what has gone wrong in a man’s business,  read his standard contract.  So it was with that 8 page contract in mind that I did a little research recently into the class action lawsuits that have been filed against Countrywide. Continue reading