This site is meant to aggregate class and mass action cases against predatory lenders. It accomplishes this by allowing homeowners to profile their cases against lenders and when possible flag themselves as a member of a particular case.
We audit mortgages for violations of state and federal underwriting statutes. BCA aggregates class members for Class Action firms suing predatory lenders and those who have abused their power in the administration of federal subsidies meant to inure to the benefit of homeowners. The BankClassAction.com site is a data platform where homeowners can match themselves with Class Action Lawsuits by answering specific questions about their interaction with their lender while the Class Action firms post specific relevant information about their case and/or investigations. The homeowner can either "FLAG" themselves as a potential member of a particular (or multiple) cases -OR- request that the platform auto profile relevant cases. In either event the homeowner data is securely passed to the relevant law firms and this costs neither the homeowner nor the law firm a dime.
Fulton Class Action Challenges Foreclosures involving MERS by: Sheryl Rosenblum & Matthew Cardinale December 3 2010 Original source: Atlanta Progressive News (APN) ATLANTA -- On October 15, 2010, a class action lawsuit was filed on behalf of foreclosed homeowners in Fulton County who had their mortgage title transferred to MERS, an entity that is alleged to routinely engage in the fraudulent recording of deeds, in Fulton County Superior Court. The case is called Rollins vs Mortgage Electionic Recording Systems, Inc. also known as MERSCORP or MERS. Dustin Rollins is an affected homeowner, who filed on behalf of himself and other similarly situated persons. David Ates is the attorney representing the class. The judge is Melvin Westmoreland. The lawsuit argues that MERS has no legal right to foreclose on the properties, because MERS is not a lender, nor is MERS a servicing agent. The lawsuit also states that MERS is foreclosing, without having produced the mortgage note, which would show they have a right to foreclose. Rollins v. MERSCORP Inc. is a class action suit, which accuses MERS of wrongfully foreclosing, based on the fact that MERS had no legal right to foreclose in the first place. Rollins v. MERSCORP Inc. hopes to reverse the previously foreclosed properties, and if the lawsuit is successful, this could be a precedent for future lawsuits. With Georgia being a non-judicial foreclosure state, the lawsuit is important because it brings an issue before the court which would otherwise not be reviewed by the court. The lawsuit, however, does not include households who have not foreclosed, including those currently facing foreclosure. It does not address the overall title questions impacting all the homeowners with their home titles held by MERS, including those who have not fallen behind on payments. The Fulton County class action lawsuit is just part of an onslaught of class actions lawsuits filed around the country. An estimated sixty percent of mortgages in the US have MERS on title. According to author Christopher L Peterson, MERS is a shell company, with few employees, that has no legal interest in our properties. The lawsuit claims MERS is a foreign-owned company that is not registered as a Georgia corporation with the Secretary of State's Office. The lawsuit claims MERS is wrongfully foreclosing on millions of homes, clouding the title, while avoiding millions of dollars in county recording fees. As previously reported by Atlanta Progressive News, MERS was created for the purpose of making the transfer and sale of loans cheap and easy. Unfortunately, as Peterson states, this is not legal, and when one separates a loan from a deed, by eliminating the need to record transfers, this clouds the title, and destroys the legal tracking system, which has caused massive legal problems. Up until a few years ago, people used to be able to go down to the county and trace the title of a property, but today it is nearly impossible to trace the title because of MERS. MERS shareholders, board of directors, and members are some of the very entities, that received bailouts, and contributed to the current US economic crisis. MERS shareholders include organizations such as AIG, Bank of America, Chase Home Mortgage, CitiMortgage, Fannie Mae, First American Title, Freddie Mac, GMAC, HSBC Finance Corporation, Merryll Lynch, the Mortgage Bankers Association, and Wells Fargo. Many of these same companies made billions by packaging risky mortgages, giving them AAA ratings, selling them for a profit, and then betting that the loans would default. The MERS system was created to avoid recording fees, while they transferred these loans over and over, causing the current economic crisis. As previously reported by APN, banks and financial gambling institutions were literally transferring mortgages via Excel spreadsheet. Peterson claims MERS may have robbed counties across the US of millions maybe billions of dollars in past and future recording fees. There is an epidemic of wrongful foreclosures, mortgage fraud, and countless homeowners are being thrown out of their homes, for no good reason. Peterson warns those who are fortunate enough to pay off their mortgage, they may not have good title. For those who are paying their mortgages, they could be paying money, only to find out the entity they are paying to is not the legal noteholder. These lawsuits may take years to settle. The companies are quickly seeking to lobby for the passage of federal legislation, to make MERS a legal way of doing business. Meanwhile, county attorneys do have discretion to sue for past and current recording fees, and to make sure counties start receiving fees on all transfers.
Some of you have asked about legislation filed related to the requirement of lenders as they foreclose on properties to be able to amply show that they have standing and capacity to foreclose on the property. Logic would suggest that showing the debt instrument and showing that the instrument has been properly conveyed to a party of interest would be standard operating procedure. In the wake of the advent of MERS unfortunately the Courts are duped into believing fraudulent lost note affidavits when, as many of the pleadings we are seeing show, they may have been shredded or shipped of shore. Anyways, we Love Marci Kaptur, have a look at her draft from 2009.
H.R.1123 -- Produce the Note Act of 2009 (Introduced in House - IH)
HR 1123 IH
111th CONGRESS
1st Session
H. R. 1123
To require the filing of certain information regarding a residential mortgage in any proceeding for foreclosure of the mortgage.
IN THE HOUSE OF REPRESENTATIVES
February 23, 2009
Ms. KAPTUR (for herself and Mr. CONYERS) introduced the following bill; which was referred to the Committee on Financial Services
A BILL
To require the filing of certain information regarding a residential mortgage in any proceeding for foreclosure of the mortgage.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Produce the Note Act of 2009'.
SEC. 2. REQUIRED INFORMATION AND NOTICE.
Notwithstanding any other provision of State or Federal law, no foreclosure, whether judicial or nonjudicial, may be commenced with respect to a covered residential mortgage unless the person commencing the foreclosure complies with all of the following requirements:
(1) SUBMISSION OF INFORMATION- The person commencing the foreclosure shall submit to the court, in the case of a judicial foreclosure, or to the office of the State or other subdivision of the State to which notice of default, foreclosure, or sale of the foreclosed property is required under State law to be submitted, in the case of a nonjudicial foreclosure, a report prepared by an independent party that includes the following information:
(A) A statement of findings as to whether the covered residential mortgage was made and serviced in compliance with the terms of, and regulations under, the following laws:
(i) The Truth in Lending Act (15 U.S.C. 1601) and Regulation Z of the Board of Governors of the Federal Reserve System under such Act.
(ii) The Equal Credit Opportunity Act (15 U.S.C. 1691 et seq.) and Regulation B of the Board of Governors of the Federal Reserve System under such Act.
(iii) The Fair Debt Collection Practices Act (15 U.S.C. 1692 et seq.).
(iv) The Federal Fair Credit Reporting Act (15 U.S.C. 1681 et seq.).
(v) The Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) and Regulation X of the Secretary of Housing and Urban Development under such Act.
(vi) The Flood Disaster Protection Act of 1973 (42 U.S.C. 2002 et seq.).
(vii) The Fair Housing Act (42 U.S.C. 3601 et seq.).
(viii) The Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.).
(ix) The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (Public Law 101-73).
(x) Any applicable provisions of State and local law relating to real estate lending or consumer protection.
(B) Certification of any mortgage modification efforts that were employed and any offers made to the mortgagor by the person commencing the foreclosure.
(C) If any noncompliance is found pursuant to subparagraph (A), a statement as to whether the violations are such that the mortgagor should be afforded an extended right, beyond the period permitted under State law--
(i) to rescind the mortgage in defense of the foreclosure; or
(ii) to redeem the mortgage.
(D) Identification of--
(i) the actual holder of the mortgage note, the originating lender for the mortgage and all subsequent assignees, and other all parties who have an interest in the real estate that is subject to the mortgage or in the mortgage or the proceeds of the mortgage; and
(ii) any parties identified pursuant to clause (i) that received any assistance pursuant to title I of the Emergency Economic Stabilization Act of 2008 (12 U.S.C. 5211 et seq.) and the amount of any such assistance received.
(E) A statement of whether a bona fide default on the covered mortgage has occurred.
(F) A description of any hardship circumstances regarding the economic circumstances of the mortgagor that would be relevant to a determination by the mortgagee of whether to modify the mortgage.
(G) A statement of whether the mortgage is insured under title II of the National Housing Act (12 U.S.C. 1707 et seq.).
(H) A statement of whether the mortgage is, or any terms of the mortgage are, unfair or constitute an unfair or deceptive act or practice violating the Federal Trade Commission Act (15 U.S.C. 41 et seq.), and if so, a description of the unfairness or the unfair or deceptive act or practice.
(I) A statement of whether any material misrepresentations were made that fraudulently induced the mortgagor to enter into the transaction to his or her detriment, and if so, a description of such misrepresentation.
(J) Identification of any offsets to the creditor claim on the mortgage.
(K) A statement of the racial characteristics, gender, census tract, and income level of the mortgagor, as such terms are used for purposes of compliance with the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.).
(2) REQUIRED NOTIFICATION- The person commencing the foreclosure shall provide notice to the mortgagor, in writing, not less than 5 days before any action is taken to commence the proceeding or action for foreclosure, and shall certify to the court, in the case of a judicial foreclosure, or to the office of the State or other subdivision of the State to which notice of default, foreclosure, or sale of the foreclosed property is required under State law to be submitted in the case of a nonjudicial foreclosure, that such notice has been provided, that includes the following information:
(A) A statement of any rights of the mortgagor under the applicable laws governing the foreclosure and consumer rights.
(B) A statement of any deadlines for filing answers, defenses, or objections to the foreclosure, including those rights of the mortgagor under the Real Estate Settlement Procedures Act of 1974 and any applicable State laws.
(C) A statement of any penalties and other consequences for the mortgagor if the mortgagor does not respond or file answers to the foreclosure.
(D) A statement of the amounts claimed to be in arrears under the mortgage and needed to reinstate the account and all associated costs and fees, set forth in itemized and distinct categories, and current and correct contact information, including telephone numbers, electronic mail addresses, and postal addresses, at which the mortgagor can obtain further information regarding the mortgage account.
(E) A description of any additional options, such as mortgage workout, modification, mitigation, and redemption, that might be available to the mortgagor to prevent the foreclosure from proceeding and a description of how the mortgagor can obtain additional information regarding such options.
(F) A statement of the correct names, telephone numbers, electronic mail addresses, postal addresses, and any State licensing numbers of the mortgage holder, the mortgage servicer, and the person or persons authorized to take the actions described pursuant to subparagraph (E).
SEC. 3. DEFINITIONS.
For purposes of this Act, the following definitions shall apply:
(1) INDEPENDENT PARTY- The term `independent party' means, with respect to foreclosure on a covered residential mortgage, an individual who has no interest in, or affiliation with, any party involved in such foreclosure or with the covered residential mortgage involved in such foreclosure, including any party that owns, manages, controls, or directs such an involved party, any party that is owned, managed, controlled, or directed by such an involved party, or any party that is under common ownership, management, control, or direction with such an involved party.
(2) COVERED RESIDENTIAL MORTGAGE- The term `covered residential mortgage' means a mortgage that meets the following requirements:
(A) The property securing the obligation under the mortgage shall be a one- to four-family dwelling, including a condominium or a share in a cooperative ownership housing association.
(B) The mortgagor under the mortgage shall occupy the property securing the obligation under the mortgage as his or her principal residence.
(3) MORTGAGE-
(A) IN GENERAL- The term `mortgage' means a deed of trust, mortgage, deed to secure debt, security agreement, or any other form of instrument under which any property (real, personal, or mixed), or any interest in property (including leaseholds, life estates, reversionary interests, and any other estates under applicable State law), is conveyed in trust, mortgaged, encumbered, pledged, or otherwise rendered subject to a lien for the purpose of securing the payment of money or the performance of an obligation.
(B) CONDOMINIUMS AND COOPERATIVES- Such term includes a first mortgage given to secure--
(i) the unpaid purchase price of a fee interest in, or a long-term leasehold interest in, a one-family unit in a multifamily project, including a project in which the dwelling units are attached or are manufactured housing units, semi-detached, or detached, and an undivided interest in the common areas and facilities that serve the project; or
(ii) repayment of a loan made to finance the purchase of stock or membership in a cooperative housing corporation the permanent occupancy of dwelling units of which is restricted to members of such corporation, where the purchase of such stock or membership entitles the purchaser to the permanent occupancy of one of such units.
SEC. 4. RELATION TO STATE LAW.
This Act does not annul, alter, or affect, or exempt any person subject to the provisions of this Act from complying with, the laws of any State or subdivision thereof with respect to foreclosure on a residential mortgage, except to the extent that those laws are inconsistent with any provision of this Act, and then only to the extent of the inconsistency. No provision of the laws of any State or subdivision thereof may be determined to be inconsistent with any provision of this Act if such law is determined to require greater disclosure or notice than is required under this Act or to provide greater protection to the mortgagee than is required under this Act.
MARIETTA, Ga. (CN) - A homeowner claims Wells Fargo instructed her to stop making her monthly mortgage payments to qualify for its loan modification program, then foreclosed after she followed the bank's instructions. The class action seeks damages for RICO fraud, in Cobb County Court.
Lisa Smoak Reid claims the bank "lulled [her] into inaction by offering to work out options to resolve her delinquency, but failed to provide any means to do so, and has failed to provide the plaintiff with the amount of the deficiency."
Reid says a Wells Fargo representative told her on April 1 this year "to fall behind on her mortgage payments," to qualify for assistance programs. "Defendant Wells Fargo informed plaintiff that a modification was possible, but told the plaintiff that she had to be three months behind on her payments," the complaint states.
So, Reid says, "Plaintiff, upon the advice of the defendant's representatives, fell behind three mortgage payments and was in contact with defendant Wells Fargo, who told plaintiff to look on the website for assistance programs."
She adds: "On or about August 1, 2010, plaintiff regularly started to make payments on the property again."
In the meantime, she says, she "filled out the requested documentation [for mortgage modification] and sent it back to Wells Fargo."
Reid says Wells Fargo told her they had received her documentation, but never told her whether the bank accepted or rejected her request, "although they continued to draft payments from the plaintiff for differing amounts."
But the bank never told her "of the reasons for the different amounts of the bank drafts," and they never contacted her attorney about her request for modification either, Reid says.
Instead, the bank foreclosed, putting at risk her $50,000 in equity and the $60,000 she spent on renovations. It also "threatened to obtain a dispossessory order" unless she pays "an alleged deficiency in the mortgage note," but Reid says that bank never told her "how much she allegedly owes."
Reid wants an emergency hearing and injunction to stop the foreclosure proceedings and set aside the foreclosure permanently. She also wants $15 million in punitive damages for RICO fraud, breach of fiduciary duty, breach of contract and emotional distress.
She is represented by Frank Marquez with Belli, Weil, Grozbean & Davis of Atlanta.
Similar complaints have been filed, and continue to be filed, against banks across the United States.
Countrywide Will Pay $108 Million for Overcharging Struggling Homeowners; Loan Servicer Inflated Fees, Mishandled Loans of Borrowers in Bankruptcy
Two Countrywide mortgage servicing companies will pay $108 million to settle Federal Trade Commission charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. The $108 million represents one of the largest judgments imposed in an FTC case, and the largest mortgage servicing case. It will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by Bank of America in July 2008.
“Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible,” said FTC Chairman Jon Leibowitz. “We’re very pleased that homeowners will be reimbursed as a result of our settlement.”
According to the complaint filed by the FTC, Countrywide’s loan-servicing operation deceived homeowners who were behind on their mortgage payments into paying inflated fees – fees that could add up to hundreds or even thousands of dollars. Many of the homeowners had taken out loans originated or funded by Countrywide’s lending arm, including subprime or “nontraditional” mortgages such as payment option adjustable rate mortgages, interest-only mortgages, and loans made with little or no income or asset documentation, the complaint states.
Mortgage servicers are responsible for the day-to-day management of homeowners’ mortgage loans, including collecting and crediting monthly loan payments. Homeowners cannot choose their mortgage servicer. In March 2008, before being acquired by Bank of America, Countrywide was ranked as the top mortgage servicer in the United States, with a balance of more than $1.4 trillion in its servicing portfolio.
When homeowners fell behind on their payments and were in default on their loans, Countrywide ordered property inspections, lawn mowing, and other services meant to protect the lender’s interest in the property, according to the FTC complaint. But rather than simply hire third-party vendors to perform the services, Countrywide created subsidiaries to hire the vendors. The subsidiaries marked up the price of the services charged by the vendors – often by 100% or more – and Countrywide then charged the homeowners the marked-up fees. The complaint alleges that the company’s strategy was to increase profits from default-related service fees in bad economic times. As a result, even as the mortgage market collapsed and more homeowners fell into delinquency, Countrywide earned substantial profits by funneling default-related services through subsidiaries that it created solely to generate revenue.
According to the FTC, under most mortgage contracts, homeowners must pay for necessary default-related services, but mortgage servicers may not mark up the cost to make a profit or charge homeowners for services that are not reasonable or appropriate to protect the mortgage holder’s interest in the property. Homeowners do not have any choice in who performs default-related services or the cost of those services, and they have no option to shop for those services.
In addition, in servicing loans for borrowers trying to save their homes in Chapter 13 bankruptcy proceedings, the complaint charges that Countrywide made false or unsupported claims to borrowers about amounts owed or the status of their loans. Countrywide also failed to tell borrowers in bankruptcy when new fees and escrow charges were being added to their loan accounts. The FTC alleges that after the bankruptcy case closed and borrowers no longer had bankruptcy court protection, Countrywide unfairly tried to collect those amounts, including in some cases via foreclosure. Settlement Terms
The FTC’s complaint and settlement order name two mortgage servicers as defendants: Countrywide Home Loans, Inc. and BAC Home Loans Servicing LP, formerly doing business as Countrywide Home Loans Servicing LP. The settlement requires Countrywide to pay $108 million, which will be refunded to homeowners who Countrywide overcharged before July 2008.
In addition, the settlement order prohibits Countrywide from taking advantage of borrowers who have fallen behind on their payments. The defendants continue to service millions of mortgage loans, including tens of thousands of loans involving borrowers in bankruptcy and foreclosure. In the servicing of loans, the defendants are permanently barred from:
Making false or unsubstantiated representations about loan accounts, such as amounts owed.
Charging any fee for a service unless it is authorized by the loan instruments, by law, or by the consumer for a specific service requested by the consumer.
Charging any fee for a default-related service unless it is a reasonable fee charged by a third party for work actually performed. If the service is provided by an affiliate of a defendant, the fee must be within limits set by state law, investor guidelines, and market rates. Defendants must obtain annual, independent market reviews of their affiliates’ fees to ensure that they are not excessive.
In addition, Countrywide must advise consumers if it intends to use affiliates for default-related services and, if so, provide a fee schedule of the amounts charged by the affiliates.
The settlement also requires Countrywide to make significant changes to its bankruptcy servicing practices. For example, Countrywide must send borrowers in Chapter 13 bankruptcy a monthly notice with information about what amounts the borrower owes – including any fees assessed during the prior month. The defendants also must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy.
This case was brought with the invaluable assistance of the United States Trustee Program, the component of the Department of Justice that oversees the administration of bankruptcy cases and private trustees. This action represents the FTC’s continuing work to help consumers who have been hurt by the economic downturn.
For more information about the case and the FTC’s refund program, see www.ftc.gov/countrywide.
The Commission vote to authorize staff to file the complaint and settlement was 5-0. The complaint and settlement were filed in the U.S. District Court for the Central District of California.
The Federal Trade Commission is a member of the interagency Financial Fraud Enforcement Task Force. For more information on the Task Force, visit http://www.stopfraud.gov/. NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.
MEDIA CONTACT:
Frank Dorman
Office of Public Affairs
202-326-2674
STAFF CONTACT:
Lucy Morris or Alice Hrdy,
Bureau of Consumer Protection
202-326-3224
Very interesting post from Michael Redmund at 4Closurefraud.org.
Well well well
Lookie what we have here folks
Is this why they tried to sneak through H.R. 3808? (just kidding)
Just like we have been saying all along, this is so much bigger than affidavits.
Here is another piece of the puzzle, without bringing up the REMIC issue
Now that YOU are affected personally in this, Mr. President, what are you going to do about it?
Let’s get off the whole CNN Axelrod signals White House opposition to foreclosure moratorium BS
The Obama administration opposes a moratorium on home foreclosures, but wants problems involving improper paperwork resolved as quickly as possible, senior adviser David Axelrod said Sunday. Im not sure about a national moratorium,
Like my dear friend at the Hamlet puts it
It’s not the foreclosure affidavits only. Hello? It’s the whole kit-n-caboodle. it’s the fabricated assignments of mortgage, fake allonges, robo-stamped endorsements in blank, and satisfactions of mortgage, ignoring SEC and IRS regulations, disregard for the steps required by the REMIC rules. Its all the top national banks and their servicing arms. The whole of it is a sham. Dont believe the propaganda that insists otherwise.
Got it?
Now for the fireworks
First we will start with a screen shot of one of Obama’s Release of Mortgage
Marshe Craine of Chase signed off on their release of mortgage.
Now you ask, so what is wrong with that?
Nothing on it’s face, but you know how I roll
With all that is going on with the robosigning, forgeries, fabrications and LIES, we decided to dig into this to see if something was there to help educate the masses on the issues that all of us as Americans face…
Guess what we found
President Obama is a victim of the robosigning phenomenon that has taken the financial industry by storm…
How else would you explain this?
Check it out
Random search of signature for Craine
(Click to Enlarge)
Whoa, is that the same Marshe Craine , Vice President of Chase that signed off, and was notarized I might add BY THE SAME NOTARY, on the Presidents Satisfaction of Mortgage?
Let’s compare
Hmmm. I’m no handwriting expert but
Let’ clarify if the same person notarized these documents
Obama Notary
Random Satisfaction Notary
Looks the same to me on the notary, so if these signatures turn out to be different, she is LYING on one of them, but hey, no big deal, it is just a “technicality”, right?
Not convinced yet?
Okay, let’s dig deeper
Let’s see if this “Vice President” Marshe Craine is a MERS agent as well.
Yep
Oh, much better, that signature is much closer to the signature on the President’s Satisfaction of mortgage…
I feel much better now, don’t you?
Was getting a little nervous there for a second…
Didn’t MERS just come out with some statement about how they weren’t involved an any fraud or something like that?
Statement by CEO of Mortgage Electronic Registration Systems (MERS) RESTON, Va.–(EON: Enhanced Online News)–Mortgage Electronic Registration Systems (MERS) Chief Executive Officer R.K. Arnold today issued the following statement regarding the organization and clarifying certain aspects of its operations: “The MERS System is not fraudulent, and MERS has not committed any fraud.” “MERS is one important Read more
Anyway, it is a good thing it was the same notary again or we would be in big trouble…
Here is another one just for fun now as a Chase VP…
So you see, this whole Foreclosure-Gate crisis has nothing to do with the deadbeat borrowers, it never has.
It has to do with the complete lack of the respect of the law by the banking industry.
They got away with it up until now and are trying their damnedest to paper over their crimes.
It is time to say no more
They tricked all of us, even you Mr. President, and completely disregarded the basic laws of this country to make a buck.
I have been beating this drum, along with a few others, for years now and it is time to come to an end.
Mr President, now that you have had the fraud perpetrated on you personally, what are you going to do about it?
The system is broken and the foreclosures need to be stopped NOW.
It is actually worse than you can imagine…
Feel free to call or email me to discuss this further, Mr President.
All documents supporting the screen shots above are available to the media upon request.
The first national news media outlet that chooses to report this to the American Public will get an exclusive on a similar issue affecting another one of the President’s mortgages…
It is just as interesting, if not better than the above…
For more on the above concerns, see here and here…
This article should be required reading by judges and county land record offices nationwide. This is in my opinion a brilliant description of what is currently going on throughout our country. It is brilliantly written and accurate.
Retired judges are rushing through complex cases to speed foreclosures in Florida
By Matt Taibbi
The following is an article from the November 11, 2010 issue of Rolling Stone. This issue is available Friday on newsstands, as well online in Rolling Stone’s digital archive.Click here to subscribe.
The foreclosure lawyers down in Jacksonville had warned me, but I was skeptical. They told me the state of Florida had created a special super-high-speed housing court with a specific mandate to rubber-stamp the legally dicey foreclosures by corporate mortgage pushers like Deutsche Bank and JP Morgan Chase. This "rocket docket," as it is called in town, is presided over by retired judges who seem to have no clue about the insanely complex financial instruments they are ruling on — securitized mortgages and labyrinthine derivative deals of a type that didn't even exist when most of them were active members of the bench. Their stated mission isn't to decide right and wrong, but to clear cases and blast human beings out of their homes with ultimate velocity. They certainly have no incentive to penetrate the profound criminal mysteries of the great American mortgage bubble of the 2000s, perhaps the most complex Ponzi scheme in human history — an epic mountain range of corporate fraud in which Wall Street megabanks conspired first to collect huge numbers of subprime mortgages, then to unload them on unsuspecting third parties like pensions, trade unions and insurance companies (and, ultimately, you and me, as taxpayers) in the guise of AAA-rated investments. Selling lead as gold, shit as Chanel No. 5, was the essence of the booming international fraud scheme that created most all of these now-failing home mortgages.
The rocket docket wasn't created to investigate any of that. It exists to launder the crime and bury the evidence by speeding thousands of fraudulent and predatory loans to the ends of their life cycles, so that the houses attached to them can be sold again with clean paperwork. The judges, in fact, openly admit that their primary mission is not justice but speed. One Jacksonville judge, the Honorable A.C. Soud, even told a local newspaper that his goal is to resolve 25 casesper hour. Given the way the system is rigged, that means His Honor could well be throwing one ass on the street every 2.4 minutes.
Foreclosure lawyers told me one other thing about the rocket docket. The hearings, they said, aren't exactly public. "The judges might give you a hard time about watching," one lawyer warned. "They're not exactly anxious for people to know about this stuff." Inwardly, I laughed at this — it sounded like typical activist paranoia. The notion that a judge would try to prevent any citizen, much less a member of the media, from watching an open civil hearing sounded ridiculous. Fucked-up as everyone knows the state of Florida is, it couldn't be that bad. It isn't Indonesia. Right?
Well, not quite. When I went to sit in on Judge Soud's courtroom in downtown Jacksonville, I was treated to an intimate, and at times breathtaking, education in the horror of the foreclosure crisis, which is rapidly emerging as the even scarier sequel to the financial meltdown of 2008:Invasion of the Home Snatchers II.In Las Vegas, one in 25 homes is now in foreclosure. In Fort Myers, Florida, one in 35. In September, lenders nationwide took over a rec ord 102,134 properties; that same month, more than a third of all home sales were distressed properties. All told, some 820,000 Americans have already lost their homes this year, and another 1 million currently face foreclosure.
Throughout the mounting catastrophe, however, many Americans have been slow to comprehend the true nature of the mortgage disaster. They seemed to have grasped just two things about the crisis: One, a lot of people are getting their houses foreclosed on. Two, some of the banks doing the foreclosing seem to have misplaced their paperwork.
For most people, the former bit about homeowners not paying their damn bills is the important part, while the latter, about the sudden and strange inability of the world's biggest and wealthiest banks to keep proper records, is incidental. Just a little office sloppiness, and who cares? Those deadbeat homeowners still owe the money, right? "They had it coming to them," is how a bartender at the Jacksonville airport put it to me.
But in reality, it's the unpaid bills that are incidental and the lost paperwork that matters. It turns out that underneath that little iceberg tip of exposed evidence lies a fraud so gigantic that it literally cannot be contemplated by our leaders, for fear of admitting that our entire financial system is corrupted to its core — with our great banks and even our government coffers backed not by real wealth but by vast landfills of deceptively generated and essentially worthless mortgage-backed assets.
You've heard of Too Big to Fail — the foreclosure crisis is Too Big for Fraud. Think of the Bernie Madoff scam, only replicated tens of thousands of times over, infecting every corner of the financial universe. The underlying crime is so pervasive, we simply can't admit to it — and so we are working feverishly to rubber-stamp the problem away, in sordid little backrooms in cities like Jacksonville, behind doors that shouldn't be, but often are, closed.
And that's just the economic side of the story. The moral angle to the foreclosure crisis — and, of course, in capitalism we're not supposed to be concerned with the moral stuff, but let's mention it anyway — shows a culture that is slowly giving in to a futuristic nightmare ideology of computerized greed and unchecked financial violence. The monster in the foreclosure crisis has no face and no brain. The mortgages that are being foreclosed upon have no real owners. The lawyers bringing the cases to evict the humans have no real clients. It is complete and absolute legal and economic chaos. No single limb of this vast man- eating thing knows what the other is doing, which makes it nearly impossible to combat — and scary as hell to watch.
What follows is an account of a single hour of Judge A.C. Soud's rocket docket in Jacksonville. Like everything else related to the modern economy, these foreclosure hearings are conducted in what is essentially a foreign language, heavy on jargon and impenetrable to the casual observer. It took days of interviews with experts before and after this hearing to make sense of this single hour of courtroom drama. And though the permutations of small-time scammery and grift in the foreclosure world are virtually endless — your average foreclosure case involves homeowners or investors being screwed at least five or six creative ways — a single hour of court and a few cases is enough to tell the main story. Because if you see one of these scams, you see them all.
It's early on a sunny Tuesday morning when I arrive at the chambers of Judge Soud, one of four rotating judges who preside over the local rocket docket. These special foreclosure courts were established in July of this year, after the state of Florida budgeted $9.6 million to create a new court with a specific mandate to clear 62 percent of the foreclosure cases that were clogging up the system. Rather than forcing active judges to hear thousands of individual cases, this strategy relies on retired judges who take turns churning through dozens of cases every morning, with little time to pay much attention to the particulars.
What passes for a foreclosure court in Jacksonville is actually a small conference room at the end of a hall on the fifth floor of the drab brick Duval County Courthouse. The space would just about fit a fridge and a pingpong table. At the head of a modest conference table this morning sits Judge Soud, a small and fussy-looking man who reminds me vaguely of the actor Ben Gazzara.
On one side of the table sits James Kowalski, a former homicide prosecutor who is now defending homeowners. A stern man with a shaved head and a laconic manner of speaking, Kowalski has helped pioneer a whole new approach to the housing mess, slowing down the mindless eviction machine by deposing the scores of "robo-signers" being hired by the banks to sign phony foreclosure affidavits by the thousands. For his work on behalf of the dispossessed, Kowalski was recently profiled in a preposterousWall Street Journalarticle that blamed attorneys like him forcausingthe foreclosure mess with their nuisance defense claims. The headline: "Niche Lawyers Spawned Housing Fracas."
On the other side of the table are the plaintiff's attorneys, the guys who represent the banks. On this level of the game, these lawyers refer to themselves as "bench warmers" — volume stand-ins subcontracted by the big, hired-killer law firms that work for the banks. One of the bench warmers present today is Mark Kessler, who works for a number of lenders and giant "foreclosure mills," including the one run by David J. Stern, a gazillionaire attorney and all-Universe asshole who last year tried to foreclose on 70,382 homeowners. Which is a nice way to make a living, considering that Stern and his wife, Jeanine, have bought nearly $60 million in property for themselves in recent years, including a 9,273-square-foot manse in Fort Lauderdale that is part of a Ritz-Carlton complex.
Kessler is a harried, middle-aged man in glasses who spends the morning perpetually fighting to organize a towering stack of folders, each one representing a soon-to-be-homeless human being. It quickly becomes apparent that Kessler is barely acquainted with the names in the files, much less the details of each case. "A lot of these guys won't even get the folders until right before the hearing," says Kowalski.
When I arrive, Judge Soud and the lawyers are already arguing a foreclosure case; at a break in the action, I slip into the chamber with a legal-aid attorney who's accompanying me and sit down. The judge eyes me anxiously, then proceeds. He clears his throat, and then it's ready, set,fraud!
Judge Soud seems to have no clue that the files he is processing at a breakneck pace are stuffed with fraudulent claims and outright lies. "We have not encountered any fraud yet," he recently told a local newspaper. "If we encountered fraud, it would go to [the state attorney], I can tell you that." But the very first case I see in his court is riddled with fraud.
Kowalski has seen hundreds of cases like the one he's presenting this morning. It started back in 2006, when he went to Pennsylvania to conduct what he thought would be a routine deposition of an official at the lending giant GMAC. What he discovered was that the official — who had sworn to having personal knowledge of the case — was, in fact, just a "robo-signer" who had signed off on the file without knowing anything about the actual homeowner or his payment history. (Kowalski's clients, like most of the homeowners he represents, were actually making their payments on time; in this particular case, a check had been mistakenly refused by GMAC.) Following the evidence, Kowalski discovered what has turned out to be a system wide collapse of the process for documenting mortgages in this country.
If you're foreclosing on somebody's house, you are required by law to have a collection of paperwork showing the journey of that mortgage note from the moment of issuance to the present. You should see the originating lender (a firm like Countrywide) selling the loan to the next entity in the chain (perhaps Goldman Sachs) to the next (maybe JP Morgan), with the actual note being transferred each time. But in fact, almost no bank currently foreclosing on homeowners has a reliable record of who owns the loan; in some cases, they have even intentionally shredded the actual mortgage notes. That's where the robo-signers come in. To create the appearance of paperwork where none exists, the banks drag in these pimply entry-level types — an infamous example is GMAC's notorious robo-signer Jeffrey Stephan, who appears online looking like an age-advanced photo of Beavis or Butt-Head — and get them to sign thousands of documents a month attesting to the banks' proper ownership of the mortgages.
This isn't some rare goof-up by a low-level cubicle slave: Virtually every case of foreclosure in this country involves some form of screwed-up paperwork. "I would say it's pretty close to 100 percent," says Kowalski. An attorney for Jacksonville Area Legal Aid tells me that out of the hundreds of cases she has handled, fewer than five involved no phony paperwork. "The fraud is the norm," she says.
Kowalski's current case before Judge Soud is a perfect example. The Jacksonville couple he represents are being sued for delinquent payments, but the case against them has already been dismissed once before. The first time around, the plaintiff, Bank of New York Mellon, wrote in Paragraph 8 that "plaintiff owns and holds the note" on the house belonging to the couple. But in Paragraph 3 of the same complaint, the bank reported that the note was "lost or destroyed," while in Paragraph 4 it attests that "plaintiff cannot reasonably obtain possession of the promissory note because its whereabouts cannot be determined."
The bank, in other words, tried to claim on paper, in court, that it both lost the note and had it, at the same time. Moreover, it claimed that it had included a copy of the note in the file, which it did — the only problem being that the note (a) was not properly endorsed, and (b) was payable not to Bank of New York but to someone else, a company called Novastar.
Now, months after its first pass at foreclosure was dismissed, the bank has refiled the case — and what do you know, it suddenly found the note. And this time, somehow, the note has the proper stamps. "There's a stamp that did not appear on the note that was originally filed," Kowalski tells the judge. (This business about the stamps is hilarious. "You can get them very cheap online," says Chip Parker, an attorney who defends homeowners in Jacksonville.)
The bank's new set of papers also traces ownership of the loan from the original lender, Novastar, to JP Morgan and then to Bank of New York. The bank, in other words, is trying to push through a completely new set of documents in its attempts to foreclose on Kowalski's clients.
There's only one problem: The dates of the transfers are completely fucked. According to the documents, JP Morgan transferred the mortgage to Bank of New York on December 9th, 2008. But according to the same documents, JP Morgan didn't even receive the mortgage from Novastar until February 2nd, 2009 — two monthsafterit had supposedly passed the note along to Bank of New York. Such rank incompetence at doctoring legal paperwork is typical of foreclosure actions, where the fraud is laid out in ink in ways that make it impossible for anyone but an overburdened, half-asleep judge to miss. "That's my point about all of this," Kowalski tells me later. "If you're going to lie to me, at least lie well."
The dates aren't the only thing screwy about the new documents submitted by Bank of New York. Having failed in its earlier attempt to claim that it actually had the mortgage note, the bank now tries an all-of-the-above tactic. "Plaintiff owns and holds the note," it claims, "or is a person entitled to enforce the note."
Soud sighs. For Kessler, the plaintiff's lawyer, to come before him with such sloppy documents and make this preposterous argument — that his client either is or is not the note-holder — well, that puts His Honor in a tough spot. The entire concept is a legal absurdity, and he can't sign off on it. With an expression of something very like regret, the judge tells Kessler, "I'm going to have to go ahead and accept [Kowalski's] argument."
Now, one might think that after a bank makes multiple attempts to push phony documents through a courtroom, a judge might be pissed off enough to simply rule against that plaintiff for good. As I witness in court all morning, the defense never gets more than one chance to screw up. But the banks get to keep filing their foreclosures over and over again, no matter how atrocious and deceitful their paperwork is.
Thus, when Soud tells Kessler that he's dismissing the case, he hastens to add: "Of course, I'm not going to dismiss with prejudice." With an emphasis on the words "of course."
Instead, Soud gives Kessler 25 days to come up with better paperwork. Kowalski fully expects the bank to come back with new documents telling a whole new story of the note's ownership. "What they're going to do, I would predict, is produce a note and say Bank of New York is not the original note-holder, but merely the servicer," he says.
This is the dirty secret of the rocket docket: The whole system is set up to enable lenders to commit fraud over and over again, until they figure out a way to reduce the stink enough so some judge like Soud can sign off on the scam. "If the court finds for the defendant, the plaintiffs just refile," says Parker, the local attorney. "The only way for the caseload to get reduced is to give it to the plaintiff. The entire process is designed with that result in mind."
Now all of this — the obviously cooked-up documents, the magically appearing stamp and the rest of it — may just seem like nothing
more than sloppy paperwork. After all, what does it matter if the bank has lost a few forms or mixed up the dates? The homeowners still owe what they owe, and the deadbeats have no right to keep living in a house they haven't paid for.
But what's going on at the Jacksonville rocket docket, and in foreclosure courts all across the country, has nothing to do with sloppiness. All this phony paperwork was actually an essential part of the mortgage bubble, an integral element of what has enabled the nation's biggest lenders to pass off all that subprime lead as AAA gold.
In the old days, when you took out a mortgage, it was probably through a local bank or a credit union, and whoever gave you your loan held on to it for life. If you lost your job or got too sick to work and suddenly had trouble making your payments, you could call a human being and work things out. It was in the banker's interest, as well as yours, to make a modified payment schedule. From his point of view, it was better that you pay something than nothing at all.
But that all changed about a decade ago, thanks to the invention of new financial instruments that magically turned all these mortgages into high-grade investments. Now when you took out a mortgage, your original lender — which might well have been a big mortgage mill like Countrywide or New Century — immediately sold off your loan to big banks like Deutsche and Goldman and JP Morgan. The banks then dumped hundreds or thousands of home loans at a time into tax-exempt real estate trusts, where the loans were diced up into securities, examined and graded by the ratings agencies, and sold off to big pension funds and other institutional suckers.
Even at this stage of the game, the banks generally knew that the loans they were buying and reselling to investors were shady. A company called Clayton Holdings, which analyzed nearly 1 million loans being prepared for sale in 2006 and 2007 by 23 banks, found that nearly half of the mortgages failed to meet the underwriting standards being promised to investors. Citi group, for instance, had 29 percent of its loans come up short, but it still sold a third of those mortgages to investors. Goldman Sachs had 19 percent of its mortgages flunk the test, yet it knowingly hawked 34 percent of the risky deals to investors.
D. Keith Johnson, the head of Clayton Holdings, was so alarmed by the findings that he went to officials at three of the main ratings agencies — Moody's, Standard and Poor's, and Fitch's — and tried to get them to properly evaluate the loans. "Wouldn't this information be great for you to have as you assign risk levels?" he asked them. (Translation: Don't you ratings agencies want to know that half these loans are crap before you give them a thumbs-up?) But all three agencies rejected his advice, fearing they would lose business if they adopted tougher standards. In the end, the agencies gave large chunks of these mortgage-backed securities AAA ratings — which means "credit risk almost zero."
Since these mortgage-backed securities paid much higher returns than other AAA investments like treasury notes or corporate bonds, the banks had no trouble attracting investors, foreign and domestic, from pension funds to insurance companies to trade unions. The demand was so great, in fact, that they often sold mortgages they didn't even have yet, prompting big warehouse lenders like Countrywide and New Century to rush out into the world to find more warm bodies to lend to.
In their extreme haste to get thousands and thousands of mortgages they could resell to the banks, the lenders committed an astonishing variety of fraud, from falsifying income statements to making grossly inflated appraisals to misrepresenting properties to home buyers. Most crucially, they gave tons and tons of credit to people who probably didn't deserve it, and why not? These fly-by-night mortgage companies weren't going to hold on to these loans, not even for 10 minutes. They were issuing this credit specifically to sell the loans off to the big banks right away, in furtherance of the larger scheme to dump fraudulent AAA-rated mortgage-backed securities on investors. If you had a pulse, they had a house to sell you.
As bad as Countrywide and all those lenders were, the banks that had sent them out to collect these crap loans were a hundred times worse. To sell the loans, the banks often dumped them into big tax-exempt buckets called REMICs, or Real Estate Mortgage Investment Conduits. Each one of these Enron-ish, offshore-like real estate trusts spelled out exactly what kinds of loans were supposed to be in the pool, when they were to be collected, and how they were to be managed. In order to both preserve their tax-exempt statusand deserve their AAA ratings, each of the loans in the pool had to have certain characteristics. The loans couldn't already be in default or foreclosure at the time they were sold to investors. If they were advertised as nice, safe, fixed-rate mortgages, they couldn't turn out to be high-interest junk loans. And, on the most basic level, the loans had to actuallyexist.In other words, if the trust stipulated that all the loans had to be collected by August 2005, the bank couldn't still be sticking in mortgages months later.
Yet that's exactly what the banks did. In one case handled by Jacksonville Area Legal Aid, a homeowner refinanced her house in 2005 but almost immediately got into trouble, going into default in December of that year. Yet somehow, this woman's loan was placed into a trust called Home Equity Loan Trust Series AE 2005-HE5 in January 2006 — five months after the deadline for that particular trust. The loan was not only late, it was already in foreclosure — which means that, by definition, whoever the investors were in AE 2005-HE5 were getting shafted.
Why does stuff like this matter? Because when the banks put these pools together, they were telling their investors that they were putting their money into tidy collections of real, performing home loans. But frequently, the loans in the trust were complete shit. Or sometimes, the banks didn't evenhaveall the loans they said they had. But the banks sold the securities based on these pools of mortgages as AAA-rated gold anyway.
In short, all of this was a scam — and that's why so many of these mortgages lack a true paper trail. Had these transfers been done legally, the actual mortgage note and detailed information about all of these transactions would have been passed from entity to entity each time the mortgage was sold. But in actual practice, the banks were often committing securities fraud (because many of the mortgages did not match the information in the prospectuses given to investors) and tax fraud (because the way the mortgages were collected and serviced often violated the strict procedures governing such investments).
Having unloaded this diseased cargo onto their unsuspecting customers, the banks had no incentive to waste money keeping "proper" documentation of all these dubious transactions.
"You've already committed fraud once," says April Charney, an attorney with Jacksonville Area Legal Aid. "What do you have to lose?"
Sitting in the rocket docket, James Kowalski considers himself lucky to have won his first motion of the morning. To get the usually intractable Judge Soud to forestall a foreclosure is considered a real victory, and I later hear Kowalski getting props and attaboys from other foreclosure lawyers. In a great deal of these cases, in fact, the homeowners would have a pretty good chance of beating the rap, at least temporarily, if only they had lawyers fighting for them in court. But most of them don't. In fact, more than 90 percent of the cases that go through Florida foreclosure courts are unopposed. Either homeowners don't know they can fight their foreclosures, or they simply can't afford an attorney. These unopposed cases are the ones the banks know they'll win — which is why they don't sweat it if they take the occasional whipping.
That's why all these colorful descriptions of cases where foreclosure lawyers like Kowalski score in court are really just that — a little color. The meat of the foreclosure crisis is the unopposed cases; that's where the banks make their money. They almost always win those cases, no matter what's in the files.
This becomes evident after Kowalski leaves the room.
"Who's next?" Judge Soud says. He turns to Mark Kessler, the counsel for the big foreclosure mills. "Mark, you still got some?"
"I've got about three more, Judge," says Kessler.
Kessler then drops three greenish-brown files in front of Judge Soud, who spends no more than a minute or two glancing through each one. Then he closes the files and puts an end to the process by putting his official stamp on each foreclosure with an authoritative finality:
Kerchunk! Kerchunk! Kerchunk!
Each one of thosekerchunksmeans another family on the street. There are no faces involved here, just beat-the-clock legal machinery. Watching Judge Soud plow through each foreclosure reminds me of the scene inFargowhere the villain played by Swedish character actor Peter Stormare pushes his victim's leg through a wood chipper with that trademark bored look on his face. Mechanized misery and brainless bureaucracy on the one hand, cash for the banks on the other.
What's sad is that most Americans who have an opinion about the foreclosure crisis don't give a shit about all the fraud involved. They don't care that these mortgages wouldn't have been available in the first place if the banks hadn't found a way to sell oregano as weed to pension funds and insurance companies. They don't care that the Countrywides of the world pushed borrowers who qualified for safer fixed- income loans into far more dangerous adjustable-rate loans, because their brokers got bigger commissions for doing so. They don't care that in the rush to produce loans, people were sold houses that turned out to have flood damage or worse, and they certainly don't care that people were sold houses with inflated appraisals, which left them almost immediately underwater once housing prices started falling.
The way the banks tell it, it doesn't matter if they defrauded homeowners and investors and taxpayers alike to get these loans. All that matters is that a bunch of deadbeatsaren't paying their fucking bills."If you didn't pay your mortgage, you shouldn't be in your house — period," is how Walter Todd, portfolio manager at Greenwood Capital Associates, puts it. "People are getting upset about something that's just procedural."
Jamie Dimon, the CEO of JP Morgan, is even more succinct in dismissing the struggling homeowners that he and the other megabanks scammed before tossing out into the street. "We're not evicting people who deserve to stay in their house," Dimon says.
There are two things wrong with this argument. (Well, more than two, actually, but let's just stick to the two big ones.)
The first reason is: It simply isn't true. Many people who are being foreclosed on have actually paid their bills and followed all the instructions laid down by their banks. In some cases, a homeowner contacts the bank to say that he's having trouble paying his bill, and the bank offers him loan modification. But the bank tells him that in order to qualify for modification, he must first be delinquent on his mortgage. "They actually tell people to stop paying their bills for three months," says Parker.
The authorization gets recorded in what's known as the bank's "contact data base," which records every phone call or other communication with a home owner. But no mention of it is entered into the bank's "number history," which records only the payment record. When the number history notes that the home owner has missed three payments in a row, it has no way of knowing that the homeowner was given permission to stop making payments. "One computer generates a default letter," says Kowalski. "Another computer contacts the credit bureaus." At no time is there a human being looking at the entire picture.
Which means that homeowners can be foreclosed on for all sorts of faulty reasons: misplaced checks, address errors, you name it. This inability of one limb of the foreclosure beast to know what the other limb is doing is responsible for many of the horrific stories befalling homeowners across the country. Patti Parker, a local attorney in Jacksonville, tells of a woman whose home was seized by Deutsche Bank two days before Christmas. Months later, Deutsche came back and admitted that they had made a mistake: They had repossessed the wrong property. In another case that made headlines in Orlando, an agent for JP Morgan mistakenly broke into a woman's house that wasn't even in foreclosure and tried to change the locks. Terrified, the woman locked herself in her bathroom and called 911. But in a profound expression of the state's reflexive willingness to side with the bad guys, the police made no arrest in the case. Breaking and entering is not a crime, apparently, when it's authorized by a bank.
The second reason the wholethey still owe the fucking moneything is bogus has to do with the changed incentives in the mortgage game. In many cases, banks like JP Morgan are merely the servicers of all these home loans, charged with collecting your money every month and paying every penny of it into the trust, which is the real owner of your mortgage. If you pay less than the whole amount, JP Morgan is now obligated to pay the trust the remainder out of its own pocket. When you fall behind, your bank falls behind, too. The only way it gets off the hook is if the house is foreclosed on and sold.
That's what this foreclosure crisis is all about: fleeing the scene of the crime. Add into the equation the fact that some of these big banks were simultaneously betting big money against these mortgages — Goldman Sachs being the prime example — and you can see that there were heavy incentives across the board to push anyone in trouble over the cliff.
Things used to be different. Asked what percentage of struggling homeowners she used to be able to save from foreclosure in the days before securitization, Charney is quick to answer. "Most of them," she says. "I seldom came across a mortgage I couldn't work out."
In Judge Soud's court, I come across a shining example of this mindless rush to foreclosure when I meet Natasha Leonard, a single mother who bought a house in 2004 for $97,500. Right after closing on the home, Leonard lost her job. But when she tried to get a modification on the loan, the bank's offer was not helpful. "They wanted me to pay $1,000," she says. Which wasn't exactly the kind of modification she was hoping for, given that her original monthly payment was $840.
"You're paying $840, you ask for a break, and they ask you to pay $1,000?" I ask.
"Right," she says.
Leonard now has a job and could make some kind of reduced payment. But instead of offering loan modification, the bank's lawyers are in their fourth year of doggedly beating her brains out over minor technicalities in the foreclosure process. That's fine by the lawyers, who are collecting big fees. And there appears to be no human being at the bank who's involved enough to issue a sane decision to end the costly battle. "If there was a real client on the other side, maybe they could work something out," says Charney, who is representing Leonard. In this lunatic bureaucratic jungle of securitized home loans issued by transnational behemoths, the borrower-lender relationship can only go one of two ways: full payment, or total war.
The extreme randomness of the system is exemplified by the last case I see in the rocket docket. While most foreclosures are unopposed, with homeowners not even bothering to show up in court to defend themselves, a few pro se defendants — people representing themselves — occasionally trickle in. At one point during Judge Soud's proceeding, a tallish blond woman named Shawnetta Cooper walks in with a confused look on her face. A recent divorcee delinquent in her payments, she has come to court today fully expecting to be foreclosed on by Wells Fargo. She sits down and takes a quick look around at the lawyers who are here to kick her out of her home. "The land has been in my family for four generations," she tells me later. "I don't want to be the one to lose it."
Judge Soud pipes up and inquires if there's a plaintiff lawyer present; someone has to lop off this woman's head so the court can move on to the next case. But then something unexpected happens: It turns out that Kessler is supposed to be foreclosing on her today, but he doesn't have her folder. The plaintiff, technically, has forgotten to show up to court.
Just minutes before, I had watched what happens when defendants don't show up in court:kerchunk!The judge more or less automatically rules for the plaintiffs when the homeowner is a no-show. But when theplaintiffdoesn't show, the judge is suddenly all mercy and forgiveness. Soud simply continues Cooper's case, telling Kessler to get his shit together and come back for another whack at her in a few weeks. Having done this, he dismisses everyone.
Stunned, Cooper wanders out of the courtroom looking like a person who has stepped up to the gallows expecting to be hanged, but has instead been handed a fruit basket and a new set of golf clubs.
I follow her out of the court, hoping to ask her about her case. But the sight of a journalist getting up to talk to a defendant in his kangaroo court clearly puts a charge into His Honor, and he immediately calls Cooper back into the conference room. Then, to the amazement of everyone present, he issues the following speech:
"This young man," he says, pointing at me, "is a reporter forRolling Stone. It is your privilege to talk to him if you want." He pauses. "It is also your privilege tonottalk to him if you want."
I stare at the judge, open-mouthed. Here's a woman who still has to come back to this guy's court to find out if she can keep her home, and the judge's admonition suggests that she may run the risk of pissing him off if she talks to a reporter. Worse, about an hour later, April Charney, the lawyer who accompanied me to court, receives an e-mail from the judge actually threatening her with contempt for bringing a stranger to his court. Noting that "we ask that anyone other than a lawyer remain in the lobby," Judge Soud admonishes Charney that "your unprofessional conduct and apparent authorization that the reporter could pursue a property owner immediately out of Chambers into the hallway for an interview, may very well be sited [sic] for possible contempt in the future."
Let's leave aside for a moment that Charney never said a word to me about speaking to Cooper. And let's overlook entirely the fact that the judge can't spell the wordcited.The key here isn't this individual judge — it's the notion that these hearings are not and should not be entirely public. Quite clearly, foreclosure is meant to be neither seen nor heard.
After Soud's outburst, Cooper quietly leaves the court. Once out of sight of the judge, she shows me her file. It's not hard to find the fraud in the case. For starters, the assignment of mortgage is autographed by a notorious robo-signer — John Kennerty, who gave a deposition this summer admitting that he signed as many as 150 documents a day for Wells Fargo. In Cooper's case, the document with Kennerty's signature on it places the date on which Wells Fargo obtained the mortgage as May 5th, 2010. The trouble is, the bank bought the loan from Wachovia — a bank that went out of business in 2008. All of which is interesting, because in her file, it states that Wells Fargo sued Cooper for foreclosure on February 22nd, 2010. In other words, the bank foreclosed on Cooper three months before it obtained her mortgage from a nonexistent company.
There are other types of grift and outright theft in the file. As is typical in many foreclosure cases, Cooper is being charged by the bank for numerous attempts to serve her with papers. But a booming industry has grown up around fraudulent process servers; companies will claim they made dozens of attempts to serve homeowners, when in fact they made just one or none at all. Who's going to check? The process servers cover up the crime using the same tactic as the lenders, saying they lost the original summons. From 2000 to 2006, there was a total of 1,031 "affidavits of lost summons" here in Duval County; in the past two years, by contrast, more than 4,000 have been filed.
Cooper's file contains a total of $371 in fees for process service, including one charge of $55 for an attempt to serve process on an "unknown tenant." But Cooper's house is owner-occupied — she doesn't even have a tenant, she tells me with a shrug. If Mark Kessler had had his shit together in court today, Cooper would not only be out on the street, she'd be paying for that attempt to serve papers to her nonexistent tenant.
Cooper's case perfectly summarizes what the foreclosure crisis is all about. Her original loan was made by Wachovia, a bank that blew itself up in 2008 speculating in the mortgage market. It was then transferred to Wells Fargo, a megabank that was handed some $50 billion in public assistance to help it acquire the corpse of Wachovia. And who else benefited from that $50 billion in bailout money? Billionaire Warren Buffett and his Berkshire Hathaway fund, which happens to be a major shareholder in Wells Fargo. It was Buffett's vice chairman, Charles Munger, who recently told America that it should "thank God" that the government bailed out banks like the one he invests in, while people who have fallen on hard times — that is, homeowners like Shawnetta Cooper — should "suck it in and cope."
Look: It's undeniable that many of the people facing foreclosure bear some responsibility for the crisis. Some borrowed beyond their means. Some even borrowed knowing they would never be able to pay off their debt, either hoping to flip their houses right away or taking on mortgages with low initial teaser rates without bothering to think of the future. The culture of take-for-yourself-now, let-someone-else-pay-later wasn't completely restricted to Wall Street. It penetrated all the way down to the individual consumer, who in some cases was a knowing accomplice in the bubble mess.
But many of these homeowners are just ordinary Joes who had no idea what they were getting into. Some were pushed into dangerous loans when they qualified for safe ones. Others were told not to worry about future jumps in interest rates because they could just refinance down the road, or discovered that the value of their homes had been overinflated by brokers looking to pad their commissions. And that's not even accounting for the fact that most of this credit wouldn't have been available in the first place without the Ponzi-like bubble scheme cooked up by Wall Street, about which the average home owner knew nothing — hell, even the average U.S. senator didn't know about it.
At worst, these ordinary homeowners were stupid or uninformed — while the banks that lent them the money are guilty of committing a bald-faced crime on a grand scale. These banks robbed investors and conned homeowners, blew themselves up chasing the fraud, then begged the taxpayers to bail them out. And bail them out we did: We ponied up billions to help Wells Fargo buy Wachovia, paid Bank of America to buy Merrill Lynch, and watched as the Fed opened up special facilities to buy up the assets in defective mortgage trusts at inflated prices. And after all that effort by the state to buy back these phony assets so the thieves could all stay in business and keep their bonuses, what did the banks do? They put their foot on the foreclosure gas pedal and stepped up the effort to kick people out of their homes as fast as possible, before the world caught on to how these loans were made in the first place.
Why don't the banks want us to see the paperwork on all these mortgages? Because the documents represent a death sentence for them. According to the rules of the mortgage trusts, a lender like Bank of America, which controls all the Countrywide loans, is required by law to buy back from investors every faulty loan the crooks at Countrywide ever issued. Think about what that would do to Bank of America's bottom line the next time you wonder why they're trying so hard to rush these loans into someone else's hands.
When you meet people who are losing their homes in this foreclosure crisis, they almost all have the same look of deep shame and anguish. Nowhere else on the planet is it such a crime to be down on your luck, even if you were put there by some of the world's richest banks, which continue to rake in record profits purely because they got a big fat handout from the government. That's why one banker CEO after another keeps going on TV to explain that despite their own deceptive loans and fraudulent paperwork, the real problem is these deadbeat homeowners who won't pay their fucking bills. And that's why most people in this country are so ready to buy that explanation. Because in America, it's far more shameful to owe money than it is to steal it.
