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What Should the 50 State Attorneys General Investigating the Mortgage Crisis Do?

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I hope readers will give their comments and ideas on the inquiry underway by the attorneys general of all 50 states into foreclosure “improprieties”, to use the term of art, and other mortgage market abuses. Given that real estate is a state law matter, and some state governments are less captured that Washington DC, this seems to be one of the best avenues for effecting change.

Some groups are considering writing an open letter to this group. What do you think it should stress? What issues do you think they should examine? What remedies and measures should they consider?

I will forward reader comments to the people involved in this effort. I’ll be adding my own suggestions based on my previous posts.

Thanks for your help and continued interest in this important topic.

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96 comments

  1. psychohistorian

    RULE OF LAW

    We should have never had the bailouts of two years ago, which, IMO, was a watershed event related to consistent application of Rule of Law.

    NO consequence related exceptions to economic failure….extend and pretend is bad policy and results in greater human cost the longer neglected.

    1. matthew slaughter

      i agree with all of the ‘enforce the law’ posters. you cant just throw hundreds of years of property law out the window because it’s inconvenient for someone’s business model.

    2. Nathanael

      The state AGs should investigate the illegal transfers of real property interests outside the county deed registration systems, and enforce existing black-letter law against them; meaning that the mortgages will in general be invalid from day one and must be unwound completely.

  2. Dirk

    I would say just respect the rule of law. If you aren’t going to do that, then you might as well bag on the whole American experiment.

  3. Greyridge

    With reference to this and yesterday’s post about PR stunts targeting small-time crooks: can the AGs establish paper trails that prove boardroom felonies, or is that just a chimera? The longer the foreclosure business goes on like this, I would have thought the fewer excuses there are in the boardroom. Here in the UK, ignorance of the law is no defence.

  4. ScottS

    I’m by no means a real estate, foreclosure, or securitization expert, so I can hardly tell Attorneys General what they should do. But as someone with negligible debt and significant savings who rents, I can say that until the cloud is lifted from property law, I wouldn’t take a house if the owner were giving it away. Banks foreclose with or without standing and courts don’t bother to check the basic facts.

    And the thuggish behavior of banks in breaking and entering homes still occupied by owners (see http://www.huffingtonpost.com/2010/10/06/banks-foreclosure-break-in_n_752613.html) has to give people, even renters, nightmares. Couldn’t any robber just break into a house, change the locks, and tell the police when they show up that they work for the bank? It’s terrifying.

    The story has moved beyond simple deadbeats versus banks. No one can feel safe in their home while this is allowed. Fraud and theft are bad enough, but the feeling that there is zero protection under the law and no due process is a breakdown of civil society. Are the police mere rent-a-cops for banks? Do judges golf with Lloyd Blankfein? It’s shameful. A complete disgrace.

    So my recommendation is to start there — a tiny step towards restoring public trust would be to have police not take the banks’ side without any evidence beyond a banker’s business card.

  5. Ina Deaver

    There are so many political problems with the states trying to clean up this issue; sure, RE law is purely state law (one of the few remaining issues, I might add). SOME banks are one of the other few issues – while the gravy train over the past couple of decades has resulted in most banks being national, there are still some purely state banks out there. Most states that I know of have elaborate state bank laws, and some banks are dual charter (or used to be – I’m out of the game, and consolidation has been particularly massive over the past five years).

    But they might seriously consider the independence of state law and state autonomy. There are only a few areas left where states are truly supreme. That means there is always a race to the bottom in those areas where one state sells its soul for revenue (all insurance companies seem to be based in South Carolina, for instance). If their state laws mean anything, they need to be enforced. They can attack this on a host of different, creative fronts: if they are successful, not only will there be money for state coffers, but they might actually build a state race to the top. There could be states at this point where the economy flourishes because the people who live there think that they will be protected from the rampant fraud, and have more faith that the law will be enforced and contracts honored. While in the past, stern enforcement might have driven out business, I feel like we’ve reached a tipping point where the opposite may be coming to pass. So what kind of business environment do you want to have in your state? Do you want to be a Florida – a haven for every fly-by-night scheme ever hatched? Or do you want to be the kind of place that draws honest players?

    If the states play their cards right, we could see a resurgence in their power we haven’t had since Schechter Poultry.

  6. Francois T

    ScottS correctly plunge a righteous finger directly unto the wound: the loss of trust generated by the banditry and extreme arrogance of the financial sector who behaved as if the law was for the little people only.

    The question is central: why should anyone in his/her sane mind harbor any thought of transacting residential real estate. Unless you build your own home and pay cash for it, that’s it!…You are potentially at the mercy of any scoundrel, fraudster, shyster and con artist.

    What would I suggest to the AGs?

    Body slam the servicers with extreme legal brute force. Do not give them ANY respite whatsoever. They have to believe you are allergic to the jugular; you can’t see one without going for it and proceed with strangulation maneuvers expertly honed by a long practice. RICO the REMFs into submission; organize a choir of suspects until the correct note is sung by a more cooperative executive honcho who understand how sweet life can be outside a 6×10 room where it’d be sleeping between Jamal and Dominic. (Gulp!)

    Yes! I know the SCOTUS and Washington are the pet slaves of Korporate Amerika, but a well-coordinated legal blitzkrieg would be really tough to stop. Plus, we talking State Rights here ain’t we? So, if DC want to get into a PR nightmare that would make 2012 look like The Movie with the same name, they’ll steer clear for the most part.

    At the same time, make sure you got a mercilessly efficient PR machine that explains (not spin, explain) to John and Jane Q Public what you’re doing. The financiers will do it against you anyway, and it won’t be pretty if they gain the upper hand in the mind of the public.

    Once the Choir of the ahem, Cooperative Servicers is done with Part I of their concert (called “The Last Confession”) let’s pay a visit to their owners, a.k.a the big banks. We’re pretty sure they’d have a lot to say. The key would be to make sure that they cannot, at any time, benefit from the protection of the docile federal agencies. It’s tricky but it should be doable.

    One thing is sure; the more hell the states AGs raise about this matter, the more they’ll be able to clean up the mess, and also prevent the federal government to shamelessly protect their cronies.

    1. Leviathan

      I like the image of bodyslamming servicers. It’s a start.

      I would also make it easier for anyone facing foreclosure to do a title search–automate and publicize it, make it free. That alone would be considered an act of war against the servicers, I think, and they would have to alter behavior. No new legislation need be passed.

      But it’s not enough to punish the evildoers here. You also have to help the taxpaying citizens of your state get back on their feet. To that end, I would encourage passage of a “mulligan” law, giving foreclosees access to credit within months of letting their house go (provided they negotiate the give-back in good faith and leave it in good repair). This alone would encourage a widescale clearing of the shadow backlog and bring quicker, more just resolution of the crisis.

      They may need to have a short leash, pay a penalty, or jump through other hoops, but people need to be treated with dignity and respect. Banks got bailed out, homeowners got the shaft. AGs could push for this in a handful of states, and it would spread to others rapidly.

  7. Cujo359

    What strikes me as so wrong about some of the foreclosure stories I read is the lack of a proper paper trail to show who owns a mortgage. How in the world can they let people foreclose a house when those people can’t prove they are the rightful mortgage holder? I don’t understand that. In criminal law, a proper trail for evidence is essential, at least in a properly run trial. Why is it so unimportant here?

  8. attempter

    I’d ask them to formally recommend to everyone facing foreclosure that they demand to see the note, and at least implicitly recommend that people refuse to vacate or pay any further without it, and resist in court on that basis.

    (I of course think activists need to take the logic much further than that, and advocate on the basis of it, but here we’re talking about what state AGs should do, and have to think in terms of what they might do.

    However the moderate Chris Whalen thinks it won’t be long into next year before state governments will actually start telling debtors in general to stop paying mortgages but continue paying property taxes.

    If yesterday’s alert about how this proposed DC deal will further clobber states is true, that may accelerate the coming of the day Whalen was talking about.

    So maybe state AGs will be advocating radical measures sooner than we think.)

    1. Tom Crowl

      There’s ample evidence from any of a number of directions, and with fault likely on many sides that there are legally significant issues on literally MILLIONS of mortgages which may take years to sort out…

      With that in mind…

      State AGs assist and/or institute class-action lawsuits on behalf of it’s citizenry against ALL property in question with the argument that there’s likely fraud that has been perpetrated against the taxpayers…

      A court would then be free to impose a moratorium on all foreclosures and evictions on said properties until these issues are resolved. (which would take years…)

      The state could not act on its own to foreclose so long as the property taxes were paid. The current residents would be free to pay them.

      This would leave the banks under tremendous pressure to negotiate with the individuals on a case-by-case basis rather than be stuck with millions of non-performing and legally ‘locked-up’ assets.

      P.S. Patent complete. Should be issued and published within weeks to month or so at most. Recent election cycle about $4 billion spent lobbying. That’s about 65 CENTS per voter per week over the course of a year. The ability to harvest very small contributions from very large numbers easily and painlessly is vital for achieving any semblance of a level playing field for an empowered citizenry whose influence is handicapped by entrenched forces of concentration.

      The Commons-dedicated Account:
      A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contribution… which for fundamental reasons of scale must allow a viable micro-transaction (think x-box points for action in the Commons).

      A fact: Most never give to a Cause or a campaign!
      Another fact: Most Do at least occasionally give to a charity.

      Putting those two things together creates an enormous opportunity…

      1. monday1929

        Can your idea be adopted to collect small contributions to start a “bounty fund”? The first Rats to Squeal (well, pig-rats) and provide info which leads to indictments will get millions. How many of Dimon’s and Chuck Prince’s “trusted” underlings will sing (canary-rats) for 60 million?

        Have some Patents myself but the only way to make money now is to join the soul-deadening casino economy. ie. have many more Puts than Patents.

        1. Tom Crowl

          Actually that’s not as silly an idea as it might seem…

          An acquaintance of mine, author and physicist David Brin wrote a non-fiction book “The Transparent Society” back in ’98.

          from Wikipedia:
          “he forecasts social transparency and some degree of erosion of privacy, as it is overtaken by low-cost surveillance, communication and database technology, and proposes new institutions and practices that he believes would provide benefits that would more than compensate for lost privacy…

          Brin argues that it will be good for society if the powers of surveillance are shared with the citizenry…

          (me here: and this is the relevant point…)

          …allowing ‘sousveillance’ or ‘viewing from below,’ enabling the public to watch the watchers. According to Brin, this only continues the same trend promoted by Adam Smith, John Locke, the US Constitutionalists and the western enlightenment, who held that any elite (whether commercial, governmental, or aristocratic) should experience constraints upon its power. And there is no power-equalizer greater than knowledge.”

          1. attempter

            This can be sorted out easily by resort to standard property philosophy.

            Our individual information is our property. No one – government, corporation, private scumbag – has any right to it other than by our free consent, or upon securing a constitutional warrant based on probable cause. (That includes all contracts of adhesion, which are invalid.)

            But system secrets, the secrets of government and big corporations (which are all welfare leeches on the society), are public property. The information belongs to we the people. Therefore by definition a system secret is a theft, unless there’s some truly critical reason why it has to be a secret. As the Wikileaks deliveries prove, this is almost never the case. So far the Wikileaks record has been 100% illegitimately secreted information, stolen property, now restituted to its rightful owners.

            So it follows: Surveillance is almost never legitimate, while complete sousveillance is our property, our right, our responsibility, our imperative.

          2. monday1929

            I was totally serious. I did get worried when I mis-read “Sousveillance” as “spousveillance”. THAT we do not need:)

    2. F. Beard

      However the moderate Chris Whalen thinks it won’t be long into next year before state governments will actually start telling debtors in general to stop paying mortgages but continue paying property taxes. attempter

      Now that is an interesting, delicious, winkle!

      For you savers who oppose a bailout of the entire population, including yourselves, I guess you’ll lose again.

  9. Sandy

    They should remember that not all markets are underwater. If servicers are allowed to continue illegal foreclosures with fake MERS assignments and wrong parties bringing suit, the bottom will fall out for homeowners in those markets too. One such market is Oklahoma City, OK. A recent report claims it is one of the least affected markets in the nation and is “expected” to remain stable. Every such market should be protected as long as possible.

    As settlement for the banks’ unfathomable criminal activity, the banks should be forced to give homeowners one of two choices: (1) allow the homeowners to say in their homes without payment as long as they want to, or (2) force the banks to pay back every cent the borrowers have put into their homes since the first closing–including loan costs, principal and interest, taxes, homeowners insurance, maintenance, repairs and upgrades. The banks also should pay, in case of the latter, all moving expenses for the borrower.

    The unjust enrichment is particularly egregious when the banks can take the home illegally from the borrower, calculate a highly inflated first-mortgage balance with exorbitant fees, arrears, and charges, sell it for that amount or slightly lower, cut out the second lender for the most part because of the add ons, and then leave the borrower with a deficiency judgment owed on it.

    The borrower is stripped of every dime he or she put into the property, (oftentimes, over MANY years), and now has to pay a deficiency judgment and exorbitant fees and charges, while the bank gets the property having invested little, if any, money. Actually the BANKS get the house free, since they only manipulate numbers. They should be forced to disclose how much they gained financially by forcing foreclosure and how much was made through other streams of income from fraudulent transactions related to the property.

    What sense does it make for the pretender lender to get the house at a greatly reduced price, but that price is never offered to the borrower to remain in their homes? Not to mention barring the borrower’s family members or friends from bidding on the home at the fire-sale price so the borrower can’t stay in the house through a third party. Added to that, allowing the second lender to sue for deficiency judgment after foreclosure is outrageous! If the home was considered collateral for the first loan, then it was also collateral for the second and the second mortgage should be viewed as part of the sheriff’s sale, and any loss should be written off.

    The banks also should be FORCED to take title to the property after foreclosure, pay taxes and insurance, and to maintain the property, including as HOAs demand. And the banks should be forced to remove any negative items from the borrowers’ credit reports.

    (Note: These suggestions are based on the presumption [contrary to what we all know] that it is highly unlikely that any relevant government official will ever publicly admit that the foreclosing lender is not really the lender or holder of the note in due course–or that the note and mortgage were separated and the property is no longer collateral for the debt because in separating the two, the mortgage is a nullity. This is also based on the presumption that the banking system and the housing market has a snowball-in-hell chance of surviving–this, too, contrary to what we all know.)

  10. financial matters

    Yes, with state budgets hurting I would think they would want to concentrate on recouping fees circumvented by the MERS system. Some MERS proponents have actually stated that they were saving the homeowners money as if homeowners were responsible for the securitization process.

    They should try and get clear titles established for the properties in their states and charge the appropriate fees for the clean-up.

    1. rd

      I agree with this.

      I think a two-pronged approach is critical for them.

      First, as suggested by financial matters, the state and local coffers are hurting and MERS and securitization was a deliberate attempt to circumvent the fee and local employment benefits to municipalities and states of requiring mortgages. Disgorgement of local recording fees based on MERS records with penalties would be a start.

      The discovery process for this would likely open up the securitization process as the second act. This would allow for two avenues. One would be requiring the mortgage originators take back the mortgages that were never really assigned to the securities. This would then position the servicers and mortagage originators to benefit from principal modifications as well as giving a lot of value back to the MBS holders, many of which are probably their own pension funds.

      The second avenue of this would be the really, really big stick of fraud charges if the mortgages were not properly securitized so that the MBS’s are really just empty sacks. This would probably have to be led by the NY AG as much of it would rely on NY trust law, but presumably there would be lots of banks headquartered in other states, state and local pension funds, state-regulated insurance companies that the AGs could use as reasons to be involved.

      1. jpe

        Disgorgement of local recording fees based on MERS records with penalties would be a start.

        There’s no legal grounds to do that. No one _has_ to record a mortgage, so avoiding the recording fee is perfectly legal.

        1. Nathanael

          That varies by state. I believe it is in fact legally required to record mortgages in some states. Or at least, if you don’t the mortgage may well be unenforceable in court (which would be a fine outcome).

  11. maniam

    Dear yves would you be kind enough to inform the 50 ag on the following?(think it is happening currently)
    Congressman Charles A. Lindbergh, Sr. revealed the Bankers Manifesto of 1892 to the U.S. Congress somewhere between 1907 and 1917.
    BANKERS MANIFESTO

    We (the bankers) must proceed with caution and guard every move made, for the lower order of people are already showing signs of restless commotion. Prudence will therefore show a policy of apparently yielding to the popular will until our plans are so far consummated that we can declare our designs without fear of any organized resistance.

    Organizations in the United States should be carefully watched by our trusted men, and we must take immediate steps to control these organizations in our interest or disrupt them.

    At the coming Omaha convention to be held July 4, 1892, our men must attend and direct its movement or else there will be set on foot such antagonism to our designs as may require force to overcome.

    This at the present time would be premature. We are not yet ready for such a crisis. Capital must protect itself in every possible manner through combination (conspiracy) and legislation.

    The courts must be called to our aid, debts must be collected, bonds and mortgages foreclosed as rapidly as possible.

    When, through the process of law, the common people have lost their homes,
    they will be more tractable and easily governed through the influence of the strong arm
    of the government applied to a central power of imperial wealth under the control of the leading financiers.

    People without homes will not quarrel with their leaders. History repeats itself in regular cycles. This truth is well known among our principal men who are engaged in forming an imperialism of the world. While they are doing this, the people must be kept in a state of political antagonism.

    The question of tariff reform must be urged through the organization known as the Democratic Party, and the question of protection with the reciprocity must be forced to view through the Republican Party.

    By thus dividing voters, we can get them to expend their energies in fighting over questions of no importance to us, except as teachers to the common herd. Thus, by discrete actions, we can secure all that has been so generously planned and successfully accomplished.

  12. Sungam

    The first thing that needs to be done is to get hold of the records and the information about this mess.

    Judges need to obtain and keep under lock and key a copy of the MERS databases. Then, if possible, get the Banks and Servicers to pay for that data to be trawled through and the public registries be updated or people prosecuted as appropriate.

    You can’t run a housing market where only the insiders have access to essential information like who is actually allowed to foreclose on your house. This is not to mention that the same insiders are the ones who can update records on that system with the equivalent of a simple handshake…

    Before we can properly gauge the size of the issue and prosecute any wrongdoers we need to get our records in order; otherwise the only way to approach this on a case by case basis. This would be slow and inefficient as it is difficult to scale up and it would also allow the Industry to spin things to pin the blame on individual “Black Sheep” rather than to admit to an industry wide problem which requires industry wide remedies.

    1. Anon

      On the nail, Sungam.

      MERS’ “commercial confidentiality” is the major stumbling block.

      That is, the information MERS holds it makes available only to servicers/fraudsters/banksters and the like, and that is the information asymmetry to end all information asymmetries.

      What we are seeing is demonstrable proof that a market in real estate cannot at base function with such IS. (MERS’ evasion of local taxes is only part of the MERS problem.)

      Open MERS up to public view. We want to check the information about our own homes, which previously we were able to do in our local courthouses. Our trust has been abused by MERS, and we want to see the worms now.

      Sunshine will be therapeutic for the housing market – at least for all those who aren’t blood-sucking, rent-seeking vampires, or vampire squids, even.

      Hey, maybe Wikileaks already has a copy of MERS (we live in hope), and that’s why Julian’s ass is in jail already.

  13. ftm

    Mortgage modifications and foreclosures need to be taken out of the hands of servicers. Servicers incentives are perverse. Each state needs a government run workout program which homeowners can enter into at their will. Nothing short of direct state intervention will protect homeowners and housing prices from the servicers.

    It will take years to unravel this mess so the workout programs must collect reduced payments from homeowners and pass them through net of reasonable state expenses to servicers. The reduction of income to servicers will accelerate servicer distress, investor lawsuits and bank failures. But that’s how capitalism works, you place your bets, then cash your tickets or in the banks’ case not.

  14. Agent Vanilla

    (1) Officers of banks must be held accountable for fraud perpetrated in the courts even if that means jail time.
    (2) Banks must ensure chain of property is maintained at each locale when they foreclose, including county title registration and payment of registration fees and payment of local taxes while property is in their name.
    (3) Foreclosed consumers must have a fair and equitable accounting of fees, penalties, and interest charges. They must pay what they are obligated, and those obligations must be made transparent. Predatory gouging must not be allowed.

    1. jpe

      The more sound approach is to go after the law firms that are overseeing all the shady evidence and presenting it to the court. As we saw w/ the Countrywide / lawfirm sanction decision, it can be difficult to prove the bank had the requisite indicia of scienter (in English: intent), but nailing the law firm is a no-brainer.

      Importantly, they’ll have the same effect: going after the law firms would result in better process the same as going after the banks themselves.

  15. DC Staffer

    Congress knows all about the MERS unenforcability problems. They are intentionally NOT acting or addressing due to systemic risk concerns. Similarly, 50 AGs are STOPPING their investigations as word is passing down from the Administration for Dems and it is the inherent historical position of Republicans. Pressure and light needs to be shined on the AGs investigation as it has stalled and been stymied. This is bad.

    1. Gansler Douglas

      I hope this isn’t the case. I would hope that the AGs would persue felonies – at the very least, debt collectors should be disbarred in each of the States they are committing felonies.

    2. aletheia33

      i’ve been worried about this. what are the AGs actually doing since the election, and losing cordray?

      what can we do now to help keep the AGs on track, or should we give up on them–realistically, as a group do they lack the gumption to proceed?

      will they only really move if/when as whalen predicts the hardships escalate to the point where the states will do whatever they have to to survive when their tax revenues/borrowing abilities dwindle to emergency level?

      thanks dc staffer. any more insight/inside you can provide would be much appreciated.

  16. Bailout Nation

    Have the state attorney generals require that at a homeowner’s request, the banks are required to fully disclose the full chain of title to a borrower’s note/mortgage, complete with all the necessary endorsements and assignments. If there are defects therein, require that the bank’s write down the total debt on the property to 90% of its current value, thereby providing incentive for the homeowner to stay with his bad investment, while forcing the banks to “give back” to the affected homeowners who were the pawns of Wall Street’s reckless greed and in part funded their continued existence.

  17. Tom Cox

    No doubt an easy out for the AG’s will be a slap on the wrist monetary sanction as was done by them in the Countrywide settlement. It is absolutely imperative that a dedicated fund on the magnitude of $100 million or more be set up to fund legal services corporations all over the country in providing representation to homeowners in foreclosures. This must be a dedicated fund as starving state governments will be desperate to get their hands on all of the money. There is already an excellent structure in place to administer such a fund that came out of the $15 million IFLA grant (Institute for Foreclosure Legal Assistance) that is now almost fully depleted and has been operated by the Center for Responsible Lending.

    1. La Caterina

      I second Tom’s idea. And I would add another $500 million to the states’ IOLA grant funds, proportional to the foreclosure rate in each state. It’s a start towards leveling the playing field.

  18. Jim the Skeptic

    1. They should act quickly to protect the states’ legal right to control real estate deeds and mortgages.
    2. They should collect penalties and fees if at all possible. MERS was a way around state and county fees and it has clouded real estate mortgages possible the deeds too. Those who used that system should be penalized, so as to pay for the corrections which will be needed. (New state laws, judicial interpretations, and complicated foreclosures all add costs to the states’ management of mortgages.)

  19. poopyjim

    They should wait a month or two before doing anything. Why?

    Because somewhere in that time frame the inevitable legislation legitimising the MERS fraud will be passed by Congress and signed into law by the great traitor Obama.

    Until then they may as well do nothing because afterwards they won’t be able to do anything and all their previous efforts will have been for naught.

  20. Jim

    Since the government and fed decided everybody was too big to fail, it is too late to handle the situation property.

    All I can imagine the AG’s could do at this point would be to force servicers and banks to have managers and executives write training manuals and give training classes on TV, at church, in the local community centers as kind of a service to the communities they screwed. They could describe in detail all in’s and out’s of mortage’s. How they went wrong, how it should be done, etc..

    Any manager, exceutive or anybody involved all the way to the top of a company that enguaged in bad practices would be required to give speaking presentations as community service on saturday’s, sundays, and on TV as punishment and to help educate consumers how to avoid these pitfalls in the future.

    Also make them tell what measures they will thake to avoid have this happening again.

    I can’t imagine any other way to punish these people and force them to change their behavior without plain accountability and embarssment. Unless they would be thrown in jail and all the companies liquidated and stock holders wpied out, and that is not going to happen.

  21. Paul Tioxon

    Since the banking industry refused to enter the 21th century until forced by 9/11 and the passage of the Federal Check 21 electronic banking reforms, the AGs need to review and press for similar e commerce records archiving and disclosure of all parcels of real estate on a block and lot basis, the history of the recording of deeds, liens, zoning and other material impact on lot size, title issues and timely removal of liens for paid in full debts. No lien shall be placed without an exit strategy, a legally mandated entity that will be contacted to verify an active lien or produce a letter of satisfaction of the lien, in writing, so that the lien can be removed. A transparent procedure must include this e commerce practice, publicly available for view on a properly maintained website, paid for by the real estate and banking industry that profits from the private property system instituted by the state and the nation by constitutional authority. It is not a free service mandated but unfunded by law.

    The Uniform Commercial Code should be reviewed for reform of the foreclosure of primary residences so that the real property rights take precedent over financial contracts for debt. This should not try to tackle bankruptcy law, but preceding that event. It should review models for institutionalized workout procedures or loan modifications to allow for people, if they are willing, to remain homeowners. The UCC should employ the principle of exhaustion, based on a sequence of legally instituted rights to workout the loan, modify the loan and keep families in their houses and in their communities. I envision something like the no fault insurance reforms that reduces the legal battling and gets people money for hospital bills and car repairs so they can get on with their lives. It is in the public’s interest to not incur the costs of what are the structural flaws of capitalism.

    We know for a fact that there are business cycles. We know for a fact that people will, through no of their own, get fired because payroll reduction is the default response by management to align reduced sales with costs. Yet, banks lend money on a 30 year basis, knowing full well that many of these loans will never be paid back, even with fully employed applicants with high credit scores. The expectation is that nothing will happen to the borrower, not death, no divorce, no downsizing and loss of income that will result in the lost capacity to pay credit obligations. The intolerable solution to this obvious state of affairs is the miserable foreclosure and bankruptcy disaster depressing our economy and ruining the lives of 10s of millions of people and their families. Foreclosure should be a virtually non existent, since people have to live somewhere. Criminal behavior should be treated like a crime, with lenders made whole in the case of fraud. But the criminal prosecution of the citizenry for living under this financial system, should not be a crime. With willing homeowners, there should be a no fault workout so people can stay in their homes and continue to be a part of the fabric of the community.

    1. dejavuagain

      Thoughtful

      I think that consideration should be given to requiring the recordation of both the note and the mortgage for residential properties, to be recorded within say 90 days. This would apply to all transfers and assignments. Failure to do so would make the mortgage unenforceable and the lender would become an unsecured creditor.

    2. monday1929

      “criminal behaviour should be treated like a crime”
      !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

      Do you realize how far we have lowered ourselves that the absurdity of that statement almost passed me by.

      This WOULD be eye-opening advice for the AG’s. But they are most likely to be bought-off with large fines extracted, with no admission of guilt, and the promise not to do what they never admitted doing, anymore, or at least, less so.

  22. noash

    I would like to see the State Attorney Generals do two things:

    1. Force banks to be honest about the lost paperwork and the mess they have made of the real estate market and offer REAL modifications of home loans. My house has lost 40% of the value it had when I bought it 3 years ago. I want banks to get a reality check like I have been forced to do.

    2. Address the MERS issue – Here in Minnesota MERS has been given a lot of power in the foreclosure crisis. The law was written by a MERS rep and no one seemed to notice. I find it disturbing that it was snuck in under the cover of darkness. If MERS is not a service provider or does not hold the mortgage they should not be given the power that only the mortgage holder should have when it comes to foreclosure.

    Honestly, I don’t hold out much hope that anything will be done but the states either. I actually called my Attorney General’s office 2 months ago to ask what I could do to compel my bank to send me the loan note for my house and they told me that the bank didn’t have to do anything it didn’t want to do. How’s that for representing the people?

  23. Master David Goodmen

    The owner of record is the one in the county records. Period. Records which are secret are not acceptable.

    The banks have to return the houses to their rightful owners, replace ALL belongings, and pay significant damages!

    The perps have to serve hard time!

    They need to build a state banking system, to prevent this recurring.

    1. Jim

      I agree all those big banks should have been wiped out and replaced with a fully funded temporary state bank designed to lend out money. The banks could be then sold to the highest bidder.

  24. jake chase

    What should state attorneys general do? I know what they will do: wrestle with one another for television face time, mouth empty platitudes about the rule of law, the sanctity of debts, the importance of the American Dream, the role of God, the fact that none of them is responsible for anything that went wrong.

    What will ultimately happen is that Congress will validate all the mortgage assignments retroactively, give the trusts power to foreclose, perhaps a power of attorney to name all intermediate assignees as plaintiff parties to the foreclosure action. What else can possibly happen? Do you think eleven million homeowners over their heads in debt will be getting a free house while every pension fund and bank trust department becomes a black hole?

    All this nitpicking concern with legalistic mortgage assignments only obscures legitimate rage over bankster looting and a government totally for sale.

  25. mk

    Make the banks write off 2nd liens and make the banks modify mortgages to reduce principle. If investors make a bad investment, MAKE THE INVESTORS SUFFER THE LOSSES! If the banks are engaged in fraudulent activity, PROSECUTE THEM! BREAK UP THE TOO BIG TO MANAGE BANKS. Make the banks keep loans on their books, no more passing risk on to dupes. Banks should operate as a public utility. Pay savers higher interest and encourage saving.

  26. wbt007

    Papering over a hole with a blanket fine by the AG(s)will be paid by the taxpayer, again, and the lesson will not have been learned.

    Let the justice system handle each company and/or executives according in each of the state courts. This will be a long,drawn out and painful exercise; however, the end result will be a legal system with a backbone.

    The law is the law and let it play out that way. Anything short of this would deminish the court system and this country.

    Fraud is fraud; and that is why we have federal prisons.

  27. mitchw

    We must respect the rule of law and the sanctity of contracts even when it means not crushing the little guy. Only justice will give the government back its mandate from the people. As it is now, I do not consent to be ruled, I merely fear the power of the state.

  28. minosgal

    If I can’t defend myself against property seized by forged documents, what is a contract, and how is it made binding?
    If I can’t own property, what is a fair tax millage rate for city or county services?
    If I am essentially a squatter in my own property, why should I pay any taxes?
    A couple of years ago there was a lot of derisive squawking on ‘moral hazard’ displayed by deadbeat homeowners.
    Such eerie silence on that subject now, as applied to financiers.

  29. toxymoron

    my 2 cents

    1. Let the past be the past; someone who acquired a property after a judicial foreclosure sale should have full and sole title to that property. This should protect the ‘latest’ homeowners against further harassment from other pretenders on title, 2nd liens.
    2. Effective immediately, only physical holders of the note and related documents have standing to foreclose. This will slow down (if not stop) all foreclosure activity, but at least it will allow (again) “due process”.
    3. Prosecute the “errors” of the past, eg the frauds on the court, the non-lawyers acting as lawyers.. This will not right the wrongful foreclosures, but will avoid too many companies profiteering from past looting
    4. Convince the NY AG to prosecute the trusts out of existence.

  30. Jim Fenton

    Force the servicers to actually carry through with modifications.
    We have been involved with a “trial modification” with CitiMortgage for over 15 months now. They have twice mistakenly taken us off the plan (by their own admission)and now have us listed as being in default to the tune of 36k and are hitting us almost $600 a month in bogus late fees. We have NEVER MISSED A MODIFICATION PAYMENT.
    I have my state Senators office involved, have filed a formal complaint with the MA AG’s office and still Citi hasn’t finalized anything and continues to ask for more documentation as it constantly becomes too old due to their inept foot dragging and screw ups.
    On top of all this, I know for a fact that they don’t have a copy of the original New Century Mortgage as the one they have doesn’t show my wife on it anywhere, yet the one which I signed is clearly made out to both of us and we both signed it.
    I expect any day that they will enter us into foreclosure, even though we have never once been even a day late with out modification payments.

  31. alan

    The AG’s should require the Servicers to take out Title Insurance and produce proof of it in court before they exercise their foreclosure right.

  32. LAS

    Servicer behavior is impacting every citizen in ways we’ve barely begun to fathom. Without the states’ AGs, who will champion the regular citizens (nevermind “financial consumers” for the moment)?

    To start with the most petty, while my problem is not as serious as others, I can’t trust my servicer. To avoid insurance cancellation and snowballing troubles, I’m going to have to double pay my home owner’s insurance because the HO’s insurer reports that the servicer is 2 months overdue with their payment (from the escrow account).

    Second, I’m worried about clear title to property when the mortgage is paid off in the next few years. I don’t know who has the note and what becomes of it when the mortgage is paid off.

    Third, to the extent that banks did not pass through notes to trusts to avoid municiple fees, they deprived local communities of tax revenues they were due, driving up property taxes.

    Fourth, many unknowing middle class people may be invested in residential real estate securitization products (through retirement and pension funds). Their funds also invested in bank shares which have tanked. How is this not investor fraud of these citizens?

    Fifth, if judges cannot determine who owns mortgage notes because pooling/servicing contracts were not respected, then in whose hands are we? When were these other entities designated with the power to supercede our laws? Where does it stop?

    Sixth, foreclosures appear to be the result of one predatory phase of behavior of a financial services entity following after another, multiple times. Let us finally see how it all hangs together, who has benefited and who has lost. Let us include all the social costs as well as the economic.

    Seventh, who can do business without trust? Who wants to purchase property without trust?

  33. s gray

    “What do you think it should stress? What issues do you think they should examine? What remedies and measures should they consider? ”

    State AGs should encourage and support every county tax assessor/collector (or other entity responsible) to collect monies due for every transfer made through MERS or any other entity. There should be late fee penalties attached.

  34. Plutocratic Rome

    Why waste any time communicating in vain with so called representatives? The majority of State Senators interests are those of the banking business. I’m being as real as possible, without cynicism, how the housing bubble and subsequent results shows once and for all how we do not live in a Democracy. The court systems weigh in favor of the debt collectors, access to due process is nearly unheard of for an individual with limited means and limited access to good information. Government agencies have shown relentless contempt towards people who are losing their homes, either through outright indifference or creating programs that have nothing to do with homeownership. There is no pressure on a majority of elected officials, attorney generals have little to fear from a majority of the populace that doesn’t bother to vote in sham elections where the rich and powerful control the results. If it makes someone feel better to receive a form letter from their elected dumbshit saying that they”will contact Fannie Mae” and help you out with your loan mod go right ahead. I’d suggest it’s a complete waste of time, but you aren’t out of options. You have a limited number of allies at any level of Guv’mint, the sooner you realize this the better.

  35. f247

    The AGs have an unique opportunity to strong arm banks/servicers in a way that few groups have had during the whole FC mess.

    There are not a lot of sticks for servicers, so the AGs need to think about what types of punishments have the potential to really change behavior. This should take the lump sum settlement idea completely off the table b/c the size of the settlement required to have an impact would never happen. I think a settlement is absolutely the worst idea b/c it tells servicers that they have put their problems behind them and they will go back to their worst behaviors.

    First, I think the AGs need to focus on mandatory principal reduction for all underwater borrowers. This is the only real stick that will change servicer/bank behavior, improve borrower position, reduce FCs, and should at the end of the day provide better recoveries for investors. The idea here is to scale this to provide the most help to the most underwater mortgages while at the same time getting buy-in from the NY/NJ/DC crowds. I assume the main obstacle preventing this will be the still absurd balance sheet valuations on 2nd mortgages; that should not be insurmountable, and it should actually be used as an additional stick.

    Second, the US govt needs to own a servicer within any type of restructured GSE model. This should be a priority and they can take care of it NOW, then merge the servicer into whatever model the GSEs adopt when legislation gets around to it. Owning a servicer would give the GSEs a much more credible threat/stick in the form of pulling servicing from those unable/unwilling to help borrowers. The large servicers have had years to add real capacity at this point, but they have little incentive to do anything b/c they don’t want to invest in something w/o long-term strategic value.

  36. Robert Jackson

    The AGs need to know which law firms were using LPS. I have a partial list of these firms. Of course, they cross reference very well with the Fannie/Freddie approved attorneys list.

  37. AR

    The AGs should audit the servicer and LPS software and analyze for fee-padding, ‘losing’ borrower paperwork, algorithms for stalling, gaming HAMP, etc. in order to maximize servicer rake-off.

    The AGs should also determine where the mortgage payments go; how they are allocated. It has been my suspicion for some time that the money sent to the fictitious MBS trusts was meant to cover-up and stall discovery of the fact of the trusts’ non-existence under law. How do mortgage payments get allocated when the mortgage has been sold into multiple pools? Where does the extra money come from to stand in for the 2nd or 3rd duplicate payment stream? Subpoena the MBS Trustees to determine who is their master. They seem to be acting as gatekeepers, protecting the malefactors from the duped investors.

    If the software is found to have algorithms designed to direct or abet illegal acts, then go after the corporate executives responsible for the design of this software and its continued use. Do whatever is necessary to investigate and prosecute the crimes of LPS, and shut it down. Shut down NewTrak. This will break the connection between the servicers and foreclosure mills.

    Find out who is manipulating the defaulting mortgages that somehow get ‘assigned’ into MBS trusts only as they default. Prosecute these people. Stop foreclosures using notes endorsed in-blank. Make entities seeking to foreclose produce a papertrail to prove they are holders in due course and owners of the notes. Declare all paperwork signed by known robo-signers null and void (after deposing them all to establish what we already know about their role).

    1. f247

      Is there evidence that selling mortgages into multiple pools was really rampant? I don’t doubt that it happened, but I’m always confused by the suggestion that it was pervasive. Your question, “Where does the extra money come from to stand in for the 2nd or 3rd duplicate payment stream?”, is basically where I get stuck.

      re: LPS, here’s what I have been wondering recently (and it’s admittedly just a conspiracy theory). I was looking back at the original announcement when FNF bought DocX in ’05, which refers to DocX as “a provider of mortgage lien release solutions, assignment services, county recording office requirements and fee calculators to the mortgage banking industry.” I have also read that one of the reasons for creating MERS was to avoid some county recording fees and taxes. Is there a chance that providers still charged fees for country recording/etc., but these never actually took place?

      1. AR

        It’s hard to make sense of how the scam of multiple sales of mortgages, and keeping track of payment streams was done. But the quants probably figured out how to keep track on spreadsheets, at least long enough to collect the CDS pay-outs when things started falling apart!

        I think the title companies colluded with the banks. Clearly Fidelity National did, only spinning off LPS when things heated up in 2008. And earlier this fall the title insurers got indemnified by the banks, which may have been just a matter of threatening to keep quiet lest the entire thing blow up.

        I would presume the standard fees collected for recordation at settlement were used to record the mortgages in MERS’ name. It’s the subsequent assignments/transfers that occurred only in the MERS system that weren’t recorded. These transfers were effected by members executing what are termed ‘electronic handshakes’ on the MERS system.

      2. readerOfTeaLeaves

        Although the stated reason for MERS was to have a nationalized database system and make it easier for banks (and also bypass local recording fees), I don’t necessarily accept that at face.

        If one wanted to create a huge, enormous system of fraud, you’d need to create a federalized database, a la MERS. Consider that Magnetar probably could not have occurred without a structure like MERS.

        I think the claims of bypassing local fees were purely obfuscation, if you look at how valuable MERS would have been to someone who wanted to commit massive, nationalized fraud.

  38. ohioralph

    Janet Tavikoli has produced the following 40 page slide show describing every element of the foreclosure fraud scandal. This presentation must be a part of this open letter. With this documentation, the RULE OF LAW must be enforced. Anything else is an invitation to anarchy and a destruction of the United States of America.
    http://www.scribd.com/doc/44915502/FHFA1282010

  39. fiscalliberal

    I would support more tate regulation, because Federal regulation does not seem to work. I would reference the 2004 OCC Premption rule which took local fraud out of the hands of the State AG’s. OCC did not prosecute fraud at teh local level – hence by policy there was no regulation of the Sub Prime loan origination activities.

  40. john cruise

    now is the time to copy n dakota with a state development bank
    it provides an alternative to tbtf mega banks.dont be niave
    to think mega banks will be brought under control-it would
    have already happened if that were so.50 state ags only want
    dollars.you can talk all day about about blatant,continuos
    overwhelming fraud but when each state develops its own
    banking system a la n dakota then and only then will there be an improvement in our economic,financial and even spiritual life.

  41. MichaelC

    What are the objectives of a settlement?

    If the aim is to assess a penalty to avoid prosecution by the State AGs, the AGs should be clear about what laws are being violated and are germane to settlement negotiations. Continued violation of those laws will not be included in any settlement.

    The objective of the settlement should be to coerce foreclosers to obey the law or face prosecution:

    Specifically,

    1.Priority one should be: AGs will prosecute fraud on the court. Set up a division devoted to bringing cases against those who have engaged in fraud on the courts and do that today please.

    2. The AGs should clarify who has standing to foreclose (ie declare definitively that MERS has NO standing, Only parties that have proven to the borrower that they own the note can foreclose, lien/note must be registered at county before foreclosure can proceed… , ).

    Its not clear to me what the AGs intend to investigate, or how their authority can be used to best advantage. They don’t legislate, and a lot of suggestions I see must be left to legislators. Their remit is enforcement of the laws so it seems to me first order of business is to determine how they prioritize the violations before any discussion of massive settlements are contemplated.

    Its the cart before the horse talking about the form of a settlement when we don’t yet know what issues they want to settle.

    Let’s help define the issuese they will use their power to enforce.

  42. lester judge

    Anyone who signed an affidavit as a robo-signer should be charged with perjury. Anyone who misused a notary seal or signed as a notary without personally witnessing the affiant signature on a affidavit or signature of conveyance on a deed, note or assignment should be prosecuted and permanently barred from being a notary public. Anyone in a supervisory position that directed a subordinate to sign an affidavit as a robo-signer or misuse a notary seal should be charged with conspiracy. Any company, corporation or partnership that engaged in the use robo-signers, false notarization of documents, computerized signatures and notaries, and back dating of documents should be prosecuted for racketeering.
    Jail the criminals including the officers an boards of directors.

  43. Reader

    I think the ultimate shape of the settlement should be something along these lines: the state AGs will “forgive” the document-related sins of the nominal owner of the note (or, alleged nominal owner) IN RETURN FOR principal write downs to current fair market value. The “forgiveness” could take the form of a stipulated order to quiet title or something, and the FMV would be determined by some formula based on comp sales (since, absent a true market transaction, FMV is essentially a fiction). They could do interest rate reductions, term extensions, recasting, whatever as well, but the principal mod is the important thing. Of course certain borrowers couldn’t even pay for the reduced-principal amount, no matter how it is recast; these borrowers, once identified, could still be evicted and the homes repo’d.

    I fear that the full consequences of taking the document fraud to its logical conclusion would be considered excessive, certainly by investors, and ultimately maybe even by the public. If you take away any claim on behalf of the note holder, someone got a “free house” which just seems unacceptable (even if the bank doesn’t really deserve it either). Also, another important consequence of that would be to essentially cloud that title FOREVER – or at least until someone else lived there long enough to claim adverse possession – which is 40 years in some states. Stipulating to a quiet title would eliminate this problem. Another lien for the crammed-down amount could be recorded after the quiet title.

    Ideally, this should be coupled with legislative / regulatory reform to the RE recording system in the various states. In a certain sense, MERS was attempting to address a real problem with the slow, cumbersome nature of shuffling around actual pieces of paper to keep track of RE ownership. The solution they came up with – privatizing the whole affair in an opaque, unaccountable database – was of course unacceptable. These records need to be held by a public entity, need to be publicly available. But the system can be reformed to better reflect how investors are actually tracking and trading these notes. (And let’s face it, mortgage securitization will eventually be making a comeback, some how, some way.)

    One thing the state AGs must NOT do is fall for the banks’ BS rhetoric about the potential for increased, “inefficient” lending rates in states that “violate the sanctity of contract” and blah blah blah. Essentially the story will be that if state XY forces these cram-downs, no bank will lend there in the future for fear that they will get crammed down, or if they do lend, it will be at a punitive rate. This is an empty threat – it makes sense in an EMH model, but does not play out empirically. Sorry I don’t have a reference, but I’m pretty sure Elizabeth Warren did a study on this a while back. States that have “anti-lender” policies (such as Texas, which has a HUGE housing exemption that applies during bankruptcy) do not get smacked with higher borrowing costs. It just doesn’t in fact happen.

    So, bottom line: throw servicers under the bus (by quieting title, thus stopping foreclosures), make the investors take a haircut (by reducing principal), keep the families living in (and paying for) their homes, and improve the RE recording system to remove incentives to game it with a MERS-like system in the future.

  44. Custerluck

    The only actions that will stop the fraud is going to be the willingness of the state AGs to strongly enforce the law.

    Start with the crooked mortgage company folks that not only falsified mortgage loan documents, but also charged exhorbitant fees. Put them in prison.

    Someone has already commented on the Title Companies. Of course they are complicit. None of these abuses would have occurred if they had insisted that the law be followed. They are the ones that have filed false records into the state register of deeds offices. Put them in prison.

    The original bankster lender and servicer. These are the people that are now hiring document manufacturers to falsify records. They then pocket any foreclosure profits instead of returning them to the original investors of mortgage backed securities. Put them in prison.

    Finally we come to the bankster attorneys. They are the ones that are deliberately ignoring state laws to foreclose on people that have no one to defend themselves. These maggots should be disbarred by thier respective states. Put them in prison.

    Finally, the homeowners that are being foreclosed upon. Point out that your mortgage has already been paid by the U.S. government in TARP funds, and numerous buybacks by the FED for the bankster’s non performing mortgage backed securities. Instead of making further payments, take a vacation.

  45. Stephen

    I read an academic paper recently in which the authors argue that the bail-out was anticipated by the market. In fact the return of stocks with a high exposure to the housing market reacted positively to decreasing housing prices after the TARP announcement. This alone is troubling, but the authors further explore the voting behavior in the senat and house when they voted (twice) for the TARP program. Guess what? Lobbying paid off, members with high amounts of campaign money from the financial sector where more likely to vote Yes. If these findings are confirmed by further studies THIS is what they should look into.

    Further details here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1722796

    (when I checked a minute ago the paper was under revision, so maybe you need to check back later)

  46. readerOfTeaLeaves

    First, I assume that the people who set this systemic fraud up, and many who participated in it, consider themselves ‘untouchable’ and can’t imagine that anyone will ever call them to account.

    Second, I assume that if the FBI can find the needle in 100 haystacks that wwas Eliot Spitzer’s bank transfer to pay a call girl, then they can bloody well locate e-transactions between banks, title companies, LLCs, mortgage borkers, et cetera. So any claims about not being able to find information seem suspect to me.

    Third, put a lot more pressure — PUBLICLY! — on Congress to fund at least 5,000 new FBI investigators, with working relationships with their respective AG offices. (Yes, I expect strong lobbying against the idea, so it goes right back to an earlier point by Francois T — get a solid PR group together and get **your message, clearly and simply, out to the public.**

    Fourth — although computer security is not my field, a few random thoughts —
    1. For starters, ensure the FBI or someone with legal authority put a whole lot of computers and hard drives under examination. Boom! Let the FBI sand your local law enforcement show up unannounced and impound the damn things. Any overwritten, or undocumented files are automatically suspect. Period.

    2. Start issuing subpeonas for IT and all digital trails — again, if the FBI and the NSA can find Spitzer hiring a hooker, they should be able to spot leaking money through the system.

    3. Get information on all network topologies (what were they, when did they change, who authorized the changes, who implemented the changes) since at least 1998.

    4. Get a very precise view of all database structures, systems of access, user profiles, user authorization levels (including overwrite abilities), and make sure that the AGs basically pull together to hire a top-notch computer forensics group that can show them the ENTIRE system: topologies, software codes, database structures and permissions settings, authorization structures, and any and all signs of overwrites, deletes, or hacking.

    5. Have part of the AG task force hire a group of programmers to go line by line through the programming code, and get some very straight, simple answers about who set the specs, how they were implemented, who had access to update code, who had authorization to overwrite.
    What was the code supposed to do? What was the file structure? (I’ll leave it at that; the forensics guys know far more questions to ask than I do. But there are lots of ways for someone to build ‘Trojan Horses’ and the forensics folks can probably track that down.)

    6. Figure out some way to get information about any linkages between LLCs (which are basically set up every time a subdivision is created; sometimes multiple LLCs are set up for every development) and then figure out whether – or how – those link to CDS’s or CDOs. Work with the IRS, because those AGs need to look for any large developers (housing, commercial) who put projects on the books, then took out CDSs knowing they weren’t going to be built within the agreed upon timeframes.

    I sincerely hope those AGs find some very, very good computer forensics people to dig into the network structures and codes of what was happening; much of the problem is probably innocent — people making poor decisions based on bad information. But that means the AGs will need to explain how bad the system is so that it can be redesigned from A to Z.

    Then again, some of the decisions enabled fraud, and those who made those decisions need to be called to account. Until they are — and unless they are — we basically have a lawless situation, a predatory environment that is profoundly socially destabilizing.

    I’d also hope the AGs would find time to read Econned — certainly the section on Magnetar — because they need the economics context. Also, at least a few of them (or their staffers) would greatly benefit from the information in “Demons Of Our Own Design” by Bookstaber (which is about the development of computing and derivatives since early 1980s), as well as view a few of the “Let Markets Be Markets” videos (online, simple to access) for a good, quick-and-easy overview of the long term damage to the economy when markets are not able to function.

    Long comment.
    Hope it will be useful for someone, somewhere…

  47. indio007

    They should be handing out uttering a false document charges like candy. There can’t be perjury charges on the affidavits because there was in fact never a notary present to swear them in.

    Since the judiciary is protecting itself from executive scrutiny, the AG’s should be running workshops on how to successfully prosecute judges AND by abstaining from backing their claims (as a 3rd party intervenor)of qualified immunity if there is fraud on the face of the foreclosure claims.

    Let hem back their own play.

    1. monday1929

      Remind the states how much they will save on pensions and health-care for Judges who are dismissed for cause.

  48. razzz

    One case at a time until banks and their cronies can’t see straight. Death by a thousand paper cuts. One lost case incurred by a bank triggers even more lawsuits from investors, well deserved lawsuits.

  49. Dennis Long

    Couple of things:

    1. During the collapse, a common phrase was “no-one knows what is in these things” and if you were creating a security like that would you be 100% honest?

    2. Option-Arm mortgages; what is the purpose of a mortgage designed to fail, if not to defraud the people buying the securities

  50. Bobbo

    The easiest, quickest and least expensive thing for each attorney general to do would be to issue and publish a formal legal opinion. An attorney general’s legal opinion, while not binding on the courts, is good authority for what the law is, or how existing law should be interpreted, in the state.

  51. CaitlinO

    Our municipalities and counties are in a state of depression due to reduced property, income and sales taxes. Reductions that were a direct consequence of the economic downturn which was brought about the banks’ abysmal behavior.

    To head off further cuts in vital services like public health, roads, schools, fire and police, banks need to re-imburse local governments for all the transfer of title fees they stole through the sham of MERS. With triple damages, of course.

    I’m just tired of hitting potholes and being hit up for more than a thousand dollars in fees for public school.

  52. ZADOOFKA FLORIDA

    Appoint Elliot Spitzer REAL ESTATE CZAR. Pay Hati to keep the banksters & services in one of their prisons.

  53. 60sradical

    Yves: thanks again!
    The recent foreclosure fraud,wicked servicers, robo-signers, clueless judges, tricky lawyers, and a near totally ignorant public regarding matters of mortgage and the promissory note have exploded over the last, what?–three months?
    For me, the big 40 ton gorilla crushing the living room is, by all means,SECURITIZATION!!! This nefarious, fraudulent beast of seemingly infinite size and implications(consider cds and “synthetic cdos”)has allowed a global kleptocracy to gain enormous, perhaps unstoppabe corrupt power. It is a financial cancer that has reached into the heart of every American mortage trustor and god knows how may foreign holders of notes and deeds of trust. The securitization frenzy(“originate the mortgage to securitze it”) has literally fed a global mega-octopus with layer upon layer of fraud and theft. It allowed a financal criminal mind-set to firmly evolve and entrench itself as a system which politicians stamped as “legal”.
    If the 50 attorneys general can begin to seriously deconstruct not only the millions of criminal deeds, but actually come to grips with the depth of criminal psychology which it engendered, then maybe, just maybe, we have a chance. Otherwise, I would advise anyone under 60 to practice farming with no elecricity and learn how to raise chickens, milk cows and handle draught animals.
    Thank you so much for your efforts. I know you and your freinds(“freinds of Yves”) will fight the good fight!

  54. Barbara Ann Jackson

    Please urge the Attorneys General to investigate THE LAWYERS WHO FILE FORECLOSURES!

    Appalling, unfair, illegal, and self-dealing actions are being committed by certain attorneys. Aside from examining mortgage lenders, securitized mortgages and modifications, there is a critical need to look at the deliberately falsified foreclosure pleadings that are filed by certain foreclosure lawyers –some of which enable lawyers to personally gain unlawfully people’s homes; and render some families homeless -UNLAWFULLY.

    Please ask the Attorneys General to see THE PETITION,with 163 signers that was started for the purpose of calling attention to the need to investigate the serious, serious problem of lawyers who intentionally file false foreclosures via use of false pleadings, and even non-existent lenders’ identity.

    Here are several statements contained in the PETITION that was targeted for the “Congressional Foreclosure Panel” –of which 163 people from across the USA have signed:

    “. . .The following facts and reasons demonstrate why it is imperative for foreclosure lawyers to be examined as thoroughly as this Honorable Congress has done for the banking industry:

    - With deliberate use of defunct lenders or lenders without “standing,” certain foreclosure lawyers intentionally execute false foreclosure proceedings. With the identity of a defunct lender, some lawyers carry out “simulated” foreclosure auctions, and instruct auction sheriffs to record property deeds into the names of defunct lenders.

    - Some foreclosure lawyers purposely create delays –which are not authorized by their lender clients, of home foreclosures. Blatant misrepresentation to conceal those delays often succeeds by falsely portraying to the courts and to their clients, that homeowners caused the delays through schemes to get ‘free houses’. However, the reason that some free houses were ordered by judges to be awarded in certain cases was due to egregious fraud on the courts and sanctions against those lawyers. These lawyer falsehoods cause courts to be hostile to homeowners –also known as deadbeats, when such fabrication enable foreclosure lawyers to engineer foreclosure litigation which generates additional legal fees from lender clients.

    - Various illegal activities, as well as actionable wrongs committed by foreclosure lawyers give rise to lawsuits for damages. Most of those wrongs are malpractices that are concealed from lender-clients and Investors, who incur the legal tabs. An example of conduct for which foreclosure lawyers are being sued is, Unfair Debt Collection Practices associated with acts of fraud, civil torts, and unconstitutional wrongs.

    - Certain foreclosure lawyers file appalling, fraudulent proceedings in U.S. bankruptcy courts –including deliberately false “Motions to Lift Automatic Stay,” on behalf of non-existent lenders, and lenders that do not own “secured interests” in mortgage notes. Fraudulent bankruptcy filings by foreclosure lawyers violate federal bankruptcy law, illegally conceals the fact of “unsecured” mortgage debt, and unfairly deprives bankruptcy debtors from specific rights under Bankruptcy Statutes, namely, “avoidance.”

    - Some foreclosure lawyers obtain unjust profit from foreclosure fraud when they falsely file “deficiency judgments” against former homeowners. Unconscionable deficiency judgments from “simulated” auctions include foreclosures that were executed in the name of non-existent lenders. Use of defunct lenders’ identity also enable ‘straw buyers’ to “credit bid” and walk away owning those homes!

    - Until recently, courtroom judges have utterly disregarded the legal requirement of “standing.” Instead, almost all judges formerly demanded that homeowners cure their mortgage arrears or their homes would be auctioned. Most judges still ignore laws of standing, and thereby facilitate the ease of foreclosure fraud, and the injustice of numbers of people becoming illegally homeless. . .”

    Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
    http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#

    1. financial matters

      This is another high stakes game of ‘too big to fail’ blackmail. The battle to legitimize all the faults of MERS to ‘save the system’ vs states’ rights to reclaim legitimate property titles is going to be interesting….

      http://www.huffingtonpost.com/l-randall-wray/merss-smoking-gun-part-1-_b_794713.html

      The second thing to note is these documents demonstrate that failure to properly endorse the notes and transfer them to the REMIC trustee was not an occasional mistake, but rather was MERS’s business model. As we will see, MERS planned from the get-go to defraud the counties, and the IRS, and the homeowners, and the buyers of the mortgage-backed securities.

      And it expects to win. The fraudsters have Congress in their back pocket and plan to rush through legislation to validate ex post all of their illegal activity. It is almost a foregone conclusion that Congress will pass a law early next year to legalize everything MERS and the big banks did — lending fraud, recording fraud, tax fraud, securities fraud, and foreclosure fraud. There will be no rule of law to protect private property in the United States. Wall Street can claim any property it wants — no proof required.

  55. Augustus Melmotte

    Unfortunately, Tom Miller of Iowa has made it clear that the Attorneys General are completely uninterested in criminal penalties and view this as a revenue collection opportunity similar to the tobacco settlements. I.e. for a sufficiently large bribe, the states will look the other way.

  56. JW

    Enforce the law and uphold the Constitution! This crisis, which is actually the new and improved version of the Savings & Loan Scandal of the 1980’s, could have been avoided if the courts had simply followed the laws that have been on the books for more than a century.

    State, federal and bankruptcy laws have been sliced and diced like a mortgage-backed security to provide relief to the mortgage industry. The courts raise the bar to the homeowner and remove it for the banks. If the homeowner makes a mistake, the court grants judgment to the imposters. When the banks get caught presenting false statements and evidence, the courts grant the banks leave to do a do-over or a three-over. Many courts willfully create a climate to drain the homeowner’s resources. All of this is insane!

    In an Ohio article: [B]ucha and other Cuyahoga County judges said they fear document foreclosure defects may give former homeowners a claim on the title that will affect future sales. That scenario fuels Judge Russo’s sense of urgency to sort out problems now, she said.

    “If courts around the country do not handle this on an individual case basis and there are later problems with the title, the courts will have participated with the clouding of the title,” Russo said. “The potential for harm is so immense at so many levels.”

    Moreover, victims of these foreclosure crimes must be allowed access to the courts whether they can afford to pay or not. If they can’t pay, state law and the Constitution mandate that litigants are allowed to proceed by first filing an Affidavit of Indigence, but the courts ignore the affidavits and dismiss the case.

    Case in point: For eight years, I was falsely accused of being in default. When the case went to trial, the imposters confessed they did not own my home; testified I was never in default and had actually overpaid, and even admitted to the court that they had been trying to steal my home and equity. Within seconds of this last admission, the judge shut down the trial, recused herself and my attorney withdrew. It took 33 months before the court would release the transcript, and it was discovered all of the imposter’s admissions of guilt had been removed.

    With foreclosure and false claims of a default off the table, once the judge, my lawyer and the transcript were out of the way, and after I had exhausted more than $600,000.00 worth of court and legal fees, the imposters feloniously influenced 20 people (including four sheriffs armed with handguns), to raid my home, restrict my movements and take possession of my home, personal property and the tools of my trade. This was done [without] court involvement and [without] a court order.

    I filed suit with an affidavit of inability to pay, but the court denied it without any testimony or evidence from the other side. The court later held a hearing where the sheriff’s attorney testified that his client was not at that location during the eviction. In response, I submitted into the record, an 8×10 color photograph of the constable standing in front of my home watching my personal belongings being removed. Witnesses at the hearing said the judge became visibly shaken and then he dismissed my case, sanctioned me $7,500.00 and I am not allowed to file anything without prior approval. My appeal of his judgment was denied 12 days before it was due.

    Recently, I discovered my “unsecured and non-negotiable” note was destroyed on or before 1992, due to the fraud discovered in the origination. My loan originator failed in 1992. Two (2) lost note affidavits were robo-signed and created and the worthless note was packaged into at least (3) separate mortgage-backed securities.

    Law firms all agree it is a fascinating and powerful case, but refuse to take it because I no longer have the $100,000.00 to cover costs of litigation.

    The criminal’s blueprint is designed to ensure judgments are granted in favor of the party with the most money – not on the merits.

    Had the initial court had followed its own local rules, I wouldn’t have spent more than a day in court.

  57. Return2Sanity

    There was a paper published by the Center for Public Integrity yesterday which you must read:

    http://www.publicintegrity.org/articles/entry/2752/

    It shows how banks (using corporate aliases) are quietly buying up the legal right to foreclose on homeowners through a back-door process. Bank of America and Fortress Investment Group are currently spending hundreds of millions of dollars to buy property tax debt at auction. By buying the tax debt they also obtain the legal right to foreclose on the property if the taxes remain unpaid. I’ll bet that soon you won’t see any more robo-signed docs coming into court. Instead you’ll see the tax lien certificates that these banks have purchased at auction, and those will be not be easily contested.

    1. Anon

      The banksters have screwed the mortgage business, but have created their next prey in the process.

      The banksters now morph into debt collection agencies to squeeze the last bit of juice out of those to whom they sold Option-ARMs to in the first place.

      They will threaten, and bully, and cajole, and call you 10 times a day at your place of work (if you still have one), all in the hope of collecting 7-10% on the debt, now inflated with fees and whatnot, they deem themselves to be “owed”.

      It’s win-win for them, or in the words of the Isley Brothers, how can you lose with the things you use?

  58. Harold Barnett

    A meaningful solution to post meltdown mortgage debacle requires squeezing the middleman – the banks/securitizers and their servicers.

    To investor suits for breaches of reps and warranties we now have the added claim that “endorsed in blank mortgages” were never properly put in the trusts. Investor should have the money returned. On financial grounds, investors might prefer effective modifications over foreclosures. Servicers reject this option since it would result in their having to write down the value of seconds and other mortgage related assets on their books. Further, servicers come out ahead financially in foreclosure vs. loan modification.

    Homeowners, and the housing market, would clearly benefit from balance reduction loan modifications and the waiving of already imposed manipulative fees. This would help borrowers who could then afford the lower monthly payments and those who would have been able to afford modifications if their credit and resources had not been depleted as a result of securitizer advice and actions.

    Legal leverage for the AGs could come from the allegations that securitizers misrepresented the trusts as containing assets that were not included in a timely and legally acceptable manner and that servicers foreclosed on properties for which they did not hold the mortgage. The Feds are arguable more concerned about the health of too big to fail banks that the interests of investors or homeowners. The AGs might be able to forge a settlement where some bank capital is directed to balance reduction modification.

  59. Barbara Ann Jackson

    URGENT need for Lawmakers to take action! Scores of HOMEOWNERS DO NOT CONTEST FORECLOSURES BECAUSE:
    1. They don’t have knowledge of the law in order to recognize which aspects of foreclosure are legally challengeable or even fraudulent.
    2. And even those who identify wrongdoing lack funds to pay for attorneys to represent them.
    3. Homeowners are told to come to foreclosure auctions with $$$$$$$ that they do not have, SO THEY STAY AWAY from foreclosure auctions.

    These homeowners are oblivious about sometimes “straw buyers” and sometimes lawyers in charge of foreclosures, obtains ILLEGAL ownership of people’s homes; and pay literally nothing through “credit bids;” and that those recorded deeds from such auctions are null! For these very reasons, there needs to be a probe of lawyers who file foreclosures. http://chn.ge/eU2zAm

    Also, the average lay person doesn’t know about legal REQUIREMENTS of “standing” that prevents their homes from being repossessed via non-existent lenders or via lenders which have no ownership of promissory notes.

    Yet, COURTS ARE SUPPOSED TO ENFORCE STANDING and compliance with established laws! Illegal, defective, fraudulent foreclosures are the cause of useless property deeds for real estate sales; title insurance companies refuse coverage on foreclosed properties –and more!

    Further, after certain foreclosure auctions (via simulation) result in fraudulent – NOT LENDER ACQUISITIONS, by lawyers or straw buyers, the common scenario becomes property flipping, neighborhood blight, rodents, and so on!

    *MORE info: Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
    http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#

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