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Another Schneiderman Con: Proposes Likely-to-go-Nowhere Foreclosure Fraud Legislation

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Having sold out the possibility of getting a decent settlement for homeowners for a seat in Michelle Obama’s box at the State of the Union address and a star turn on a Potemkin mortgage fraud task force, Schneiderman appears to be an adept student of the Obama strategy of preferring empty gestures to substance, since they generate good PR and take a lot less effort.

The latest headfake is that Schneiderman has presented a bill to the New York State legislate opposing foreclosure fraud. What’s not to like? Well, for a former state Senator who got some heavily contested legislation through, Schneiderman appears not to even be doing the basics. From the Politics on the Hudson blog:

Schneiderman said the bill has an Assembly sponsor in Assemblywoman Helene Weinstein D-Brooklyn, but he didn’t mention a sponsor in the Senate—where Schneiderman was a member.

No Senate sponsor for a late-in-session bill? And it’s even later than that. Nevada’s attorney general, Catherine Cortez Masto pushed for legislation to criminalize foreclosure abuses and it became law last October. Schneiderman and Masto were almost certainly communicating last year; he was probably aware of the legislation before it was passed. Why did he take so long to launch (feebly) a similar measure here?

By contrast, the New York courts were swift to act when the robosigning scandal broke. A mere month later, it imposed a certification requirement which had the effect of lowering the bar for sanctioning attorneys for failing to take “reasonable” steps to verify the accuracy of documents submitted to the court. This has a chilling effect. Foreclosure filings plummeted. This was a de facto admission that the banks were not able, by legal means, to establish in court that they had the right to foreclose.

Now one might argue that this bill (were it ever to pass) still has merit because it, like the Nevada bill, criminalizes foreclosure abuses and preparing other types of false mortgage documents (like HUD or FHA documentation), and not just for attorneys, but for other document preparers and their managers. Even so, Schneiderman’s bill is less bloody minded than Masto’s. Hers had up to 10 years in prison and a $10,000 fine per violation. By contrast, it takes five or more incidents of bad conduct in one year to get a class E felony conviction, which would lead to up to four years in prison.

A big potential weakness in the Schneiderman bill is it requires that the staffer or manager preparing/overseeing documents believe they are false. Ex bogus notarizations (the rules there are simply and widely understood), servicer personnel are convinced they did nothing wrong. And I am not making that up. I spoke at a conference on the chain of title issue, and servicer managers there treated me as if I was crazy. They seemed to have absolutely no appreciation of how pooling and servicing agreements stipulated how mortgage notes were to be executed (through a specific chain of title by a date certain, with wet ink signatures). Even when I explained it privately to some of the smaller “combat servicers” (one with much higher levels of staffing who can handle portfolios with high levels of delinquencies and do mods), they were incredulous. Similarly, I’ve seen a lawyer at a supposedly reputable law firm admit under oath to executing documents they weren’t empowered to sign. She didn’t seem to recognize the significance of her revelations.

I’m told procedures developed in the servicing industry in the wake of the S&L crisis to transfer loans out of failed S&Ls, and the same processes have been used with securitized loans. But the problem is you can transfer a bank-owned loan any time, right up to the eve of foreclosure. A securitized loan is a completely different beast. That doesn’t mean in gross situations (“surrogate signing” aka forgeries) that employees would not recognize that what they were doing did not pass the smell test, but I can see servicer staff saying with a straight face that they thought there was nothing wrong with fabricating an allonge.

But we are nevertheless going to be subjected to more praise of Schneiderman’s empty accomplishments, when the focus should instead be on his betrayal, of joining the mortgage task force and going silent on where he stood on the mortgage settlement, which enabled the Administration to push it over the line. But with Netroots Nation heaping praise on him, there is no reason to expect anything other than political theater from the New York attorney general.

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49 comments

  1. C

    This route was also taken by Kamala Harris. She submitted a range of good bills to the California Assembly. One of which was the, seemingly no brainer, requirement that those who seek to foreclose prove they can do so.

    The bills were brought to the floor but abruptly pulled from consideration by the head of the banking committee just mintues before a scheduled hearing on them. They have since disappeared into the bowels of the assembly.

    1. Susan the other

      All the forgeries are intended to prove ownership. It’s so crazy that they go to this extreme and then play dumb as if to say, So what’s so important about a clear title?? They really can’t have it both ways, unless of course there is a collusion of politics and finance protecting this crime wave. That collusion just peeked out the door and got caught:

      The Trans Pacific Partnership secret trade pact that everyone is justifiably filling their shoes over is a manifesto of crime. (Democracy Now vid.) One of the clauses it is promoting is that individual government authorities cannot ban risky financial products and services! This bit of info goes a long way in explaining why our “government” (which is the Big Pusher behind this secret pact) has refused to prosecute the godawful mess our banks made. They are buying time until there is a global trade law, complete with its own forum of “justice” which gives international corporations like our wonderful megabanks, their own set of rights and priveleges without any social responsibility to justify it.

  2. Conscience of a Conservative

    You mean to tell me we don’t have laws on the books that deal with this. And NY is a judicial state. The problem here is not lack of laws, but an unwillingness to enforce them. I’m reminded of the controversial Sarbanes Oxley laws which many on the right cry are a burden and an expense and further reminded by the lack of a government to enfroce those same laws(e.g. Corzine)

    1. Walter Wit Man

      Bullshit we don’t have the laws on the books.

      This is yet another excuse for the Democrats for not prosecuting crimes already on the books.

  3. timotheus

    Anyone with a pulse knows, or should, that the act of proposing a bill means zip and is equivalent to praising motherhood in dear-constituent bulletins. Plus, Schneiderman is not in charge of generating legislation–that was his old job–but of enforcing it. It’s hard for me to believe that even gullible Kool-Aid chuggers at Netroots will fall for this, but no doubt your pessimism is warranted.

  4. Norman

    Is anyone sharpening the blade of the Guillotine, or is it set in stone that it’s K-B jelly time?

  5. Pitchfork

    “I spoke at a conference on the chain of title issue, and servicer managers there treated me as if I was crazy. They seemed to have absolutely no appreciation of how pooling and servicing agreements stipulated how mortgage notes were to be executed (through a specific chain of title by a date certain, with wet ink signatures). Even when I explained it privately to some of the smaller “combat servicers” (one with much higher levels of staffing who can handle portfolios with high levels of delinquencies and do mods), they were incredulous.”

    What exactly did they not understand? Did they have a clear counter-argument, or was it just an assertion of “This is how we do things, what’s your problem?”

    1. Shutterbuggery

      Pitch, they were stunned because there was no provision for an under-the-table kickback if the job is done right.

      “…Where’s my piece of the pie..” was their most likely reaction.

      The country hasn’t fallen into criminality, its fallen into abject incompetence. At all levels.

    2. LillithMc

      Lawless by agreement. It begins because someone gets some easy money. Everyone agrees to go along. It becomes the “new normal”. No one remembers there were laws against this behavior because people were hurt by it. We ignore the hurt people. Soon the market dries up because it makes no sense. No one trusts anyone. That is where we are now. Impossible to produce a “chain of title” when information was never recorded.

    3. Westcoastliberal

      Pitchfork, I feel your angst. Gotta say, though after being put through the wringer by Chase including calls with what supposedly was their “executive office”, and an auction sale while the loan modification was being “considered”, seems to me you were making a presentation on a topic that means nothing to these people. It’s the new normal and no one at the executive level has to actually follow rules. You wouldn’t either if you had the blessings of the Don (Obama). It’s all crooks all the time now, capish? And 5 companies control everything.
      Looks like Scheiderman got the message.

  6. monday1929

    Could someone explain why ignorance of the law gets these people off? does it go to intent? But why would that not always be the case? If I honestly do not know the speed limit, I still pay the fine for speeding.
    (this is an actual, not rhetorical question)

    1. Shutterbuggery

      Monday… I’m coming to believe there is no ‘law’ in a universal sense. There’s only varying degrees of restriction based on class and race. Try to move outside your class (upward) and the man will use whatever arbitrary powers available to slap you back where you belong. Think of it like one of those food pyramids the FDA is always showing to 6th graders… lots of enforcement for the big lower parts of the pyramid and hardly any enforcement for the tip-top.

      and IMHO there is no such thing as a ‘rhetorical’ question. Its just a slippery way to divert the discussion and attempt to appear above it all.

    2. James Cole

      Couple of reasons, one main one being that banks are too big and powerful to be messed with, another being that from 30000 feet, most Americans believe that as between a lender and a delinquent mortgagor, the lender should win. They think that because neoclassical property rights theory has beaten back Judeo-Christian ethics as the dominant moral principles of our society.

  7. Watt4Bob

    “The country hasn’t fallen into criminality, its fallen into abject incompetence. At all levels.”

    The country hasn’t only fallen into ubiquitous criminality on the part of the 1%, it’s also fallen into abject incompetence on the part of every system of law enforcement and regulatory oversight that might tend to mitigate the impact of that criminality on the quality of life for the 99%.

    This is not a criticism SB, just putting a finer point on your totally true observation.

  8. Guy Fawkes

    This is my email to a DOJ attorney who has my documents and still has done nothing:

    Bill,
    I was just sending you a great big thank you to my government. And since you have been such a good chap, thought I’d deliver it through you.

    You can tell all those people at all the agencies that I have contacted, spending literally hundreds of dollars worth of return receipt requested letters, thank you. I have contacted the DOJ, CFPB, Senator Cantwell, Senator Brown, the OCC, the SEC, the FBI, and the last agency the FTC. What the government has never confirmed is the office of the DOCBI (Dept of Criminal Banking Industry.) Why have you not let me know that this last agency was who I should have gone to first? It seems that this agency is the most powerful of all the government agencies….in fact, it seems that no one can hold a candle to the DOCBI. They trump all.

    Just to let you know, JPMorgan Chase showed everyone this week in Congress just who runs things in DC. And I also learned this week just who runs things in DC. You see, they have just informed me that they will be setting a sale date on my house. After all the governmental agencies that I have alerted, it seems that JPMC does not fear ANY OF YOU. They threw the middle finger up to Congress when they had the Chairman of the DOCBI in front of the banking committee and they are throwing the middle finger up again in this letter and sale date to me.

    “Why” I ask myself were you so foolish to think that your government is stronger than the wolves who feed them? I guess you can say I was very naive. So naive, in fact, that I have now put my trust in the sheep rather than the wolves. Really sad to see that our government is made up of sheep. I believed my whole life that if there was an injustice, that government would see to it, and right the injustice. Just glad I don’t have children to pass on my rather sad belief system now. It would be a shame to pass on my anger and rage toward this pack of sheep to another generation. However, I was pretty sure I could show my neighbor’s kid, who thinks I’m a hero, that one person can make a difference. I was wrong.

    So, don’t worry about all the crimes that I’d hoped you gave a shit about. I will be just like the rest of the middle class out here. I will go up against the DOCBI with nothing but a private attorney and just hope I get a judge that has some balls. Because it seems that all the white men I’ve met along this journey have been castrated by the DOCBI. No one has any sort of courage to do anything but cower to that smug pig, Dimon.

    So, just continue to trample down the hard worn path of indifference to the populace out here.

    And have a great vacation. You so deserve it. Kiss the wife and kids.
    ~K

  9. TK421

    “it takes five or more incidents of bad conduct in one year to get a class E felony conviction”

    What’s four felonious acts between friends?

    1. monday1929

      It could help unemployment- as soon as each employee reaches
      the four crime limit, they can be switched to new job and a new hire can rotate in…….

      1. LeonovaBalletRusse

        That’s how it worked in the “brokerage” business in my time: The RR is not only fired for breaking the law, he/she is guaranteed higher pay at the next “brokerage” firm–he/she has proven to be an “aggressive risk taker” with other people’s money to generate House profits. This “revolving door” has been moving faster than that door of Greta Garbo’s “Grand Hotel” famous in “Old Europe.” I guess it’s just one big melodrama about human “fallibility” for profit by Arthur Schnitzler. Oh wait, isn’t that what “Eyes Wide Shut” was trying to show us in a general way?

  10. Lloyd C. Bankster

    Earth to Schneiderman! Didn’t you get my wife’s message that Princess (her Shih Tzu pooch) has a dingle berry problem and we need you here ASAP!

    Where the hell are you? (And don’t pull the one about the JP Morgan butch dominatrix who beat the crap out of you again. No, not that again!)

    And for everyone else, don’t forget to send your checks to: “Blankfein/Dimon Job Creator Fund”, Goldman Sachs c/o Lloyd Blankfein, 200 West Street New York, NY 10282.

    Or you could mail your checks to my assistant: Attorney General Eric Schneiderman, 118A Fulton Street, Suite 250, New York, NY 10038. (Just don’t make it payable to that groveling shithead)

  11. stripes

    There are more than 5 violations in my one fraudclosure. The servicer “sold” (swapped bad quality loans because they had no notes) with the originator bank who refied my mortgage and recorded 4 fraudulent assignments at the recorders office, fraudulently reconveying the mortgage back to the originator bank in order to create a chain of title they DO NOT have. This was all done after the foreclosure lis pends was recorded by the original bank. That is app. 11 violations and a Federal crime prosecutable under RICO and that’s not the half of it.

  12. monday1929

    Eric Scheiderman’s phone is 800-771-7755. I spoke to a very nice woman and referred her to this website. She seemed genuinely interested in what I had to say. (select the “mortgage fraud option). She obviously had not gotten any similar calls, let’s change that.
    Remember to be polite, the people YOU reach are as much a victim as any of us.
    I let her know that I wished to void my earlier call of support, and that large numbers of people ARE aware of his sell-out.
    EDUCATE and AGITATE .

  13. Enraged

    In 2008 and 2009, I was satisfied that Obama didn’t have a prayer with implementing any of the great ideas he had spent a few years publicly enunciating: his own party had thrown him under the bus right off the bat. I didn’t understand why but the facts did speak for themselves. That was then my take on it.

    Since 2010, I have been satisfied that Obama didn’t have a prayer: the republicans have put all their energy into blocking him every step of the way, pulling rabbits out a hats at every turn. Socialism, patriotism or lack thereof, birth certificate, everything flew. The guy was a victim. My (then) take on it.

    I watched every one of his programs dismally flop. It wasn’t him. It was “they”. Until January 23, 2012, announcement day. I’ve watched him since, systematically neutering every man with a conscience and the will to act and redress all the wrongs committed against the people. I’ve watched him refuse every solution proposed by the Bill Blacks of the world. Bo Biden, Schneiderman, Rich Cordray: they all bear the stigma of the “before Obama” and “after Obama” transtion. My mind kept on telling me: “Keep your friends close and your enemies even closer.”

    At this juncture, it doesn’t make any difference. Results are what counts and results have been lacking. Does he have a hidden agenda adverse to the good of this country? Is he simply misguided (doubtful: he did pick Holder and Geithner, after all)? Whatever his motives, the fact of the matter remains: he will come down in history as “the Great Neuterer”. Hard to understand in a man with two young kids who, in a few years, will fly solo. One would think that the last thing he would want is throw them into the situation we currectly have in this country.

    Stupidity? Naivety? Machiavelism? It really doesn’t matter. Take the job away from him. Because in the end, all that remains is that he is a dangerous individual.

    1. Murky

      For me Obama has always been 100% preacher, and nothing more. He very convincingly delivers billowing moral rhetoric at any time, in any circumstance, and to any audience. I just never believed any of it. And he has proven himself to be completely impotent as a man that stands behind his words. He’ll say anything for the sake of PR, and then immediately sell out to the people who have big money or influence. In shorter phrasings: He’s not in charge. He’s a pushover. A stuffed shirt. The man stands for nothing.

      I’m sorry you ever thought Obama was more than he is.

      Likewise with the rhetoric from both Democrats and Republicans. When you start aggressively believing in any of their rant, you’ve probably got more disillusionment coming your way.

      One thing we’ve both got right. We look for expert opinion from people who really do have moral conscience. Bill Black is at the top of my list for expertise on fraud. I look to Simon Johnson for the broadest overview of corrupt financial markets (website: Baseline Scenario). I’m not familiar with Rich Cordray, though I know he bumped Elizabeth Warren as head of the Consumer Financial Protection Bureau. Schneiderman’s reputation is under a cloud, as this and other posts here at NC have made clear.

      Better that we find common ground, than to bicker as Republicans and Democrats.

      1. monday1929

        Thank you. Just added baseline scenario to my ‘favorites’.
        Bill Black is GREAT, but he may be too decent to recognize the Evil he is up against.

        1. LeonovaBalletRusse

          Bill Black knows exactly what he is up against. He is the Prince of Patriots.

      2. Westcoastliberal

        Just bookmarked Baseline, thanks.
        And you’re absolutely right. It’s high time to set any of the usual differences between Conser/Lib, Right/Left, GOP/DEM and get to the heart of the problem; our government isn’t working, the system isn’t working, we know why, now we have to decide what to do about it. If we can do it together, we can change the direction. But we can’t let the MSM control the dialog, otherwise we will fail. That’s why the Nazi’s were successful; they knew how to control the message. One of the things we can do is create a massive movement to bust up the monopolies. Only 5 companies control 90% of the media in the U.S. Millions of jobs have been eliminated due to this. Other industries are the same. Just an idea.

    2. Walter Wit Man

      Yea, what is the saying . . .

      Incompetent or evil?

      Whatever. You’re fired dubmass.

    3. LeonovaBalletRusse

      “fly solo?” – No. He, Michelle, and their DNA will have paid work in perpetuity, as part of the “new” 1% (the .99% Agency part of the “Blood Nobility” .01%.

    4. Glen

      Well, look at what happen today – Obama moved towards implementing parts of the DREAM act by executive action. Voila! He could have done this ANYTIME in the last three years. Why did he do it now? He losing his base and needs votes bad.

      Guess what else he could have done – tell the AG to enforce the freak’n law and throw banksters in jail, but have we seen any of that? No. Tell the SEC to enforce the regulations and quit letting the banksters off with a puny fine and no admission of guilt (this stops civil lawsuits by shareholders or pension funds dead in their tracks and is viewed by banskteras “the cost of doing business”). Go after loan servicers, go after trusts with RICO and bust the whole MERS fraud wide open. This would have allows counties to claw back billions in fees.

      But what do we get instead – endless bailing out of the banksters that caused the world economic crisis. NO enforcement of existing laws or regulations and a “look forward not back policy”. Pretty hard to enforce laws by predicting who may break them in the future rather than who already HAD IN THE PAST.

      Obama didn’t need Congress for any of that.

  14. Hugh

    The Democrats will continue to flimflam progressives with Schneiderman for as long as they can. The joke is that liberal Democrats and progressives cut their teeth exposing pro forma proposals that never had a chance of being enacted during the Bush years. Obama has been laying down the same con for his whole Presidency and the liberal Democrats and the faux-progressives have gone all quiet on the practice or worse acted liked they were to be taken seriously. Is it any surprise that with such a track record of success even third players like Schneiderman are using it now?

  15. Jill

    The following is from; “The Literature of Ancient Egypt”. It is a Middle Kingdom story called: “The Eloquent Peasant”. The peasant is trying to redress his grievance with his lord. He speaks plainly to him saying: “The measurer of corn-heaps cheats for himself;…he who should rule according to the laws orders robbery, so who then will redress wrong?”

    That about sums things up for me.

  16. gozounlimited

    When the criminals are prosecuted we can establish a secondary mortgage market, deal with Fannie and Freddie, and try to make sense of the screwed up property chain of title caused by mortgage fraud/securities fraud. The housing market is being held hostage along with the US economy …. crime continues to pay…..disgusting!

  17. TMC

    How about enforcing existing banking and criminal laws on fraud and the chain of ownership? I have to say that for while he had many of us fooled. I was curious as to why Cuomo didn’t support him in the democratic primary for AG. Schneiderman must have fooled him, too. I’m sure Cuomo is quite pleased he’s AG.

  18. Glen

    Schneiderman just needs to enforce the EXISTING laws. Proposing dead end legislation is a smoke screen. Can we recall a State AG?

    1. rotter

      Yes, its a smoke screen. Its screens the fact that he has no intention of enforcing the laws on the books.

  19. rotter

    “the Obama strategy of preferring empty gestures to substance”

    Thats the style of today, if your a with-it, up and coming political grifter. It all the rage in Europe too.

  20. enouf

    … Nevada’s attorney general, Catherine Cortez Masto pushed for legislation to criminalize foreclosure abuses and it became law last October. …

    (not to nitpick, but we all (most) know what color-of-law is and legalese is, and how Legal Jargon is *not* English, etc) but;

    Why isn’t “abuses” in above written as “fraud”?
    .. and since when did fraud need to be “criminalized”?

    [Am i existing only in a parallel universe?]

    Love

    1. stripes

      Bingo..! The color of law is exactly how they are fraudclosing. They have no notes and therefore the mortgages and notes are a nullity under well settled law. Property Law is power as the Congresswoman from Ohio Marcy Kaptur stated.

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