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Cofrancesco sues East Haven’s Maturo over alleged sex discrimination


City Gumbo

Staff reporter Shahid Abdul-Karim covers the New Haven Housing Authority, New Haven public schools and community management teams. Get the authentic view of diversity in a mixture of hot topics, news, events and community updates.

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Scientology leader David Miscavige’s twin sister faces marijuana charges

The black Dodge Durango was parked next to the house that had been such a problem for St. Petersburg police. Street cop Terrence Nemeth was watching. Shortly before 7 p.m., the Durango went out the back way. It turned into an alley and then drove into the street, nearly hitting an ambulance.

Nemeth stopped it. A middle-aged woman was at the wheel. The officer told her he had seen the car at “a known drug house.”

Could he search it?

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She said yes.

Under the driver’s seat Nemeth found a black vinyl bag with nine cigars, or “blunts,” containing marijuana.

The woman said she didn’t know how it got there. But she slurred her words, belched, smelled of alcohol, and had bloodshot, watery eyes, Nemeth reported. Breath tests showed readings of 0.119 and 0.124, above the 0.08 at which Florida law presumes that someone is unable to safely drive a motor vehicle.

Police charged the driver with misdemeanor marijuana possession, DUI and failure to yield. Nemeth took her to jail.

It probably seemed a routine arrest. But the woman was Denise Gentile, and in her world, this was anything but routine.

Gentile, of Clearwater, is a well-known Scientologist and the twin sister of the church’s worldwide leader, David Miscavige.

Her marijuana arrest is messy for the church because Scientologists have zero tolerance for mind-altering substances. They believe street drugs and psychiatric medicines make spiritual growth impossible.

“The single most destructive element present in our current culture,” church founder L. Ron Hubbard wrote, “is drugs.”

The church treatise What Is Scientology? flatly states: “Scientologists are … drug-free (none at all use illegal street drugs).”

Gentile’s pot bust has remained a secret. But it is just the beginning of the story.

Miscavige’s sister has been involved with drug users and drug sellers for years, an investigation by the Tampa Bay Times reveals.

Her husband, Gerald Gentile, owned the “drug house” his wife was seen leaving on Jan. 22. Denise Gentile collected rents from tenants in the four rental units. They called her “Miss Denise.”

She knew some residents used and sold drugs, but did nothing to stop it, former tenants said.

Drug sales at the Gentile property got so bad police raided it twice in 14 months, busting up a marijuana den and what police called a cocaine sales operation.

The city contacted the Gentiles after the first raid, insisting they curb the drug activity. But the sales continued, according to police and former residents.

Miss Denise kept coming by, demanding money. And former tenants said she left with more than cash.

• • •

Denise Gentile, 53, has pleaded not guilty. She is fighting the marijuana and DUI charges with the help of Tampa criminal defense attorney Jo Ann Palchak. Palchak is an associate at Zuckerman Spaeder, a firm the church has hired to represent it in court. She would not say who is paying for Gentile’s defense.

Gentile’s pretrial hearing is July 25. Neither she nor her husband has a criminal record in Florida.

Both declined to be interviewed. But Palchak said Denise “summarily denies any allegation that she received contraband from anyone.” The lawyer said Denise had no knowledge of drug activity at the property.

A summary of the Times’ findings sent to the Gentiles “contains numerous inaccuracies which are shocking, hurtful and defamatory,” Palchak said.

The church and David Miscavige declined to comment. “The church does not discuss Mr. Miscavige’s family as it would be inappropriate to do so,” spokeswoman Karin Pouw said.

• • •

The house at 620 15th St. N and its three detached apartments at 620 ½ were painted bedroom-blue. They stood out in the frayed neighborhood west of St. Anthony’s Hospital.

Gerald Gentile, an electrical engineer, bought them in 2005, when property values were soaring. He financed the purchase with a $157,250 mortgage. Monthly payments were $917.

Rents easily surpassed that.

Tenants in the house paid $675 a month. The ground floor apartment in the duplex rented for $500. The slightly larger unit upstairs fetched $625.

Roreco Currie — everybody calls him Rico — paid $500 to live in the cottage by the alley.

Miss Denise stopped by nearly every month to collect rents. She asked tenants for a separate payment for the water, sewer and trash bills, which usually were less than $100 per unit.

“She was very nice,” Currie said. He knew she lived in Clearwater but didn’t know she was a Scientologist, let alone a member of its first family.

For a while, he covered the rent with disability payments he got for sickle cell disease. When that money ran out, he tried selling T-shirts, socks and snacks on Dr. Martin Luther King Jr. Street. But the city chased away street vendors. He fell behind.

“I was about to get kicked out,” said Currie, 36. “What I did, I just started selling some marijuana back in that apartment.” Dealing allowed him to stay.

The upstairs apartment in the duplex came open in 2010. Currie moved in, but kept the cottage. Total rent: $1,000.

He now was on-site property manager. He cut the grass and trimmed the bushes. Tenants went to him about leaky faucets and broken appliances.

Miss Denise knew he was smoking and selling marijuana, Currie said.

“Every time she would come, people would be coming and knock,” Currie said. “I was trying to keep everything discreet. But she kind of figured it out. She asked me what I was selling. I told her.”

The enterprising tenant turned the cottage into a party house. Strippers danced after midnight. People paid $10 to get in — and more after that.

“To see one of the girls in the back house, on a pole or whatever, they had to come by and buy some liquor,” Currie said. Guests paid the dancers by throwing money on the floor.

Currie did business by appointment only.

“You’re not just going to walk up and knock and purchase something. That’s just not happening.”

• • •

Small cigars called blunts are cheap, sold everywhere and easily converted into marijuana joints.

Currie was smoking one on the steps of his upstairs apartment when his landlord walked up.

“She asked me, did I have any more?”

“I told her, ‘Yeah.’ “

That night, Denise phoned him, Currie said, asking what he had been smoking. He told her.

“She was like, ‘Well, can you hook me up?’ “

Denise paid for blunts with rent money Currie handed her in an envelope, he said.

“She would sit in her car, count it. But then she’d say, ‘You got any cigs?’ ” She would give him $30 or $40 for a few blunts, he said.

He soon proposed a new arrangement. He’d pay the water bills with blunts instead of cash. A blunt was worth $10, he told her, so he’d give her 15 for a $150 water bill. He paid his bill with marijuana for months, he said.

Denise often called or texted to alert him she was coming by.

“I’d ask, how did she want it? Half money and half cigs?’

“She’d say, ‘Can I have it all in cigs?’ “

A couple of times, she bought hydroponic blunts. They were $20. Currie sold her just two or three at a time. He paid the rest of his water bill with regular pot.

Currie said he gave Denise 10 to 20 marijuana blunts nearly every month from summer 2011 until he was arrested and jailed in October 2012.

“It was a monthly thing,” he said. Weed for the water bill.

He said he never smoked marijuana with Miss Denise, but she once mentioned a previous batch hadn’t tasted good, he said.

“Denise is not a bad person,” he said. “She just came around to collect our rent. I don’t fault her. She helped me out.”

• • •

Denise Miscavige’s bloodlines afford her near-nobility status in Scientology circles.

Her father, Ronald Miscavige Sr., a trumpet player and salesman in the Philadelphia area, first tried Scientology “auditing” in the early 1970s. The one-on-one counseling sessions are said to help Scientologists purge from their “reactive mind” negative images believed to be causing emotional or physical pain.

The elder Miscavige saw such benefit he and his wife moved their four children to England for several months to study and train at a Scientology facility outside London. Twins Denise and David, in their early teens, became auditors before the family returned to Philadelphia.

On his 16th birthday, David dropped out of high school and left home to work full time for the church. He told the Times in a 1998 interview he did it, in part, because he was “appalled” at the drug use among his classmates.

Denise finished high school and later married Scientologist Robert Covington. They settled in New Hampshire and had two daughters.

David Miscavige quickly ascended in Scientology, working alongside Hubbard. When the founder died in 1986, Miscavige, just 25, took over the church. Now, anyone named Miscavige had prestige.

Denise’s clout was evident in the mid 1990s when she and her second husband, Scientologist Sam Licciardi, moved from New Hampshire to Clearwater to work for a Scientologist.

Brian Zwan had started the technology company, Digital Lightwave, a maker of fiber optic testing equipment whose stock price soared during the dot-com boom. He elevated Denise, who hadn’t attended college, to vice president of administration and gave her a $123,000 salary three months after hiring her.

Two years later, Denise got caught up in a scandal. Partially filled boxes and unassembled equipment had been shipped to give the impression a $9 million order had been filled. Digital Lightwave executives pressured Zwan to fire her. He refused, noting “whose sister she is,” the Times reported in 2002, quoting a former Digital executive.

She negotiated her severance package: One year’s salary, three cellphones, a laptop and forgiveness of a $71,000 company loan.

In 2000, Denise married Jerry Gentile, whom she had met at Digital Lightwave when both were married to other people. They moved to Maryland for two years, had a daughter, then returned to Clearwater, where the Flag Land Base, Scientology’s spiritual headquarters, dominates the downtown skyline.

Jerry joined the church. He commuted weekly to a technology job in Maryland. Denise worked at a small Scientology mission in Belleair. An “ethics officer,” she coached church members making amends for inappropriate behavior.

• • •

Denise had progressed far up Scientology’s spiritual ladder. She was an “Operating Thetan VI,” two levels from the top of Hubbard’s Bridge to Total Freedom. She would have been well versed in Scientology teachings, including the dangers of drugs.

Hubbard once wrote: “The planet has hit a barrier which prevents any widespread social progress — drugs and other biochemical substances. These can put people into a condition which not only prohibits and destroys physical health but which can prevent any stable advancement in mental or spiritual well-being.”

His words have inspired Scientologists to back a drug education campaign the church says is one of the largest in the world.

Scientologists donate money and volunteer to distribute millions of free, nonreligious booklets and DVDs warning of the perils of drug use, including marijuana. The Foundation for a Drug-Free World spent more than $2 million in the last five years, according to IRS records.

The church says “The Truth About Drugs” materials — translated into 17 languages — are now in more than 180 countries.

“We are the authorities,” Tom Cruise declared, “on getting people off drugs.”

• • •

Denise worked at the Belleair mission less than a year, but continued to enjoy special status in the church. As a member of the Miscavige family, she was on Flag’s “President’s List.” Scientology celebrities, such as actors Cruise and John Travolta, are on it, as are the church’s biggest financial donors. President’s List visitors receive you-want-it-you-get-it attention.

In 2006, Denise started taking classes at Flag to become an auditor again. One of the people she audited during training was Scientologist Tom Brennan, a handyman who worked at her rentals.

In February 2007, Brennan told Denise he was concerned about his son, Kyle, 20, who was visiting from Virginia. Kyle didn’t look good and had been seeing a psychiatrist, he told Denise. Scientologists believe psychiatry and psychotropic drugs are evil — like street drugs.

Denise thought Kyle may have gotten hooked on street drugs. Brennan and Denise phoned Kyle’s mother and urged her to send him to Narconon, the drug treatment program affiliated with the church. Kyle’s mother refused. (All of this was later recounted in sworn testimony from Denise and Brennan.)

Thomas Brennan locked Kyle’s antidepressant medication, Lexapro, in his car trunk. Brennan later found Kyle dead of a gunshot wound in his apartment.

The first person Brennan called was Denise Gentile. Then he called 911.

Clearwater police ruled the death a suicide. Kyle’s mother, who is not a Scientologist, filed a wrongful death lawsuit against the Gentiles, Brennan and Scientology’s Flag Service Organization. She alleged the Gentiles persuaded Brennan to take away Kyle’s medication, contributing to his death.

The suit was dismissed in 2011, in part because Brennan said his son voluntarily turned over his medicine.

• • •

Denise and Jerry Gentile began investing heavily in real estate in the boom years of the mid 2000s.

They bought a rental house in Clearwater in 2003 and four more in the Clearwater-Largo area in 2004. In 2005, they bought five more rental properties in Pinellas, including the house, duplex and cottage on 15th Street N in St. Petersburg. Denise managed the properties.

In 2008, the U.S. housing market collapsed, and suddenly the Gentiles’ properties were worth far less than their mortgaged amounts. The couple defaulted on five properties from 2009 to 2011. All went into foreclosure.

“The Gentiles find themselves in the same housing market as other people in this country,” said Palchak, Denise’s lawyer.

By 2011, the St. Petersburg rentals were in rough shape. Code inspectors found decayed wood inside and outside the units. Floor tiles were missing. Refrigerators were broken. Electrical outlets were missing. Walls were cracked or damaged by water. Doors needed knobs.

The city sent Jerry Gentile a violation notice in August, giving him three weeks to make repairs. That month, he stopped making mortgage payments.

Rico Currie was still around. He and his new girlfriend, Shauton Hines, had moved into the house fronting 15th Street. They had a young son.

“Miss Denise would come in and pick my son up, hold him and squeeze him and squeeze his cheeks,” Currie said.

“She would come by and give him toys and clothes.”

Currie asked Denise to be the child’s godmother.

His marijuana buyers still came to the cottage. Buyers also were knocking on the door of the lower unit of the duplex. Currie’s friend, Demetrius Jackson — nickname: Meat — had moved in there.

Meat paid his $500 rent directly to Miss Denise. He did not pay with pot, Currie said.

But an informant told police large amounts of marijuana were being sold in the apartment.

Undercover detectives saw “heavy foot and vehicle traffic coming to and from the residence,” a detective wrote in a lengthy affidavit.

Police sent in an undercover buyer on two occasions. He reported seeing large amounts of marijuana on a table.

Cops raided the duplex on a Thursday afternoon in October 2011. They found packages of marijuana on a desk, crack cocaine on the kitchen counter and a .38-caliber revolver hidden in the cushions of a couch.

They arrested Jackson, then 35, and two other men who had small amounts of cocaine in their pants pockets. (Jackson did not respond to an interview request.)

When police left the rentals, Currie called Miss Denise.

“She just said: ‘Wow. Is everybody all right?’

“I told her: ‘Yeah, everybody is cool.’ “

On Dec. 29, 2011, St. Petersburg police legal adviser Donald Gibson contacted Jerry Gentile by letter, saying police had served a search warrant and documented drug activity. Gibson told Gentile he “must … alleviate the issues arising from this property.”

Palchak said Denise never got that letter. But according to Lisa Ledbetter, a nuisance abatement coordinator, Denise called and left a message referencing the letter. Ledbetter still has a desk note documenting the call.

Ledbetter said she left a message in return, but the Gentiles didn’t call back.

• • •

St. Petersburg police arrested Rico Currie in October 2012 on several charges, some dating back months. One count alleged he sold cocaine to a woman out of the house.

He pleaded guilty to fleeing and eluding, driving with a suspended license, aggravated assault on a law enforcement officer, possession of marijuana, tampering with evidence and possession and sale of cocaine. He is serving a 38-month sentence at the Tomoka Correctional Institution in Daytona Beach. The Times interviewed him there this month.

When Currie went to jail, his girlfriend, Hines, stayed in the house. A married couple, Reginald and Lashawnria McRae, whom Currie had recruited to rent the raided unit, stayed on, too.

“We had a lot of people knocking at our door that we didn’t even know,” Reginald McRae said.

“At 3 and 4 o’clock in the morning,” added his wife.

They were marijuana buyers, Currie said. But the McRaes didn’t have what they wanted. The buyers simply saw the TV on and figured they could score.

“That’s the only reason they were knocking on the door like that,” Currie said. “For the weed.”

One day, McRae walked out his door, bound for the corner store. The upstairs tenant hollered down at him.

Get me 20 blunts.

McRae brought back Swisher Sweets. He stayed in the apartment long enough to watch his neighbor cut them open, stuff one blunt with marijuana, roll it and drop it in a clear plastic bag.

Miss Denise was parked beside the duplex. “She was waiting on that marijuana,” McRae said.

“They came (downstairs) with a baggie with all this marijuana in it and just handed her the marijuana and whatever money they had,” he said.

The McRaes — he is 46, she is 31 — moved out New Year’s Eve.

They did not have hot water during the nine months they lived at the Gentiles’ property.

• • •

Police raided the rentals a second time just before Christmas 2012. They charged a St. Petersburg man with operating a drug house and said they found crack, pot, oxycodone and a Glock handgun in the cottage.

Two raids in 14 months. Drug buyers knocking at all hours. Cops on stakeout. Guns hidden in furniture. Windows boarded up. Two tenants convicted of drug dealing. Another tenant accused of dealing.

After all that, and only three weeks before the Feb. 15 foreclosure sale, Denise Gentile paid another visit to the property. Then, flashing lights.

After Officer Nemeth searched the Durango, Denise told him she had stopped at a house she used to own and gone upstairs.

Someone must have put marijuana in her car, she told Nemeth. She never lent the car to anyone.

She said she had not smoked marijuana in 10 years, Nemeth reported.

• • •

The tenants interviewed by the Times knew nothing about the Gentiles’ vaunted status in the church, and weren’t aware of Scientology’s hatred of drugs.

They said they never saw any antidrug literature. They never heard Denise or Jerry Gentile say drugs are bad.

They said they never heard the Gentiles say the word “Scientology.”

That’s not how Scientologists are taught to deal with drug users.

They are supposed to “handle” them — persuade them to stop using — or cut off ties with them.

Denise said so in a sworn statement.

Her comments came during a deposition she gave in the Kyle Brennan wrongful death suit in July 2010. Tampa lawyer Ken Dandar asked for her understanding of the Scientology term “potential trouble source.”

“That is somebody who is connected to somebody else who is antagonistic to that person’s well-being,” Denise said.

Dandar pressed, and Denise explained that a Scientologist has two ways to deal with a trouble source: handle or disconnect.

“If a Scientologist in good standing … is connected to a” —

“Drug pusher,” Denise said, finishing his sentence.

“Drug pusher?” Dandar asked.

“Absolutely disconnect,” she said.

Joe Childs can be reached at Times researcher Caryn Baird contributed to this report.

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Brennan’s Family Feud Unsettled in Wake of Eviction

Brennan’s employees after eviction

The family feud that flambéed with Friday’s shuttering of Brennan’s Restaurant isn’t over just because the Royal Street eatery isn’t serving its famed breakfast on Saturday morning. In fact, the eviction papers have only shined public light on another family member who recently entered the fold. Ralph Brennan, a cousin of the family who owned the famed restaurant and maintains his own independent restaurant business, is a key player in the company that took control of Brennan’s at a sheriff’s sale auction in May.


That means Ralph Brennan, who owns New Orleans eateries such as Ralph’s on the Park, Mr. B’s Bistro and Redfish Grill, essentially evicted his own family members – Owen “Pip” Brennan and his sons Clarke and Blake — from the restaurant on Friday. The restaurant was sold at sheriff’s sale on May 23 to LEGGO 4 LLC. Ralph Brennan is a partner in LEGGO 4, along with local businessman Hunter White.


Employees showed up at the restaurant, located at 415 Royal St., on Friday morning to find the doors locked, and collected their last checks. An employee told NoDef a sheriff’s office official came to the restaurant and locked the doors at 4 p.m. Thursday. According to court documents filed by Owen “Pip” Brennan, LEGGO issued an eviction notice to Brennan’s nearly 10 days earlier, on June 19.


That inserts Ralph Brennan into an ongoing battle between his cousins Ted Brennan, who ran Brennan’s Restaurant in the immediate wake of the Federal Flood with his daughter Bridget Brennan Tyrell, and Owen “Pip” Brennan, who took control of the restaurant just before the Sheriff’s sale auction.


In the run-up to the sheriff’s sale, Owen “Pip” Brennan had been attempting to oust his brother Ted from control of the business. The feud culminated in a dramatic scene at the restaurant on April 26. Police had to be called in after Pip Brennan held a shareholder’s meeting during which he said he was voted into control of the company. However, a judge later nixed that power grab, leaving Ted Brennan at the helm. After the sheriff’s sale, however, Owen “Pip” Brennan was able to get control of the company.


In a lawsuit filed in federal court on June 19, Pip Brennan — who was owed $2 million by Brennan’s since selling his shares in 2010 – accuses Ted Brennan of not doing enough to stop the foreclosure. Pip Brennan filed for a temporary injunction to stop the sale from going forward. A judge granted the injunction, but said Brennan’s would need to post a $150,000 bond to stop the sale. Ted and Bridget Brennan didn’t post the bond, the lawsuit states.


Pip Brennan’s lawsuit further states that Ted and Bridget Brennan were in talks with Ralph Brennan and LEGGO prior to the foreclosure. Given Ralph Brennan’s position as a restauranteur, it’s possible to see this as a move designed to save the family business. However, Pip Brennan paints the talks in a negative light.


“On the day of the foreclosure, Bridget Tyrell made a call to a member of Pip Brennan’s family chastising them for attempting to stop the foreclosure proceeding,” the lawsuit states. “Bridget Tyrell announced it was the plan of Ted Brennan, Bridget Tyrell and third parties to allow the foreclosure proceedings to go through.”


The lawsuit also states no lawyer for Brennan’s was present at the sheriff’s sale.


As a result, the lawsuit states, Ted and Bridget Brennan directly contributed to the inability of the family business to pay off its debts. As a result, Pip Brennan said he is entitled to the return of money equal to the value of the restaurant, or the building itself. The lawsuit remains pending in federal court.


Even with a Brennan remaining in the ownership role, the restaurant’s future remains unclear. A lawyer for White at Brennan’s Restaurant and a spokeswoman for Ralph Brennan Restaurant Group declined comment Friday.


Stephen Babcock contributed reporting.

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How a Loan Modification Can Help You Avoid Foreclosure

The 2008 subprime mortgage crisis and ensuing collapse of the housing bubble wreaked havoc on the American economy. While the situation has improved somewhat in recent months, not too long ago a Harris Poll found that that 22% of people with mortgages were struggling to make payments, including some 7% who were having “a great deal of difficulty”.

If you count yourself among the millions of Americans who are drowning in mortgage debt, you may be interested to know there is a solution that can help you avoid foreclosure, lower your payments and keep your home. It’s called a loan modification.

What Is a Loan Modification?

A loan modification is exactly what the name implies: It is a modification of your mortgage loan, either through an adjustment to your interest rate, a lengthening of your loan term or adjustments to other loan parameters, such as mortgage insurance, escrow, etc. By modifying any one or more of your loan parameters, your mortgage payment can once again be made affordable.

A Loan Modification Scenario

A starting loan balance of $200,000 amortized on a 30-year term at 8% would equate to a monthly principle + interest payment of $1,467.53. Let’s say the homeowner has already paid 5 years, always on-time and has a remaining balance of $189,939. Recently, a loss of income caused the homeowner to struggle financially. In this case, the bank might offer to lower the borrower’s interest rate to 4 percent, and stretch the remaining loan term back out to 30 years. In such a scenario, the new principle + interest payment would be just $906.80, or s monthly savings of approximately $560. For most Americans, this is not a trivial amount of money. This is just one example of how a loan modification might work, although there could be many others.

Be Careful

History has already shown that not all loan modifications are created equal. It is possible that your new loan might only postpone the inevitable if not done in a way that addresses the constraints of your financial situation. Indeed, this has been the case for many homeowners who had their loans modified, only to realize their new loan terms weren’t sufficient to keep them out of financial hot water yet again at a later point.

In response to this widespread phenomenon, the Obama Administration announced important enhancements to the Home Affordable Modification Program, also known as HAMP in February, 2012. These enhancements expanded the reach of the program to help homeowners in hard-hit communities to stay in their home.

Tips for Getting the Right Kind of Loan Modification

It’s not enough to get a loan modification. You must ensure that your new loan is not just a temporary solution.

Don’t put it off. Loan modifications were historically reserved for homeowners who had already defaulted on their loans, typically by 90 days or more. This is increasingly no longer the case at many financial institutions. While some loan servicers stipulate that borrowers be at least 30 days late, it is not always the case. Regardless of whether you are late, it is never too soon to contact your loan servicer or lender to find their requirements for a loan modification. One important fact: Federal assistance programs do not require that homeowners be in default before seeking help.

Should You Seek Professional Help?

Mortgage loans are inherently confusing for many people. Deciding whether or not to seek the help of a professional is not always an easy task. Should you seek the advice of an attorney? What about a nonprofit organization, or even a federally funded housing counseling agency? Do you have the time and knowledge to pursue a loan modification on your own? These are all good questions. And the answers may vary depending on your specific circumstances.

In general, it is wise to seek the help of a knowledgeable professional, although it is not always necessary, especially if you already have a good grasp of how mortgage loans work. Many HUD-approved counseling agencies can guide you through the process and don’t charge for their services.

In fact, the FTC recently issued a final rule to protect struggling homeowners from mortgage relief scams. Under the MARS Rule, “mortgage relief companies may not collect any fees until they have provided consumers with a written offer from their lender or servicer that the consumer decides is acceptable, and a written document from the lender or servicer describing the key changes to the mortgage that would result if the consumer accepts the offer. The companies also must remind consumers of their right to reject the offer without any charge.”

Spending a few thousand dollars on an attorney who specializes in these types of issues can be money well-spent if it ensures you don’t wind up with another bad loan. There is no shortage of loan-modification scams out there. Be sure to not disclose any bank-account information to any party other than your mortgage lender or servicer.

Find out Who Your Lender Is

Dealing directly with your lender is your best hope of getting the most flexible loan terms, since your lender doesn’t need anyone else’s approval. But in the modern mortgage era, where loans are so often sliced and diced, and then packaged into mortgage securities, it can be anything but obvious as to who owns your loan. The best way to find out who owns your loan is to ask your loan servicer. Your servicer’s number can typically be found on your payment coupons or monthly statements. You should also be able to find your servicer’s contact info online. Also, your lender may participate in the Making Home Affordable program. The purpose of the Making Home Affordable program is to help about 9 million American homeowners. While participation in this program is left to the loan servicer, most major servicers do participate in the program to some extent. An updated list of participating loan servicers and lenders can be found on the Making Home Affordable program website.

Don’t Bend the Truth

Once are in communication with your lender, and have begun the process of applying for a loan modification it will be necessary to gather some information and documentation. You lender needs to get an accurate picture of your financial situation in order to determine if a loan modification is right for you, and if so, how to structure the loan so that it best addresses your financial needs. People are sometimes tempted to fudge the numbers a bit, or exaggerate certain things in order to convince the lender that you should be approved for a loan modification. Or, some borrowers are embarrassed by some past mistake which led to the financial predicament in which they find themselves. Whatever the reason, it is unwise to misrepresent anything, no matter how small. It will be counter-productive in the end, and only slow things down.

Gather Your Documentation

Your lender will ask for supporting documentation, proving your income, expenses and other liabilities. It is a good idea to gather this documentation as soon as possible. Here are some examples of the types of documentation you will most likely need.

  • Income documents, such as your most recent paycheck stubs, showing your gross, monthly, pre-tax income, and any other gross income received.
  • Your most recent 1-2 years’ worth of tax returns, including all schedules.
  • Bank statements showing account balances.
  • Other financial statements showing the value of assets, such as stocks, bonds, annuities, etc.
  • Mortgage statements such as those for a second or third mortgage, home equity line of credit, etc.
  • Monthly credit card statements, showing all balances owed and payment information.
  • Other documents showing balances and payments on such obligations as car loans, student loans, etc.
  • A letter explaining what events and circumstances led to your financial predicament. Divorce, death in the family, job loss, and health problems are all examples of traumatic life events outside the borrower’s control.

How to Write a Hardship Letter

As mentioned, you will have to write a hardship letter describing what caused your current situation. The importance of this letter should not be underestimated, and as such, it should be very well written. A well written letter should stick to the facts, and present a timeline of events that coincide with the progression of the financial hardship. If after reading your letter the lender still can’t determine why you fell behind on your mortgage then they may suspect there is something more going on. So try to be as specific as possible, connecting the dots, so to speak, so your lender can see exactly how certain events coincided with, and directly contributed to, your current situation. One final tip: Stick only to the facts and be concise. A few paragraphs are easier to read and require less patience on the part of your lender compared to a 10-page letter.

Talk to the Right People

One of the most commonly cited problems among homeowners who had gone through the loan modification process is finding the right person to talk to. For anyone going at it alone, make sure you’re in the right department first and foremost. Talking to someone in collections, for example, will do no good when you really need to be talking to someone in your lender’s loss mitigation department. This may sound like common sense, but it is an easy thing to get wrong if you’re not specifically aware of it.

Don’t Set Your Sights Too High

It is a hard reality to accept, but you have very little control over the loan modification process, including the terms of your modified loan. Once you have presented all documentation necessary to make a determination, any offer to modify your loan is solely made at your lender’s discretion. This is not to say you have no influence whatsoever. But keep in mind that your lender’s goal is to make as much money over the lifetime of the loan as possible, while at the same time allowing you to stay in the home. This is most typically achieved by lower your interest rate, and possible extending the loan term. If the proposed, new loan is still too high, and you can present a convincing argument in support thereof, then don’t feel as though you must sign on to the new loan. In making your case, be sure to present specific details showing how the proposed loan still leave you financially vulnerable. Whether you are working with a professional or on your own, just present the crunched numbers and make a case for why a different payment would work better. Remember, foreclosure is expensive process and your lender would prefer not to get stuck with an empty home.

Stay Cool

For you, a loan modification is personal, since it affects your life. For your lender, it’s strictly business. Anger and frustration are understandable reactions when dealing with your lender. But while understandable, such behavior does not serve your best interests. Remember that the loan-modification officer you’re dealing with has feelings too, and probably deals with angry people all day long. You don’t want to give him or her any excuse to ‘accidentally’ lose some important document, or forget to accomplish some important task related to your loan modification. Even if you feel you have good cause to be upset it is important to stay cool and collected. If and when the time arrives to negotiate more flexible terms you will be glad you maintained good relations with your loan modification officer. It may sound like common sense, but it’s important to realize that people want to help people they perceive as nice.

Contact Your Congressman or Congresswoman

If your lender refuses to work with you or is giving you the runaround, consider enlisting the help of you congressman or congresswoman. Believe it or not, this is a tactic that can produce results when progress is being held back due to inaction or irresponsibility on the part of your lender. Politicians like to keep their constituents happy, and employ staff to assist in dealing with all manner of issues. Enlisting the help of your congress person should not be a first resort. But when all else fails, and an impasse has been reached, it is something worth trying.

Document Everything

Leaving a paper trail and documenting everything is wise should legal action be required at any future point. Keep all documentation sent to you by your lender. Make detailed notes as to whom you talked to and when. For example, “Spoke with Tom Smith, agent number 123, on June 30, 2012 at 3: 30 p.m.” Try to get your lender representative to send a recap of your conversation in an email message. By documenting everything, you can work with an attorney to build a case that you tried to work with your lender to find a solution should you face foreclosure at a later time. Plus, keeping track of everything and staying organized just makes life easier and helps you be efficient in your dealings with your lender. Whenever you need to mail anything to your lender, be sure to use some trackable means of deliver, such as certified mail, FedEx, UPS or even U.S. Postal Priority mail. This ensures you can prove that documents were received by your lender, and on what day/time. Sure, it costs more to send things this way, but in the end it is your best protection against your lender claiming to have never received something you sent.

Be Patient, Be Perseverant

When you are drowning financially patience can be hard to come by. It helps to realize from the start that most loan modifications can take as long as 90 days to complete. Your lender should be able to give you a ballpark idea as to how long yours should take, based on its own caseload and average processing time. If at first you are told “no” don’t be afraid to ask again, even if it means calling and asking to speak with someone else, perhaps a supervisor. People make mistakes, and it is possible if you were told “no”, that it was in error. It can take a certain amount of perseverance when dealing with a large organization, especially when the system is complex and has many moving parts. Be sure to get a timeline when you start the process. Understand the milestones that must be achieved, and then follow up accordingly, always adhering to deadlines as they arrive, especially when you have heard nothing from your lender.

Final thoughts

If there’s one thing about life you can be sure of it is that there will be adversity. How you handle adversity is what’s important. When facing any big challenge, it often helps to break it down into smaller, more manageable challenges—“baby steps” if you will. A loan modification is really nothing more than a series of small challenges that must be dealt with one by one. As an ancient poet once said, “A journey of a thousand miles begins with a single step.”

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LA settles foreclosure case with Deutsche Bank – KMPH FOX 26 | Central San …

LOS ANGELES (AP) – Los Angeles city officials say they’ve settled a lawsuit they brought against Deutsche Bank over foreclosures for $10 million.

The Los Angeles Times reports ( ) the city had accused the Germany-based bank of neglecting foreclosed properties in a 2011 suit seeking hundreds of millions of dollars in penalties and restitution.

About 2,000 foreclosed homes in the San Fernando Valley, South Los Angeles and other areas fell into squalor, with many becoming graffiti-scarred dens for squatters and criminals.

The bank admitted no wrongdoing in the settlement and has maintained that prosecutors were going after the wrong party. They said loan servicers are contractually responsible for maintenance of foreclosed homes.

City officials say the bank will, however, ensure foreclosed properties are well-maintained in Los Angeles as part of the settlement.

Information from: Los Angeles Times,

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Revamped foreclosure policies looming

Posted on by Rick Tarsitano

The Michigan State Senate has not lived up to Governor Snyder’s expectations in recent weeks, opting for vacation instead of voting on vital bills.

However, one bill, comprised of 4 pieces of legislation tie-barred together, did make it through before recess and now it’s sitting on Snyder’s desk waiting for a verdict.

ABC 10′s Rick Tarsitano has more on the possibility of new regulations in the foreclosure process.

For decades, Michigan has been lauded as state with reasonable and balanced foreclosure policies.

Legislators lived up to that billing in December of 2008 when the housing bubble burst, acting quickly to pass new foreclosure laws.

Five months later they had new mandates in place, which required banks to inform families in writing that they were going into foreclosure and that the bank had an obligation to meet with the family to work out a loan modification or mortgage extension.

It was dubbed the 90-day law due to the fact that it set up an unprecedented 3-month pre-foreclosure period where banks, homeowners, and a Michigan Housing Development Authority Counselor could work together to reconcile the situation and avoid foreclosure; a near death sentence for someone’s credit rating.

“Foreclosure is going to show up on a person’s credit report for a long time. A short sale doesn’t. A short sale shows their was a mortgage that was paid off,” explained Terry Huffman, a Realtor and Certified Distressed Property Expert at RE/MAX.

But short sales take time.

In the past year, REMAX closed 631 properties in Marquette County, 52 of which were foreclosures with six going into a short sale.

Of those 6, the average time on the market was 258 days compared to 155 for a traditional sale.

“So it’s about three months longer to a short sale and often times a buyer’s not willing to wait that out. Often times a buyer has moved into town, they’re here to buy a house, and they want to get into it in 30 to 45 days. It kind of exempts a lot of people who are in the buying pool from even considering a short sale,” Huffman noted.

And the buyer isn’t the only party that needs time to mull things over.

Lenders sift through hundreds of pages of tax forms, financial reports and other personal information.

“It all boils down to someone making a decision as to whether or not that’s the best case scenario for the lender. Sometimes foreclosure is the best case scenario for the lender.

In the past, that might not be the end of the world for the homeowner. They would still have a 6 month redemption period to challenge the foreclosure for being fraudulent or at least make the necessary arrangements to come up with enough money to save the home or make the transition to a new location.

But starting June 30th, the redemption period can shrink from 6 months to less than two weeks.

With the new legislation, banks and lenders can come to the foreclosed property unannounced as many times as they want and check for a laundry list of items including debris in the front yard. If anything fits the bill they can have the homeowners evicted in ten days time – a power that no other state allows. Organizations like the Michigan Foreclosure Task Force believe this will lead to more foreclosures that turn into vacant homes thereby decreasing property values and tax revenues in the neighborhood.

The bill made it through the house strictly on party lines and narrowly passed through the Senate with the support of Tom Casperson and Howard Walker

Now, it hangs in the balance on Governor Snyder’s desk. His decision will be enacted on July 1st. If you’d like to voice your opinion call the governor’s office and recommend which way he should vote on Senate Bill 383.

This entry was posted in Local News. Bookmark the permalink.

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Deutsche Bank settles LA claims on foreclosure blight

Sat Jun 29, 2013 7:20am EDT

FRANKFURT (Reuters) – Deutsche Bank said it has settled a lawsuit with the U.S. city of Los Angeles that accused the bank of allowing hundreds of foreclosed properties to deteriorate into slum conditions and destabilize communities.

“The settlement will be paid by the (loan) servicers responsible for the Los Angeles properties at issue and by the securitization trusts that hold the properties,” the bank said in a statement late on Friday.

“Deutsche Bank is not contributing any funds toward the settlement,” it said, without disclosing any financial details.

“Deutsche Bank did not admit any liability or wrongdoing as part of the settlement, and continues to dispute the claims asserted by the City,” it added.

A statement from Los Angeles City said it has secured $10 million in civil penalties as part of settlement of the lawsuit it filed in May 2011.

During the housing boom and subsequent bust, Deutsche Bank subsidiaries acquired more than 2,000 properties in Los Angeles, according to the city’s 2011 civil enforcement action.

The city accused Deutsche of becoming one of its largest “slumlords,” allowing vacant properties to turn into nuisances, neglecting to maintain occupied properties, and illegally evicting low-income tenants to clear the way for a sale.

Los Angeles is one of many cities in the United States grappling with the problem of blighted properties after a wave of foreclosures that followed the housing bust.

It has passed a law requiring banks to fix the blighted homes they own, or pay a fine, but enforcing that has proven difficult.

In April this year a judge denied Deutsche Bank’s bid to dismiss the lawsuit, allowing Los Angeles to proceed with its case.

(Reporting By Marilyn Gerlach; Editing by David Cowell)

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Cofrancesco sues Maturo over alleged sex discrimination


City Gumbo

Staff reporter Shahid Abdul-Karim covers the New Haven Housing Authority, New Haven public schools and community management teams. Get the authentic view of diversity in a mixture of hot topics, news, events and community updates.

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Distorted Housing Market Gives False Hope

The housing market’s rebound is being misconstrued as a real recovery, and there’s more here than meets the eye, especially as unemployment is stubbornly high, even without the negative contribution of the shrinking labor force participation rate. The housing data is being taken at face value, and as recently as May of this year, Fed members wanted out of the mortgage business.

A trio of hawkish regional Federal Reserve officials are calling for the U.S. central bank to stop buying mortgage-backed bonds, citing the recent improvement in the housing market.

The strongest foundation supporting Bernanke’s confusing hint of a QE pull back can be found in the FOMC’s June 19 statement indicating that “the housing sector has strengthened further.” Markets responded in kind, further frustrating the Fed. But Bernanke didn’t explain “Why,” the fifth “W” that is often left out of a well constructed question sequence – Who, What, Where and When.

Looking at the most recent National Association of Home Builders/Wells Fargo housing-market index, the increase to 52 in June from 44 in May – the first time the index reached positive territory since April of 2006 – feeds into the assumption that the less than reliable linear economic theory, a Fed favorite, will prevail.

(click to enlarge)

But the sudden increase in interest rates has the Fed freaking out, because they know the true story. Certainly they are worried about inflation because they don’t know any better, but also realize that QE hasn’t delivered the goods. In addition, housing strength is less than impressive considering that we’re far from the average 30-year fixed-rate mortgage rate of 6.41% during 2006, according to Freddie Mac. In addition, the most recent rate of 4.46% — a jump of 53 basis points from 3.93% in only one week — is still 1.95% below the 2006 average, and if mortgage rates move up to historical averages, what will happen to home sales when unemployment hasn’t recovered one iota?

(click to enlarge)

As the chart above illustrates, when unemployment is adjusted for labor force participation rate, a fact that cannot be overlooked, we still have an extremely feeble labor environment, and far worse than the official rate implies. However, and without a doubt, there’s a sense of revived interest in real estate and I shall provide anecdotal evidence. On the street where I live, seven houses were sold in the last 30 days, and judging from the activity one would assume that all is well. However, not a single house sold for the asking price, and the price reductions leading up to the sales, not increases, varied between 3% and 7%.

(click to enlarge)

The celebratory mood was visible when the most recent SP/Case-Shiller Home Price Index registered an annual gain of 12.1%, but according to the chart above, house prices have only stabilized from depressed levels, despite the headline grabbing year-over-year increases. While inventories are tight, according to the National Association of Realtors, the underlying contributory factors are not making the rounds. The implication here is that traditional buyers are coming to market, but the reality is different because “cheap money bankrolls Wall Street’s bet on housing.”

The once-beleaguered Las Vegas housing market has been on fire since investment firms led by Blackstone Group LP, Colony Capital and American Homes 4 Rent began buying homes here some eight months ago, backed by $8 billion in investor cash to spend nationally. These big investors and a handful of others have bought at least 55,000 single-family homes across the U.S. in the past year. In the Vegas area alone, they have accounted for at least 10 percent of the homes sold since January 2012, according to a Reuters analysis of housing transactions.

That is not the much needed organic growth! Back in February the NAR said that “roughly 32 percent of all single-family homes were purchased in all-cash transactions,” while historically “all-cash deals have represented no more than 20 percent of all transactions.” The easy conclusion is that past demand will dry up! In addition, “private equity firm Cerberus Capital Management wants to provide financing to small investment firms that are buying foreclosed homes as part of a long-term bullish bet on the housing recovery.” The keyword here is “bet,” and a housing recovery cannot materialize unless common folk are out in force buying their caves, especially as unemployment lingers and incomes are stagnant.

What’s wrong with this picture? Unlike the traditional buyer, Wall Street is not planning to hold these properties for the long term, and an old fashioned investment exit is in the cards. In addition, turning these properties into rentals is not sustainable long-term due to the absence of economies of scale found in multi-family units, while risk exposure for single family homes is very different from multi-family units, because when a single family rental loses its tenant, it loses 100% of revenue.

An interesting Quarterly Report to Congress (pdf) by the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), quietly delivered an additional worrying development.

SIGTARP is concerned that the number of homeowners who have redefaulted on a HAMP permanent mortgage modification is increasing at an alarming rate. Treasury’s data shows that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at a rate of 46.1% and 39.1%. HAMP permanent modifications from 2010 also had high redefault rates, ranging from 28.9% to 37.6%.

Meanwhile, the Home Affordable Modification Program, “a federal program that helps troubled homeowners receive modified mortgages, is being extended by two years” as interest rates rise. Student loans, an apparent unrelated wrinkle that complicates the housing industry, will prevent first time buyers from jumping into the market, and the food chain is crucial to the real estate industry because in most cases buyers are also sellers.

The amount of student loan debt issued in the US has nearly tripled from $350 million in 2004 to nearly $1 trillion in 2012, making it very difficult for the mortgage industry to find first-time homebuyers – a critical element of a functioning housing market

Despite the appearance of a housing recovery, the Mortgage Bankers Association stated in May that “the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.25 percent of all loans outstanding at the end of the first quarter of 2013, an increase of 16 basis points from the previous quarter, but down 15 basis points from one year ago.” Obviously the foreclosure problem persists because the delinquency rate is still well above the “historical average of 1 percent to 2 percent.”

Returning to Wall Street, the ultimate objective is to profit from price appreciation, not rental income, although a name has been given to the strategy — “REO to Rental, with REO standing for ‘real estate owned’” — and financial creativity is once again finding its way into the investment world.

The hedge funds and private equity firms who have bet on the REO to rental market had a more sophisticated exit strategy in mind than simply flipping their properties to the next sucker. The plan has been – and still is – to sell the cash flows from rental income and property sales, by using them as collateral for bonds. Investor appetite for such REO to rental securitizations, though, may have been overestimated, not least because the bonds are riskier than Wall Street claims. Rating agencies say the dangers include not just another economic downturn, but also failures on the part of the rental property managers, and risks associated with the lack of historic precedent for the REO to rental market.

The hedge fund game has been in play for a while now, and here’s another example that was reported last year, while highlighting that economies of scale are a problem.

“We view (single-family housing) as a real continuation of our strategy,” Cogsville said, adding that his company wants to buy more homes to gain economies of scale needed to manage scattered properties. “It is different, but it’s doable.” Cogsville offered $11.8 million on the Chicago homes, putting $2 million down and agreeing to pay the rest over time by splitting rental income with Fannie Mae. What remains to be seen is how the new ownership will affect neighborhoods, and how long investment firms will stick around if prices rebound.

Although there’s plenty that Bill Gross has added to the investment discussion as of late, there’s only one statement that he made that is in line with my observations.

The Fed itself may be driving in a fog to think that it’s a cyclical as opposed to a structural problem in terms of our economy.

What Mr. Gross misses is that this is a structural problem within an extremely misunderstood cycle which is far more refined than Kondratieff ever envisioned. I do maintain that the Fed doesn’t have a clue as to what it is doing, and, worse yet, does not know what to do. To ensure that the current status quo is not disturbed, Fed members have been out in force engaging in damage control, and the message is that “the Federal Reserve will be keeping monetary policy very simulative for years to come,” according to Federal Reserve Bank of Atlanta President Dennis Lockhart.

The observations above are not so much about real estate, but rather about the broader economy and stock market and how investors are banking on a recovery that will prove to be illusive and disappoint plenty of experts, and although the process always develops in slow motion, it will become apparent in 2014.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. (More…)

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Megabanks Said They’d Stop Illegal Foreclosures. Guess What Happened Next.

More than a year after the $25-billion settlement that was to serve as a denouement of the notorious “robo-signing” scandal, banks still have not changed their habits of unscrupulously seeking quick mortgage foreclosures at the expense of struggling homeowners, a report from the body monitoring compliance of settlement terms indicates.

A bit of background: In late 2010, many large banks in the U.S. were found to have perpetrated horrendous abuses to speed up foreclosures amidst the housing crisis, most notably by allowing employees to rapidly sign affidavits to foreclose on homes without reviewing whether they were valid or accurate, leading to countless foreclosures that legally should not have occurred and numerous cases of heart-wrenching misery for evicted families. Some lost homes because their payments were not properly received, while others could not be present to challenge wrongful foreclosures because they were serving overseas in the military. Worse, it turned out that robo-signing long predates the 2008 crisis. Needless to say, a snafu ensued and public outcry demanded our government act. It did, and the result was this historic settlement between five banks, jointly the Justice Department, and state attorney generals last February.

Now, if you ask me, having our country’s largest banks cough up $25 billion between them is barely a slap on the wrist, and the figure looks pale in comparison to the amount the federal government shelled out to shore up the banks in the beginning of this housing crisis. But with this settlement a monitoring body called Office of Mortgage Settlement Oversight was created to periodically examine if banks have played by the rules or continued to break the law. So on June 19, they submitted a report to the courts on the banks’ compliance. The picture revealed is not pretty.

Four out of the five banks involved in the settlement, Bank of America, Citigroup, Wells Fargo, and Chase, failed at the “loan modification document collection timeline compliance” metric. This means when homeowners facing foreclosure submitted their documents requesting loan modification relief as permitted by law, the four banks were not forthcoming in telling them whether any paperwork is missing. Still in the dark about what had gone wrong, they got ejected from their homes when it was already too late to send in paperwork.

According to the report Citi seems to be a particularly serious offender on this count, as its error rate was 53.04%, indicating among the cases involving missing modification documents more than half of the time the bank did not notify homeowners on time. A different, but related and common complaint against the banks the report identified was “dual tracking,” where a bank would start foreclosing on a home while pretending to negotiate on a loan modification application.

Bank of America and Citi failed at another metric called “pre-foreclosure initiation,” by neglecting to send a letter to homeowners before they started the foreclosure process. We see a general theme running through all these findings: that banks are trying their best to hide as much information as possible from homeowners lest a foreclosure could be halted. It sounds pretty pathological and desperate.

The report spells out possible penalties if these banks fail again in the next two quarters, but they look paltry: Penalties include “a court order to stop specific behaviors,” “up to $1 million civil penalty,” and “up to a $5 million fine for failing particular metrics multiple times.” Sorry, but to large corporations several million dollars are almost nothing. When the settlement was announced, some commentators like economist Simon Johnson decried its leniency towards banks and that not a single banker went to the slammer for illegally taking away people’s houses. Unless some dramatic change takes place, it is unlikely any banks would receive significant punishment from the violations after the robo-signing settlement.

When Congress and the Justice Department refuse to hold big banks truly accountable, or even collude with them (a bill to effectively legalize robo-signing passed both chambers and was only stopped by a presidential veto), some state officials, individual homeowners, and activists are not so patient. A month before this report was published, Attorney General of New York Eric Schneiderman had already planned to sue Bank of America and Wells Fargo for violations he documented independently. An indignant Florida couple brought trucks to take away furniture from a Bank of America branch when the bank foreclosed their house in error but balked at paying them any damages even after a court decision in the couple’s favor. And we should not forget the important role played by Occupy activists who stood at the frontlines in countering improper foreclosures through direct action. All of these different efforts should be commended, as they send a message that even when the federal government fails to uphold justice and fairness from the top, states, localities and individuals below will not stay silent and will take action on their own.

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