Obama Admin: Look Forward! Even in the Face of Obvious Corporate Fraud!

I’m not surprised by this–but I simply don’t understand how the Obama Administration can claim they haven’t found anything fundamentally flawed (though that could be HuffPo’s formulation) when thousands of people have been thrown out of their homes based on documents whose signers falsely attested to those documents.

U.S. Housing and Urban Development Secretary Shaun Donovan said Wednesday that the Obama administration will attempt to protect homeowners and police the kind of paperwork fraud that led the nation’s largest banks to temporarily halt foreclosures this month, but added that the administration had yet to find anything fundamentally flawed in how large banks securitized home loans or how they foreclosed on them.

“Where any homeowner has been defrauded or denied the basic protections or rights they have under law, we will take actions to make sure the banks make them whole, and their rights will be protected and defended,” Donovan said at a Washington press briefing. “First and foremost, we are committed to accountability, so that everyone in the mortgage process — banks, mortgage servicers and other institutions — is following the law. If they have not followed the law, it’s our responsibility to make sure they’re held accountable.”

He added, however, that the administration is focused on ensuring future compliance, rather than on looking back to make sure homeowners and investors weren’t harmed during the reckless boom years. The administration is “committed to forcing institutions to change the way that they conduct business,” Obama’s top housing official said, “to make sure these problems don’t happen again.”

When people were suckered into inflated mortgages, it wasn’t good enough for them to “make sure [those] problems don’t happen again.” They lost their homes, their credit ratings, and their savings.

But I guess that’s their own fault for being a mere human rather than a corporate person.

  1. MadDog says:

    We must’ve missed that secret Obama Executive Order that orders all branches of his Administration to “look forward, not backward.”

  2. emptywheel says:

    I think a part of this bullshit is that the Admin is complicit in HAMP, and they have to say HAMP is working (though it’s not), so they have to say these people are in compliance.

    • MadDog says:

      I also view this as one more affirmation that the permanent government busybodies are the ones really running the show for their usual corporate clients, and that Obama and his appointees are at best clueless in managing the bureacracy, or at worst, complicit in preferring their corporate donors over their citizen voters.

    • phred says:

      Not just HAMP, but those “stress tests” were a steaming pile of b.s. dressed up in its Sunday best, too.

      The Feds have done nothing but screw up the markets and financial sector for years and now they are desperately trying to keep their trillion$ of failure$ hidden a$ long a$ they po$$ibly can.

  3. emptywheel says:

    Oh, and Assistant Secretary Michael Barr repeats the “let the banks fix their own mess, god knows the govt shouldn’t exercise any oversight.”

    When pressed how much longer the government’s review would take, Donovan estimated another nine weeks, placing its completion the week before Christmas. Barr had a less committal answer.

    “This is not a problem for Secretary Donovan to fix,” Barr said. “This is a problem for the banks and servicers to fix. They can fix it as fast as they feel like it.”

  4. phred says:

    I don’t listen to NPR much any more, but I did for a bit today and I was struck by the fact that none of their reporters covering the foreclosure beat used the word “fraud”. Paperwork mistakes and other euphemisms cropped up, but not “fraud”.

    Got me to thinking that “fraud” is the new “torture”. I would give a lot for NPR to suck less.

    • emptywheel says:

      They must have, because they refused to say, repeatedly, which of the servicers the government has–in a study started in May–found to be problematic but allowed to go on continuing servicing loans.

  5. fatster says:

    Efforts to Prosecute Blackwater Collapse

    “Nearly four years after the federal government began a string of investigations and criminal prosecutions against Blackwater Worldwide personnel accused of murder and other violent crimes in Iraq and Afghanistan, the cases are beginning to fall apart, burdened by a legal obstacle of the government’s own making.”


    • bmaz says:

      The use of the Garrity letter process to immunize these goons was not a problem, it was a designed plan and the State Department participated willingly and aggressively in executing it. It just absolutely reeks. The US government, from the DOJ to the State Department to the Executive Branch, appears to be nothing but one big criminal enterprise. I will say one thing, the cases are so fucked up it is likely hard to get top count convictions on the defendants at this point; however the only reason that is so is because the US government intentionally create those circumstances.

      • fatster says:

        Which is worse, bmaz? Going about it this way or getting an Act of Congress granting them retroactive immunity? I despair.

        Thank you very much for your comments. I hope you’ll have the time to expand them into a full-blown post.

  6. DeadLast says:

    It is not corporate fraud they are covering up. Rather this is an issue of coordinated government policy and market manipulation. Yes, this is the language of conspiracy, but consider the facts.

    Everyone is able to say ‘Clinton did it’ because of the gutting of Glass-Steagal in the Enron Act of 1999.

    Then, on August 9, 2001 the Treasury Department stopped issuing 30 year bonds, driving most all long term bond demand into the mortgage market.

    If you chart* the sales of real estate and focus on prices AND volume, this is about the start of the bubble. (Also note that this occurred before 9/11, implying that the Fed/Treasury policies were not an effort to boost a post-attack economy.)

    The Treasury Department announced in August 2005 that they would once again start selling 30-year long term bonds in 2006.

    Again, if you look at the market trend data* for house prices and sales volume, most market areas peaked in value in 2006 and some into 2007, although the number of home sales peaked in late 2005. By early 2008, prices seemed level, but the numbers of sales had fallen considerably.

    So did the Fed and Treasury under Bush manipulate the market (like Enron did the energy markets in California)? I have not seen any direct evidence, but there appears to be a strong correlation between the government’s actions and the housing bubble.

    Now, there is a final event that could be construed as an effort at a cover up. In March 2006, the Federal Reserve stopped tracking (or publicly reporting) M3, which is the broadest determination of money. It would have included much the debt and synthetic instruments that led to the crash.

    Now is this a coinky-dink? Or a shrewd political gamble that would pay off in trillions?

    IMO, once the government came back in and offered debt, mortgages were no longer as attractive to long term investors. The buyers of this debt knew (or should have known) that they were being forced to purchase low-octane gas, but hell, that’s all there was for sale. So it appears as if the Fed/Treasury started the bubble and that they ended it too.

    Smart contributors/investors then waited for someone to notice that Schroedinger’s Cat was dead! And then they could collect on the insurance payout known as TARP! Brilliant!

    Now, with the new mortgage mess, PIMCO and others are forcing pool buy backs, the banks will be broke again. Can anyone say TARP3 DIEM? (Or government cover up of government actions?)

    (*FN: I have done the charts for work and the are proprietary for client and litigation purposes – so I can’t post them. I am sure you can find the data on the net.)

  7. MikeD says:

    Legal issues being legal issues, they need to be settled according to the law, I absolutely don’t disagree. But the moral sentimentality does get a little rich at some point, and you’ve been laying on pretty thick. I am one who absolutely believes these mortgage companies were irresponsible and broke our economy. but it takes two to tango. People wanted to buy these houses; they’re not unresponsible for figuring out correctly for themselves what they could afford, even if the price went down. These are the people who drove the bubble; now we’re getting morally worked up because their likely economically legit foreclosures might actually go forward despite legal technicalities that allowed them to get a house they wanted to begin with? The thing should be resolved according to the letter of the law, come what may, but let’s not pretend we’re dealing with a bunch of innocent victims here (except where people really were deceived or materially defrauded, but that’s a far narrower class of folks than we’re dealing with in this paperwork crisis).

    • emptywheel says:

      Um, once again, no.

      If the foreclosures aren’t legally legit, they aren’t legit.

      Anything else advocates taking apart the laws of property entirely.

      Furthermore, the REASON the foreclosures aren’t legit is probably at least partly to cover up evidence that the bankster knew at the time the mortgages were written that they sucked, but can’t admit that without bigger legal problems.

      • MikeD says:

        And if they aren’t legally legit, they shouldn’t go forward, and with no moral sanction from me. That’s fine. It’s just if they go forward and they’re economically legit, I don’t have a hell of a lot of sympathy.

        • MikeD says:

          If they go forward and they’re not legally legit and they are economically legit (i.e. no material fraud in the lending process), I’m not saying that’s okay with me – because of the property rights issue you describe – I’m just saying I don’t have much sympathy for the homebuyer. I rent, in case you hadn’t guessed. Shook my head while my 23-year-old teacher peers were buying houses in new developments in the 2000s cuz it just seemed off to me — and I’m sure they did everything right and are still in their homes! There was irresponsibility on the part of buyers.

        • klynn says:

          Actually, we had a bank try to “fix’ the math as they presented our loan approval for us. They approved us 25% above what we knew we could afford. The pitch the bank gave to explain how they came up with a higher loan approval was slick. They also approved us higher in order to make our 20% down payment not worth 20%. We still bought a house at the price we could afford but we did not get the benefit of the 20% down (even though we did put down 20% of our house price) The 20% was based on the loan approval amount not the actual home amount. My husband and I knew the average person would not get that they were being snookered.

          Many games were being played on home buyers. We had waited and saved for a house for over 15 years. This was not a “rush in” situation for us and we did not by a mega house.

        • econobuzz says:

          There was irresponsibility on the part of buyers.

          And the banks who have been bailed out? How about them?

        • emptywheel says:

          Dude, “economically legit” does not exist. It is legal or no. What you’re trying to do is create another class–legally illegitimate but nevertheless rationalized by those advancing legally illegitimate claims because of a legally illegitimate claim. But that doesn’t exist. And your efforts to try to invent it does terrible damage to property.

        • MikeD says:

          You don’t know any of that, except obviously that legally illegitimate claims are legally illegitimate. That’s your operative dogma, but it is highly likely not to be true. And I am not making any legal rationalization for what happens to the class of economically legitimate, legally illegitimate foreclosures, and I absolutely agree that any legally illegitimate foreclosures that go forward do harm to property. The only issue I’ve raised is where my personal sympathies lie.

        • Knoxville says:

          But aren’t you saying that we should be far more concerned for the banks because there are some cases in which a foreclosure might be justified than for the American people as a whole who’ve been screwed over because of the systemic problems created by the banks reaching after profits beyond the dreams of avarice?

          You seem to want us to focus on a few deadbeats rather than on the practices of the banks, as if the few deadbeats created the systemic problems rather than the banks. Nonsense.

      • Watt4Bob says:

        It would be useful at this point in the conversation to explain the concept of leverage to illustrate the fallacy that in some way the responsibilities of homeowners as a class, counter-balance the responsibilities of the bankers, as concerns the economic mess we’re in.

        The delinquent homeowners are responsible for some very small percentage of the $14 Trillion total mortgage debt outstanding, while the bankers are responsible for the as-yet unknown, but surely gigantic portion of the estimated $650 Trillion dollar derivative market that they built by leveraging mortgages, and that has evidently collapsed causing so much heartache.

        On the one hand are homeowners whose fiscal failure is fully enumerated and a matter of public record, on the other hand the bankers are allowed to keep the details of their enormous failure an impenetrable secret.

        The whole cover-up IMHO is based on a patently phony story that paints a false equivalence between the dead-beat homeowners on one side and the sloppy bankers on the other.

        The American homeowner is being forced, not only to take the rap for the collapse of the banker’s house of cards, but they are also footing the bill for the whole amount, not only those who are delinquent on their home loans, but all of us.

        The balance of responsibility for this mess is clearly hundreds if not thousands of times greater for the bankers than for the homeowners, but that story is never clearly stated.

        Never have so few, stolen so much, from so many.

        The same basic story is the same for the false equivalence being perpetrated as regards the political donations to candidates by corporations on the one side and unions on the other.

        But that’s another post …

        • econobuzz says:

          The whole cover-up IMHO is based on a patently phony story that paints a false equivalence between the dead-beat homeowners on one side and the sloppy bankers on the other.

          Exactly. It is a bullshit RIGHT-WING talking point. That many who consider themselves progressive have bought into and are propagating on this thread.

        • bmaz says:

          I fully second that motion. And if it is written I will do my best to see it gets noticed.

          Watt4Bob to the post phone please!

    • Knut says:

      A lot of people are under water because they lost their jobs or their health. You can’t assure against that kind of risk short of living in a tent.

  8. prostratedragon says:

    Ahh, MikeD has brought me back to my dream that DeadLast nearly caused to evaporate (Good catch about those 30-year Tbonds!).

    The dream in which hundreds and hundreds of thousands of citizens like you and me streamed down Pennsylvania Avenue, arm-in-arm in candlelit procession, and jammed the Mall, singing

    Let banks be banks!

    You know the tune. The perfect anthem for the silly season in this reinvented land of ours. Now I can sleep a while.

  9. MikeD says:

    Let’s follow the law, i said. if we do, the banks are gonna get hit pretty good here. Not sure how you hear me calling for sympathy for banks. In general, I think there is just too much sympathy for all sides who got involved in this bubble. let’s have sympathy for the jobless. Lots of the foreclosees are in that category, so we can have our sympathy for them on account of that. The ones who are being foreclosed even though their income is similar, because their home values fell, if they get to stay in their houses because of the title fraud, wonderful, good for them, I am certainly not calling foul. But where an economically legitimate foreclosure goes forward, where there wasn’t real fraud that got them into that house, sorry, but that’s what they were getting into buying a lot of house.

    • wavpeac says:

      Why is it so hard for someone like you to accept that maybe, just maybe if these banks were engaging in forgery, robo signing etc…that they might also be lying about balances on mortgages, that they might be forcing insurance and charging people fees for insurance when they already had it, that they might be taking the insurance checks from Katrina and keeping them, or that they might be messing around with escrow accounts and applying payments improperly. This is the reality. There are numerous complaints online alleging exactly this. Some people lost their homes simply because their loan was bought, they ended up being charged the wrong payment and balance belonging probably to someone else and lost their homes. Why? Cause you can’t contact them. Because these banks engaged in a series of TILA And RESPA violations so that you could not straighten out the errors that they caused either by neglect or on purpose.

      So sick of this blame the victims mantra. In some cases, flippers bought houses they should not have, sometimes home owners bought more house than they should because they pushed the mortgages, and in some cases, even when you could afford your payment, they would engage in behaviors made to create a foreclosure.

      As long as you agree that there should be investigations, that each loan should be gone through looking for fraud, then we are good. Cause the truth will set us free!

      • MikeD says:

        That is exactly what I agree to. And I stipulated that anyone who did suffer fraud obviously deserves relief, including moral sympathy. Are we saying there isn’t anyone who isn’t getting a break on a foreclosure they actually deserve here?

        • wavpeac says:

          There are some, I am sure. But when you start to realize the extent of the TILA and RESPA violations, how do you measure the impact? For instance, let’s say someone is one month late, does that one month late give the servicer the right to do “anything” they want? What if they violated TILA and RESPA laws such as refusing contact when the person tries to call and work out a plan? Or what if the only option given is to refinance the payment at 23% interest on top of the next 6 payments? What if as a result of being one month late, they decide to charge you property inspection fees out of the blue without even notifying you? And add that to the back payment so that you cannot get caught up by simply paying the one month payment back? What if these behaviors happen to someone who could not afford their loan by a slight amount for a couple months, but recovers and finds that their balance has tripled? What if this person can prove they tried to contact the servicer but the servicer never returned calls or faxes? What if the person didn’t know that they were supposed to get a call back? How do you determine what part that illegal behavior and the burden of it, plays in the outcome of finally ending up in foreclosure? How do you determine who might have recovered without these behaviors? It’s just not that black and white.

          Isn’t that why TILA and RESPA laws exist?

        • emptywheel says:

          Yes, that’s what I’m saying. THere is no one who won’t be foreclosed on who could be, short of a modification, and that by itself is an admission that the banks bought mortgages that were overvalued and therefore both parties in that transaction are splitting the difference.

        • PeasantParty says:

          And which is exactly why big investment entities should never have used mortgages as a poker chip. (taking from above commenter) They crossed state lines and caused all kinds of problems due to the fact that states have differing laws and real estate codes. Not to mention, our investments were made by the same entities into these derivites knowing the fact and they intentionally lost our savings on the pieces of crap they turned it into.

    • econobuzz says:

      But where an economically legitimate foreclosure goes forward, where there wasn’t real fraud that got them into that house, sorry, but that’s what they were getting into buying a lot of house.

      And what exactly were the banks — who have been bailed out by trillions — “buying into?”

      • Knoxville says:

        I agree with MikeD. Screw homebuyers and screw taxpayers. The banks are the real victims. Maximizing profits regardless of the expense to customers and taxpayers is hard, after all. Sure, homebuyers got crappy deals, but the banks are just looking out for their shareholders. And, yes, taxpayers had to bail out the banks when everything they did inevitably blew up, but we the American people should be grateful to the banks for all that they do to maximize their own profits at our expense. Besides, that’s what taxes are for: propping up corporate failures in the wake of their own messes. (smirk.)

        • sabretoothedcritter says:

          Now that was refreshing! Finally, somebody who understands the plight of our hampered and fettered banks! I mean, the top brass at those places actually had to raise their bonuses just because of the mean people on progressive blogs who clearly don’t understand that we need more money-changers in the temple!

        • PeasantParty says:

          Whew! Ain’t that the truth! The poor banksters had to take all our earnings from our savings and retirement accounts because their economy was just flunking. Then they had to hide all that mortgage swap and loan shark mess. When things got so darned bad then they had to go to the government and beg for a rescue package. They are finally on solid ground and are patting themselves on the back for a job well done. You can see it well in the bonuses for the past two years.

          Although, the poor things just don’t have enough yet so they will keep taking peoples homes so they can resale them for a little more. What on earth could be wrong with that?

          We just give it all to the banks and they will take care of everything for us. Yep. (snark)

  10. klynn says:

    He added, however, that the administration is focused on ensuring future compliance, rather than on looking back to make sure homeowners and investors weren’t harmed during the reckless boom years. The administration is “committed to forcing institutions to change the way that they conduct business,” Obama’s top housing official said, “to make sure these problems don’t happen again.”

    I am so tired of hearing anyone from this administration start out with proactive language and accountability language which is veiled in a lack of accountability with the proverbial “however” followed by insipid verbs and nouns.

    The puppetry is world class.

    • BoxTurtle says:

      Don’t listen to what ObamaLLP SAYS, watch what they DO. But be careful, if you do that because you’ll start to think we never had the last election and Bush is still in charge.

      Boxturtle (Did I say Bush? I meant Cheney)

        • BoxTurtle says:

          Oh, no worries. I hate flu and I hope it burns itself out with you and yours quickly.

          Boxturtle (Don’t I recall there is another Wheelhouse regular in the Columbus area?)

  11. Bluetoe2 says:

    Hey, I thought Citizens United codified into law that corporations are “persons” too ergo if they are persons they must be human, just not humane.

  12. klynn says:


    You asked a great question on your Twitter EW, IRT Scalia, Thomas and Koch retreat.

    Great question.

    Makes me wonder about corporate personhood even more.

  13. MikeD says:

    I find it funny that I’m in this position – I’m the guy who types comments in all caps at McMegan’s blog saying what an unreconstructed feudalist she is.

  14. pgrlights says:

    After yesterdays pictures and press about Obama I don’t trust ANTHING that Huffington Post does..Like alot of the crap that comes from Fox..HP has gotten to big and has forgotten how they got to where they are.

  15. PeasantParty says:

    Obama and his spokespeople are not the real focus. We do have a Banking and Finance Committee in Congress and they need their bells rung a few times to wake them up.

      • PeasantParty says:

        Yep. I’m watching what is left of my savings very closely. I will be screaming from the mountain tops if they try to yank it out again. I have no time left to rebuild it and somebody is supposed to be watching it on the other end! Don’t think I won’t start a class action, cause I will.

        Oh look over there! You can go to the Bernie Madoff auction and spend your money again to get some of his jewels!

  16. Knoxville says:

    But I guess that’s their own fault for being a mere human rather than a corporate person.

    Maybe humanity should be granted corporate person status. That way we can prosecute the banks for crimes against humanity.

    • PeasantParty says:

      Hey! I thought that was already done. The Supremes made the corporations a person. Now all of us persons have equal rights and protections just as they do. Didn’t you know you now have a totally new set of tax laws that you can take advantage of? I bet you didn’t know you could now pay yourself a nice salary and deduct it all! (smirk)

  17. Knut says:

    Four words explain it all: ‘To big to fail.’ As Keynes famously said, ‘If I owe you a thousand pounds and can’t pay up, I have a problem; if I owe you a couple of hundred billion, you have a problem (or something like that). The banks have the Administration over a barrel, because if they go down, the economy collapses, and with it the administration and only God knows who will replace it. Folks, this is getting to be like Germany in 1928.

    • PeasantParty says:

      Zactly what the NeoCons want. They are happy, very happy and looking forward to more devastation. Oh, but they want your last dollar first.

    • crowinghen says:

      Too big to fail, exactly. I have a more personal example. My parents married in the 30’s and rented some land with a ramshackle house on it and became sharecroppers. They borrowed $75 from the bank to cover their farming expenses until the crops came in and pledged everything they owned as collateral. Unfortunately that year was the hottest, driest year in state history, and the crops dried up. The bank called their note, and they had to sell their mules (used to pull the plow) and harnesses and all their equipment to satisfy the debt.

      They talked about how the ‘wealthy’ (compared to them) people who had bought farms and couldn’t pay their mortgages owed a lot more than they did, but the bank carried their notes over because the bank would have lost money if they foreclosed–it was the Depression and the dust bowl and the bank couldn’t have sold the farms for enough to pay the mortgage. My parents sold everything they owned and went back to picking cotton for fifty cents a day for the farm-owners who had been saved from foreclosure by being a mini-version of ‘too big to fail’.

      Back to the present….small banks and small businesses fail, but those deemed too big to fail survive the same circumstances that caused the smaller ones to fail because they are given government assistance. And that’s when there’s no fraud involved; it’s just been seen as in the public’s best interest. (And sometimes it is.) When fraud is involved, treating any entity as too big to fail is giving them a license to keep looting and is not in the public’s best interest.

      The banks (and apparently the government) don’t care about the individuals being foreclosed on, many of whom have been swindled and had their homes essentially stolen through fraud and their credit ruined. That’s considered a private problem by the banks and the government and the MSM. If the banks fail, that’s a public issue.

      It’s only thanks to FDL and others who have done a great job of bringing the foreclosure fraud to light, providing links to sites where we can dig into as much of the detail–the legal filings, the depositions–as we want, to really understand it. And in the process have educated at least a segment of the population and revealed that the foreclosure fraud is a BIG public issue that affects not just those being foreclosed on but possibly anyone who has a mortgage or who buys a property that has had a mortgage in the last dozen years or so.

      If these banks aren’t broken up, they will keep doing this again and again…the behavior that hurts taxpayers will just manifest itself differently…financial Whack-A-Mole. I missed this story “Looting Main Street” when it first came out last April in Rolling Stone, but it’s a good illustration of how JPMorgan’s financing of a new sewer system devastated a county in Alabama. It has bribery, add-on fees, penalties, and other outrageous behavior, of course, and the county’s debt increased exponentially, as did the citizens’ utility bills.


  18. CalGeorge says:

    “He added, however, that the administration is focused on ensuring future compliance, rather than on looking back…”

    Where have I heard that before? Oh, yeah, not looking back was the Obama admin’s response to torture.

    My little runaway, a run run run run runaway.

    • sabretoothedcritter says:

      Since O is so keen to look forward and not back, then what is the purpose of a criminal court system? That’s not looking forward, it’s looking back to the time of a crime.

      Does this mean that if I stop paying taxes, Obama won’t let the IRS look back in the form of an audit?

      If somebody commits arson, Obama won’t let the police investigate because it requires looking back?

      Looking forward and not back, has become a stupid euphemism.

      In life, and in all things, we should look forward AND back.

      If we don’t look forward, we will trip and fall.

      If we don’t look back, we will trip over the same thing the next time we come across it.

      • redX says:

        That is the problem, its not possible to say look to the future for crime. It always takes place in the past or present, so looking forward just means fraud and allowing whoever the hell has stolen & continues to steal everything forever.

        Obama is disgusting. Let’s look forward to the next congress, no need to look back on 2 years with massive majorities and nothing but time spent bowing to the minority as a false dance.

  19. BlueFloridian says:

    When I read this “He added, however, that the administration is focused on ensuring future compliance, rather than on looking back to make sure homeowners and investors weren’t harmed during the reckless boom years.” I was floored. I guess I have not gotten as jaded as emptywheel.
    I just cannot understand why the focus of the foreclosure crisis is on the homeowner when the more malicious parties are the Banks.
    To me there are three problem areas with the loans issued during the manufactured real estate bubble.
    You have the predatory lending problems, the securitizing problems, and the foreclosure problems. Take the first and third prongs out of the picture for now, so we don’t get into an argument as to whether the homeowners are victims or deadbeats.
    The loans were all bundled to sell as Mortgage Backed Securities. They had to be transferred to a trust which was supposed to hold the thousands of like loans and upon the value of those thousands of loans, securities were sold. And they weren’t just sold to one group of investors, some of these trusts had three levels of investors who all owned a piece of these mortgages that weren’t really there. So tell me, who owns that mortgage? The original lender? No they were supposed to deposit it in the trust. If they didn’t they committed security fraud. The Trust? No it was never deposited with them (thus all the lost note counts in these foreclosure cases.) They did commit fraud. If the property was not transferred and thus the trusts upon which the securities were sold is empty of no value, someone committed security fraud. And that someone was not the little old homeowner. And they, the depositing Banks or the Trustees (the Trusts are dead now,)should be prosecuted for what it is security fraud. They certainly could make a securities fraud case.
    Now go to the third prong, the foreclosure process. Who owns the mortgage and who has the right to foreclosure on the mortgage? You have to have the correct party. The original lender should not be able to bring the foreclosure, because by the terms of the trusts they allegedly transferred their rights. The trusts and their trustees should not. Most of these trusts stopped reporting to the SEC in 2008 which means they are gone, belly up, no longer a person in existence. The Trustees? They could if their trusts were still alive and they were representing their interests, but they are not. How about the investors in the trusts? Maybe and more likely and that’s part of the problems to come when the pension funds etc find out they got nothing.
    But the foreclosure mill attorneys told the Banks and the Trustees not to worry. They would hire a third party (DOCX or Lender Processing Service, ) and they would create all the documents needed to cover up what was supposed to happen but which did not happen. They would create phony assignments to show the lender selling its rights after the fact and then get phony affidavits from the servicers signed by minimum wage workers posing as vice presidents of corporations which had no employees to show that the loan was in default and there were amounts due. Then the lawsuits would be brought in the name of the Trustees or if that became too obvious a hint of fraud (afterall we could all look up the Trusts on the SEC and see they had been dead for years) bring the suit in the name of the servicers acting as an agent for the original lender. Nevermind that the servicers had no legitimate ownership interest in the property. Just plug in any old name whether it existed, (Soundview Home Loan Trust1) whether it had been bought up (Washington Mutual) whether it had gone belly up (LaSalle Bank) Just stick some name in there, do it quickly and no one will notice.
    That was done, in thousands and thousands of cases. Purposefully, with the intent to mislead. And its a fraud. And its should be prosecuted as such.
    All of the above was done totally without the little ol’ homeowner and regardless of whether he or she paid on time or paid enough. You may think of the homeowner as a deadbeat (my opinion they aren’t) or a victim.
    Regardless, someone is getting away with securities fraud and fraud on the multiple courts. And its not the little ol’ homeowner. And its a threat to the very system of property ownership in this country. If the titles are not clear, then property ownership lines are not clear. And all of that has nothing to do with the little ol’ homeowner paying or not paying.

    • PeasantParty says:

      WOW! You, GO! I agree 100%. This fraud has nothing to do with Joe Homebuyer. We must include all those Home Equity and Consolidation loan sharks in this pot of black stew. Seriously, most people had 10 or 20% down payment in hand but were screwed out of it by the banks when they did their wishy washy numbers run.

  20. TarheelDem says:

    The weasel words in the report of Donovan’s statement are “yet” and “fundamentally flawed”. And both of those occur outside of direct quotes from Donovan.

    Later in the report we have this direct quote:

    we have not found any evidence at this point of systemic issues in the underlying legal or other documents that have been reviewed.

    The follow-up question is how far they are in the review process and what evidence are they transmitting to DOJ should they find it.

    I understand that a couple dozen anecdotal stories in the press do not constitute evidence of systemic problems and that it takes time and investigation of a lot of cases to demonstrate the system through which the systemic problems occurred. But it is also clear that the rampant privatization of the recording process has clouded the determination of clear ownership and the outsourcing of the foreclosure and eviction processes have opened the door to fraud, assault, and theft.

    • Watt4Bob says:

      The sheriff in Chicago stated in a radio interview that I heard yesterday, that of the well-over 300 mortgage foreclosures he’d examined, only 17 contained the expected, complete/necessary paperwork.

      Crude assessment, but an interesting ratio if you ask me.

        • Watt4Bob says:

          I believe it was, I heard him in a Public Radio interview, I believe it was new.

          He mentioned the paperwork not being what he would expect to find in a ‘normal’ foreclosure, so either he has enough experience to know what he is looking at, or he has become educated recently about what to look for.

      • TarheelDem says:

        Which tells how large the investigative job is going to be. Each and every one of those 283 mortgages has to be investigated sufficiently for them to be used as evidence. And there are probably many more out there that have yet to be filed. And that is just in Cook County.

        • Watt4Bob says:

          And that is just in Cook County.

          Reportedly 50,000 total this year, 1,000-1,500 back-log at the moment.

          Lenders say “We’ve taken care of all that …”

          Yeh, right.

          I’m with Sheriff Dart, show me the paperwork.

  21. brighton says:

    Mortgage-backed securities should be outlawed. All foreclosure business should be local. Lenders would then be able to work with borrowers based on economic “conditions on the ground.” Peoples’ houses are not poker chips. My two cents here.

  22. papicek says:

    One wonders where in the constitution it states that freedom of contract trumps everything else, including the constitution. Because that’s what we’re being fed by this administration.

    • PeasantParty says:

      THEY ARE! They are intentionally pushing people out of their homes for just that reason. Plus the banks can resale the home and make more money all over again!

  23. Knoxville says:

    I think MikeD is confused. He’s laboring under the assumption that the banks were honest players for the most part and that the systemic problems were created by shady homebuyers who knowing bit off far more than they could chew.

    Wikipedia might help: subprime mortgage crisis (banks gave mortgages to people they knew could not afford them, tricking the vast majority of those people with low rates that they knew they’d be raising later to unaffordable levels) and mortgage-backed security (banks think they’re covering their asses by selling off the shit they just set up with borrowers, knowing that it’s likely to go bad, i.e. that the homebuyer will likely get booted from his or her house in a couple of years when the rates go up).

    I think that’s the basic version of what happened.

  24. vagreen says:

    “We must go forward, not backward. Upward, not forward. And always twirling, twirling, twirling towards freedom!”

    Kang, “The Simpsons: Treehouse of Horror VII”

  25. bmaz says:

    Oh, the blanket immunity from Congress would be far worse; not that that is of much solace when you look at these critical big cases like the Christmas eve killing and Nissour Square.

  26. flyarm616 says:

    I can not seem to look “FORWARD” to voting in November. My Forward pen is stuck in looking backwards to how some of my family members have been screwed, and have or are losing their homes!

    Sorry but this White House and Congress tried to screw the American people even more with their sneaky bill they tried to push through without the American people being protected!

    No one will tell me that this White House and Congress were concerned about the American people over their owners, the Corporate whore masters!

    I live in Florida, I have seen so many people being thrown out of their homes. Only to be harassed for the past month by Phone Calls from Bank Of America..not harassed because anything I am going through, but harassed by BOA for my brother in Law in California! I have gotten at least 40 calls in this past month from BOA calling looking for my brother in law and sister in law. And telling me on the phone their financial Business!

    I did not and have not said I know either of them. I will not give BOA any information. It is not my right or obligation to do so. And yet the calls keep coming. Early morning till late at night.

    MY husband nor I have ever been used by our BIL on their records with the bank or their mortgage, or any credit forms.

    This past week I was getting calls before 8 am. I began cussing and screaming at them on the phone. They are invading my privacy and my private phone number! BOA is awakening me morning after morning, and during a period I was very sick in bed. They are harassing me, ME..who has nothing to do with their business! In fact My husband nor I had spoken to this BIL for years.

    I finally had to contact my sister in law and tell her of these harassing calls. I did not want to embarrass her, but I could not longer tolerate these harassing calls, and I worried they were in deep trouble.

    As it Turns out, they are not in arrears of anything, my sister in law simply filled out the Papers in May to re-align her mortgage with BOA, as per the federal guidelines put forward by our own government. ( I don’t know the legal details of that law)..but my sister in law said she filled out all the documents required to get the aide offered by our government that is suppose to be offered by the banks ..in May of this year.

    It seems I was not the only one getting these harassment calls..MY sister in laws Parents were also receiving these Harassment calls!

    The only way BOA could have tied my husband and his brother together is that my husband was the executor to his mothers will, and all of the brothers had to sign off on the selling of her home, and that a very small loan was paid off to BOA on that home in California.

    My brother and sister in law live in Northern Calif..we live in Fla..and have a very common name. There is no other way the two brothers could have been tied to each other.

    BOA had no right to call me looking for my brother -in- law, or telling me over the Phone the business of anyone else.

    I only told BOA I didn’t know who they were looking for! I repeatedly told them I was not who they were looking for and that they had the wrong phone number!

    I called Nancy Pelosi’s office about this harassment and was cut off by her phone answerers numerous times ( 8 times exactly). The last time I was cut off, I called immediately back, the last time I was hung up on, and told her phone jockey that I was going to cut up my ballot that sat in front of my phone, That I no longer was going to hold my nose, and tolerate this type of behavior when I was calling as a concerned citizen. Only then did the Phone Jockey began to listen. I Stated that Ms Pelosi works for me, and I would be withholding my vote in November, as I called and called her office about the harassment I was receiving in another state,across the country , for one of HER Constituents.

    I also stated that I was a former ELECTED Democratic Delegate in my State of Florida and I would be sure to let people in my State know of her office’s total neglect of pressing issues involving her constituents being Harassed by BOA, by the People following the rules for the very programs she and this congress instituted that are supposed to be helping people of this nation and in her own state!

    I will not be voting this November. Nor will my husband be. We have discussed it, and we feel very strongly that this congress and Obama have done nothing to help the people, nor have they fulfilled their obligation to the oath they took to the People of this nation, nor are they following the laws of this land, nor the Constitution.

    My vote is my voice. It is the most powerful Tool I have, to hold those who work for me, in MY GOVERNMENT accountable.

    No one “deserves” my vote, it must be earned, and so far I see nothing this Congress or White House has done, that have earned my vote!

    -My vote was taken away in the 2008 Primary.

    -Torture continues to this day.

    -Immunity was given to the Telecom’s for illegally spying on Americans.

    -War was accelerated in Afghanistan.

    -Renditions continue to this day.

    -No one has been held accountable for war crimes.

    -Blackwater was just exonerated by Obama’s DOJ for a murder committed in Iraq, one of many.

    -GITMO Still operating. No end in sight.

    -Obama’s DOJ has obstructed court cases of prisoners.

    -Obama’s DOJ keeps fighting the rights of Gays in our courts on DADT.

    -Obama did secret deals with Big Pharma and Hospital conglomerates and Insurance big boys, and screwed the American people out of real health care reform.

    -Obama and this Dem congress bailed out BIG Banks and Wall Street with my money and yet they spit on the American people who have been and continue to be ripped from their homes by Fraud by the Banks to big to fail.( funny Obama and his administration could look backwards to bail out the assses of the big bankers, but can’t look backwards to help the American people who were defrauded by these same banks! And thrown out of their homes!!)

    My vote will be withheld in November and will continue to be so, Until Democrats decide that Democratic Values and Principles, I have held dear for 40 years, are important to them.

    They don’t frighten me with their BS rhetoric of Re pubs running congress, I see no difference right now anyway!

    When does Obama replace his cabinet of Bush holdovers??? And the continuing of Bush Polices..only making them worse and more permanent!

    I have had enough of the BS!

    • bmaz says:

      Here is the thing: I understand your pain. You cannot vote on Obama on Nov. 2. But you can vote on your representative and maybe a Senator in your state. If you feel that way about them too, okay; but GO VOTE. Make yourself count on school bond elections, school board elections, your state legislature, all those other things are critically important too. Make your vote count on those!

      • flyarm616 says:

        Here’s the thing, I can vote for Meek, and he doesn’t have a fat babies fart of a chance of winning! Period. I have gotten emails every day from Dem Charter Clubs telling us to vote for Crist. We have a Rahm owned FDP Chair we can’t get rid of who is incompetent at best! We have a Democratic senator who acts more like a republican than many republicans! Any good dems are run off, and supplemented with republicans who registered as Dems for elections with the full knowledge of the Dem national Party, and they get the money, not real dems, heck no , they get shunned by the national party!
        Just see what is being done to Grayson! He has been cut off from the money. Anyone who has stood up to our FDP Chair is removed from the party and castrated! Look up John Russell!
        I worked my rear end off in the 2008 primary, only to see our votes stolen, not by the Republican party but by the Democrats.
        They told us they didn’t need our votes then, well they won’t get mine now!
        I have been an elected democrat in my state, I have been a Poll Watcher at large, protecting people’s rights to vote, I have housed field reps sent to my state during national elections, I have helped run huge Democratic Field offices. I have traveled to other states for the Dem party, I was a rapid responder for years for the national DNC. And I have donated Big big bucks to the democratic party. I am finished now. I have been called the “C” word by Obama supporters , I have been called a racist, when My husband and children are dual minorities. I have seen women marginalized and every faction of the Democratic Base Maligned by this administration. And called nasty names after nasty names.
        I have seen Obama cover up for BP Oil, a foreign oil corp who took over my state and all the Gulf States and covered up their crimes with the sanctions of this Administration. Our Beaches , our Air and our water have been polluted and Obama held no one accountable. The Gulf is my back Yard, I and my family and my neighbors had to breathe air that was toxic for several weeks in the spring, and where was our government..AWOL, excpet they lied to us over and over again! But worse than that , this administration turned over our Coast Guard, our Homeland security, our FAA, our air space , our beaches to a Foreign Oil Corp. While we will suffer cancers and respitory illnesses for many many years to come. I had to say no to my grand daughter coming to visit her Grandma this spring because I could not live with myself if she had to breathe the air we were forced to breathe.
        I have been called nasty things when I even explain to others why some Dems in Fla are voting for Crist..to keep the corrupt evil Rubio out of our senate. I didn’t say I was voting for Crist, but I fully understand why others are. As I said, I am sitting out this election.

        I thought of writing in Mickey Mouse, but decided otherwise.

        I have worked on election reform in my state and did Public speaking about it long before anyone else ever contemplated a problem with our DRE machines. I worked hard teaching others what was going on and how to fight to remove the DRE machines from my state. It was the very state Legislative Bill to abolish the DRE Machines in the state of Fla ( the only state in the nation to do so for the 2008 election I might add)That allowed the Republican Congress/legislature in Florida to change our Primary date, the Re pigs attached the Primary date change to the bill that abolished DRE voting machines from the State of Florida. And it was people I taught that got the bill in front of our legislature to abolish the DRE voting machines from the state of Fla. And how did we get paid back for all our work ?? Our primary votes were thrown away and our delegates were taken away! 2 million Democratic primary votes were negated.

        I have lived in 9 states in 40 years of being a Democrat. I have worked hard for 40 years for the Democratic Party. I have donated a boat load of money to this party. I have traveled to other states on My dime and sat in court rooms to protect people’s votes. I have gone post election and court cases, to Warehouses and checked voting machines when votes have disappeared.
        I have gone to Iowa in the dead of winter to be a co-captain of caucus’s to make sure they represented the voters for the Democratic party, only to see cheating like never before by this administration in the primary. I have gone to NH and SC and Calif , and NJ to protect people’s right to vote. I have very strong Democratic values and principles, and have many times held my nose and voted. I have never voted for a republican and I will not now or ever vote Republican light. I no longer recognize the Democratic party. These people in office are not Democrats. To pretend other wise, is only fooling oneself.
        I truly tried to give this administration the benefit of the doubt. I can no longer ignore what is going on. Perhaps others can, so be it, I can not.
        My co-workers were killed on 9/11 I know what failure to lead looks like up front and personal.

        I know what war crimes have been committed. It was done in my name. That is unacceptable to me.

        I can be called names till the cow jumps over the moon. But I know what and who I am, and today I am not proud to call myself American! And I am certainly no longer proud to call myself a democrat.

        My vote or lack there of is my only voice.
        I will not hold my nose again!

        • uneasyone says:

          That is a proud record; I’m certainly not going to call you names. But if you don’t vote, your vote will be counted by the politicians anyway – as apathetic or satisfied with the job they are doing.

          So vote. Vote only for candidates you like, vote Green or Socialist, or write in Mickey Mouse – but vote.

          That lets the politicians know you are engaged, but disgusted.

    • masaccio says:

      I understand your thinking, but look, not voting means the toads win. Bmaz is right, surely you can find someone worth a vote, and, if not, write in someone or something. I plan to vote for Social Security in races where I can’t stand the incumbent.

  27. dstrong says:

    I’ve come to the conclusion this President and his people are suffering from PTSD. They have been so lambasted by the right, they’re afraid of their shadow. The Shirley Sherrod matter completely exposed this. They are so afraid of what the right is going to say, they won’t defend or fight against anything they say they believe in. Why is it Democrats are right on the issues but don’t have the strength of their convicions, and allow the right to dictate the actions they take; but the right, always wrong on the issues, barrel ahead full steam rolling over anything or anyone who gets in their way!

    If you are still an Obama kool-aid drinker (and I voted for him in 2008), how do you explain this man’s failures, one after the other, while all the while saying he believes something must be done about the foreclosure crisis.

  28. djfourmoney says:

    Look all this constant moaning I keep hearing on FDL is pathetic.

    Are the banks guilty of racketeering and fraud? YES! Can you do anything about it? Likely not. All I know is if the Government is forced to tell the banks to take back their fraudulent paper (or lack thereof), they will have insolvent books (again) and ask for a bailout. Seeing there is no way politically allow that to happen in full sight of the public and the media, they will just change the laws.

    You forget the Government (and the banks) want to prop up the housing market hoping prices stabilize and rise. Rising home prices once personal debt has been paid down (which is happening now) will allow people to once again borrow against their property value.

    But the currency war might not allow for that.

    You have a couple of options I have said them on FDL several times. Maybe because I’m Black and a Man generally not wanted in America anyway proven all too well by the criminal justice system and social sigmas that follows us around like dark clouds, I can see what needs to be done.

    Do what you can do locally or leave!

    There is nothing wrong with being an expat and I don’t understand the attachment to a place that doesn’t care weather you live or die. How much more proof do you need? They allow poisons into your food, your air and your water. You have lost your property rights. You no longer have any property rights. You don’t have time off, you have high cost health insurance. There’s a financial barriers at every turn.

    Its time to disconnect yourself from the sinking ship.

    If that’s not an option, then its move to a progressive state and fight for what benefits remain.

  29. jawbone says:

    Now, why was it Martha Stuart was sent to jail? Something about a lie?

    But, banksters and their minions? Meh.

  30. captjjyossarian says:

    I’m not sure which is more upsetting, that the Obama admin is not promoting the rule of law or the false belief that the existing rule of law will contain this crisis.

    In a world where people are fully financialized, liquidating capital is liquidating humanity.