5 Things You Only Learn About America Foreclosing On Homes
Hey, remember the giant economic crash of 2007? No? You drank that one away, along with your failed marriage, and the ending of Lost? We'll help you out: It started with the collapse of the housing bubble. It turned out appraisers had been overvaluing houses for years, and banks had been giving people mortgages they couldn't actually afford. Then all those mortgage holders started missing their payments, the cascade of defaults nearly killed several banks, and more than 7 million Americans had their homes foreclosed upon. While the bankers responsible for it all were out blowing their multi-million dollar bonuses on leather-wrapped Lamborghinis, people like our source for today's article, Sarah, had to do all the actual legwork of ruining people's lives. She told us...
You Can Take People's Homes Away With Surprisingly Little Training
In December of 2008, the average value of U.S. homes did this:
Commonly referred to as the "OH-FUCK-OH-FUCK-OH-FUUUUUCCKK!!!" curve.
Right where that dark red line hits its lowest point is when Sarah started her new job. From 2009 to 2013, she worked for one of the banks responsible for the whole financial crisis. Sarah was a fresh-faced college graduate at this point ... but her degree wasn't related to finance. It turns out that didn't matter.
"Like anyone with a pulse who could speak in complete sentences, I quickly moved up the ladder from a call-center servicer, to a foreclosure specialist, to a team manager at the trustee's office that performed foreclosure for the bank."
"Foreclosure specialist" being the polite term for "Crusher of Hopes."
She had possibly the most responsibility a 24-year-old can be given, outside of Beyonce's butt-glitterer. Sarah was basically minting new hobos.
"I was signing up to 1,000 foreclosure packets a day at the peak of the crisis. I had very little training and I didn't know what I was doing. All of my employees had a quota of how many foreclosure referrals they needed to process. Many aspects of the loan in default were overlooked. We were supposed to compare the opening foreclosure referral info with the actual legal mortgage information."
Which is like playing "Spot the difference" with a couple of phone-book pages.
Bank employees, due to being overwhelmed and friggin' 24, were prone to making seemingly minor mistakes, like listing the buyer as a single woman, rather than a married one. Seems like a banal enough typo, but...
"... One voids the foreclosure process ... the consequence of that is you would have to start the whole thing over. It was all null and void. But we weren't trained to do that."
Maybe you've never completed a mortgage packet -- we can assure you, it's a gigantic pain in the ass that can take hours of time. If you're a normal person, buying a house is essentially taking on a part-time job for several weeks. These tiny mistakes voided the whole process, forcing buyers to repeat huge chunks of it.
"I think we may have mistyped your zip code. Could you just fill out these forms to verify?"
But still, some fuckups are inevitable. And when Sarah first started working, she felt her company was more or less the "good guys."
Even People In The Trenches Didn't Necessarily Know What Was Happening
"I started working for the bank on my 24th birthday on 2009. I was bright-eyed and bushy-tailed and I had no idea ... about the banks closing and Freddy Mac, I had no idea what I was getting into ... I wasn't a manager, so I didn't understand . I just knew my manager would have ... five stacks of envelopes on his desk ..."
Robo-signing is a process by which bank employees signed tens of thousands of foreclosure documents without actually reading them. Being a foreclosure specialist isn't like being in Congress: you're legally required to read this stuff. JP Morgan Chase, probably the giant bank that was least criminally irresponsible with this sort of thing, still paid the Justice Department a $50 million settlement and admitted to having employees robosign "tens of thousands" of documents. 25,000 documents were signed by employees "who either had no familiarity with the proceedings or no longer worked at the bank."
"Hop in; here's a gyro. Welcome to the world of real estate finance."
Sarah saw evidence of robo-signing all around her, and once she was promoted to foreclosure specialist she gained some insight into exactly why it happened:
"When I was provided over to trustee I was getting stacks and stacks of folders." She was handling a thousand foreclosure packets per day, on the worst days. Sarah insists she never robo-signed, but she does recall thinking, "Oh shit, what did I get myself into?" when the first stacks of folders landed on her desk.
"In the beginning ... I kinda had blind allegiance, I was proud of the company I worked for, I was proud to be a part of it, it's not our fault, it's the homeowner's ... this is what happens when you don't read the paperwork!"
Or read but failed to understand the paperwork intentionally written to be indecipherable.
But then she learned many of her own co-workers weren't reading the paperwork, and the banks were being incredibly shady...
"At the peak I was managing 40 people and we were bringing in temps to work on classified information, stuff temps really shouldn't be seeing."
Sarah called her manager's office to warn her about the whole "temporary employees being handed people's incredibly private information" thing. But her complaints fell on deaf ears. And then she got a promotion!
Shattering both the glass ceiling and the dreams of thousands of homeowners.
Unfortunately, it was bogus:
"I moved over as a manager in the trustee department where my job was processing the foreclosures. I wasn't supposed to sign any of these foreclosure documents and I agreed ... but then they fired the manager of this other team and stuck me in her role ... they gave me the fake title of assistant vice president so I could sign these documents ... it was a fake title because in order for someone to be eligible to sign these documents they had to be an AVP, so they stuck that onto my name but I wasn't qualified. I was a team manager. They did that to dozens and dozens of people on the floor."
Sarah's promotion was so fake she didn't even try to defend it when she had to do a video testimony for a court case against the bank.
We get the impression this kind of thing wasn't mentioned during employee orientation.
" 'Were you really an AVP?' I said no. And the lawyer stood up and said, 'you can't ask her that!'"
"You can't ask her own job title!" ... is a bold move. Let's see how that works out for him ...
The Banks Targeted Poor Minority Families First
"Seeing the names of the people in default, it was easy to see who was preyed upon. Most of our predatory loans were issued to families that didn't speak English (Hispanic and Asian primarily) and didn't understand the horrors of things like 'interest-only loans' or 'adjustable rate mortgages' that cost $1,200 per month for the first three years, then could triple after that."
The wart on the proverbial scrotum of the banking industry: the whole "home loan" process is already pretty racist. Banks turn down black people 28 percent of the time, Hispanic people 22 percent of the time, and whites just 10 percent of the time. Since so many more white people own homes, you might expect them to have been the hardest hit demographic in the housing crash. But nope: Hispanics were actually hit hardest; predominantly Hispanic communities saw their home values drop 46 percent. Majority black communities saw a 32 percent drop. America's whitest communities lost 24 percent. Which isn't to say white people didn't suffer, the great recession sucked for almost* everybody ...
But black and Hispanic communities suffered the most, and not by accident. Both realtors and banks took advantage of these homebuyers, who were often the first members of their family to purchase a home in the U.S. They knew less about the system, and could be convinced to sign loan agreements that were less affordable than they seemed...
"You'd see interviews with these loan officers bragging about taking advantage of immigrant families. When I was in department making outgoing phone calls ... that was my personal experience, I was calling all over the country trying to collect on these default loans and these families didn't speak English."
There's a problem when someone who speaks 100 words of English knows "delinquency" and "foreclosure."
A lot of these families lost everything, which made for what has to be some of the most harrowing moments in customer service history.
"I was in collections, and I was just trying to get some of this defaulted money back ... and I had one guy say, 'If you guys don't stop calling me I'm going to kill myself and murder my family.' I felt like a 911 operator. I had to wave my little flag to my manager and say 'Hey man, you need to call the police.' My manager called ... the police had to go over to the house but nobody was there."
It's a threat that's alarmingly easy to believe.
Heads up, folks: that's the closest to a happy ending you're going to see in this article.
Angry Homeowners Tracked Down Bank Employees
"I think I realized I was being targeted ... when it was brought to my attention there were these websites ... robo-signing lists ..."
Homeowners who felt taken advantage of by the banks sometimes decided to go a little vigilante. Hence online lists like this:
People this angry weren't about to stop at writing stupid lists like some kind of worthless internet comedians. Some of them made the effort to track their suspected robo-signers down. Sarah insists she never robo-signed, but it was her job to foreclose on people. Some of those people just assumed she was one of the vile robo-signers they'd heard so much about. "My social was all private but they'd still find my pictures ... someone performed a skip trace to find me."
As unethical as many of the bank's practices were, they were also in their legal right to foreclose on these houses. The only way aggrieved homeowners had a chance of fighting back was in court. They couldn't subpoena the CEO of the bank, but they could go after someone they suspected as a robo-signer.
"I don't know about the details of how they found me ... my move was very innocent, my husband and I had a baby, we outgrew our apartment ... 1-2 days into my move, there's a knock on my door and there's a gentleman. He hands me a stack of papers and says, 'You've been served.' 'How did you find me?' 'We have our ways.'
"I was just freaked out. And I was also on high alert, I'd just had a baby. I think I'd been targeted or named in lawsuits, probably four times. One of them me of targeting them. 'This individual ... wants to take my house, she is going out of her way to take my house.' Of course I have no personal interest in any of that." Another, even crazier rumor: "That I, do not exist. This signature was just done by whoever the hell. They accused all the managers of that, 'You guys don't exist.'"
There absolutely were real robo-signers, and there were banks that fraudulently used names of former employees to sign foreclosure notices. But not everyone with Sarah's job was a robo-signer. We don't expect you to feel sorry for her -- some light harassment isn't worse than losing a home. But we should point out that the banks didn't stop at fucking over homeowners.
It Took A While For The Seriousness Of The Situation To Set In
"Toward the end of my employment, we were not able to celebrate holidays at work. The reason given was if any homeowners so happened to come into our office (which was really just a boring, filthy little joint hiding in suburbia) they might see the employees having fun, which would make light of the foreclosure crisis."
Stories like this would go viral, prompting every company involved with foreclosures to pre-emptively punish their employees:
If your wacky Halloween costume's punchline is "Haha, that family lives in a dumpster!" then maybe dress as a pirate instead.
Sarah and her co-workers were strongly encouraged to avoid social media. In the cold, sober light of 2016, maybe that wouldn't have been a bad thing for us all to do. But back in 2008 this crap was still new, fun, and not filled with articles about Hillary Clinton's mythical child sex slavery ring. Forcing employees off of it seemed a little strange. But the bank had an explanation:
"If you seem happy on social media, then you're mocking everybody, you're taking it as a joke."
Sarah's office soon got a sobering reminder of just how real shit had gotten:
"One day a political cartoon of a gingerbread house being foreclosed on was circulated around the office and we were all almost destroyed by one of the higher-up managers."
"We all had a little laugh, and then we were all threatened to be fired, there was a big meeting. They were basically saying that, this isn't a joke. You don't understand the size of what's happening. The collapse of what's happening. And anyone who takes this as a joke or does anything that seems mocking will be written up and likely fired. You couldn't go out and celebrate ... They were like, don't go out with your managers, don't go out with employees, don't be friendly with each other because what's going on is so serious."
"You left more people homeless than a major earthquake today. Maybe skip the TGIF toast."
It didn't hit home (no heartrending pun intended) for Sarah quite yet, but it would: "It ruined me online for years. Angry homeowners found my social media and took screen grabs." She'd unwisely posted the cartoon on her own Facebook page, somehow not foreseeing that she'd be tracked by vigilantes pissed off at realty robots. "They sent it to corporate and accused me of turning their misery into a joke."
It was a dumb move, but remember: Sarah wasn't a bank executive. She never sold anyone on a subprime mortgage. She made $40,000 a year. She didn't get bonuses for foreclosing on homes. She barely got a lunch break. People like her -- young, naive, and in need of steady work -- had to deal with the emotional fallout, and the lion's share of the consequences: "I went to school for creative writing. I have two articles on Cracked that I wrote. The second I got out of college, wanting to do some sort of writing, I fall into this , and I got married, and five seconds after I change my name I'm on the internet as a robo-signer. Now I wrote a manuscript, and I'm trying really hard to get it published, and I'm just so terrified they're going to Google me."
There's a reason she didn't use her name on this article, despite having a writing career: this job still haunts her. Meanwhile, the actually guilty parties received bonuses so large they qualified as newsworthy:
What better way to punish someone for crashing the economy than giving them a large part of it?
"They all shook out without major consequence -- as long as you were loyal to the bank, they would represent you in court. If you spoke out against the bank, you were screwed."
On the upside, unchecked capitalism has brought us some pretty sweet phones, though.
For more insider perspectives, check out 4 Scary Things You Only See Cutting People's Power As A Job and How To Find Anyone: 5 Lessons From Serving People Papers.
Have a story to share with Cracked? Email us here.
Follow us on Facebook, and let's just hug each other.