Category Archives: Real estate

Massachusetts Announces First Comprehensive Lawsuit Against Major Banks

The Massachusetts Attorney General has announced a major lawsuit against the biggest banks in the foreclosure game, namely Bank of America, JP Morgan, Citigroup, Wells Fargo, GMAC (now Ally) as well as MERS and its parent MERSCorp.

It seeks accountability for violations in the foreclosure process, including robosiging, initiating foreclosures when they were not entitled to do so, the use of MERS (both a violation of land records requirements and what amounts to unjust enrichment via failure to pay local recording fees) and deceptive practices in foreclosure (as in failing to offer modifications as required by law and would be good for borrowers).

Former Award Winning Chase Banker Describes Predatory Mortgage Lending Practices

Readers need to read today’s op ed by Nicholas Kristof in the New York Times, and pronto. It is a former insider debunking of the idea that borrowers rather than bankers bear primary responsibility for the mortgage crisis.

Michael Olenick: Are Remotely-Processed Mortgage Assignments Another Smoking Gun?

By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)

Assignments of mortgages are the legal instruments that transfers ownership of a mortgage from one party to another. In a securitized mortgage, a trust holds thousands of mortgages on behalf of investors. The investors in the various bonds that get cash flows from a single trust expect the trust to be in a position to take advantage of the rights conferred by the mortgages when certain events occur, usually payoff or default.

I used my crowd-sourced online software, www.findthefraud.com, to help categorize 2,500 assignments in Palm Beach County, FL, which were recorded in late 2008 and early 2009. Palm Beach County, like any Florida county, is a high foreclosure state and, thanks to strong public records laws in Florida, serves as a good bellwether about bank business practices both in Florida and around the country.

LPS Foreclosure Fraud Whistleblower Found Dead (Updated)

Nevada notary Tracy Lawrence, who was due to be sentenced today to up to a year in jail for a single count of misdemeanor fraud, went missing from her sentencing hearing today and was found dead.

Dylan Ratigan: To Eric Holder – A Simple Way To Prosecute Bank Crimes

By Dylan Ratigan, MSNBC host and author of the new book Greedy Bastards. Cross posted from DylanRatigan.com

Shahien Nasiripour has a great scoop in the FT – bank regulators have uncovered up to 5000 military families who were foreclosed on illegally by mortgage servicers.

Matt Stoller: Mortgage Servicers – Getting Away with the Perfect Crime?

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller. Cross posted from New Deal 2.0

Without prosecutions, there’s nothing keeping fraud from becoming a standard business practice.

Federal Judge Refuses to Dismiss Bank Break-In Case Against JP Morgan, Lender Processing Services

In the sordid underworld of foreclosure-related reporting, certain stories have started to develop a prototypical feel. Bank Forecloses on Wrong Home. Bank Forecloses on Home with No Mortgage. Bank Refuses Even to Talk About Short Sale. Bank Sends Borrower into HAMP-Created Hall of Mirrors and Forecloses Anyhow.

The problem with stories becoming cliched is that the force of the recognition of the injustice loses some of its punch with repetition. But one type of story still seems to trigger well warranted outrage in the public: Bank Breaks Into House.

Matt Stoller: Nevada Attorney General Catherine Cortez Masto Cracks Open the Financial Crisis

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) gmail.com or follow him on Twitter at @matthewstoller.

Learn the name Catherine Cortez Masto, because she just took a big leap in front of every public servant in the country in terms of restoring faith in government. As Nevada AG, she actually indicted someone for blowing up our housing system. Specifically, she handed down 606 counts of felony or gross misdemeanor indictments on robo-signing against two employees of big bank subcontractor Lender Processing Services.

It’s pretty clear from the indictment that these are mid-level employees, one level up supervisors of fraud rather than top CEOs. And yet, even if this were as far as it goes, it would still be a big deal. These would be the only charges served involving the housing crisis and its link with the structurally corrupt securitization chain so far. By itself, these indictments signify that the fraudulent foreclosure game is over for the big mortgage servicers in Nevada, which is the center of the foreclosure epidemic. It says the rule of law matters, in at least one corner of the country.

Michael Olenick: Don’t Buy Mortgage Industry Hype on Mortgage Modifications

By Michael Olenick, founder and CEO of Legalprise, and creator of FindtheFraud, a crowd sourced foreclosure document review system (still in alpha)

The Mortgage Bankers Association (MBA) boasts that its members have modified over five million mortgages over the past few years. As a data analyst focused on patterns of foreclosure fraud, I’ve analyzed tens of millions of pieces of information. I was willing to take the MBA’s claims at face value but, years ago, came to the conclusion that the MBA and their members have a severe credibility gap.

Remember, the reason for advocating mods is that, properly structured, they are a win-win: investors take a lower loss than they would in a foreclosure, the borrower stays in his house, and another real-estate-price-depressing sale is averted.

But this “everyone comes out ahead” is not what I’ve seen. I’ve been able to check modifications, since they are recorded in public records. It quickly became apparent that while theses modifications are, at best, worthless, and more often than not border on an extension of the same predatory practices that resulted in the original mortgages.

These modifications are to mortgages as vultures are to predators, another opportunity to take one last bite out of people trying to keep their homes. Banks are “modifying” lots of loans, but to terms even more favorable to banks.

Nevada Attorney General Masto Files 606 Count Criminal Indictment Against Two Title Officers (Updated: Lender Processing Services Employees)

The Nevada attorney general Catherine Cortez Masto has just filed a 606 count indictment against two title officers in a single county, Clark County, for supervising the filing of tens of thousands of fraudulent documents in a robo-signing scheme.

On the one hand, this indictment is not as gratifying, say, as busting Angelo Mozilo. On the other hand, if low level supervisors in bank frauds face the risk of serving time, you are going to find a ton fewer people willing to take that job. Those higher up on the food chain might also have to be a lot more careful and pay the people involved more money, which in turn undermines the basic logic of these abuses, which is cost savings.

More Evidence That Judges Have Had it With Banks

Today, we linked to an article in the New York Times that illustrates a considerable change in the attitude of some judges in the wake of the robosigning scandal. Before, the assumption was that of course, the bank was right and any borrower trying to block a foreclosure had better have an awfully compelling case. But a lot of judges were stunned by the level and institutionalization of bank abuses of procedure. And in a small, happy note, some of the employers of the worst foreclosure mills are finally cutting them lose. Per Michael Olenick, Fannie Mae has ceased doing business with the Baum law firm in New York (the one with the now notorious 2010 Halloween party that made fun of mortgage borrowers fighting foreclosures as future homeless people).

We first got wind of this decision below from Matt Weidner. Frankly, it reads like a parody, but we got it from April Charney, and it does have the stamps you’d see on the real deal. I’m sure you’ll enjoy it even if it is an artful fabrication, and even more if someone with access to Pacer can confirm that it is genuine.

Devastating Analysis of MERS

We’ve tended to think the securitization industry is in for a world of hurt even before you get to the legal and practical mess created by MERS. A national registry done correctly could have been a very useful, but “correct” was apparently too hard (as in costly) to be seen as attractive to the mortgage industrial complex. And the stripped down version is proving to be a disaster.

I’ve read a number of legal analyses of MERS, and this is one of the tidiest I’ve seen of what is so wrong headed about it.

Cheer Up, FTAdviser: At Least You Don’t Publish Threadbare Excuses from Scammers, Like Reuters Does

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By Richard Smith

Having hooted mildly at FTAdviser yesterday, for their somewhat skimpy fact checking, I found my eye caught today by a similar miss from Reuters (in bold):

Denial in the Mortgage Industrial Complex

I just came back from the AmeriCatalyst conference in Austin, which was a packed two days focused on the state of the housing and securitization market. The panels were very informative, and it was also good to see some of the people I’ve read or heard about, in particular the leading analyst, Laurie Goodman of Amherst Securities. She gave a talk that where she went through a very persuasive (and conservative) analysis that there are 8.3 to 10.3 million more foreclosures baked give how underwater borrowers are. And she had some striking bits of information. One is if you take out the homes where no one has made a mortgage payment in a year or more, homeownership in the US is 61%. In addition, Judge Annette Rizzo discussed a successful program she had developed in Philadelphia to do remediation. The success rate on modifications that come out of her court is 85% after 18 months.

I had quite a few people come and commend me on my comments. I think the main reason was that the viewpoint presented on this blog, that there are deep seated problems resulting from chain of title issues, and that servicers have engaged in a lot of abuses, was sorely underrepresented. I don’t blame the organizer, Toni Moss, who has an exceptionally well organized and prepped effort; I think this reflects the nature of who has expertise in this industry.

Foreclosure Law Firm, Vilified for Making Fun of Homeless, Now Attacks Constitutionality of New Rules to Assure It Verifies Court Documents

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To quote the immortal Forrest Gump, stupid is as stupid does. The biggest New York foreclosure mill, the Steven J. Baum law firm, is a textbook example.