US Prepares to Sign Off On Foreclosure Fraud Settlement

JPMorgan Chase and Wells Fargo are two of the
banks involved in the current negotiations. (photo:
New York Magazine)

By Jessica Silver-Greenberg, The New York Times

31 December 12

anking regulators are close to a $10 billion settlement with 14 banks that would end the government's efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.

Under the settlement, a significant amount of the money, $3.75 billion, would go to people who have already lost their homes, making it potentially more generous to former homeowners than a broad-reaching pact in February between state attorneys general and five large banks. That set aside $1.5 billion in cash relief for Americans.

Most of the relief in both agreements is meant for people who are struggling to stay in their homes and need the banks to reduce their payments or lower the amount of principal they owe.

The $10 billion pact would be the latest in a series of settlements that regulators and law enforcement officials have reached with banks to hold them accountable for their role in the 2008 financial crisis that sent the housing market into the deepest slump since the Great Depression. As of early 2012, four million Americans had been foreclosed upon since the beginning of 2007, and a huge amount of abandoned homes swamped many states, including California, Florida and Arizona.

Federal agencies like the Securities and Exchange Commission and the Justice Department are continuing to pursue the banks for their packaging and sale of troubled mortgage securities that imploded during the financial crisis.

Housing advocates were largely unaware of the latest rounds of secret talks, which have been occurring for roughly a month. But some have criticized the government for not dealing more harshly with bankers in light of their lax standards for making loans and packaging them as investments, as well as their problems with modifying troubled loans and processing foreclosures.

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Banks Booting Families and Leaving Homes to Rot: A Tour of Blighted Homes in Los Angeles

Photo Credit: Melissa Chadburn

Los Angeles has an ordinance that fines banks for leaving foreclosed homes in disrepair. So why are so many of them blighted, dragging down whole neighborhoods?

June 11, 2012

These enormous economic shifts imprint people at an incredibly deep level. We feel it. When we wake up in the morning. We are going through the pain of this one. We are having our lives changed by this one.  We take with us through our days the big sack of worry for our kids with this one. It’s on our streets. You see it in the overgrown lawns and boarded-up windows of some of those bank-owned homes.

There’s a loss. A deep loss of trust. And it stays even when the DOW is up. Even when the tickers are going and there’s hopeful news on the radio about the housing market. We are suffering a kind of punishment from this recession. From all the terrible lies that came before. This is what remains. Distrust. Fear. Worry.

We know the foreclosure crisis began with the lies. The banks gave home loans to anyone with a pulse, provided they had another sucker institution lined up to buy the loan. How did they make these loans in the first place? By committing every kind of lending fraud imaginable—particularly by entering fake data on home loan applications magically turning minimum wage janitors into creditworthy wage earners.  READ MORE

Shafted! Why are Homeowners Still Left to Struggle Against Big Banks Alone?

Photo Credit: woodleywonderworks on Flickr

Across the country, states are diverting foreclosure settlement funds to plug budget holes.

May 18, 2012

It was with great fanfare that the Obama administration, alongside nearly every state’s attorney general, announced in February that a $25 billion accord had been reached with the nation’s five biggest banks, settling charges that the banks engaged in widespread foreclosure fraud. Those billions were intended to provide relief to struggling homeowners, using the banks’ own money to help the victims of Wall Street malfeasance.

“These banks will put billions of dollars towards relief for families across the nation,” President Obama said. “They’ll provide refinancing for borrowers that are stuck in high interest rate mortgages. They’ll reduce loans for families who owe more on their homes than they’re worth. “

However, more than a dozen states across the country are doing their best to undermine the settlement by diverting the funds to other areas of their budgets. Arizona recently became the latest state to do so, taking $50 million meant to aid homeowners and instead plowing it into the state’s general fund (after scrapping an earlier plan to use the money to pay for prison construction).  READ MORE

Foreclosure Fraud: First Criminal Charges Filed In Nevada Over Robo-Signing

The Nevada attorney general has indicted two midlevel staffers at a mortgage document company, Lender Processing Services, on a whopping 606 counts of felony and gross misdemeanor for directing employees to forge signatures and falsely notarize documents used to illegally foreclose on Nevada homeowners.
Nevada's is the first criminal indictment since last year's discovery of the nationwide "robo-signing" scandal, in which mortgage servicing companies and banks were processing foreclosures en masse at lightning speed by signing documents they neglected to review and falsifying information.

"The grand jury found probable cause that there was a robo-signing scheme which resulted in the filing of tens of thousands of fraudulent documents with the Clark County Recorder's Office between 2005 and 2008," said Nevada's chief deputy attorney general, John Kelleher, in a statement.

The indictment against the two employees, Gary Trafford and Gerri Sheppard, describes them as LPS title officers and California residents. Neither has been arrested, but the court has set bail at $500,000 each.
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Google results: "robo signing scandal"

In DocX Case, Robo-Signing Forgery Charge Hits Top Executive

For the first time since the start of the robo-signing crisis, a senior executive has been indicted on criminal charges of forgery and faces jail. The forgery charges against a mortgage processing executive come as the nation's largest banks attempt to close the books on a civil investigation into widespread document fraud and could spark further federal criminal cases.

A grand jury in Missouri handed up the 136-count indictment late last week charging Georgia-based DocX -- a subsidiary of the massive mortgage processor Lender Processing Services -- and its founder and former president Lorraine O. Brown, with forgery. The indictment alleges that DocX employees fabricated signatures on hundreds of real estate documents, some used in foreclosures.

"This is the first time any grand jury in the country has indicted a corporation or a high-level executive at a corporation for 'robo-signing,'" Missouri Attorney General Chris Koster told The Huffington Post. "The grand jury is alleging that the documents have false signatures on them, that the notarizations are fraudulent and that it was all done with an intent to deceive. If that’s true, it makes the [foreclosure] documents forgeries."

A lawyer for DocX did not immediately return a call seeking comment. A lawyer for Brown told The New York Times she intended to plead not guilty and had no criminal intent.

The indictment stands in sharp contrast to the settlement shaking out over so-called "robo-signing" allegations between the state attorneys general and five of the nation's largest banks. So far, more than 40 states have agreed to what could amount to a $25 billion settlement with Citigroup, Bank of America, Wells Fargo, JPMorgan Chase and Ally Financial over allegations they forged documents and incorrectly foreclosed on homeowners.  READ MORE

Study: Errors in 84 percent of SF foreclosures

February 16, 2012 5:30 PM

(AP)  SAN FRANCISCO — More than 80 percent of residential mortgage loans that have gone into foreclosure in San Francisco have missing documents or signatures or otherwise violate the law, according to a review ordered by the city assessor.

The results hint at potentially broader problems with how foreclosures have been handled since the collapse of the housing market.

While many of the errors were technical and related to paperwork, the problem shows the state needs to change its antiquated real estate regulations, Assessor-Recorder Phil Ting said on Wednesday.

"The whole process ... is absolutely, 100 percent broken and not working for any of us at this time," Ting said. "These rules were made for people who walked or rode their horse to the bank."

The review found that signatures of some original owners of loans were missing and that affidavits were not filed showing lenders had contacted borrowers to discuss their options 30 days before a mortgage default notice.

The review was conducted by Newport Beach-based Aequitas Compliance Solutions. The company looked at 382 of the city's 2,405 foreclosure sales between January 2009 and October 2011.
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Occupy the Neighborhood: How Counties Can Use Land Banks and Eminent Domain

A foreclosed home in Salt Lake City, Utah.
Photo: Monica Almeida / The New York Times)

Saturday 14 January 2012

by: Ellen Brown, Truthout | News Analysis 

 

An electronic database called MERS (Mortgage Electronic Registration Systems) has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

John O'Brien is register of deeds for Southern Essex County, Massachusetts. He is mad as hell and he isn't going to take it anymore. He calls his land registry a "crime scene." A formal forensic audit of the properties for which he is responsible found that:

• Only 16 percent of the mortgage assignments were valid.
    

• Twenty-seven percent of the invalid assignments were fraudulent, 35 percent were "robo-signed" and 10 percent violated the Massachusetts Mortgage Fraud Statute.
    

• The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60 percent).
    

• There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called MERS as a mere placeholder for the true owners. The owners are a faceless, changing pool of investors owning indeterminate portions of sliced and diced securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor:

What this means is that ... the institutions - including many pension funds - that purchased these mortgages don't actually own them....  READ MORE

 

David Dayen: Mortgage Settlement Agreement Is Only An Agreement In Principle

 By Susie Madrak


David Dayen, who's done more than anyone to keep this mortgage settlement deal in the public eye and under the microscope, is horrified to discover that the deal announced this week doesn't actually exist in any tangible form. He calls it "a real failing on the part of the activists, who jumped at the opportunity to pontificate on the deal, without actually seeing the term sheet, which we know now in fact does not exist:"

Well, so much for my first “making chicken salad” option. We are more than 24 hours removed from the foreclosure fraud settlement and the terms have, shockingly, not been released. In fact, American Bankerreports that the terms will not be released before the filing of the settlement in federal court, because a document with actual terms does not yet exist.

More than a day after the announcement of a mammoth national mortgage servicing settlement, the actual terms of the deal still aren’t public. The website created for the national settlement lists the document as “coming soon.”

That’s because a fully authorized, legally binding deal has not been inked yet.
The implication of this is hard to say. Spokespersons for both the Iowa attorney general’s office and the Department of Justice both told American Banker that the actual settlement will not be made public until it is submitted to a court. A representative for the North Carolina attorney general downplayed the significance of the document’s non-final status, saying that the terms were already fixed.

“Once the documents are finalized, they’ll be posted to nationalmortgagesettlement.com,” the representative said in an email to American Banker.

Incidentally, why is nationalmortgagesettlement.com a dot-com, not a dot-gov? What’s going on here?This is incredible. The Administration, the AGs, everyone involved in this made a big show of an agreement reached on foreclosure fraud. But there is no piece of paper with the agreement on it. There’s no term sheet. There are just agreements in principle.There’s a HUGE difference between an agreement in principle and the actual terms.  READ MORE


Mortgage settlement agreement search

New York AG Sues 3 Major Banks and MERS, Calls Mass Foreclosure Filings a Fraud on Court

Posted Feb 3, 2012 6:01 PM CST
By Martha Neil

The attorney general of New York today filed suit in state court against three major banks and an electronic mortgage recording operation, contending that they circumvented legal requirements and cost the the state some $2 billion in property recording fees by keeping their own private list of property transfers and mortgage assignments.

The Brooklyn Supreme Court suit seeks to ban foreclosure filings that rely on information from the Mortgage Electronic Registration System and obtain reimbursement from the defendants for lost recording fees and other damages, according to the Los Angeles Times and Reuters.
Bloomberg also has a story.

"The banks created the MERS system as an end-run around the property recording system to facilitate the rapid securitization and sale of mortgages,” AG Eric Schneiderman said in a written statement today. “Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law.”  READ MORE

Mortgage Giant Places Bets Against Homeowners by Chris Arnold

January 30, 2012
NPR and ProPublica have found that Freddie Mac, the giant government-owned mortgage company, has been placing financial bets against homeowners. Specifically, Freddie Mac has made targeted investments that pay off if homeowners are unable to refinance their mortgages. At the same time, Freddie has been making it harder for many homeowners to get new loans.

TRANSCRIPT

Families Join the Occupy Movement as the 99 Percent Takes On the Housing Crisis

A nine-year-old demonstrates with a picture of a home that Fannie Mae foreclosed on in Boston, October 10, 2011. (Photo: Lauren Metter, DIgBoston.com) Mike Ludwig, Truthout: "On Tuesday, the Occupy Our Homes national day of action against foreclosure saw home occupations, civil disobedience actions and community events in more than 20 cities, reflecting a shift in focus from tent cities to local neighborhoods." Read the Article