The Weekly Walk of Shame: Blaming “Deadbeat” Homeowners for Foreclosure Fraud

This doesn’t appear to be a mere “paperwork issue” – we seem to be dealing with bullying and lawbreaking.

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This Motley Fool series examines things that just aren’t right in the world of finance and investing. Here’s what’s got us riled up this week. If something’s bugging you, too, go ahead and unload in the comments section below.

Today’s subject
Foreclosure fraud is heating up. While bankruptcy judges have chastised Wall Street’s lacksidaisical approach to recordkeeping and fabrication of court documents at least as far back as 1999, the foreclosure wave sweeping America has provided a new venue for lawbreaking.

Wall Street has characterized the fraud epidemic as a mere paperwork issue. Various journalists have echoed and expounded the party line, laying the blame thick on “deadbeat ” homeowners.

Here’s The Wall Street Journal editorial team:

Talk about a financial scandal. A consumer borrows money to buy a house, doesn’t make the mortgage payments, and then loses the house in foreclosure — only to learn that the wrong guy at the bank signed the foreclosure paperwork. Can you imagine …? Welcome to Washington’s financial crisis of the week …

We’re not aware of a single case so far of a substantive error. Out of tens of thousands of potentially affected borrowers, we’re still waiting for the first victim claiming that he was current on his mortgage when the bank seized the home.

Umm …

  • Bank of America (NYSE: BAC) foreclosed on a Fort Lauderdale home that didn’t even have a mortgage .
  • A terrified Orlando woman for whom foreclosure proceedings had not begun dialed 911 when JPMorgan (NYSE: JPM) contractors attempted to break into her home.
  • On Wednesday The New York times reported that Deutsche Bank tried to foreclose on a Michigan house that was paid for in cash, a Kentucky couple was foreclosed on by a trust that did not exist, and a Colorado woman is facing foreclosure after her bank told her to skip a payment as compensation after it mistakenly changed her locks.
  • My favorite: Wells Fargo (NYSE: WFC) hired a law firm to foreclose on a condo owned by … Wells Fargo. The bank then hired a separate legal team to defend itself. As business reporter Al Lewis is quoted, “You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself.”
  • And the list goes on. Wells Fargo alone has found documentation “lapses” in 55,000 current cases, and there’s no reason to think they are special among mortgage servicers.

Why you should be indignant
As Cleveland Federal District Court Judge Christopher Boyko wrote in 2007:

Plaintiff’s “Judge, you just don’t understand how things work” argument reveals a condescending mind-set and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.

It’s galling when Wall Street institutions that were bailed out by the public in 2008 still feel they can rip off consumers and investors because they’re above the law.

So here’s the fraud: In order to foreclose on a house, you need to have the note, the IOU that identifies which homeowner owes money to whom.

But during the housing securitization bonanza, as mortgages were issued, sliced and diced, and traded left-and-right, sketchy mortgage originators appear to have cut corners by failing to supply notes to mortgage-backed security trusts. According to the CEO of a major subprime lender, “We never transferred the paper. No one in the industry transferred the paper.”

Many of these contracts were also destroyed — banking executives told a Florida court in 2009 that it was standard practice to shred them.

Now that Wall Street is without the notes, it may be unclear in many cases who owes money to whom. As law professor Catherine Porter testified yesterday before the Congressional Oversight Panel:

If the trust does not have the loan, homeowners may have been making payments to the wrong party. If the trust does not have the note or mortgage, it may not have standing to foreclose.

Now, Wall Street could agree to negotiate with more homeowners to restructure their loans in an affordable manner, as is common in the corporate world. Or we could create a process that would allow mortgage debt relief to be included in personal bankruptcy proceedings, as Blackrock‘s (NYSE: BLK) Vice Chairman recently argued we should. Such moves would help to clean up consumer debt and move the housing and economic recoveries forward.

They might even be welcomed by investors like PIMCO, Blackrock, Legg Mason‘s (NYSE: LM) Western Asset Management, Annaly Capital (NYSE: NLY)-managed Chimera (NYSE: CIM ), taxpayers (via the New York Fed and Freddie Mac), the investors who actually own the mortgages, since foreclosure can be a costly process for them too. (That group, minus Chimera, recently notified Countrywide they were displeased with how it was servicing their investments in mortgage-backed securities.)

But Wall Street, which collects late payment fees and additional fees during foreclosure, has instead resorted to hiring companies to “recover” the documents and paying notaries to “robo-sign” themselves hundreds of times daily. They’re even charging investors for the robo-signing tab.

You can check out the rest here…

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4closureFraud.org

Comments
15 Responses to “The Weekly Walk of Shame: Blaming “Deadbeat” Homeowners for Foreclosure Fraud”
  1. Recoveryless Recovery says:

    You CAN’T unscramble an omelette. The U.S. has been digging itself into the current hole it’s in for DECADES now, yet it STILL refuses to acknowledge its need for MAJOR institutional restructuring and return to rule of law. The writing was clearly on the wall after Americans voted for a mentally challenged, semi-functional illiterate (not once, but TWICE) and then followed THAT up by voting n an absolute political stranger based solely on his promises of alleged ‘hope & change’.

    Little did most Americans suspect that the ‘change’ this man was refering to meant changing the U.S. into ZIMBABWE.

  2. truthmonger says:

    People!! Wake UP!!! There was and is NO LOAN!!!! Hello!! What you say? That is right NO LOAN!!! Ok, lets say just for one moment that you gave them a Note (a negotiable instrument) or as the banker likes to say a “debt Note” ok you gave them a debt note….. what did you get in return??? Look at it, that is right pull it out of your dam pocket right now and look at that green paper, the front, the very top… it says, “FEDERAL RESERVE NOTE” That is right it is a note too!! And it is a private, foreign, bank note, backed by — what does it say? United States (corporation) and as we all know they are trillions in Debt. So that means they gave you DEBT NOTES in return!! Let me see, you gave them a debt note and they gave you debt notes in return… hmmm no LOAN here, an exchange maybe, but loan? NO!
    OK, but wait, lets look at it again, the first words on the Note say “In return for a loan I have received”, Well, who out there has received anything at all (and for a contract to be valid there must be an exchange of value for value) before they sign the note? Anyone? anyone ever get something before they sign the note.. I don’t think so!!! So the Note is fraudulent in the inception/execution. But but but, you say, I took out a loan from the bank. Ok, If you are going to loan me $100, don’t you have to have $100 to loan? If you don’t have $100 there is no way you can loan it right? So if the bank loaned you $100,000 then there certainly would be a paper trail, a record of the money existing before the day of the signing of the Note by you. Tax record, transfer records and so forth.. there ain’t none because they never had it to begin with. !!! They never had and never Loaned anything. They bamboozled you into thinking that they were going to Loan you money when in fact they took your Note and cashed it then used that cashing to transfer funds to “pay for the house”. Don’t believe me? Look at the Note, the bottom page he last page or the Allonge, it is clearly written “Pay To The Order Of … Wells Fargo Bank (or whom ever), now look at one of your checks, do they not say “Pay to the order of”? Shore doo. That is right they cashed your Note!! you created it and they ….. well actually look closer, they did not cash it they got someone else to cash it for them because they are a fiction and only a real person can accept a note…. and then deposit full face value into the bank which now monetizes it several times and copies it several times and sells it several times.
    Ok, one more common sense thing, the reason one pays interest is because the “lender” can no longer use that money so to make up for the loss of the use of it we pay a fee or interest. Now, if the banks, or anyone for that matter takes our note and is able to use it then they are not out the use are they? So no Interest, compound interest etc. is reasonable. Nope, actually they can take your note and monetize it many times over,sell it many times over, fictionalize it any times over and bundle it many times over.. which they can not do with the Federal Reserve Notes… that is against the maxim pf law found in their Blacks. it is all against principals and maxims and codes and rules and everything known too man. is it any wonder why Jesus turned over the tables and whipped these money changers? They don’t give a rats ass about the property, it is only a means to get peoples signitures!!!!!!!!! Which they can monetize over and over again!!!
    oh wait, did we forget? The under writers, the dreaded underwriter’s who they keep referring to during the fictional lending process… what about them? That is right they pay off the loan when you stop making payments… Hmmm so even if it were all above board and they did loan you money and did not cash the note and all was well and good, why are they foreclosing? They got paid by the insurance companies…. and what about the title company??? and oh wait , I have paid off at least 15 alleged loans and yet never received my note back.. where are they now? Who is still selling, trading or other them today? I want them back!! Don’t you?
    The Judges know there is fraud yet they ignore it and continue to give orders that cause damages… hmmm why? Well maybe the 30k and up bonds written to the judges, state, and/or attorney or assigns, might be a clue. That is right in at least two cases there are Bonds to be paid to the state or who ever they assign.. think that is bribe money/ Seems like it to me……
    Oh and was there full disclosure? I don’t think so!!!
    It is time to get our assemblies together… make contact with people in your county and create an assembly of the people and then grand juries of the people not the corporate for profit entities. but of the people and take back our land.
    all the best to the rest, a hug just because, reserving all powers, not for sale or obligation, I-am creator, known as Colin

  3. JS says:

    Once again, I think it’s important to state that this isn’t just about robo-signers and improperly transferred paperwork. It’s about deliberate, orchestrated FRAUD on the part of the financial institutions. FRAUD that created the entire financial meltdown. FRAUD that lured struggling homeowners to participate in a Loan Modification process that was meant to deceive them.

    Anyone who doubts that this is about FRAUD, should watch Bill Moyers interview of William K Black:

    http://www.pbs.org/moyers/journal/04032009/watch.html

    or see the movie “Inside Job”

    or simply take the time to read up on how this crisis was created.

    Consider how the banks have dealt with struggling homeowners:

    Take my case for example. I lost my job just as I turned 55, after a 32 year career with Macy’s. I drive a 12 year old second-hand car. I live in an extremely modest 45 year old, 2-family house. I had 2 kids in college when I lost my job. (one since graduated) ….Hardly the MO of a deadbeat. Then I saw the advertisements from our Federal government and CHASE bank stating that they wanted to help struggling homeowners with legitimate hardship.

    The CHASE web site, (https://www.chase.com/chf/mortgage/hrm_loanmodification) states specifically:

    “Four key steps in the loan modification timeline”

    1. “Determine eligibility – Use our quick assessment tool to determine if you may be eligible for a loan modification.”
    ====> I did, and It said we were eligible and should submit an application. (Anything deadbeat about that?)

    2. “Review & Analysis” “After we receive your package, a home retention specialist will review all the information you’ve submitted to confirm your eligibility for a loan modification. This review process may take up to 30 days.”
    ====>CHASE moved our home to foreclosure status FIRST, then responded… It took MORE than 30 days. (hmmm, who is the deadbeat?)

    3. “Trial Period Plan” “If your loan modification request is approved, you’ll receive a letter from Chase explaining the terms of your loan, the amount of your new trial period mortgage payments and the next payment date. When you receive this letter, you’ll begin a three-month Trial Plan. Making your mortgage payments during the trial period is essential, because it shows us that the new loan terms will work within your budget.”
    ====>We did receive this letter only the 3-month trial lasted for FIVE months. (Nothing deadbeat here…. at least not on my part)

    4. “Final Modification Agreement” “If you successfully make your payments during your trial period, and the documentation you provided supports the home retention specialist’s initial review, we will approve your request and your loan modification will become permanent. When you’ve successfully completed the Trial Plan:”
    ====> We made all FIVE trial payments on time. All the required documentation was submitted, and resubmitted, and resubmitted again, on a timely basis, with accurate figures. Not one thing changed from the documents we submitted for “initial review”. Nevertheless, we were rejected from the loan modification. During this time period CHASE lied repeatedly, saying 2-family homes are excluded (1-4 family homes qualify), saying in writing, that 31% of our income was NOT less than our housing expense (It is by a HUGE margin, which they later conceded…but only verbally, not in writing). Finally we were formally rejected due to “negative NPV results”, a nebulous reason that provides us no opportunity to verify the accuracy of the rejection. Then, after CHASE had to suspend foreclosures they suggested we start an entirely new modification request! They claimed we had been rejected by the “imminent default dept” and were now working with the “loss mitigation dept” This is a LIE. Everyone I spoke to identified themselves as working in the loss mitigation dept. (Again, who is the deadbeat?)

    My mortgage is not a “liars loan”. I provided 100% accurate information. My home is not “underwater”. We have about $160k equity. We can manage a mortgage at current rates. We have rental income from a legal apt in the house, which can easily expand by giving up a large storage room and making it part of the Apt. to maximize rental income. I don’t need a principal reduction. I don’t need an artificially low interest rate…just a current market rate.

    Do I want to get my home free and clear because of paperwork errors by the banks. NO. I DON’T. But, on the other hand. those SOB’s handled my loan modification request in deliberately dishonest manner. Their behavior is despicable. In essence they kicked me while I was down and out, all the while claiming they were helping. So, if they can’t produce the paperwork, F… ’em. !!

    Any time they want to offer a legitimate, permanent modification, I am ready, willing, and able, and we can “call it even” on the loan paperwork issue! (But they’ll still be despicable dishonest SOBs)

    Am I a deadbeat? I don’t think so!

    Is CHASE, run by crooks? CHASE advertises on their web site:

    “CHASE

    THE WAY FORWARD > > >

    AT JPMORGAN CHASE, WE ARE COMMITTED TO DOING THE RIGHT THING”

    The facts tell a completely different story!

    Perhaps it should read, “Jamie Dimon’s CHASE Bank” where the “F” word is FRAUD!

  4. RAMONA says:

    this is par for the course.. brainless vs mindless . did that say they did not have a ownership role?

  5. Gabe says:

    I think Banksters are just plain incompitent,ignorant, idiots.

    • JS says:

      Gabe,

      Don’t believe for a minute that the banks are incompetent. They know EXACTLY what they are doing. Sure, they’ve made a few dumb errors, like requesting my DEATH CERTIFICATE (REALLY), but they knowingly created this crisis and they are deliberately luring people into the modification process to squeeze out a few more bucks before kicking them to the curb… and all the while giving themselves record bonuses.

      Did you know that the financial institutions, seeing that their housing bubble was about to burst, started betting on the meltdown, and actively sought out the worst possible mortgages to securitize (and sell with triple-A ratings), so they could make huge profits when they failed? That’s not the work of idiots. That’s the work of CRIMINALS!

    • A.R.B. says:

      A confusing mess is a great smokescreen for fraud.

      The Standard and Loans scandal 20 years ago led to over 1000 banksters and their accomplices being convicted. That was the big fry, executives and high level traders, the small fry got immunity in exchange for testifying against their bosses. Nowadays Wall Street is even more out of control, executive bonuses and accounting irregularities bigger than ever before. You seriously believe that bankster behavior is purely due to incompetence and ignorance? Understand this, crooks only care about becoming rich, the viability of the bank itself is of little concern to them.

  6. rich says:

    My favorite: Wells Fargo (NYSE: WFC) hired a law firm to foreclose on a condo owned by … Wells Fargo. The bank then hired a separate legal team to defend itself. As business reporter Al Lewis is quoted, “You can’t expect a bank that is dumb enough to sue itself to know why it is suing itself.”

    Where can I get more info on this situation?

    This would be great to be used for anyone dealing with WF.

  7. mp3rmd says:

    THE PROBLEM OF FORECLOSURE COULD END!

    THE BULLYS COULD RIGHT THEIR WRONGS???

    WHAT IS BULLYING?

    DEFINITION OF BULLYING:
    http://en.wikipedia.org/wiki/Bullying#Definition
    “Bullying is an act of repeated aggressive behavior in order to intentionally hurt another person, physically or mentally (they forgot to include “economically” and “emotionally”). Bullying is characterized by an individual (they forgot to include groups, organizations or corporations) behaving in a certain way to gain power over another person (they forgot to include “person(s), or groups of persons, or classes of persons”) “.

    Home buyers in America did not collectively conspire en mass to take out loans for homes they could not afford, and then plot to default on those loans en mass purposely within a short period of time, causing their own homelessness, thumbing their noses at the banks just to “show them” how they did this to themselves! Why would American Homeowners desire to do this to a country they love in hopes of causing it to suffer economic disaster?

    It is unimaginable how anyone or any agency would ever dream of accusing the victims of a crime of being the cause! Why would our own media conjure up, believe and spread such atrocious lies and blame homeowners of something so ludicrous? Homeowners are being Victimized! American citizens are being Victimized! America is being Victimized! This economic and housing crisis was not caused by Victimized American Homeowners!

    “Sleight of hand” tricks and ploys have been devised and used intentionally by loan servicers to encourage homeowners to utilize the HAMP Federal Government Program, and to encourage homeowners to seek assistance from loan servicers or lending institutions to make their monthly payments more affordable (never with the intent to avoid paying altogether) in the guise of ensuring the homeowners retain the ability to keep paying their debts responsibly.

    Financial Institutions, Banks and Servicers are preying on unsuspecting homeowners by way of a Federal Government program called HAMP, that was created by our Government for the purpose of protecting homeowners from the very situation that is occurring! Those who are doing this should be seen as the “Bullies” and perpetrators that they are…and THAT is the problem needs to be addressed!

    “Bullying tactics” (as stated above, straight from Wikipedia.org) are being used by Banks, Lending Institutions, Loan Sevicers to defraud millions of unsuspecting homeowners of their properties and homes, in order to gain power over them and thus to gain substantially financially from such acts, without so much as a second thought or any evidence of remorse…

    …Now if that is not Bullying, then what is???

    No matter what is said, the responsible parties of these atrocious crimes are unlikely to accept responsibility, apologize, and make right their wrongs…BUT THEY COULD! Perpetrators of crimes seldom show remorse…BUT THEY COULD! Restitution is rarely ever voluntarily given…BUT IT COULD BE! Further slams and name-calling and labeling is likely to continue from those who only see from the perspective of those opposing the victims in this situation…BUT IT DOES NOT HAVE TO CONTINUE! Seeing from the eyes of the victims and walking a few steps, not even the proverbial mile, COULD HAPPEN, and would lend to understanding this situation fully. Only a mature change of heart and true sorrow and remorse would ever cause the perpetrators of these crimes to admit to and correct their wrongs…

    THIS COULD HAPPEN…

  8. James Trow says:

    The default of the homeowner is not what is in question here. If the mortgage lender cannot legally prove it’s foreclosure case, then the suit should be dismissed… period. Here’s a perfect analogy; if a person is indicted on, let’s say a murder case (I don’t mean to compare a foreclosure to a murder) and it is later discovered that the arresting officer “planted evidence”, then the case is dismissed and the defendant is set free. As I see it, the mortgage companies are “planting evidence” so the defendant should be set free dismissing the case and perhaps the entire mortgage released.

    • JS says:

      James,

      Your assessment is certainly accurate, but we have now moved from “too big to fail” to “too big to JAIL”. Do you think for a minute that Bernanke, Geithner, etc, are going to allow the majority of America’s mortgages to be declared invalid, and lock up all the crooks involved?

  9. Beau Deters says:

    Why would anyone negotiate a loan modification with any banking entity unless it can be demonstrated that they are the legal, lawful, and actual holder of the original promissory note and have the interest and right of foreclosure? I say leave me alone until such a time that someone is able to come forth meeting the aforementioned qualifications and then we will discuss, until then I will establish an escrow and send payment there that would demonstrate to the court that I had actually planned to pay, but only to the proper party in interest.

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