foreclosure fraud

Once Again, Lying to Courts to Protect Banks Goes Unpunished

This story — about how Occupy Wall Street protestor Michael Premo beat an assaulting an officer charge when his lawyers found video evidence to disprove the NYPD’s claims — might make you believe in justice.

Except for this. Premo’s lawyers first went to the cops for video, knowing they had tons of officers deployed with cameras during the protests. They found the cop who had relevant video. And … he apparently lied in court about whether he had that video.

Prosecutors told them that police TARU units, who filmed virtually every moment of Occupy street protests, didn’t have any footage of the entire incident. But [Premo's lawyer Meghan] Maurus knew from video evidence she had received while representing another defendant arrested that day that there was at least one TARU officer with relevant footage. Reviewing video shot by a citizen-journalist livestreamer during Premo’s arrest, she learned that a Democracy Nowcameraman was right in the middle of the fray, and when she tracked him down, he showed her a video that so perfectly suited her needs it brought a tear to her eye.

For one thing, the video prominently shows a TARU cop named Bosco, holding up his camera, which is on, and pointing at the action around the kettle. When Premo’s lawyers subpoenaed Bosco, they were told he was on a secret mission at “an undisclosed location,” and couldn’t respond to the subpoena. Judge Robert Mandelbaum didn’t accept that, and Bosco ultimately had to testify [Correction: Bosco didn't take the stand; he had to appear at the District Attorney's office for a meeting with Maurus and prosecutors. Judge Mandelbaum accepted that Bosco would likely say on the stand what he said in the meeting, and didn't require him to testify.] Bosco claimed, straining credibility, that though the camera is clearly on and he can be seen in the video pointing it as though to frame a shot, he didn’t actually shoot any video that evening.

Bosco almost certainly lied. The NYPD clearly lied, repeatedly.

And yet there’s no hint they’ll be charged with obstructing justice.

While you’re reflecting on that, remember what the cops were doing (funded, in part, by JP Morgan Chase $4.6 million donation to the NYPD Foundation). They were making sure that a bunch of hippies could not continue to engage in a highly visible challenge to bank power, and certainly not in the banks’ turf around Wall Street.

Sure, OWS did not present as significant a financial threat as preventing banks from foreclosing on homes they did not hold the proper paperwork on — the threat that robosigners lied under oath to combat. But they did present an ideological threat to the banks.

And here we are, again finding people — cops! — lying in court to protect the banks. And here we are, once again, finding those liars go unpunished.

No Banksters Were Harmed in the Production of This Anti-Crime Video

[YouTube]nV2cYC9IfNc[/youtube]

The United Nations Office on Drugs and Crime has rolled out a campaign to raise awareness of Transnational Crime.

$870 billion dollars a year. Including $250 billion on counterfeit goods. $320 billion on drugs. $32 billion on human trafficking. $250B on illegal arms.

But nowhere did the UNODC include the crimes of multinational banks.

Not the gaming of a key market measure, LIBOR. Not the theft of customer money. Not the theft of millions of homes through foreclosure fraud, or the massive fraud involved in the inflating of the housing bubble. It’s not even clear the UNODC includes the banks’ stake in all this illicit trade.

In short, while the UNODC laudably wants to draw attention to how much of our transnational trade benefits gangsters and thugs, it left an entire category–perhaps the most insidious–of thugs out of its reporting (the same blind spot the US government had when it rolled out sanctions against TCOs).

At this point, there’s no getting around it, no matter how much polite society would like to deny this fact. If we want to go after TCOs–and we should–we need to go after the cornerstone of transnational crime, which is increasingly the banks the government and international community has been propping up for the last 5 years.

Conferring Immunity from Justice, Barack Obama Becomes “The Great Vaccinator”

Ronald Reagan was The Great Communicator. Lyndon Johnson’s anti-poverty efforts were aimed at realizing The Great Society. Barack Obama’s presidency is moving toward greatness, as well, but not in a good way. At seemingly every turn, Obama has made sure that major crimes are met not with justice but with immunity. Obama has conferred so much immunity on so many different groups that he has earned the title “The Great Vaccinator”.

Ironically, even Obama’s major “success”, the killing of Osama bin Laden, is marred by an illegal act that this time is mingled with biological rather than legal immunity. It appears that Pakistani doctor Shakil Afridi, working with the CIA, pretended to be carrying out a house-to-house vaccination program so that he could gather intelligence on who was residing in the compound where bin Laden was found. This short-sighted action by the CIA has now put public vaccination programs in a very bad light and set back vaccination programs in impoverished countries significantly.

Even before becoming President, Obama began his quest of conferring immunity wherever justice is demanded. Once he had the Democratic nomination in his pocket, Obama abandoned the principled stand he took during the primaries (when he said he would filibuster any bill with retroactive immunity and would vote against it) and voted along with all Senate Republicans for cloture and then in favor of the bill that conferred retroactive immunity on the telecommunications companies that illegally wiretapped citizens without warrants.

After he won the election but prior to taking office, Obama then began his quest to confer immunity for one of the most egregious crimes committed by our country, the institutionalization of torture as a major tool in the “War on Terror”. As ABC published on January 11, 2009, Obama famously told George Stephanopoulos “we need to look forward”: Continue reading

A Rancid Foreclosure Fraud Settlement Trial Balloon, Herbert Obamavilles, What Digby Said & The Import of the Occupy Movement

I do not usually just post simply to repeat what another somewhat similarly situated blogger has said. But late this afternoon/early this evening, I was struck by two things almost simultaneously. Right as I read Gretchen Morgenson’s latest article in the NYT on the latest and most refined parameters of the foreclosure fraud settlement, I also saw a post by Digby. The intersection of the two was crushing, but probably oh so true.

First, the latest Foreclosure Fraud Settlement trial balloon being floated by the “State Attorney Generals”. There have been several such trial balloons floated on this before; all sunk like lead weights. This is absolutely a similar sack of shit; from Morgenson at the NYT:

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

It looks as if they were right to worry. As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash — $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done.

The banks contend that they have seen no evidence that they evicted homeowners who were paying their mortgages. Then again, state and federal officials conducted few, if any, in-depth investigations before sitting down to cut a deal.

Shaun Donovan, secretary of Housing and Urban Development, said the settlement, which is still being worked out, would hold banks accountable. “We continue to make progress toward the key goals of the settlement, which are to establish strong protections for homeowners in the way their loans are serviced across every type of loan and to ensure real relief for homeowners, including the most substantial principal writedown that has occurred throughout this crisis.”

Read the full piece, there is much more there.

Yes, this is certainly just a trial balloon, and just the latest one at that. But it is infuriating, because Continue reading

Obama’s “Get Out of Jail for Helping 1.36% Card” for Banksters

Yesterday, I described how the Obama Administration was going to charge the banks just $8 billion for immunity from a whole new swath of crimes. Shahien Nasiripour has more details which make the deal look even shittier. First, the proposed deal does appear to provide states immunity not just from robo-signing and the lies banksters made at origination, but also for their securitization errors.

In return for getting the banks to agree to the refinancing scheme and give up higher interest income, the states would release the banks from civil claims related to loan originations, the stage at which many homeowners say they were duped by unscrupulous lenders.

Last month, state prosecutors proposed to effectively release the five big lenders from legal liability for allegedly wrongful securitisation practices related to the banks’ treatment of loan documents. Taken together, the release from liability over poor origination, securitisation, servicing and foreclosure practices could amount to an effective grant of immunity for the banks from civil claims, people familiar with the matter said.

And in exchange, the banks would pay 80% of their $25 billion penalty into a fund that the same people who botched HAMP would use to help just 1.36% of homeowners who are underwater on their homes.

About 150,000 borrowers could benefit from the refinancings, as the vast majority of US home loans are owned by investors and government-controlled mortgage giants Fannie Mae and Freddie Mac. By comparison, nearly 11m US borrowers are underwater, according to CoreLogic, a data provider. The average underwater homeowner owes $258,000 on his mortgage.

In other words, all the settlement would do is help those who crashed our economy stay in business. The vast majority of their victims–and the US economy–would continue to pay the price for their crimes.

Obama Administration’s Price Tag for Bank Lying, Predation, and (Probably) Securitization Fail: $8 Billion

Back when the foreclosure fraud settlement was purportedly only going to cover robo-signing abuses, the price tag was going to be $17 billion.

Now that the Obama Administration is desperately trying to craft a settlement deal to include origination problems, the price tag has grown to $25 billion.

Under the proposed terms of the settlement — which could total $25 billion — banks would get broad legal immunity from state lawsuits in exchange for refinancing underwater loans, those mortgages where borrowers owe more than their homes are worth, the sources said.

The deal could provide some relief to the battered U.S. housing market and clear up some uncertainty about banks’ legal exposure that has been a drag on their shares.

Banks have been holding out on a multi-billion-dollar settlement because they wanted broader legal immunity than state attorneys general were prepared to offer.

Originally, the states were only considering immunity for shortcuts taken during mortgage servicing and foreclosures, including the so-called “robo-signing” of documents to evict people behind on their mortgages.

In recent days, the state attorneys general agreed to release major banks from claims that they made legal errors when first originating the loans, such as approving loans for borrowers without verifying any income, according to two people familiar with the talks.

That means for all the additional things the banks would get immunity for–at the very least, the liars loans and the predatory lending, all the things they’re getting hammered for in reps and warrants suits, though the language might well immunize securitization failures–banks would pay just an additional $8 billion.

That, in spite of the fact that FHFA filed lawsuits against the banks that might be worth $40 billion, with $11.5 billion from Bank of America alone.

So basically Obama wants to fund HAMP 2.0 by letting banks out of at least 80% of what they stand to lose in court.

Register of Deeds Curtis Hertel: “If you or I committed this kind of fraud, we’d go to jail.”

In Lansing today, Ingham County (Lansing Area) Register of Deeds, Curtis Hertel and State Rep Jim Ananich presented a bill to introduce judicial foreclosure in MI.

As part of the press conference, homeowner Bill Donahue described how he almost lost the home he has lived in for 25 years because Fannie Mae, which had not claim to his loan, foreclosed on him as he was being processed for a HAMP modification (which he ultimately got).

Last May, he applied for a HAMP modification. After submitting a second round of paperwork in June, he was told in July he was in underwriting, which might take six months. During that period, Bank of America’s collection people kept harassing Donahue and his wife. By late summer, they received a foreclosure notice from Fannie Mae, which explained it was just a formality since he hadn’t made a payment in so long. BoA told him to ignore it, but it turned out his house was sold in a sheriff’s sale. In December, he got the HAMP modification, which cut their payment in half. Nevertheless, this April, a process server came to his house with a foreclosure notice. When Donahue showed him the document proving he had a mod, the process server congratulated him for being of the 5% or so who actually got mods. The server took copies. But in May, Fannie Mae sent a packet giving him 3 days to contest a foreclosure. Finally, by early June, Fannie dismissed the foreclosure. (I hope to have video from Donahue later.)

In his presentation explaining the importance of replacing MI’s current foreclosure by advertisement with judicial review, Hertel explained,

You can literally walk into my office and tell me you’re committing a crime and there is nothing I can do to stop you except report it. I still have to submit the documents.

Hertel later elaborated on this, revealing among other details that he recently received an FBI subpoena relating to foreclosures.

There were a few people at the press conference (including my own county clerk) who complained about the cost of instituting a judicial foreclosure system. Representative Ananich had the best response to those questions:

Due process isn’t a system that only works when it’s affordable or it’s convenient.

It’s nice to hear that sentiment from a few public figures.

Continue reading

The Folks Who Run Our Economy Believe in the Easter Bunny

The folks at the Fed who run our economy apparently believe in the Easter Bunny. And Casper the Friendly Ghost. And Santa Claus.

I mean, I can only conclude the folks over there are completely unhinged from reality given their claim that no people–not a single homeowner–was wrongly foreclosed.

A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.

Jason Grodensky, who paid cash for his house yet lost it to Bank of America in “foreclosure” nevertheless. The Fed says there were no wrongful foreclosures.

Christopher Marconi, who got foreclosed by Wells Fargo on a house he didn’t own and had never seen. The Fed says there were no wrongful foreclosures.

Jonathan Rowles, who never missed a payment, who got foreclosed by Chase while he was away in Iraq, in violation of the Servicemembers Civil Relief Act. The Fed says there were no wrongful foreclosures.

Granted, they came to this conclusion, in part, by defining wrongful foreclosure in a way that totally ignores title problems, failure to serve homeowners, and tack-on charges servicers have used to force people into default so they can foreclose.

During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.”

[snip]

Kirsten Keefe, a member of the Fed consumer panel and an attorney at the Empire Justice Center in Albany, New York, said the Fed’s report defined “wrongful foreclosures” as repossessions of borrowers’ homes who were not significantly behind on their payments.

And they’re not releasing the report–they’re keeping it totally secret! I can only presume that the logic and data (based on just 500 loan files) behind it is so laughable that releasing it would be more damaging than simply issuing this claim with no proof.

Nevertheless, as my list above makes clear, it is simply impossible to state that there have been no wrongful foreclosures and still claim to have even a shred of grasp on reality.

Which I guess, given the smoke and mirrors that has constituted our economy in recent years, is about what we ought to expect from the Fed.

Third Way “Solution” to Foreclosure Fraud? Limits on Rule of Law

The Third Way has just released a response to the US Bank v. Ibanez decision that purports to offer a solution to the foreclosure problem.

I’m sure others will point out other problems with this document: its embrace of the “strategic default” myth, its focus on the Uniform Commercial Code rather than the Pooling and Servicing Agreements that govern securitization, its confusion of the dual track problem with the robo-signer problem, its apparent ignorance of other problems in foreclosure fraud, such as insufficient notice to homeowners, even though that, too was an issue in Ibanez.

But I wanted to point out something about the first step in its purported remedy, in which it describes how to protect injured homeowners. It includes among its injured homeowners:

  • Those who were current on their mortgage payments but who were foreclosed on anyway
  • Those who were robo-signer foreclosed via on while awaiting a modification decision
  • Those who were robo-signer foreclosed while in the process of short-selling their home
  • Those who had made a payment on delinquent mortgage but were foreclosed “because of a faulty process that failed to take that payment into account”

Note how carefully this paper avoids admitting the improper payments that servicers often use to force people into foreclosure, which are a separate problem from robo-signing?

In any case, here’s the remedy the Third Way advocates:

These aggrieved borrowers should be entitled to four things: (1) the immediate suspension of foreclosure proceedings; (2) the right to sue for actual damages caused by a wrongful signed foreclosure; (3) access to a 30-day expedited application process for loan modification if they have an application pending (but without a guarantee the modification will be granted); and (4) a refund of any fees and charges assessed by the bank, as well as protection from any deficiency judgments (if a borrowers was seeking a modification or short sale). [my emphasis]

It goes on to suggest that banks should be in charge of points 1, 3, and 4. That is, while elsewhere it espouses putting the Consumer Finance Protection Board in charge of standardizing servicing, it does not want the government involved in the process of “protecting injured homeowners.” Maybe that’s so it can retain for the banks–as it does later in the paper–sole discretion whether or how to modify loans. That is, even while the paper admits Ibanez shows that the banks still have a shitpile problem, it doesn’t want banks to take the hit for the fact that they don’t have legal standing to foreclose on the loans they’re foreclosing on. Nor does it really provide a solution for what to do with truly delinquent loans on which banks do not have legal standing to foreclose. Nor does it say what happens when people are denied a modification by a bank that doesn’t have the legal right to foreclose.

Meanwhile, the paper remains silent on who should be in charge of point 2.

You know, the right to sue, that right protected by the Constitution?

But of course, point 2 is not actually a protection. Rather, it is a limitation on their protection. Rather than admit that property owners have the right to sue in this country, the Third Way thinks that we can best protect them by limiting their right to sue to actual damages.

And the Third Way supported limit to rule of law goes further. It calls for Congress to bail out the banks holding shitpile by:

  • Eliminating foreclosure challenges on vacant or abandoned homes
  • Eliminating foreclosure challenges on borrowers who defaulted 18 months ago who have not cured the default
  • Instituting 12-month statutes of limitation on “paperwork-related” lawsuits

To begin with, their envisioned bailout doesn’t account for many realities: homeowners who were harassed into leaving their home, homeowners who are only in default because of the often-undisclosed and exorbitant fees banks slap onto late payments, and homeowners who did not get proper notice of the foreclosure. The Third Way wants to take away the right to sue of all these people, even though they have a legitimate grievance.

But don’t worry, Third Way says, this does not amount to letting banksters avoid any consequences for their actions:

What it emphatically does not do is shield bad actors from the consequences of their behavior. A safe harbor and statute of limitations will do nothing to protect banks and their lawyers from the investigations currently underway by state attorneys’ general across the country.15 Nor will it prevent disbarment and other consequences that are likely to be suffered by lawyers at the “foreclosure mills” at the heart of the robo-signing scandal. The now infamous firm headed by David J. Stern in Florida, for example, “has seen its fortunes plummet, with major clients, like Fannie Mae, Freddie Mac, and Citigroup, cutting ties to Stern. Stern’s operation has also laid off hundreds of employees in recent weeks.”

The consequences the Third Way believes are adequate for bankster trying to take property they don’t have legal standing to take, resorting to legal fraud to do so, involves an Attorney Generals’ investigation that itself says will include no criminal charges, disbarment no one expects to happen, and the loss of business.

But nowhere does the Third Way envision the banksters will have to take a financial hit on the value of these loans, much less any legal consequences for fraud. Now, ultimately, the former may well be negotiated by the Attorneys General. But the Bill Daley-connected Third Way seems to see the Ibanez decision as a moment to offer pseudo-solutions that are not only inadequate, but stop short of what would otherwise come out of the Attorneys General “investigation.”

In short, this seems like an admission by the Third Way that the shitpile remains a serious problem. But also an attempt to preempt processes already underway to solve the shitpile. Not to mention eliminate legal recourse for many of the people who have been wronged here.

Update: The more I think about this paper, the more it seems like Third Way is saying, “Congress, we’ve had a major setback in the courts. Can you please make sure to 1) limit access to the courts and 2) preventing any more of these judgments that will reveal just how deep the shitpile really is?”

MA Court: Banks Must Own a House to Foreclose on It

A radical thought, I know.

But still only definitively true in Massachusetts.

At issue is a Massachusetts case, U.S. Bank v. Ibanez, which challenged a foreclosure because of processes banks have widely used in securitizing a bunch of loans into something they can sell investors chumps. Here’s how Bloomberg described the case earlier this week:

Massachusetts’s highest court is poised to rule on whether foreclosures in the state should be undone because securitization-industry practices violate real- estate law governing how mortgages may be transferred.

The fight between homeowners and banks before the Supreme Judicial Court in Boston turns on whether a mortgage can be transferred without naming the recipient, a common securitization practice. Also at issue is whether the right to a mortgage follows the promissory note it secures when the note is sold, as the industry argues…

“This is the first time the securitization paradigm is squarely before a high court,” said Marie McDonnell, a mortgage-fraud analyst in Orleans, Massachusetts, who wrote a friend-of-the-court brief in favor of borrowers. The state court, under its practices, is likely to rule by next month…

If loans weren’t transferred properly, the banks that sponsored such trusts may have to repurchase them, Adam J. Levitin, an associate professor at Georgetown University Law Center in Washington, said in prepared testimony in the U.S. House of Representatives in November.

If the problem is widespread enough, it may cost the banks trillions of dollars and make them insolvent, Levitin said.

The court just ruled against the bank.

This is just one state, just one ruling, but it may well mean the efforts to help banks avoid accountability for their shitpile mess will fail.

Update: Here’s dday on this.

The point here is that the mortgage assignment and the securitization process was improper. US Bank and Wells Fargo did not have possession of the mortgage note, and thus did not have the standing to foreclose. In addition, they put the endorsement in blank, without naming the entity to which they were assigning the mortgage. This violated Massachusetts law, according to the original judge in the case, and now the MA Supreme Court agreed. And as we know, this is more the norm than otherwise. But this is one of the first major cases, decided by a state Supreme Court, that affirms that a lack of securitization standards means that the bank who thinks they have the power to foreclose on a delinquent borrower actually does not.

If this ruling gets applied far and wide, you’re basically going to have a situation where most securitized mortgages in the country cannot be foreclosed upon. It depends on state law and the associated rulings, but you can see the Ibanez case being used as precedent.

Emptywheel Twitterverse
JimWhiteGNV $44 million for what?
2mreplyretweetfavorite
JimWhiteGNV RT @NAWTADIGM: More like Roger Badell
9mreplyretweetfavorite
bmaz @OBEYshiba @xor Yes, precisely, its an important issue+there needs to be conceptually far more research+advocacy on it cc: @elizabeth_joh
18mreplyretweetfavorite
bmaz @SomeHack You seem like an ignorant jackass. Who is now blocked. Ta ta.
26mreplyretweetfavorite
bmaz @ScottGreenfield @gideonstrumpet @OrinKerr Yah, didn't think so.
35mreplyretweetfavorite
bmaz @SomeHack go fuck yourself ignorant asshole.
36mreplyretweetfavorite
emptywheel @normative Also, have you read In Re Sealed? Yahoo really had the better end of that arg. Wonder whether there are interim FISCR decisions.
37mreplyretweetfavorite
bmaz This----> RT @elizabeth_joh Also some value in protesting: http://t.co/rG6Pa5E9Id
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