Let’s Count The Frauds

You can categorize these different ways and I don’t claim this list is is exhaustive, but inspired by Dan Froomkin I thought I’d list briefly some of the Bank Frauds that are encapsulated in what is generally called “Foreclosure Fraud”, but which I call Title Fraud.

As you read them, keep in mind that the bankster position is that all these frauds are mere bagatelles and formalities and that the only time there is a problem is when some deadbeat asshole home owner stops paying.

Appraisal Fraud

• Your house was never worth all that.  Your appraiser is paid based on the appraised value and by the bank which wants you to take the largest loan possible to maximize their fees and interest.  This is part of what caused the Bubble.  They lied to you and that is fraud.

Loan Fraud

• Low introductory rate?  Try flat out usury which used to be considered a sin by Christians (remember Jesus and the Moneychangers) which is one reason they feel justified in their anti-semitism (and they wiped out the Knights Templar too).  They lied to you about the terms of your loan to your face and buried the details in the fine print.  That is fraud.

Income Assessment

• NINJA!  No Income?  No Job?  Accept!  Loan originators encouraged people to lie on their applications so they could sell them the loan that generated the largest fees and interest.  That is fraud.

Conveyance of Title

• Thousands of years of precedent.  No shit.  We have hieroglyphics from the Egyptians and cuneiform from the Sumerians.  All of it had to be recorded in stone (or wet clay), so the proof could be produced.  Ephemeral photons not so much.  There are legal requirements and MERS lied about fulfilling them.  That is title fraud.

Tax and Fee Cheating

• Why did they do that with the thousands of years and all?  Well it’s really about the next item in my list, but a not insignificant second reason was to avoid billions in fees to State and Local governments.  Tax cheating is fraud.

Collateralized Debt Obligations

• Here’s the real money and motivation.  It’s not about the property, it’s about the income stream and if I can package them in a way the promises a certain rate of return on investment I can sell it like bonds.  The problem is that if I don’t have title to the underlying asset and lie to you about the income stream and your ability to collect from it (Brooklyn Bridge) that’s fraud.

Debt Rating Agencies

• Part of the way I lie to you is I pay some purported “independent expert” to come in and repeat my lies, just like I did with the appraiser.  That is fraud.

Multiple Sales of the Same Asset

• Since all you care about is the general performance of the income stream to produce the revenues I promised, it really doesn’t matter if I include some “assets” that I know are guaranteed failures as long as the overall performance passes fictitious muster.  As long as I’m servicing my Ponzi Scheme no one will ever know.  This is fraud.

Credit Default Swaps

• In order to convince you I’m a fair dealer, I offer to take the worst parts of the pie myself.  Then I turn around and buy insurance against them failing for pennies on the dollar from a company that doesn’t have the money to pay off the policy when I need to collect.  This is Insurance Fraud (hello AIG and back door bailouts).

Fees, Fines, and Foreclosures

• How do I make money?  Well you may think it’s off the interest, but I sold that for cash to a pack of fools who got a pile of crap in return.  But they need a Tax Farmer and Rent Collector and I’m happy to do that for a price.  And if I happen to run short I’ll just make up a penalty by holding a check and imposing it just like I do on unsecured credit cards and then siezing the property for myself if your lawyers aren’t are good as mine (and I have mighty fine lawyers, you betcha).

Accounting Fraud

• And why do I do this?  To keep the inflated assets on my balance sheet defrauding my investors so I can keep my billion dollar bonuses flowing in.  If we had mark to market every major bank in the United States would be as underwater as the most foreclosed home owner.

The problem with this story is that there are so many individual frauds that it’s hard to keep track of them and I hope this summary is helpful.