Read the Full Article here at Naked Capitalism
Two stories were published yesterday, one a long form Reuters investigation (hat tip April Charney), the other a shorter report by AP (hat tip Lisa Epstein and Daniel Pennell). First from Reuters:Reuters has found that some of the biggest U.S. banks and other “loan servicers” continue to file questionable foreclosure documents with courts and county clerks. They are using tactics that late last year triggered an outcry, multiple investigations and temporary moratoriums on foreclosures.In recent months, servicers have filed thousands of documents that appear to have been fabricated or improperly altered, or have sworn to false facts.Reuters also identified at least six “robosigners,” individuals who in recent months have each signed thousands of mortgage assignments — legal documents which pinpoint ownership of a property. These same individuals have been identified — in depositions, court testimony or court rulings — as previously having signed vast numbers of foreclosure documents that they never read or checked.
So the reality again is put in front of us and no one seems to care in the federal government or the administration. The banks are back up to their old tricks again and they are getting away with perjury and fraud. How could anyone think that they were going to clean up the industry over night as they claimed they were doing when foreclosures where briefly halted. The banks have ruined the housing market and wiped out years of hard work and dedications of millions of Americans.
One would think that would be bad enough and since they had been caught red handed they would start to play by the rules. However, since regulators and the government are failing Americans the banks are just back to their old tricks.
Remarkably, the head of the industry lobbying group admits this is happening and offers a weak defense:
One of the industry ’s top representatives admits that the federal settlements haven’t put a stop to questionable practices.This commentary is an interesting shift in stance. The MBA chief still tries to justify the abuse of legal procedures and contractual requirements as “cutting corners” against people who are really undeserving (they were delinquent anyhow, right?). The problem, which does not get the press it deserves, is that many foreclosures are servicer driven. One or two late payments (and they may not even have been late; servicers have been found to hold checks to make them late or simply be dilatory about processing payments) can quickly compound into a foreclosure due to impermissible but nevertheless common misapplication of payments and junk fees. Borrower attorneys as of last year estimated that 50% to 70% of the parties that fought foreclosures were victims of servicer fee abuses (the problem is it is very costly to contest foreclosures on that basis; it’s generally easier to go after standing). Yet for the MBA to concede that borrowers should fight foreclosures if the mortgage transfers were botched is a major change in posture.
Some loan servicers “continue to cut corners,” said David Stevens, president of the Mortgage Bankers Association. Nearly all borrowers facing foreclosure are delinquent, he said, but “the real question is whether the servicer complied with all legal requirements.” The loss of a home is “the
most critical time in a family’s life,” and if foreclosure paperwork is faulty homeowners should contest it. “Families should be using every opportunity they can to protect their rights.”
The Reuters report begs an additional question: why has no Federal regulator done the sort of review the journalists undertook? As they describe it:
Reuters reviewed records of individual county clerk offices in five states -– Florida, Massachusetts, New York, and North and South Carolina -– with searchable online databases. Reuters also examined hundreds of documents from court case files, some obtained online and others provided by attorneys.By contrast, 11 Federal agencies, which have vastly greater access to bank records, were satisfied to look at a mere 2800 loan files, only roughly 100 of which were foreclosures. Predictably the review found pretty much no foreclosures to be unwarranted. This wasn’t merely a dereliction of duty; it was a cover-up.
The searches found more than 1,000mortgage assignments that for multiple reasons appear questionable: promissory notes missing required endorsements or bearing faulty ones; and “complaints” (the legal documents that launch foreclosure suits) that appear to contain multiple incorrect facts.
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