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The scope of foreclosure fraud may not be limited to GMAC and not just to JPMorgan Chase; it may be every bank you can think of, including mortgages held by government-sponsored enterprises Fannie Mae and Freddie Mac. Any bank whose foreclosures have been handled by a law firm specializing in foreclosure services — a "foreclosure mill" — may be affected.
A paralegal at the foreclosure mill of David Stern gave a deposition to Florida’s Attorney General Bill McCollum’s office indicating that virtually every affidavit, assignment or other sworn document coming out of that firm is faked.
It’s over 100 pages, and it will curl your hair. Two thousand foreclosure files were processed each day by just this one firm and the entire lot appears to have been a sham. Go read the transcript for yourself. If this happened at one foreclosure mill, it’s hard to believe this wasn’t happening at all the other foreclosure mills.
Ohio’s attorney general is suing for $25,000 in fines for each fraudulent affidavit; at this rate, he could solve his state’s budget gap.
By the way, Florida’s assistant attorneys general conducted a very nice line of questioning; Mr. McCollum owes them a pat on the back. The states of Ohio and Florida are showing how it’s done, the rest of you states’ attorneys general and U.S. Attorneys need to get on the stick.
[F for Fraud - photo: ivers via Flickr]
28 Comments
I’m @ p.52. Uneffingbelievable. OTOH: why wouldn’t I believe Ms. Kapusta. How else could DJS have churned out all those MSJs so fast?
Anyone not wishing to click on the pdf can go to 4closurefraud for an HTML sampler.
As I was reading, I thought to myself: ‘I wonder if Cynthia has posted about this yet?’
Cynthia, is the rush to force through the foreclosures so rapidly a coverup process, to hide the fact that the mortgages were never conveyed into the MBS? How did they ever expect to clean up the chains of title? Is the next step to stop paying the taxes on the REOs, and then use straw buyers to get the houses with clear title?
I read in another FL court filing that it’ll take 12 years to ‘rocket’ through all of the foreclosure dockets. The subtext is that the state of FL is in collusion with the banks, having illegally set up ‘Circuit W’ to hear the foreclosure cases using only unelected judges.
Can we now say it’s premeditated?
wow.
when I was a flight attendant, there came a point in take off called V2 it was the point of momentum where take off was the only option – we are there in this story now – can not believe the sheer thunder of developments this week
I find it wildly coincidental HR 3808 which had failed twice before in the Senate is suddenly, miraculously passed this week
Cynthia – did you see that fab Reuters piece giving full and mad props to Yves Smith ?
and 4closure Fraud is like the quintessential small town paper that wins a Pulitzer for cracking some major story – jaysus they are on fire !
p.s. of course in reading the depo, can’t help but wonder where all these Tammie Lou Kapusta’s have been – and she didn’t even get started until 08. probably a ton of these folks out there huh ?
Too late tonight to start reading that, but I’ve bookmarked it.
You wanna bet all those Tammie Lou Kapusta’s were getting paid $10 to $12 an hour?
Okay, I couldn’t resist. 1100 employees? All the affidavits were signed in-house? There were documents being prepared off-shore! (voice rising) The Philippines? Guam?! Oh, my f******g gawd.
Must.go.to.bed. Will be back tomorrow evening.
Thanks Cynthia. This story is just exploding, isn’t it?
Or per-file or even commission: places like that tend to use a pay structure where you have to bust balls to just barely get by.
Excellent news, and you heard some Bell Commissioners are going to jail?
Let’s hope both cases “encourage the others.”
Thanks, Cynthia. While scary for its total disrespect for the law, these cases are awakening a somnolent public to the danger to its basic structure when laws are regarded as a speedbump and/or irritant by the business community.
Every system has a carrot and a stick. Rewards and punishment.
In the RMBS (Residential Mortgage Backed Securities) systems, the carrot is one’s own home. The stick is foreclosure.
The Banks used the carrot to enrich themselves and caused the recent crash the, crash the first in 2007. That was a complete misuse of the system, and we are all enjoying the rewards of their behavior.
Now it becomes evident (I use the word evident because it is the adjectival form of evidence) the stick is also now tainted with misuse, which has all the hallmarks of becoming crash the second, and sequels are always worse than the original.
What’s the outcome? The collapse of the RMBS market? The biggest single securities market in the world. As soon as mortgage foreclosures are halted (a moratorium that may never end), why should anyone actually make payments on their mortgages? Fraud in the note assignment severs the link between the debt and the security, the property.
What’s more is the Banks have not fixed the System. I reviewed a new loan in CA just a few weeks ago that appears identical to the other bad MERS loans of the last few years. It appears the system is incapable of making corrections. Not surprising as MERS is trying to circumvent state laws, and finally the MERS circumventions are being tested in Court, and are in the process of failing.
This is a disaster. The banks, not content with origination fraud, have surpassed themselves with foreclosure fraud (who could have guessed?)
There is no pension fund in the world that can survive this disaster. If you wondered why the smart money is all going into gold, look no further than a huge upset in the RBMS market.
I also notice than some of O’s economic team are deserting the sinking ship – what is it they know that we do not?
I can assure you that the bail out only fortified the illegal behaviors of these banks. I was in Chapter 13 bankruptcy until this month…over the last 5 years trying to save my house. Gmac has sent me lots of letters trying to get me to refinance on my mortgage…a loan amount that is absolutely bogus. At the time I was in foreclosure (I filed so I could save my home…had no other debt really and was told over and over by lawyers that I should file bankruptcy just for the house, that I didn’t need to file bankruptcy…that the banks would work with me, given my credit…whatever.) Anyway, Gmac stated my debt to be 8300.00$. There were fees in there but nothing I couldn’t live with. So I have paid this amount in full according to the bankruptcy lawyer. Now comes GMAC stating that I am 3 payments in arrears and owe another 10,000.00$. We are suing for my payment history and have asked for it twice for GMAC. Anyway GMAC is currently trying to get me to refinance with them to cover these bogus back fees. Letter after letter…refinance NOW. It’s yet, another scam. They have not stopped the behavior and are still trying feverishly to hide the truth.
I’m not holding my breath anymore.
Every time I’ve said to myself, “They can’t possibly get away with that.” or “Now we’ll finally see some criminals going to jail.” I’ve been wrong, and they do indeed get away with ‘it’, and nobody is ever held accountable.
That said, I think we’re finally seeing the fraudulent scheme that underpins their game being hauled out of the shadows and into the bright daylight;
Their system for tranching the MBSs is built on the fraudulent premise that nobody really owns any of these mortgages until they go bad, and so, by design, nobody can prove they own any particular mortgage, and so they have no right to foreclose.
The same fraud that deliberately, and totally obscures the worth of the mortgages that underpin the MBSs, (and prevents auditing), also obscures the ultimate ownership of those mortgages, which prevents foreclosure, unless more fraud is engaged in.
Those ‘invested’ in this obscure, and ultimately fraudulent and criminal scheme cannot get their money out of it without committing just one more crime, and that crime is remarkable for it’s brazen crudity.
It’s just like an old-time detective movie, the criminals,(who cannot help themselves because of their blinding greed) have returned to the scene of the crime, only just like the movie, the detectives are waiting behind the bushes and now have the last piece of the puzzle, the identity of the thief, and the nature of the motive.
I don’t think they can possibly get away with this.
I read that deposition. I’m waiting for the miniseries based on it(but any comparisons to real people would be purely coincidental.) Greed, lust, crime, cover-up, it’s got all the ingredients for a hit. I’m doing the casting in my head right now for Foreclose Florida. I’m thinking Harry Hamlin for the head of the law firm, perhaps Shannon Doherty as the scheming, petulant head paralegal,and Seth Green as the lovable goofy service processor who keeps looking up Jane Doe in the phone book and not finding her.
It sounded like they were literally tripping over notary stamps and using them as door stops when they weren’t tossing them to each other.
Foreclosure Fraud is Watergate meets the 1918 Flu Pandemic
Cynthia,
I still think there is fraud that happened at the loan stage. The fraud was processing the borrowers financials on the loan application in a way that pitched that they qualified for a higher loan amount than the borrower realized or had calculated. This increased borrower’s risk and probably made it possible for lenders to know right away the high risk pools in order to bundle the risks and move on from there to win at both ends of the game.
I think the lenders were betting on CDS’s based on “gamed knowledge”.
Again, I only base this on the experience we had when we went for our loan.
The mortgage affidavit and fraud scandal is a snowball racing down the mountain now. No stopping it.
now I’m starting to wonder if we’ll soon find the Title Companies took their share of this big phat pie as well – loosely analogous to the ratings agencies failing as official backstops in the original crash
I think that the title companies have recently begun refusing work on forclosed property because there are problems which they cannot overcome with out tremedous risk.
Anybody with enough sense to afford a home, knows you don’t purchase a house without title insurance, and so there’s big impact on the housing market.
See my related diary here.
These guys did not cover all their tracks, and one of these trails will eventually lead to prosecutions.
The trouble is, the trail also leads to another crisis.
Yes, and along the way it’s inevitibly going to evolve into further disclosure of the fraud underlying the creation and marketing of MBSs (Mortgage-Backed Secuities), CDOs (Collateralized Debt Obligations) , and CDSs (Credit Default Swaps) that sank our economy.
Wall St. hasn’t gotten away just yet.
“In the following interview with the WaPo’s Ezra Klein, Janet Tavakoli shares some more information on why every bank is about to shut down all foreclosures, in what she calls the “biggest fraud in the history of capital markets. Not very surprisingly, we are, so far, spot on in our 29th September projected timeline at this point: “We predict that within a week, all banks will halt every foreclosure currently in process. Within a month, all foreclosures executed within the past 2-3 years will be retried, and millions of existing home sales will be put in jeopardy.”
—Tyler Durden
http://www.zerohedge.com/article/janet-tavakoli-biggest-fraud-history-capital-markets
The front-end fraud, perpetrated by a reletive few millionaires requires the back-end fraud by probably thousands of low-paid employees of the foreclosure-mills.
While it’s easy to predict the millionaires can, and will keep their mouths shut about the front-end, I don’t see how they could ever expect the back-end portion of this thing to hold together?
Slow down, bumps ahead.
I read the rest of that depo. Amazing. You could hear the barely-restrained amazement in the words of the deposing attorney; could hardly believe what she was hearing.
And it sure sounds like the woman who did most of the signing and screaming was practicing law without a license.
The paralegals? Like the one being deposed? She clearly had no legal training or education, yet they called her a “head paralegal.” She had the smarts to get the heck out, at least. Apparently so did a bunch of people.
I hope the lawyers who ran firms like this not only get disbarred but go to jail.
Not holding my breath, though.
Oh, and separate signagure pages, switched from one file to another? My.F’g.Gawd.
I can remember when a document that ended in such a way that the signature would be on a page separate from the rest of the doc would simply have to be re-typed, to avoid just that sort of fraud.
What has happened to us? How did such dishonesty, such greed, such indifference to other human beings become entrenched in society?
From your keyboard to God’s eyes.
Like you, I have been astonished in disbelief that this could go on for so long. It’s been increasingly clear there had to be massive fraud — anyone reading masaccio’s posts these last 16 months or so had to see something like this coming.
And McClatchy did a phenomenal expose about a year ago on the extent of mortgage fraud in CA, and its impact on several cities.
But I am increasingly furious with electeds who take money from these criminals, who can’t get their heads around their own role in enabling the most predatory, insolent, criminal private interests.
The FBI was sounding alarms in 2004 about rampant mortgage fraud, back when the GOP was in charge of Congress and the WH. To say that no one saw this coming is bullshit.
It only stands to reason that this is precisely what they were doing. But what I find even more disturbing is the larger, multiyear pattern by which the system was deliberately, systematically manipulated and gamed to enable precisely these kinds of fraudulent activities. All under the ballyhoo about ‘free markets! free markets! don’t interfere with free markets!’
Orwellian.
well, that was the appraisers. totally in on the scam, too.
Hi ROTL, how are you???? We have to catch up.
Your comments are totally on the mark! Bravo.
Nope.
Try again -are you an appraiser? Do you know how the appraisal process to determine value works? There’s USPAP and FIREEA, and you know what?
What you can’t do at the end of the day is ignore an arms length transaction for a sale; it’s proof of what the market would bear.
Externalities are the major force for the rise in residential property values, not appraisers, who only watched how crazy the shit happened.
The 2 agents who profited out of any transaction were the real estate agents and the loan originators. That is who is to blame here.
Hi Kelly,
But I’ve seen SOOO many times when “magic” the appraisal turns out to be the asking price, again and again, even in a falling market.
FORECLOSURE NATION Google your town or city of interest in Google maps. Take out the city name from the search line and put the single word “Foreclosure” in the search line and then hit search. Wham. See the Elite gobble up this nation.
What is the difference between a Foreclosure and a bulldozer?