I’ve taken a particular interest in GMAC because in the one consumer foreclosure case I
‘ve attended, back in May, I had the dubious pleasure of seeing a GMAC employee and an attorney for the local foreclosure mill, who was also put on the stand, perjure themselves. And this isn’t my interpretation; documentary evidence was presented later in the trial that showed core elements of each of their testimony to be false. The GMAC staffer, who had made confident statements about the case and provided plenty of bromides about the integrity of GMAC’s processes, was suddenly reluctant to say anything more definitive than “I don’t know.”
A Birmingham, Alabama law firm, Bradley Arant Boult Cummings, has been GMAC’s national counsel on real estate servicing matters for some time (see here for examples of some of the matters it has handled).
Curiously, Bradley Arant is one of the firms that GMAC engaged to conduct an “independent review” after its use of robo signing became public:
GMAC Mortgage is initiating an independent review of foreclosures in all 50 states and examining foreclosure sales nationwide to ensure procedures and documentation are accurate….
The firms hired to conduct the review are Sullivan & Cromwell LLP, Bradley Arant Boult Cummings LLP, Morrison & Foerster LLP and PricewaterhouseCoopers LLP, said a person familiar with the matter.
Given Bradley Arant’s long-standing and extensive involvement in GMAC’s mortgage business, how can it legitimately be part of the team conducting the review? It’s incentives will be to minimize any problems, for a host of reasons, the most important being so as not to ruffle a big meal ticket and to avoid the exposure of any issues that might create liability for the firm.
But if that isn’t bad enough, get a load of this, courtesy Bloomberg:
Fannie Mae, the largest provider of mortgage financing in the U.S., said it halted referrals to a Florida foreclosure-processing law firm that’s being investigated by the state attorney general.
The Law Offices of David J. Stern PA have drawn scrutiny in Attorney General Bill McCollum’s investigation into the foreclosure of homes based on possibly fraudulent or improperly prepared documents….Fannie Mae, which has a $3.3 trillion book of business, has hired law firm Bradley Arant Boult Cummings LLP to review Stern’s processes and operations.
Why is this problematic? The profile of a typical foreclosure mill is a very high staff to partner ratio, as many as 90 to 100 paralegals for every partner. Their processes are routinized. Foreclosure mills are evaluated according to parameters set by Fannie and Freddie, in case of GSE securtizations. Most of this coordination and assessment does not take place directly, but via a firm called Lender Processing Services, which serves as a defacto outsourced manager on behalf of the GSEs and servicers.
It is hardly news that foreclosure mills in the LPS/Fannie/Freddie network were engaging in questionable conduct. Consider this June 2009 statement:
Attorney General Richard Blumenthal, as part of an investigation into the foreclosure business in Connecticut, has requested information from mortgage giants Lender Processing Services, Inc., Freddie Mac and Fannie Mae concerning their process for selecting law firms in foreclosure proceedings.
Blumenthal is investigating reports that a majority of Connecticut foreclosures are assigned to only a few select law firms, and complaints by consumers who said they did not receive proper foreclosure notices from marshals.
In letters to Lender Processing Services, Inc., the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), Blumenthal said he understands that these organizations maintain a network of law firms that perform legal services relating to foreclosure actions…
“Dominance over foreclosure service by a few select law firms and marshals has spurred complaints about improper or illegal practices — wrongfully allocating work to non-marshals, forging papers, failing to serve papers, and making kickbacks,” Blumenthal said. “Concentrating this work in a few hands can be severely problematic — causing unconscionable costs and failed notice delivery. These companies — mortgage lending giants — have a public trust.’
Now how does this relate to GMAC and Bradley Arant? LPS and the mills they hire work in an integrated fashion. Moreover, Freddie, Fannie, and the servicers have chosen to work with firms that operate in a high-volume, highly standardized manner. Blumenthal clearly was of the view that Fannie and Freddie would bear some, perhaps a great deal, of responsibility for any improprieties, since the law firm was operating less independently than would normally be the case.
GMAC also used the David Stern law firm. Thus both due to its desire to deepen its relationship with Fannie and to keep itself and GMAC out of trouble, Bradley Arant is certain to frame its examination as narrowly as possible and not consider potentially troublesome but germane questions such as who at the contracting organizations (LPS, Fannie, other servicers) might also be culpable.
A broader look is key to understand who really bears responsibility. Foreclosures of securitized loans increasingly look to be what Bill Black would call a criminogenic environment, in which the major perps are deeply entwined and work together. And if caught, it is clearly in their best interest to cut loose the weakest, most dispensable actor in their tidy group, the foreclosure mill.
So in many ways, the selection of Bradley Arant makes perfect sense. It is familiar with the terrain, so it will be able to issue a plausible-sounding report. It is also so deeply part of this questionable backwater that it is highly unlikely to make a bottoms up investigation and potentially rock the boat.
As former central banker Willem Buiter remarked, “Regulation is to self regulation as regard is to self regard.” The only way for an investigation of this sordid business to succeed is for it to be truly independent, and that means requisitioned and executed by parties that have their hands clean. If any of these companies had a new CEO or a particularly tough compliance/internal audit function, they might fill that bill. However, the very choice of Bradley Arant strongly suggests that these examinations are exercises in form over substance.
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LPS seems to be one of the firms that creates the fabricated documents which magically arrive (with instructions) at the foreclosure mills, where the paralegals robo-sign them. The firms that get the data from MERS’ database, and direct the foreclosure mills’ actions would seem the place to do some digging.
Why does it seem that Fannie and Freddie, as well as the banks, are actively working to displace the American middle class into the streets? Who benefits from millions of homeless, doubled-up families, and depressed neighborhoods?
Fannie held it’s “Walk to Help the Homeless” in DC yesterday. This is while they are using debt collectors like Samuel I White to eject people onto the street. Fannie Mae had a big role in the housing bubble. Michael Hudson wrote about Fannie and Freddie:
“These two semi-public mortgage-packaging companies dominate the nation’s mortgage market and have supported real estate prices by steering over $5 trillion to enable homebuyers to bid higher and higher prices for homes, earning billions of dollars of bonuses, profits and interest for the bankers, mortgage brokers and Wall Street debt packagers who are the financial beneficiaries of the real estate bubble.”
Robert Scheer:
Tom Donilon was ” the chief lobbyist for Fannie Mae from 1999 to 2005, he was far more intimately involved than Paulson in the manufacturing of this crisis. He successfully pressured Congress to give Fannie Mae the green light to speed past any sound regulation. Indeed, had Congress endorsed the barest semblance of regulation of the Fannie Mae-led housing scam, it would have been stillborn instead of being a very much alive Frankenstein creation.”
Conflict of interest in DC is a vital, important part of our Government. Revolving door a la mode. 4Closurefraud last July reported how Fannie execs “got it on”. Let’s talk about clouded titles:
“Documents provided to Congress under subpoena show Jim Johnson, who made $21 million as Fannie Mae CEO, took $10 million dollars in VIP Countrywide loans. Other Fannie Mae executives who got VIP loans from Countrywide include: then-Vice Chair Jamie Gorelick, who earned $26 million over four years at Fannie Mae and now represents BP. And former CEO Franklin Raines who earned $90 million dollars in his five years at Fannie Mae. The amounts of their loans aren’t known.”
As you’ve pointed out so well previously… In the past, when we had small local banks who issued and held the note and mortgage…
There was every motivation for finding reasonable modifications, forbearance, or whatever method might be found to work it out to the best advantage of both sides… who after all… are the actual parties with most at stake.
This situation also obviously made banks reluctant to make stupid loans in the first place!
The point I’d like to make is that the growth of irrationality with scale is not exclusive to banking. But rather reflects a similar disconnection that occurs when centralization and standardization of what should (and must) be GRANULAR decisions.
In complex/chaotic systems, where decisions must be based on multiple non-quantifiable characteristics, many of which are intangible and relate to neglected concepts like trust, integrity and further may well relate to shared conditions only realizable to another in some proximity… (not just physical but especially social and psychological proximity)… standardization and compartmentalization are DISASTERS!!!!!
You know what that means! We have to allow JUDGMENT at the local level.
We must build the strength of communities. So that we may live in social/political environments suitable to the lives and needs of human beings. (A radical thought apparently.)
This is a real world observable phenomenon that arises in everything from banking to education to governance.
The ‘Establishment’ is trying to stuff humanity into a ‘Newtonian’ mechanistic political/economic framework when we actually exist in a complex/chaotic uncertain Heisenberg world.
Our survival must rest on recognition of our roots and the need to build systems that are in harmony with those roots… rather than in attempting to force us to live in service to an ‘economic’ machine who’s creation we thoughtlessly allow to grow till there’s nothing left of us.
How Would Hunter-gatherers Run the World? (Psst… They DO!)
http://culturalengineer.blogspot.com/2009/11/how-would-hunter-gatherers-run-world.html
Why Politics MUST be Localized
http://culturalengineer.blogspot.com/2010/10/why-politics-must-be-localized.html
and just to push the limits of rationality… (it’s only by trolling the boundaries of “let’s just be reasonable here”… that we can ever find the next shoreline):
Quantum Politics: Crazy Speculations on the Physics of Decision
http://culturalengineer.blogspot.com/2010/08/quantum-politics-crazy-speculations-on.html
The most simple fix to the student loan and the mortgage fiasco is get rid of the 2005 amendments to the bankruptcy code that make private student loans nondischargeable and bar cram down of home loans.
I recently heard a tea party say that the party believes in ” Austrian economic” so maybe they believe in “creative destruction” a la Schumpeter? If really do (I don’t think they even heard of Schumpter let alone creative destruction ). Nothing is a bigger barrier to creative destruction than legal barriers to debt discharge and forcing lenders to accept the real of their collateral.
Unfortunately I see no such change coming
Allowing cramdown makes a lot of sense under the “greater good” theory, but what do we do about those who either didn’t buy homes they couldn’t afford or who paid cash or a large down payment? I hate to say it, but I think stupid borrowers need to give up title, stupid lenders need to take their losses, and smart savers need to get rewarded. That is the only moral result.
As this unfolds it’s now becoming clear that the people that participated in the ‘shadow banking system’ securitization process did not receive the note that they actually held the mortgage. Not transferring these notes let them circumvent tedious but well established state and county processes for tracking who actually owns the property and also let them circumvent the fees paid for these processes.
As these securitization positions continue to unwind as to show what is actually there it also begs the question of whether these notes were used more than once. This would further compound the fraud and be another reason why the actual note wasn’t transferred.
In other words ‘criminogenic’…
Yves, excellent catch to find the weasel in the woodpile!
But it might be more fruitful to drill into the major firms supposedly doing the “review.”
“The firms hired to conduct the review are Sullivan & Cromwell LLP, Bradley Arant Boult Cummings LLP, Morrison & Foerster LLP and PricewaterhouseCoopers LLP, said a person familiar with the matter.”
Sullivan & Cromwell and Morrison Foerster almost certainly have major money-center banks as clients. Those are the wolves that will use the “review” to defraud Congress, the Treasury, Fed & FDIC. They will eat Bradley Arant for a snack in the process, because they will force the little foreclosure mill partners to waive attorney-client privilege and work-product doctrine, kill the little weasel with what they discover (malpractice, fraud, unprofessional conduct, perjury). Then the big wolves will stonewall prosecutors with their own claims of privilege.
Which banks use Sullivan & Cromwell or Morrison Foerster?
Remember, start at the bottom up. Prove just one foreclosure, or even better, just one set of documents for a 1-4 real estate property with a loan is legitimate, win $10,000. Please look at the figure from the experts on this matter, the best guess is that 4 to 8% of the existing loans may have credible chain of title. But 4 is closer to reality and this is only a guess based on how many bad ones have been examined. As a paralegal investigator, I haven’t found one case yet that has a legitimate chain.
Try it with your own or a friend, be amazed. Be outraged. Be aware.
@Brian,
I have gone much further than just my own and my friends. I decided to make this fraud personal for my elected officials and look into their documents. What’s interesting is our Seattle mayor has the most corrupt docs. Followed by our Rep from the 36th District. Also, Rep Dave Reichert not only has forgery in his docs, but he also oversaw two Sheriff Sale’s when he still was Sheriff of King County that were not notarized. Been trying to get someone, anyone interested from the media, but it’s been a black-out.
Freddie Mac and Fannie Mae, and most of GMAC/Ally Bank are government properties.
What I clearly understand from all this is the government is actually okay with all this fraud.
Why does the Obama Administration feel the need to fraudulently foreclose on the middle class? If there could be two to four million foreclosures between now and 2012, are they missing the whiteboard Goolsbee math that there are two to at least four million voters who probably aren’t going to get their vote? Let alone those who will suspect he’s not on the side of the middle class?
The Guv’mint, captive to Industry is OK with a lot of things. Shit, just this week in Frederick MD, outside of Fort Detrick, after many years and appalling numbers of cancer deaths (families basically wiped out) and after “extensive testing” by the State of Maryland, the US Army finally admits they tested Agent Orange extensively here.
If not for continuing community activism, nothing would have come of it, they wouldn’t have revealed anything. Which brings us back to the crux of this article, which only reinforces the need for activists to be relentless – these sob’s are still scratching each others backs. Perhaps the elites have flawed title on their Dachas, setting up the hypothetical scenario of the disaffected filing affadavits, conducting sales, and seizing their plantations right out from under them. “Touche som’bitch!”
Reading Catherine Austin Fitts helps one to understand HUD/F&Fs’ role in the economy.
Could it be that the housing bubble was a government policy to mask the hollowness of our industrial sector, and the fact that there is no way the US economy can maintain itself, other than by blowing asset bubbles? There is no industrial base that can create value-added products. The dot.com bubble is certainly a sick joke in this regard: it was a Seinfeldian bubble: nothing but a way for insiders to siphon off middle class savings.
The housing bubble was nothing more than an official government policy to prop up the economy, and siphon off more middle class savings for intelligence operations and defense corporations.
The Negative Return Economy, by Catherine Austin Fitts
http://www.scoop.co.nz/stories/print.html?path=HL0408/S00277.htm
There’s lots of info in the article about the corporate parasites that run the accounting software in DoD and HUD. Reads like MERS.
OOOPS!
Countrywide never transferred the note to trust!
http://stopforeclosurefraud.com/2010/11/21/explosive-case-file-new-jersey-admissions-in-testimony-notes-never-sent-to-trusts-kemp-v-countrywide/
Lenders are not just getting a free ride in the mess they helped create, costing us billions, while they do nothing to fix this.
Foxes being abetted by the ELEPHANT in the room: JUDICIAL CORRUPTION is a horrific mess to be exposed!
Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
Lawyers are officers of the court knowledge of applicable laws and civil procedure is not required from mortgage lenders, nor loan servicers. In states that require judicial foreclosures, FORECLOSURE LAWYERS are the ones who file lawsuits to seize and sell property; and lawyers are responsible for filing and recording foreclosure property deeds.
An investigation could prove helpful to sorting out whether improper and illegal foreclosure proceedings are linked to any self-dealing conduct disadvantaging lenders, investors, homeowners, and city governments. . .”
Inadequate or questionable foreclosure can lead to useless property deeds that impede real estate sales. Increasing numbers of title insurance companies are refusing to cover foreclosed properties; and certain mortgage default claims, are being denied because of defective foreclosure proceedings.
PETITION
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#