POWERFUL FORECLOSURE TESTIMONY: Women Goes OFF on Congress (VIDEO)

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Wall Street Quietly Creates a New Way to Profit From Homeowner Distress

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Homeowners Get The Boot For Bad Paperwork While Banks Get Millions For Same

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Shahien Nasiripour
Huffington Post

Mortgage companies enrolled in the Obama administration's signature foreclosure-prevention initiative may be receiving taxpayer funds despite not having a legal right to the home or to the mortgage, a top Treasury Department official revealed Wednesday.

But despite faulty or missing paperwork, the Obama administration allows mortgage companies to boot homeowners from the program, sticking the borrowers with massive bills that often leave them worse off.

During an oversight hearing, Phyllis Caldwell, Treasury's housing rescue chief, acknowledged during questioning that Treasury doesn't know whether mortgage companies and the owners of mortgages are receiving public money under "false pretenses." Treasury is investigating, she said.

The contradiction highlights what many critics of the past two administrations' policies have claimed for some time: they exert overwhelming force when it comes to saving financial institutions, but merely modest assistance when it comes to distressed homeowners.

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Foreclosuregate Explained: Big Banks on the Brink

Peter White
Truth-Out

Scandal is spreading across Wall St. like a very bad case of poison ivy. A rash of fraudulent home foreclosures has exposed some of the nation's biggest banks to an even worse condition ... bankruptcy.

Until late 2007, the money boys on Wall St. made a bundle in the housing market. After the bubble burst, they were just itching to cash in on the down side, calling in all those bad loans they made and selling off millions of repossessed homes. According to RealtyTrac, Inc., which compiles such data, lenders foreclosed on 3.2 million properties in the last three years, 288,000 in the last quarter, the highest number on record.


But evidence came to light, first in New York, then Florida, Maine, Ohio, and other states that lenders were taking shortcuts to speed up foreclosures. Law firms hired so-called "robo-signers," some of whom have admitted in depositions that they routinely signed off on thousands of foreclosure papers they had never read and sometimes forged signatures of notary publics who were not present.

"Why don't we have Mickey Mouse sign the thing, instead of having a human being sign it? I mean it becomes meaningless," New York Supreme Court Judge Arthur Schack told PBS "Newshour."

Legally meaningless maybe, but not without consequence for hundreds of thousands of Americans who have been evicted from their homes, many of whom have no jobs, and who were snookered into sub-prime mortgages in the first place.

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Mortgage Crisis: The Six Trillion Dollar Problem

Greg Hunter
USA Watchdog

When I was an investigative reporter at the networks, the first question we would ask when trying to decide if we wanted to do a story was: How many?  How many people have been hurt by a defective product?  How many defective products of a certain kind were in use? How many dollars will it take to fix the problem?  In the case of the recent mortgage crisis – “Foreclosuregate,” the question of how many has been answered.It has been widely reported that there are a little more than 60 million home mortgages in the Mortgage Electronic Registry System (MERS).  If every one of the 60 million mortgages are worth $100,000, that would mean a total of at least $6 trillion in home mortgages that are electronically filed.  In MERS, there is no physical written record of a “Promissory Note.”  In almost all states, you need that original “Note” to prove ownership of a home.  That means in almost every single state, the banks cannot legally foreclose on your home without this document.  Some say the loan documents were lost on purpose because the bankers did not want their massive fraud to see the light of day.  Whether or not the “Notes” were lost on purpose or accident, the fact is the original “Notes” are nowhere to be found.  That is what the “Robo Signing” part of the story is all about.  It has been widely reported that “foreclosure mills” were creating massive amounts of counterfeit Promissory Notes so banks could legally foreclose on homeowners.

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Foreclosure Fraud: The Perfect No-Prosecution Crime

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Greg Hunter
USAWatchdog

Did you know that in the aftermath of the Savings and Loan (Thrifts) scandal there were more than a thousand felony convictions of financial elites?  The cost of the wrongdoing associated with the rip-off and closure of nearly 800 Thrifts cost taxpayers more than $160 billion.  The current sub-prime/mortgage-backed security scandal is 40 times bigger according to Economics professor William Black.  That means the size of the crime is $6.4 trillion by my calculation.  Can you guess how many indictments there have been on financial elites who created this enormousmortgage crisis mess?  Zero, none, nada, zip.  Yes, not one single prosecution or conviction has been started of achieved.

That is simply outrageous considering the width and breadth of the many crimes committed.  There was “rampant” mortgage fraud in the loan application process according to the FBI as far back as 2004.  (Click here to see one of many stories of the FBI warning of mortgage fraud) There was real estate document fraud when the original Promissory Notes and loan documents were “lost.”  The Promissory Notes were required to create tens of thousands of mortgage-backed securities (MBS).  No “note,” no security.  That is security fraud.  No security means the special IRS tax treatments for the MBS’s were fraudulently obtained.  That is IRS tax fraud.  Because there were no documents, the rating agencies fraudulently made up triple “A” ratings for the securities.  When the whole mess blew up, big banks hired foreclosure mill law firms to create forged documents.  That phony paperwork was and is being used to wrongfully remove homeowners from their property.  That is foreclosure fraud.

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Foreclosure Mess Scares Away Investors as 'Fear has Taken Hold'

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Reuters

Investors who have been snapping up foreclosed homes are backing off in the wake of the U.S. foreclosure fiasco, driven off by sagging inventory and fears over legal title. Some economists say the trend could hurt the overall housing market.

With foreclosed properties accounting for a large portion of housing sales, and investors accounting for a large portion of buyers — particularly in some key markets with very high foreclosure rates — the implications for the broader economy could be serious.

Investors who would buy, rehabilitate and then sell or rent foreclosures were playing a "huge role," in helping to clear the market, said housing economist Tom Lawler.

But many of those investors are now staying on the sidelines.

"We're like a plane flying around in a holding pattern, waiting to land," said Tony Alvarez, an investor in southern California who is currently renting out 40 former foreclosed homes. "Nothing is going on, and why? Fear has taken hold in the marketplace."

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Task force probing whether banks broke federal laws during home seizures

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Zachary A. Goldfarb
Washington Post

Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people's homes, according to people familiar with the matter.

The Obama administration's Financial Fraud Enforcement Task Force is in the early stages of an investigation into whether banks and other companies that submitted flawed paperwork in state foreclosure proceedings may also have misled federal housing agencies, which now own or insure a majority of home loans, according to these sources.

The task force, which includes investigators from the Justice Department, Department of Housing and Urban Development and other agencies, is also looking into whether the submission of flawed paperwork during the foreclosure process violated mail or wire fraud laws. Financial fraud cases often involve these statutes.

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STOP FORECLOSURE in TX, CA, or FLA

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Wall Street, White House blame homeowners in foreclosure crisis

Tom Eley
Global Research

Wall Street has raised its voice against any government moratorium on foreclosures, even as evidence mounts that banks systematically and illegally falsified documents in order to expedite hundreds of thousands, or even millions, of foreclosures.

Documented examples of abuse include banks hiring contractors and what one Goldman Sachs executive referred to as “Burger King kids” to process thousands of foreclosure documents per week, all the while declaring to courts they were familiar with the cases. Lenders also falsified signatures, notary stamps, and tossed legal documents into the garbage. Every major bank is implicated in the widening scandal.

Yet to the barons of Wall Street these examples of law breaking—what a number of state attorneys general have called a “fraud on the court”—are immaterial, and those who were evicted deserved their fate.


Jamie Dimon, CEO of JP Morgan Chase, whose bank is implicated in the scandal, said this week in a conference call that there have been no accidental evictions. “We’re not evicting people who deserve to stay in their house,” the multimillionaire banker declared.

“If you didn’t pay your mortgage, you shouldn’t be in your house. Period,” Walter Todd of the investment advisory firm Greenwood Capital Associates, told Reuters.

“Everyone’s responsible for following the law. If we all don’t have to pay our mortgage, should we just stop paying taxes, too?” said Anton Schutz, president of Mendon Capital Advisers. Everyone has to follow the law except the banks, that is. Schutz added, “Your mortgage didn’t get to a robo-signer by accident, it’s because you’re not paying.”

As Paul Krugman of the New York Times notes, “In effect, they’re saying that if a bank says it owns your house, we should just take its word. To me, this evokes the days when noblemen felt free to take whatever they wanted, knowing that peasants had no standing in the courts. But then, I suspect that some people regard those as the good old days.”

Krugman attempts to distinguish these claims by Wall Street with the position of the Obama administration, whose opposition to a moratorium on foreclosures the Times columnist suggests is a policy mistake. In fact, the White House is of one mind with the banks.

In spite of mounting popular anger toward Wall Street—and the upcoming off-year elections—the Obama administration this week categorically ruled out any national moratorium on foreclosures, instead encouraging banks to review their own practices and carry through with foreclosures “as quickly as possible,” according to the Washington Post.

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Mortgage Damage Spreads

Big Bank Stocks Hit Again as Modern Finance Collides With the Legal System

Nick Timiraos, Jessica Silver-Greenberg, Dan Fitzpatrick
Wall Street Journal

The unfolding foreclosure-processing debacle is causing bank stocks to slide and putting millions of delinquent borrowers in limbo.

But how disruptive the crisis ultimately becomes—for homeowners, the housing market and the broader economy—depends on how quickly a number of technical problems and legal challenges are resolved in the months ahead.

In essence, fast-paced modern finance is colliding with the much slower machinery of the U.S. legal system. While finance aims for efficiency and maximized profits, the courts demand due process. And that's becoming a growing issue as lenders come under attack for taking short cuts to oust homeowners who haven't mailed in a mortgage check for months.

Banks stocks were hammered on Friday for the second straight day as investors continued gauging the sector's exposure to higher operating and legal costs.

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STOP FORECLOSURE in Texas, California, and Florida

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The Mortgage Morass: Obama Opposes Any Action That May Upset the Banks

Paul Krugman
NY Times

American officials used to lecture other countries about their economic failings and tell them that they needed to emulate the U.S. model. The Asian financial crisis of the late 1990s, in particular, led to a lot of self-satisfied moralizing. Thus, in 2000, Lawrence Summers, then the Treasury secretary, declared that the keys to avoiding financial crisis were “well-capitalized and supervised banks, effective corporate governance and bankruptcy codes, and credible means of contract enforcement.” By implication, these were things the Asians lacked but we had.

We didn’t.

The accounting scandals at Enron and WorldCom dispelled the myth of effective corporate governance. These days, the idea that our banks were well capitalized and supervised sounds like a sick joke. And now the mortgage mess is making nonsense of claims that we have effective contract enforcement — in fact, the question is whether our economy is governed by any kind of rule of law.

The story so far: An epic housing bust and sustained high unemployment have led to an epidemic of default, with millions of homeowners falling behind on mortgage payments. So servicers — the companies that collect payments on behalf of mortgage owners — have been foreclosing on many mortgages, seizing many homes.

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STOP FORECLOSURES in TX, CA, and FLA.

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Grayson Tells FBI It's Time for "Handcuffs" For Banksters Involved in Foreclosure Fraud

Alan Grayson

Dear U.S. Attorney O’Neill and Director Mueller,

When it comes to foreclosures, there is mounting evidence of a state of rampant lawlessness in Central Florida. There are increasing signs that big banks routinely evade laws meant to protect homeowners, in many well-documented cases of ‘foreclosure fraud.’ Despite the demonstrated existence, for instance, of ‘robosigners’ signing affidavits attesting to documents that they have never seen, the parties engaging in such misconduct are not being brought to justice. Big banks are mischaracterizing this as mere ‘technical problems,’ and apologizing only where there is clear and very public evidence of harm.

It is not enough for big banks only to apologize for fraud, perjury, and even breaking and entering – when they are caught. It is time for handcuffs. Fraud does not become legal just because a big bank does it.


On September 20, 2010, after my office found evidence of systemic foreclosure fraud perpetrated by big banks and foreclosure mills, I called for a halt to illegal foreclosures.

Since then, big banks such as Bank of America, JP Morgan Chase, GMAC, PNC and others have suspended foreclosures or foreclosure sales. These banks are still claiming that the massive fraud they have perpetrated amounts to nothing more than a series of technical mistakes. This is absurd. This is deliberate, systemic fraud, and it is a crime.

To give but two of the many available examples, attached is a deposition from an ex-employee of one of the largest ‘foreclosure mills’ in the state, the Law Offices of David Stern. In it, this employee testifies under oath that it was routine for that office to falsify documents regarding military records, in order to move foreclosure cases along more quickly.

The local media has reported on the case of Nancy Jacobini; a contractor for JP Morgan Chase broke into her home after the bank mistakenly foreclosed on it. JP Morgan Chase ‘apologized’ for terrifying her. But in the US we have a system of laws. I am writing to ask you to enforce them.

The organized and systematic manufacturing of falsified documents to deprive people of their homes is not only a threat to the integrity of the legal system. It also aggravates and extends the weakness in the housing market. Who is going to feel comfortable buying a home if a big bank can simply take it, whether or not that bank has a right to it? Given the securitization of mortgage-backed securities, this misconduct is a threat to our securities markets as well. But fundamentally, this is a question of protecting basic property rights – if you don’t own it, then you shouldn’t try to take it. Without clear property rights, and a legal system that insists on clear proof of those rights before transferring ownership by force, the economy will fall apart.

If perpetrators of perjured affidavits and other systematic criminal activity can get off simply with civil liability – or even less, an insincere bureaucratic apology – the freedom that Americans enjoy will erode quickly in the face of lawless seizures of property. I appreciate your work on the joint Middle District of Florida’s Mortgage Fraud Initiative, and respectfully request that the efforts of your offices turn towards reining in this rampant criminality.

Regards,

Alan Grayson
Member of Congress

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Meet Danielle And Jim Plus 9: The Squatters Who “Reclaimed” Their Foreclosed Home Over The Weekend

Tyler Durden
Zero Hedge
Thursday, October 14, 2010

Unfortunately, surreal stories like this will very soon become daily news. As was pointed out yesterday, Simi Valley has just seen the first case of a forced reclamation of a foreclosed home, after Jim and Danielle Earl took their nine (9!) children, ages 9-23, and a locksmith and broke into the six-bedroom house that had been foreclosed upon for lack of payment, and on which the couple owed $880,000! And where would such brilliant advice originate from? Why, the couple’s lawyer of course, who will one day be seen as the prophetic visionary who stole the bankers wealth from underneath them and handed it out to America’s millions of starving lawyers, one billing sheet at a time: “The move was recommended by their lawyer” as the WSJ suggests. Already in process: millions of cases identical to this one, billions in legal fees, and hundreds of billions in lost market value of associated equity and credit instrument, not to mention very unpleasant days for LPs in “Recovery” funds.

More on the family:

The Earls paid $500,000 for the house in 2001 and then refinanced to pull out cash. They fell behind on their mortgage and at the time of their eviction they owed about $880,000 on a no-interest mortgage.

Investors at Conejo Capital bought the house for $697,000 at a lender’s trustee sale and put $40,000 of work into a remodel, replacing carpeting and appliances, as well as upgrading the kitchen. They flipped it to new buyers for $800,000. Those buyers were supposed to move in this week; those plans are on hold.

The Earls claim that they were working with GRP Financial Services to catch up on payments, but discovered a $25,000 difference between what they believed they owed and what the bank said they owed. They then stopped making payments.

“This is only the beginning of this,” the Earls’ attorney, Michael Pines tells KABC News. “I chose this family because we needed to get back in before the investor and the real-estate broker defrauded a new family by having them move in, which would have created a bigger mess. (The Earls) have done absolutely nothing wrong.”

So there you have it: people who owe $880,000 on their mortgage believe it is their right to reclaim homes. We will avoid any ethical commentary on this, suffice to say that it is the bankers who in the greed and stupidity have managed to dig themselves into what could be a hole so deep not even TARP 2-XXX can dig them out of.

For a clip of this surreal harbinger of things to come, click below.

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Why is the White House Against Freezing Foreclosures in the Face of Rampant Fraud?

Treasury and Obama are facing huge financial pressure.

Economic Hitmen

Nomi Prins
Alternet

At first, there was a deafening silence from Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke on the foreclosure front. It was as if they: 1) didn’t read the news; or 2) were afraid someone would notice afresh their incompetence in dealing with the ongoing housing crisis and deteriorating economy, while convincing everyone that the bank bailouts and subsidizations were good for us.

Last week, while Senator Harry Reid, House Speaker Nancy Pelosi and others in Congress were dispensing irate pre-election sound-bites, attorneys general across the country were gearing up for investigations. Banks were reluctantly announcing foreclosure moratoriums because it’s quarterly earnings season and uncertainty is bad for stock prices, and Geithner was defending TARP and mixing it up with China over the dollar. Meanwhile, the Fed was gearing up to buy more Treasuries, like some kind of rapacious alien that eats its progeny, because no one else wants our debt.


But that changed when Geithner came out of hiding yesterday with a stance. (Bernanke is still in hiding, but will support Geithner’s view soon.) Unsurprisingly, Geithner chose to side with the likes of conservatives and CNBC. Thus, his response to Charlie Rose when asked whether he supported banks in declaring a foreclosure moratorium was: “No, I wouldn’t say it that way.”

Why? Geithner’s logic follows the typical blame-the-little-guy-for-taking-on-too-much-debt-to-buy-a-house-he-couldn’t-afford pattern, coupled with old-style fear-mongering: if you wait and analyze what’s really going on, it might be bad for the housing recovery. And, what housing recovery is that? The one in which 25-30 percent of homes being sold are REOs (bank owned real-estate, a.k.a. foreclosed properties). On a trading floor, that’d be considered "churning," not new value.

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