You know how people like to bandy around the term “mortgage fraud”? Saying that people got “liar’s loans” and bought houses they knew they could not afford and so deserve to be foreclosed upon and evicted?
Those people never talk about predatory lending. They don’t talk about mortgage brokers who encouraged people to take out higher interest rate/no document check loans, who told them if they had trouble making the higher payment when the adjustable rate suddenly shot up in year 3, they could just refinance again and get back to the low teaser rate.
I know, I threw a mortgage broker out of my dining room when he kept trying to talk me out of a fixed rate mortgage and he gave me that exact spiel. People, believing that no bank would be so foolish as to lend to them if the bank did not think they could repay, got loans that they could barely afford at the teaser rate. When the loans reset, they could not make the payments, and defaults began, this set off a wider financial panic and then people lost their jobs, so even more loans defaulted and housing prices plummeted.
Many, many people are now underwater in their mortgages and cannot refinance. And Congress and FOX want to blame it on homeowners. They don’t want to blame it on predatory lending.
Now foreclosures are happening at an astounding rate. I was filing a motion in court on Long Island a month or so ago and I overheard the clerks talking about the new special mortgage foreclosure court. They were getting around 40 filings a DAY.
There are specialty foreclosure parts in most, if not all, of the counties in NY now. I know other states have special “land courts” to handle these kinds of cases. The idea is for the judges to develop expertise in the minutia of foreclosure and land recordation.
And it’s paying off. In a case where the demoralized homeowner did not even put up a fight and defaulted on a motion by the bank to foreclose upon her home, Justice Schack, in Deutsche Bank v Harris, observed that the person signing claiming to be an employee of MERS was the same person signing claiming to be an employee of the Bank. And that the Bank, MERS, and INDYMAC all claimed the same suite of offices in California to be their principal place of business. There are more cases just like this, and not just in NYS.
Now comes the revelation, that is a pool of names of individuals who have signed documents under oath, claiming to have assigned mortgages into various pools and trust under circumstances not credible on their face. Basically these individuals, and more cases are being identified every day, are claiming to Vice Presidents of multiple banks and other mortgage related entities, all at the same time. In reality, they appear to be low level clerks at a company called DOCX. Take a minute and go read this report and then for even more fun, go look at actual examples of these titles and signatures.
What does this mean? It means that banks, and the companies that they used to warehouse and process the mortgage documents backing their securities, either knowingly or negligently mishandled the documents and failed to actually transfer them into the trusts that back those securities. They acted as if they had. All would have gone well except that homeowners began to default and when the trusts went to foreclose, they found out that they don’t actually have the mortgages in their trusts. So, to cover it up, it appears that these document mills are fabricating missing documents, backdating documents, and doing assignments of documents after the time to lodge those documents in the trusts has long expired. In other words, they are committing fraud to cover up the fact that they failed to “perfect” their ability to foreclose.
Congress may be blind, deaf and dumb to the families needlessly made homeless, most prosecutors may be wringing their hands not knowing what to do—this latter part amazes me b/c you would think an ambitious prosecutor would love to become a populist hero by riding to the rescue of beleaguered homeowners—but, at least, bankruptcy judges and mortgage part and land court judges —perhaps because they are seeing so many boiler plate filings—have begun to smell the coffee.
[Earlier posts in this series and related links at Kouril's Foreclosure Fraud Resources]