According to the Treasury Department’s schedule, Treasury Secretary Tim Geithner and HUD Secretary Shaun Donovan met with “leaders of unions, civil rights and minority advocacy groups to discuss the Administration’s foreclosure prevention efforts.” So far, I haven’t found one person active in the foreclosure fraud crisis who even knew about this meeting before this announcement.
But I guess it’s not too surprising, as the crisis is reaching a turning point. Not because repossessions topped 1 million for the first time ever in 2010; that’s not seen as a crisis in political circles, I fear. No, it’s the Ibanez case, and the potential implications for courts across the country, that has everyone’s wheels turning. All of a sudden, Third Way introduces a proposal, aimed at limiting the due process of foreclosure victims, to “solve” a problem they refused to identify previously. Similarly, corporate lawyers at K&L Gates came out with their own spin document. The defenders of the banks keep relying on a very thin reed in the Ibanez decision, where one judge wrote “[w]here a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder.” They always neglect the next sentence, which reads “However, there must be proof that the assignment was made by a party that itself held the mortgage.” In other words, the banks are flipping forward to assume they can fill in the gaps in recording in between the trades from the originator to the trustee, but they still have to own the loan at some point, and to date in many cases, the banks cannot even establish that minimal requirement. In essence, that’s why we’re all here.
The banks are right to be worried, as evidenced by this flurry of activity. Homeowners and investors alike are getting smarter about the scams that the banks have tried to use in recent years. They are engaged in a more public strategy to identify criminal fraud and dictate the terms of an acceptable settlement. They have studied the games the banks play and know how to point them out to a judge. This is a good example of that.
Ibanez set off the alarm bells among the corporatist sources. But the unlikely allies – foreclosure victims, public interest lawyers, academics, investors – have been ready for this for a while.