The House Judiciary Committee held a hearing today, the fourth in a few weeks on Capitol Hill, on foreclosure fraud. And because this was a Judiciary Committee hearing, the focus was a little different. We heard more about standing to foreclose and the whole legal mess in this hearing.
Mortgage lenders and their servicers, by flooding courts with falsified foreclosure documents, have created chaos in the judicial system, housing lawyers told lawmakers.
“As we allow the mortgage loan industry to circumvent the rule of law, we show that corporate interests can get away with such massive dishonesty,” said Thomas A. Cox, a foreclosure- defense lawyer. “We thereby encourage more of it.”
James A. Kowalski, a Jacksonville, Florida, foreclosure defense lawyer, described a homeowner who is facing simultaneous foreclosure lawsuits filed by two different trustees both claiming to own the same loan [...]
“It’s a bedrock securitization problem,” Kowalski said in an interview before today’s hearing. “Once we allowed the securitization model and the concept of the securitized trust servicer to run the show, we ended up going down this road.”
Cox and Kowalski are the right two people to listen to about this. They’re on the front lines in the courtrooms and they know the law. Judge F. Dana Winslow of the New York State Supreme Court also testified, and he said that judges, who helped create this atmosphere of chaos by accepting faulty documents, are starting to “recognize the need to scrutinize the evidentiary submission of lenders and their agents.” That’s bad news for lenders and their agents.
Julie Williams, the chief counsel of the Office of the Comptroller of the Currency (OCC), said in the hearing that banks could face “civil money penalties, removals from banking and criminal referrals, if warranted” from the documentation problems. I’d doubt the last two, and the first would amount to the cost of doing business. The far bigger problem the banks have, beyond the regulators, is with the courts. More from Ariana Cha.
New York State Supreme Court Justice Dana Winslow said Thursday in written remarks that “standing has become such a pervasive issue” in the cases he sees “that I frequently use the term ‘presumptive mortgagee’” to describe the entity trying to foreclose.
Winslow described a litany of problems with documentation about mortgages that go far beyond the “robo-signing” that led to the current uproar over foreclosures. He said it’s unclear whether MERS, the electronic system used by the majority of lenders to record mortgage assignments, gives it the right to foreclose, as well as whether trusts — where many mortgages wound up after they were pooled and traded — also have that right [...]
University of Utah law professor Christopher L. Peterson raised further questions about MERS in his written remarks, saying the system has a “problematic legal foundation” because it undermines state recording laws.
Calling MERS a “deceptive” and “anti-democratic” institution because it allows 20,000 people who are not its employees but rather employees of mortgage lenders, servicers and law firms to sign mortgage paperwork in its name, Peterson argued that the practice clouds the ownership of the loan.
Peterson said Congress should stop Fannie and Freddie from buying any loan recorded by MERS because of the title problems – there’s actually legislation to that end from Marcy Kaptur.
Testimony from all the major players at the hearing is available at the bottom of the link.
Between this and Tom Deustch’s FAIL yesterday at the Senate Banking Committee hearings, everyone on these committees has had the opportunity to know the extent of the very real problem involved in foreclosure fraud. Add to this the revelations in Countrywide v. Kemp, and it’s clear that the entire land title system of the United States is at risk.




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God, don’t you ever take a break? We need you for the long haul, DDay. At least get some dinner. It’s impossible to keep up with you. *g*
Great work 24-7 DDay. What Fractal said.
i too am IMPRESSED – the time off must’ve supercharged your battries.
The time is ripe for a due process investigation. If state courts aren’t hewing to their own procedures, it’s a constitutional violation.
Thomas Cox gave the hearing even greater credibility.
But while they were dealing with legal standing, there’s a case affecting a lot of Pennsylvania foreclosures.
As the article says, ‘non-lawyers’ filed cases. (Bank of America was the bank.)
So I wonder if that means those related foreclosures aren’t valid, and how that affects any securitization issues.
Thousands of Pennsylvania Foreclosures Could Be Thrown Into Doubt
http://www.dailyfinance.com/story/thousands-of-pennsylvania-foreclosures-could-be-thrown-into-doub/19740497/
Bank of America is breathing a sigh of relief with Julian Assange’s imminent arrest.
Word needs to be circulated outside the Lake about the fabulous work DDay is doing. He deserves far wider recognition.
I could see how using nonlawyers to routinely run cases w/o attorney oversight creates an ethics issue for the firm, but I don’t see how it imperils any cases. The article cites no authority whatsoever for that proposition.
It subjects the involved law firms to steep fines and disciplinary action (ie, they could be put out of business), but I don’t see how it would impact the lawsuits. Standing, underlying merits, etc., don’t have anything to do w/ the title of the person that filed on behalf of the client.
Post link to governing statutes please.
great eCAHN’s ghost….again with the *evidence*
will stick to /s around here…
It’s amazing that Congress has time to be bothered with incidental issues like foreclosure fraud when they have far more important business at hand — like chastising the dark-skinned fellow.
Effing hypocrites.
Something for nothing. I give you nothing, you give me something.
I give you no payments, you give me a house.
Seems like it boils down to that. THEN, you figure out some way to justify it.
The massive dishonesty of the whole thing is breathtaking. An entire population encouraged to go criminal.
Heh. Just arrived after dinner to find my name already used in vain in absentia. I’ll take that as a compliment.
I’m sure that’s better than what peeps said behind my back when I worked on Wall St.
You should know that, although my professional career was an economist, my undergrad training was in hard science (chem major).
Asking for evidence seems to be a polite & pretty certain way of giving trolls panty twists. They don’t usually hang around very long after that. Jury is still out on whether they still try hit ‘n runs, though.
Also, I found out as a FDL newbie that this site is keen on asking for links & evidence. One of the reasons I attached myself here.
Hoping it is one of yours too.
Wow, for someone that I’ve seen plenty of evidence in the past that has a functioning brain, it seems like you choose not to use it often.
If you’re going to continue to blame the homeowners for foreclosure fraud then you might as well blame the Gulf of Mexico for the BP Oil Spill.
You left out the part after where “I (borrowers) give you nothing, you (banksters) give me a house,” where banksters said: I pretend to give you a fair loan that you can never unnerstan (called information asymmetry in the jargon), then I raise your interest rates sky high and get your house back. Not to mention the part where banksters went crying to USG, after housing bubble burst so banksters could no longer spin the foreclosed house in a rising home price market, that the U.S. taxpayer made banksters whole and provided even higher compensation for CEOs thereof.
for sure i appreciate evidence, proof, backup, truth & justice, to name a few. but am not fully linked like the rest of teh power commenters around here. just abit out of my league is all… happy to be here, however. hope your meatspace work went well…
David Dayen is upstairs!
Telecoms Love Pretend Net Neutrality Proposal; Democratic FCC Commissioner Copps Doesn’t
After we hum a few bars, you’ll catch on.
Unfortunately, you don’t understand that the borrowers are the victims of the most massive control fraud ever committed in the United States. How could you possibly think that unsophisticated borrowers hoodwinked or forced lenders to lend them hundreds of thousands of dollars per each liar’s loan to buy overpriced houses backed up with fraudulent appraisals?
You really need to get up to speed on this thing, unless you have an agenda to dissemble talking points. Should that be the case, don’t bother wasting your time here carrying the criminal bankster’s water. We know what happened; why it happened; and who is responsible.
Read William K. Black and L. Randall Wray’s post on the fraudsters and their recommendation to start by placing Bank of America in receivership.
The banks are insolvent, but for FAS 157. And that is the heart of the current problem.
If you are so inclined, come back after you understand what I just said and we can have a conversation.
Have a link to the Black/Wray piece? I haven’t seen one except for their numerical protocols to bank solvencies. Fantastic, by the way.
Jon Walker is upstairs!
PPIC Poll Reveals Why Californians Voted Against Prop 19
Wendy @ 21
Here’s William K. Black’s page at HuffPo. Scroll down to the October 22 post.
Thank you for another great post, David. You do amazing quality and volume of work. I hope you do keep taking very good care of yourself with bits of rest her and there. We want you with us for the long haul. :)
Here‘s a nice summary of reasons for setting aside verdicts. The relevant excerpt:
In other words, what’s needed is “but-for” causation. The court asks, “but for the alleged misconduct, could a different result have been reached?” Other things being equal, whether the person presenting evidence to the court is an attorney or not is precisely the sort of thing that would not have any material effect on the result.
Of course, if you want to say that there is other misconduct that did affect the proceedings, you’d be correct and speaking to a different point altogether.
Yves Smith at Nakedcapitalism.com often links to David’s pieces. ;o)
Thanks, Parsnip. Forgot I could access him on their blogroll.
Wonder why that happened? Could it be that it’s a result of an entire financial industry deciding to go criminal? Get those orange jump suits ready!
Here are reviews of the two Black/Wray pieces:
http://my.firedoglake.com/letsgetitdone/2010/10/24/foreclosing-the-banksters/
http://my.firedoglake.com/letsgetitdone/2010/10/26/foreclosing-the-banksters-part-2/
The reviews pieces have links to other posts on the subject too.
That article is just one more mind blower. Another completely innocent homeowner, coming out of bankruptcy yet CURRENT on her mortgage, is victimized by Countrywide/BOA in an attempt to fraudulently foreclose on her home by claiming the amounts she paid were incorrect and that her attorney had been notified 3 times that the amount had changed, but those three notifications were manufactured by a “low-level” Countrywide employee and only exposed when they used an address for one of the notifications that the attorneys did not move into until years later. Then, after being AWARE, that the notifications were forged, Countrywide/BOA did not inform anyone. The judge is so shocked by the behavior that he addresses it as a warning to other courts and judges, even though it is not even a point of contention. This story is a great one to bookmark and send to people who continue to believe that this whole thing is just some “deadbeats” trying to pull a fast one on the banks when in fact, it is the very opposite.
Speaking of deadbeats:
Even more interesting, and I have noticed this on every single foreclosure fraud story I have ever read in any newspaper, are the number of completely bizarre comments concerning the story (the whole point of which is the homeowner’s INNOCENCE) about “throw the deadbeats out”. The people making those comments can’t have read the story or if they did, they just do not care about the content.
I not only agree, but I hope that more citizens would take actions to PROMPT lawmakers to ensure that judicial proceedings are not being utilized in furtherance of foreclosure frauds:
Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
Lawyers are officers of the court knowledge of applicable laws and civil procedure is not required from mortgage lenders, nor loan servicers. In states that require judicial foreclosures, FORECLOSURE LAWYERS are the ones who file lawsuits to seize and sell property; and lawyers are responsible for filing and recording foreclosure property deeds.
An investigation could prove helpful to sorting out whether improper and illegal foreclosure proceedings are linked to any self-dealing conduct disadvantaging lenders, investors, homeowners, and city governments.
Inadequate or questionable foreclosure can lead to useless property deeds that impede real estate sales. Increasing numbers of title insurance companies are refusing to cover foreclosed properties; and certain mortgage default claims, are being denied because of defective foreclosure proceedings. . .”
http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#
It seems there is basis for declaring the filings, if not immediately the foreclosures, illegal. And claims that real lawyers were used when they weren’t, or made up fees and documents that are clearly falsified is not exactly a good idea.
The AP picked up on the story I see.
Pa. Lawsuit: Firm Let Nonlawyers File Foreclosures
http://www.nytimes.com/aponline/2010/12/03/business/AP-US-Philly-Firms-Foreclosures.html?_r=1
Clearly fraud on the court which should affect several cases the firm handled.
4closure Fraud found the docs of the Pennsylvania case.
It also turns this ‘non-lawyer’ business turned up with Daniel Stern in Florida.
There’s a video clip of a deposition as well.
Thousands of Pennsylvania Foreclosures Could Be Void
http://4closurefraud.org/2010/12/03/foreclosure-fraud-bombshell-thousands-of-pennsylvania-foreclosures-could-be-void/
Uh, David? Kiddo you gotta fact check.
Dana Winslow is NOT a “she”, he’s a he. I know the guy.
===modnote: fixed, thank you.===