"The reincarnating mortgage" is the latest evidence of a seriously dysfunctional, perhaps fraudulent, foreclosure system, experts say.

Reuters this week published a remarkable story about just how bad the foreclosure system has gotten. Entitled "Old mortgages rise from the dead," it tells how people who thought they'd sold off their mortgage or refinanced out of one now find themselves reported as delinquent to credit bureaus or facing lawsuits.

The story also does a good job of describing all the other problems and how they came to be. Reporter Michelle Conlin writes:

The problems grew from a lot of sloppy recordkeeping that began during the housing boom, when Wall Street built a quick-and-dirty back-office operation to process mortgages quickly so lenders could sell as many loans as possible. As the loans were later sold to investors, and then resold around the world, the back office system sidestepped crucial legal procedures.

Now it's becoming clear just how dysfunctional and, according to several state attorneys general, how fraudulent the whole system was.

The story has it all. Affidavit slaves. Robosigners. Faked, forged and backdated documents.

Oh, plus "the reincarnating mortgage:"

The reincarnating mortgage is only the latest development in the megabanks' mortgage debacle, a scandal that has made them the target of a mounting pile of investigations and lawsuits. 

It's a good reason why so many homeowners feel wronged by the big banks and why many eyes will be on Oregon Attorney General John Kroger as he reviews a proposed multi-billion-dollar settlement between state attorneys general and the nation's five largest servicers. Keep an eye here for more details. Other AGs are reviewing it as well. Already, California and Delaware reportedly have rejected the proposal.  

Fewer students attend their top choice of colleges, a study finds. Fewer are receiving scholarships, and scholarship amounts are declining.

An annual survey of college freshmen has found fewer than ever enrolling in the college of their first choice. The most likely reason: cost.

Inside Higher Ed summarized the finding in the report by researchers at UCLA:

" ... fewer students than ever report being enrolled at the college they most wanted to attend, although a significant number of students continue to do so. Despite the fact that 76 percent of this year's freshmen were accepted to their first-choice institution, only 57.9 percent enrolled in their preferred college -- that’s the lowest the figure has been since 1974, when (researchers) first asked the question."

This downward trend began in 2006, the report says.

One reason: Fewer students report being able to finance or use scholarships for their education, the survey found. "... Fewer students are receiving scholarships and the dollar amount of scholarships is trending downward," the report says.

Meanwhile, as The Oregonian's Bill Graves reported this morning, Oregon universities are increasingly trolling community colleges for transfer students. It's Only Money's hunch is that those students have a better shot at getting financial aid because these universities want them more.

Recall my column from last year: Don't just get into college, get funded.

Increasingly, it's looking like a better move to start your college years at a community college before transferring to a more expensive school. The number doing so has increased dramatically in the past couple years.

Do you agree? What's your experience? Weigh in below.


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IT'S ONLY MONEY updates its March 2011 survey of free checking and fee-based checking at major Oregon banks and credit unions.

-- A version of this column first appeared online on March 5, 2011. The column and chart were updated last week:


Katherine Hunt opened her first bank account a decade ago at Washington Mutual. Her dad, an executive there, helped set it up.

Several years ago, Jim Hunt moved on from what is now Chase to become OnPoint Community Credit Union's chief financial officer. But it wasn't until December 2010 that his daughter moved her account with him.

"I'd been on her for a while," Jim Hunt said.

The trigger: Chase's new requirements to avoid monthly checking fees.

"I hardly have a balance above the threshold at a single time," said Katherine Hunt, who studied law at the University of Oregon in Eugene. Now, she says, "a lot of my friends have switched for the same reason."

Hunt and her friends aren't alone in leaving big banks because of not-so-free checking. Wells Fargo & Co., Bank of America Corp., JPMorgan Chase and KeyBank, four of Oregon's six largest banks, have announced monthly fees on their most basic checking accounts. Competitors say they're picking up some of the dissatisfied customers.

Plenty of financial institutions still offer free, no-frills checking. But increasingly, they're taking away perks or charging for other services.

Some institutions refrain from promoting their free products. They say they're still not sure they can provide it until new rules on debit-card fees become clear.

"We just don't know what's going to happen," said Chuck Garner, chief executive of Oregonians Credit Union (FYI, where I bank). "So we're not jumping on the bandwagon saying we're going to do many changes."

Hunt's delay in joining her father also illustrates how difficult it can be for people to leave their financial institution.

"It's very difficult to get certain demographics to move, senior citizens in particular," said Steve Ferber, president of Clatsop Community Bank in Astoria, the state's newest. "They shop around for CDs, but they hate to change because they have the same checkbook.

"The more relationships you have with that client, the less likely it is for them to move somewhere else."

Generally, the big banks allow customers to avoid annual fees by maintaining a certain average balance, using electronic banking or doing business with other arms of the bank.

"We just believe the deeper your relationship, the better the value," said Richelle Messick, a Wells Fargo spokeswoman.


All KeyBank customers must make five or more transactions or deposit $500 each month to avoid a $5 monthly fee on the bank's basic checking account. New customers must abide by this structure starting April 1.

"Client research told us that this was the preferred manner to avoid fees versus maintaining a minimum balance," KeyCorp spokeswoman Anne Foster said via email. "The overwhelming majority of Key's customers will continue to receive no monthly maintenance service charge by meeting the new account transaction activity requirements."

Other banks still offer free checking but have removed perks.

Portland-based Umpqua Bank last year stopped offering the first box of checks for free. The Umpqua Holdings Corp. unit also ended a $90 credit toward checks on its free business checking account. (I also have an account there.)

U.S. Bank, Oregon's largest, last year stopped enrolling new customers in rewards debit cards. "There will continue to be options for customers to have a checking account without a monthly maintenance fee," said U.S. Bancorp spokeswoman Teri Charest. "Like many banks, we are assessing our products and services in light of changing industry dynamics."

Garner's credit union recently asked some members to limit transactions at credit unions that aren't one of its six branches. This "shared branching network" allows transactions at more than 4,000 credit union locations but costs $3 a visit. Garner said only 1,200 of its 26,000 members used the service in 2010.

"In many cases, people are going less than a mile for a shared branch location," he said. "We're just trying to manage our costs." The letter asked members to use the service only when more than 10 miles from one of Oregonians' six branches and in need of quick access to check deposit.

There are a host of reasons for these cost controls. Large banks face declining revenue from a federal law reducing swipe fees that are charged each time you use a bank debit card. Banks and credit unions also are earning very little on the investments they make with your money. And loan demand, the traditional way banks make money, is down. The interest they can charge on loans is low.

Credit unions are forking over millions a year to bail out corporate credit unions that invested in toxic mortgage securities. Garner's credit union paid $350,000 toward that cause in 2010, essentially all of the credit union's earnings.



Still, these price pressures haven't stopped some smaller banks and credit unions from pushing their free checking accounts.

Unitus Community Credit Union's home page had an animated feature in 2011 poking fun at the big banks, asking: "How many hoops do you have to go through for their free checking?" A representative said its account would remain free regardless of what happens with debit-card fees.

"We know it could very well hit the bottom line, but we still believe free checking is an important line to offer," said Laurie Kresl, Unitus' vice president of planning and business development.

Banner Bank offers a checking account that contains perks rarely found even at credit unions: free rewards cards with 5 cents back per transaction and refunds on fees charged by non-Banner ATMs.

West Coast Bank, headquartered in Lake Oswego, covers the cost of as many as five monthly withdrawals at other banks' ATMs for its free "Simple Checking" account.

Of course, there's a good chance some of the free benefits will disappear.

Last fall, Bank of the West replaced its "Free Checking" with "Easy Checking," which imposed a monthly service fee of $8 to $10. Customers can avoid the fees each month by making 10 debit-card purchases, keeping a $1,000 average balance or setting up a direct deposit of $250 or more.

Take it from Garner, a 30-year banking vet who can remember when free checking didn't exist.

"I look at some institutions out there and think, wow, they're really promoting free checking; what do they have up their sleeves down the road?

"We're kind of mum on it because we just don't know."


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IT'S ONLY MONEY's first of two columns on picking a tax preparer that's right for you.