Were there heroes in the foreclosure crisis?

Real Estate Agent with Utah Homes 9334967-SA00

David vs. Goliath.

We like those stories, right?

Recently "The Big Short" won several awards. It's a dramatic comedy that attempted to show how a few people were able to take advantage of the impending implosion of the mortgage market.

A lesser known story involves Lisa Epstein who had a hand in blowing the lid off foreclosure fraud.

The larger story can be found in "Chain of Title: How Three Ordinary Americans Uncovered Wall Street's Great Foreclosure Fraud" by David Dayen. The shorter story is encapsulated in the Salon article, "How one woman beat the big banks: The amazing true story about how Wall Street's mortgage fraud unraveled."

This is not a post about how great the books and movies were. Instead, it's a resource for a few less dry ways to learn about the consequences of a) insufficiently seeing warning signs in financial markets and b) persons of limited political stature doing what they could to address the problems that appear to be too big for a single person to correct.

One might say that the "heroes" of the big short were rewarded handsomely for discovering fraud. I've spent a great deal of time reading about them as well as interviews with them. If anything, they appear to be a bit disgruntled that the market reached such a point that greed won the day and so many people lost their homes and hit a financial spiral as forces bigger than them managed to extract a great deal of financial gain from the market conditions.

Also, they don't seem to feel that we've righted the ship. We're not immune to the conditions that existed creeping up again. Hopefully though- we'll be better at spotting the conditions next time around.

In the case of Lisa Epstein she was undaunted in her pursuit to read the fine print that could save her home.

I hate to be a spoiler- I'm not going to give her story away. Please read the Salon story if you're interested. I'm sure it will be time well spent.

Also- foreclosures are down to 2007 levels. I'm hoping this is a trough that will be longer lasting and not the beginning of an upward slope.

Comments (16)

Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Chuck- the signs were there back then but some chose not to see them or were blinded by $$.  If we don't learn from our mistakes, then we are dumber than I thought. I hope the same as you!

May 23, 2016 12:16 PM
Gayle Rich-Boxman Fishhawk Lake Real Estate
John L Scott Market Center - Birkenfeld, OR
"Your Local Expert!" 503-755-2905

Chuck, this missive ought to get more attention. I like how your mind works and you are an explorer, researcher and thus a sharer of your well-spent energy, thank you!

(I haven't seen The Big Short yet, but it's on my "short list"!!)

May 26, 2016 11:46 AM
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224


                          Thanks Chuck Willman UtahHomes.me for my ah-ha moment. 

May 28, 2016 11:30 AM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I am glad that Kathy Streib featured this - I will have to read the Salon article - thanks for letting us know! 

May 28, 2016 09:12 PM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning Chuck Willman UtahHomes.me ,

I would have missed this thought provoking post had I not seen it highlighted on Kathy Streib 's post this morning of her "Ah-Ha" moments of the week. I'm with Gayle Rich-Boxman Fishhawk Lake Realtor (503)755-2905 this post devers more attention! Thank you for your research and sharing your thoughts. Will make time to see  "The Big Short."

May 28, 2016 10:28 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

Lots of tears shed....and we shared them during this crisis that no one wanted to believe would ever happen.

May 28, 2016 10:59 PM
Wayne Martin
Wayne M Martin - Chicago, IL
Real Estate Broker - Retired

Good morning Chuck. Amazing how some can create investments out of thin air! Hopefully we have learned our lesson! Enjoy your day!

May 29, 2016 12:35 AM
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

I can see why Kathy chose to include your post in her weekly wrap up...great job!

May 29, 2016 01:58 AM
MaryKay Shumway
The Kellstrom Ray Agency, Inc. (Est. 1948) - Sister Bay, WI
Door County Wisconsin's Real Estate Expert

I read the article--excellent read.  Thank you for sharing.


May 29, 2016 08:54 AM
Mike Cooper, Broker VA,WV, MD
Cornerstone Business Group Inc - Winchester, VA
Your Neighborhood Real Estate Sales Pro

Chuck, I recently watched "The Big Short". It was eye-opening. I told my wife in the mid-2000s there was nothing keeping the housing market afloat. When it exploded, I wasn't surprised. I was surprised at how long it has taken it to recover. 

May 29, 2016 12:26 PM
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Unfortunately, the Great Recession many profitted from the disasater. When I told the bank there is no 4 plex sold in our area under 400K since 1996 they wanted to hear that the 4 plexs can be short sale back to the seller's relative for < 400K with an arson to claim insurance.  

I sticked to my gun.   

May 30, 2016 01:38 AM
Praful Thakkar
LAER Realty Partners - Andover, MA
Andover, MA: Andover Luxury Homes For Sale

Chuck Willman UtahHomes.me - will read the story.

Hope the foreclosure level remains at this level or even below - forever.

May 30, 2016 04:06 PM
Kevin J. May
Florida Supreme Realty - Hobe Sound, FL
Serving the Treasure & Paradise Coasts of Florida

The book will be on my Summer reading list and the only thing missing here is our old friend the Implode-O-Meter. Here via Kathy!

May 30, 2016 11:38 PM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Saw the movie as soon as it came out, Chuck Willman UtahHomes.me ... and had too many flashbacks to bad/scary times to say I really "enjoyed" the movie.  But I learned some new things from it, to be sure.

I think many knew that the good times couldn't last forever.  A correction was inevitable.  The disaster that came?  Few imagined something that devastating.

Was something learned from the experience?  Yes ... some.  And new regulations will make it harder to commit the same fraud and bad practices again.  But greed is not cured .. and that really was the cause of the tragedy.  Sadly, someone greedy enough and with the will to do wrong will always find a way ...



May 31, 2016 08:02 AM
Margaret Kapranos
Berkshire Hathaway Home Services - Novato, CA
San Francisco Bay Area REALTOR. 415-608-5070

Yes and Lisa Eptsein was treated like a pirahauna by the greedy crooks involved in this scandal.  She was a whistleblower but no one listened.  That is a sad statement to the inadequacy of checks and balances in the system.  Voila!  Dodd Frank...onerous, cumbersome and business crushing to maneuver.  Still waiting for the uptick rule to be reinstated....now that would have gone a long way to help this problem too.  That was a more natural controler of the market than Dodd Frank.  

Jun 18, 2016 02:53 AM