Texas AG halts all foreclosures

[CosmicCowboy]

Texas Attorney General Greg Abbott called for a halt on foreclosures Monday amid nationwide scrutiny over the way they are processed.
Notices to suspend foreclosures were sent to 27 loan servicers doing business in Texas, including Bank of America and JPMorgan Chase, the attorney general's office said. It did not have the full list of companies available late Monday.

The office also called for a halt on the sales of properties previously foreclosed upon, which might affect auctions scheduled today, and on evictions of people living in such properties.

The office said it began investigating foreclosures last month after reports that an employee of Ally Financial, a large mortgage lender, acknowledged signing thousands of foreclosure documents without reviewing them as required.

Ally has since suspended foreclosures on certain properties in 23 other states, as have JPMorgan Chase and Bank of America. This is so they can investigate whether their employees rushed foreclosures, a practice called “robosigning.”

In the state's letter to JPMorgan Chase, Paul Carmona, chief of the attorney general's consumer protection and public health division, said robosigning practices can include signing documents without reading them, signing thousands of documents a month, signing documents without proper notarization and signing affidavits falsely claiming personal knowledge of facts.

http://www.mysanantonio.com/news/politics/texas_ag_suspends_foreclosures_104323339.html

A JPMorgan Chase spokesman declined to comment on the attorney general's move, and Bank of America officials could not be reached late Monday.

Chase and Bank of America, along with Wells Fargo, service more than 50 percent of the outstanding loans nationwide, said David Zugheri, co-founder of Houston-based Envoy Mortgage.

Abbott sought the foreclosure suspension Monday “in an effort to determine the full harm Texas homeowners may have suffered or could suffer as a result of these business practices,” according to a statement released late Monday by Jerry Strickland, a spokesman for the office.

Abbott's office has not sought a court order and wouldn't say what kind of action, if any, it might take if companies don't comply.

1 | 2 | 3 Next Page Show full article

[boutons_deux]

already posted:

http://spurstalk.com/forums/showthread.php?t=163166

[Wild Cobra]

Government interfering with the free market... again...

[RandomGuy]

Government interfering with the free market... again...

In this case the "free market" was committing fraud.

Do you support fraud?

[boutons_deux]

Government interfering with the free market... again...

You Lie

the government is pausing the process so as to question the dubious mis/application of contract and title laws and procedures that apparently have been widely violated by lenders and their sub-contracted foreclosure meat grinders.

[Oh, Gee!!]

Government interfering with the free market... again...

:lol

[Wild Cobra]

You Lie

the government is pausing the process so as to question the dubious mis/application of contract and title laws and procedures that apparently have been widely violated by lenders and their sub-contracted foreclosure meat grinders.
OK, they didn't halt ALL foreclosures then.

[ChumpDumper]

Government interfering with the free market... again...States' rights!

[George Gervin's Afro]

nuances!

[Parker2112]

It wasnt fraud, it was failure to follow the legal formalities in carrying out these foreclosures. But it damn sure wasnt intererference in the free market.

WC is on that stuff.

[RandomGuy]

It wasnt fraud, it was failure to follow the legal formalities in carrying out these foreclosures. But it damn sure wasnt intererference in the free market.

WC is on that stuff.


The office said it began investigating foreclosures last month after reports that an employee of Ally Financial, a large mortgage lender, acknowledged signing thousands of foreclosure documents without reviewing them as required.

Essentially, they issued signed documents saying that they had reviewed the paperwork, and that it was sufficient to support their position.

This was not the case in either instance. That makes it a clear misrepresentation, i.e. fraud.

[Winehole23]

This was not the case in either instance. That makes it a clear misrepresentation, i.e. fraud.My PFA predictions:

No one goes to jail.

No one even gets prosecuted for thousands of discrete acts of fraud, committed by banks against mortgage holders.

The banks are given a grace period to get their shit tight, promise to do better and pay a big fine without admitting any fault. The end.

[Wild Cobra]

My PFA predictions:

No one goes to jail.

No one even gets prosecuted for thousands of discrete acts of fraud, committed by banks against mortgage holders.

The banks are given a grace period to get their shit tight and pay a big fine without admitting any fault. The end.
I said it before the bailout, I'll say it again. Let them fail.

[Winehole23]

You're about the only one who agrees with me openly on that.







Maybe I should reconsider. :p:

[Winehole23]

I could see Greg Abbott nailing a few hides to the wall. He's enough of a straight arrow to get really pissed about (shenanigans) like this.

[boutons_deux]

Greg Abbott ain't gonna nail nobody's hides, esp not any Repug hides.

He doesn't have enough people to audit the banks to see if they did stop their fraud, just like the banks don't have enough people to do the foreclosure/title search right.

[Nbadan]

No doubt...wait till the other shoe drops, then we'll see if Abbott is a 'straight arrow'

[Winehole23]

Greg Abbott ain't gonna nobody's hides, esp not any Repug hides.You focused on my afterthought rather than my prediction.

Always spinning. It's never a straight tale with you, is it?

[TDMVPDPOY]

if ur an insurance company, a sign of relief

[Winehole23]

Hadn't even thought of that. That's pretty swift, TDMVPDPOY.

[RandomGuy]

I said it before the bailout, I'll say it again. Let them fail.

Then you should be happy then that these banks that issued/purchased all of these shitty mortgages will now face the consequences of their actions.

Personally I am.

We all know that if the shoe were on the other foot and it had been a homeowner who fucked up on the paperwork, the bank would damn well use every means in their possession to hold the homeowner to it.

The banks got greedy and sloppy. The price of skimping on labor to do things right is now being collectively paid.

Too bad the shareholders of these institutions, and not the management that fucked it up, will end up paying the price.

Quite frankly, I think that companies should institute universal "claw back" clauses in any executive contract for just such cases to get back some of the compensation paid out for incompetance/greed.

The executives who made themselves look good through sloppy padding of revenues got THEIR money a long time ago. The people left holding the bag are the shareholders, who are essentially anybody saving for retirement.

[RandomGuy]

You're about the only one who agrees with me openly on that.







Maybe I should reconsider. :p:

I agree with some conditions.

The problem is that we can't let one bank fail without causing a lot of "collateral damage".

At some point, we need to limit the ultimate size of banks, as well as take steps to limit the interlinking of institutions. This requires regulation and government enforcement of that.

If you can keep the banks a bit smaller and keep the domino effect from taking down other banks, then I would be all about punishing the shit out of the management and stockholders.

Stockholders tend to be very tolerant of generous management compensation, and compensation schemes that are more in the interest of management than shareholders.

[boutons_deux]

Bank foreclosure cover seen in bill at Obama’s desk

Bank foreclosure cover seen in bill at Obamas desk

WASHINGTON (Reuters) - A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama's signature after it quietly zoomed through the Senate last week.

The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.

The timing raised eyebrows, coming during a rising furor over improper affidavits and other filings in foreclosure actions by large mortgage processors such as GMAC, JPMorgan and Bank of America.

Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings.

The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.

http://www.rawstory.com/rs/2010/10/bank-foreclosure-cover-bill-obamas-desk/

=========

Amazingly coincidental timing, huh?

I wonder which financial industry lobbyists wrote the bill and paid Aderholt to push it? :lol

[Winehole23]

Wow.

[LnGrrrR]

Good catch B_d.

[boutons_deux]

Foreclosuregate and Obama's "Pocket Veto"

Amid a snowballing foreclosure fraud crisis, President Obama today blocked legislation that critics say could have made it more difficult for homeowners to challenge foreclosure proceedings against them.

The bill passed the Senate with unanimous consent and with no scrutiny by the DC media. In a maneuver known as a "pocket veto," President Obama indirectly vetoed the legislation by declining to sign the bill passed by Congress while legislators are on recess.

http://www.truth-out.org/foreclosuregate63953?print

[Winehole23]

Wow.

[Wild Cobra]

Well, here's the text:

HR 3808 (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3808enr.txt.pdf)

An Act

To require any Federal or State court to recognize any notarization made by a notary public licensed by a State other than the State where the court is located when such notarization occurs in or affects interstate commerce.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the ‘‘Interstate Recognition of Notarizations Act of 2010’’. SEC. 2. RECOGNITION OF NOTARIZATIONS IN FEDERAL COURTS. Each Federal court shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the Federal court is located if—

(1) such notarization occurs in or affects interstate commerce; and

(2)(A) a seal of office, as symbol of the notary public’s authority, is used in the notarization; or

(B) in the case of an electronic record, the seal information is securely attached to, or logically associated with, the electronic record so as to render the record tamper-resistant.

SEC. 3. RECOGNITION OF NOTARIZATIONS IN STATE COURTS. Each court that operates under the jurisdiction of a State shall recognize any lawful notarization made by a notary public licensed or commissioned under the laws of a State other than the State where the court is located if—

[Winehole23]

Wow, someone in DC has connected the dots: that the banks’ failure to adhere to contractual and legal requirements in the residential mortgage backed securities market are so extensive and widespread as to constitute systemic risk. Alan Grayson, Congressman from Ground Zero of the foreclosure mess, is calling on the Financial Stability Oversight Council to investigate the escalating foreclosure fraud crisis.


Although the data points we have seen so far could be considered anecdotal, we have evidence that strongly suggests that major RMBS originators, the investment bank packagers, and the bank trustees failed to convey the notes (the borrower IOU, which is critical to having the legal standing to foreclose in 45 states) to the RMBS trusts starting in 2005, perhaps even earlier. And comments from industry insiders suggest this problem is pervasive.

That puts a cloud over the entire US RMBS market, the biggest asset class in the world. This paper was sold as secured; the ability to offset the cost of borrower defaults by seizing and selling his house is critical to the value of the instruments. And if no assets were conveyed to a particular trust by closing, an even uglier possibility exists: under New York law, which was elected by RMBS as governing law for the trust, it would be considered to be “unfunded”, which means it does not exist.


Now the rather sick irony is that this monster screw-up probably affects Fannie and Freddie paper only indirectly; presumably, it will a given that this will be treated as if the government guarantee covers this little mess. The Obama Administration is the last bunch of folks that will look into the fine print to see if Fannie and Freddie ought to eat this liability. I’ll admit I have not looked into the Fannie/Freddie procedures on this one, but I’d have trouble believing their rules would include having the government guarantee extend to operational screw ups that prevent losses on guaranteed mortgages being relieved by foreclosures. I’d have to believe they have putback procedures which will not be applied because the consequences would be too devastating to Team Obama’s best friend, the banking industry. So Frannie and Freddie not pushing the losses related to foreclosures back to the banks would be yet another back door bailout.
Felix Salmon is also on the case and makes some sound observations (http://blogs.reuters.com/felix-salmon/2010/10/07/where-is-the-foreclosure-mess-leading/) as to the larger implications:

….the mother of all legal messes has already emerged from the foreclosure crisis, and threatens not only a large chunk of the financial system but also venerable civic institutions, like the courts, which have thus far emerged from the crisis largely unscathed….


Argentina’s sovereign default has been called “the slowest trainwreck in history”, but this one might turn out to be slower, bigger, and much less fair. Millions of people have already lost their houses to lenders who didn’t have the proper paperwork, and it’s unlikely they will ever get any redress. For people who haven’t yet been foreclosed upon, however, it could now be a very long time before they lose their house.


The big-picture consequences here are by their nature unpredictable, as no one has a clue how this might all play out.



But I can think of a few themes:

1. Bond investors, who have seen the value of their mortgage-backed debt rise impressively over the past 18 months, could find themselves unable to find any kind of bid at all. The paper will still be cashflowing, but those cashflows will be surrounded by enormous uncertainty, and no one’s going to want to buy them except at extremely deep discounts until the mess is cleared up.


2. Mortgage servicers will go from being assets to being liabilities, and banks which own mortgage servicers could find themselves on the hook for substantial losses.


3. The time from default to foreclosure will become indefinite, and as a result there will be a significant uptick in strategic defaults, especially in states with judicial foreclosures.


4. The “shadow inventory” of houses which aren’t on the market but will eventually be sold once the bank gets around to foreclosing will grow substantially from its already-enormous level.
Yves here. It appears there are four ways this crisis might play out:


1. Congress intervenes to try to wave a magic statutory wand to make many of these problems go away, invoking its authority over national/interstate banks. To the extent industry incumbents admit there is a problem (Tom Adams reports there was amazing denial at an American Securitization Forum conference earlier this week), they immediately say, “Congress will pass a law.” But any Federal statutory remedy will run roughshod over well settled state real estate law and New York trust law. This is big state/Federal rights matter, potentially one of those rare Constitutional battles that the average citizen will care about.


2. The Federal government comes up with a mass refi program of sorts. Even though in theory that might also run afoul of various state law issues, the reason the states are fighting is they see the devastation foreclosures are creating in their cities and towns. It would probably take some to-ing and fro-ing, but state legislatures would be far more inclined to play ball with this solution than the one outlined in point 1. But this is so contrary to how Team Obama operates that I see no will to go down that path, and the odds that the incoming Congress will be even more anti-spending is another not-trivial impediment.


3. Mass deep principal mods. As we indicated, there are programs which are ready to go and only need some tweaking to help servicers make deep mods. With mortgage loss severities at 70% or worse, a 40% principal mod for borrowers, say, is a win for everyone but the servicer. And before readers howl that this is unfair, life isn’t fair. Moreover, lenders restructure loans all the time; it’s normal creditor behavior to rework a loan if the outcome looks to be more profitable than liquidating.


The critical bit is assessing borrower viability. There is no point trying to save borrowers who are so broke they can’t afford payments even with a reduction in principal to, say, the current market value of the house. The and the NACA program (http://www.nakedcapitalism.com/2010/08/why-are-nacas-innovative-mortgage-modification-marathons-below-the-radar.html) provides a platform for handling what has been the sticking point, collecting evidence of borrower income and preparing a budget so a bank can see how much discretionary cash flow he has.
While the banking industry will insist this would be a simply horrid outcome, what would turn the tide is private or attorney general suits in a particular state leading to a mass resolution. That would turn the tide regarding perceived viability.


But mass mods would also leave the servicers with big losses on all the advances of principal and interest they have made to investors, and will force banks to end their phony accounting on second mortgages. It’s entirely plausible this puts some banks back in the TARP, which from my perspective is a good outcome. It would be hard after all the banks’ false claims that all was well and outrageous 2009 bonuses not to seem some pain imposed, at a minimum, the firing of top management for cause (meaning no severance) and the replacement of boards.


4. Continued gridlock. I expect this to be what we see until the pressure hits the breaking point.
http://www.roubini.com/financemarkets-monitor/259763/dc_waking_up_to_escalating_foreclosure_train_wreck __grayson_calls_for_fsoc_to_examine_foreclosure_fr aud_as_systemic_risk

[boutons_deux]

If there's anything America knows how to do, it's capitalism. :lol

This is classic banker scam, 100s of years old. Destroy the economy, then grab assets at low prices and foreclose on collateral.

Now if Fannie and Freddie would now just CRAM BACK DOWN the bankers'/lenders/etc throats the toxic mortgages sold to them in bad-faith, we'd have a real good time watching the bankers suffer, and save the taxpayers 100s of $Bs.

[Wild Cobra]

BoA also suspended foreclosures nationwide.

[Winehole23]

Too late. The states might go apeshit on them anyway.

[MannyIsGod]

So what happens if no action is taken? The banks lose the houses if they can't produce the paperwork?

[Winehole23]

Action will be taken. Banks are on the hook for huge losses if they don't.

[Wild Cobra]

Action will be taken. Banks are on the hook for huge losses if they don't.
But he's right.

With all the shakeups, reselling of loans, etc...

What if critical paperwork is missing?

[MannyIsGod]

Action will be taken. Banks are on the hook for huge losses if they don't.

What action will be taken? If my house is being foreclosed upon and the bank doesn't produce the paperwork they can go fuck themselves and any government that tries to step in and fuck me is going to endure a fury that they can't imagine.

Maybe a direct monetary bailout but I'm not sure that shit would fly again consequences be damned.

All I know is that if the government tries to let the banks slide with no paperwork and it fucks people out of their homes then you'd better believe it will get ugly.

[Winehole23]

Congress just tried to fix that problem for foreclosure fraudsters in the dead of night, without any debate. It won't be the last proposed fix. Hopefully the greater visibility of a regular session will make it harder for Congress to try screw us so blatantly next time.

[Winehole23]

It already is ugly, MIG. Banks have foreclosed on wrong addresses and people who paid cash for their houses.

[MannyIsGod]

You saw how fast that shit turned once it came to light. Its one thing to hand these assholes a check but to help them kick people out of homes is an entirely different political animal.

I'm not sure how much will there is to hand them a check again either. Maybe the cat ran out of lives.

[MannyIsGod]

Double.

[CosmicCowboy]

meh....the taxpayer is the insurer of last resort on all those. We own AIG that guaranteed all the bonds.

[Winehole23]

The banks will just stick us up again. Give us hundreds of billions more, or the sky will fall. Same game as 2008, with a similar likely result.OTOH, one possible difference is resolution authority established in the Dodd-Frank finreg bill. Some banks could hit receivership instead of a bailout jackpot this time.

(I'll believe it when I see it.)

[MannyIsGod]

Oh, but those guarantees surely don't cover lost paperwork.

[MannyIsGod]

We'll see, WH. I don't think the political will is there this time.

[CosmicCowboy]

Oh, but those guarantees surely don't cover lost paperwork.

Sure they do.

[MannyIsGod]

Sure they do.

The fuck? I refuse to believe this is actually the case.

[Winehole23]

Seems a little glib to me. Courts take this stuff very seriously, which is why the shit is hitting the fan now.

[CosmicCowboy]

The fuck? I refuse to believe this is actually the case.

Sorry. Tis true. They guaranteed the bonds against default. Trillions of dollars worth with no collateral to back it up. Why do you think the Fed bailed out AIG? They put the money in AIG and it immediately went to Goldman Sachs to pay off guarantees at 100% on the shit bonds they held in their portfolio.

[Winehole23]

Pretty sure they'll be some kind of a haircut whenever we pull their bacon out of the fire. Again.

[MannyIsGod]

Sorry. Tis true. They guaranteed the bonds against default. Trillions of dollars worth with no collateral to back it up. Why do you think the Fed bailed out AIG? They put the money in AIG and it immediately went to Goldman Sachs to pay off guarantees at 100% on the shit bonds they held in their portfolio.

Against default but what if they legally don't exist? If the banks can't produce the paperwork thats exactly what it means legally: Those loans do not exist. Pretty hard to collect insurance on something that has been declared legally null and void.

[CosmicCowboy]

Against default but what if they legally don't exist? If the banks can't produce the paperwork thats exactly what it means legally: Those loans do not exist. Pretty hard to collect insurance on something that has been declared legally null and void.

Obviously the lawyers will make hundreds of millions deciding which one of us is right, but you have to mentally draw a line between the original high risk loans secured by the houses and the bonds that were issued with those shit loans as the underlying collateral. The original shit loans PLUS AIG's guarantee of repayment is what turned shit bonds into AAA rated securities. Fanny, Frddie, Goldman, and AIG all made out like bandits till the house of cards came tumbling down...Then, of course, they were all "too big to fail' and the Taxpayers did bail them out and will bail them out again.

[Winehole23]

Megan McArdle points a finger at an antequated titling (http://www.theatlantic.com/business/archive/2010/10/the-real-scandal-of-the-foreclosure-mess/64289/) process.

[Winehole23]

"The banks simply digitized mortgage titles into a privatized system, called the Mortgage Electronic Registry System (or MERS)," he said. "And it did the transfers by trading Excel spreadsheets among the banks and trusts, rather than endorsing the notes as required by their own contracts, by state real estate law and by IRS rules." He stated that 60 million properties are recorded in the name of MERS -- 60% of the mortgages in the USA, and 97% of the loans made between 2005 and 2008. http://www.opednews.com/articles/SHOCK-THERAPY-FOR-WALL-STR-by-Ellen-Brown-101003-838.html

[Winehole23]

MERS is simply an electronic data base. On its website and in assorted court pleadings, it declares that it owns nothing. It was set up that way intentionally so that it would be "bankruptcy-remote," something required by the credit rating agencies in order to turn the mortgages passing through it into highly rated securities that could be sold to investors. MERS not only has no assets; it has no employees. The thousands of people enlisted to sign affidavits on its behalf are merely conduits. The arrangement satisfied the ratings agencies, but it has not satisfied the courts. Increasingly, judges are holding that if MERS owns nothing, it cannot foreclose, and it cannot convey title by assignment so that the trustee for the investors can foreclose. MERS breaks the chain of title so that no one has standing to foreclose. The homes are effectively owned free and clear.



That does not mean the homeowners don't owe money to someone. They do. But the claim for relief is not in "law" (by virtue of an enforceable contract or rule) but in "equity" (a remedy provided just because it is fair), and MERS is not the proper plaintiff. Every MERS case involves a securitization, which means the real parties in interest are a group of investors somewhere; and before the homeowners can be made to pay, the investors have to come forward and prove not only that they are the parties owed the money, but the actual sums they are owed. In some cases they might already have been paid; for example, by insurers on credit default swaps held by the investment pool. The investors are entitled to recover in equity only so much as they are actually out of pocket, not the full amount of the original promissory notes, since they were not parties to those notes and there is no way to re-establish the chain of title.
ibid.

[boutons_deux]

Robo-Signing: Two Class Actions Raise More Troubling Foreclosure Questions


The mortgage foreclosure and robo-signing mess keeps getting messier. And the giant banks that have been caught up in the crisis have plenty of company, including Lender Processing Services and its subsidiary LPS, which plays a huge role in foreclosure process now in high gear across the U.S. LPS describes itself as the nation's "number one provider of mortgage processing services, settlement services and default solutions," working with all the top-50 banks in the country.


To provide its "default solutions," LPS maintains a nationwide network of attorneys who do enormous volumes of foreclosure work. The core of the service LPS provides is a software application that enables its attorneys to communicate with LPS and with LPS's financial institution clients. Documents are uploaded, and sometimes created, in the system and then distributed for signing, often as it turns out, by robo-signers. LPS makes money from its default services work primarily via the various fees it charges attorneys it refers cases -- far more so than from the fees it charges its bank/mortgage servicer clients.

http://www.dailyfinance.com/story/credit/robo-signing-two-class-actions-raise-more-troubling-foreclosure/19665854/

I wonder if any politicians (not Repugs, of course. They whine falsely about govt when the real culprit is private, which they want to hide from the bubba dumbfucks) want to exploit this mess and really punish these predatory, parasitic scumbag middlemen (aka lawyers)?

[boutons_deux]

The title insurance mess:

After Foreclosure, a Focus on Title Insurance

http://www.nytimes.com/2010/10/09/your-money/mortgages/09money.html?partner=rss&emc=rss&pagewanted=print

So that could put dampen sales of millions of foreclosed homes, and sales of title insurance on those buyers' homes (leaving the supposed title holders/banks paying property taxes and insurance while the houses are in limbo), since who can be sure of who really owns the house.

The Business of America is Fucking Up Business.

[boutons_deux]

"attorneys general of up to 40 states plan to announce soon a joint investigation into banks' use of flawed foreclosure paperwork.

an announcement could come as early as Tuesday"

http://www.huffingtonpost.com/2010/10/10/foreclosure-fraud-inquiry_n_757162.html?view=print

[LnGrrrR]

Again, I seriously think that those financial wizards are all either mentally incompetent or pure scum. Not sure which.

[Wild Cobra]

There should never be a law that allows digital images have the same force of law as original signatures. Too easily copied.

[Winehole23]

Foreclosure Fraud For Dummies, 1: The Chains and the Stakes (http://rortybomb.wordpress.com/2010/10/08/foreclosure-fraud-for-dummies-1-the-chains-and-the-stakes/)

Posted in Uncategorized (http://rortybomb.wordpress.com/category/uncategorized/) by Mike on October 8, 2010


The current wave of foreclosure fraud and the consequences for the economy are difficult to follow. As such, I’m going to write a few posts to simplify what is going on so you can follow stories as they unfold. This is very 101 level, and will include a reading list of blog posts and articles at each stage to help provide depth. (Special thanks to Yves Smith and Tom Adams for walking me through much of this.) Let’s make three charts of the chains involved in the process. The first is what is currently going on with foreclosure fraud (click through for larger).
http://rortybomb.files.wordpress.com/2010/10/foreclose_101.jpg?w=720&h=215 (http://rortybomb.files.wordpress.com/2010/10/foreclose_101.jpg)
As you can see, in judicial review states like Florida the courts require that servicers, or those who administer the bonds that are full of mortgages (securitization, residential mortgage backed securities, RMBS, are all phrases for them), say that they have everything necessary in order to have standing to bring a foreclosure. They need to have the note for a mortgage, which is supposed to be in the trust – part of the mortgage backed securities – that they administer.


What is breaking down here? In Florida, a judicial review state, it was found that one person was notarizing documents far faster than anyone could reasonably have. Forged documents necessary for the foreclosure process like the note were found. A separate court system was set up to resolve these foreclosures faster at the expense of allowing serious challenges to the documents. Here’s Smith on how kangaroo these courts look (http://www.nakedcapitalism.com/2010/09/floridas-kangaroo-foreclosure-courts-judges-denying-due-process-on-behalf-of-banks.html) up close. Here’s WaPo on one individual (http://www.washingtonpost.com/wp-dyn/content/article/2010/09/28/AR2010092806523_pf.html) and the nightmare of trying to challenge an invalid foreclosure. Keep him in mind when you hear about deadbeats and whatnot: the current system is designed to make it difficult for anyone to challenge their case.


Meet the robo-signer who kicked it off here at this WaPo story. (http://www.washingtonpost.com/wp-dyn/content/article/2010/09/22/AR2010092206650.html) I almost feel bad for this patsy; the real battle here is between junior and senior tranche holders, and this doofus could end up in jail in order to keep John Paulson rich. (http://www.nakedcapitalism.com/2010/10/john-paulson-throwing-weight-around-in-dc-versus-foreclosure-fraud-inquiries.html) After reading about this guy I’m asking our elites to take care of their patsies better. (Can we get a Financial Patsy Fordism social contract movement going? If you are going to be a patsy for GMAC, you should be paid enough able to be able to buy GMAC’s services or something.)
Why would servicers do this? One story would be that the more foreclosures they process, the more fees they get, so there is an incentive to cut as many corners to speed through the process as possible. Hence the term foreclosure mills. You can read more about this from Andy Kroll’s excellent work for Mother Jones (start here (http://motherjones.com/politics/2010/07/david-stern-djsp-foreclosure-fannie-freddie?page=2)).


There’s another problem though – what if servicers are behaving this way because the actual notes aren’t in the trust? Let’s go back to the creation of these instruments.
http://rortybomb.files.wordpress.com/2010/10/foreclose_101_2.jpg?w=450 (http://rortybomb.files.wordpress.com/2010/10/foreclose_101_2.jpg)
I take a mortgage out at Joe’s Lending, a mortgage originator. A mortgage consists of two parts. The first is the note, or the IOU, which is the borrower’s promise to pay. The second is the mortgage, which is the security, or the lien, or the actual interest.


Joe’s lending takes the mortgage note to a sponsor to turn these mortgages into a bond. The sponsor was often an investment bank like Bear Sterns. Now that investment bank puts an intermediary in between itself and the trust. This intermediary is usually called a depositor, and sometimes there are several of them in the chain.


What’s the worry here? Well many of these mortgage originators were fly-by-night shops, shady enterprises that collapsed the moment they hit trouble. And many of them cut corners and one of the corners they may have cut would have been to send the note to the trust. Specifically, there is worry that many mortgage originators never sent the notes to the depositors. Originators wanted volume to get fees and may not have done all the paperwork correctly. There are a lot of things that have to end up in the trust when I take out a mortgage, things like the note, title insurance, supporting documents. But the note is the most important.


Why is this important? Well the trustees usually sign several certificates saying that they have verified all the documentation in these trusts. Many of these trusts are under New York trust law which is particularly clear and strict when it comes to these matters. With this in mind, tackle these three posts by Yves Smith (one (http://www.nakedcapitalism.com/2010/09/more-evidence-of-bank-fubar-mortgage-behavior-florida-banks-destroyed-notes-others-never-transferred-them.html) two (http://www.nakedcapitalism.com/2010/10/congressmen-attack-lps-servicer-misconduct-pr-counteroffensive-starting.html) three (http://www.nakedcapitalism.com/2010/10/paging-elizbeth-warren-california-congressmen-call-for-foreclosure-probe-bank-sub-rosa-pushback-underway.html)).


So connect the two together, and you can see why we might have a systemic crisis on our hands:
http://rortybomb.files.wordpress.com/2010/10/foreclose_101_3.jpg?w=720&h=533 (http://rortybomb.files.wordpress.com/2010/10/foreclose_101_3.jpg)
There are roughly $2.6 trillion dollars in mortgage backed securities. The Wall Street Journal starts to explain (http://online.wsj.com/article/SB10001424052748703843804575534303696918076.html?m od=googlenews_wsj) how this will be a battle between holders of junior and senior tranches of debt. It also exposes the servicers, which include the four largest banks, to extensive legal liabilities by those who bought these securitizations that were signed off as being properly administered and created.


One result is that this has lead homeowners to reasonably demand to see the proper documentation before they and their families are put out on the street. Read Ryan Grim and Shahien Nasiripour from June, Who Owns Your Mortgage? “Produce The Note” Movement Helps Stall Foreclosures (http://www.huffingtonpost.com/2009/09/22/whos-got-the-mortgage-pro_n_294169.html).


Katie Porter is an expert who has done extensive research into this area and often blogs about it at credit slips. See the blog posts: How to Find the Owner of Your Mortgage (http://www.creditslips.org/creditslips/2010/04/how-to-find-the-owner.html) and Produce the (Bogus?) Paper. (http://www.creditslips.org/creditslips/2010/02/follow-the-paper-to-nowhere.html) Porter found that this was extensive in her research, see Misbehavior and Mistake in Bankruptcy Mortgage Claims (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1027961) (“A majority of mortgage claims are missing one or more of the required pieces of documentation for a bankruptcy claims. Fees and charges on claims often are poorly identified and do not appear to be reasonable. The bankruptcy data reinforce concerns about the overall reliability of the mortgage service industry to charge homeowners only the correct and legal amount of the debt and to comply with applicable consumer protection laws”). By rushing the process, unreasonable and excessive foreclosure fees can get applied to homeowners when there may not even be the proper documentation to have the standing to bring foreclosure at all.


So keep these frameworks in mind when you see the debate unfold in the next weeks. It is a problem of systemic risk, and it is a problem for the currently cratered securitization market. It will need to be addressed, the sooner the better. But how?

[boutons_deux]

I read an article, WaPo/Perlstein?, that still implies that all responsibility is on the home owners, with something like "no matter what the screw ups are on the lenders'/servicers' side, the homeowners are still delinquent", with no mention that the lenders in the housing bubble were, as is the case in 90% of mortgage fraud, the guilty party for lending to borrowers they the lenders didn't prove credible borrower ability to sustain the payments.

Nobody forced the lenders to write shitty loans, just like CRA didn't force lenders to write sub-prime/teaser mortgages for poor blacks/browns, clearly proven by the fact the the govt can't now get to lenders to modify mortgage terms.

[LnGrrrR]

Go free market! Less regulation will help protect consumers!

[Wild Cobra]

Go free market! Less regulation will help protect consumers!

What can the courts do when presented with fraudulent document? When the proof is shown of fraud, then those responsible need their asses kicked so hard, they can never do it again. No amount of regulation will help is the justice system is asleep at the wheel as well.

[boutons_deux]

Here's Cantor today trashing the irresponsible borrowers, while saying nothing about the lenders:

"you have 10 percent, if that, of the population who are now in a foreclosure situation or in a mortgage that they have been unable to meet the obligations… Now, come on, people have to take responsibility for themselves."

http://thinkprogress.org/2010/10/10/cantor-defends-banks/

As is always the case with Repugs/conservatives, esp our beloved WC and CC, the corps/capitalists/Haves are innocent, beyond reproach, and the HaveNots are criminals to bear full responsibility.

[Winehole23]

Debunking Banks’ “Procedural Problems” Defense on the Foreclosure Crisis (http://www.nakedcapitalism.com/2010/10/debunking-banks-procedural-problems-defense-on-the-foreclosure-crisis.html)

As more and more problems with foreclosures and borrower horror stories are coming to light, it isn’t hard to notice that banks are still gamely sticking with the pitch that the failings are technical and procedural even as the breadth of their response and the official reaction says otherwise. Suspending all foreclosures in the US, as Bank of America did today, is a very significant move. And the pressure appears to be escalating, as a multi-state effort is close to going live.



Per Bloomberg (http://noir.bloomberg.com/apps/news?pid=20601087&sid=a.fOkFPyKnnM&pos=4):

Attorneys general in about 40 states may announce by next week a joint investigation into potentially faulty foreclosures at the largest banks and mortgage firms, according to a person with direct knowledge of the matter.


State attorneys general led by Iowa’s Tom Miller are in talks that may lead to the announcement of a coordinated probe as soon as Oct. 12, said the person, who asked not to be named because an agreement wasn’t completed. The number of states may change because several are deciding whether to join, the person said. New Mexico Attorney General Gary King said yesterday in a statement that his state will join a multi-state effort.
The Financial Times gives us Bank of America’s gloss (http://www.ft.com/cms/s/0/df488338-d2f4-11df-9ae9-00144feabdc0.html) on this shoddy situation:

Banks have downplayed the problem by saying it is a mere technicality, adding that they are only foreclosing on homeowners who are months behind on their mortgage payments. BofA reiterated that position on Friday, saying:



“Our ongoing assessment shows the basis for foreclosure decisions is accurate.”
Yves here. Although we have chronicled the affidavit improprieties, we’ve kept our focus on the fact that these abuses are symptoms of much bigger, and we believe pervasive, problems with the securitizations. But in trying to give the big picture, we may have played into the bank narrative of minimizing the importance of the affidavit issue. Reader ella in comments provided a reminder:

An affidavit is a legal document which can substitute for live witness testimony in court. All testimony in court is governed by the rules of evidence or by statute. All testimony requires that the witness swears to tell the truth, is competent and has personal knowledge of the facts they are testifying about. An affidavit is no different, in most if not all jurisdictions; the affiant swears to tell the truth by being placed under oath by the notary, the affiant states in the affidavit that they were sworn, are competent and that they have personal knowledge of the facts in the affidavit. The notary attests to the oath of the affiant and that the affiant is who he claims to be.


If a witness lies in court or in an affidavit then they could be charged with perjury. Perjury is lying to the court.


The affidavit issue is being portrayed in the MSM at a paperwork problem. Lying to the court is not a paperwork problem. Attorneys are prohibited from making a material misrepresentation to the court of fact or law. Further, attorneys in most jurisdictions have an affirmative duty to report known perjury by their clients to the court.


The problem with the affidavits is perjury on behalf of the affiants and possibly the notaries depending on the notaries’ knowledge that the affiants had not reviewed the files, the promissory notes, the mortgages, or the records of default.


Further, you can reasonably argue that the entities pursuing foreclosure (banks or servicers) have perpetrated a fraud on the court by submitting perjured affidavits. If the attorneys representing the entities have knowledge of the fraud or are preparing questionable documents then they may also be involved and subject to penalties.


At the heart of any trial or hearing is the determination of the truth of the matter. It is the very purpose of the rules of evidence and what law and fact is presented to the court. If the affiants lied, as it appears, then the truth of whether they owned the note and held the mortgage and the borrower was in default is at issue. Courts, Attorneys General, and bar associations need to serious consider actions that will assure compliance with the rule of law.


This country cannot stand as a democracy if there is one set of law for the banks, corps, elites and another set of law for the rest of us. Perjury and fraud on the court is very serious matter. It is not a mere paperwork problem.
http://www.nakedcapitalism.com/2010/10/debunking-banks-procedural-problems-defense-on-the-foreclosure-crisis.html

[boutons_deux]

Here's more the CRA lie:

Conservatives Push Absurd Lie that Wall Street Hustlers Were Innocent Victims ... of Poor People

Perhaps the most pernicious right-wing lie of late is that the Wall Street hustlers who came close to bringing the global economy to its knees in 2008 were just innocent victims of government-sponsored programs that forced them to lower lending standards in a misguided effort to increase home ownership among the poor (read: dark-skinned).

http://www.alternet.org/module/printversion/148454

===========

And like the shills here for warming deniers, the same shills here immediately, in 2008, blamed the Dems, Freddie, Fannie, CRA for screwing up the lenders and mortgages. Total and complete lies.

[Winehole23]

Obama has said no moratorium is necessary, stressing, like the banks, the "valid basis" for foreclosure instead of fraud and contempt for the rule of law on the part of the banks.

If borrowers cheat on their paperwork they face jail. If banks do it the President of the USA stands behind them and stresses the "valid basis" of their fraudulent acts.

[Winehole23]

The sense of priorities is astonishing. Axelrod repeatedly stresses the need to get “this” resolved quickly. Notice the refusal to use accurate and honest language: at best, these are improprieties, but the more accurate word is fraud.

[Winehole23]

Bank Disinformation II: Banks Attacking Rule of Law Frontally (http://www.nakedcapitalism.com/2010/10/bank-disinformation-ii-banks-attacking-rule-of-law-frontally.html)

Readers may argue I’m reading more of a bank PR role in a page one Wall Street Journal story than is warranted. However, even the Columbia Journalism Review took notice of the Journal’s scanty reporting on the foreclosure crisis, (http://www.cjr.org/the_audit/the_journal_trails_badly_on_th.php) a mounting series of problems that is deservedly damaging to the banking industry’s image and bottom line. Now we have the Murdoch paper feature a remarkably one sided story on foreclosures. That looks to be no accident.



The story, “Courts Add To Foreclosure Delay (http://online.wsj.com/article/SB10001424052748703358504575544342488365152.html?m od=WSJ_hps_LEFTTopStories)” is utterly one sided. Having a judicial process for making foreclosures, as is required in 23 states, is bad for you….because it is preventing the housing market from bottoming. This argument is the polar opposite, by the way, of the Administration’s lame defense of its HAMP mod program.



Readers may recall that HAMP for the most part merely delayed foreclosures of participating homeowners for a few months, allowing banks to extract a few more payments from stressed borrowers and extract some incentive fees. Team Obama contended that was really a good thing, a feature, not a bug. The housing market was weak; better to have foreclosure properties dribble out on the market to prevent overshoot on the downside. So it seems that bank defenders will spin the delay issue whatever way they need at any point in time to flatter the banks.


The author also leads with an exaggerated claim up front:

One comparison widely cited: In California, where judges don’t handle foreclosures, the housing market appears to have hit bottom a year ago and has been bouncing back. In Florida, where foreclosures go through the court system, prices keep falling, and foreclosure inventory continues to rise.
Correlation is not causation, and indeed, the author backpedals, but it’s a full 13 paragraphs later:

The judicial process isn’t the only determining factor. California’s economy is more diverse than Florida’s and real estate, long term, has always been a stronger bet in California, which explains why buyers would pounce once prices declined.
The article attributes differences in foreclosure times solely to the judicial versus non-judicial issue. Yet it has repeatedly been reported that banks themselves are failing to foreclose on severely delinquent borrowers. Indeed, the “deadbeat borrower” reaction comes up repeatedly whenever we talk about people fighting foreclosures. In fact, relatively few people who can’t afford their homes fight; most are beating back a bank motion to break a bankruptcy stay or believe they are the victim of servicing errors; in Florida, some were partway through getting mods, yet the servicer failed to call off the foreclosure mill. The banks aren’t about to release the data, but a fair bit of the lengthening of time to foreclosure is due to the banks’ choice: they keep the borrower in place so that they are liable for the real estate taxes. If a bank has a lot of real estate already in a certain city or area, it’s going to have trouble moving inventory, so it sees delaying foreclosure as a way to save holding costs.



There is also not a single acknowledgment in the article that affidavits submitted were improper. Look how timid the Journal’s formulation is: “alleged irregularities in foreclosure documents submitted by the banks.” The banks have ADMITTED the affidavits were fraudulent, prepared by people who had no direct knowledge. This isn’t an “allegation”; these are admissions by bank employees in multiple depositions.



The article focuses strictly on the same theme of the Axelrod Face the Press remarks on Sunday: delay is bad for the economy, and gives as little mention as possible to the dead body in the room, that the “documentation” problems are severe and not fixable in any simple fashion.



That isn’t to say that some of the issues and data in this article aren’t worth exploring. But this piece was not an inquiry; it’s a badly skewed account, but the framing and the heavy use of data provides effective camouflage.



On another front, we had a pretty lame sighting over the weekend, the president of MERS, Mortgage Electronic Registry System, trying to defend his firm’s activities. We’ve avoided talking much about MERS, simply because it is a secondary problem in the foreclosure mess. The big failing of the securitization industry was not conveying the borrower IOU (the note) correctly to the securitization trust. In 45 of 50 states, it’s no tickie, no laundry: if you don’t own the note, you can’t foreclose. The mortgage (aka a deed of trust) is an “accessory” to the note in those states.


Some statements made in a Q&A released in connection the the president’s remarks are patently untrue, as in they have been repeatedly contradicted by sworn testimony by MERS employees. For instance:

1) MERS holds legal title to a mortgage as an agent for the owner of the loan

2) MERS can become the holder of the promissory note when the owner of the loan chooses to make MERS the holder of the note with the right to enforce if the mortgage loan goes into default.
This is utter baloney. MERS has no legal relationship to the note-holder. The owner of a loan (in the MERS context) will always be a trust. Per Max Gardner, a Federal bankruptcy attorney:

The Trust is NOT a member of MERS by a bi-lateral or tri-lateral agreement. The Trust cannot be a member of MERS per the MERS By-Laws. The Trust has never signed any document or filed any document that appoints MERS to execute any documents for the Trust. You simply cannot have a silent or unauthorized “agent” or “nominee” for a NY or Delaware Trust without a specific designation and appointment by the Trust…..The mortgage note is never transferred to MERS.
There is more from the Q&A that is false:

Claims that MERS disrupts or creates a defect in the mortgage or deed of trust are not supported by fact or legal precedents….MERS does not remove, omit, or otherwise fail to report land ownership information from public records.
Yves here. Ahem. This is misleading. There is no public record of the transfers from the originator to the trust (assuming that was done correctly).


MERS also falsely insists it increases transparency:

MERS was created to provide clarity, transparency and efficiency by tracking the changes in servicing rights and beneficial ownership interests. It was not created to enable faster securitization.
Um, MERS was create to save recording fees. And transparent? Absolutely not. Only MERS members, which are basically banks and servicers, can access the service. And it appears any MERS member can assign a mortgage. Moreover, from what I can infer, MERS is lacking in the sorts of checks you’d expect in a registry of this importance (requirement of approval or confirmation by a second party of a records change; audit trails, etc).



Although the MERS effort at image-burnishing is a side show, it’s still worth noting that they can’t even keep their own story straight. And MERS is hardly alone in that regard.

[boutons_deux]

The foreclosure fraud confirms the hsitory that mortgage fraud has been 90% of the time by the lenders, not the borrowers.

[Wild Cobra]

The foreclosure fraud confirms the hsitory that mortgage fraud has been 90% of the time by the lenders, not the borrowers.
Isn't it fraud to knowingly take on responsibilities you cannot make good on? Not everyone losing houses lost income.

Now I'm not supporting the banks here. I think those doing bad business practices should own up to it, and go bankrupt if necessary. No bailout. However, with you, it's always the big guys fault. Never the little guy.

[Winehole23]

What history are you talking about, b_d?

The last ten years? The last 100?

[Winehole23]

However, with you, it's always the big guys fault. Never the little guy.Irresponsible borrowers aren't responsible for banks faking their foreclosure paperwork.

[Wild Cobra]

Irresponsible borrowers aren't responsible for banks faking their foreclosure paperwork.
I agree. As I have pointed out in past posts, I agree with that point. To me, those responsible need to be locked up!

[boutons_deux]

Borrowers were NOT vetted thoroughly by lenders who wanted to write (sub-prime, teaser, balloon mortgages, pocket their fees, and sell the mortgage into the MBS shit hole.

the power (knowledge) imbalance between a probably first-time mortgage borrower and a lender armed with accountants, lawyers, and the experience Ks or Ms of mortgages is exactly how the LENDers like it.

Ever hear of lenders accepting borrowers on "stated income" and "liar's loans"? It was rampant in the most bubbly regions. The lenders had many way to block incapable borrowers (like applying federal law, 2 years of bank statement, 2 years of income tax statements, etc, etc), but they simply didn't. They were flipping mortgages for the fees and flipping mortgages they wouldn't have to service.

[Winehole23]

The lenders had many way to block incapable borrowers (like applying federal law, 2 years of bank statement, 2 years of income tax statements, etc, etc), but they simply didn't.Sure. But is that fraud?

[Wild Cobra]

Notice how he allows for the possibility that borrowers would lie on their applications because the lenders would appear insensitive if the required proof, and chastised by activist groups, yet the fault is only that of the lenders. None of it, the borrowers.

There is shared blame.

[Winehole23]

Not sure what paperwork Ms Tavakoli is referring to, but this might back you up:


And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security interest, and it’s not optional. http://voices.washingtonpost.com/ezra-klein/2010/10/this_is_the_biggest_fraud_in_t.html

[boutons_deux]

Willfully accepting fraudulent claims of ability to pay a mortgage could be considered accomplice to fraud.

The bigger question is why the lenders are now following the federal rules for mortgages scrupulously after they essentially ignored them during the bubble?

The lenders have and have had many means to protect themselves from borrower fraud, they refused, millions of times, to use those means.

[Winehole23]

There is shared blame.Sure. I've said so all along. Or were you talking to b_d.?

[Wild Cobra]

Not sure what paperwork Ms Tavakoli is referring to, but this might back you up:

http://voices.washingtonpost.com/ezra-klein/2010/10/this_is_the_biggest_fraud_in_t.html
And their lack of protecting their financial status means they should fail, rather than being dubbed as "too big to fail."

Rewarding such activity will just cause more of it.

[Winehole23]

The lenders have and have had many means to protect themselves from borrower fraud, they refused, millions of times, to use those means.If true, this seems to undercut your fiat assertion that banks are responsible for 90% of the fraud.

[Wild Cobra]

Sure. I've said so all along. Or were you talking to b_d.?
That part was more for b_d. Like I pointed out, his take is that it is never the little guy. Always the big 'evil' corporations.

[Winehole23]

And their lack of protecting their financial status means they should fail, rather than being dubbed as "too big to fail."

Rewarding such activity will just cause more of it.I agree, but I have a feeling that "letting banks fail" (i.e., subjecting banks to the government's resolution authority) will be met with aggrieved cries of "nationalization," even though that's just how we faded the S&L crisis.

[Wild Cobra]

I agree, but I have a feeling that "letting banks fail" (i.e., subjecting banks to the government's resolution authority) will be met with aggrieved cries of "nationalization," even though that's just how we faded the S&L crisis.
Regardless, I think we would be better off fighting those demons than the ones we have now.

[Winehole23]

Interesting. That's not what I'd have expected you to say.

[Wild Cobra]

Interesting. That's not what I'd have expected you to say.
We have those advocating nationalism already, and we already fight against it. What's one more demon in that category? Why allow bad business models to live? How many times do I take the position that if something cannot stand by merit, then let it fail? Why would this surprise you when I must pick the lesser of two evils?

[Winehole23]

Why would this surprise you when I must pick the lesser of two evils?Ideological rigidity was an option. Glad to see you resist it in this case.

[boutons_deux]

If true, this seems to undercut your fiat assertion that banks are responsible for 90% of the fraud.

Hell no, it doesn't.

The foreclosure fraud is different from the fraud at the time writing the mortgage, which is where I read the fraud is 90% on the lender side.

btw, much of the problem with the bubble was non-bank (non-regulated) lenders. The big banks were gettting cut out of that action, so they created non-regulated lending subsidiaries to get in on the bubble action.

[Winehole23]

The foreclosure fraud is different from the fraud at the time writing the mortgage, which is where I read the fraud is 90% on the lender side.That wasn't clear contextually. Thanks for the clarification

[Wild Cobra]

Hell no, it doesn't.

The foreclosure fraud is different from the fraud at the time writing the mortgage, which is where I read the fraud is 90% on the lender side.

btw, much of the problem with the bubble was non-bank (non-regulated) lenders. The big banks were gettting cut out of that action, so they created non-regulated lending subsidiaries to get in on the bubble action.
Except for a very small percentage of mistakes, are any foreclosure notices going out to people who are paying? The notices may not have legal force because of errors, but once the paperwork is found, how many will be shown not to be valid?

[Winehole23]

WC: one reason banks faked the paperwork (other than reasons of expediency) was precisely because of the difficulty of reconstructing the chain of title.

[Wild Cobra]

WC: one reason banks faked the paperwork (other than reasons of expediency) was precisely because of the difficulty of reconstructing the chain of title.
I don't doubt that one bit, and like I said, those responsible need to be caged.

[Winehole23]

Fly by night lenders, incessant flipping and a flawed titling process means in very many cases the chain of title cannot be reconstructed.

[Wild Cobra]

Fly by night lenders, incessant flipping and a flawed titling process means in very many cases the chain of title cannot be reconstructed.
Then they don't have a valid claim against the home. Maybe people will get off with a clear title in the end. Not sure how that works, but possession does have something to do with claims.

I will contend that whoever let the paperwork process fail, should be the one to carry the loss.

[ElNono]

The problem is that the lenders have the red-carpet treatment, filing thousands of claims a day with seemingly little to no oversight (at least until this was brought up to light), where the little guy has to navigate a sea of bureaucracy and spend the money they don't have in lawyers and the like to contest anything.

[Wild Cobra]

The problem is that the lenders have the red-carpet treatment, filing thousands of claims a day with seemingly little to no oversight (at least until this was brought up to light), where the little guy has to navigate a sea of bureaucracy and spend the money they don't have in lawyers and the like to contest anything.
They shouldn't get that red carpet treatment, should they? There are already legal standards in place. If they violate the process, they should be the losers. When the politicians stop protecting these people with new laws and regulations, maybe we can get some proper resolve. Still, with the way the media treats everything, the politicians responsible for protective laws go unchallenged. If we had real journalists, the public would know the truth. However, real journalism too, died years ago in the mainstream.

[MannyIsGod]

Obama has said no moratorium is necessary, stressing, like the banks, the "valid basis" for foreclosure instead of fraud and contempt for the rule of law on the part of the banks.

If borrowers cheat on their paperwork they face jail. If banks do it the President of the USA stands behind them and stresses the "valid basis" of their fraudulent acts.

Link? I saw where Axelod said they should proceed with foreclosures because of the ones where the banks have valid paperwork but thats not what you're saying.

[Winehole23]

Link? I saw where Axelod said they should proceed with foreclosures because of the ones where the banks have valid paperwork but thats not what you're saying.I meant Axelrod. (I think it's fair to assume he had Obama's ok to say what he did.) He's spinning this as a paperwork problem rather than incompetence and fraud. I'll dig up a link for you.

[Winehole23]

Axelrod did suggest there exists a "valid basis" for the foreclosures when in fact that's exactly what's at issue. He's begging the question and in so doing, spinning on behalf of a more or less corrupt banking system.

[MannyIsGod]

I read his quotes from this weekend. But I believe you are miscatagorizing them. I don't see how any foreclosures with valid paperwork will be stopped in the long or short run and I believe that is what he was saying.

If Obama wanted to side with the banks he would have signed the legislation.

[MannyIsGod]

Axelrod did suggest there exists a "valid basis" for the foreclosures when in fact that's exactly what's at issue. He's begging the question and in so doing, spinning on behalf of a more or less corrupt banking system.

Well he said so in context of a nation wide manded moratorium. What legal right do they have to stop foreclosuers with the appropriate paperwork?

[ElNono]

They shouldn't get that red carpet treatment, should they?

It's difficult without some form of oversight/regulation in place, isn't it?
Ultimately, lenders have much more resources at their disposal than the little guy.

[Winehole23]

I read his quotes from this weekend. But I believe you are miscatagorizing them. I don't think so. Denotation and connotation. It is an election year. Axelrod stressed valid foreclosures when that's really not the problem. The problem is robo-signing.


I don't see how any foreclosures with valid paperwork will be stopped in the long or short run and I believe that is what he was saying.I don't either, but banks arre declaring moratoriums all on their own, too.

[MannyIsGod]

Banks doing it on their own is far more favorable than the US government doing it for any number of reasons. My point is that his comments don't signal Obama siding with the banks - especially in light of the recent veto.

[Winehole23]

Well he said so in context of a nation wide manded moratorium. What legal right do they have to stop foreclosuers with the appropriate paperwork?I don't know the legal basis. It may have to do with state chartering of banks.

[Winehole23]

If titling process is as screwed up as suggested, protecting the public would seem to outweigh possible harm to banks.

[boutons_deux]

"protecting the public would seem to outweigh possible harm to banks."

quit thinking rationally. Banks profits ALWAYS outweigh harm to their clients.

[MannyIsGod]

Well,, in states where a judge reviews the foreclouser this should already be happening. Don't know about the other half of the country, though.

[Winehole23]

Banks doing it on their own is far more favorable than the US government doing it for any number of reasons. My point is that his comments don't signal Obama siding with the banks - especially in light of the recent veto.Sending Axelrod out there to spin expediency over compliance with the law and protecting the public is the functional equivalent of Obama speaking from both sides of his mouth.

[MannyIsGod]

Of course WH. He's a politician. His actions were a veto. Speaks louder than any administration official on any Sunday talkshow.

I don't expect Obama to just bend the banks over and screw them with a taxpayer dick - no matter how satisfying that might be - but I don't see him siding with them either considering sweeping this under the rug was easiest by signing the bill.

[Winehole23]

The veto is unquestionably the right thing to do. But given the totality of US poicy vis-a-vis the financial sector, I tend it doubt it reflects where Obama's heart really is.

Like Axelrod's spinning, Obama's veto is more a matter of political expediency than principle IMO.

[boutons_deux]

It is impossible to overstate the severity of the real estate crisis in the United States which has been caused entirely
by the reckless fraud of the nation’s largest banks – the Wall Street Oligarchs. We now have mortgage-fraud being
openly acknowledged by the banksters, and on a scale never before seen in human history.

We have a single individual with JP Morgan (JPM) openly admitting that she and her team committed more than
18,000 acts of fraud per MONTH, while one Bank of America official admitted that she personally committed 7,000 to
8,000 acts of fraud monthly. Regular readers will recall that in a recent commentary I reported on two, separate
anecdotes where the Bank of America attempted to foreclose on properties which did not even have mortgages.
In that same commentary, there was also an anecdotal report from a Florida lawyer who specializes in foreclosure
proceedings, who stated that he regularly encountered (so-called) judges who were rubber-stamping these
foreclosures without even looking at the documents. The lawyer also reported that one particular judge had already
written her judgments (confirming foreclosure) before the foreclosure trial started.

We thus have the following chain of events, a Wall Street bank pushes a stack of 18,000 foreclosures in front of a
small group of clerks (who make convenient patsies), and tells them they have to clear this many documents every
month – knowing that it is impossible to process that volume and still follow mandatory legal procedures.

Stacks of these foreclosures are then pushed before judges. In the case of Florida, they are being processed by
judges called out of retirement. Many of these people are likely no longer allowed to operate motor vehicles. These
past-their-prime judges then rubber-stamp these fraudulent foreclosure documents, without even looking at them –
effectively stealing the home from the homeowner through the coordinated fraud being committed by Wall Street
banks and the U.S. government.

This is the sort of systemic horror-story which we would expect to hear coming out of some tiny, Third World country,
with a ‘two-bit’ legal system – not from the Leader of the Free World. The crime-waves being confessed to by JP
Morgan and Bank of America follow similar (if not worse) admissions by Ally Financial (GMAC’s mortgage
subsidiary).

Naturally, the U.S. propaganda-machine isn’t reporting this mass-fraud as a crime-wave, but merely as “mistakes”.

Let me make things clear. Doing something once is a “mistake”. Doing something 10 times is a pattern. Doing
something 100 times is serial fraud. Doing something at least 7,000 times a month is a crime-wave. Obviously the
banks themselves must have understood they were engaging in fraud.
In the case of JP Morgan, we have the largest, and one of the oldest banks in the United States. It has been
processing foreclosures in the U.S. for more than a century. It clearly has an intimate, administrative understanding
of how long it takes to process a foreclosure. When its largest mortgage-processing unit started reporting (month
after month) a rate of productivity which was utterly impossible (while following mandatory legal procedures), it
obviously should have put a stop to these mistakes at a much, much earlier time.

How much earlier? That is the unknown question. We already know that Ally Financial had already been sanctioned
for such mortgage-fraud by a Florida judge as far back as 2006. But that was only the first time it was caught. With
courts in many U.S. states severely clogged with enormous backlogs of foreclosures (more than 500,000 in Florida
alone), we have no way of knowing how many foreclosure-judges are also rubber-stamping everything that is put
before them.

Tragically, as despicable and inexcusable as this bankster crime-wave has been, these past horrors pale into
insignificance when stacked-up against the future problems which have been created by Wall Street greed. A
Bloomberg article begins to explore this legal nightmare.
“Defective documentation has created millions of blighted titles that will plague the nation for the next
decade,” said Richard Kessler, a Sarasota, Florida attorney. Kessler conducted a study which found defects in
approximately 75% of all court filings.

Let me expand upon this horror. For any and every U.S. residential property which has a mortgage that has come
within reach of the large U.S. banks over (at least) the last four years, it now has a title which cannot be relied upon
by any potential buyer. And as the Florida lawyer states, this is not just going to be a problem for one year, or five
years, but roughly a decade (if not longer).

Readers must understand how our legal systems operate. A party which has defective title to a property (i.e. the Wall
Street banks) can never pass "good title” to any buyer. From the time that defect is created, no subsequent buyer
can ever own that home, legally. Should that defect be discovered – several years later – by the original owner, that
owner then has several more years in which to file a claim (based upon our limitations statutes).

If the original owner can demonstrate that he was stripped of his title through one of these millions of acts of Wall
Street fraud, the original owner must and will be awarded clear title to that property, without one penny of
compensation to the new owner.

To be more specific, any U.S. home which has been bought / sold more than once in the last five years, and any /
every home with a mortgage tied to one of these fraud-factories cannot be trusted when it comes to being able to
purchase clear title.

This means that any prospective buyer of a U.S. home must do extensive research on that property before ever
making an offer, especially if they are considering making a purchase in the fraud-capitals of the U.S. housing
market: Florida, California, Arizona, and Nevada. In the case of any home which has been tainted by Wall Street
fraud, any sane buyer will simply walk away.

For those who decide they must buy a particular home, at the very least you will have to hire a lawyer to do a
detailed analysis of the title. Given how complicated these Wall Street webs of fraud are, hiring a lawyer won’t
guarantee good title, but it will give you someone to sue, if your home is later taken from you (by the rightful owner).

The most-obvious warning siren applies to foreclosure sales. Previously seen as a way to get a cheap home, it now
appears more like a way to buy a home with a ticking-bomb inside it. No one in the U.S. should consider purchasing
a foreclosed property without conducting extensive research on its title.
Keep in mind that this foreclosure-fraud is also only one way in which title to U.S. residential property is now
seriously in question. Court cases to date have only dealt with defective titles in foreclosure proceedings – in other
words the defect is discovered at that point in time.
The yet-unanswered question is what about the tens of millions of other securitized mortgages which have been
“sliced-and-diced” by the Wall Street banks to the point where it is unclear whether any homeowner with one of these
tainted-titles is capable of passing good title to a prospective buyer? I first brought up this bigger legal-nightmare
roughly a year ago, in a two-part series titled “Who Owns Foreclosed U.S. Properties?”.

In other words, even if a homeowner remains current on their payments, as long as there is an outstanding mortgage
on that property, title rests with the mortgage-holder – and thus title must be conveyed from the genuine holder of
that mortgage to any prospective buyer. If the bank which is servicing the mortgage does not hold full-and-clear title,
and cannot locate / identify a single holder of clear title, then it becomes impossible to legally convey title of the
property from one homeowner to another.

Much of this additional uncertainty can be attributed to the Wall Street creation known as “MERS”. This private
company was created by Wall Street to attempt to bypass established legal procedures for financial companies to
hold and transfer mortgages. The Wall Street fantasy was that any one of the Oligarchs could submit a file to MERS,
claiming rightful title to a particular property, and have MERS rubber-stamp that title.

When the housing-bubble created by Wall Street imploded (and the real fun began for the Oligarchs), they expected
to be able to waltz into foreclosure courts, show the judge their rubber-stamp from MERS, and then have the judge,
in turn, rubber-stamp the foreclosure. This problem will last for much longer than ten years – since MERS has not yet
been entirely wiped-out by court judgments finding against it.

Only after MERS and that entire registry system is abolished will the ten-year countdown (described by the Florida
attorney) begin. Similarly, with respect to the millions of acts of foreclosure fraud now being admitted by Wall Street,
this will be a problem for ten years only if U.S. regulators and law enforcement authorities put a total stop to such
fraud immediately. If this national disgrace is allowed to persist, then that must extend the previous ten-year estimate
for this catastrophe.

When I first began to refer to Wall Street banks as “fraud-factories” more than two years ago, some people found the
term offensive. It has now been openly confessed by at least two of these companies that this is exactly what they
are.

First they destroyed much of their own sector, through their multi-trillion dollar Ponzi-schemes based upon the
housing-bubble these fraud-factories created. Now they have destroyed much of (if not most of) the U.S. residential
real-estate market. Nothing but a complete national audit of the titles of all U.S. residential real estate can restore full
trust to this market.

Unless / until that should occur, Wall Street has rendered much of the U.S. real estate market radioactive. And like
radiation, these “toxic titles” are invisible – and can only be discovered through specialized detection. For anyone in
the U.S. considering purchasing any U.S. home with an outstanding mortgage, the words “caveat emptor” have
never been more applicable.

Disclosure: I hold no position in JP Morgan, Bank of America, or GMAC.
Mortgage-Title Fraud: A National Catastrophe --

Seeking Alpha Page 3 of 3
http://seekingalpha.com/article/229048-mortgage-title-fraud-a-national-catastrophe?sourc... 10/10/2010

[Winehole23]

http://abcnews.go.com/Business/banks-accused-illegally-breaking-homes-facing-foreclosure/story?id=11847377&page=1

[boutons_deux]

Bailout Watchdog Investigating Alleged Foreclosure Fraud

The special inspector general for the $700 billion financial bailout is looking into the improper foreclosures, which led GMAC Mortgage to halt foreclosures in 23 states,

GMAC Mortgage halted some foreclosures last month after an employee admitted to approving 10,000 foreclosures per month. The employee signed court papers swearing that the foreclosure documents were accurate. But he did not read the documents.

http://topicfire.com/Bailout-Watchdog-Investigating-Alleged-Foreclosure-Fraud-15744313.html

=============

[boutons_deux]

The First Domino: Foreclosure Fraud and the 'Invisible Bailout'

The foreclosure fraud scandal is a big deal (or a big "effin'" deal, as Joe Biden might say). But its real significance is an even bigger deal. Foreclosure fraud is one domino, and if it falls others will follow. The result could be an end to the "invisible bailout" -- the one you never hear about, the one that forces millions of people to subsidize bad lending practices in order to prop up Wall Street.

The invisible bailout is the reason why the government isn't pushing to freeze foreclosures. If the foreclosure process is halted and lending practices are thoroughly investigated, it might eventually force bankers to own up to their own lawlessness -- and write down billions of dollars in artificially inflated assets. How are they going to pay themselves record bonuses if that happens?

How much could that cost? One in four US homes is underwater, which means that proper accounting would require a writedown of enormous proportions. And, as the AP reported, "forecasters at John Burns Real Estate Consulting predicted that 41 percent of residential sales this year would be on distressed properties." The banks have been counting on that revenue.

Write down one mortgage in four? Halt nearly half of all home sales?

Now that's a big effin' deal.

http://www.huffingtonpost.com/rj-eskow/the-first-domino-foreclos_b_760215.html?view=print

[boutons_deux]

Finance industry hired hair stylists, Walmart workers to approve foreclosures


http://www.rawstory.com/images/new/foreclosuresign.jpg

In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.

In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.

http://www.rawstory.com/rs/2010/10/lawyer-finance-industry-hired-hair-stylists-walmart-workers-approve-foreclosures/

=========

Magic Negro is chickenshit appealing the stop-DADT ruling, will he also let the foreclosure fraud artists escape?

[boutons_deux]

Here's the document that destroys MERS

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1469749&download=yes

We know a Repug Exec/DoJ would undoubtedly let the foreclosure frauds escape, so it's a big test for the Dem Exec/DoJ to see if they can be different from the Repugs. Or, all they all just totally corrupt.

[Winehole23]

The banks are creatures of the states. Seems likelier to me the DOJ will stay out of the way.

[boutons_deux]

Since mortgages were sliced up and sent anywhere, they certainly weren't tied to any state.

These aren't state banks, their national banks with plenty of inter-state commerce.

[Wild Cobra]

The banks are creatures of the states. Seems likelier to me the DOJ will stay out of the way.
Which only add to the proof of how corrupt our government is.

[MannyIsGod]

Since mortgages were sliced up and sent anywhere, they certainly weren't tied to any state.

These aren't state banks, their national banks with plenty of inter-state commerce.

National banks are still chartered in the states, correct?

[MannyIsGod]

Which only add to the proof of how corrupt our government is.

:lmao

WC with a swing and a miss. Now you want the federal government to step over states rights?

[Wild Cobra]

:lmao

WC with a swing and a miss. Now you want the federal government to step over states rights?
Which only add to the proof of how corrupt our governments are.

Better?

[MannyIsGod]

How does the DoJ staying in their jurasdiction prove how corrupt our governments are?

[Wild Cobra]

How does the DoJ staying in their jurasdiction prove how corrupt our governments are?
Each state has it's own DoJ. Unlikely they will do anything.

[MannyIsGod]

Too bad thats not what WH was referring to. But sure, try to dance around it now. Its irrelevant anyway, I just love making you squirm.

[boutons_deux]

"Unlikely they will do anything."

???

see title of this thread.

whether the TX or any state AG subpoenas or charges anybody, that is the Big If.

[Wild Cobra]

Too bad thats not what WH was referring to. But sure, try to dance around it now. Its irrelevant anyway, I just love making you squirm.

No, I shouldn't participate in this thread. I'm not paying attention to all that's said before.

[boutons_deux]

The Subprime Swindle and the Foreclosure Fraud Cover-Up

Fraud in the foreclosure process conceals a second, more massive fraud: the astonishing levels of mortgage fraud perpetrated by subprime lenders during the housing bubble. These frauds don't just expose big banks to epic losses, they expose bigwig bankers to prison time.

Clearly, we're dealing with a lot of different frauds here. Tomorrow, I'll detail one of the smaller-bore problems with foreclosure fraud: providing cover for illegal fees that lenders charge to troubled borrowers. But today I'll discuss a much different and much bigger scandal. During the housing bubble, banks falsified documents on a massive scale in order to issue as many toxic subprime loans as possible. This was straightforward mortgage fraud, and the current wave of fraud in the foreclosure process is covering it up.

according to the FBI, 80 percent of mortgage fraud is committed by lenders.

http://www.huffingtonpost.com/zach-carter/the-subprime-swindle-and_b_761222.html?view=print

[Wild Cobra]

according to the FBI, 80 percent of mortgage fraud is committed by lenders.

If that's true, that's where we can put some stimulus money...

Build more prisons!

[Winehole23]

Each state has it's own DoJ. Unlikely they will do anything.That must be why 40 state AGs are having a meeting about it. To coordinate how they all will disregard the problem.:rolleyes

[boutons_deux]

these guys says the participants in the fight are states vs feds, vs banks vs owners vs American Land Title Assoc vs the law


http://www.thinkbigworksmall.com/mypage/archive/1/53951/

[boutons_deux]

http://www.readersupportednews.org/images/stories/article_imgs2/1559-williams-eviction-minnesota-091109.jpg

"Officials in All 50 States Launch Foreclosure Probe

13 October 10

"A joint investigation by every state and the District of Columbia could force mortgage companies to settle allegations that they used flawed documents to foreclose on hundreds of thousands of homeowners.

It could take months, at least, for any settlement to be reached. But legal experts say lenders could be forced to accept an independent monitor to ensure they follow state foreclosure laws. The banks could also be subject to financial penalties and be forced to pay some people whose foreclosures were improperly handled."

http://www.readersupportednews.org/news-section2/320-80/3602-officials-in-all-50-states-launch-foreclosure-probe?tmpl=component&print=1&page=

=======

And you tea baggers want to hand your Social Security to Wall St and get raped with unchallengeable, secret, arbitrary, random fees for decades? :lol

[boutons_deux]

About 1 million foreclosures this year, and many 100K/year in previous years.

Review the paperwork, trace/clear the title, etc

= 1 hour (that might be a low-ball estimate :lol )

= 1,000,000 hours

= 125K 8-hour days

= 350 years, and figure at least one lawyer's billable hours all the way.

Now, you ignorant, duped tea baggers, tri-corned-hat jokers, xenophobes, racists, nativists, NRA gun fetishists, "Christians" tell us again how illegal immigration, Ground Zero terrorist center, same-sex marriage, fudge packers, Magic Negro, imaginary Dem spending, and Restore America/Take Our Country Back are country's number one priorities. :lol

America is so fucked, and unfuckable, and America fucked itself, not gays, not terrorists, not illegals.

[Winehole23]

(How cute. You put a tail on it.)

[boutons_deux]

Why Is the White House Against Freezing Foreclosures in the Face of Rampant Fraud

But the real reason for Geithner’s reluctance about a foreclosure moratorium is that he’s scared stiff about those securities – because even if he won’t admit it, he knows that the bailout wasn’t just about TARP and Bernanke isn’t just an economic savior.

The government owns or is backing trillions of dollars worth of assets predicated on the same or similar suspicious loans that defaulted during the 2008 crisis period, which they did nothing to stop (or force banks to restructure).

Instead, the Fed now owns nearly $1.5 trillion of toxic assets that have no bid (meaning no one but the Fed wants them). They would have less of a bid if there was even more uncertainty about the loans that fill them. The Treasury is directly backing $400 billion of government-sponsored entity (GSE) securities, and is indirectly backing another $6.8 trillion. If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.

See, the loan that might be analyzed in a foreclosure situation could be part of a chain connecting the underlying home to 20 or 50 different securitized assets, all depending on it for either the interest payments the loan was supposed to provide, or the value of the foreclosure property if those payments stopped (in Wall Street speak, the "recovery value"). If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. Think what that can do to the value of toxic assets living at the Fed and the Treasury Department. Kill it.

http://www.alternet.org/module/printversion/148495

=================

So now the govt has gotten into the mud puddle with the Wall St pigs, and the govt got dirty, too.

[Winehole23]

So now the govt has gotten into the mud puddle with the Wall St pigs, and the govt got dirty, too.You say that like it's news or something. Activist government picked up steam a hundred years ago in the USA, about the same time as liberal corporatism.

By mid century we had full on bureaucratic/theraputic management of everyday life, in the USA. It's not like it happened 15 minutes ago O Great Boutons.

[boutons_deux]

The getting dirty was taking the toxic debt off the books of Wall St pigs.

In return, we got ...

[Winehole23]

A fouled public balance sheet. You're welcome, Wall Street.

[Wild Cobra]

Can you imagine if they bailed out renters too?

[Winehole23]

A declining market already does that if it has not already eliminated your job.

[boutons_deux]

For foreclosure processors hired by mortgage lenders, speed equaled money


Millions of homes have been seized by banks during the economic crisis through a mass production system of foreclosures that was set up to prioritize one thing over everything else: speed.

With 2 million homes in foreclosure and another 2.3 million seriously delinquent on their mortgages - the biggest logjam of distressed properties the market has ever seen - companies involved in the foreclosure process were paid to move cases quickly through the pipeline.

Law firms competed with one another to file the largest number of foreclosures on behalf of lenders - and were rewarded for their work with bonuses. These and other companies that handled the preparation of documents were paid for volume, so they processed as many as they could en masse, leaving little time to read the paperwork and catch errors.

And the big mortgage companies overseeing it all - including government-owned Fannie Mae - were so eager to get bad loans off their books that they imposed a penalty on contractors if they moved too slowly.

The system was so automated and so inflexible that once a foreclosure process began, homeowners and consumer advocates say, there was often no way to stop it.

"The problem is when you try to fight back against this machine, well, it's a machine," said Michael Alex Wasylik, an attorney for homeowners in Dade City, Fla. "You have to be able to get your case off the mass production line and to someone who will take the time to read what they file, but in many mortgage firms that person doesn't exist."

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/15/AR2010101506541_pf.html

==========

Why have the tea baggers and Repugs refused to campaign and scream their fake outrage about this huge problem, the financial sector, having caused the economic catastrophe, grabbing real estate and collateral? Because they are financed by the financial sector to scream false outrage about other completely smokescreen issues while the financial sector rapes Americans.

Even after the fraud has been widely and accurately exposed, not a peep from pitbull bitch, Bachmann, the witch, etc, etc. Why is that?

[boutons_deux]

Personally Invested In Mortgage Banks, Cantor Opposes Fix For ‘Foreclosure-Gate’

– Many of Cantor’s top contributors are financial companies and lobbyists for the mortgage banking industry. Mortgage banks like Bank of America, Capital One, and Hartford Financial have contributed over $100,000 to Cantor’s two political action committees, and the Mortgage Bankers Association, a trade group of mortgage banker lobbyists, pitched in $23,500.

– Cantor’s wife, Diane Cantor, serves as the managing director of a bank recently reported to have one of the highest foreclosure rates in the country. Diane Cantor leads New York Private Bank & Trust, which is among the top three banks in the mortgage business “with the the greatest percentage of family loans in the foreclosure process, according to SNL Financial.” New York Private Bank & Trust, a TARP recipient that has not paid back the taxpayer, is also a member of the U.S. Chamber of Commerce.

– Cantor is personally invested heavily into the mortgage industry. According to reporter Neil Simon, Cantor’s “personal ties to the mortgage industry helped play a leading role” in his decision to vote for the bank bailouts of 2008. For instance, before going to Congress, Cantor handled real estate law at his family’s law firm, and continues to own between a $250,000 to $500,000 stake in TrustMor Mortgage, a mortgage brokerage he opened in 1996. According to Cantor’s latest personal finance disclosure, Cantor still earns $5,000 to $15,000 in income from his TrustMor business stake.

While Cantor defends the banks’ power to foreclose on homes without due process or legal paperwork as part of his philosophy of “free enterprise” and “private property rights,” his stance may reflect more on his own relationship with the mortgage industry.

http://thinkprogress.org/2010/10/16/cantor-bank-foreclosure/

=============

There will no surprise if the foreclosure crimes and fraud go completely unpunished due to the Repugs blocking all prosecutions, punishments, and limiting/blocking hearings.

We are expecting the financial sector fraud criminals to stop committing and in-fraudulently "correct" all their frauds to be perfect?

btw, orange fraudster Mozilo just "settled" to pay $70M for insider dealing, allowing him to keep the $70M from insider dealing.

[boutons_deux]

Foreclosure Fraud: Megabanks At Risk As Analyst Identifies New Problems With Mortgages

Pension funds and other investors who have suffered losses on mortgage-backed securities could have a "strong legal basis" to call into question the very securitized mortgages they purchased stakes in, increasing the pressure facing large Wall Street firms that packaged these securities during the housing boom,

"We have a larger and more significant concern, which, if proved out, could call into question the validity of nearly all securitizations."


Investors would thus have the upper hand in their negotiations with big Wall Street securities issuers and mortgage servicers, and could force the firms to buy back more of the shoddy loans underlying their securities.

There are more than $1.3 trillion in outstanding mortgage-backed securities in which the mortgages are not backed by the federal government"

trustees, who oversee the flow of documents from the originator of the mortgage to the vehicle that holds those documents for investors, may not have properly performed their role, either.

"If not properly transferred, the 'true sale' of mortgages to the trusts that issued mortgage-backed securities would be in question. If this proves to have occurred we believe the Trustee may have liability."

Just four firms dominate the trustee market for mortgage-backed securities in which the mortgages aren't guaranteed by Uncle Sam: Deutsche Bank, U.S. Bancorp, Bank of New York Mellon, and HSBC serve as trustees for 70.5 percent of all such issuance since 2005, according to Asset-Backed Alert, an industry newsletter and data provider. An additional four firms -- Wells Fargo, Bank of America, JPMorgan Chase, and Citigroup -- control 29.1 percent, Asset-Backed Alert data show.

All told, these eight firms have served as trustees for 99.6 percent of all private-label mortgage-backed securities issued since 2005.

http://www.huffingtonpost.com/2010/10/14/mortgage-bond-analyst-say_n_763215.html?view=print

[boutons_deux]

CNBC predicts Congress will retroactively legalize foreclosure fraud

Congress will pass a bill to "forgive" banks the potentially criminal errors made in foreclosure proceedings, a senior CNBC editor predicts.

http://www.rawstory.com/rs/2010/10/cnbc-legalize-foreclosure-fraud/

===========

aka, Too Big To Jail

[RandomGuy]

CNBC predicts Congress will retroactively legalize foreclosure fraud

Congress will pass a bill to "forgive" banks the potentially criminal errors made in foreclosure proceedings, a senior CNBC editor predicts.

http://www.rawstory.com/rs/2010/10/cnbc-legalize-foreclosure-fraud/

===========

aka, Too Big To Jail

No effing way.

I would love to see the Republican who has the nuts to propose that.

[Wild Cobra]

Seriously. Why worry about the home owners so much? They can rent. Why not worry about the renters being kicked out on the streets instead?

Why are you liberals always concerned about saving whatever the news tells you to care about?

[boutons_deux]

I haven't read anything about a crisis for renters.

Why are you concerned about renters?

Mortgage fraud and criminal financial predation are the crisis, not renting. WTF?

[Wild Cobra]

I haven't read anything about a crisis for renters.

Why are you concerned about renters?

Mortgage fraud and criminal financial predation are the crisis, not renting. WTF?
Didn't I already ask:


Why are you liberals always concerned about saving whatever the news tells you to care about?

[Winehole23]

Hernando de Soto, slightly reprised in BW:

The U.S. and other Western democracies have grown wealthy over the past three centuries for a simple reason: Their citizens have been able to establish clear title to land, buildings, and other property. So argues Hernando de Soto, the Peruvian economist, in his influential 2000 book The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else. While people in developed nations can borrow against their property and use the money to start businesses and accumulate wealth, he wrote, squatters in countries like Peru have no such option. Property rights beget prosperity.



That's why the burgeoning foreclosure mess in the U.S. strikes at the nation's economic heart. Confusion is so rife that Bank of America (BAC (http://investing.businessweek.com/research/stocks/snapshot/snapshot.asp?symbol=BAC)), the biggest mortgage lender, suspended foreclosures in all 50 states to determine whether faulty documents were used to confiscate homes. Americans took their title-recording system for granted, abused it during the housing boom, and let it deteriorate. "Somehow in the last 10 or 15 years, everything that was good record-keeping isn't telling the truth anymore," says de Soto, reached by phone while traveling in Copenhagen. "My feeling is this: Your recession is going to last. And it's going to last, and it's going to last, because essentially the trust has broken down."
http://www.businessweek.com/magazine/content/10_43/b4200009860564.htm

[Winehole23]

De Soto may be an alarmist, but he has correctly identified why the foreclosure mess is not a simple clerical problem. It's part of a broader breakdown in the financial world—the one that nearly caused a depression in 2008 when banks and other financial players couldn't tell whose balance sheets were stuffed with toxic subprime mortgage debt and whose weren't. Unable to trust one another, the big institutions pulled back from every asset except Treasury debt. At the height of the crisis, even stalwarts like AT&T couldn't borrow in the commercial paper market for durations of more than a day—meaning they were only 24 hours removed from default. ibid.

[boutons_deux]

...

[Winehole23]

Unregulated capitalism never existed in the USA. If you want to say regulating it somewhat less has turned out to be a disaster, fine.

[Winehole23]

Without the core of constitutionally guaranteed (and socially/institutionally respectable) property rights capitalism never really gets off the ground, is roughly the point being made.

Property rights aren't just a propaganda smokescreen for trickeration and graft. A stable, reliable legal/political context is foundational for both the expectation and the hoped for reality of future prosperity, allegedly.

[Winehole23]

...Really?

[boutons_deux]

Yes, really.

[Winehole23]

Got something to hide?

[boutons_deux]

Richard (RJ) Eskow: Foreclosures and Guilt: The "Home Loan Moral Hazard Scorecard"

Jamie Dimon and the other mega-bankers who derailed the economy have a new PR campaign to sell you. They're saying that families who can't pay their mortgages must bear the blame - all the blame - for the foreclosure crisis. That means the public should just ignore banks' widespread lawbreaking in the registering and transfer of property titles. For the bankers who would appoint themselves the nation's moral arbiters, It's always somebody else's fault.

Not that we should be surprised. After all, the Mortgage Bankers Association, which calls itself "the voice of the real estate finance industry," did a short sale on its Washington DC headquarters which left CEO John Courson uncharacteristically speechless. It seems he didn't want to talk about how he walked away from the loans he took out to buy that building. But before the cat got his tongue, Courson managed to lecture homeowners on their "legal obligation" and the terrible "message they would send" by walking away from their mortgages.

Morality and law for thee, but none for me.

It's just "paperwork," they say. But any homeowner who filed false affidavits - a crime that's legally equivalent to perjury - would be looking at jail time. Remember: Law and morality for thee ...

"But if these people had paid their mortgages, there wouldn't been a problem." That's a pretty compelling argument (if you're willing to ignore the widespread lawbreaking by the banks)

http://www.huffingtonpost.com/rj-eskow/foreclosures-and-guilt-th_b_766054.html?view=print

===========

And these Wall St criminals are giving MASSIVELY to the Repugs who voted against DISCLOSE, and who will NEVER do anything to impinge Wall St predations and crimes.

[Winehole23]

Big money favored Obama in 2008. C'est la guerre.

[boutons_deux]

Only because they knew dubya/dickhead and their disastrous Repug Reign of Error and Criminality was extremely unpopular as seen in 2004, 2006, so the simply put their money on the winner, McLiar and pitbull bitch being losers out of the gate.

[Winehole23]

Their money will be on the winners this time too.

[boutons_deux]

"At a large Florida "foreclosure mill," a manager signed up to 1,000 documents a day without reading them and employees were given gifts to speed up foreclosure paperwork, according to depositions released today by the Florida Attorney General's Office. "

http://www.huffingtonpost.com/2010/10/18/foreclosure-mill-employee_n_767174.html?view=print