I agree with Matt Latimer that the Massachusetts Senate race has taken an ugly turn into sideshow. Scott Brown, concerned about the prospect of losing, threw the kitchen sink at Elizabeth Warren in the first debate, and ever since then, the race has been dominated by anecdote, trivia and out-of-context finger-pointing.
So I don’t want to contribute to that. But as long as we’re talking about prior work histories among these candidates, Scott Brown made an interesting disclosure to reporters the other day. He casually mentioned that he, in fact, was a real estate attorney, who ran a small practice out of his home. He apparently was the guy who came to your house to do a real estate closing, a cog in the mortgage wheel. And he did this for the past nine years, encompassing all of the major years of the housing bubble.
According to Brown, he worked with small community banks and small mortgage companies in his part of Massachusetts, and as a title agent for two companies in particular: Fidelity National and First American. Now that’s a notable disclosure. As Adam Levitin points out, Fidelity National is the former parent company of LPS, one of the worst offenders in the foreclosure fraud industry. Fidelity National split with LPS very quickly once their worst abuses came to light.
As I’m sure you can gather from my reports here, LPS was a middleman in this game, providing faulty documents – often off a prescribed menu, where you pay $100 for a mortgage assignment, or $150 for a full loan file – through its subsidiary DocX. This company facilitated forgeries and mass false documents, which we know through Lynn Szymoniak’s work. The Linda Green phenomenon came right out of LPS and DocX. This is where robo-signing lived.
LPS has friends in high places – members of Florida’s Attorney General’s office left to work with LPS even as the company was under investigation by the same office – but they still operate under a consent order by the Federal Reserve for multiple violations of law. LPS was sued by the state of Nevada for document fraud (Nevada criminally indicted two LPS employees in the case), and also by the state of Missouri in a criminal case that was later settled. One of the whistleblowers against LPS, who was vital to the Nevada case, mysteriously turned up dead.
This is a terrible company for a US Senator to be involved with. All Brown has said is that he did “title work” for Fidelity National, so we don’t know much more. But Levitin asks some pertinent questions.
Who were those “mortgage companies” that he worked for? It’s nice that Brown named a bunch of local banks, but I wonder what lies under the “mortgage company” label? What did Scott Brown understand about the mortgage market he was facilitating? Did he recognize that there was a bubble? (He was a town property assessor at one point, so one would think he’d notice this sort of thing.) If not, what does that say? And if so, what does that say? How many predatory loans did Scott Brown facilitate? How many of the loans where he handled the closing resulted in foreclosure? What would he say to those families that lost their homes to predatory loans?
I suspect that Brown’s reply to these questions would be “Aw shucks, I’m just a guy with a pickup truck with 238,000 miles on it who was helping people out by doing the paperwork on their real estate closings.” That’s not good enough. Either Brown was so inept that he didn’t see that the loans he was closing were becoming untenable or Brown saw the problem and didn’t do anything. As long as the music’s playing, the guy’s gotta earn a living, right?
I actually think this is more of an issue about Brown’s actions during the financial reform bill. He held out in the bill, getting a bank fee removed that would have paid for much of the regulatory measures, and weakening the Volcker rule to allow more proprietary trading among big financial institutions. So Brown was a cog in the great finance wheel when doing these closings and “title work,” and also when a US Senator trying to enable as much profit-earning risk in the big financial institutions as possible. A useful cog.
Levitin certainly has a professional relationship with Warren, but he’s merely teasing out Brown’s relationship as a keep-your-head-down facilitator of bad mortgages, in association with one of the biggest malefactors in the entire foreclosure fraud industry. I don’t think Brown “knew” anything about what was going on, necessarily, but there is something to be said about the company you keep.