Mortgage Settlement Talks Look Like Tobacco II

First he starts out with…

Stop me if you’ve heard this one before: Politically ambitious state attorneys general target an unpopular industry with lawsuits based on creative legal theories that would stand a tough time in court. Their sheer legal might brings the other side to the negotiating table. Talks grind on. Finally a grand bargain is struck that buys the industry some measure of immunity and sends cash sluicing directions that will help the AGs in their political careers.

That’s how the great tobacco settlement went down, and it’s looking like the mortgage settlement is headed the same direction. In both cases, the AGs are seizing upon behavior which looks bad and may technically violate the law, but is hard to link directly to consumer injuries.

Oh, so it is okay to violate the law if you personally can’t link injury to consumers. You must not of tried…

He then goes on to say…

Take Nevada Attorney General Catherine Cortez Masto’s December lawsuit against Lender Processing Services, DocX and other document-preparation firms. According to the Nevada AG, “the foreclosure crisis has been fueled by two main problems: Chaos and speed.” There’s no mention of the primary cause: Borrowers not paying their mortgages. And while the lawsuit throws around words like “kickbacks” and “forging scheme,” it is notably short on evidence a single homeowner suffered foreclosure while current on his payments.

Guess he hasn’t read Michelle Conlins article in Reuters how this happens to thousands of people on a routine basis…

Next up…

Instead, the complaint cites “confidential witnesses” who signed thousands of documents a day without “personal knowledge” of their accuracy. What would that “personal knowledge” consist of? A computer record showing the mortgage was in default. The mortgage industry computerized a long time ago, and the “personal knowledge” inside the mortgage-syndication machine is institutional. Lawyers, notaries and county recorders of deeds may cling to the idea that a knowledgeable person, preferably a lawyer, must bless every document in a foreclosure. But where’s the evidence that the computers were wrong, and vast numbers of foreclosures were filed on mortgages weren’t in default?

As they did with the tobacco companies, the AGs attempt to build a case by citing what the loan processors said, not specific actions that hurt consumers. The Nevada case makes much of LPS’s SEC filings stating it doesn’t falsify documents or do other bad things — laying the ground for a barrage of securities-fraud lawsuits when it agrees in a settlement that maybe it did (there are two already). It also accuses LPS of violating Nevada’s consumer-protection laws, without citing any of its customers — banks and investors — who complain of being defrauded.Instead the consumer fraud is a hazy, derivative sort of thing. Consumers weren’t told that the foreclosure processors charged lawyers filing the paperwork against them a $125 fee for accessing their computer database, which Nevada calls a “kickback” but LPS characterizes as an “administrative fee.”

The penalties are stiff, up to $12,000 for each of the tens of thousands of cases of “fraudulent” documents. But with all those confidential witnesses and tens of thousands of illegal foreclosures, why can’t the state cite a single case of a foreclosure that was made in error?

You can check the article out in full if you can stomach it here…

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4closureFraud.org