Few books have seen as many miles, as much pain and triumph, as Henri Adier’s childhood diary. It recounted the Belgium-born Adier’s experiences helping his family — then called the Adlersteins — to evade the Third Reich in Vichy France, at an age when most boys are focused on puberty and pop quizzes.
When Adier died at 82, he was downstairs in the Morristown, New Jersey home where he and his late wife Rita raised their two adopted children. As of his death in August of 2012, that house held the physical and emotional spoils of the Adlersteins’ elusion. Henri’s children hadn’t lived there for years, but they began the painful preparations that follow the death of a parent.
There were practical matters to tend to, and finding the energy to crack open Henri’s handwritten memories was always a task for the future.
“I don’t think any of us ever looked at it,” Henri’s son David said in an interview. “There was a time he expressed a desire to write his memoirs. We’d get him set up and he’d pull out his diary and start looking through it,” he said, tearing up. “There’d be a definite change in his demeanor.”
“He’d close the book and put it in a drawer and say, ‘today isn’t the day. Another time.’”
The stories and recollections that book contained must have been gripping. Henri didn’t just survive the war. After Paris fell and soldiers sealed his family’s apartment, the boy helped his father — David’s grandfather, a tailor by trade — to sneak into the flat and boost sacred family heirlooms: a kiddish cup, a seder plate, and some other objects.
The liberated silver came with the Adlersteins to America. They stayed in the family through the official name change that helped David’s parents find work as educators in northern New Jersey, through Henri and his late wife Rita’s decision to adopt David and his sister Anne in Florida.
But they didn’t survive Wells Fargo. Neither did Henri’s diary.
After Henri died and Hurricane Sandy devastated David’s business, he says, financial paperwork involving the Adier family home was slow to process. Henri’s mortgage, which had been current when he died, went unpaid for two months.
Then, a lawsuit by David and Anne Adier alleges, agents under contract to Wells Fargo visited the house in Morristown, New Jersey, and decided it was abandoned. The inspectors’ finding allowed the bank’s property management subcontractor, Lender Processing Services (LPS), to ask the bank to authorize what’s called a “lockout.” The inspectors left a sticker on the Adiers’ door warning that the bank would consider it abandoned and start changing locks unless notified otherwise.
Anne Adier discovered the sticker on November 6, 2012, the Adiers say, and called the company to inform them they were mistaken, that the house was being looked after and didn’t need to be secured on Wells Fargo’s behalf. “They thanked her for calling and assured her nothing would happen to the property,” David said. (Anne declined to be interviewed.)
Three weeks later, though, David arrived to find the locks changed and the house ransacked. David called the police, but “their party line was this is a civil matter between you and the bank.” Despite Anne’s conversation with LPS, Wells Fargo’s contractors had gotten approval to go into the Adier home. They changed the locks. When David finally got back into the house weeks later, he found it ransacked.
The loss of family artifacts stings, but the alleged thefts also sealed the last window David and Anne had back into their father’s past. Henri’s diary is gone, and with it his children’s chance to better know his traumas and triumphs. David, who said his father relayed few detailed stories of his war years, takes that loss harder than the ceremonial objects, the coin and stamp collections, the furnishings that surrounded him growing up in that house.
“There’d been some hope after his passing of having a chance to sit down with that diary and better understand some of those things he’d gone through that he found so hard to share with his family,” he said. “That’s one of the things that got scooped up by these thugs that came in under the bank’s orders.”
Wells Fargo hadn’t initiated foreclosure proceedings, but refused to deal with David until he furnished his father’s death certificate. After he sent that over, he says the bank demanded to see court papers deeming David his father’s executor. When those documents were certified, the bank finally began negotiating with David about the property’s future.
By then it was the spring of 2013. Bank agents had visited the house repeatedly. Almost every material object had been taken, including family photos and a diary Henri kept of his wartime travails.
“It became this game of cat and mouse, until everything of value — down to the brass door knocker — had been taken,” Adier said.
Your Home Is Your Castle Until The Bank Decides Otherwise
When foreclosed homes are legitimately abandoned, banks are required to secure the properties. Lockouts, trashouts, and weatherization help prevent vermin, criminals, and neglect from destroying the value of a home that’s become bank- or investor-owned. Federal rules require mortgage servicers to perform such work in a timely fashion to maintain the security and property value of neighborhoods, and banks including Wells Fargo have been successfully sued for alleged civil rights violations when they’ve failed to perform such upkeep in black and brown neighborhoods, allowing blight to spread at everyone’s expense.
That community interest puts people like the Adiers in a bind — and one that’s hard to untie, according to City University of New York Law School professor Alan White. “On the one hand they have to make sure they act promptly to secure abandoned properties,” he said. “But if that’s not a careful, individualized determination by people who have some sort of past relationship with the homeowner, there’s always a risk of error.”
The stage is set for a lot of mistakes.
Inspections rules, and the public interest that motivates them, can be followed without locking out legitimate homeowners. With millions of distressed properties around the country, all indications are that most of the time servicers get it right.
But property inspectors working on a sub-subcontracted basis for a far-distant megabank don’t have much incentive not to screw it up– and they have made painful mistakes in hundreds of cases all around the country ever since the housing crash brought a deluge of foreclosures.
A Huffington Post investigation in 2013 found over 250 lawsuits across 31 states relating to bank contractors’ inspections and lockouts work. Documents leaked to that site by a former compliance specialist with one of the largest property maintenance firms in the business indicate that firm alone was fielding as many as 100 complaints a month in the wake of the crisis.
Part of the problem is how easy it is to get an inspector job, according to Lisa Epstein, a Florida housing rights activist who got involved in local homeowner advocacy work after her own foreclosure nightmare in the wake of the financial crisis. “You basically have to have a working car, a driver’s license, and a digital camera,” Epstein told ThinkProgress. “You drive by the homes, take a picture, fill out a simple form. You upload the picture, you upload a little questionnaire, and you go on to the next one.” If an inspector makes an error and marks your house down vacant, good luck getting the truth to your mortgage servicer in time to prevent one of those same contractors from coming back and locking you out of your home.
The Adiers’ ability to win any kind of recourse — not that Henri’s memories are replaceable — may hinge on the law’s treatment of a string of contracts by which Wells Fargo outsources the on-the-ground work of preventing neighborhood blight to others.
“The way it works in most cases is the bank engages a property preservation company, which then sub-contracts with another company, who then sub-subcontracts with day laborers to save as much money as possible,” said plaintiffs’ attorney Josh Denbeaux, referring to numerous confidential contracts he has seen in other cases but cannot discuss in detail. “The day laborers get paid $10, $12, $15 bucks a pop for doing a drive-by inspection. They get $200 to $300 for a lockout.”
There is little in the way of accountability or professional training to counteract the skewing effect of those wage incentives, according to Center for American Progress housing market expert Julia Gordon. “The compensation to do the work quickly is there,” Gordon told ThinkProgress, but not the kind of compensation that would motivate people to do it correctly.
“This is a very blue-collar industry,” she said. “You lock up so many properties, you get a certain dollar amount for each one, so the incentive is to move through them pretty quickly.” Between the workers’ incentive to move fast and request more lucrative lockout work and the legal obligations facing servicers, things can escalate fast. “The stage is set for a lot of mistakes,” said Gordon.
Wells Fargo doesn’t dispute that its sub-contracted agents conducted a lockout and a trashout on Henri Adier’s home, but believes that it had the proper legal authority to perform any actions necessary to secure a home they thought to be abandoned.
Bank spokesman Tom Goyda told ThinkProgress they had no knowledge of any specific family valuables being taken from the house. “When our contractors arrived the home was unlocked, the doors were open, there were no utilities on, and the property was in disarray,” Goyda said. Goyda acknowledged that foreclosure proceedings did not formally begin until the following spring, but said the mortgage contract and New Jersey law both empower and require the servicer “to secure a vacant and abandoned property to protect the value of the property for the investors for which it’s serviced.”
Goyda would not discuss Anne Adier’s call to LPS, which Denbeaux said is corroborated by phone records, nor Denbeaux’s contention that Wells Fargo should have initiated foreclosure before locking out the house. An LPS representative did not respond by press time.
It’s entirely plausible that Anne’s call was faithfully recorded by whoever she spoke to without that information ever making it to the other companies involved, said National Consumer Law Center counsel Margot Saunders.
“This is a huge corporation dealing with another huge corporation, and nobody in the United States at this point should be unaware of the fact that huge corporations don’t communicate that well, either within themselves or with other people,” she said.
Many homeowners victimized by improper lockouts have won suits or settlements to cover the cost of damages to their property. But some mistakes can’t be undone.
Even if memories were as replaceable as property, the loss of Henri’s diary has cut his children off from his past irrevocably. “My father did not speak of his Holocaust years often,” David said. Jewish holidays were an exception. Something about taking those old ceremonial objects down from a shelf and putting them to use again seemed to kick something loose for the survivor. “We’d use the heirlooms that had been taken from the apartment in France, and those were the times he talked about his life over there,” said David. “He had a very strong sense of family and a very strong sense of his religion. It was at those times when you could see them both come together.”
Until a friend of Anne’s interviewed Henri for a school project, the children he adopted had heard few of his stories from the time. Henri recounted some of his closest calls. He was briefly sent to a children’s internment camp by France’s German occupiers, and escaped only because he came down with appendicitis and got sent to a convent to recover. Another time, he was a bit too slow to respond to a Nazi soldier who called him by his fake name, and thought he was about to be shot — only to have the soldier hand him some cash as thanks for the work he’d been conscripted into on an airstrip.
David and Anne’s recollections of the few stories Henri shared now stand as the sole surviving record of the years that the French underground kept the Adlersteins out of fascist clutches. Even the physical touchstones that linked them back to those experiences are gone.
Too Big To Be Humane
When the responsibility for a home lies with a local bank with deeper ties to the community and a direct financial interest in maintaining the value of the real estate, the incentives run the opposite direction. The bank’s own financial performance will benefit if it can keep a struggling homeowner in their house on a revised mortgage, so there is less reason to rush into foreclosure. It has tighter relationships with the homeowner, her neighbors, and her attorneys, all of which help mitigate the risk of incorrect inspection findings and erroneous lockouts.
“If you look at smaller servicers who work in a particular geographic area with a small book [of loans] and they know their customers, they’ve had a very different experience,” Gordon said, noting that new federal regulations on servicing have exempted smaller firms.
For giant servicers like Wells Fargo that have millions of loans on their books, the motivation is entirely different. Servicers get paid a monthly fee for handling the nitty-gritty work on each individual mortgage they service. But the fee they earn is based on the mortgage principal outstanding — a figure on a piece of paper that doesn’t shrink if the real-life value of the home dips, giving servicers no vested interest in the actual, long-term quality of the property.
“The middlemen responsible for maintaining the collateral have all kinds of fees and incentives to keep a property on the book for 60 percent more than what it’s really worth, as well as to milk investors for that monthly fee every month for as long as possible,” Epstein said. “Because what do they care? Their interests are not aligned with the real financial interests of the actual property owner, who’s losing money every month.”
These misaligned incentives elongate the distance between Henri Adier’s children and the bank that gets paid to “service” his mortgage gets elongated by a string of subcontracts.
The pain is just as fresh as when it happened.
As these chains of responsibility sprawl, the prospect of egregious errors that destroy family memories and violate the sanctity of private homes grows. Communication breaks down between subcontractors, sub-subcontractors, homeowners, and the actual servicing company of record. “Everybody’s passing the buck,” said CAP’s Gordon.
The problem may be that there aren’t enough bucks to pass. Servicing is one of the least-lucrative parts of the home loans business. If there were more money in it, there might be less incentive to shuck the scutwork off onto subcontractors. “It’s not a moneymaking business,” White said.
Homeownership has been central to the American Dream for lifetimes now. If banks can bust into your house — or your dead father’s house — and make off with the objects and memories that you bought that house to preserve, the dream itself starts to curdle.
“It’s the house that my sister and I were raised in, that my parents built their American dream in,” David Adier said, apologizing as his voice broke again. “That was all suddenly taken away by people who decided they had rights they didn’t have.”
Too often, the kind of good-faith effort Anne made to correct an inspector’s error before it’s too late isn’t enough to spare someone a bank-authorized break-in. “It’s not that mistakes are made. They’re made in every industry,” Gordon said. “It’s when it turns from just a mistake anybody can make into something more Kafkaesque.”
So long as the mortgage servicing business remains concentrated in relatively few corporate hands, and servicing continues to be treated as a low-value segment by the rest of the financial players in the mortgage industry, there’s not much reason to think things will get better.
“There’s a problem of too big to comply, or too big to be humane.” White said. Wells Fargo and the other mega-servicers are responsible for more than half of all U.S. mortgages.
“The risk of error is all compounded by that market concentration,” he said.
Building A Better Mousetrap
The risk of bank agents inappropriately deeming a house abandoned and entering it is difficult to mitigate. The option that would likely be most effective is also the least practical: drive the business of servicing mortgages out of these gigantic national companies and back into local operations and community banks that will have incentives to perform this work more diligently.
How, then, to reform the existing leviathan that has proven itself so capable of destroying people’s homes and violating a central tenet of the American economic-mobility mythos?
It will take a combination of higher legal standards for servicers and retraining local law enforcement to assert homeowners’ rights instead of siding with bank agents by default, the experts said. “Any other breaking and entering would be considered criminal, but law enforcement won’t do anything,” Epstein said.
Police willingness to privilege a bank agent’s claims of legitimacy over a homeowner’s, as the Adiers say some Morristown officers did, removes a key firewall from cases where a servicer has authorized an inappropriate lockout.
“I think there’s an institutional bias in favor of institutions, not people,” said Denbeaux, who believes that educating cops about the law would change things. “There would be a protocol. ‘Show me the court order. Don’t have one? Show me the deed. Don’t have one? OK, you have 10 seconds to get off this property or I’m arresting you for trespassing.’”
Ideally, bank inspectors would act more diligently and cops would never be forced to adjudicate such disputes. Regulatory or legislative action is probably required to achieve a meaningful change in servicer and contractor behavior. Recent Consumer Financial Protection Bureau rules for servicers included limits on inspection fees, Saunders said in an interview, but set no federal standard for conducting the inspections themselves. “They can send ’em out all they want,” she said, “they just can’t charge the homeowner.”
Any more aggressive restrictions on inspections could threaten the balance between neighborhood security and individual homeowners’ rights, White warned. “The more you require we absolutely have to be positive the homeowner’s not there, the more risk you create that when a property really is abandoned it’s going to sit there too long,” White said. “There isn’t necessarily an obvious and easy solution.”
But if public officials are going to take it on themselves to force the inspections trade to shape up, they might as well go further. “I think there needs to be a lot more policy work done in this area,” said Gordon, noting that the hyper-local effect of foreclosures and abandonment has lead local lawmakers to enact an endlessly complex fabric of different policies and requirements. Shifting to one national standard for the entire foreclosure process might help standardize conduct.
Meanwhile, it’s people like Anne and David Adier who get crossed up by the housing finance industry.
“We are three years on and the pain is just as fresh as when it happened. There’s been no closure, no healing,” David said. “We really didn’t have an opportunity to mourn.”
Anne still can’t bear to visit their childhood home, and every time David drops by he plunges back into the same turmoil. “I get within a few miles of it and a giant surge of anxiety fills me. It’s not the way I should feel about the home I grew up in,” he said.
“It wasn’t just the things that were stolen. Our sense of security was taken from us.”