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Remember when I said that Foreclosure Fraud was going to be a lot like the tobacco cases? Well, the parallels continue:
In the early days of the tobacco litigation, the tobacco companies denied that they knew how harmful and addictive smoking really was. That lie was gaining a lot of traction in the courts, and in the court of public opinion.
Then, one day, a whistleblower named Jeffrey Wigand, came along and told the plaintiffs about the intentional manipulation of the nicotine levels in cigarettes to make them more addictive. This led to exposure of much of the phony scientific research by the Tobacco Institute and the truly horrifying research conducted by the R&D departments of all the major tobacco companies.
Why do I bring this up? Naked Capitalism has a HUGE, HUGE SCOOP, they obtained a copy (via 4closureFraud.org) of the price list and order terms put out by a document mill which includes the price for forging an assignment of mortgage and the price for forging the entire mortgage file. . . .
So wake up and smell the coffee. The story that banks have been trying to sell has been that document problems like improper affidavits are mere technicalities. We’ve said from the get go that they were the tip of the iceberg of widespread document forgeries and fraud. This price sheet provides concrete proof that the practices we pointed to not only existed, but are a routine way of doing business in servicer and trustee land. LPS is the major platform used by all the large servicers; it oversees the work of foreclosure mills in every state.
Go over there, read for yourself. And for those with blogs of their own—and you in the MSM – make sure you give Naked Capitalism lots of link love and attribution. This is a HUGE breakthrough, a total game changer.
The Holy Grail of criminal prosecution, a true smoking gun.
I am so over the moon right now, I could sing. BTW, read the whole article, they did a great job.
Update: Please take a wander over to www.4closurefraud.com. They are breaking a lot of news on this topic right now.
27 Comments
Woah! Thanks for your continued efforts re this ongoing story.
Wow…great news! There is still much more to this story, but I do feel that it is unraveling little by little. Hopefully it will unravel fast enough to save Obama and the democrats running.
Hopefully it will unravel fast enough to keep more homeowners from being thrown out into the street
This is so interesting. I have been watching this story you tell, Cynthia, in part because when I refinanced my house a couple of years ago, I did not receive any final documents from the process. All I have are documents that say something to the effect “draft copy only.” I wanted the actual “closing documents” because I needed the costs for my tax return. I could never get any final documents, and the only thing they (GMAC) produced are copies of the “draft only” that I already have.
My process was conducted over the phone/fax and was finalized with some kind of server who came to my house. I am self-employed, so it was a “no-doc” mortgage, though for this I had to produce more papers than I had ever had to produce for any of the mortgages I had over the years.
I am in no danger of foreclosure and have a great interest rate (believe me I read all their stuff to make sure I had no hidden adjustable rate, etc). I have had many mortgages over the years, and this is not like any other in that I don’t have a package from anyone that has all the original documents. At the time, I didn’t snap to demand my own copies before the server left.
But it all makes me nervous, especially as the people who were writing the loan are long gone, disappeared.
You’re doing yeowoman’s work on this topic, Cynthia. We are all grateful!
recommended
I’m singing right along with ya, Cynthia !
amazing, amazing work 4closureFraud !
particularly sweet timing for me on this – my day started with a BP spike when I opened my laptop to see this nakedly editorialized pos – from AP (natch)
Foreclosures Bungle Could Hit U.S. Banks
Bungle this ass*’s !
Mad Props again to you, Cynthia
So, if the banks can’t legitimately foreclose on millions of properties, what does this do to their bottom lines?
Are they 20,000 leagues under the sea?
Are they back in TBTF land, knock knock knockin on Bummer’s door, again?
Cynthia-
Thanks for all your work on this continuing series.
This is the type of discovery that will force some action- after the ensuing gridlock. There are not enough lawyers and judges…to undo this Gordian knot.
If this isn’t another TBTF I’m not sure what is.( It is not just the money involved. The entire residential property market has just seized.- If the documents all have to be verified as legitimate rather than forgeries- that can’t be done.) Many recent sales are now potentially illegitimate.
Now the question must be asked=
What can Washington and the various states do to help ensure the continued smooooth functioning of the foreclosure markets? With the assistance of staffers and lobbyists a ‘fix’ is possible.
Giving credit where credit is due- let us remember the great thinkers and enablers that helped make this economic fiasco possible.Several Bushisms come to mind.
From About.com Top 10 Bushisms #2 and #1:
There has been another development today. stopforeclosurefraud.com has posted IS LPS’s Aptitude Solutions Software In Your County Courts & Land Records???, which lists dozens of announcements made by LPS of this nature:
Putting this news together with MERS and the LPS price list for fabricated documents suggests the following scenario:
The big players in real estate, mortgage lending and securities decided to dispense with the hassle of storing, accessing and transmitting paper records and to concoct their own system for digital record keeping. This would explain the intentional destruction of originals after scanning into MERS, and the disregard of following through with transmitting mortgages into MBSs until documents to that effect might be required for later legal proceedings, as well as the Excel spreadsheets ‘traded among themselves’ for keeping track without keeping voluminous paper in storage.
Thus, whenever a paper document was required for court, instead of paying the warehousing entity to retrieve and transmit the ‘wet ink’ original paperwork, LPS recreated said documents from the digital databases which the county clerks maintained with the LPS software.
Of course this scheme also allows for photoshop, fabricated allonges, ‘lost note’ and ‘lost summons’ affidavits as well.
In the end, perhaps the plan was to lobby Congress to make digital record keeping retroactively legit by necessity…..seeing as the original paperwork no longer exists?
……………
But this does not explain the criminogenic servicer contracts, which I believe are the instigation for the cascading bogus foreclosure actions. I would also expect the rocket docket courts to act as an accelerant, making foreclosures a slam dunk for servicers. And, by the way, stopforeclosurefraud also posted another LPS document today in which they instruct their foreclosing attorneys to name the servicer as the plaintiff, and never the owner of the MBS trust, and not to use email. (to avoid wire fraud?)
…………..
Cynthia: Who pays the servicers the fees for foreclosures? At this point the homes are unsellable (Title Insurance glitch) so what’s the incentive to pay to foreclose now? I can understand the servicers and foreclosure mills speeding up actions to earn as many fees as possible before it all comes to a screeching halt, but who would pay for more repos that either can’t be sold, or that will depress the price of housing when flooding the market?
Sorry about the coding screw-up in my comment#9. My editing time expired before I found the error, because the editing window is too small. &^%$#. The first link is:
http://stopforeclosurefraud.com/2010/10/02/must-read-is-lpss-aptitude-solutions-software-in-your-county-courts-land-records/
Second link: http://stopforeclosurefraud.com/2010/10/03/what-lps-the-mills-dont-want-you-to-know-who-really-owns-the-note/
The servicers take their fees off the top from the $ they collect on the mortgages that are still performing, each month they remit to the investors the net amount of money recieved less any fees they have generated for themselves.
Ivestors need to be suing. I need to write another post about that, I guess
Cynthia, great post. Thanks for staying on top of this. To reiterate a point I just made at Yves’s site:
As an attorney, this is what caught my eye–
Law firms retained by Lender Processing Services also often use their own employees, posing as officer of Mortgage Electronic Registration Systems, to produce the needed Assignments.
As a “learned professional”, an attorney is personally responsible for the actions of himself and his employees. Also, general partners are personally responsible for each other’s actions– this is why law firms and accounting firms have switched to LLCs, which really is against public policy. Partners self-police each other, LLC Members do not.
Even with an LLP or LLC, an attorney cannot limit his personal liability for his own actions and those of his subordinates (associates, paralegals, clerks, etc). Even if Uncle Sam ignored the multiple counts of bank fraud, wire and mail fraud involved here, there are going to be a bushel full of disbarment proceedings resulting from this that will be used by local District Attorneys as the basis to file state fraud charges.
Edit: I was just thinking, I wonder if there’s an opportunity for a lawyer (no, not me, I’m not a litigator) to use the combination of bank bailouts and mortgage fraud to file qui tam actions against lenders under the False Claims Act (which allows private party to sue on behalf of Uncle Sam if its been cheated out money, if private plaintiff wins (on behalf of the Government), they’re awarded 20% or so of the recovered amount. Alan Grayson made a fortune in this field before going into politics).
http://en.wikipedia.org/wiki/False_Claims_Act
Totally agree…that first and foremost as I am in this category of folks. I have a concern though that my mortgage began in 2001 (I have held on longer than most) and have made all payments since the first foreclosure began. I do know however, that my lawyer has twice asked for a payment history and we have never received it. I wonder if this is connected. I got a new “account” number at some point because they moved the GMAC office from TX to KT. The account number was similiar but not the same, and my balance and payment changed slightly at the time. Regardless, this is finally coming out.
Thank you so much for your hard work covering this. However, I don’t think anything will ever be done for all the people who already lost homes to this fraud. I feel so bad because many were first time home buyers! I do hope that down the road these messes can be erased from people’s credit reports. When I think of the money I have spent trying to save my home it makes me sick. But I didn’t know back in 2004, what I know today.
I think you are precisely right about a possible liability suit against the firms themselves. I have one such case in which a firm attorney did sign as Vice President MERS. Not only is it a fraud on the court but, you cannot act for both sides of the equation, meaning she (or the firm) was representing the Plaintiff Bank at the time that she signed as a vp of MERS who assigned the matter back to the Bank. Too convenient by hald. Attorney’s and firms cannot do that, they cannot sign affidavits and create evidence for the principal.
I don’t like having to expose just how difficult it is for me to grok what’s going on here -
but I am vexed by the matter of property taxes on these ‘in limbo’ properties – does this mean counties and cities everywhere aren’t collecting any $$$ on them ??
A couple things:
on reviewing the price list, the fees they would charge for creation of the documents in and of themselves indicate fraud and whole-cloth creation of documents was the purpose of the operation. There is no way anyone is going to charge $12.95 for any of those activities, let alone a title search. I don’t care that the TPC (“Third Party Costs”) might be several times that or even more – no one is going to even start searching a title until they know they’ll get paid, and a title search ordinarily costs at least a hundred bucks and likely more.
And some of those items – corrected mortgages and the like – require an attorney to do the actual work. If you don’t want to be accused of the unauthorized practice of law, of course. And that’s a separate crime in some jurisdictions. I once litigated a case on behalf of a homeowner who’d dialed one of those “Prevent Foreclosure” numbers you see attached to phone poles and wound up deeding his property over to scammers who were equity-mining. The deed and closing had been done by attorneys in one state (the only one those attorneys were licensed in) while the property was located and the deeds recorded in another. In that second state, the unauthorized practice of law (by someone not licensed in that second state) was a crime and that conduct included drawing deeds for recordation. So when we sued to undo the transaction and for an injunction to stop the scammers from tossing the homeowners out, we joined the attorneys and the scammers as co-conspirators in that crime and a couple others. This provided all the hook the equity judge needed to issue the injunction, compel preparation of new deeds and all the other relief we sought. “Counselor, come here and explain why the prosecutor should not prosecute you for the unauthorized practice of law” is a powerful way to effect a remedy.
like ! like ! like !
Sometimes yes, sometimes no. Depends on whether the banks are paying them, the landowners are paying them or no one is paying them. I’d suspect that if the property is vacant, either no one is paying them or the banks are. At some point, though, the banks will tire of paying them – usually about the time the tax debt comes to be close to the depreciated value of the property.
Which brings up another thing. I’ve been noticing a lot of late-night informercials lately piching how to make money fast and buy houses cheap by buying tax sale certificates.
The gist of a tax sale certificate is that when a municipality is not paid the property taxes on a particular piece of realty, the municipality auctions off that debt to the public. Once that auction takes place, the municipality gets its property taxes and the prior property owner gets a defined, short time within which they can either pay the person who covered the tax bill by winning at the auction (i.e., “redeem”) or lose title to the property. The interesting thing about tax sales is that the person who won the auction (and paid the tax debt) gets a fresh, new, clean title free and clear of all other previously existing liens.
So, for example, if Johnny owes $1million on his mansion’s mortgages and $1,000 on his property taxes and for some silly reason the banks don’t cover the tax bill when Johnny defaults on his mortgage, then the municipality can auction the mansion to the highest bidder. The guy who wins the auction (“tax sale”) then gets the right to collect from Johnny the amount he paid to cover the taxes, plus interest. If Johnny doesn’t redeem the tax sale within the short time the law provides, the guy who won the auction gets title to the property free and clear of all liens, including those nasty $1million mortgages.
That’s how you get to buy a 4 bedroom house for $1000 or similar other tales told on late night TV. Up to a certain point, it’s pretty much a risk-free investment, at least so long as the property is salable. Things that might make the property not salable are toxic waste, e.g., the last inhabitants ran a meth lab there, so you have to do due diligence on the property. That, and you have to pay the government cash when you bid at the sale.
A little creative lawyering goes a long way.
In response to scribe @ 16 & 18:
What you seem to be pointing to is a huge conspiracy to dispossess millions of families and create tens of millions of homeless, destitute unemployed people (combining this mortgage fraud with so-called ‘structural unemployment’).
Reading of cases where predatory lenders foreclose over a disputed $.01 bill rolled over into a $276 late fee; the lack of care in even keeping their own spreadsheets current, thus leading to the case of foreclosing on a man who paid cash for a repo; the huge amount of equity stripping chronicled daily at The Home Equity Theft Reporter, and watching the mining of the land and coastal waters for energy and mineral resources without care for permanent toxicity and destruction of an entire locale (Gulf of Mexico) or ground water contamination which will make vast areas uninhabitable (Marcellus and Barnett shale and elsewhere) would seem to imply an unimaginably huge conspiracy among the global financial and energy cartels to strip all equity of every kind from the US. That’s even worse than my simple scenario @9.
I hope this article doesn’t portend the planned future: We’ve Got To Stamp Out Modern Slavery. The article describes modern slavery in Asia and Africa as resulting from the dispossession of peasant farmers creating an endless supply of desperate people who can be pressed into becoming involuntary slaves (kept docile via violence) at agribusiness CAFOs:
The Coalition of Immokalee Workers has had an anti-slavery campaign in Florida for over a decade. It seems obvious by now that the intent of the financial elite is to reduce wages in the US to a ‘competitive’ level with Asia.
This has been a great series. Thank you so much for your wisdom and commitment to the most crucial financial issue in our country’s history.
It’s enough to make me want to try practicing law again (I was a litigator, on a small scale, but the life was not good for my health.
It depends on the servicer. Some pay the tax, some don’t. Some banks that have a large inventory of foreclosed homes ontheir books don’t pay the property taxces until the house sells or the municipality starts to try to foreclose on the tax lein.
This is screwing up cash flows for some gov’ts
Thanks again for this entire series, CK. Once again, the regulars at FDL were ahead of the game.
Cynthia Kouril, you utterly RAWK for this series and pointing out details, as the above, as to who is throwing the monkey-wrenches … If I am reading you correctly, it seems to me that the municipalities should be PISSED given the nasty position they’ve been forced into by the bankster-manipulated Fed.
I have a theory that this was part of a terrorist attack. Way back when Bill Black and several others discussed this possibility. I am not saying it was a terrorist attack, but if it was, it was a very effective one. The irony being that the USA greedy were duped in the Global market.
Certainly the richest got richer and that may have been how Bush and republicans were convinced to collude. It’s all theory but I can tell you that there has been an orchestrated movement to keep the homeowners silent, the lawyers in the dark, judges in the dark. It’s been a media blitz to convince the american public that all this was the fault of the homeowners. Someone orchestrated that message. How ironic using the name Cerebus for Homecomings financial. Owned almost exclusively by Republicans like Dan Quayle.
Whether it was or not might not matter as much as the devastation it has caused.
thank you very much Scribe and Cynthia
the question springs from my ongoing concern about city and county govt’s already being in the red from investing in the sliced and diced sh* these mobsters were selling