naked capitalism

More shoes are dropping on the foreclosure improprieties front. Let’s not forget the throughline: the parties in the securitization pipeline were so keen to rip out fees and maximize profits that they allotted too little in the way of expense dollars to executing tasks required both by statue and contractual agreements. The result was that they cut corners to such a degree (explained longer form here) that the trusts (the securitization entity) appear not to have been properly conveyed the notes (the borrower IOUs) on a widespread, if not pervasive basis. In 45 states is necessary for the party foreclosing to have the note to be able to foreclose. I’ve had attorneys tell me that when they have uncovered serious document shortcoming, the trustee’s response to the judge has been, “You can’t expect us to do that. We aren’t paid enough.” Funny, they apparently didn’t raise this issue when they signed up for the job.

The failure to transfer ownership properly creates fundamental problems under securitization processes. Bottom line is we’ve spoken to a lot of people, there seems to be no simple or even not so simple fix. Put it another way: why would law firms and servicers be engaging in widespread document fabrication and other improprieties if there were a straightforward remedy?

The latest reports: first, the Florida Bar News reports that a sampling of foreclosures in Florida’s kangaroo foreclosure courts found 20% “or more” had serious shortcomings:

As Florida courts struggle to whittle down a backlog of property foreclosure cases, some judges and lawyers involved in the process say shoddy paperwork filed on behalf of lenders is handicapping the effort….

But the 12th Circuit compiled some numbers from three weeks of its “rocket docket” for foreclosures in Manatee and Sarasota counties and found that 20 percent or more of the cases set for summary judgment had some procedural or paperwork problems.

Yves here. Note this remark appears to address merely the documentation filed by the trustee/servicer. It appears NOT to address judge rubber stamping foreclosures when the borrower may have other legitimate issues. For instance, we gave several examples of cases where the borrower was in the HAMP mod process, but somehow had gotten erroneously kicked into the foreclosure process. and neither the mills nor the judge were willing to halt the process. In addition, the Legislature is pushing the courts to speed up their bogus procedures:

“What’s irritating to me is frankly that the impression is from the Legislature is that the courts are not processing these quickly. Well, the courts can only process them as people comply with the rules,” said 12th Circuit Chief Judge Lee Haworth.

Alan Grayson’s office provided a particularly troubling example, that of a counterfeited court summons. It’s bad enough that servicers and foreclosure mills are making up securitization-related paperwork out of whole cloth, but now court documents to seize someone’s home? This is lawlessness. (View on ScribD)

Separately, CNBC today got word to JP Morgan admitting to problems similar to GMAC with “robo signers” providing improper affidavits. Note that so far, JPM is asserting contra GMAC, which notably was silent on this point, that the underlying facts that the robo signers affirmed were correct, but it is nevertheless delaying foreclosures as a result of this problem. Hat tip 4closurefraud:

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