About 35 people joined Hertel, a leading voice in the battle to expose and challenge illegal foreclosure activities in the state, as he explained the ins and out of the crisis.

In explaining the crisis, Hertel shared a graph showing foreclosures in the county from 2000 to present. The graph starts at about 400 foreclosures a year, but by 2010, that number was about 1,800 foreclosures a year — a 450 percent increase. Hertel showed how the foreclosures are aiding in the destruction of property values. The taxable value of all the property in the county has lost nine percent of its value in the last two years, or $700 million.

These two issues combined, Hertel said, are leaving the county struggling to make budgetary requirements. In fact, because of declining property values, the county eliminated most out-county sheriff patrols earlier this year. In Lansing, voters are being asked for the second time this year to approve a four mill increase in property taxes to fund the city’s public safety infrastructure. The city was forced to lay off firefighters and police officers earlier this year when voters rejected the public safety millage.

“This impacts us all,” says Hertel.

While that information shocked the assembled group, it was when Hertel began showing evidence his office had collected of alleged robo-signing examples filed in his office that audible gasps and expressions of anger could be heard.

At one point, Hertel put up a projection of signatures from Orlans Associates foreclosure attorney Marshall Isaacs. There were four very different signatures, each above Isaacs type written name.

“Representatives from Orlans came to our offices and looked at these,” Hertel told the group, “and they said all of these are Isaacs’ signatures. They were so different, they said, because it would depend on what mood Mr. Isaacs was in or where he was signing his signature.”

Hertel referred Isaacs to Attorney General Bill Schuette for criminal investigation earlier this year after Michigan Messenger reported Isaacs had been placed on a list of suspected or known robo-signers in a Massachusetts county.

In addition to the above, Hertel also laid out the operations of Mortgage Electronic Registration System (MERS) and its role in the foreclosure crisis. Hertel is currently suing MERS as well as lenders and foreclosure firms for back taxes. Under Michigan law, when title of property is transferred $1.10 per $1000 of value on the property goes to the county, while $7.50 per $1000 of value goes to the state. That means a property worth $100,000 upon transfer should pay the county $110 and the state $750. Hertel has argued that the banks, foreclosure firms and MERS owe “tens of millions of dollars” in back taxes to the state and counties.

Also in attendance at the meeting Tuesday night was Perry Thompson. Thompson works for Legal Services of South Central Michigan, which has a contract with Ingham County to offer low cost foreclosure legal assistance for county residents. He says since the program began this summer, he is representing 40 individuals in litigation and many more in the early process of litigation. At the meeting on Tuesday night, Thompson picked up two more clients struggling with the threat of foreclosure.

In spite of the overwhelming number of cases, Thompson says he prefers being at the meetings and getting new clients.

“I guess I am a bit of a realist,” says Thompson. “I know when I deal with people, they say I wish I had known about you last year. Well being here, I can let them know we are here.”

The event was touted as a “special reception to honor Secretary of State Ruth Johnson” according to a copy of the invitation. Former Michigan Republican Party Chair Ron Weiser was also in attendance. Attendees at the event, held in Orlans’ home, were asked to pay $250 to $3,400 to Johnson’s campaign fund.

Michigan Messenger reported earlier this year that Orlans’ attorney Marshall Isaacs had been placed on a robo-signing list by a county clerk in Massachusetts.

Kevin Harvey, first assistant clerk for the Southern Essex District Register of Deeds in Massachusetts, says a private mortgage fraud investigator brought the robo-signing to the attention of his boss, John O’Brien. That investigator, Steve Dibert, runs MFI-Miami, which has offices in Florida as well as Traverse City.

“Steve [Diberts]’s work on Marshall Isaacs was confirmed by our certified mortgage fraud examiner Marie McDonnell here in Massachusetts and his name is on our registry’s robo-signers list,” Harvey told the Michigan Messenger.

Those revelations resulted in lawmakers and activists alike calling on Johnson to conduct an investigation of Orlans Associates.

The National Institute on Money in State Politics shows that in the 2010 cycle, Linda Orlans gave tens of thousands of dollars to Republicans. She donated $25,000 to the state party, as well as maxing out in donations to Secretary of State Ruth Johnson with a $3,400 donation. She gave Gov. Rick Snyder’s campaign $2,600 and Attorney General Bill Schuette’s campaign $2,100.

The group’s records also show that between 2006 and 2010, other officials with the company also gave tens of thousands of dollars to Republican candidates.

Steve Dibert, of MFI-Miami, slammed Johnson for her relationship with Orlans.

Last year, when she ran for Michigan Secretary of State, Ruth Johnson vigorously campaigned for opening up government and for more government integrity. Yet, Ruth Johnson pals around with and has taken thousands of dollars in campaign contributions from a woman whose law firm is currently under criminal investigation in two states for filing fraudulent documents on the public record. Recently, Orlans Associates was sued for illegally foreclosing on a Michigan National Guardsman while he was fighting in Iraq. Orlans Associates has also been named as a defendant in a lawsuit filed by several Michigan counties because their clients failed to pay millions of dollars in unpaid Michigan Real Estate Transfer Taxes.”

During Ruth Johnson’s tenure as Oakland County Register of Deeds, Linda Orlans’ firm filed hundreds of documents with fraudulent attorney and notary signatures in Oakland County. Yet, when approached about these signatures in December of 2009 and again in the Spring of 2010 by me and other people, Ruth Johnson did nothing. Even now my staff has alerted the Michigan Secretary of State’s office to the fraudulent notary signatures on mortgage assignments filed by Orlans Associates in dozens of counties in Michigan and Massachusetts. Ruth Johnson responds by raking in an estimated $25,000 of dirty money from Linda Orlans and her friends who are hell bent on committing financial genocide against middle class families across America.”

Shortly after that story appeared, Ingham County Register of Deeds Curtis Hertel, Jr. referred Isaacs to Republican Attorney General Bill Schuette for criminal investigation in a series of robo-signed documents he had discovered in county records.

Orlans issued a blanket denial against the allegations two weeks after the stories about Isaacs first broke.

This news comes on the heels of a revelation last week that robo-signed documents have now been linked to Trott and Trott, the state’s largest foreclosure law firm. Dibert writes on his blog that Trott attorney Kenneth Kurel is alleged to have robo-signed at least eight deeds on file with Register of Deeds offices across the state. Two days later, Dibert reported that Ellen Coon, another Trott attorney, was allegedly involved in robo-signing at least four such documents.

Trott is another GOP donor with deep pockets. David Trott, owner of Trott and Trott, came under fire in 2008 when he leased space to the presidential campaign of Republican candidate John McCain.

The banks include Bank of America, Citigroup, Countrywide, JP Morgan Chase and others, according to a press release from the agency. The release explained the suits:

These complaints were filed in federal or state court in New York or the federal court in Connecticut. The complaints seek damages and civil penalties under the Securities Act of 1933, similar in content to the complaint FHFA filed against UBS Americas, Inc. on July 27, 2011. In addition, each complaint seeks compensatory damages for negligent misrepresentation.

Certain complaints also allege state securities law violations or common law fraud.As conservator of Fannie Mae and Freddie Mac, FHFA is charged with preserving and conserving these companies’ assets and does so on behalf of taxpayers. The complaints filed today reflect FHFA’s conclusion that some portion of the losses that Fannie Mae and Freddie Mac incurred on private-label mortgage-backed securities (PLS) are attributable to misrepresentations and other improper actions by the firms and individuals named in these filings. Based on our review, FHFA alleges that the loans had different and more risky characteristics than the descriptions contained in the marketing and sales materials provided to the Enterprises for those securities.

The agency oversees the troubled assets of Freddie Mac and Fannie Mae as part of the federal government’s move to shore up the housing market early on in the crisis. The agency argues that the banks knew, or should have known, that the mortgage securities they were bundling were based on fraudulent or bad loans. The lawsuits seek a total of $100 billion in fines and recovery from the banks.

“I am excited about the suit,” said Curtis Hertel, Jr, Ingham county’s register of deeds. “The reality is that there are both civil and criminal penalties on a lot of the banks’ illegal practices. I believe the corporations should be made to pay and their CEOs tried for the crimes committed. This is a step in the right direction and hopefully federal prosecutions will follow.”

But Steve Dibert, who runs the mortgage fraud investigation company MFI-Miami, is not as hopeful about the federal actions.

“It’s politics and next year is an election year. Fannie and Freddie are under attack based on falsehoods spread by conservatives who want them eliminated and by advocacy groups who have no background in lending. This lawsuit is an attempt to show that they are making an attempt to recoup losses,” Dibert said. “However, in my opinion this lawsuit is futile and won’t result in the settlements they think they are going to get. Even if they win, this lawsuit won’t put a dent in Fannie/Freddie’s mounting debts. Since Fannie/Freddie were taken over by the federal government they have become a dumping ground for toxic mortgages no one wants. When Treasury did that in 2007, they sealed the fate of Fannie/Freddie. It’s only a matter of time before a priest comes performs last rites.”

Dibert had very little positive to say about Fannie and Freddie and the housing market scandals.

“I would not be surprised if Fannie/Freddie knew this was going on, just like the servicers knew it was going on,” Dibert said. “No one figured they were going to get caught and they figured even if they did, no one will have the testicular fortitude to convict them. It’s like Captain Renault from Casablanca when Rick’s get raided by the Nazis: ‘I’m shocked to learn gambling is going on here!’ Then the attendant says, ‘Here are your winnings, sir.’”

This action comes as officials across the state have identified more and more questionable documents related to the foreclosure document. The questions arise from what is called robo-signing. This is where many people, under penalty of perjury in some instances, sign the same legal documents as part of documenting property sales.

Friday, the Associated Press reported that robo-signed documents dated back at least a decade.

Hertel has been a leading voice in the battle over robo-signed documents here in Michigan.

“I am not surprised that robo signing went back far. MERS [Michigan Electronic Registration System] was created in 1995 to stop filing many mortgage documents with Register of Deeds across the county,” Hertel said of the robo-signing revelation. “At that point banks stop caring about filing documents in the public record unless they had to. At that point documents that were never created had to be and it makes sense that robo-signing would be an issue.”

Dibert said the AP revelation is in line with his experience as well.

“MFI-Miami has found robo-signed documents going back to 2001 in Michigan and 1998 in other states,” Dibert said. “The discovery of robo-signing happened two years ago in Florida.”

The programs — the Home Affordable Modification Program, HUD’s Neighborhood Stabilization Program, the Emergency Homeowner Relief Fund (passed under the Dodd-Frank Act) and the FHA’s Short Refinancing Program — will be the subject of a March 2 hearing by the Insurance, Housing and community Opportunity Subcommittee. Bill mark-up is expected to take place the following day, March 3.

“In an era of record-breaking deficits, it’s time to pull the plug on these programs that are actually doing more harm than good for struggling homeowners,” said U.S. Rep. Spencer Bachus (R-Ala.), who leads House Financial Services.

“These programs may have been well-intentioned, but they are not working and, in reality, are making things worse.”

The call to end the programs, which are considered key Obama administration projects to combat the nation’s foreclosure crisis, was joined by U.S. Rep. Judy Biggert (R-Ill.), who leads the Insurance and Housing Subcommittee.

“We need to break down barriers that have delayed the housing recovery, including expensive and ineffective government programs that have failed to help homeowners. Unfortunately, these programs were set in haste, executed poorly, and have done little to restore stability in the marketplace,” she said.

As The Iowa Independent reported in 2009, the Home Affordable Modification Program hasn’t performed as well as expected. Despite placement of $29 billion into the program that would allow banks to alter loans to make them more affordable, only 116,000 such modified loans had been made permanent as of the end of February last year. Democrats have charged that the problem lies not with the program itself, but the fact that the Obama administration relied on private mortgage servicing companies to provide the modified loans.

The goal of the program was to have reached around four million struggling homeowners by 2012. As of February 2010, nearly one million homeowners had entered into trial modifications, although there is no guarantee that such altered loans will become permanent after the 90-day trial, according to Phyllis Caldwell, who leads the federal program. And, even if the loans reach permanent status, many homeowners ultimately re-default. Currently, about 500,000 loans have been modified under the program, and only $840 million of the $29 billion invested in the program has been spent.

Although Democrats seem poised to fight for the other three programs on the chopping block, statements issued by U.S. Rep. Barney Frank (D-Mass.), who serves as ranking member of House Financial Services, neglected to mention the Home Affordable Modification Program.

Congress appropriated $7 billion for the Neighborhood Stabilization Program, which included $2 billion in stimulus funds. Two round of funding through the program have been provided to states and localities, but the bill being drafted by House Republicans would prevent a third round of roughly $1 billion in funding.

According to information from the Iowa Department of Economic Development, the state received roughly $21.5 million in funding as an adjunct to the Community Development Block Grant Program to provide emergency assistance to state and local governments to acquire and redevelop foreclosed properties that might otherwise become a source of abandonment or blight. Of that funding, approximately $4 million was earmarked for Des Moines and $1.5 million for Davenport. The cities of Cedar Rapids, Council Bluffs and Sioux City each had about $1.2 million allotted during state formulas, and the cities of Waterloo, Dubuque and West Des Moines were also expect have shares of the money to combat blight. The cities were singled out based on a formula used to calculate “Entitlement Cities,” and the department noted that if any decided not to accept the funding, the monies would instead be moved into a competitive application pot.

Nationally, of the roughly $8 billion that was appropriated for the FHA Refinance Program Termination Act, only about $50 million had been disbursed (about 35 applicants as of December 2010). The bill by House Republicans seeks to terminate the program and rescind all unused funding. It is unclear how much of the disbursed funding, if any, has made it into Iowa.

The Emergency Mortgage Relief Program is a reauthorization of the 1975 Emergency Homeowners’ Relief Act that was made possible by the larger Dodd-Frank Wall Street Reform and Consumer Protection Act, which became law in July 2010. It provided $1 billion for the U.S. Department of Housing and Urban Development to make mortgage relief payments to homeowners facing foreclosure for up to 12 months, and provided a pathway to an additional 12-month extension.

Perhaps not surprisingly, this was the piece of legislation most defended by Frank, who said the program is designed not to help people who were “imprudent or irresponsible,” but those that are unemployed. He called it “the single most effective anti-foreclosure program that has been put forward,” and noted that Alabama, Bachus’ home state, had a similar program in place.

If Republicans want to cut spending, Frank said, “there are better ways … than by attacking these programs.”

“If you didn’t pay your mortgage, you shouldn’t be in your house. Period. People are getting upset about something that’s just procedural.” said Walter Todd, portfolio manager at Greenwood Capital Associates. [...]

“Everyone’s responsible for following the law. If we all don’t have to pay our mortgage, should we just stop paying taxes, too?” said Anton Schutz, president of Mendon Capital Advisers. “Your mortgage didn’t get to a robo-signer by accident, it’s because you’re not paying.”

John Carney has a smart and more nuanced post on the topic as well, here. I actually don’t disagree with these points. But I would also note that servicers have in many cases resisted helping homeowners in foreclosure with principal write-downs, modifications or other solutions. The system did not work to keep families in homes. It worked to process foreclosures as fast as possible.

To get a sense of how that happened, I spoke with April Charney, a lawyer at Jacksonville Area Legal Aid, a non-profit clinic that helps low-income Floridians. The interview is lightly edited for clarity.

TWI: Some, including J.P. Morgan Chase chief executive Jamie Dimon, are arguing that this is a paperwork problem, and the homeowners undergoing foreclosure were in default.

April Charney: There is a contract that Fannie and Freddie applies to all its home loans, a customer service, of sorts, that you pay for in your mortgage. It is hundreds of pages online and it’s called the “single-family loan servicing guideline.” There’s a section just for default loan servicing — for servicing loans when the homeowner is in default — and it lays out requirements of the servicers. Any servicer of a Fannie- or Freddie-backed loan, when a borrower goes into default, the servicer has to give the borrower this very special customer service to try to avoid the foreclosure.

It never happens. The servicers just push the loans into foreclosure. They’re missing that entire legal step. We have a complete and utter failure of default loan servicing — a contractually required step in the process that’s there to help homeowners in default. It is preexisting, far preexisting this crisis. And it’s in every contract, and every servicing agreement. The servicer is supposed to be bound to those best practices.

So I’m sick of hearing — they’re in default! They’re not paying their mortgage! They’re delinquent! The servicers have whole books of rules about what they’re supposed to do to aid the homeowner in that case. And they haven’t done any of it.

TWI: Are these guidelines, or are they actually obligated to do it?

AC: No, it’s a breach of contract. And it’s also in the pooling and servicing agreements [for mortgages that have been sold to investors, rather than being held by the mortgage-originating bank]. That’s a breach of contract, as far as the servicers and the investors are concerned.

TWI: And what were the lenders doing, rather than servicing the loans properly?

AC: The servicers were moving homeowners into foreclosure as quickly as possible. Basically, they were paid up to twice as much to finish the foreclosure. And their agreements [with investors] required them to do it within four months of default. Plus, they weren’t staffed up, they weren’t careful, they had absolutely no intention of providing the proper services to the homeowners. They were rubbing their hands, and licking their lips, and foreclosing as fast as possible, and getting paid.

Look, they agreed to service the loans! And there were regulations in place to keep families in their houses. You show me a family that goes through 30 years on a loan without a problem, and I’ll show you somebody who walks on water!

TWI: And what should they have been doing to keep families in their homes?

AC: There’s an entire process — it’s almost like an out-of-court bankruptcy plan, when you work through the guidelines. You can modify the loan, you can change the payment schedule. There’s all sorts of alternatives.

TWI: And so it’s unfair to push homeowners into foreclosure, then blame them for the foreclosure crisis?

AC: There was such a demand for securitized mortgage products, these loans were artificially appraised — appraised for much more than the homeowners could afford or the houses were worth. So, they’re liar loans in more than one sense. We have no appraisal system that’s functioning in this country. We have no title insurance system that’s functioning in this country. And we have no lending system that is functioning in this country. So we should probably stop the foreclosure system, that’s functioning too well, until we have that sorted out.

And I’ll note, these problems aren’t just in residential mortgage loans. These problems are in commercial loans, and credit cards, and student loans, and all sorts of other kinds of debt. There are a lot of shoes that are going to drop.

But the outlook looks grim for the bank — and especially when it comes to mortgages. This afternoon, about 40 state attorneys general are set to announce a joint investigation into widespread foreclosure fraud. Some analysts argue that the scandal could engulf every mortgage securitized — that is, bundled and sold to investors — in the last seven years. All in all, the crisis could cost banks tens of billions.

And J.P. Morgan’s statement reveals it is battening down the hatches. The company said it has set aside an extra $1.3 billion for possible legal costs. It also said it is carefully reviewing 115,000 mortgage affidavits in an earnings call. (CEO Jamie Dimon tried to reassure call participants by saying there is “almost no chance we made a mistake” with foreclosures.) And it revealed that it increased its mortgage-repurchase reserves by $1 billion. The bank uses that money, now more than $3 billion, to buy back bad mortgages it packaged and sold to investors or the government-sponsored entities, Fannie Mae and Freddie Mac. (Often, the investor makes the bank buy the mortgage back because the documents are faulty.)

That implies J.P. Morgan alone is preparing for a multi-billion-dollar fallout. Watch for other banks to do the same when they reveal their third-quarter earnings, this week and next.

But regulations on servicers are thin. Servicers can, Andy Kroll noted earlier this year, change their charges and fees without notifying homeowners in advance. The companies routinely mess up families’ paperwork. And often they benefit from the confusion — tacking late-payment or wrong-payment fees onto customers’ bills.

Servicers have existed for decades, but have remained obscure — to the press, to the public and even to the regulators meant to be overseeing them. The federal regulators in charge of mortgage servicers — including the Office of the Comptroller of the Currency and the Federal Trade Commission, though each in a limited capacity — generally have not taken action when they break laws. In fact, though the Housing and Urban Development Department receives thousands of complaints a year, Washington hardly ever reacts. Instead, state governments are responsible for regulation. And that means a patchwork quilt of responses. Some states, like Ohio, go after the companies aggressively. Others don’t.

The good news is that this will soon change. Already, the Consumer Financial Protection Bureau technically has the mandate to oversee and write rules for mortgage servicers, though it is not staffed or set up yet. If the foreclosure fraud crisis is big enough, the new Office of Financial Research and Financial Stability Oversight Council might become involved. And last week, Rep. Brad Miller (D-N.C.) said of Congress, “We now have resolution authority that we can take out for a spin.”

Plus, Congress and the White House are now paying attention. Though the administration is using kid gloves, not pushing for new solutions or calling for a national moratorium on foreclosures, the Hill is more active. Sens. Richard Shelby (R-Ala.) and Chris Dodd (D-Conn.) have called for hearings when Congress comes back into session, after the November elections. Other offices I spoke with, including Sen. Sherrod Brown’s (D-Ohio), said they are considering new legislation or hearings to look into the fraud crisis. In the meantime, about 40 state attorneys general are investigating or initiating cases related to the crisis.

I write to request that your mortgage-servicing division suspend foreclosures on Nevada home owners until systems are in place to ensure Nevadans are not being improperly directed into foreclosure proceedings.  I also renew my request that your firm meaningfully participate in the Nevada Housing Division’s Hardest Hit Fund (HHF) program by matching in kind any mortgage-principal reductions provided by our state agency.

Recent reports that some mortgage servicers have made misrepresentations in foreclosure-related court documents revealed they are cutting corners in their efforts to process the large volume of delinquent home owners. Some servicers have rightfully suspended foreclosures in those states that have judicial-foreclosure proceedings until they complete a review of their processes to ensure affidavits and other court documents meet the appropriate standards.

While Nevada is not among those states, suspending foreclosures on Nevadans is also justified because the reports of shoddy and defective affidavit preparation suggest that servicers might not be reviewing a home owner’s loan documents with the requisite care.  To be sure, a closer review of these documents could lead a servicer to initiate a foreclosure in many cases.  But I’m concerned about those cases where carefully analyzing a home owner’s income and debt would lead to the conclusion that a modification is the best solution.  These are the cases where adjusting the terms or reducing principal of the mortgage would result in the net present value of the loan being greater to the lender than it would recover through foreclosure.

It is only fair to Nevada home owners, consequently, that you also suspend foreclosures in our state until you complete a review of your processes that ensures a home owner’s loan documents are being adequately analyzed to properly determine the best, individualized loss-mitigation solution.  It is my belief and hope that once such a system is in place, more Nevadans will avoid foreclosure and remain in their homes.  This is the goal of the Obama Administration’s various Making Home Affordable programs, and should be the goal of a servicer acting as a fiduciary to investors.

Additionally, since months have now passed since I last made the request, and the Treasury Department has now approved Nevada’s and the other HHF states’ foreclosure-prevention programs, I ask again that you consider matching the dollars contributed by the Nevada Housing Division through these programs.  The Housing Division has designed both a principal-reduction and a second-mortgage-reduction plan that will only be successful with your commitment to do so.  Indeed, many of Nevada’s local community banks have made this pledge.  The similarities between the various state HHF plans should streamline your participation and provide the scale necessary to significantly reduce foreclosures in all of the hardest-hit states, quickening a recovery in these struggling housing markets.

I appreciate your consideration of these requests, and I look forward to your response.

Sincerely,

Harry Reid

U.S. Senator, Nevada

Three of the biggest mortgage servicers — Ally Financial, J.P. Morgan Chase  and Bank of America — have halted foreclosure-related evictions and in some cases other proceedings in the 23 states that require a judge to OK a foreclosure.

Nevada is the state worst-hit by the unemployment and foreclosure crises. There, nearly 70 percent of homeowners are underwater or nearly underwater on their homes.

[Richard Cordray, the Attorney General for the state of Ohio] has filed a lawsuit in Lucas County (Toledo) Common Pleas Court against GMAC Mortgage and their parent company Ally Financial, in a suit which names Jeffrey Stephan, the infamous “robo-signer” who signed off on up to 10,000 foreclosures a month across the country with affidavits, without verifying the information in the foreclosure documents. The lawsuit alleges fraud on the part of GMAC, along with violations of the Ohio Consumer Sales Practices Act, in filing false affidavits to mislead the courts in what they describe as “hundreds” of Ohio foreclosure cases. And, the Attorney General is treating every single false affidavit filed in an Ohio court as a separate violation, with a fine of up to $25,000, plus additional restitution for the homeowner of an unspecified amount.

This is a major lawsuit, and as Cordray told reporters, “We’re at the beginning of this, not the middle or end, and we’ll see where it leads us.” For context, approximately 450,000 foreclosures have been filed in Ohio since 2005, and potentially all of them used this robo-signing process. At the outer edge of this, if every one of those foreclosure processes is seen as a single case of fraud, the fines for the entire lending industry would add up to $11.25 BILLION dollars, just in the state of Ohio, not including the extra restitution for homeowners.

And political pressure is growing from all levels of government — local, state and federal, from attorneys to senators — for all banks to halt all evictions until the paperwork fiasco is sorted out. Rep. John Conyers (D-Mich.), for instance, sent out this advisory this afternoon, calling for a halt to evictions in Michigan:

Thus far, only three lenders — [Ally], Bank of America, and JP Morgan Chase — have ceased post-foreclosure enforcement actions in 23 states that have court-controlled foreclosure proceedings: Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont, and Wisconsin. Even those lenders appear to have only ceased evictions, while they continue to engage in foreclosures, which take title from homeowners.

At this point Michigan and 26 other states are not on the moratorium list for these lenders, purportedly because they have a non-judicial foreclosure process. However, without judicial oversight, the possibility of abuse can be even greater in these states. As a result, elected state officials in non-judicial foreclosure states such as California, Colorado, Texas, Massachusetts, and Maryland have recently asked lenders to suspend their foreclosures.

And Sen. Jeff Merkley (D-Ore.) is calling for Treasury and Housing and Urban Development officials to name a special investigator into the fraud crisis and to halt foreclosures in the meantime. In a letter, he writes:

According to credible reports … Ally Financial did not exercise proper professional standards as decisions were made about the fate of families struggling to maintain their homes. These reports are even more disturbing because the U. S. Government is a majority stakeholder in Ally Financial. The recent freeze in foreclosures announced by J.P. Morgan Chase, GMAC Mortgage, and Bank of America while internal investigations take place suggests that this problem may be widespread and not limited to poor management at a single company.

Accordingly, I request that the full resources of your departments, and of other relevant agencies of the U. S. Government, be brought to bear on this situation. Specifically, I urge you to jointly appoint an independent investigator to examine the foreclosure actions at the major loan servicers. I believe that foreclosures initiated by Ally Financial and other servicers with established problems should not be allowed to move forward until it can be ascertained that all proper steps were followed for any affected homeowner.

The signature Obama program to ameliorate this crisis was the Home Affordable Modification Program, or HAMP, which helps homeowners modify their mortgages for lower monthly payments.

But the program has proven frankly disastrous — in many cases hurting the families it was meant to help. The administration expected it to help 3 to 4 million homeowners. It has aided a fraction of that, completing just 434,700 permanent modifications, according to the last scorecard. The process frequently takes months and requires applicants to file extraordinary amounts of paperwork. About half of applicants are rejected during the trial modification period. Worst, for many HAMP participants, their monthly mortgage payment barely goes down. Those homeowners often keep paying a mortgage they can’t afford for a while  before defaulting anyway, meaning the bank is the real winner.

Now, rather than doubling down and helping homeowners, the administration is shuttering, or at least shrinking, the program. As David Dayen noticed, a recent Treasury report on the Troubled Asset Relief Program tucks in the detail that the government is granting HAMP just half of the funds it originally allocated.

As for President Obama’s mortgage modification program, the CBO estimates that the Treasury Department will use no more than $20 billion of TARP funds, less than half of the $50 billion originally allocated. That’s because the CBO expects many fewer people will participate in the program than the government originally expected, a view held by many housing industry observers.

When Obama announced the program in February 2009, he said up to 4 million people could save their homes through the loan modification program, which lowers eligible borrowers’ monthly payments to no more than 31% of their pre-tax income. But more recently, officials have backtracked and said up to 4 million people could qualify for trial modifications, during which loan servicers assess their borrowers’ eligibility and ability to pay.

Through February, around 170,000 distressed homeowners have received long-term modifications under the program. Another $1.5 billion in TARP funds will be used to provide grants to state housing agencies in California, Arizona, Nevada, Florida and Michigan. These agencies are tasked with coming up with programs to assist the unemployed, the underwater who owe more than their homes are worth, and the second-lien holders.

All I can say is that I hope they funnel the additional $30 billion into other, better initiatives to help homeowners.