Tweet
Centuries ago, news of momentous events traveled throughout the countryside by means of beacon fires, alerting all along the route to big changes coming. September and October 2010, are shaping up to be the time of the beacon fires when it comes to foreclosure fraud.
FDL has been chronicling all the many problems with documentation of securitized mortgages, my first post published over a year ago.
In that time, we have demonstrated that the originators, servicers and trustees who make their money from fees rather than repayment of principle and interest had no reason to carefully document the chain of title of the mortgage (the interest in land) and the promissory note (the debt secured by the mortgage). Not only were the original wet ink documents lost, destroyed or misfiled; but often the ownership of the interest in land was sold to a different party than the debt holder, thereby destroying the enforcement of the debt by recourse against the real estate.
From time to time, a homeowner would succeed in breaking through a judge’s predisposition to believe that banks are great record keepers and actually win on the merits by showing that the foreclosing bank had not presented sufficient paperwork to meet its burden of proof to show it had a right to foreclose. Sadly, those cases were few and far between, tiny candle lights in a sea of foreclosure blackness, but we fixated on them, stared at them as if willing them to flare up into beacon fires of systemic action. . . .
It’s finally happening:
- Rep. Conyers (D-Mich) sends a letter to Fannie Mae demanding that Fannie stop paying for foreclosure cases against homeowners of Fannie owned mortgages pending a better modification program.
- Ally Financial – the bank formerly known as GMAC finance—announcing suspension of most of its foreclosure related activities in the 23 “judicial foreclosure” states (states where the bank has to sue you in court to take your house).
- The California AG ordered all foreclosures halted pending the outcome of his investigation.
- Ohio and Texas AGs opened their own criminal investigations.
- Several days later, JP Morgan Chase announced suspension of its foreclosure actives in the 23 judicial foreclosure states.
- Rep. Grayson (D-Fla.) put out an excellent 8 minute video explaining the problems in Florida, which are exacerbated by a special court that seems to think the way to clear its docket backlog is to refuse to read homeowner’s legal papers or listen to their legal arguments in court.
- Sen. Franken (D-Minn.) sent a heartfelt letter to the heads of every federal agency bearing an oversight function over banks, mortgages or securities asking them to look into the matter and to reply to him with concrete steps they will take to prevent such ongoing fraud.
- The acting Comptroller of the Currency responded by directing seven of the nation’s largest lenders to review their foreclosure processes.
- A group of homeowners in Maine began a class action suit alleging foreclosure fraud [standing on my chair clapping for brave/smart homeowners in Maine].
- The state of Connecticut AG suspends all foreclosures and Bank of America indicate that it may follow Ally and Chase.
- One of the nation’s largest title insurance companies just announced that it would no longer write title insurance for houses resold after foreclosure, rending those houses almost completely unmarketable.
If you go to the first link above, you will see that we here at FDL have not only chronicled these developments as they happened (special kudos to David Dayen who seems to have radar for finding these things as they are breaking), but we have also accurately predicted how things would play out.
So, where will it go from here? There are several possibilities:
1) The Comptroller of the Currency may actually do his job.
2) More class action suits may be filed—this is probably the most likely, there is HUGE punitive damages potential here.
3) US Attorneys may get a clue, and realize the federal jurisdiction here and the fact that FBI and Secret Service actually have tons of expertise when it comes to making bank cases and they will do some criminal and civil cases.
4) State court judges will read the newspapers, watch the evening news and find out that they have been hoodwinked and made fools of by banksters, and may finally begin putting the burden of proof where it belongs, on plaintiff banks.
5) Homeowners in non-judicial foreclosure states (for whom I have special concern) will feel empowered to go to court to sue to stop foreclosures and evictions. I know it’s hard for you, where will the money come from for a lawyer? You bear the burden of proof; but see #2 above.
6) State AG’s, who ought to be the heroes of this story, will get off their asses and do what Blumenthal did in Connecticut and what Brown did in California, even if they are not currently running for higher office.
7) Banksters will finally see their peril and do the right thing (don’t hold your breath for that one).
14 Comments
But what about all the probable mortgage fraud in the 27 states that are not “judicial foreclosure” states? If there’s fraud in the 23 states, there’s equal or greater fraud in the 27 as there has been no judicial review available.
But it is a start.
Yeah, it kind of looks like the banks are screwed. They can’t collect and they can’t foreclose. So far so good. But we all know the government won’t just let the banks fail. The big ones I mean. So do we Nationalize the banks (like we should have done in the first place)? Or do we bail them out again?
Here is a good article for understanding the title problems.
Shock Therapy For Wall Street:
http://webofdebt.wordpress.com/2010/10/02/shock-therapy-for-wall-street-jpmorgan-suspends-56000-foreclosures-gmac-and-boa-many-more/
Check out my link above dakine regarding the other 27 states. The last two paragraphs.
We still have to work to get the news out. Last night Bill Maher was lamenting that homeowners were walking away from their homes and how immoral it is. I was so frustrated that no one, (not even Arianna although she hit a higher note) was discussing the fraud. In my case, I know that their accounting is wrong. I know they violated TILA and RESPA laws. I know they have hauled me into court twice in front of judges who knew they were violating the laws, but the judges felt they could not act on my behalf but to threaten punitive damages. We need to keep honking this horn so that others understand that before foreclosure occurred there were likely a series of events designed to make the homeowner fail and also designed to pad the value of these loans. If people walk away it’s because they see the violations but have no recourse. There was a huge class action lawsuit under way against Homecomings (owned by GMAC),but GMAC went bankrupt and got bailed out by our government, this basically meant that the class action lawsuit that had gotten the okay from the Judge to go forward, would go to the back of the line as far as creditors. As a result this meant lawyers would not get paid at all. So the lawsuit was dropped just in the nick of time, before the bailouts occurred.
This thing is huge. It’s been designed to do exactly what it has done and I have to wonder who really owns all of this. WHO is running our banks?? Who owns them? Do we even know?? Is there even a small chance that all of this was part of a terrorist attack against our economy for which the rich and greedy were used as dupes??? Is it possible?
Regardless, it has bankrupted America, and stolen millions of homes.
Have y’all seen Yves Smith’s latest on the foreclosure front? She posts an image of LPS’ price list for fabricating documents here.
Can we get a couple more beacon fires? Say, one for the end of habeas corpus and another for the gutting of Social Security?
C
I live in CA, a non-judicial foreclosure state.
My client, a very good California BK attorney, states that homeowners should file the voluntary BK (chapter 11 I believe).
1. It stops the foreclosure
2. It provides Judicial review.
He has reviewed your published list of cases, especially CA and believes this can be done.
he stated that the note is severed from the property, and is now a unsecured note, and is still a valid debt. He states the bank may pursue other actions against the homeowner to recover the debt.
Disclaimer: This Attorney is my client. I’m happy to refer him business, and he refers me business.
Cynthia, excellent work, as usual. Am thinking that the effect on those toxic assets, which include the very mortgages that are proving not viable, is to become ever less worth the value initially imputed to them
Cynthia posted about that yesterday
you can read it here
again my sincere props to Cynthia and David Dayen – both were voices in the wilderness for quite some time on this significant, national story
call me tribal, but when I saw that NYT and HuffPo front pages on this on friday, I was thinking of FDL and how there was an entire repository for these stories at a time when no one else (online & TradMed) was even talking about it.
credit must also be given to Jane Hamsher – this is how things used to work when we had a functioning Media (and DOJ), Publishers like Graham and Sulzberger (the elder thankyewverymuch) would recognize the national significance and impact of stories and stand back and create the space for the reporting to flow -
Yves Smith and Naked Capitalism just published the Pentagon Papers of the War Against the Middle Class
GO, Cynthia and David! So glad the small lights are gaining momentum. I still don’t understand how the banks were “saved” from all this mortgage fraud and gaming, while their payoffs by the taxpayers are not enough. They have been paid for their loses yet still claim ownership of the mortgages and the property in question.
I said when TARP was being voted on it would be better to save the homeowners than the banks. If the mortgages were all paid in full the crisis would have stopped. But then again, you have all the fishy paperwork where nobody could determine which mortgage was actually paid for.
In this current state it is nothing more than a land grab by the banks. Not only will they have accumulated all the money, they will be the largest land owner in America!
I was late to discovering your excellent motgage/foreclosure fraud coverage. I applaud you for your persistance when other media was (and still is) asleep at the wheel. I am now sending links far and wide.
That may be so (sort of), but they can’t sell the properties due to the clouds on the titles, and the properties will be worth much less than they “paid” for them. Therefore, they’ll be the largest slum lords or whatever, while they will be responsible for taxes, insurance, maintenance and management of more property than they can handle. But imagine the jobs that will be created as they hire all those people they’ll need plus the lawyers to get them out of the mess they created!