The big news this week is that the U.S. Department of Justice, Eric Holder & Co., has reached a mass settlement in the housing bubble scandal.
It’s a settlement of more than $25 billion dollars. That’s to pay for all the phony loans, the robo-signing deals by phony bank officials who never ever looked at your real estate closing documents. Attorneys General across the country are hailing it as a landmark settlement, a massive achievement, to help cash-strapped and bankrupted homeowners. They’re holding news conferences and talking about how hard they fight for the average consumer.
Hmm, let’s see. You got crushed in the Fannie/Freddie housing debacle. You lost your house in the mortgage slamdown. Your wife left you and went back to her parents in New Jersey. Your credit is crap. You’ll get to see your kids maybe one time a year. The settlement is for 25 billion dollars. That means at some point in the future, you might… you might, get a check say, for $2000.
That means IF you qualify for a settlement payoff, you COULD get a reimbursement of $2000.
Gosh, I suddenly feel all warm and fuzzy… just warm. And fuzzy.
“It’s a settlement of more than $25 billion dollars. That’s to pay for all the phony loans, the robo-signing deals by phony bank officials who never ever looked at your real estate closing documents.”
Ward, I think you’re confusing sub-prime lending with robo-signing.
The “robo-signing” settlement isn’t about the loans and closing, it’s about the fraudulent foreclosures; ie, banks foreclosing without verifying that they had title to the property, the borrower was in default, etc. but submitting falsified affidavits (“perjury”) to courts that they had.
Robo-signing is a term used by consumer advocates to describe the robotic process of the mass production of false and forged execution of mortgage assignments, satisfactions, affidavits and other legal documents related to mortgage foreclosures and legal matters being created by persons without knowledge of the facts being attested to. It also includes accusations of notary fraud wherein the notaries pre and/or post notarize the affidavits and signatures of so-called robo-signers.
On July 18, 2011, the Associated Press and Reuters released two reports that robo-signing continued to be a major problem in U.S. courtrooms across America. The AP defined robo-signing as a “variety of practices. It can mean a qualified executive in the mortgage industry signs a mortgage affidavit document without verifying the information. It can mean someone forges an executive’s signature, or a lower-level employee signs his or her own name with a fake title. It can mean failing to comply with notary procedures. In all of these cases, robo-signing involves people signing documents and swearing to their accuracy without verifying any of the information.”
In 2009, attorney Tom Ice pointed out the wide-scale practice of robo-signing in depositions taken of GMAC’s Jeffrey Stephan and other robo-signers. News outlets reported that on September 14, 2010, Jeffrey Stephan testified that he had signed affidavits which he hadn’t actually reviewed on behalf of Ally Financial Inc. This revelation led to increased scrutiny of foreclosure documentation. The practice was apparently common in the mortgage industry. In following weeks, the robo-signing revelation other large banks have come under fire for employing robo-signers as well, including JPMorgan Chase and Bank of America.
Why is this important?
Because innocent people were being evicted from their homes due to the fraud committed by the banks. The banks were committing fraud before foreclosing on who knows how many people who should not have been foreclosed upon, but didn’t have the resources to challenge the banks in court.
from The Washington Post (February 23, 2012):
“We never want to see an innocent party ‘accidentally’ evicted from a home. The legal system has evolved so this has become a ‘legal impossibility.’ Imagine returning home from work or vacation to find the front door padlocked, the belongings strewn all over the block, a big orange sticker screaming ‘FORECLOSED’ on the garage door, with an auction sign in the front lawn. Now imagine that this occurred even though you are not in default or even delinquent on payments. Thanks to the robosigning banks, this legal impossibility has happened repeatedly, even to homeowners who paid cash for their houses and had no mortgages. Imagine that — foreclosed with no mortgage.”
Various state attorney generals wanted to prosecute the bankers for this foreclosure fraud, but were pressured by Obama’s U.S. Justice Department to agree to the settlement which does nothing for the victimized homeowners but lets the criminals go unpunished.
from Slate (February 24, 2012):
First, there was no serious criminal prosecution, meaning that no one will be charged with a felony and no one will go to jail. In terms of affecting executives’ incentives, this is the only thing that matters.
Even the terminology used to frame the discussion is wrong. Kelleher, an attorney with extensive experience in private practice and the public sector, tells it like it is: “ ‘Robo-signing’ is massive, systematic, fraudulent, criminal conduct.” Alternatively, as he points out, we could just call it “lying, cheating, and stealing.”
Second, the civil penalties in this settlement—a form of fine—are minuscule relative to the size of the companies involved. As Shahien Nasiripour, one of the best reporters on this issue, dryly put it: “None of the five lenders have said they expect to incur a material charge due to the settlement.” In other words, from a corporate perspective, the penalty is a trifling affair.
Third, such fines are, in any case, paid by the companies’ shareholders, not by their executives or board members (all of whom carry insurance). In the rare cases in which fines have been levied on individuals, either their insurance policies picked up most of the bill, or the penalties were trivial relative to the cash compensation that they received while committing their crimes—or both.
As if all of this weren’t bad enough, the banks reportedly will be able to use government money to write down the value of mortgages, which amounts to subsidizing them to pay their own meaningless fines.
It’s the beauty of corporatism in action. Although corporations are legally people under the law, you can’t put one in prison.
Which may explain why, in spite of the massive fraud in the foreclosure process, Republican presidential candidate Mitt Romney wants to speed up the foreclosure process.
from FDL (October 18, 2011):
“don’t try and stop the foreclosure process. Let it run its course and hit the bottom, allow investors to buy homes, put renters in them, fix the homes up and let it turn around and come back up. ”
But don’t worry: Romney has an answer to the fraud committed by banks — take the banks to small claims(!!!) court (even though the amount of fraud would exceed the jurisdiction of small claims court).
Obama, Romney, and their banker friends deserve to burn in Hell for eternity.
There is an article about foreclosure fraud in yesterday’s Denver Post
Failed bill on foreclosure filing in Colorado may get second chance on November ballot
By David Migoya
The Denver Post
Posted: 03/30/2012 01:00:00 AM MDT
“In other states, courts are scrutinizing whether the foreclosing party has the right to foreclose and concluding that in most cases (they haven’t) demonstrated that right with proper documentation,” said Debra Fortenberry, a Colorado Springs attorney who helped draft the initiative with Brunette and the Colorado Progressive Coalition.
“In Colorado, there is nothing to scrutinize,” she said.
No other state allows for a foreclosure without the lender first proving it is the right entity to do so. Colorado allows foreclosure lawyers to sign a “statement of qualified holder,” which basically says they think their client owns the note or mortgage without ever actually seeing it — a practice some states have labeled as “robo-signing.”
Colorado law allows a foreclosure to continue even if the lawyer gets it wrong — and doesn’t hold anyone accountable for the mistake. It’s a crime in Nevada, one of the states to use deeds of trust like Colorado.