By collecting on a woman with Stage 4 Breast Cancer, which is going to be all over every local North Carolina news broadcast by the end of tonight, and every national news outlet tomorrow. After all, when has any story about a bank that's started off like this...

To say that Kirk Davis loves his wife Cindi just doesn’t quite cut it. Married for 19 years, Kirk and Cindi are in it together, for better for worse.

...ever—ever—ended well for the bank? And oh, does this WCNC report get better (and worse):

But cancer is just one of their fights. Kirk and Cindi Davis are also fighting to keep their home. In and out of foreclosure since 2008, Wells Fargo is telling Kirk and Cindi they have to pay $873 a month to stay. "They want us to make a house payment of almost $900 a month. We can afford maybe half that. I pay $1,100 a month in prescription medications," Cindi said.

Before we get to Wells Fargo's response, here's the last sentence of the report:

"If it does hit the brain, there's nothing we can do," cried Cindi's husband, Kirk.

"And by 'nothing we can do' he means 'nothing we can do (to pay your loans off, because we're dead)'" some middle manager at some point explained to some well-to-do collections agent below him, who, let's face it, got better job perks at The Gap only thee months ago.

Naturally, Wells Fargo response to this is standard "we can't disclose individuals' etc" boilerplate flackspeak:

"We understand that many of our customers may face challenges beyond their mortgage payment, so we often work with local housing counselors and other non profits that can help determine if any other assistance may be available. It’s important for customers to continue to work with their servicers and advise them of any changes in their situation. In assisting customers we must follow investor guidelines. These guidelines determine the kind and amount of assistance a borrower may receive. We work hard to help our customers maintain homeownership and view foreclosure as a last resort."

Which, again, instills confidence in their collecting ability. Humanity? Meh.

fkamer@observer.com | @weareyourfek

The government wants in. (BasicGov, flickr)

California has been the ‘cool kid' of states, reinstating hippie-esque garb for daily wear and passing laws that appeal to a weed-loving population.

Now, the several cities in the state are toying with a novel—and highly debated—idea that would utilize its eminent domain power to restructure mortgages, without actually seizing the homes, The Wall Street Journal reports.

It’s a plan with obvious appeal for California's many struggling homeowners, but as cool kids and trendy new ideas are sometimes wont to do, it's ticking off a certain portion of the Cali population—the investors who own the loans.

Officials in San Bernardino County cities Ontario and Fontana, citing blighted neighborhoods and communities, propose using the state's eminent domain power—most commonly used to seize land from homeowners and re-allot it for public use—to acquire underwater mortgages (loans that exceed current property value) and decrease the loan principle to match the current property value. They would then resell the reduced mortgages to new investors.

The idea is to keep people in their homes at a time when foreclosures are rampant. The officials want to help borrowers who owe more than their homes are currently worth.

Those in favor of the untraditional use of eminent domain say that it will help reduce the debt that’s restraining economic growth, while also helping to ward off foreclosures that chip away at the tax base. But loan owners are less than thrilled about the intrusion into their profiteering ways.

"I don't see how you could find it anything other than appalling," Scott Simon, a managing director at Pacific Investment Management Co., or Pimco, a unit of Allianz SE, told The Journal.

And the plan, though it sounds almost revolutionary, would not be as far-ranging in scope as it might appear. Homeowners would need to current on their payments to qualify for the program, and it would only focus on mortgage-backed securities that aren’t federally guaranteed, which accounts for only  10 percent of outstanding U.S. mortgages. Cause, perhaps, for some future Occupy protests?

Opposition or no, supporters of the plan have vowed to move forward, generating outrage and we'd expect, a number of lawsuits.

sgrothjan@observer.com

Foreclosures in Dec. 2011

Foreclosures in Feb. 2007

Want to experience the housing market crash in less than a minute? You're in luck! The New York Fed has released an interactive map that displays foreclosures by county in the tri-state area between Jan. 2007 and Dec. 2011. (Warning: we do not recommend the map to anyone with an underwater mortgage or high blood pressure).

The map animation shows the New York's counties, as well as New Jersey's and Connecticut's, changing from a calming light peach (one percent of properties in foreclosure) to panicky dark red as the number of foreclosures climbs (more than four percent!). Watching it made the Observer's palms sweat.

The map reveals that Manhattan was the only place in the state with less than 2 percent of foreclosures (1.3 percent) in Dec. 2011, although considering that before the crisis, it sat comfortably at .1 percent, that number's still kind of scary. The outerboroughs fared much worse, with 8.3 percent in the Bronx, 8.1 percent in Brooklyn and 7 percent in Queens.

The map is frightening, but as a small silver lining, NYU's Furman Center for Real Estate and Urban Policy released a report this week that found foreclosure starts were down in most of the city—33 percent fewer foreclosure notices in the fourth quarter of 2011 compared to the same quarter in 2010

For a more calming experience, you can also watch maps of delinquent mortgages (60 and 90+ days delinquent) in purple and blue.

The map will be updated on a regular basis, according to the Fed.

“We are confident this tool will provide relevant and timely analysis to help inform the public, policy makers, and community leaders about these ongoing conditions," said Kausar Hamdani, senior vice president of regional and community outreach, in a release.

kvelsey@observer.com

We don't feel so well. (Getty)

For almost five years now, the housing crisis has been a drag on the U.S. economy, the U.S. psyche, the U.S. spirit. It turns out it is also dragging down Americans’ health.

A new study by two economists finds a relationship between the number of foreclosures in a community and the number of hospital visits, according to The Wall Street Journal. Princeton’s Janet Currie and Erdal Tekin of Georgia State University studied residents in Arizona, California, Florida and New Jersey, and they discovered “an increase of 100 foreclosures corresponded to a 7.2% rise in emergency room visits and hospitalizations for hypertension, and an 8.1% increase for diabetes, among people aged 20 to 49.” There has also been a rise in suicides.

The Journal notes that general financial stress could be as much to blame as the housing bubble, but since the two are so intimately intertwined, the case either way seems strong. Furthermore, because there was not a corresponding rise in cancer or elective surgeries at hospitals, it appears that the hospitalizations were more stress related than anything.

There is evidence of these problems outside the states studied, too. The Journal found Patricia Graci, a Staten Island woman whose husband lost his job as a painter in 2008, which led to two years of dwindling savings spent on mortgage payments until nothing was left. "Everything was going downhill. My savings were going down to nothing," Ms. Graci told the daily. "When I realized the money wasn't there anymore, I started getting very anxious and depressed."

Then there is the unfortunate case of Norman Adelman.

In 2008, Norman Adelman of Freehold, N.J., called his lender to ask for a forbearance of three or four months, saying he was about to undergo knee-replacement surgery. The lender complied and Mr. Adelman, who runs a home-energy business, says he began scaling back his work. He underwent needed tests and doctor visits.

After two months of not paying his mortgage, he successfully applied for a loan modification, taking his monthly payment from $2,700 to $1,900. But then the loan was sold—and a new servicer didn't recognize the terms of the arrangement, he says.

Mr. Adelman is fighting the new lender but says he has been in and out of the hospital for the last two years. He never had his knees replaced and is now on antidepressants and antianxiety medication.

"He's deteriorated. He's had sleepless nights," says his wife, Shulamis. "You always have this fear of being thrown out. He's just gotten worse and worse from not sleeping."

So which do we need more—chicken soup or loan modifications?

mchaban@observer.com

Nice suit, Mark. (Patrick McMullan)

If it is going to take at least six decades to unwind the foreclosure fiasco in New York, that can only mean two things: bad news for homeowners and good news for attorneys, especially those who know the right people.

The Times delivers another frontpage foreclosure whammy today about how the court system that is making the Empire State the slowest to processes foreclosures--California should be through the process in a few years--is also enriching lawyers in high places. The poster boy is Mark Lebow, husband of Mrs. Mayor Patti Harris, who has made $352,000 in fees after taking over the foreclosure of a Diamond District building in 2009.

As The Times points out, about 605 attorneys are cleared for such work, but those in the know seem to get the plummest properties:

Paul Vallone, a scion of one of Queens’s most powerful political families, earned nearly $17,000 for one assignment. Howard R. Vargas, a commissioner of the Taxi and Limousine Commission, was awarded $28,000 for three cases. Marc Landis, a Democratic district leader and member of the transition team of the new state attorney general, Eric T. Schneiderman, was compensated $22,000 for supervising three buildings.

And those were for assignments that were given out earlier in the foreclosure crisis and that have already yielded fees. The newest appointments, with the billing to come, are filled with even more lawyers with ties to the powerful.

Dominick Calderoni, a law partner of State Senator Jeffrey D. Klein, a Bronx Democrat, was handed six receiverships. William C. Thompson Sr., the father of William C. Thompson Jr., the former city comptroller and mayoral candidate, got six. Gregory C. Soumas, a member of the city’s Board of Elections, received two, though he said one property went into bankruptcy, ending his involvement.

It's Boss Tweed meets Fannie Mae/Alan Greenspan  [PICK YOUR POISON].

mchaban [at] observer.com | @MC_NYC

At least it feels good. (Getty)

At least not in the Empire State, as a cover story from the Sunday Times explains:

In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.

And this is as 2010 was a record year for foreclosures. There are those states like California and Nevada that should only take a few years to fix, the Gray Lady reports, while others—Florida, Massachusetts and Illinois—could take upward of a decade. Why, then, is New York so backward?

In New York, lenders seeking to repossess face additional hurdles. The legislature has mandated that borrower and bank meet to discuss terms under the auspices of the court, but these conferences have turned out to be anything but brief or simple. Instead of one conference, 10 are often needed, court officials say.

And many foreclosure lawyers seem unable to meet a requirement, made last October by the New York Chief Judge Jonathan Lippman, to affirm the accuracy of their documentation.

“The affirmation has had a pretty chilling effect,” said Ann Pfau, New York’s chief administrative judge. “The attorneys for the banks tell us they can’t get through to the right people at their clients who can verify the information.”

Last September, before the documentation crisis, nearly 1,500 New Yorkers lost their houses as a result of foreclosure, according to LPS. The average over the last six months: 286. That is far lower than at any point since the recession began.

Discussions? Accurate documentation? These notions are downright medieval!

mchaban [at] observer.com | @MC_NYC

The company might well have followed all proper procedures. But the extent of the company's involvement in the foreclosure business should raise concerns, especially in light of investigations that have uncovered unethical and illegal practices elsewhere. The firm has failed to provide proper paperwork in a number of cases, leading to criticism and, in one case, the imposition of sanctions from a judge. One lawyer said that the Baum firm's paperwork was riddled with irrelevant and poorly researched information.

The Baum firm has filed more than 50,000 foreclosure cases over the past three years, a figure that rightfully set off alarm bells in Mr. Schneiderman's office. It is worth noting, too, that federal prosecutors also are looking into the firm's dealings.

No property owner is entitled to hold on to a home or a building that he or she cannot afford. As sad experience has taught us, over the past 10 or 20 years, many people bought property they simply couldn't afford. Lenders have a right to seek legal remedies when property owners fail to make their payments.

That said, foreclosure is a drastic, and even tragic, measure. Lenders and the law firms they employ should be above board, their proceedings transparent and their paperwork beyond reproach.

The foreclosure business has taken on the look and feel of a white-collar assembly line. Mr. Schneiderman has every right to make sure that law firms and lenders are following proper procedures before taking such serious actions.

According to a report out from Zillow today, homes are on track to lose $1.7 trillion in value this year, 63 percent more than the $1 trillion in value they sacrificed in 2009. Much of that fall has come in the latter half of the year, after the first-time homebuyers tax credit expired. This suggests that the rate of devaluation could continue to accelerate through 2011 and possibly beyond.

The total value lost since the peak of the market in 2006 now stands at just over $9 trillion, for a total market of $22.7 trillion in homes, which is down a little more than 28 percent. Given that some are predicting continued housing troubles through 2014, that number could possibly double and the country would be looking at home values that have collapsed by half as a result of the bursting of the real estate bubble. Indeed, next year could be even worse, as foreclosures are expected to accelerate, at least in some areas.

Meanwhile, New York is doing better, but by no means well. The big story this year may be the roaring return of the high-end market (the Post said the same today), but across the five boroughs, home values still fell by almost $104 million. 

That is less severe than the $145 million lost last year, but compared to L.A., where values declined 48 percent year-over-year, New York fell 72 percent (about the same as Chicago). By comparison, Dallas, Philadelphia and Atlanta all saw greater losses this year than last year, while Miami and Washington, D.C., also saw their rate of decline accelerate.

Only 31 of 129 cities surveyed, or 24 percent, saw their market value rise, as Zillow's handily depressingly chart shows.

mchaban [at] observer.com | @mc_nyo

There were 1,466 foreclosure filings in the city last month, according to a report that came out today from Realty Trac. The Daily News points out that this gives New York one of the lowest foreclosure rates in the country. Unless, of course, you live in Brooklyn, where foreclosure filings actually climbed 9 percent last month, making it the second-most perilous county for homeowners in the state. 

But the main reason was a self-imposed freeze by banks shamed by Foreclosuregate (you may have read about it). That means we're likely set for a spike this month, experts say, as banks make up for lost time. 

And there's the rub. In the U.S. as a whole foreclosures were down a mere 4 percent, which some say is so slight it could be a statistical error. Despite the relatively slow rate of foreclosures in the state, one in every 2,087 houses in New York, and one in every 389 houses in the U.S., received a foreclosure notice in October. More than 2 million homes are currently in foreclosure, according to Realty Trac. That's a mess that no one-month moratorium is likely to clear up. 

It should be noted, however, that default notices (the first step in the process) also fell, suggesting we could be seeing some meaningful improvement. 

A first-rate article in last week's New Yorker compares the paperwork pile-up to an earlier debacle, in which the Wall Street of the 1960s was buried under a pile of securities certificates. It took years and legislation to put an end to the madness.

Happy Holidays.

lkusisto@observer.com

Reuters reports that Holder said today he's looking into "charges that have surfaced in the newspapers in the last couple of days." House Speaker Nancy Pelosi, Senator Al Franken and other members of Congress have asked various regulators to dig into allegations that major lenders have improperly foreclosed on properties.

Attorneys General in North Carolina, Texas and Connecticut have called for wholesale moratoriums on foreclosures in their states, while California and Massachusetts have asked particular lenders to suspend foreclosure activity. JPMorgan Chase and GMAC have each curtailed foreclosures  to review their processes and make sure employees properly prepared court documents.