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by Neil Roland via The Street

Mortgage brokers, many of whom originated deceptive loans that helped trigger the 2008 financial crisis, are still supervised by a dysfunctional patchwork of state and federal regulators.

A federal lawsuit against a leading mortgage broker last week exposed a gaping regulatory hole that will persist as long as Senate Republicans block appointment of a chief for the new consumer agency.

The U.S. Consumer Financial Protection Bureau created by the Dodd-Frank legislation can’t examine or supervise mortgage brokers until it gets a director confirmed by the Senate. Former Ohio Attorney General Richard Cordray was nominated in July, but a Senate vote has not yet been scheduled.

Senate Republicans headed by their leader, Mitch McConnell of Kentucky, and Richard Shelby of Alabama are playing Russian roulette with borrowers’ homes and assets by threatening to block Cordray’s nomination. If he were to be confirmed, the consumer agency would likely have the focus and independence to prevent a massive decade-long fraud like that allegedly conducted by Allied Home Mortgage Capital Corp.

"These crises can be averted," said William Black, an economics and law professor at the University of Missouri in Kansas City who was a senior thrift regulator in the 1980s. "But if you create regulatory black holes, mortgage brokers will just move to areas where regulation is weakest."

The hazards of the status quo were highlighted by the federal civil-fraud complaint last week against Allied, which billed itself as the nation’s largest privately held mortgage broker.

The allegations, if true, show how a determined broker can easily sidestep disengaged and unconnected regulators. Since 2003, three federal agencies and more than a dozen states cited or settled with Allied or a related company for misconduct, according to a 2010ProPublica story. Yet Allied chugged along. Thousands of other mortgage brokers committed similar deception about loans they were peddling in the run-up to the financial meltdown.

In 2005, many of the $1 trillion in nonprime loans were handled by mortgage brokers, who were paid by lenders to prepare loan paperwork for borrowers, according to the Financial Crisis Inquiry Commission report.

Many of the 200,000 new brokers who began their jobs during the subprime boom had criminal records, the January report said.

It cited a Miami Herald story that said more than 10,000 brokers with criminal records entered the field in Florida between 2000 and 2007, 40% of whom had been convicted of crimes such as fraud, bank robbery, racketeering or extortion.

"Lack of accountability created a condition in which fraud flourished," Marc Savitt, former National Association of Mortgage Brokers president, told the commission.

The regulatory structure at the time, which remains in place to this day, consists largely of the states and the Federal Trade Commission, whose varied missions include consumer protection. Brokers that originate mortgages backed by the Federal Housing Administration also are monitored by that agency.

The problem with FHA oversight, as the Allied case shows, is that it relies on supervision by federal computers that are easily evaded.

No boots are on the ground in the form of federal examiners, nor is there any umbrella coordination of state efforts. The CFPB, which began operating in July, is the only government agency in the United States with the dedicated mission of protecting consumers in the financial marketplace.

"I believe that a fully functioning CFPB would be more likely to identify and prevent serious violations of law by mortgage brokers and nonbank lenders," George Washington University law professor Arthur Wilmarth said.

Without a director, CFPB can examine the 100 or so banks with assets of more than $10 billion, and has begun doing so. The agency also has asked state regulators to share information about enforcement actions taken to protect consumers against mortgage abuses.

But it can’t oversee nonbank providers such as mortgage brokers and servicers, payday lenders and debt collectors. The federal suit last week alleged Houston-based Allied cost the FHA at least $834 million in insurance claims on defaulted home loans.

The broker engaged in "reckless mortgage lending" in originating 112,324 FHA-backed loans, most to low- and middle-income borrowers, from 2001 to 2010, the complaint contended. About a third of those loans defaulted, leaving thousands of homeowners facing eviction.

Allied, headed by Jim Hodge, who also was sued, did not reply to requests seeking comment. The broker successfully evaded housing regulators through a series of maneuvers, prosecutors alleged.

When an Allied branch office approached unacceptably high default rates, the company made a subtle change to the office address to fool FHA computers and ostensibly create a new branch with a blank default slate.

All the broker had to do to hoodwink the government was change "Street" in the address to "St.," or add a suite number, the suit alleged.

When the FHA upgraded its system to prevent such manipulation, Allied simply switched ownership of its branches to a successor entity with a slightly different name.

And in 2006, when the FHA barred a North Carolina branch of Allied from originating loans, the broker said the mortgages were from a different branch with a cleaner slate, according to the suit.

In Congress, the Republican charge is being led in part by Shelby, by far the leading 2010 recipient of campaign contributions from finance and credit companies, according to the non-partisan Center for Responsive Politics. Shelby, the top Republican on the banking committee, and 43 other Senate Republicans sent a May letter to President Obama calling for revisions in the Dodd-Frank law.

Their letter called for "accountability" for the consumer agency — oddly, the same concept said to be lacking for mortgage brokers during the subprime boom.

The Republicans threatened to block the appointment of any agency director unless CFPB was headed by a bipartisan board rather than a single director. The agency also should be funded by Congress rather than through the self-supported Federal Reserve, they said.

Under Senate rules, it would take 60 votes to halt the filibuster threatened by the 44 Republicans. The White House has not disclosed its plans nor whether it is holding any back-room talks with Senate Republicans.

But this is a clear-cut issue — the protection of consumers against the potential greed of mortgage brokers — on which the president should stand tall.

 

 

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Laura Vecsey, Zillow

Dobermans released every two hours to patrol the property. Underground streets lined with a restaurant, bars and a barber shop. A private beach and marina sculpted into the shores of Lake Erie. Helicopter pad. Rotating garage floor made of marble so no one had to back out that rare Ducati.

These are just a few of the unique features found in the Waterwood Estate, a fascinating Ohio property owned by the late Don Brown, an inventor who gave the world the drop ceiling.

“It takes four-and-a-half hours to show this property,” said Scott Street of Sotheby’s, the listing agent for the Waterwood Estate, which is now listed on the Vermilion real estate market for $19.5 million.

The property sits on 160 acres, boasts three-quarter miles of frontage on Lake Erie and contains a series of “pods” connected by glass corridors that were navigated by scooters and golf carts.

When Brown and his wife, Shirley, were killed in a plane crash in 2010, their two living sons (their third son, Kevin, died in a speed boat race in 1989) decided to sell the sensationally unique property. But to who?

So far, Street said the listing has attracted a ministry group and a group of Colorado helicopter pilots have expressed interest in turning the property into a fly-in, fly-out resort (Waterwood comes with an FAA-approved helicopter pad). Then there’s a couple who, perhaps like the octogenarian Browns, wants to grow old in an amenity-laden house.

“This was a very forward-thinking house when it was built in 1990 in terms of systems and functionality,” said Randal Darwin, vice president of CB Richard Ellis, the firm brought in to help market Waterwood.

“It was 20 years ahead of its time because of its features and unique characteristics. Mr. Brown literally broke the mold on this house. I know he had the white brick specially fabricated for this project and when it was done, he had the molds destroyed so no one else would ever use them,” Darwin said.

These few details only begin to tell the story of Brown’s Waterwood Estate. One other important fact? The listed size of Brown’s dream house is off — by about 30,000 square feet.

The Inventor and the Architect

“They’ve got the square-footage listed wrong,” said architect Hugh Newell Jacobsen. “It’s not 38,000 square feet. It’s 60,000 square feet. The underground floor is the same size as the main floor. They forgot to count that.”

Jacobsen would know about the true size and intricacy of the Brown estate. The world-acclaimed architect was hired by Brown to deliver the visionary design, just as Jacobsen has done for more than 400 private homes for clients that included Jackie Onassis, Meryl Streep and members of the Mellon family. But the collaboration ended when the secretive Brown fired Jacobsen.

“We were a year-and-a-half into the project and he sacked me. I’ve never been fired before,” Jacobsen said from his Washington D.C. office, still bemused about the turn of events.

“He kept a secret of his life. He thought everyone wanted him. He’d say, ‘Hugh, jealousy is a terrible thing.’ I asked him, ‘Don, do you think I’m jealous of you?’ I think he was offended,” Jacobsen said.

At 81, Jacobsen has been at the forefront of American architecture for sixty years, ever since he attended Yale and apprenticed with Philip Johnson. The rich and famous are Jacobsen’s clients. He delivers uniquely landscaped structures that reference the Quaker-simple lines of the American barn, smokehouses and farmhouses. He has won many awards and published three books cataloging his work, but his first look at the Waterwood Estate came when he saw listing photos after the property was put up for sale.

“About two months before he died, after 20 years since I’d heard from him, he called and said,  ‘I guess you’d like to see the place.’ I said, yes, I’d like to see it. My homes are like my children. But then he died in the crash,” Jacobsen said.

Jacobsen used his trademark “pod” style design to give the design more flexibility and allow it to evolve as Brown wanted other things added. The entire home is a series of 20 castle-like concrete buildings connected by glass corridors and each structure is topped with a slate pyramid.

Marble, Glass, Polar Bears and Dobermans

On the lower level of the house, there are a series of streets built to scale and named after streets in cities like Georgetown, Paris and Savannah.

“There were five bars in the house, one with a full-mounted polar bear. There’s a barber shop with a pole where Don would go every morning for a shave. At one end of the house, he had cages that would open every hour on the hour and two Dobermans trained to run the perimeter of the property would run out. The next hour, another pair would take off,” Jacobsen said.

He also used tons of sand and dirt from the lake shoreline, where cliffs were graded to build a beach and the harbor, to shape hills into the flat, Midwestern terrain. From the road, the house is not visible behind those hills. But from the lake, boaters can see the modernist white castle.

If it sounds wild, Jacobsen disagrees.

“No, it’s not wild. It’s your dream. This house is the house of an inventor. It has a space where, inside eight white columns, there are chairs and a couch. This floor lifts up through the ceiling to a pergola so guests can look out over the lake. The floor also goes down to the ground floor, where there’s a piano so the family can sing Christmas carols,” Jacobsen said.

“Near the main entrance, there is a 10-by-10-foot room behind the closet. You slide the door, remove the clothes’ pole and there’s a fully decorated Christmas tree. The room had its own air filter and air conditioner to keep the dust off the ornaments. He was so embarrassed about having a fake tree he had it sprayed so that it smelled like pine needles,” he said.

What amuses Jacobsen is that despite being fired, his plans were fully executed. Brown brought in another renowned and innovative architect, the late Hideo Sasaki.

“Don told Sasaki, ‘Don’t change Jacobsen’s plan.’ And they didn’t change a thing. Sasaki would call and tell me,” Jacobsen said.

During his lifetime, Don Brown never allowed the property to be photographed. It was a sanctuary for his family, lacking for nothing. Now, with the house listed for sale and photographs to prove its splendid fruition, the architect who designed Don Brown’s house is curious.

“He was building his dream, he had money and he hired me. We bought the furniture, the art, we did the landscape, then I was fired. I’d like to see it, but I’ve  never paid my own airfare to see a home I built for a client,” Jacobsen said.

And if you’re wondering whether the home has a drop ceiling, it does — in a workshop.

 

 

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Kari Huus, msnbc

California woman’s case may show how movement can use its muscle against banks.

LA PUENTE, Calif. — Rose Gudiel and her family were squatters in their own home. They had lost a two-year battle against foreclosure, and the eviction date had arrived. They hunkered down in the house on Sept. 28, surrounded by dozens of homeowner advocates and friends, hoping to stave off forcible removal.

“(The bank) kept saying we can’t do anything. Your case is closed,” said Gudiel. “Our stand was, ‘No, we’re not leaving. This is our home. We worked hard for it and we’re just not going to leave.’”

But instead of the anticipated confrontation, there was a dramatic reversal of fortune. Fanny Mae canceled the eviction notice and offered the Gudiels a loan modification that could enable them keep their home.

Why? Fannie Mae and loan servicer OneWest won’t discuss the case. But nonprofit advocates say a series of bold protests — with reinforcements from the “Occupy Wall Street” movement — and a spate of media interest put Rose in the limelight and forced the banks to back down.

It was a small victory — and Gudiel still has to finalize her deal with the bank — but one that Southern California housing activists hope to repeat. It also provides an example of how the sprawling "Occupy" movement — often criticized for its lack of focus — can lend muscle to specific goals pursued by organizations and individuals.

Gudiel’s version of the foreclosure on the 1,200-square-foot home she has shared with her parents and a brother in this working-class suburb of Los Angeles since 2005 is starkly at odds with the limited information provided by the banks.

According to Gudiel, when she tried to make the $2,500-a-month mortgage payment two weeks late in November 2009, OneWest refused the payment and instructed her to pursue a loan modification, a long process that ultimately ended in rejection in January.

Gudiel said she fell behind when the family suffered a tragedy and two financial setbacks: Her brother, Michael, was killed in a drive-by shooting, meaning he was no longer contributing to the mortgage payment. At the same time, Gudiel was temporarily earning less in her job with the California Economic Development Department after being furloughed because of the state budget crisis.

Shortly thereafter, Rose Gudiel’s income returned to normal, and a second brother moved in to help with the mortgage.

Gudiel continued to work through the loan modification process but encountered obstacles at every turn, said Peter Kuhns, director of the Los Angeles branch of Association of Californians for Community Empowerment, a nonprofit that has been working on her case.

“Month after month, she supplied documentation to the bank for the modification,” he said. “At the same time, each month she saved the money she would have used to make the house payments so that she could make back payments (so) at any point OneWest could accept her money.”

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David Lachapelle, Design Boom

Natural Architecture

The natural environment still manages to fill us with a sense
of awe and amazement. despite the amount of scientific
knowledge mankind has gathered, nature still holds great
mysteries that we may never be able to unravel.
this complexity has continually daunted man. in frustration, we
try to control nature by enforcing order. as a result,
we have distanced ourselves from the earth, even though
our survival is completely dependent on it. we are now trying
to regain our close connection to nature.

There is an emerging art movement that is exploring mankind’s
desire to reconnect to the earth, through the built environment.
referred to as ‘natural architecture’, it aims to create a new,
more harmonious, relationship between man and nature by
exploring what it means to design with nature in mind.

The roots of this movement can be found in earlier artistic
shifts like the ‘land art’ movement of the late nineteen sixties.
although this movement was focused on protesting the
austerity of the gallery and the commercialization of art,
it managed to expand the formal link between art and nature.
this has helped develop a new appreciation of nature in all
forms of art and design.

The ‘natural architecture’ movement aims to expand on ‘land art’
by acting as a form of activism rather than protest. this new
form of art aims to capture the harmonious connection we
seek with nature by merging humanity and nature through
architecture. the core concept of the movement is that
mankind can live harmoniously with nature, using it for our
needs while respecting its importance.

The movement is characterized by the work of a number of
artists, designers and architects that express these principles
in their work. the pieces are simple, humble and built using the
most basic materials and skills. because of this, the results
often resemble indigenous architecture, reflecting the desire
to return to a less technological world. the forms are stripped
down to their essence, expressing the natural beauty inherent
in the materials and location. the movement has many forms of
expression that range from location-based interventions to
structures built from living materials. however all of the works
in the movement share a central ethos that demonstrates a
respect and appreciation for nature.

These works are meant to comment on architecture and provide
a new framework to approach buildings and structures.
they aim to infuse new ideas into architecture by subverting
the idea that architecture should shelter nature. instead,
the structures deliberately expose the natural materials used
in the building process. we see the branches, the rocks and
all the materials for what they are. we understand that these
structures won’t exist forever. the materials will evolve over
time, slowly decomposing until no evidence remains.
these features are intentional, provoking viewers to question
the conventions of architecture. the designers aren’t suggesting
that architecture must conform to their vision, they are just
providing ideas that they hope will inspire us all to rethink the
relationship between nature and the built environment.


‘la tonnelle’ by gilles bruni and marc babarit, 1996


‘ash dome’ by david nash, 1977


‘organic highway’ by mikael hansen 1995


‘bridge in moasi, china’ by edward ng, 2005


‘clemson clay nest’ by nils-udo, 2005


‘weidendom’ by sanfte strukturen, 2001


‘reed chamber’ by chris drury, 2002


‘running in circles’ willow and maple saplings, patrick dougherty, 1996


‘toad hall’ by patrick dougherty, 2004


‘fog pad’ by n architects, 2004


cover of ‘natural architecture’ by alessandro rocca, published by princeton architectural
press, 2007 – all the images featured in this article are taken it.

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