Wednesday, October 6, 2010

Foreclosure Furor Rises

Updating last Friday's post, comes more news on the latest white-collar crime revelations in the banking and mortgage industries:

The uproar over bad conduct by mortgage lenders intensified Tuesday, as lawmakers in Washington requested a federal investigation and the attorney general in Texas joined a chorus of state law enforcement figures calling for freezes on all foreclosures.

Texas Attorney General Greg Abbott, a Republican, sent letters to 30 lenders demanding they stop foreclosures, evictions and the sale of foreclosed properties until they could provide assurances that they were proceeding legally.

Last week, JPMorgan Chase and Bank of America joined GMAC in suspending foreclosures in the states where they must be approved by a judge. The judicial states do not include California or Texas. But Mr. Abbott, the Texas attorney general, told lenders in letters dated Oct. 4 that if they used so-called robo-signers — employees who signed thousands of foreclosure affidavits a month, falsely attesting that they had reviewed the material — it would be a violation of Texas law.

As a result, he wrote, “the document and therefore the foreclosure sale would have been invalid.”

The three lenders who are at the center of the controversy, GMAC Mortgage, JPMorgan Chase and Bank of America, declined to comment. Other lenders singled out by Mr. Abbott include Wells Fargo, CitiMortgage, HSBC and National City.

Meanwhile, shares of a major foreclosure outsourcing company, Lender Processing Services of Jacksonville, Fla., fell 5 percent on Tuesday, adding to a slide that began last week.
It's interesting to see the bank/mortgage industry line of defense forming: "it was a paperwork error," an "accident," "people are people," and so on.

Sorry, but it's more than a "notary mistake" when hundreds of thousands of people are foreclosed and evicted from their homes in an act of white collar crime so brazen, it makes the events on Wall Street circa 2008 look penny-ante in comparison.

In fact, you could even conceptualize this, using more of Reiman's rubric, as a form of corporate violent crime...thugs in the foreclosure business forcing people out of their rightful and legal homes, often at gunpoint.

That's violence, where I come from.

UPDATE: Obama Vetoes Bill Making Foreclosure Easier:
As slipshod bookkeeping by some big mortgage lenders continued to rattle the housing market on Thursday, another major lender indicated it would suspend sales of foreclosed homes and White House officials said President Obama would not sign a bill that critics suggested could facilitate foreclosure fraud.

The bill would have mandated that notarizations of mortgages and other financial documents done in one state, including those done electronically, be recognized in other states. By the time the bill arrived at Mr. Obama’s desk, however, it was caught in the controversy over major institutions’ acknowledgment of problems in processing documents for tens of thousands of foreclosures. Those included suspected forgeries and notaries’ failure to review the paperwork as required.
Make sure you are paying attention to the language in articles such as this and others: the crisis is framed in terms of "slipshod bookkeeping," "shoddy preparation," "foreclosed on in bad faith" and so forth. The words "fraud," "racket," "criminal enterprise" and "scam" seem to be missing.

So far, anyway.

UPDATE II: Bank of America has suspended all foreclosures pending further investigation. 10/8/10

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