Source: The Dylan Ratigan Show- LINK
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In accordance with Title 17 U.S.C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment for non-profit research and educational purposes only. GRG [Ref. http://www.law.cornell.edu/uscode/17/107.shtml]

Mother Jones has dropped an exclusive today and reports Fannie, Freddie Ditch Foreclosure King David J. Stern’s firm.

Here is an excerpt by Andy Kroll:

Not only have Fannie and Freddie suspended foreclosure referrals to Stern’s firm, the Wall Street Journal reported, but two major banks—Citigroup and GMAC—have also stopped sending cases to the firm, which is under investigation by the Florida attorney general Bill McCollum. “Pending the outcome of the AG’s investigation, Citi is not referring new matters to this firm,” read a company statement.

Continue reading…Mother Jones

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SAN FRANCISCO (Reuters) – An outcry over questionable foreclosures by GMAC Mortgage and other lenders is likely to hit some states more than others because of major differences in real estate law across the nation.

But ramifications for federal taxpayers and investors will depend on the costs of clearing up the problem, the latest fallout from the bursting of the U.S. real estate bubble.

GMAC Mortgage announced last week that it had suspended evictions and post-foreclosure closings in 23 states due to concerns over paperwork. In order for a lender to foreclose on a property, it must prove that it actually checked the borrower’s loan agreements, and that the homeowner defaulted.

But the unit of Ally Financial, which is 56.3 percent owned by the U.S. government after a $17 billion bailout, said employees preparing foreclosures had submitted affidavits to judges containing information they did not personally verify.

“It’s a real mess,” said Justice Arthur Schack, a jurist on foreclosure issues who sits on the New York State Supreme Court in Brooklyn.

GMAC’s announcement has raised doubts about whether some people lost their homes without good reason. Attorneys general in several states, including California, Colorado, Illinois and Ohio, are investigating.

“The law demands that lenders prove their case in foreclosure actions,” Illinois Attorney General Lisa Madigan said last week.

But Ally characterizes the problem as merely technical, arguing that the underlying facts in each foreclosure are accurate.

“We are confident that the processing errors did not result in any inappropriate foreclosures,” it said in a statement last week.

GMAC landed in its predicament after one of its employees testified in a December 2009 deposition that he signed off on tens of thousands of affidavits containing information he did not verify.

The company said it has “substantially increased” the number of employees to verify documents, provided additional training, and suspended evictions out of an “abundance of caution.”

Ally isn’t the only firm under the microscope.

JPMorgan Chase & Co is delaying its current foreclosure proceedings and has begun to systematically re-examine related documents after discovering that some employees may have signed affidavits in some cases without personally reviewing the files.

Lawyers in Florida are questioning JPMorgan’s practices after discovering one of its executives did not check the details of its claims against a homeowner.

The executive said she had been part of an eight-person team that signs 18,000 documents a

Continue reading… REUTERS

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This all makes sense now since the Obama administration was about to hold a conference on what to do with both Fannie and Freddie around this same time.

Ally Said to Tell Freddie Mac of Faulty Foreclosures Weeks Ago

By Lorraine Woellert and Dakin Campbell – Sep 24, 2010 12:01 AM ET

Ally Financial Inc.’s GMAC Mortgage unit told Freddie Mac that foreclosures by the auto and home lender might have been faulty weeks before halting its own evictions, according to two people briefed on the matter.

Ally informed Freddie Mac on Aug. 25 that affidavits for court proceedings might not be valid, according to a person with direct knowledge of the matter. By Sept. 1, Freddie Mac had notified its network of lawyers and stopped related foreclosures and evictions, said the person, who declined to be identified because the matter hasn’t been formally disclosed. GMAC told agents to halt evictions in 23 states on Sept. 17.

Fannie Mae, the largest government-backed mortgage firm, said it notified lawyers of flaws in GMAC documentation after it was alerted. Fannie Mae spokesman Brian Faith declined to say when GMAC contacted the company, and Gina Proia, the spokeswoman for Detroit-based Ally, said she couldn’t comment.

“We are obviously dismayed by reports of document problems,” Freddie Mac spokesman Brad German said in an interview. “The practices described in these reports are clearly not in compliance with Freddie Mac guidelines and servicer directives.” German wouldn’t say how many of the McLean, Virginia-based firm’s holdings were affected by the freeze.

Servicers ‘Accountable’

Fannie Mae said in a statement that its servicers must adhere to all legal requirements. “It is their responsibility to put processes in place that ensure they are fulfilling this requirement, and they are accountable for rectifying any issues that may arise in this regard.”

Continue Reading… BLOOMBERG

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Lynn E. Szymoniak, Esq.
The Metropolitan, PH 2-5
403 S. Sapodilla Avenue
West Palm Beach, Florida 33401
(szymoniak@mac.com)

Mr. Ed Albrigo
Senior Vice President
FREDDIE MAC
8200 Jones Branch Drive MS 200
McLean, Virginia 22102

Mr. R.K. Arnold, President and CEO
Merscorp, Inc.
1595 Spring Hill Road, Suite 310
Vienna, Virginia 22182

Marianne Sullivan
Senior Vice President
FANNIE MAE
3900 Wisconsin Avenue
Washington, D.C. 20016

September 6, 2010

Re: Abuses and Forgeries By MERS Officers in Mortgage Foreclosures

Dear Mr. Albrigo, Mr. Arnold and Ms. Sullivan:

I am writing to you in your capacity as members of the Board of Directors of MERS.

This letter concerns certain widespread abuses by individuals using MERS titles. After extensive research regarding Mortgage Assignments prepared in Alpharetta, Georgia, purportedly signed by MERS certifying officers, it is apparent that:

1. there were widespread forgeries by individuals who signed over a million Mortgage Assignments as MERS officers with many different individuals signing the same four names;

2. the individuals signing these names also used many different MERS titles,with Linda Green, Korell Harp and Tywanna Thomas claiming to be authorized by many different lenders to convey mortgages as MERS
officers;

3. the information on the Mortgage Assignments is false particularly regarding the dates on which mortgages were conveyed. In several hundred thousand cases, Assignments to Residential Mortgage-Backed Securitized
Trusts state that the Trusts acquired the mortgages AFTER foreclosure litigation was filed by the Trusts. This has resulted in a tremendous backlog of cases as the wrong parties often file the foreclosure actions.
These Mortgage Assignments are being used extensively in foreclosure actions in Florida and other states. Because of the apparent authority of MERS, these assignments are most often assumed to be correct by judges. Because so many foreclosure litigants are unrepresented by counsel, these Mortgage Assignments
are going unchallenged even though they are obvious forgeries.

Please carefully examine the attached mortgage assignments signed by Linda Green, Korell Harp, Tywanna Thomas and Jessica Ohde as MERS officers as these examples plainly show many variations of the Green, Harp, Ohde, and Thomas signatures.

Many of the MERS job titles that have been attributed to Linda Green are listed in Schedule A attached hereto. Many of the MERS job titles that have been attributed to Korell Harp are listed in Schedule B. Many of the MERS job titles that have been attributed to Tywanna Thomas are listed in Schedule C.

TIME IS OF THE ESSENCE. There were nearly 11,000 mortgage foreclosures granted in Palm Beach County, Florida in the last six weeks. Many of these foreclosures were granted based on these Mortgage Assignments signed by individuals using MERS titles. It is apparent that these signatures and MERS titles are misleading judges and homeowners. The Palm Beach County experience is occurring throughout the country.

The Florida Attorney General is investigating fraudulent documents used to “facilitate” foreclosures.

Most often, in Florida, these fraudulent Assignments are used by the same law firms that are hired by Lender Processing Services, in its role as a foreclosure management company. In Florida, the firms that most often use these documents to foreclose are the Law Offices of David J. Stern, Florida Default Law Group, Shapiro & Fishman, and the Law Offices of Marshall Watson.

All four of these law firms have also been named by the Florida Attorney General as being under investigation for using fraudulent documents in foreclosures.

I am prepared to brief you or your designees fully on my research.

Thank you for your attention to this most serious matter.

Yours truly,

Lynn E. Szymoniak

John Hooge Co-Writes Article Surveying MERS Mortgage Loan Cases

Half the residential loans in this country are MERS mortgage loans and are being given increased scrutiny both in bankruptcy cases and foreclosure actions.   John Hooge and Laurie Williams, the Wichita, KS. Chapter 13 Trustee, have co-written an article,  “Mortgage Electronic Registration Systems, Inc.: A Survey of Cases Discussing MERS’ Authority to Act “.

Click image below for Article:

by PAUL JACKSON

For the law firms that manage and process foreclosures on behalf of investors and banking institutions, what’s a fair legal fee? What’s a fair filing fee? Should fees to outsourcers be prohibited? And just how much money should it really cost to process a foreclosure?

As I write this, the answer to these and other questions are being fought out in the trenches, in an out-of-sight but increasingly heated battle involving Fannie Mae and Freddie Mac, the law firms that specialize in creditor’s rights, default industry service providers, and various private equity interests.

It’s a complex fight that many say will ultimately shape the way U.S. mortgages are serviced over the course of the next decade — and perhaps beyond. It’s also a debate that promises to spill over into how loans are originated and priced.

“No aspect of the U.S. mortgage business will go untouched by the outcome of this current debate,” said one attorney I spoke with, on condition of anonymity. “This is the single most important issue facing mortgage markets today, and will even determine how securities are structured in the future.”

How foreclosures are managed

Typically, a foreclosure involves legal and court filing fees — it is, after all, a legal process involving the forced transfer of a property from a non-paying borrower to secured lender. But the foreclosure process also typically involves a host of other associated fees, including necessary title searches, potential property insurance, homeowner’s association dues, property maintenance and repair, and much more.

Many of these fees are ultimately tacked onto the “past due” amounts tied to a delinquent borrower — and done so legally. Much like when a credit card becomes past due and the interest rate kicks into high oblivion, consumers looking to catch up on their delinquent mortgage payments must also make up the difference in additional fees in order to successfully do so.

Legal fees in the foreclosure business, however, aren’t what you might think. Instead of billing hourly for most work, as most attorneys in other fields would do, attorneys that specialize in processing foreclosures are paid on a flat-fee basis, using pre-determined fee schedules.

Thanks to the market-making power of the GSEs, Fannie Mae and Freddie Mac — both of whom publish allowable fee schedules for every imaginable legal filing and process in the foreclosure repertoire — the entire foreclosure process has been reduced to a set of flat fees.

And not even negotiated fees, at that. For firms that operate in the field of foreclosure management, the GSE allowable fees amount to a take-it-or-leave-it menu of prices.

“For us, it doesn’t matter who the client is, even if it isn’t Fannie or Freddie,” said one attorney I spoke with, under condition of anonymity. “We know we’re only going to be able to claim whatever that flat fee schedule they set says we can claim, since other investors tend to employ whatever the GSE fee caps are.”

Fannie and Freddie as housing HMOs? In the foreclosure business, that’s pretty much what it amounts to.

But beyond determining the legal fee schedule for much of the multi-billion dollar default services market, the GSEs also largely determine who gets their own foreclosure work. Both Fannie and Freddie maintain networks of law firms called “designated counsel” or “approved counsel” in key states marked with significant foreclosure volume — and they either strongly suggest or require that any servicers managing a Fannie or Freddie loan in foreclosure refer any needed legal work to their approved legal counsel.

Each state will have numerous designated counsel — sometimes as many as five law firms — but in practice, attorneys say, two to three firms end up with the lion’s share of each state’s foreclosure work. In states hit hard by the housing downturn and foreclosure surge, like Florida, the amount of work can be substantial.

“The GSEs can force a servicer to use their designated counsel, especially if timeline performance in foreclosure management is out of some set boundary,” said one servicing executive at a large bank, who asked to remain anonymous. “It’s usually easiest to simply use their counsel on their loans, even if we don’t see that firm as best-in-class.”

With the vast majority of the mortgage market now running through the GSEs, and much of what’s left of the private market following the guidelines Fannie and Freddie establish, it should come as no surprise to find that a few law firms in each state end up with the majority of the foreclosure work, sources say.

The rise of the ‘foreclosure mills’

Being designated as approved counsel by Fannie Mae and/or Freddie Mac does carry risk. Just ask Florida’s David Stern, who has seen his burgeoning operation pejoratively branded a ‘foreclosure mill’ by consumer groups, dragged through the press for both alleged and real consumer misdeeds, and facing numerous investor lawsuits surrounding the operation of DJSP Enterprises, Inc. (DJSP: 3.22 -1.23%) — the publicly-traded processing company tied to the law firm.

While Stern’s operation may win the award for ‘most susceptible to negative publicity,’ how the law firm operates is far from unique in the foreclosure industry.

Continue reading…Housing Wire

Kenneth Eric Trent, P.A. of Broward County has amended the Class Action complaint Figueroa v. MERSCORP, Inc. et al filed on July 26, 2010 in the Southern District of Florida.

Included in the amended complaint is MERS shareholders HSBC, JPMorgan Chase & Co., Wells Fargo & Company, AIG, Fannie Mae, Freddie Mac, WAMU, Countrywide, GMAC, Guaranty Bank, Merrill Lynch, Mortgage Bankers Association (MBA), Norwest, Bank of America, Everhome, American Land Title, First American Title, Corinthian Mtg, MGIC Investor Svc, Nationwide Advantage, Stewart Title,  CRE Finance Council f/k/a Commercial Mortgage Securities Association, Suntrust Mortgage,  CCO Mortgage Corporation, PMI Mortgage Insurance Company, Wells Fargo and also DJS Processing which is owned by David J. Stern.

MERSCORP shareholders…HERE

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Related article:

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CLASS ACTION FILED| Figueroa v. Law Offices Of David J. Stern, P.A. and MERSCORP, Inc.

DEPOSITION OF NOTARY SHANNON SMITH OF THIS CASE

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MORE ON THIS CASE & FIRM BELOW

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Take Two: *New* Full Deposition of Law Office of David J. Stern’s Cheryl Samons

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Law Offices of David J. Stern, MERS | Assignment of Mortgage NOT EXECUTED but RECORDED

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Cheryl Samons | No Signature, No Notary, 1 Witness…No Problem!

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STERN’S CHERYL SAMONS| SHANNON SMITH Assignment Of Mortgage| NOTARY FRAUD!

In accordance with Title 17 U.S.C. Section 107, any copyrighted work in this message is distributed under fair use without profit or payment for non-profit research and educational purposes only. GRG [Ref. http://www.law.cornell.edu/uscode/17/107.shtml]

Banking Executives Tell Obama Officials Government Needs To Play Large Role In Mortgage Market

(AP) WASHINGTON (AP) – The Obama administration invited banking executives Tuesday to offer advice on changing the government’s role in the mortgage market. Their response: stay big.

While the executives disagreed on the exact level of support needed, the group overwhelmingly advocated the government should maintain a large role propping up the nearly $11 trillion market.

Bill Gross, managing director of bond giant Pimco, said the economic recovery required more government stimulus, particularly in the housing market. He suggested the administration push for the automatic refinancing of millions homes backed by mortgage giants Fannie Mae and Fannie Mac.

Refinancing those homes at the lowest mortgage rates in decades would give Americans more money each month. That would boost consumer spending by $50 billion to $60 billion and lift housing prices by as much as 10 percent, he said.

Without such stimulus in the next six months, Gross said, the economy will move at a “snails pace.”

Treasury officials have said they have no plans to enact such a plan, which has been the subject of intense rumors on Wall Street in recent weeks.

Tuesday’s conference at the Treasury Department is the administration’s first of many steps toward restructuring the troubled industry. So far, rescuing Fannie and Freddie has cost the government more than $148 billion. That number is expected to grow.

Treasury Secretary Timothy Geithner pledged “fundamental change” to the structure of Fannie and Freddie. The mortgage giants profited tremendously during good times but burdened taxpayers with losses when the housing market went bust. He said the two companies weren’t the only cause of the financial crisis, but made it worse.

Fannie and Freddie buy mortgages and package them into securities with a guarantee against default. They have ensured that millions of Americans can get home loans – even after the housing market collapsed.

The two companies, the Federal Housing Administration and the Veterans Administration together backed about 90 percent of loans made in the first half of the year, according to trade publication Inside Mortgage Finance.

Geithner did not offer a specific exit strategy for Fannie and Freddie. He agreed that the government could remain involved in the mortgage system by guaranteeing investors in mortgage-backed securities get paid, even when borrowers default.

There is a “strong case to be made” for such an arrangement, Geithner said.’

But Geithner suggested that Fannie and Freddie’s replacements could pay the government to insure the loans. That money could be tapped if the housing market collapses and would ensure taxpayers do not get hit with losses in the future.

“It is our responsibility to make sure that we create a system that is not vulnerable to these same failures happening again,” Geithner said.

Republicans are expected to pick up seats in Congress in November and the Obama administration will need support from both parties to enact changes next year.

The Obama administration’s management of Fannie and Freddie has been under fire for months from Republicans on Capitol Hill. In December, the Treasury Department eliminated a $400 billion cap on how much money it would give the mortgage giants to keep them from failing.

Rep. Spencer Bachus, the top Republican on the House Financial Services Committee, accused the Obama administration of excluding critics of the government’s role in the mortgage system from Tuesday’s conference.

In a letter to Geithner, Bachus said Treasury appears to be “laying the groundwork for a predetermined policy outcome that looks uncomfortably similar to the failed status quo.”

But the industry executives and experts at the conference seemed to agree that the government should maintain a role in the mortgage market, even if Fannie and Freddie disappear someday. Where they disagreed was on the level of government involvement and whether it should be reduced gradually.

Gross advocated the biggest government role. He said Fannie and Freddie’s function should be consolidated into one government agency that would issue mortgage-backed securities. Without such a solid guarantee, mortgage rates would soar, he warned.

Gross said he is skeptical of having those securities issued by the private sector, saying that doing so would favor “Wall Street as opposed to Main Street.”

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Watch carefully at the latest “Master Plan” the banks have up their sleeves!

By WILLIAM POOLE
Published: August 11, 2010

Elkton, Md.

THE Federal National Mortgage Association — known as Fannie Mae — and the Federal Home Loan Mortgage Corporation — Freddie Mac — were poorly structured from the time, 40 years ago, when they were set up as so-called government-sponsored enterprises. Both of these technically private companies, designed to foster the issuance of home mortgages, enjoyed implicit federal backing in the event they got into financial trouble but only weak regulation to prevent such trouble. Essentially, the federal government insured the companies’ liabilities but never charged a premium.

Fannie and Freddie had a license to print money. They could borrow at an interest rate only a bit over the Treasury rate and then accumulate large portfolios of mortgages and mortgage-backed securities earning the market rate. What a deal — borrow at the low rate, invest at a higher one, hold little capital and let the federal government bear the risk! Investors enjoyed high returns, and management enjoyed high salaries. Incidentally, politicians also got a steady flow of campaign contributions from the companies’ executives.

Fannie and Freddie’s risky policies led to their near collapse; in September 2008, the federal government brought them under federal conservatorship. Fannie and Freddie have cost taxpayers about $150 billion so far.

On Tuesday, the Obama administration plans to hold a conference to address the question of what to do with the two companies. Clearly, it would be an inexcusable mistake to reconstitute them as private companies in anything close to their prior form. Some people have suggested recasting them as a single new “Fan-Fred agency” that would continue to securitize and guarantee home mortgages. It’s true that Fannie and Freddie played an important role in developing the market for mortgage-backed securities. But they have completed that work, and they should not be preserved in any form. They should be thanked for their successes and gracefully retired.

Continue Reading…NYTimes

William Poole, a senior fellow with the Cato Institute and a distinguished scholar in residence at the University of Delaware, was president of the Federal Reserve Bank of St. Louis from 1998 to 2008.

Washington Post Staff Writer
Saturday, August 7, 2010

For several decades, whenever a question of housing policy came up in Washington, two companies dominated. Fannie Mae and Freddie Mac marshaled armies of lobbyists, deep political connections and millions of dollars in contributions to get their way.

Scratch this record!!!!! Need help go to MERS!!

Last week Fannie Mae asked treasury for $1.5 billiion in assistance …now comes Freddie with loss and seeks aid.

You know this is outrageous! They applaud MERS and write recommendations of how they are excited with MERS but yet MERS does nothing but conceal information from the borrowers and has secret agreements with the possible beneficiaries of these loans. MERS takes tax dollars away from our schools, children, counties etc.

While we are on this subject of counties and states, why are they crying bankruptcy and major cut backs…how about ending the MERS sham and go after the fees that you cry about with them? Who does this benefit? Not us but the Mortgage Banking Industry and Wall Street so called Lending Institutions.

All these problems came about the same time MERS came to existence…now tell me something? Isn’t this a tad of a coincidence these issues became at the same time sub-prime loans hit peak?

By now we all have witness the Foreclosure Barons you have as designated counsel and what do you plan to do about it? No matter what dots there are, both Fannie and Freddie have a connection?

Why was all this NEVER a REAL PROBLEM in the past with assignments…lets say prior to 1998? Hmmm…

We are no fools.

Excerpts:

MERS was created in 1995 under the auspices of the Mortgage Bankers Association (MBA), as the mortgage industry’s utility, to streamline the mortgage process by using electronic commerce to eliminate paper. Our Board of Directors and shareholders are comprised of representatives from the MBA, Fannie Mae, Freddie Mac, large and small mortgage companies, the American Land Title Association (ALTA), the CRE Finance Council, title underwriters, and mortgage insurance companies.

Our initial focus was to eliminate the need to prepare and record assignments when trading mortgage loans. Our members make MERS the mortgagee and their nominee on the security instruments they record in the county land records. Then they register their loans on the MERS® System so they can electronically track changes in ownership over the life of the loans. This process eliminates the need to record assignments every time the loans are traded. Over 3000 MERS members have registered more than 65 million loans on the MERS® System, saving the mortgage industry hundreds of millions of dollars in the process. The Federal Housing Administration (FHA) and Veterans Administration (VA) approved MERS for government loans because they recognized the value to consumers. On table-funded loans, MERS eliminates the cost to the consumer of the mortgage assignment ($30 – $150). In addition, the MERS process ensures that lien releases are not delayed by eliminating potential breaks in the chain of title. Similar to the residential product, we also addressed the assignment problem in the commercial market with MERS® Commercial, on which is registered over $110 billion in Commercial Mortgage-Backed Securities (CMBS) loans.

More than 60 percent of existing mortgages have an assigned MIN, making a total of 65,000,000 loans registered since the inception of the system in 1997. The corresponding data for these mortgages is tracked on the MERS® System from origination through sale and until payoff. MERS therefore offers a substantial base of historical data about existing loans that can be harnessed to bring transparency to existing MBS products. Attached are letters from the MBA, FHA, Fannie Mae and Freddie Mac on this point.

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Related:

MERS May NOT Foreclose for Fannie Mae effective 5/1/2010

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Fannie Mae’s Announcing Miscellaneous Servicing Policy Changes

Financial giants have figured out yet another way to profit from fraud. After devastating communities across the country with shady subprime loans, the mortgage industry has launched a new assault on America’s neighborhoods. Big banks are now outsourcing their foreclosure processing to shady law firms with a history of breaking the law for a quick buck. These foreclosure scammers forge documents, backdate signatures, slap families with thousands of dollars in illegal fees and even foreclosure on borrowers who haven’t missed a payment.

Andy Kroll lays out the insanity in a terrific piece for Mother Jones. “Foreclosure mills,” as they are known, have been around for years, but they’ve become a much bigger problem as the mortgage crisis has deepened. Fannie Mae and Freddie Mac spurred the creation of these social beasts decades ago to help them process large volumes of foreclosures quickly and cheaply. Pretty soon big banks wanted in on the action, and bailout barons at Wells Fargo, Citigroup and Bank of America starting sending foreclosures to these scummy law firms by the thousands.

Banks opt to outsource dirty work like this for a reason. It takes weeks to process the legal work necessary to kick somebody out of their home, since cops and judges don’t want to give borrowers the boot without proof. If you can cut down that processing time, you can save a lot of money on legal bills. Foreclosure mills cut costs for banks by cutting corners—when they can’t compile the documentation needed to push families out of their homes right now, they simply fabricate the documents. Still worse, these guys illegally withhold documentation from borrowers seeking to negotiate loan modifications with their banks—effectively forcing borrowers out of their homes instead of allowing them to cut a deal with the bank. When borrowers actually do straighten things out with foreclosure mills, the scumbags slap them with huge illegal fees. Kroll details a foreclosure mill that erroneously tried to evict a Florida couple who had been paying their mortgage on time. When it became clear that the couple could not be kicked out of their home, the foreclosure mill tried to charge them $18,500 in fees for mistakes committed by the foreclosure mill and the bank. The foreclosure mill even invented two new people who it said lived in the home in order to demand four sets of legal processing fees instead of two.

If nobody holds you accountable, then lying, cheating and stealing are very profitable business models. That’s one reason why banks love sending this kind of work to foreclosure mills. While the foreclosure mills and their lawyers have been bombarded with lawsuits for their trickery, the banks are not directly involved in the funny business. So Citi, BofA, Fannie and Freddie get to cut their costs with shady practices, but they don’t have to shoulder the legal liability for them, even though they must surely know what goes on (if they don’t know, they’re being astonishingly negligent, and should be held responsible).

The foreclosure mill scandal is very similar to a game the banks played in the craziest days of the housing bubble. A few years back, banks outsourced much of the work that goes into issuing mortgages to third-party mortgage brokers. Banks knew that many of these brokers were up to no good, and routinely trained brokers how to steer borrowers into unaffordable subprime loans. Banks also lobbied regulators aggressively for the right to look the other way when brokers abused borrowers or committed fraud. For a few years, banks made big bucks as mortgage brokers turned out fraudulent loans by the truckload. When those loans started defaulting, the banks pleaded innocence and blamed the brokers for the social and economic fallout.

Continue Reading …AlterNet