By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)
The people in flight from the terror behind — strange things happen to them, some bitterly cruel and some so beautiful that the faith is refired forever.
– John Steinbeck, Grapes of Wrath.
I’m Jewish: my father is a Rabbi, my mother a prominent Jewish artist, but having been raised in the US it’s impossible to miss both the holiday and the meaning of Christmas.
As Christmas lights and Chanukah menorahs light up our dark winter nights it’s impossible not to look back over the prior few years, and contemplate the difference sunlight — in the form of the Internet shining information — has made in the US and around the world. Normally, I focus solely on data — hard facts — but it’s Christmas and Chanukah, holidays centered around people, change, and miracles.
About three years ago a local bankruptcy lawyer, head of a large firm, called asking if I’d take a software project creating a system to intake and analyze debtor information, to find mistakes or patterns of fraud. I wasn’t thrilled. I’d gone through a tough divorce, leading to the inevitable and all too familiar financial problems; the thought of programming a system to dig through piles of debt seemed depressing.
He was persistent, calling repeatedly like only a lawyer on a mission can, so I finally agreed to spend some time and at least do the analysis about the market and how the software would might work. I learned the basics of bankruptcy, met some clients, worked with the staff, and studied the software and systems in use.
One item persistently caught my eye; the foreclosure progress dockets, the items filed by the banks to win their case, often didn’t make sense.
I had a foreclosure of my own, filed by now-known fraudster David J. Stern, after Aurora Loan Services told me to stop paying my full-doc, 15% down-payment loan to qualify for a short-sale. I hadn’t paid it much attention; I bought that house with an ex-girlfriend in an area of town I didn’t especially like, and just wanted to be finished with it.
Even though they’d told me to, it was I who stopped paying so .. time to leave. I received two strong short-sale offers, both at or above generally accepted market value. Aurora eventually accepted both, but long after the deadlines on the offers ran and the home’s value had plunged considerably further.
I took the hint that Aurora had no interest in working in good faith. Their failure to mitigate my breach, that they’d induced anyway, was well documented.
I thought my own story was an anomaly. It wasn’t. In retrospect, it didn’t even rank at the top of the bad-faith-o-meter. Since then, person after person told the same nightmare stories.
Eventually I started to download court filings in bulk to look for patterns, and what I saw was atrocious. First one county, then another .. I now have dozens; tens of millions of pieces of electronic data detailing dreck that would make the most bank-friendly legal ethicist cringe.
Eventually, the “I” transformed into a “we,” as a small group of us here in South Florida started working with one another.
We looked at the list of over 50,000 bank “errors,” where banks at the end of the foreclosure told the court ex-parte (without informing the other side), that they’d made a small mistake, a typo on every piece of paperwork ever filed in the case; the typo was they’d typed the wrong bank name. Or maybe the wrong address, the wrong borrower .. even the wrong case. Oops.
We gagged at the list of “Guardians,” who stand in when a borrower is incapacitated, on active duty in the military, or deceased; robo-guardians. Guardians are hired by banks, and there are examples where mill lawyers, the lawyers that prosecute foreclosures, serve as guardians themselves. They take an oath to protect, say, soldiers or the estates of deceased retirees while their children were trying to figure out what was happening, while simultaneous working for the same banks in other cases, albeit at different law firms. We found that — surprise — lawyers who prosecute foreclosures don’t make very good foreclosure defense lawyers. It’s not uncommon they speed a foreclosure along even faster than if nobody had shown up on behalf of the borrower.
Then there are the judges.: the infamous Florida senior judges brought in to “rocket-docket” foreclosures — the rocketeers, if you will — aren’t even the worst. They’re retirees that stamp virtually anything; at least one arguably suffers from dementia. Arguably the worst is a young judge, a top-notch young lawyer who should have known better, who bragged about the courtroom innovation she’d pushed to the rest of the state, Florida infamous rocket-docket. [Digression: has anybody else noticed that terrible ideas always referred to as “great innovations,” whereas genuine innovations are “great ideas?”] Public records show she owns a substantial stock portfolio that reads like the list of plaintiffs on her daily calendar. As the robosigning scandal was unfolding she’s famously quoted telling a local reporter “I haven’t seen any widespread problems.”
We closed down crooked foreclosure processing companies, exposed crooked bankers, and now even identified a crooked (or at least grossly incompetent) senior US government official or two. We’ve watched them twist the law, the financial markets, and their own humanity into some unrecognizable nightmare form, and now and again helped shut one down. But it’s like a game of Angry Birds; after cracking how to destroy one set of bad guys you advance to a new screen that’s even tougher.
Bankers and their lawyers didn’t hesitate to label our rag-tag group as, well … crazy. But Lynn Szymoniak, Lisa Epstein, and Michael Redman, and Nye Lavelle, the earliest, aren’t only colleagues, but dear friends.
Then there are the lawyers who go to the mat for their clients and our cause, especially foreclosure defense lawyer Matt Weidner, and civil rights advocates Larry Schwartzol and Rachel Goodman of the national ACLU. Then lawyers who both fight but, almost more importantly, teach other lawyers how to: especially Max Gardner and April Charney.
Things began to really change when the journalists and publishers started catching on. Gretchen Morgenson has been at the forefront. Matt Taibbi called out the scam early, often, and using deliciously inappropriate language to describe atrociously inappropriate behavior. Abigail Field joined us later but jumped on board with a vengeance. On TV Scott Pelley and his producer, Dan Reutinck, brought the story to countless living rooms with moving pictures and stories. Then there’s my personal favorite, Yves Smith, my publisher who gave me a voice.
There are about five million American families living in their own homes — their children sleeping in their own beds — who wouldn’t otherwise be there but for this group. Their parents are terrified that any minute the Sherriff, or some thug hired by “The Bank,” will come to the door and they’ll be living in their cars. They should be scared; that threat is very real.
My father, the Rabbi, relayed a story to congregants at a Chanukah party. He taught that, at the core, Chanukah is a spiritual holiday, the holiday of miracles, when a small batch of ancient Israelite soldiers drove away the then mighty Greek army against all odds. Small, dedicated groups of can win when, at their core, they know that they’re fighting genuine evil.
Throwing children to the street, stealing dreams, and being enabled to do so because of massive government subsidies to the most culpable, the most reckless, the most conniving predators really is evil.
We’re living in a strange time, a polarizing time that brings out the very worst and the very best in humanity, that crosses political parties, blasts away nonsensical wedge issues, and gets to the core of what defines us as either human or inhuman. It’s like an alien invasion movie except that the aliens are people, the injuries are real, the bad guys don’t disappear after two hours. Oh yeah .. and the producers will never admit their involvement, even if the credits ever finally roll.
Maybe this year the country will come to its collective sense and where we’ll start to care about one another again, to treat one another like people rather than numbers, but I doubt it.
Gretchen Morgenson quoted Congressman Brad Miller, D-NC, it in an August 14, 2010 article. “I’ve seen the banks going from losing no fights to losing a few fights,” Morgenson quotes Miller. “What I’ve found is the more fights we pick, the more success we have.”
Morgenson then added her own thoughts, “Here’s to more fights then. Many more.”
Merry Christmas, Happy Chanukah, and to the hope that when the Christmas lights and the Menorah’s shine next year that the fights will be finished. Maybe it’s a dream; the polar opposite of the nightmare Brian Moynihan, Jamie Dimon, Timothy Geithner, and the rest have inflicted on the rest of us. But I see a day, not so far in the distant future, where our Christmas and Chanukah lights pierce a physical darkness, rather than a spiritual one that then will be nothing more than a bad memory.