NYTimes October 14th:
“Mortgage Mess May Cost Big Banks Billions. After scratching their heads for weeks over how much the foreclosure mess will hurt banks’ bottom lines, investors calculated the potential costs—and sent bank stocks plunging. . . .The share price of Bank of America fell 5.2 percent . . . JPMorgan Chase sank almost 2.8 percent.”
Apparently, the foreclosure problem is not a “crisis” or a “scandal” or even a “racketeering enterprise”—it’s merely a “mess,” hmm?
But, OMG!, the banks’ stocks fell a whopping 5.2% and 2.8%? Whatever will we do? Gee, if the foreclosure “mess” starts to hurt the banks’ “bottom lines,” it almost sounds serious.
“Wall Street initially hoped the banks would work quickly to put this issue behind them. But as the political furor grew, a quick end to the crisis looked less and less likely. On Wednesday, 50 state attorneys general announced they were investigating the practices of the mortgage servicing industry . . . .”
It may be that all 50 state AG’s have routinely entered into simultaneous and coordinated investigations in the past—but I can’t remember when. The fact that all 50 states are investigating “fraudclosure” suggests that this problem is too big to be “quickly put behind” and much more than a mere “mess”.
“Richard X. Bove, an analyst with Rochdale Securities, said, ‘The [foreclosure] moratorium won’t last that long but the problem will last at least four or five years, maybe a decade.”
“Meanwhile, the foreclosure machinery in many states has ground to a halt. Major institutions like Bank of America, JPMorgan and GMAC Mortgage have halted foreclosures in many states . . . . As a result, foreclosed homes will remain on the bank’s books while racking up thousands of dollars a month in extra costs.”
Again, OMG!, our banks, our beloved banks (!!!)—are losing money!! . . . When will this horror end?!!
But, as you’ll read, the problem goes far beyond the “banks” and reaches right up to Congress, the courts and the White House.
“Christopher Kotowski, an analyst with Oppenheimer, said, “We need to look at whether they are filing foreclosures on a massive basis against people who are not delinquent. So far, I haven’t seen any evidence that they are.”
Yep, there’s no evidence of “massive” foreclosures against people who are not delinquent. Truly, virtually everyone who’s been foreclosed has been delinquent in their mortgage payments. In that regard, the banks’ foreclosures seem appropriate.
But here’s the problem: Whether a mortgagor is or is not “delinquent” in his mortgage payments is not the primary issue of foreclosure. To illustrate, suppose you hear that your next-door neighbor is delinquent in his mortgage payments. Does that knowledge entitle you to foreclose on his home? Of course not.
Thus, the primary question in foreclosure is not Who is delinquent, but Who has the right to foreclose?
The answer is: A property can be legally foreclosed by whoever holds both the original Note (which entitles him to collect the mortgage payments) and the original Mortgage (which secures the Note by entitling the holder to seize the subject property).
For example, if a bank owns the original Note (not a mere copy), then the bank is legally entitled to collect the mortgage payments. But if that bank doesn’t also own the original Mortgage (not a mere copy), the bank could place a lien on the property for all the delinquent payments and that lien would have to be paid if and when the property was ever sold. But without the original Mortgage to secure the Note, the bank could not legally foreclose on the property.
Thus, if a bank doesn’t own both the original Note and the original Mortgage, that bank would have no more standing to lien or foreclose on a delinquent property than you, me, or Jesse James.
In short, foreclosure does not depend on whether a mortgage is delinquent; it depends on who has the right to foreclose. That right depends on owning both the original Note and the original Mortgage. (By “original” I mean the document with your original, wet-ink signature—not a mere copy.)
Thus, banks are disingenuous when they claim that they “haven’t seen any evidence of massive foreclosures against people who are not delinquent.” They’re attempting to mislead Americans into believing that their foreclosures are legal, ethical and moral—when, in fact, the banks may have no more right to foreclose most homes than Jesse James had to rob trains.
Why? Because in most, perhaps virtually all, modern mortgages, shortly after the mortgagor negotiated the Note and Mortgage with the original bank, that bank quickly sold the original Note and/or original Mortgage for full face value to a third party.
Once the bank sold (and therefore no longer owned and held) the original Note, the bank lost standing (right) to collect the mortgage payments. If the bank lacks legal standing to foreclose, but does so anyway, the bank is taking property without legal authority and is every bit as criminal as Jesse James.
The NYTimes (more or less) agrees:
“If it turns out that mortgages were bundled together and sold improperly, more holders could sue the banks and force them to buy back tens of billions in mortgage-backed securities.”
In fact, it makes no difference if the mortgages were sold “properly” or “improperly”. Once a bank sold a Note and/or Mortgage, that bank lost legal standing to foreclose on the particular property. If the bank nevertheless does foreclose, the foreclosure will be fraudulent. Fraud is a felony. Somebody should go to jail.
“Manal Mehta, a partner at Branch Hill, said, “There has been pervasive bad behavior throughout the system.”
Mr. Mehta is correct. The “fraudclosure” crisis is systemic. Fraudclosure is not the result of isolated errors by one bank or one state. This problem is pervasive throughout the U.S. financial system.
Second, “bad behavior” sounds a lot more innocent than “criminal behavior”. If the banks are only guilty of “bad behavior,” America might say, “Ohh, those naughty scamps” and fine them a few thousand dollars. But if banks are guilty of “criminal behavior” (foreclosing on homes without legal authority to do so), America will say, “Ohh, those greedy, lying racketeers”—and jail some banksters for some considerable number of years.
Here’s another article from the October 8th NYTimes:
“Bank of America stops US foreclosures for review. Bank of America Corp., the nation’s largest bank, said it would stop sales of foreclosed homes in all 50 states as it reviews . . . paperwork in tens of thousands of cases for flaws, expanding a crisis at a perilous time for the housing market.”
Is the BOA reviewing for “flaws”—or for evidence of “fraud”?
“A BOA spokesman acknowledged that the bank acted in response to pressure from state attorneys general and other public officials inquiring about the accuracy of foreclosure documents.”
“Accuracy”? Or “legality”?
“A document obtained last week by The Associated Press showed a BOA official acknowledging in a legal proceeding that she signed thousands of foreclosure documents a month and typically did not read them. The official, Renee Hertzler, said in a February deposition that she signed up to 8,000 such documents a month.”
Reportedly, many, perhaps all, of these “foreclosure documents” were affidavits signed under the “penalty of perjury”. The legality of signing an unread affidavit under “penalty of perjury” is doubtful.
But Hertzler was forced to admit not reading the “documents” because she couldn’t claim to have actually read and signed 8,000 “documents” in a single month. I.e., if she worked 50 hours a week, that’d be about 215 work hours per month. 215 hours = 12,900 minutes. Assuming she devoted every minute to reading and signing those documents, we could divide 12,900 minutes by 8,000 “documents” and wind up with an average reading and signing time of about 1.5 minutes per “document”. (Of course, if she ever had to use the bathroom, get a drink of water, or answer the phone, the amount of time she spent “reading and signing” would be reduced.)
Bear in mind, these legal documents probably include more than one page per “document”. How fast can you read even a one-page legal document that you’re expected to sign and personally stand good for under penalty of perjury?
By admitting to have signed 8,000 “documents” in one month, Ms. Hertzler may have won herself an all-expense paid vacation in the big house.
Why? Consider the October 20th NYTimes:
“Battle Lines Forming in Clash Over Foreclosures. About a month after Washington Mutual Bank made a multimillion-dollar mortgage loan on a mountain home near Santa Barbara, Calif., a crucial piece of paperwork disappeared. Bank officials were unperturbed. After conducting a “due and diligent search,” an assistant vice president simply drew up an affidavit stating that the paperwork—a promissory note committing the borrower to repay the mortgage—could not be found . . . . The handling of that lost note in 2006 was hardly unusual. . . . Now those missing and possibly fraudulent affidavits are at the center of a potentially seismic legal clash over whether the lenders’ rush to foreclose flouts private property rights.”
First, the crucial documents have not simply “disappeared” in the sense of being lost or misplaced within a “month” of negotiating the mortgage. They’d been sold—and the banks know it.
Second, to cover the loss of “documents” needed to give a bank standing to sue for foreclosure, bank executives signed affidavits (under penalty of perjury) testifying that the needed records have been merely lost and therefore, the bank should still have standing to foreclose—even though the signatories and/or the banks knew that the documents weren’t actually “lost” or “misplaced”—they were sold. That knowledge makes the affidavits a lie. That’s perjury. That’s fraud.
That’s why Ms. Hertzler may go to prison for signing 8,000 “documents” in one month. She apparently signed affidavits to testify that a missing Note and/or Mortgage had been lost—when, in truth, those instruments had been sold. She (and other bank executives in other banks) signed fraudulent affidavits to create an illusion that bankers who had sold the Note/Mortgage still had standing to foreclose.
It’s possible to sign one or two affidavits that testify that one or two sets of mortgage documents have been accidentally and innocently “lost”. It’s impossible to sign 8,000 such affidavits in a single month and honestly believe that the losses were “accidental” rather than an “institutionalized” and “systemic” procedure.
Signing thousands of falsified affidavits per month has become routine banking business practice. This routine practice is proof that the modern foreclosure industry is largely based on fraud. That’s a crime. A conspiracy. A felony.
Even so, the October 8th NYTimes also reported:
“Senate Majority Leader Harry Reid . . . applauded the BOA ‘for doing the right thing by suspending actions on foreclosures while this investigation runs its course.’”
Senator Reid’s support for the BOA tells me that he’s in this “mess” right up to his ears.
More, I’ll bet that Senator Reid actually “applauded the bank” for trying to derail the growing crisis. Why? Because the fraudclosure problem is systemic. It affects all 50 states. A nation-wide, systemic problem couldn’t be possible unless fraudclosure was ultimately based on national laws passed by the U.S. Congress, Senate and President.
And that’s why Fraudclosure is such an extraordinary story. Fraudclosure is not about one bank trying to extort its customers. It’s not about one state that somehow “legalized” fraudclosure. Fraudclosure is not about Ms. Hertzler signing 8,000 “documents”.
Fraudclosure is about all the mortgage lenders, and all the states, and probably just about every mortgage signed in the past 20, maybe 30 years. It’s ultimately about treasonous whores in the cathouse on the Potomac conspiring with banksters to repeal laws that had previously protected the American people from this kind of fraud, and conspiring to pass new laws that allow institutionalized extortion.
Fraudclosure is about cadres of foreclosure lawyers and judges who knew or should’ve known that our modern foreclosures are based on fraud, but allowed the foreclosures to take place anyway.
Fraudclosure is about a criminal conspiracy of bankers, lawyers, judges, and federal politicians who have knowingly and intentionally robbed the American people on a scale that may be unprecedented in American and world history.
Fraudclosure is not simply about ordinary greed or even institutionalized extortion. It’s about a moral collapse in our government that may precipitate a “Greater Depression,” incredible chaos and, perhaps, even national disintegration.
Fraudclosure will ultimately destroy some our biggest banks and some of our biggest politicians. It won’t die quickly or quietly. It will fester for another five, maybe ten years. It will precipitate financial, political and national ruin.
Fraudclosure is bigger than the Kennedy assassination, bigger than the Viet Nam war. It may be so big that it can’t be covered up. And that’s very, very big.
Why? Because fraudclosure involves the systematic, institutionalized robbery of several million homes from several million homeowners and families. It involves the wanton destruction of families, subjecting adults and children to psychological trauma, precipitating suicides and divorces and even some violence against bankers.
And I don’t doubt for one minute that—once the victims of fraudclosure realize they were robbed of their homes, much of their lives, their home equity and even their credit ratings—those victims will scream to hold the banksters liable for their crimes. Fraudclosure victims won’t be angry, they’ll be enraged. And some of ‘em will start shooting.
Fraudclosure won’t go away any time soon. It’s going to grow until it erupts into the single biggest scandal America’s ever seen. The political heat should be devastating.
Written at arm’s length and without the singular “United States” (“this state”) by Alfred Adask