Friday, October 15, 2010

Foreclosure Follies: Friday Edition

The NYT continues to be the must-read organ of note regarding the Foreclosure Fraud being perpetrated by Big Mortgage.

This article explores the "ground zero" house that led to the foreclosure freeze:

All of this is largely because [Thomas A. Cox, a retired lawyer] realized almost immediately that Mrs. Bradbury’s foreclosure file did not look right. The documents from the lender, GMAC Mortgage, were approved by an employee whose title was “limited signing officer,” an indication to the lawyer that his knowledge of the case was effectively nonexistent.

Mr. Cox eventually won the right to depose the employee, who casually acknowledged that he had prepared 400 foreclosures a day for GMAC and that contrary to his sworn statements, they had not been reviewed by him or anyone else.

This article suggests that the "mortgage mess" may end up costing Big Banks untold billions:

One billion dollars? Six billion? Ten billion? More? After scratching their heads for weeks over how much the foreclosure mess will hurt banks’ bottom lines, investors got out their calculators Thursday to tally the potential costs — and sent bank stocks plunging.

Of course, we could also view the suggestion, that by cracking down on the criminal enterprise of foreclosure we're going to "cost banks" billions of dollars, as ludicrous. It's like saying by cracking down on robbery, we're going to cost robbers untold millions of dollars in lost revenue. Revenue from (alleged) rackets is not revenue.

The article also contains this hilarious observation:
“It’s inexcusable that the banks didn’t staff up to meet the surge in foreclosures,” said Christopher Kotowski, an analyst with Oppenheimer. “On the other hand, we need to look at whether they are filing foreclosures on a massive basis against people who are not delinquent. So far, I haven’t seen any evidence that they are.”
Er, the "evidence" is mounting exponentially each day. Paul Krugman:

But do they actually have the right to seize these homes? Horror stories have been proliferating, like the case of the Florida man whose home was taken even though he had no mortgage. More significantly, certain players have been ignoring the law. Courts have been approving foreclosures without requiring that mortgage servicers produce appropriate documentation; instead, they have relied on affidavits asserting that the papers are in order. And these affidavits were often produced by “robo-signers,” or low-level employees who had no idea whether their assertions were true.

Now an awful truth is becoming apparent: In many cases, the documentation doesn’t exist. In the frenzy of the bubble, much home lending was undertaken by fly-by-night companies trying to generate as much volume as possible. These loans were sold off to mortgage “trusts,” which, in turn, sliced and diced them into mortgage-backed securities. The trusts were legally required to obtain and hold the mortgage notes that specified the borrowers’ obligations. But it’s now apparent that such niceties were frequently neglected. And this means that many of the foreclosures now taking place are, in fact, illegal.

Let the lawsuits begin. And by all means, let's put some of these people, from those who ordered the "robo-signers," to the company personnel executing the evictions, in prison.

Maximum-security prison.

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