City of Oakland Sues Wells Fargo for Discriminatory/Predatory Lending

see http://www.housingwire.com/articles/35126-oakland-sues-wells-fargo-for-mortgage-discrimination

My first suggestion was in 2007 that governmental units sue the big banks for what they were doing to their constituents and government budgets. Nobody was interested. They were all listening to Greenspan and Paulson saying that this was nothing and that it was contained. How do you warn people about the tidal wave when they have turned their back to it?

Had the lawsuits began then, the number of foreclosures would have dropped sharply as the predatory practices and fraudulent practices were revealed — the servicers and trustees would have been revealed as emperors without clothes, and governmental agencies would have taken over the process of cleanup instead of allowing the “servicers” and “trustees” to walk off with the money and the property.

But I now renew my OTHER question: Why would anyone spend hundreds of millions of dollars promoting loans that were guaranteed to fail? And the corollary question: Why would anyone spend hundreds of millions of dollars (remember DiTech and Quicken and the Lending Tree?) promoting loans that carried an interest rate of 2.5%???? At that rate, there is a guaranteed loss from inflation even if the borrower pays!!!

The answer is obvious but few people have really drilled down on this stuff and fewer still have done anything about it.

The answer is that no sane person would want those loans much less promote them through surrogate “originators”.

So the next question is if nobody would do that, how did it get done?

And the answer to that is also obvious,  and we all know about it now — other people’s money (OPM). The big banks were making a fortune buying and selling mortgages they didn’t own with mortgage bonds they didn’t own that were sold as guaranteed, insured, high-rated mortgage backed securities, when they were neither securities nor backed by mortgages.

AND THAT is the beginning of why eminent domain is completely appropriate to seize the loans, share the benefit with investors and kick the servicers and trustees out of the picture. Since the Trusts have zero assets anyway, the Trustee and servicer are legally empowered to do NOTHING. None of them have standing to challenge eminent domain.

Tags: Oakland, Wells Fargo
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