02/22/2012 archive

Crooks on the Loose!

More Foreclosure Mischief: Bankruptcy Hijackings

Yves Smith, Naked Capitalism

Tuesday, February 21, 2012

One of the common complaints from banks that the concerns raised by borrowers over robosigning are mere “paperwork” problems, that everyone who is foreclosed on deserved it, and no one was really hurt. That is patently false, as there have been an embarrassing number of instances where someone with no mortgage was foreclosed on, as well all too many cases of servicer-driven foreclosures. And that’s before we get to damage to property records.

Attorney Timothy Fong called our attention to a below the radar form of chicanery that is predictable when you have nonjudicial foreclosure with no significant oversight and agents who lack incentives to do a good job.

So get this: the procedures are so bad that totally bogus documents can be created and slipped into the bankruptcy of an innocent victim to stop foreclosure sales. Even worse, the servicer, who OUGHT to know better, treats this person in BK who suddenly materialized out of nowhere from his perspective as a real owner and hits him with a motion for relief of stay so they can take a house from him that he never owned. And the foreclosure mill lawyers don’t question this because more motions of relief of stay means more fees.

If this example wasn’t such a serious indictment of our system, it would serve as a black comedy in bureaucratic incompetence.

Quelle Surprise! Servicers Rip Off Investors as Well as Homeowners

Yves Smith, Naked Capitalism

Tuesday, February 21, 2012

We’ve been giving examples off and on about how servicers scam borrowers. Examples include impermissibly deducting fees before applying payments to interest and principal; force placed insurance, inflated prices on and excessive frequency of broker price opinions, and in altogether too many cases, treating payments that are on time as late. What many observers fail to appreciate is that these are tantamount to scamming investors. If a borrower goes into default, any bogus charges will be deducted from the sale of the house, and hence come out of investors’ hides.

Lisa Epstein of Foreclosure Hamlet is a mortgage document maven and has been looking extensively at investor reports and compared them to court documents and has found serious discrepancies. Her research shows that servicers are not only taking advantage of borrowers but are also scamming investors.

Investors have told me they’ve seen signs of even more gross abuses, such as servicers treating fees as credit losses. But this sort of remark in a way shows investors suffer from the same agency problems as servicers, who have no reason to do a good job but instead are motivated to game a complex system of fees. Institutional investors are running other people’s money and therefore have no incentive to crack down on miscreant servicers (they feel it is not their job, plus if any one investor were to take this issue on, the rest of the industry would free ride on his work).

So no wonder we only have isolated and very dedicated individuals chipping away at this looting. Everyone else appears to be part of the problem.

John O’Brien: Mortgage Settlement Fails to Address Banking Criminal Enterprise

John L. O’Brien of the Southern Essex District Registry of Deeds – Salem, MA, Naked Capitalism

Wednesday, February 22, 2012

When you enter my registry you see a sign that reads “The deeds tell the story.” Before the big banks took it upon themselves to corrupt the land recordation system, the deeds used to tell a happy story, one in which people purchased a home and lived “the American Dream.” Today, however they tell a different story one of greed, fraud, and forgery. By now everyone in Massachusetts knows what I have been doing over the past two years to expose and stop the schemes by the Mortgage Electronic Recording Systems, Inc. and their shareholder banks. The accuracy and integrity of the land records in my registry are of the upmost importance to me.

Just this past week the Attorney Generals of this country said they will enter into a deal with the 5 largest banks who have agreed to stop robo-signing, provide principal reductions of between 20 to 25 thousand dollars to a million underwater homeowners. This amount will in no way solve the housing crisis that we are faced with nor even begin to turn our economy around. In addition, the settlement suggests that approximately 750,000 people who have had their homes taken by foreclosure using fraudulent documents will receive a check for $2,000. As Yves Smith has said, “that amount is the new penalty for forgery.” This is merely a slap on the wrists to these lenders. It is my opinion that this deal has been crafted for the banks and by the banks. It is not in the best interest of the consumer, the homeowner, or the taxpayer. Simply put, I do not trust these lenders who have flooded my registry with over 32,000 fraudulent documents to do the right thing. Those homeowners who now have a corrupted title are looking for answers. This deal gives them none. The illegal activity by the banks is nothing shy of a criminal enterprise, where they crossed state lines using the United States Postal Service to deliver the instruments that were fraudulent and contained forgeries.

I will continue to pursue my request for Federal and State grand juries to be impaneled to hold the CEO’s of these banks liable for the crimes that have been committed under their watch. The only thing missing in this illegal scheme that MERS and the big banks came up with was a gun and a mask. I will continue to expose this fraud and work everyday to make sure that the taxpayers are fully reimbursed for the over $44 million dollars in lost recording fees in my district alone by institutions who still believe fees are “for thee but not for me.” A message needs to be sent to these banks that they may think that you are too big to fail but they are not too big to go to jail.

Yes, Virginia, Foreclosure Is Theft

Author: L. Randall Wray, EconoMonitor

February 22nd, 2012

There’s a lot of pushback anytime someone points the finger at banks. As I’ve argued for a couple of years now, virtually all recent foreclosures really amount to theft. The banks have no legal standing to take homes. They created the MERS monster, which destroyed the chain of title and “lost” all the documents. That is why the mortgage servicers hire robo-signers to forge new ones. Yet, 4 years into the crisis, almost no one wants to admit the truth. Foreclosure in the US is theft-as practiced it is almost always illegal. Yet, the servicers are now ramping up foreclosures after they bought out the state attorneys general under pressure from the Eric Holder at the White House.

Audit Reveals 84% of San Francisco Foreclosures Violated Law

David Wallechinsky, Noel Brinkerhoff, AllGov

Tuesday, February 21, 2012

City officials requested the audit that examined 382 randomly chosen foreclosures that occurred from January 2009 through October 2011. The findings revealed that 84% of the files involved “what appear to be one or more clear violations of law.” The violations included not giving homeowners warning that they were in default on their loans (6%), not giving homeowners adequate legal warning their property was being sold (10%), backdating of documents (59%) and transfers of loans by entities that had no business doing so (45%).

Another disturbing discovery related to the Mortgage Electronic Registry System (MERS). In 1995 the bigger banks created MERS as a privately owned electronic system for registering mortgage sales that was supposed to replace local county recording. In the words of the New York Attorney General’s Office, they did so “to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages.” The San Francisco audit found that in 58% of cases, the loan beneficiary listed on the deed of sale was different from the one listed in the MERS database.

Audit Uncovers Extensive Flaws in Foreclosures


Published: February 15, 2012

(T)he detailed and comprehensive nature of the San Francisco findings suggest how pervasive foreclosure irregularities may be across the nation.

The depth of the problem raises questions about whether at least some foreclosures should be considered void, Mr. Ting said. “We’re not saying that every consumer should not have been foreclosed on or every lender is a bad actor, but there are significant and troubling issues,” he said.

California has been among the states hurt the most by the mortgage crisis. Because its laws, like those of 29 other states, do not require a judge to oversee foreclosures, the conduct of banks in the process is rarely scrutinized. Mr. Ting said his report was the first rigorous analysis of foreclosure improprieties in California and that it cast doubt on the validity of almost every foreclosure it examined.

“Clearly, we need to set up a process where lenders are following every part of the law,” Mr. Ting said in the interview. “It is very apparent that the system is broken from many different vantage points.”

The report contradicted the contentions of many banks that foreclosure improprieties did little harm because the borrowers were behind on their mortgages and should have been evicted anyway. “We can deduce from the public evidence,” the report noted, “that there are indeed legitimate victims in the mortgage crisis. Whether these homeowners are systematically being deprived of legal safeguards and due process rights is an important question.”

The Joke Is On Schneiderman

Both Yves Smith at naked capitalism and David Dayen at FDL New Desk highlighted this part of an article penned by Glenn Thrush at Politico:

   Schneiderman, whose Lower Manhattan office overlooks Zuccotti Park where the Occupy movement began, felt like he was being strong-armed by Donovan and wasn’t shy about sharing his dissatisfaction. In late August, The New York Times reported that Schneiderman had come “under increasing pressure from the Obama administration to drop his opposition to a wide-ranging state settlement with banks over dubious foreclosure practices.”

   That did it for [HUD Secretary Shuan] Donovan, according to people close to him. Worried that the settlement was in danger of falling apart, he woke up at 5 a.m. the next morning and sketched the outline of what would emerge as the final compromise plan.

   A bit later he called Schneiderman, who immediately began re-arguing his case for holding banks accountable.

   Donovan stopped him: “Look, hear me out, I want to get past this,” he said, and proposed creating a special panel to probe wrongdoing by banks, to be co-chaired by Schneiderman. He also promised to limit the scope of any releases granted to the banks and rewrote his draft.

   Miller, who clashed with Schneiderman over the releases, said Donovan didn’t make many changes but was artful enough to sell it as a compromise to the New York attorney general, who wanted to seal the deal.

   “Essentially what Shaun did was let Eric take credit for shaping the release,” Miller said, “credit that wasn’t factually correct.”

Dayen points out, quite accurately, that with Schneiderman on board with the settlement deal the opposition to it fell apart:

Whether you believe in Eric Schneiderman’s ability to deliver a legitimate investigation on mortgage securitization fraud or not, you have to admit that the united front on opposition to a settlement on foreclosure fraud collapsed the moment that he agreed to helm that federal investigatory task force. He immediately separated “pre-bubble” and “post-bubble” conduct, allowing for a settlement on the latter while he joined the investigation on the former. And eventually, every other AG on the Democratic side fell in line, as they didn’t have New York as an anchor to stay out of a settlement.

That’s just what happened. And now we have HUD Secretary Shaun Donovan and Iowa AG Tom Miller, head of the executive committee that settled on foreclosure fraud, clowning Schneiderman on the record, saying that he got next to nothing in exchange for his holdout.

As Yves Smith notes “you can draw some damning conclusions conclusions about New York attorney general Eric Schneiderman’s role.”

Unless Schneiderman has been promised something bigger by Obama, US AG, he should walk away from this farce and, if he still can, withdraw his support of this “bait and switch” settlement that hasn’t been settled.

But I have a feeling, he’s accepted a bigger bribe and signing onto this bank bailout will assure his easy confirmation. (Just speculating that Obama will get a 2nd term.)

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Wednesday is Ladies’ Day.

Katrina vanden Huevel: The failure of austerity politics

“We are headed to a Greece-type collapse,” GOP presidential candidate Mitt Romney has warned repeatedly, while indicting President Obama’s stimulus plan. Romney promises to slash spending and balance the budget to unleash growth.

Only now his warning provides a starkly different caution. Portugal, Ireland, Spain, Italy, Britain – the countries that have responded to the economic crisis by focusing on slashing their deficits – are sinking. And the ruin inflicted on Greece threatens its democracy, as riots and resistance spread.

The advocates of austerity – here and in Europe – have argued that cutting spending and reducing deficits, even with interest rates already near zero, would revive the economy. The irresponsible – other than the banks – would be disciplined. This would reassure investors and “job creators,” and they would invest and start to hire again. With an added refrain about deregulation, this remains the mantra chanted ceaselessly by Republicans.

Rebecca Solnit: Mad, Passionate Love — and Violence: Occupy Heads into the Spring

When you fall in love, it’s all about what you have in common, and you can hardly imagine that there are differences, let alone that you will quarrel over them, or weep about them, or be torn apart by them — or if all goes well, struggle, learn, and bond more strongly because of, rather than despite, them. The Occupy movement had its glorious honeymoon when old and young, liberal and radical, comfortable and desperate, homeless and tenured all found that what they had in common was so compelling the differences hardly seemed to matter.

Until they did.

Revolutions are always like this: at first all men are brothers and anything is possible, and then, if you’re lucky, the romance of that heady moment ripens into a relationship, instead of a breakup, an abusive marriage, or a murder-suicide. Occupy had its golden age, when those who never before imagined living side-by-side with homeless people found themselves in adjoining tents in public squares.

All sorts of other equalizing forces were present, not least the police brutality that battered the privileged the way that inner-city kids are used to being battered all the time. Part of what we had in common was what we were against: the current economy and the principle of insatiable greed that made it run, as well as the emotional and economic privatization that accompanied it.

Carole Joffe: The Abortion Wars: The Real People Behind the Restrictions

The last ten days or so we have seen Republicans, and their religious allies, wage a war against contraception-and bungle it badly. With poll after poll showing that a majority of Americans support contraceptive coverage in health reform, and with the 98 percent figure (of American women who have ever used contraception in the context of heterosexual sex) endlessly repeated in the media, the Republicans nonetheless push ahead with this attack, providing a welcome gift to the Obama reelection campaign and much material to political artists and comics. I have lost count of the number of parodies that have been inspired by that now gone viral picture of five male clerics testifying at the Congressional hearing called by Rep. Darrell Issa (R-CA). A picture that of course immediately brings to mind another image of a similar tone deaf moment on the part of social conservatives,  the nine men surrounding President George W. Bush as he became the first president to sign a ban on a particular technique of performing abortion, in the case of so-called “partial birth abortion.”  It’s no wonder that the term “patriarchy” has made a comeback in the blogs! [..]

But while the media is momentarily fixated on the second big story this month of a losing fight against family planning (remember the Susan G. Komen Fund fiasco?), less attention has been paid to a related war that is not going well at all.  The assault on abortion that has resulted from the 2010 elections–the Republican takeover of Congress and many statehouses and governorships–has arguably produced the most serious threat to abortion access since the Roe decision in 1973.  What we mainly have heard about this situation are the statistics, the unprecedented number of abortion restrictions introduced and eventually passed in state legislatures at a time when one might assume politicians’ focus would be on the economy.

Medea Benjamin: Police Chief Timoney, Meet Bahraini Mothers

John Timoney is the controversial former Miami police chief well known for orchestrating brutal crackdowns on protests in Miami and Philadelphia- instances with rampant police abuse, violence, and blatant disregard for freedom of expression. It should be of great concern that the Kingdom of Bahrain has brought Timoney and John Yates, former assistant commissioner of Britain’s Metropolitan Police, to “reform” Bahrain’s security forces.

Since assuming his new position, Timoney has claimed that Bahrain has been reforming it brutal police tactics in response to recommendations issued by the Bahrain Independent Commission of Inquiry. He says that there is less tear gas being used and that while tear gas might be “distasteful,” it’s not really harmful.

I have no idea what country Chief Timoney is talking about, because it’s certainly not the Bahrain I saw this past week, a week that marked the one-year anniversary since the February 14, 2011 uprising.

Maureen Dowd: Rick’s Religious Fanaticism

Rick Santorum has been called a latter-day Savonarola.

That’s far too grand. He’s more like a small-town mullah.

“Satan has his sights on the United States of America,” the conservative presidential candidate warned in 2008. “Satan is attacking the great institutions of America, using those great vices of pride, vanity and sensuality as the root to attack all of the strong plants that has so deeply rooted in the American tradition.”

When, in heaven’s name, did sensuality become a vice? Next he’ll be banning Barry White. [..]

He told The Washington Post on Friday that, while he doesn’t want to fund contraception through Planned Parenthood, he wouldn’t ban it: “The idea that I’m coming after your birth control is absurd. I was making a statement about my moral beliefs, but I won’t impose them on anyone else in this case.”

That doesn’t comfort me much. I’ve spent a career watching candidates deny they would do things that they went on to do as president, and watching presidents let their personal beliefs, desires and insecurities shape policy decisions.

Mullah Rick is casting doubt on issues of women’s health and safety that were settled a long time ago. We’re supposed to believe that if he got more power he’d drop his crusade?

Ellen Brown: How Greece Could Take Down Wall Street

In an article titled “Still No End to ‘Too Big to Fail,'” William Greider wrote in The Nation on February 15th:

Financial market cynics have assumed all along that Dodd-Frank did not end “too big to fail” but instead created a charmed circle of protected banks labeled “systemically important” that will not be allowed to fail, no matter how badly they behave.

That may be, but there is one bit of bad behavior that Uncle Sam himself does not have the funds to underwrite: the $32 trillion market in credit default swaps (CDS).  Thirty-two trillion dollars is more than twice the U.S. GDP and more than twice the national debt. [..]

The Houses of Morgan, Goldman and the other Big Five are justifiably worried right now, because an “event of default” declared on European sovereign debt could jeopardize their $32 trillion derivatives scheme.  According to Rudy Avizius in an article on The Market Oracle (UK) on February 15th, that explains what happened at MF Global, and why the 50% Greek bond write-down was not declared an event of default.

If you paid only 50% of your mortgage every month, these same banks would quickly declare you in default.  But the rules are quite different when the banks are the insurers underwriting the deal.

Rachel Signer: Occupying the SEC for a Stronger Volcker Rule

On Monday evening, around one hundred people gathered in Liberty Square in downtown Manhattan, preparing to march to the Federal Reserve and Securities and Exchange Commission buildings nearby. Protesters carried signs reading, “We don’t make demands so this is a suggestion: Enforce the Volcker Rule.”

Occupy the SEC, a working group of Occupy Wall Street that includes former financial industry professionals, lawyers and concerned citizens, had been up until 5am the night before, editing and formatting a letter they had prepared as a public comment to the SEC. For months, OSEC met twice weekly to review the 298-page proposed Volcker Rule, conducting a diligent, line-by-line analysis of the document. Proposed as part of the Dodd-Frank Act, the Volcker Rule essentially aims to ban proprietary trading and ownership of hedge funds by banks. Between now and July, the regulating bodies involved-the SEC, the FDIC, the OCC, the CFTC and the Fed-are required to read public comment letters and issue final details on the Volcker Rule.

When members of OSEC viewed their letter on Monday on the SEC’s website, they were elated to see that at 325 pages, it was the longest letter by far. In comparison, the longest letter by the Securities Industry and Financial Markets Association (SIFMA), a group that represents the interests of securities groups, banks and asset managers, was 173 pages-although SIFMA submitted five letters in total.

Sarah Stillman: Nancy Grace, Policymaker

When the not-guilty verdict came down in the Casey Anthony trial last summer, TV personality Nancy Grace exploded in a cable news paroxysm for the ages: “Somewhere out there, the devil is dancing tonight.” The polarizing former prosecutor had massively expanded her national following with her nightly crusades against the 25-year-old Anthony, an unemployed single mom charged with killing her 2-year-old daughter, Caylee. When, soon thereafter, Grace announced she would be joining the cast of Dancing With the Stars, critics had a field day. But her leap into the world of bedazzled spandex was not half as alarming as a less widely discussed foray, into the arena of panic-driven policymaking. [..]

On its face, the law sounds well-reasoned. Don’t all parents have certain de facto obligations vis-à-vis their kids-particularly alerting authorities when young lives may be on the line? Michelle Crowder, the 30-year-old Oklahoma mother who authored the Change.org petition, certainly thinks so. “I just decided to jump on there and do it,” she told Grace in an interview tag-lined “Breaking News: Outrage.” But others are not convinced. There is a long history of passing tough-on-crime legislation in the wake of a brutal crime and the results have been mixed, at best. Caylee’s Law is far from unique in transforming the name of an innocent young female victim into a rallying cry for crime-fighting reforms with dubious results. And Grace is only the latest pundit to spin her entertainment empire into a legislative one.

Supreme Court To Revisit Affirmative Action

Affirmative Action has been around since 1961 when President John F. Kennedy issued his executive order which created the Committee on Equal Employment Opportunity and mandates that projects financed with federal funds take affirmative action” to ensure that hiring and employment practices are free of racial bias. In 1964, President Lyndon B. Johnson signed the Civil Rights Act which prohibits discrimination of all kinds based on race, color, religion, or national origin. Since then Affirmative Action has gone through the courts where it has been narrowed but essentially left intact. The last major challenge to the University of Michigan’s Affirmative Action admissions policy (Grutter v. Bollinger) resulted in the Supreme Court in a narrow 5 – 4 ruling up held the University’s policy.

Challenges didn’t end there. In January of 2011, the 5th Circuit Court of Appeals, ruled against a student who challenged the University of Texas’ policy in Fisher v. University of Texas (pdf). The plaintiffs appealed and the Supreme Court has decided to reconsider what has been considered decided law (stare decisis). In Grutter v. Bollinger the deciding vote was cast by Justice Sandra Day O’Connor who has since retired and was replaced by the very conservative Samuel Alito. Justice Elena Kagan, who was solicitor general when the Obama administration filed the Fifth Circuit brief, recused herself from the case. So the case will be considered by only 8 Justices, 4 of whom are very conservative. The deciding vote may fall to Justice Anthony Kennedy who has sided with the more conservative justices in recent rulings.

George Washington University law professor, Jonathan Turley joined Keith Olbermann on Countdown to discuss what might happen when the U.S. Supreme Court reconsiders the legality of affirmative action:

On This Day In History February 22

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

February 22 is the 53rd day of the year in the Gregorian calendar. There are 312 days remaining until the end of the year (313 in leap years).

On this day in 1980, the U.S. Olympic hockey team makes “miracle on ice”.

In one of the most dramatic upsets in Olympic history, the underdog U.S. hockey team, made up of college players, defeats the four-time defending gold-medal winning Soviet team at the XIII Olympic Winter Games in Lake Placid, New York. The Soviet squad, previously regarded as the finest in the world, fell to the youthful American team 4-3 before a frenzied crowd of 10,000 spectators.

The United States did not win the gold medal upon defeating the USSR. In 1980 the medal round was a round-robin, not a single elimination format as it is today. Under Olympic rules at the time, the group game with Sweden was counted along with the medal round games versus the Soviet Union and Finland so it was mathematically possible for the United States to finish anywhere from first to fourth.

Needing to win to secure the gold medal, Team USA came back from a 2-1 third period deficit to defeat Finland 4-2. According to Mike Eruzione, coming into the dressing room in the second intermission, Brooks turned to his players, looked at them and said, “If you lose this game, you’ll take it to your graves.” He then paused, took a few steps, turned again, said, “Your fucking graves,” and walked out.

At the time, the players ascended a podium to receive their medals and then lined up on the ice for the playing of the national anthem, as the podium was only meant to accommodate one person. Only the team captains remained on the podium for the duration. After the completion of the anthem, Eruzione motioned for his teammates to join him on the podium. Today, the podiums are large enough to accommodate all of the players.

The victory bolstered many American citizens’ feelings of national pride, which had been severely strained during the turbulent 1970s. The match against the Soviets popularized the “U-S-A! U-S-A!” chant, which has been used by American supporters at many international sports competitions since 1980.