Fannie and Freddies's illegal Affinity scheme exposed

[Mejappz]

Contact: Jeremy Bagott, MAI, AI-GRS
Tel: 805-794-0555
email: jbagott@gmail.com









*** FOR IMMEDIATE RELEASE ***

CHURCH INFILTRATION BY HOUSTON ‘BROKER’ RECALLS ADDIE POLK
CASE

VENTURA, Calif. (July 21, 2023) – Addie Polk was a 91-year-old African-
American widow who shot herself in 2008 during a Fannie Mae-initiated
eviction in Akron, Ohio. It marked the low point in the mortgage giant’s embrace
of toxic mortgages. Fannie, in federal conservatorship since, bought and
guaranteed tens of billions in subprime loans made to vulnerable borrowers in
the years leading up to the 2007-2008 financial crisis.

In Polk’s case, a fraudulent mortgage was taken out in the widow’s name
through a so-called affinity scam in which commissioned salespeople for the
now-defunct Countrywide Home Loans infiltrated her African-American Baptist
church. It is believed bad actors, after taking volunteer positions at the church,
copied the elderly woman’s signature from donation checks. The subsequent
cash-out mortgages and lines of credit taken out in her name devoured the
equity in the nonagenarian’s home, which she had owned free and clear prior to
the episode.

In a case that rings familiar, a Houston man was sentenced to 20 years in
prison earlier this month after he reportedly made more than $1 million
targeting dozens of parishioners whose trust he had gained in a similar affinity
scam. Robert Gibson, 59, pleaded guilty to theft in exchange for the 20-year
sentence. He had sold bogus properties to parishioners.

“He was a con artist, and he worked the members of his congregation, and they
handed over tens of thousands of dollars in cash for a piece of paper that
wasn’t worth anything,” Assistant District Attorney Sheila Hansel said. “He had
the paperwork and it looked legitimate, but it wasn’t, and the money was spent
as fast as it was coming in. Now it’s just gone.”

Under the banner of "Special Purpose Credit Program," some nonbank lenders,
again enabled by Freddie and Fannie and their regulator, are targeting minority
borrowers in affinity schemes.

This month, the country's top lender, United Wholesale Mortgage, began
offering a Special Purpose Credit Program through Fannie and Freddie. The
Special Purpose Credit Program was created by the mortgage giants, and
blessed by their executive branch regulators, to increase credit access to
historically disadvantaged individuals. But these special programs, which
promote racial targeting, violate fair-housing and fair-lending statutes put in
place by Congress. Regulators are not authorized to create or endorse
programs that violate federal statutes.

Polk became the national face of predatory lending as she lay dying of self-
inflicted gunshot wounds in an Akron hospital. When Polk’s story was picked up
by the wire services, Fannie quickly announced it would halt its eviction of the
dying elderly widow and forgive her debt. Her story was retold in the 2020
docuseries “The Con” by filmmakers Eric Vaughan and Patrick Lovell. Polk’s
case came to symbolize the way in which lenders – egged on by Fannie and
Freddie – targeted African-Americans for subprime loans.

In their book “Predatory Lending and the Destruction of the African-American
Dream,” wrote law professors Janis Pearl Sarra and Cheryl Wade:

“Millions of middle-class and high-income African-Americans who qualified for
regular fixed-rate, long-term mortgages were steered to subprime mortgages.
For the most part, white American borrowers who had credit histories identical
to the credit histories of African-American borrowers were not targeted for
subprime mortgages.”

 

[Mejappz]

Fast-forward to 2023. There are new signs commissioned salespeople have
descended on equity-rich but cash-poor neighborhoods, using affinity schemes
to assist black homeowners, eliminating generational wealth by shoveling
equity into debt traps with frequent refinancings.

In 2020, the Greenlining Institute, an Oakland, California-based nonprofit,
reported that the eight largest nonbank mortgage lenders in the state had
lent disproportionately to black and Hispanic home buyers when compared with
chartered banks in the state. That suggests racial targeting.

New attention is being paid to properties that don’t appraise to what
commissioned salespeople want the properties to be worth to make their deals
work. Appraisers are being pressured to play ball, to abandon established
analytical principles and become warriors on the front line of social justice – or
else.

National appraiser organizations that once pioneered analytical techniques like
discounted cash-flow models and regression analysis have been recently
promoting webinars by an organization known as ACTION, which calls for
“restorative appraisals” in which appraisers are taught to use comparable sales
from so-called “white neighborhoods” when appraising homes in what are
identified as “black neighborhoods.” Using comparables from distant
neighborhoods is how a dishonest Ohio appraiser, working with Countrywide,
was able to appraise Polk’s home for reportedly twice the home’s market value.
With the implicit full faith and credit of the U.S. government, Fannie Mae then
guaranteed Polk’s loan based on the inflated appraisal. This led to Fannie’s
eviction of the elderly widow.

The large financial institutions have been armoring up to repel the next public
relations disaster like the Addie Polk case or the next Justice Department civil
rights investigation.

Before Ameriquest’s spectacular collapse in 2006, the U.S. Justice
Department’s Civil Rights Division had brought a case against the now-defunct
subprime lender for padding mortgages made to minorities, women and the
elderly, and for engaging in bait-and-switch tactics. Countrywide was also in
government crosshairs for targeting Black and Hispanic Americans, along with
the elderly. This would have been no surprise to Addie Polk. After the crisis, the
Justice Department levied big fines against its new owner, Bank of America,
over 10,000 toxic subprime mortgages. The now-bankrupt New Century was
also linked to predatory lending.

The next generation of forensic investigators will find an illegal government
carve-out called the “Special Purpose Credit Program” at the center of many
as-yet undiscovered scams. Count on it.

# # #

Jeremy Bagott is a real estate appraiser and former newspaperman. His most
recent book, “The Ichthyologist’s Guide to the Subprime Meltdown,” is a
concise almanac that distills the cataclysmic financial crisis of 2007-2008 to its
essence. This pithy guide to the upheaval includes essays, chronologies,
roundups and key lists, weaving together the stories of the politics-infused
Freddie and Fannie; the doomed Wall Street investment banks Lehman and
Bear Stearns; the dereliction of duty by the Big Three credit-rating services; the
mayhem caused by the shadowy nonbank lenders; and the massive
government bailouts. It provides a rapid-fire succession of “ah-hah” moments
as it lays out the meltdown, convulsion by convulsion.

 

[Tawfik Ahdab]

Thanks for the great post. It just reminded me of how easily corrupted the system was and remains today.

 

[djd09]

Lawyer: "Robo-Signers" Rushed Foreclosures​

In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.

Foreclosure "Robo-Signers"


"The mortgage servicers hired people who would never question authority," said Peter Ticktin, a Deerfield Beach, Fla., lawyer who is defending 3,000 homeowners in foreclosure cases. As part of his work, Ticktin gathered 150 depositions from bank employees who say they signed foreclosure affidavits without reviewing the documents or ever laying eyes on them - earning them the name "robo-signers."

The deposed employees worked for the mortgage service divisions of banks such as Bank of America and JP Morgan Chase, as well as for mortgage servicers like Litton Loan Servicing, a division of Goldman Sachs.

https://www.cbsnews.com/news/lawyer-robo-signers-rushed-foreclosures/

trust them...

 

[djd09]

In Polk’s case, a fraudulent mortgage was taken out in the widow’s name
through a so-called affinity scam in which commissioned salespeople for the
now-defunct Countrywide Home Loans infiltrated her African-American Baptist
church. It is believed bad actors, after taking volunteer positions at the church,
copied the elderly woman’s signature from donation checks. The subsequent
cash-out mortgages and lines of credit taken out in her name devoured the
equity in the nonagenarian’s home, which she had owned free and clear prior to
the episode.

After Polk's ordeal last October sparked national outrage, Fannie Mae moved to halt the foreclosure process and "give her the house," company spokesman Brian Faith said at the time.

"We're going to forgive whatever outstanding balance she had on the loan," Faith said. "Given the circumstances, we think it's appropriate."

In 2004, Polk took out a 30-year, 6.375 percent mortgage for $45,620 with a Countrywide Home Loan office in Cuyahoga Falls, Ohio. The same day, she also took out an $11,380 line of credit.

Over the next couple of years, Polk missed payments

https://www

.cnn.com/2009/US/03/31/eviction.suicide.death/index.html

different versions of the same story....

 

[Digger88]

Unreal

 

[John Hassler]

This is a very dangerous time to be a residential appraiser who’s skills are effectively limited to mortgage work.

 

[Tom D]

nothing new here. from long ago, i seen this time after time with the big lender's. nobody big goes to jail, so why stop.

 

[djd09]

no worry...USPAP has it covered...just do what the client and the quasi clients say...the sow, assignment conditions and such