Ritholtz: Why foreclosure fraud is so dangerous to property rights

[boutons_deux]

the "bad choices" should never have been offered by the predatory, criminal lenders.

The lenders, regulated and unregulated, bank and non-bank, have always been able to defend themselves against "liar's loans" by demanding years of IRS forms, credit/bank/utilities statements, but they accepted "stated income", wrote the loans, pocketed the fees, and sold the mortgages into the Wall St casino.

WC will always defend the powerful ins ution's actions and crimes vs the individual.

[Wild Cobra]

the "bad choices" should never have been offered by the predatory, criminal lenders.

The lenders, regulated and unregulated, bank and non-bank, have always been able to defend themselves against "liar's loans" by demanding years of IRS forms, credit/bank/utilities statements, but they accepted "stated income", wrote the loans, pocketed the fees, and sold the mortgages into the Wall St casino.

WC will always defend the powerful ins ution's actions and crimes vs the individual.

Well Boutons. Unlike you, I believe in freedom, which means the freedom to make mistakes.

Tell me... are you still wearing your diapers, and having mommy take care of you?

Did you miss the part where I agree deceptive practices should be prosecuted? As long as there is disclosure, and the individual makes a bad choice, why do you want to reward their poor choice?

Some people simply do not have the means to sign up for what they committed themselves to. The terms were high interest in many cases because of risk. Maybe the right choice would have been to rent rather than buy.

[FuzzyLumpkins]

Red herring. That's not anywhere in this thread. What I just posted isn't a proposed bailout. It's a lawsuit for deceptive trade practices.

Sometimes it literally is like talking with a downs patient. Downey, Jr was right: never go full re . He just mindlessly parrots the same taglines and spin hes been fed over and over. At least hes not a disgusting liar like Darrin though.

[Winehole23]

Sometimes it literally is like talking with a downs patient.

In my experience it's not. The comparison to WC is unfair to people with Down's syndrome.

Please feel free to shove it where the sun don't shine.

[Winehole23]

Two employees of Lender Processing Services (LPS: 18.52 -3.29%) were indicted in Nevada on alleged robo-signing charges connected to foreclosure filings, according to the Office of the Nevada Attorney General.


Gary Trafford and Gerri Sheppard, both California residents described as le officers, were indicted on a total of 606 counts by a Clark County grand jury.

http://www.housingwire.com/2011/11/1...igning-charges

[Winehole23]

A former employee supervised by Trafford and Sheppard said she forged signatures on more than 25,000 notices of default, according to KLAS-TV in Las Vegas.

ibid

[Winehole23]

”The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent do ents with the Clark County Recorder’s Office between 2005 and 2008,”said Chief Deputy Attorney General John Kelleher.

http://www.ritholtz.com/blog/2011/11...g-indictments/

[Winehole23]

LPS has cooperated fully with the investigation, the Jacksonville, Fla.-based company said in a media statement Thursday morning.


"Earlier this month, the attorney general's office confirmed that the company was not a target of this inquiry," the company said.

[boutons_deux]

Denial in the Mortgage Industrial Complex

I just came back from the AmeriCatalyst conference in Austin, which was a packed two days focused on the state of the housing and securitization market. The panels were very informative,

But the biggest undertone was the “borrowers are deadbeats” meme. In the first panel I was one, one of the other speakers went on about borrower fraud in the widely criticized HAMP program.

It was pretty clear that the American Securitization Forum party line, that these were mere errors or sloppiness, is widely shared. Too few are willing to accept the point made by Levitin:

To raise the “it’s just paperwork” argument in the context of securitization, however, is unreal. Securitization is all about legal fictions and paperwork. Why on earth would anyone every bother with the complex legal structures of securitization (typically involving two s en ies) other than to take advantage of legal fictions?

As I’ve noted in other venues, securitization is the legal apotheosis of form over substance, and the basis on which this is legally tolerated is the punctilious observance of formalities. Failure to do so can result in a securitization failing to be bankruptcy remote or to lose its off-balance sheet accounting status or lose its pass-thru tax status, any of which are disasterous. Securitization deals were so heavily lawyered precisely because the paperwork matters. They aren’t like a sale of a used sofa over Craigslist.

The “it’s just paperwork” argument quickly proves too much. Is the borrower’s signature on the loan “just paperwork”? How about a co-signor’s? If it’s just paperwork, why bother to have the borrower or co-signor sign, especially as it can create federal Equal Credit Opportunity Act issues when a spouse is involved.

So it isn’t surprising that a lawyer who represents investors made an impassioned plea for servicers to wake up and smell the coffee, that he’d rather work with them and negotiate a deal, but he was too often left with no other option than to sue. And that means that this battle will continue to play out in the courtroom.

http://www.nakedcapitalism.com/2011/...+capitalism%29

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The Big (VRWC/financial) Lie: The borrowers are deadbeats, the lenders are perfect, conscientious knights in shining armor who were defrauded.

[boutons_deux]

Devastating Analysis of MERS

The full paper, “The MERS Mortgage in Massachusetts” was sent by the author Robert Ludden to 4ClosureFraud, and you can download it there.

A “continuity” made of smoke and mirrors. In the MERS model, the mortgage doesn’t pass by assignment from one owner to the next by formal assignment; in fact, it really doesn’t pass at all, at least not in any ordinary sense that would involve time and a sequence of events. Rather, in the Mersian world there is a kind of simultaneity of time and event in which all ownerships of the mortgage exist ab initio by virtue of the MERS membership agreement and do not have to be independently established. It is very much a framework of interrelationships in the form of a venn diagram. Let’s say that a particular mortgage changes hands three times before it is foreclosed— which would mean a total of four owners. And let’s use a circle to represent each of the four owners. In the MERS model, these four circles are arranged symmetrically so that each one overlaps the other three in equal measure to form a common area at the center. That common area is MERS acting, as Arnold has said, as a “common agent” with respect to that mortgage. Because each owner is already tied conceptually to the mortgage, there is no need for an assignment and MERS, in its capacity as agent, may therefore simply remain the mortgagee of record at the local land office. Indeed, the MERS model is in many ways quite elegant. But the complex and recondite nature of the thing has served well to obscure its falsity under well-settled principles of agency and contract law.

http://www.nakedcapitalism.com/2011/...+capitalism%29

[boutons_deux]

massive fraud, ML settles, nobody to jail

Merrill Lynch To Pay $315 Million To Settle Charges It Misled Mortgage Investors

http://thinkprogress.org/economy/201...ud-settlement/

[boutons_deux]

5,000 Military Families Illegally Foreclosed On -- How We Can Prosecute Bank Crimes

Shahien Nasiripour has a great scoop in the FT – bank regulators have uncovered up to 5000 military families who were foreclosed on illegally by mortgage servicers. Foreclosures on active duty troops is usually a big no-no, for a lot of reasons – for instance, when your credit rating is damaged by a foreclosure, it can impact your national security clearance. In addition, there’s enormous stress that the soldier goes through when his or her family is facing a threat of eviction, and it’s the kind of stress that makes him or her less equipped to be ready in a warzone. Congressman Bob Filner has even accused banks of “homicide” against American troops, blaming the banks for suicides resulting from the increased stress brought on by aggressive debt collection techniques.

“The SCRA is not some obscure legal technicality that might just have escaped the attention of mortgage servicers. Those servicers are all affiliates of the biggest banks, but they’re huge and specialized. Servicing mortgages is all they do, and they really don’t have that many laws to keep up with. They have got to have known what the law required, and consciously decided that they could just ignore it, the same way they apparently decided it was okay to file false affidavits in legal proceedings.”

Much has been made of President Obama’s argument that the banks did nothing illegally, and various other scholars and officials have argued that prosecuting the banks is far too expensive and difficult. Yet, the SCRA is a simple law with teeth; it carries real jail time, and the parties have already confessed to the crime. Here’s Section 303(d)(1) of that law, which spells out penalties.

(1) MISDEMEANOR.—A person who knowingly makes or causes to be made a sale, foreclosure, or seizure of property that is prohibited by subsection (c), or who knowingly attempts to do so, shall be fined as provided in le 18, United States Code, or imprisoned for not more than one year, or both.

Interestingly, the Department of Justice seems to agree with this interpretation. Here’s a press release from the Department of Justice on a settlement of some of these claims, from Bank of America. I’ve bolded the important part.

The Justice Department announced today that, as part of its settlement with BAC Home Loans Servicing LP, a subsidiary of Bank of America Corporation, servicemembers whose homes were unlawfully foreclosed upon will each receive a minimum $116,785 plus compensation for any equity lost to compensate them for the bank’s alleged violation of the Servicemember Civil Relief Act (SCRA).

http://www.alternet.org/module/printversion/153249

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Too Big Too Jail

[Winehole23]

The borrowers are deadbeats, the lenders are perfect, conscientious knights in shining armor who were defrauded.

True colors. Your wage slaves are plotting your richly deserved demise as we speak, corporate-American s .

[boutons_deux]

Gfy

[Winehole23]

too bad you're basically ed and un able, or I would say same to you

[boutons_deux]

A Banker Speaks, With Regret

"On the application, you don't put down a job; you don't show income; you don't show assets," he said. "But you still got a nod.""If you had some old bag lady walking down the street and she had a decent credit score, she got a loan," he added.

some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers - those with less education, without previous mortgage experience, or without fluent English - and nudged them toward subprime loans.These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

http://mobile.nytimes.com/article?a=...&sub=Columnist

??? Didn't the Repugs and right-wing hate media tell us it was CRA that forced banks to lend the red-lined poor neighborhoods?

btw, the guy above worked for REGULATED lender. Easy to imagine the predatory fraud was much worse with non-regulated lenders.

[Winehole23]

Easy for you, mr boss man. We're can't all be world class exploiters.

[Winehole23]

Someone's got to shine your shoes, press your shirt and toil in your immaculately manicured garden. Those grass clippings won't take themselves to the curb.

[Winehole23]

http://www.mass.gov/ago/docs/press/a...onal-banks.pdf

[Winehole23]

The Massachusetts attorney general has filed a lawsuit against five large U.S. banks accusing them of deceptive foreclosure practices, a signal of ebbing confidence that a multi-state agreement can be worked out.

Attorney General Martha Coakley said on Thursday the lawsuit was filed in state court in Boston against Bank of America Corp, JPMorgan Chase & Co Inc, Citigroup Inc, Wells Fargo & Co and GMAC.

It also names the banks' private mortgage registry, MERS, as a defendant.

"Our suit alleges that the banks have charted a destructive path by cutting corners and rushing to foreclose on homeowners without following the rule of law," Coakley said in a statement. "

http://www.baltimoresun.com/business...,4010430.story

[Winehole23]

Coakley had indicated she is open to joining the settlement, Miller said.

"We're optimistic that we'll settle on terms that will be in the interests of Massachusetts," Miller said.

ibid.

[boutons_deux]

The Collapse of Financial Regulation Since 1980 and Its Consequences: A Nice Summary from Lawrence Lessig

Before 2008, the zeitgeist was deregulation, and Wall Street succeeded in getting deregulation. Frank Partnoy calculated for me that in 1980, 98 percent of financial assets traded in our economy were traded subject to the normal rules of transparency, anti-fraud requirements, basic exchange-based rules of the New Deal. By 2008, 90 percent of the assets traded were traded invisibly because they were not subject to any of these basic requirements of transparency and anti-fraud exchange-based obligations.

Every discussion about the economic crash of 2007-2009, which was touched off by a massive financial crisis, should begin with the striking fact that there were no serious financial crises in the United States between the New Deal and the beginning of the Reagan administration. This was no accident. During the 1930s a remarkably intelligent set of regulations was enacted to cover banking and the rest of the financial sector, and it worked.

At the same time, in a vicious cycle of mutually reinforcing processes, the financial sector—including a whole “shadow banking system”—metastasized out of control and swallowed up an ever-larger share of the economy. The overflowing funds, increasing political clout, and ideological prestige of the financial system were used, in turn, to promote further deregulation. And it so happens that during the same period, starting in the 1980s, we have once again experienced recurrent financial crises (and massive bailouts), escalating most recently into the great financial crash of 2007-2009 from whose consequences we are still recovering.

Instead, the fault lies entirely with quasi-governmental ins utions like Fannie Mae and Freddie Mac and with the consequences of the Community Reinvestment Act (which supposedly forced banks to issue subprime mortgages to poor people and minorities). This nonsense was recently summed up, in an astounding statement that seems to vindicate the crudest versions of a Marxist theory of class-bound ideology, by none other than New York City Mayor Michael Bloomberg:

It was not the banks that created the mortgage crisis. It was, plain and simple, Congress, who forced everybody to go and give mortgages to people who were on the cusp [....] But they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent, if you will. They were the ones that pushed the banks to loan to everybody.

Some intelligent, serious, and well-informed people have been taken in by this propaganda, and like most propaganda it does contain some grains of truth, but overall it’s just a fable. (For a patient explanation of some of the reasons why, see here.) However, this nonsense is far from being harmless, since as long as the real sources of the problem are ignored or obscured or distorted out of recognition, it will be hard to generate the political will to do anything constructive about them.



http://www.dissentmagazine.org/atw.php?id=619

[Winehole23]

Cat got your tongue, boss man?

[boutons_deux]

gfy

[boutons_deux]

Mortage Lender GMAC Retaliates Against Massachusetts Lawsuit By Ending Most Lending In The State

GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices. The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there.

http://thinkprogress.org/special/201...-in-the-state/