Bishop Eddie Long Now Faces Mortgage Fraud Charges in Addition the Molestation Lawsuits

In my experience in the legal profession and the area of real estate law in particular, typically, the biggest crooks are those who always wear religion on their sleeves and somehow work religion into what ought to be a purely business/legal matter. Now, Bishop Eddie Long - who is already facing lawsuits brought by four young men who accuse him of sexual coercion while using his church position to gain their confidence - has reportedly been linked to a mortgage fraud operation being run from his church. Apparently, Long was not satisfied with the $3 million salary he was drawing from his church. CBS Atlanta is reporting that thousands of homeowners may have lost their homes after paying an upfront $1500 foreclosure rescue fee during church sponsored seminars - surprisingly, even Virginia has legislation that bars such up front fees - only to end up losing their homes and/or ending up in bankruptcy. Here are some story highlights:
*
CBS Atlanta News has found Bishop Eddie Long and another local megachurch leader, Gary Hawkins, are linked to a questionable mortgage venture that is being investigated by the feds. CBS Atlanta was the first to report on Matrix Capital's long list of victims. The company promised to lower people's mortgages for $1,500 upfront. Police say thousands of homeowners paid Matrix money, but according to investigators, most of them ended up in bankruptcy and losing their homes.
*
So many people trusted Matrix Capital front man Fred Lee because he made promises of lowering people's mortgages in the sanctity of their local church. CBS Atlanta first tracked down Fred Lee on the campus of New Birth, Bishop Eddie Long's church.
*
On Wednesday nights, New Birth is where Lee convinced church members to pay him instead of their mortgages. That is where people started the process that would eventually cost many their homes. "Where is Eddie Long? Because we would like to talk to him about why he is holding these seminars on his property here," Saltzman asked the security guards at New Birth. "You have to leave the property," the officer responded. The case against Lee is now being investigated by DeKalb County police and the Secret Service.
*
In a statement, Long said Matrix Capital is no longer holding seminars at New Birth. But CBS Atlanta has learned another Matrix executive has continued making those same presentations in Lee's place.

1 In 5 Homeowners Underwater on Mortgage

Less we forget what Republican economic policies have wrought, this article from Reuters is a good reminder. Roughly 20% of homeowners now find themselves owing more on their mortgages than their homes are worth in today's real estate market. Yet McSenile wonders why confidence is down and the GOP brand is about as popular as poison with many voters. The deregulation mantra has certainly yielded a heavy, heavy cost. To make matters worse, some project the number of homeowners with such upside down loans may increase to 1 in 4. Of course as property values fall, municipal revenues based on tax assessments will follow and create more downward pressure on the economy. The next president has a terrible hole to dig the country out of compliments of the Chimperator and a GOP controlled Congress until January 20, 2007. Here are some highlights:

*

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows. About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

*

Seven hard-hit states -- Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio -- had 64 percent of all "underwater" borrowers, but just 41 percent of U.S. mortgages. This is very much a regional problem, and people tend to forget that," said David Wyss, chief economist at Standard & Poor's, who expects home prices nationwide to fall another 10 percent before bottoming late next year.

*

JPMorgan Chase & Co, one of the biggest mortgage lenders, on Friday offered to modify $70 billion of mortgages to keep a potential 400,000 homeowners out of foreclosure. Bank of America Corp, which bought Countrywide Financial Corp in July, also has a large loan modification program.

*

Last week, Wachovia Corp said borrowers with its "Pick-a-Pay" ARMs and living in or near Stockton and Merced, California, owed at least 55 percent more on their mortgages, on average, than their homes were worth.

Mortgage Lender Implode-O-Meter

It seems that in every economic crisis there will always be some new idea that allows someone to benefit financially as the economy goes into a nose dive. The New York Times has a story about a new website called the Mortgage Lender Inplode Meter, the brain child of 28 year old Aaron Krowne, a former researcher at Emory University in Atlanta. To date 265 mortgage lenders have failed and gone out of business or suffered severe losses which have placed them on the watch list. Meanwhile, the sites advertising revenues are exploding. Damn, I guess I need to come up with something equally foresighted. Here are highlights from the NYT story:

*

The misery in the housing market is registering on the Implode-O-Meter. As millions of homeowners fall behind on their mortgages, a fledgling Web site called the Mortgage Lender Implode-O-Meter is gleefully tallying the number of lenders that run into trouble too. On Monday, the count was 265 — and rising.

*

The Implode-O-Meter is the brainchild of Aaron Krowne, a former researcher at Emory University in Atlanta. A computer scientist and mathematician, Mr. Krowne, 28, started the site in 2007, believing that the troubles in the housing market, and by extension the mortgage industry, would worsen. He was right — and the Implode-O-Meter took off. Traffic on the site soared, reaching as many as 100,000 regular visitors, and advertising dollars rolled in. Mr. Krowne quit his day job and hired 10 people for his company, Implode-Explode Heavy Industries.

*

The tips usually come anonymously from employees at the troubled mortgage companies. Critics of the site say some of the tips have been more gossip than reality. But the Implode-O-Meter often posts the phone recordings and company e-mail to back up the bad news coming out of places like Merrill Lynch, which in March fired nearly everyone at First Franklin Financial, a business it purchased in 2006.

*

The Implode-O-Meter, Mr. Krowne likes to say, has beat out the mainstream media time and again. Case in point, he says, was last October when it broke the news that Michael Jackson faced foreclosure on his Neverland property. Mr. Jackson’s representatives quickly denied the Implode-O-Meter’s story, which Mr. Krowne chalks up to his start-up status. His response? He posted the notice of Mr. Jackson’s defaults.

*

“Every company thinks it is different,” Mr. Krowne says. He points to April last year as an example. Employees of SouthStar Funding, a mortgage company in Atlanta, bombarded him with phone calls at his day job, trying to persuade him that the company was fine after he placed it on his Ailing Lender list, he said. After all, the employees told him, they were being sent on a team-building trip to the Bahamas. Soon, Mr. Krowne said, he started getting threats from the company. When SouthStar folded, Mr. Krowne wrote: “I have to say that it is with genuine satisfaction that I post this report of SouthStar’s closure.”

Mortgage Debt Is Snowballing

Several commentators have argued that the Democrats need to do more to tie the home mortgage debacle sweeping the country to the GOP and its policies of decreasing regulation, apparently believing that the fox would properly police the hen house. I believe they are correct and someone needs to get the blame for this disaster which is dragging down the entire economy and pushing more and more businesses to the brink financially. As this New York Times story indicates, the problem of loan defaults and plummeting home values is getting worse - much worse. It is becoming a downward spiral that keeps going as values fall and more homeowners find themselves owing more on their mortgages than their homes are now worth. Also note, that it is the Republicans who are opposing legislation to try to help the very bad situation. It their view, it is fine to bail out the fat cats on Wall Street, but to Hell with regular Americans (Senators DeMint and Bunning from the South probably think the borrowers in distress are members of minorities, so why help them. Only white evangelicals count). Here are some highlights:

*

When Congress started fashioning a sweeping rescue package for struggling homeowners earlier this year, 2.6 million loans were in trouble. But the problem has grown considerably in just six months and is continuing to worsen. More than three million borrowers are in distress, and analysts are forecasting a couple of million more will fall behind on their payments in the coming year as home prices fall further and the economy weakens.

*

Those stark numbers not only illustrate the challenges for the lawmakers trying to provide some relief to their constituents but also hint at what the next administration will be facing after the election. While the proposed program would help some homeowners, analysts say it would touch only a small fraction of those in trouble — the Congressional Budget Office estimates it would be used by 400,000 borrowers — and would do little to bolster the housing market.

*
“It’s not enough, even in the best of circumstances,” said Mark Zandi, chief economist of Moody’s Economy.com. The number of people who will be helped “is going to be overwhelmed by the three million that are headed toward default.” The bill would let lenders and borrowers refinance troubled mortgages into more affordable 30-year fixed-rate loans that are backed by the government. Democratic leaders say Congress could send something to the president next month. The White House, which initially threatened to veto the measure, has indicated that it is open to supporting the bill if certain provisions are removed.

*

Representative Barney Frank, Democrat of Massachusetts and a central force behind the legislation, said on Friday that recent reports about falling home prices have rallied support for the plan. But he acknowledged that the plan may not do enough to help homeowners or the housing market. Mr. Frank, chairman of the House Financial Services Committee, said that even after a bill like this, “you may need more.”

*

But not everyone supports government interventions. Some Republicans, like Senators Jim DeMint of South Carolina and Jim Bunning of Kentucky, say the proposal would use government subsidies to bail out reckless lenders and borrowers. They suggest that the housing market will correct itself more quickly if Congress does not intervene.

*

[O]thers forecast that two million to three million mortgages will default — beyond the three million in trouble now — and economists at Lehman Brothers say home prices nationally may drop 15 percent by the end of 2009. That may force policy makers to consider further interventions.