Andy Kroll

Andy Kroll

Senior Reporter

Andy Kroll is Mother Jones' Dark Money reporter. He is based in the DC bureau. His work has also appeared at the Wall Street Journal, the Guardian, Men's Journal, the American Prospect, and TomDispatch.com, where he's an associate editor. Email him at akroll (at) motherjones (dot) com. He tweets at @AndyKroll.

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Slouching Towards Foreclosure Help

| Fri Mar. 26, 2010 12:10 PM EDT

Talk about timing. A day after Congress excoriated the Obama administration's multibillion-dollar foreclosure rescue, and after many months' worth of criticism and hand-wringing, the administration rolled out today a revamped plan to help beleaguered homeowners and try to slow the pace of foreclosures, after a record-breaking 2.8 million were filed last year.

It's a multi-pronged plan, and here are the details:

If you're out of work...then this plan could help you. Specifically, servicers are required to lower payments for unemployed borrowers to 31 percent or less of your income, which is likely comprised of unemployment payments. So your payments would drop to about a third of your monthly unemployment cash. That period of lower payments can last from three to six months, during which time the hope is that the unemployed can find work. If you do, then you're also eligible for a modification under Obama's flagship modification program, the Home Affordable Modification Program. If you don't find work, then you could, under the administration's plans, try to short-sell or try a deed-in-lieu with your bank, both as a means to avoid foreclosure. This part of the program is slated to be up and running within a few months.

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DOJ Balks on Cartel Crime Rise

| Thu Mar. 25, 2010 4:46 PM EDT

Drug trafficking Mexican cartels continue to spread like weeds throughout the US, funneling drugs through American cities and pocketing massive profits. In the National Drug Intelligence Center's annual "Threat Assessment" report for 2008, the agency found that Mexican drug traffickers had distribution networks in at least 230 American cities, an expansive operation generating billions of dollars a year.

Today, the NDIC, which is part of the Justice Department, released its 2010 "Drug Threat" report. Again, the NDIC highlighted the rise of Mexican drug trafficking organizations (DTOs) in the US: "Mexican DTOs are more deeply entrenched in drug trafficking activities in the United States than any other DTOs." What the 2010 report doesn't include, however, is the latest tally of American cities now fostering Mexican drugrunners and dealers. The 2010 report says only that they're "active in more cities throughout the country than any other DTOs."

So why the omission? Is the DOJ reluctant to include the figure because the number is so large, the power of Mexican cartels so far reaching? An official with the National Drug Intelligence Center said the report didn't include a hard figure because the agency was "in the throes of reanalyzing" its data, and wouldn't have a new figure for another month or so. The official did add that the NDIC predicts that 230 figure has increased from 2008. You can read into the DOJ's lack of new data however you'd like, but be prepared for some startling statistics when the department does release its new tally of cities caught in the Mexican cartels' web.

Undercover in the Foreclosure Scamming Underworld

| Thu Mar. 25, 2010 4:50 AM EDT

It begins with a flyer on your front doorstep, a roadside sign with a local phone number, an ad on TV. "Stop Foreclosure Now!" "We guarantee to stop your foreclosure." "We stop foreclosures every day. Our team of professionals can stop yours this week!" They promise quick access to your bank or lender, and a way out of foreclosure and losing your home. They seem almost too good to be true, especially if you're a beleaguered homeowner clinging to your house.

Almost always they are too good to be true. Welcome to the world of the foreclosure rescue scam. Just as epic levels of fraud helped cause the subprime crisis, now, in the wake of the greatest housing meltdown in at least a generation, thousands of scheming, manipulative foreclosure relief swindlers are preying upon desperate homeowners unschooled in consumer finance and looking for help. The FTC, for example, reported 7,927 complaints on "mortgage modification and foreclosure relief" last year; in 2008, it had one. The Illinois Attorney General filed 31 different lawsuits last year regarding mortgage rescue scams, and the Florida AG filed 20 within the past year.

This newest wave of housing fraud is documented in painstaking detail in a new report, "Foreclosure Rescue Scams: A Nightmare Complicating the American Dream," to be released today by a leading housing advocacy group, the National Community Reinvestment Coalition, as part of a hearing held by the House oversight committee. An early copy of the report was obtained by Mother Jones.

To document the pervasive foreclosure relief scamming out there, NCRC arranged more than 200 different undercover "shops," or visits with, these swindlers, getting details on numerous relief scams and probing what each claimed to offer. The services had names like 123 Fix My Loan, Help U Modify, and Legal Loan Bailout; others were clearly intended to confuse homeowners by sounding like legitimate government or private programs, like HopeNow Mortgages or Federal Loan Modification Bureau. In all, 115 foreclosure relief services were identified in NCRC's investigation. (So shady are some of these scams that 17 of them didn't even have legitimate phone numbers.)

The fear, the NCRC report says, is that these rackets draw homeowners away from real programs that could help them. "Modification companies are often operating in a regulatory vacuum, without any accountability, and may be preventing consumer access to the Home Affordable Modification Program," the report says.

Blacks Shut Out of Obama's Housing Rescue

| Thu Mar. 25, 2010 4:10 AM EDT

Black homeowners hit hard by the housing crisis and economic downturn are disproportionately shut out of the Obama administration's multibillion-dollar homeowner rescue effort, the Home Affordable Modification Program (HAMP). This startling new finding appears in a first-of-its-kind poll conducted by a leading housing advocacy group, the National Community Reinvestment Coalition, in conjunction with a hearing by the House oversight committee today investigating why HAMP has failed beleaguered homeowners and hardly slowed the rising tide of foreclosures. A copy of the report laying out NCRC's findings was first obtained by Mother Jones before its public release.

According to NCRC's findings, white homeowners eligible for the HAMP program are 50 percent more likely than blacks to receive a loan modification, which can lower monthly mortgage payments and help homeowners keep their homes. Loan servicers, the poll finds, foreclosed on black homeowners who were late on their mortgage payments noticeably faster than white or Hispanic borrowers. The poll's finding here "suggests that lenders and servicers push delinquent Black or African-American borrowers into the foreclosure process much sooner than borrowers from other racial and ethnic groups." Black homeowners who did receive modifications also saw smaller reductions in their loan's interest rate—an average drop of 2.84 percentage points—than did whites and Hispanics—3.32 and 3.35, respectively. So telling is NCRC's finding relating to racial differences that the group calls for "fair lending investigations of [the] HAMP program and participating servicers."

NCRC's poll is the first to investigate whether servicers and lenders treat people differently during the modification process due to race.

The poll is equally damning in its broader examination of HAMP, the Treasury Department's flagship homeowner initiative. As others have pointed out, HAMP's results have been dismal at best: Despite originally claiming that HAMP would help 3 to 4 million people—around 270,000 every three months—the program has only resulted in 170,000 permanent mortgage modifications in a year's time. In NCRC's poll, they found homeowners surveyed were more likely to get lasting help if they weren't eligible for HAMP than if they were.

Big Finance's Derivatives Battle

| Wed Mar. 24, 2010 2:56 PM EDT

Gary Gensler, a top government regulator of tricky financial products like swaps and futures, singled out today big Wall Street firms and their lobbyists in Washington as a leading force specifically trying to kill new reforms of derivatives, the opaque deals that helped crash the global economy. Gensler told reporters at the US Chamber of Commerce today that Big Finance was "undercutting" efforts to regulate and shed light on derivatives, which help utilities and other companies hedge risk but are also used as gambling chips. "Wall Street has been expressing great opposition on Capitol Hill," Gensler said. "We've seen the emails."

Gensler, the chairman of the Commodity Futures Trading Commission, appeared at the Chamber to deliver a speech advocating for far more rigorous and reaching oversight of the $600 trillion, "over-the-counter" derivatives market. (Over-the-counter means they're traded in the dark, between buyers and sellers, without much transparency and information on bids and prices.) Unlike the speaker who preceded Gensler, Sen. Blanche Lincoln (D-Ark.), who vaguely hinted at the need to exempt certain users from derivatives regulation, Gensler took a strong stance by calling for complete regulation of the shadowy derivatives market. To illustrate his point, Gensler compared the derivatives markets to our streets system:

Can anyone imagine a traffic system without safety regulation? Of course not. Think about a regulation-free highway network: no traffic lights, no street lamps, no cops on the beat, not even a stop sign. Think about how we would be as a nation.

By placing a few street lights and stop signs, so to speak, in the derivative markets, it would "lower risk in this marketplace." Gensler said that, while not ideal, he could palate a narrow exemption for those companies that use derivatives solely to hedge risk and control for fluctuations in prices. But he insisted several times—and challenged the Chamber's top brass in attendance at the conference to back him—on the need for moving nearly all derivatives trades onto clearinghouses, where the prices and participants in trades are made public, and to make dealers register publicly as well. "I would think the Chamber would want to embrace this," Gensler said in his remarks. "This is not red meat."

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