Tweet
In December, when Iowa Attorney General Tom Miller said unequivocally to a group of foreclosure activists, “We will put people in jail,” the working assumption was that he was referring to the 50 state AG investigation of foreclosure fraud in the mortgage servicing industry. However, as it turned out, he walked that back almost immediately. The 50 state investigation, his office claimed, was inherently civil in nature. The statement about putting people in jail referred to a separate state-level investigation in conjunction with a US Attorney in Iowa.
But there may be a good reason for that. Geoff Greenwood, a spokesman for Miller, told The Lookout that when the AG spoke of putting people in jail, he wasn’t referring to the 50-state probe, which is a civil investigation targeting major lenders like Bank of America, Wells Fargo, and JP Morgan Chase, as well as the law firms they hired to help speed the foreclosure process. Rather, he was talking about pursuing local criminal cases as part of an upcoming partnership with the US Attorney’s Office for the Southern District of Iowa.
That partnership was eventually announced. But pay attention to how it refers to “mortgage fraud,” and with a very vague set of targets.
United States Attorney Nick Klinefeldt and Iowa Attorney General Tom Miller announced today the creation of the Iowa Mortgage Fraud Working Group.
The working group will identify and investigate targets for criminal prosecution in the Southern District of Iowa and perform other important functions in the fight against mortgage fraud. Klinefeldt and Miller said they expect the working group to effectively and efficiently protect the public from mortgage fraud and ensure that wrongdoers are brought to justice. The working group combines the civil expertise of the Attorney General in the mortgage industry with the criminal expertise of the United States Attorney [...]
“This new partnership between my office and the United States Attorney’s office will help us take some of the most egregious mortgage fraud cases to the next level,” said Miller. “There are some situations where civil enforcement efforts simply are not enough to punish the wrongdoers. We look forward to working with the United States Attorney to ensure that criminal enforcement tools are also available.”
I’ve talked to enough people throughout this process to know that “mortgage fraud” means something entirely different from foreclosure fraud, and Miller is profiting from this shift in language. Usually, mortgage fraud refers to stopping scam artists who try to help borrowers with loan modifications, or other penny-ante scams. There’s nothing in that announcement that specifically refers to prosecuting the type of foreclosure practices we’ve seen, only an oblique reference to Miller’s other foreclosure investigation. If you think about it, a local investigation into ripoffs of Iowans almost by definition cannot generate criminal prosecutions for national bank executives.
So Miller was from day one, playing games with language. And when he described the 50 state AG investigation as “inherently civil,” many people jumped on him, figuring that this was a total betrayal. I joined that chorus. But it turns out he was gently fibbing almost from the moment he made that statement.
Since the release of the “inherently civil” comment, foreclosure activists have inundated Miller’s office with queries. They’ve stopped trying to shift the “put people in jail” comment to this unrelated local investigation. Instead, they are claiming that the state AG investigation can only enforce civil consumer fraud law, and that any criminal conduct they find in the course of the investigation will be forwarded along to the proper authorities. Additionally, they say that conduct that constitutes a crime under state law can be addressed by local authorities.
But this conflicts with an interview Miller gave to the Washington Post in late December:
Miller did not rule out the possibility that the large-scale issues with foreclosure filings – which prompted lenders such as Bank of America, GMAC and Ally Financial to halt foreclosures temporarily – could lead to criminal charges. But that’s not his current aim, he said. Some criminal matters probably would rest with federal officials.
“Our focus is on the civil side now,” he said. “We hope to clear up the problems. We hope to have redress for any homeowners that have been harmed, and we hope to try and leave the situation better than when we came in. We think this has been, in varying degrees, a mess for a long time.”
Clearly Miller is focused on the civil penalties. But he “did not rule out” criminal charges at that time. Essentially, within the course of a week or two, he’s saying that criminal charges could never be addressed by the 50-state investigation.
Getting the truth here is pretty slippery. But it’s clear that people seeking civil penalties for foreclosure fraud could be satisfied by his investigation, but people seeking actual enforcement, the invocation of the rule of law, criminal charges, will not. And the claim that state AGs cannot prosecute criminal fraud in the foreclosure industry in a joint investigation seems to me to be a pretty weak claim.
UPDATE: PICO, a faith-based community group who has been working on foreclosure fraud, and whose members were in the room when Miller made the “We will put people in jail” statement, released this comment:
Homeowners urge Attorneys General to stand strong against mortgage fraud
Homeowners expect Iowa Attorney General Tom Miller and the other Attorneys General who are investigating mortgage fraud to conduct a thorough investigation, punish banks that broke the law, and impose remedies that stop the flood of foreclosures destroying lives and communities.
As the top law enforcement officers in the states, the Attorneys Generals must exert bold action against the nation’s biggest banks that engaged in pervasive fraud against the American people.
Over the coming weeks, homeowners from PICO, National People’s Action, Alliance for a Just Society, Alliance of Californians for Community Empowerment, IAF Southeast, SEIU and other organizations representing homeowners will be meeting with Attorneys Generals across the country — including a meeting this Thursday with Mass. Attorney General Martha Coakley — to press for a strong settlement that makes principal reduction the primary strategy for addressing the harm done by mortgage fraud.
I don’t think their concept of “mortgage fraud” and Miller’s are the same.
12 Comments
Support this site!
Subscribe to the newsletter
Advertise on Firedoglake
Send
us your tips
Make us your homepage
About FDL News Desk
No AG in the nation save NY ones in certain circumstances dares go against major corporations especially financial ones. In fact they can’t even think about it. To the extent one would is the extent to which they would never be AG to begin with. When you start fooling with giant corporations you are dealing with empire America. Now do you want to niggle about some law or other and a few lowly citizens being damaged when America needs to be strong. I know most don’t think consciously in those terms but that’s the point. That is the culture of our elites and our elites work through the law and lawyers primarily.
This whole 50 state thing never made any sense to me. It is all sort of extra legal. From the moment I heard of it I knew the deal was done, they just had to work out the details. States are going to get some money and the financial world is going to get everything they want. Everything they want going forward.
Thanks, David, for parsing this one out.
I think you made a slight error in the definition of the type of ‘mortgage fraud.’ I think you described foreclosure rescue scams. Penny ante mortgage frauds are when someone gets one or multiple mortgages on a house and then absconds with the dough. And there are countless mortgage scams in which people take out a mortgage on someone else’s home, forging their signature, or by gaining Power of Attorney, and then abscond with the cash. Or, settlement agents abscond with the money meant to pay off a mortgage.
There are numerous examples of recent efforts by various District Attorneys to prosecute foreclosure rescue scams. They’re doing a lot of this because it’s easy and looks good, to fool the uninformed into believing that this sort of effort is ‘doing something’ about the problem, when in reality these prosecutions have nothing to do with the banks’ foreclosure fraud. Criminal Prosecutions Of Sale Leaseback Peddlers In Equity Stripping Foreclosure Rescue Deals
This page lists sources for detecting the rescue and loan modification scams. Many former mortgage brokers are now operating these fly-by-night outfits, offering to help intercede with the banks in gaining loan mods for an up-front fee. The states are passing laws to try to prevent this, but these outfits just change the names of their so-called services, such as by offering ‘forensic loan audits.’
The most interesting thing I find about prosecution of ‘mortgage fraud’ is that it’s hard to find any federal cases yet. Apparently there is no federal statute against mortgage fraud in the inducement.
So the question is whether the banks will face charges for fraud upon the courts, forgery, uttering, and other aspects of their foreclosure practices. Not to mention failing to convey the notes into the MBS.
I suspect that the media are in cahoots with the feds in failing to report the true depths of the banks’ criminal acts in the mortgage/foreclosure arena because TPTB truly fear another economic freeze, like happened in September 2008, when it becomes clear to everyone that the banks are entirely corrupt, insolvent, and untrustworthy. The banks have their computers programmed to cause a flash crash at the press of a button, and are surely threatening to pull the trigger each time there is the slightest hint of law enforcement blustering about putting bankers in prison.
Unfortunately (as I state the obvious), the most likely result of any “criminal” cases will be a select few, low-level show prosecutions and the real culprits will continue to live their lives of luxury
Maybe there’s an alternative explanation, i.e., that Miller meant it at first but then got his orders and obeyed. (But I think dday is probably right. Tom is just a plain ol’ liar.)
Mortgage stuff is traditionally a province of state enforcement. It’s probably a mix of jurisdiction, custom and inertia that prevents the feds from getting too involved.
I think he’s trying to be a lot of things to a lot of people.
No mystery. Miller was lying. It’s what politicians do.
The massive lawsuit against Wells Fargo / Wachovia, Indymac / OneWest bank, Citibank, Bank of America, JP Morgan Chase, GMAC…………..can actually put a stop, not only to your foreclosure, but also to your house payments…………
https://sites.google.com/site/sueyourlendernow/
Thanks David, disappointing news but not unexpected. Glad to see the folks are pushing back.
In May of 2010 I spoke with Kentucky Assistant Attorney General Harold Turner in regard to the systemic and systematic use of forged and fabricated assignments of mortgage in our states land records, as well as their use as false evidence in foreclosure proceedings. This was, of course, before the 50 State AG panel was enjoined. Initially I was pleased, excited even, that someone in my AG office was interested in the issue. I provided Mr. Turner with approximately 200 sample assignments of mortgage I had pulled from local land records, all of which had some defect or flaw, and all of which were less than genuine.
Even as I was physically handing Mr. Turner these sample assignments of mortgage my excitement began to wane. He seemed to have no interest at all in hearing of my experience and/or knowledge in detecting and diagnosing the fraud and deception involved in those documents. His nonchalant attitude is among the biggest problems in detecting this fraud.
At a mere glance the errors are not always apparent, or easy to notice or recognize. This is precisely how the fraud and forgery slips past our legal professionals, particularly our judges.
Having reviewed and inspected numerous assignments of mortgage (numbering in the thousands) I have become aware of the patterns, of the common subtle and blatant errors, of the individuals that commonly execute and/or notarize fraudulent documents, etc. The only way I know of to acquire this knowledge is to spend many hours reviewing the documents and to give each of them more than a cursory glance. In other words you have to do the “grunt work.” Once this has been done, and the discerning eye has been developed, any of literally dozens of potential flaws and defects jump off the page pretty quickly.
Mr. Turner, rather than express any interest in how to diagnose and/or detect these defects (and thus criminal violations and fraud) quickly turned our brief conversation to the possibility of finding what he referred to as a “global solution.” This phrase, “global solution,” to me, is a euphemism for “We won’t conduct an in depth investigation, and thus won’t be able to truly hold anyone/s accountable, or truly make any of the victims whole. Instead we’ll go for image over substance and that as quickly as possible.”
I fear the entire AG panel will have a similar attitude and at this point that seems to be taking shape.
The heavy lifting is left to the individual and the only possibility of being made whole comes not only through the arduous investigative and legal work but also through literally having to fight with our elected officials and our courts to receive any justice at all.
terryjo,
can you provide more info and background from other sources on the kramer stein mass joinder suits? it is hardt o evaluate the action based on the one link you have provided. kramer stein say they have 1400 borrowers signed on to this litigation. surely with that number, this would have some news coverage? any further information you can provide would be much appreciated.
IANAL, so I would be grateful for any links to articles that discuss my point. I’ve seen several times over the last few months that one reason we have seen so few criminal cases is that the law requires that the prosecution prove INTENT to defraud. Now this is very hard to do. It also goes against any common sense understanding of what “fraud” means. I don’t think the law used to be this way. If you performed fraudulent actions, you were guilty of fraud, ipso facto. When and why did this change? Did it have anything to do with the “normative law and economics” movement?