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INSIDE CHASE and the Perfect Foreclosure

INSIDE CHASE and the Perfect Foreclosure


“JPMorgan CHASE is in the foreclosure business, not the modification business’.”  That, according to Jerad Bausch, who until quite recently was an employee of CHASE’s mortgage servicing division working in the foreclosure department in Rancho Bernardo, California.

I was recently introduced to Jerad and he agreed to an interview.  (Christmas came early this year.)  His answers to my questions provided me with a window into how servicers think and operate.  And some of the things he said confirmed my fears about mortgage servicers… their interests and ours are anything but aligned.

Today, Jerad Bausch is 25 years old, but with a wife and two young children, he communicates like someone ten years older.  He had been selling cars for about three and a half years and was just 22 years old when he applied for a job at JPMorgan CHASE.  He ended up working in the mega-bank’s mortgage servicing area… the foreclosure department, to be precise.  He had absolutely no prior experience with mortgages or in real estate, but then… why would that be important?

“The car business is great in terms of bring home a good size paycheck, but to make the money you have to work all the time, 60-70 hours a week.  When our second child arrived, that schedule just wasn’t going to work.  I thought CHASE would be kind of a cushy office job that would offer some stability,” Jerad explained.

That didn’t exactly turn out to be the case.  Eighteen months after CHASE hired Jared, with numerous investors having filed for bankruptcy protection as a result of the housing meltdown, he was laid off.  The “investors” in this case are the entities that own the loans that Chase services.  When an investor files bankruptcy the loan files go to CHASE’S bankruptcy department, presumably to be liquidated by the trustee in order to satisfy the claims of creditors.

The interview process included a “panel” of CHASE executives asking Jared a variety of questions primarily in two areas.  They asked if he was the type of person that could handle working with people that were emotional and in foreclosure, and if his computer skills were up to snuff.  They asked him nothing about real estate or mortgages, or car sales for that matter.

The training program at CHASE turned out to be almost exclusively about the critical importance of documenting the files that he would be pushing through the foreclosure process and ultimately to the REO department, where they would be put back on the market and hopefully sold.  Documenting the files with everything that transpired was the single most important aspect of Jared’s job at CHASE, in fact, it was what his bonus was based on, along with the pace at which the foreclosures he processed were completed.

“A perfect foreclosure was supposed to take 120 days,” Jared explains, “and the closer you came to that benchmark, the better your numbers looked and higher your bonus would be.”

CHASE started Jared at an annual salary of $30,000, but he very quickly became a “Tier One” employee, so he earned a monthly bonus of $1,000 because he documented everything accurately and because he always processed foreclosures at as close to a “perfect” pace as possible.

“Bonuses were based on accurate and complete documentation, and on how quickly you were able to foreclosure on someone,” Jerad says.  “They rate you as Tier One, Two or Three… and if you’re Tier One, which is the top tier, then you’d get a thousand dollars a month bonus.  So, from $30,000 you went to $42,000.  Of course, if your documentation was off, or you took too long to foreclose, you wouldn’t get the bonus.”

Day-to-day, Jerad’s job was primarily to contact paralegals at the law firms used by CHASE to file foreclosures, publish sale dates, and myriad other tasks required to effectuate a foreclosure in a given state.

“It was our responsibility to stay on top of and when necessary push the lawyers to make sure things done in a timely fashion, so that foreclosures would move along in compliance with Fannie’s guidelines,” Jerad explained.  “And we documented what went on with each file so that if the investor came in to audit the files, everything would be accurate in terms of what had transpired and in what time frame.  It was all about being able to show that foreclosures were being processed as efficiently as possible.”

When a homeowner applies for a loan modification, Jerad would receive an email from the modification team telling him to put a file on hold awaiting decision on modification.  This wouldn’t count against his bonus, because Fannie Mae guidelines allow for modifications to be considered, but investors would see what was done as related to the modification, so everything had to be thoroughly documented.

“Seemed like more than 95% of the time, the instruction came back ‘proceed with foreclosure,’ according to Jerad.  “Files would be on hold pending modification, but still accruing fees and interest.  Any time a servicer does anything to a file, they’re charging people for it,” Jerad says.

I was fascinated to learn that investors do actually visit servicers and audit files to make sure things are being handled properly and homes are being foreclosed on efficiently, or modified, should that be in their best interest.  As Jerad explained, “Investors know that Polling & Servicing Agreements (“PSAs”) don’t protect them, they protect servicers, so they want to come in and audit files themselves.”

“Foreclosures are a no lose proposition for a servicer,” Jerad told me during the interview.  “The servicer gets paid more to service a delinquent loan, but they also get to tack on a whole bunch of extra fees and charges.  If the borrower reinstates the loan, which is rare, then the borrower pays those extra fees.  If the borrower loses the house, then the investor pays them.  Either way, the servicer gets their money.”

Jerad went on to say: “Our attitude at CHASE was to process everything as quickly as possible, so we can foreclose and take the house to sale.  That’s how we made our money.”

“Servicers want to show investors that they did their due diligence on a loan modification, but that in the end they just couldn’t find a way to modify.  They’re whole focus is to foreclose, not to modify.  They put the borrower through every hoop and obstacle they can, so that when something fails to get done on time, or whatever, they can deny it and proceed with the foreclosure.  Like, ‘Hey we tried, but the borrower didn’t get this one document in on time.’  That sure is what it seemed like to me, anyway.”

According to Jerad, JPMorgan CHASE in Rancho Bernardo, services foreclosures in all 50 states.  During the 18 months that he worked there, his foreclosure department of 15 people would receive 30-40 borrower files a day just from California, so each person would get two to three foreclosure a day to process just from California alone.  He also said that in Rancho Bernardo, there were no more than 5-7 people in the loan modification department, but in loss mitigation there were 30 people who processed forbearances, short sales, and other alternatives to foreclosure.  The REO department was made up of fewer than five people.

Jerad often took a smoke break with some of the guys handing loan modifications.  “They were always complaining that their supervisors weren’t approving modifications,” Jerad said.  “There was always something else they wanted that prevented the modification from being approved.  They got their bonus based on modifying loans, along with accurate documentation just like us, but it seemed like the supervisors got penalized for modifying loans, because they were all about finding a way to turn them down.”

“There’s no question about it,” Jerad said in closing, “CHASE is in the foreclosure business, not the modification business.”

Well, now… that certainly was satisfying for me.   Was it good for you too? I mean, since, as a taxpayer who bailed out CHASE and so many others, to know that they couldn’t care less about what it says in the HAMP guidelines, or what the President of the United States has said, or about our nation’s economy, or our communities… … or… well, about anything but “the perfect foreclosure,” I feel like I’ve been royally screwed, so it seemed like the appropriate question to ask.

Now I understand why servicers want foreclosures.  It’s the extra fees they can charge either the borrower or the investor related to foreclosure… it’s sort of license to steal, isn’t it?  I mean, no one questions those fees and charges, so I’m sure they’re not designed to be low margin fees and charges.  They’re certainly not subject to the forces of competition.  I wonder if they’re even regulated in any way… in fact, I’d bet they’re not.

And I also now understand why so many times it seems like they’re trying to come up with a reason to NOT modify, as opposed to modify and therefore stop a foreclosure. In fact, many of the modifications I’ve heard from homeowners about have requirements that sound like they’re straight off of “The Amazing Race” reality television show.

“You have exactly 11 hours to sign this form, have it notarized, and then deliver three copies of the document by hand to this address in one of three major U.S. cities.  The catch is you can’t drive or take a cab to get there… you must arrive by elephant.  When you arrive a small Asian man wearing one red shoe will give you your next clue.  You have exactly $265 to complete this leg of THE AMAZING CHASE!”

And, now we know why.  They’re not trying to figure out how to modify, they’re looking for a reason to foreclose and sell the house.

But, although I’m just learning how all this works, Treasury Secretary Geithner had to have known in advance what would go on inside a mortgage servicer.  And so must FDIC Chair Sheila Bair have known.  And so must a whole lot of others in Washington D.C. too, right?  After all, Jerad is a bright young man, to be sure, but if he came to understand how things worked inside a servicver in just 18 months, then I have to believe that many thousands of others know these things as well.

So, why do so many of our elected representatives continue to stand around looking surprised and even dumbfounded at HAMP not working as it was supposed to… as the president said it would?

Oh, wait a minute… that’s right… they don’t actually do that, do they?  In fact, our elected representatives don’t look surprised at all, come to think of it.  They’re not surprised because they knew about the problems.  It’s not often “in the news,” because it’s not “news” to them.

I think I’ve uncovered something, but really they already know, and they’re just having a little laugh at our collective expense… is that about right?  Is this funny to someone in Washington, or anyone anywhere for that matter?

Well, at least we found out before the elections in November.  There’s still time to send more than a few incumbents home for at least the next couple of years.

I’m not kidding about that.  Someone needs to be punished for this.  We need to send a message.

Mandelman out.

@ MANDELMAN MATTERS


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in chase, concealment, conspiracy, corruption, foreclosure, foreclosure fraud, foreclosures, geithner, hamp, jpmorgan chase, Wall StreetComments (1)

Don’t Blame the Dream of Home Ownership

Don’t Blame the Dream of Home Ownership


Robert Kuttner

Robert Kuttner

Co-founder and co-editor of The American Prospect

Posted: June 13, 2010 06:52 PM

Here is a fable that is making the rounds. It is a collection of half-truths and outright lies:

The financial meltdown was the result of too many people pursuing the American Dream of home ownership. People who couldn’t really afford to be homeowners became speculators. Government added to the damage with cheap mortgages, misguided laws such as the Community Reinvestment Act, and overgrown government-sponsored agencies like Fannie Mae and Freddie Mac.

This stuff is a staple of rightwing talk shows. In a moment, I will rebut each element of this storyline, but first I want to single out a wildly misleading piece by the New York Times financial columnist Joe Nocera. The piece, which ran in Saturday’s business section, was titled “Wake-Up Time for a Dream.”

The dream — surprise — is home ownership. It is depressing that a rightwing theme has invaded the mainstream Times.

Nocera writes, “The financial crisis might well have been avoided if we as a culture hadn’t invested so much political and psychological capital in the idea of owning a home. After all, the subprime mortgage business’s supposed raison d’etre was making homeownership possible for people who lacked the means — or the credit scores — to get a traditional mortgage.”

Now this is just malarkey. And the Nocera piece is worth reading in its entirety to appreciate just how an influential financial columnist can get a critically important story so utterly wrong.

For starters, the homeownership rate was already 64 percent in the mid 1960s. It peaked at about 69 percent just before the bubble burst — but was nearly 68 percent in 2001 before subprime lending took off. Back in the 19th century, thanks to the Homestead Acts of the Lincoln era, homeownership (mainly family farms) was well over 70 percent in much of the west.

Ordinary working people can become homeowners and accumulate property wealth when two elements are present. Government programs have to be competently run and prevent private-industry sharks from abusing them. And working people need a degree of financial predictability in their job security.

In the period between, Franklin Roosevelt and LBJ, both factors prevailed. The Federal National Mortgage Association, later privatized as Fannie Mae, was part of the government. If mortgages met its standards, FNMA bought them from local banks and replenished bank working capital. Just as importantly, wages of working people steadily rose, so that more and more ordinary Americans could afford mortgage payments. Not surprisingly, homeownership rates rose. After Congress passed fair housing legislation in 1968, so that minorities could get a fair shot, black homeownership took off, too.

But beginning in the 1970s, wages stopped increasing with productivity growth. And the financial sharks got hold of programs intended to promote homeownership.

A newly privatized FNMA increasingly thought more about using its implicit government guarantee to increase market share and enrich its executives and shareholders. Not until Bush II, however, in 2004 and 2005 just before the housing collapse, was Fannie directed by the political masters in the White House to lower its standards and purchase pools of dubious mortgages so that Bush’s “Ownership Society” could claim credit for increasing homeownership rates.

Fannie Mae, a corrupted agency, has become a handy all purpose scapegoat. The lack of a provision in the financial reform legislation to resolve the mess at Fannie has become the main alibi that Republican senators give for voting against the whole reform package.

Nocera contends that the subprime industry’s “raison d’etre” was to promote homeownership “for people who lacked the means — or the credit scores — to get a traditional mortgage.” Sorry, Joe. The industry’s reason for being was so that financial wise guys could make a bundle at the expense of suckers. Low income prospective homeowners were merely useful props. They were the poster children, but not the real purpose.

(In 1994, the same Nocera was celebrating prosperity-for-all in a wildly over-optimistic book titled “A Piece of the Action: How the Middle Class Joined the Moneyed Class.” If his latest debunking is Nocera’s way of doing penance for his own earlier misplaced euphoria, it is just not helpful.)

The pity is that carefully run government programs, from the Homestead Acts to Neighborhood Housing Services, to the good work of community development financial institutions such as Chicago’s ShoreBank, have indeed increased the rate of homeownership among working people, and have done so by avoiding bait-and-switch products like subprime loans, not promoting them. The culprit is not the dream of owning your own home, but the utter cynicism of the financial sharks who took advantage of people innocently pursuing the dream.

Large numbers of subprime loans were in fact marketed to elderly people who had low mortgage debts, who could not live on fixed incomes and who needed to refinance their homes to take out equity. This was not about promoting homeownership but destroying it. Many of these victims are now losing their homes. The stripping of home equity is partly a story of a collapsing pension system in the face of rising costs for America’s seniors.

The 1977 Community Reinvestment Act, which encouraged banks to keep credit flowing to less affluent neighborhoods “consistent with sound lending standards” is not part of this fiasco at all. Had CRA been enforced, subprime loans that waived underwriting standards would have been illegal. Most of the mortgage brokers who retailed subprime loans were not even covered by CRA.

It’s certainly true (and no serious person claims otherwise) that 100 percent of Americans will never own their own homes. Some people are too transient or just too poor. Some would prefer to rent. But, maddeningly, one element of the story that the debunkers of the American Dream invariably leave out is the near-collapse of programs for affordable rental housing. Among moderate income Americans who rent, the fraction of income spent on housing rose steadily for three decades.

Ironically, many low income people turned to homeownership as a last resort because they couldn’t find an affordable rental — and the same Bush Administration that gutted subsidies for affordable rental housing refused to enforce laws on the books specifying standards for responsible lending to aspiring homeowners.

A sound housing policy would combine assistance for homeownership with affordable rental housing. A homeownership rate of 70 percent, which is common in several affluent European nations, is perfectly reasonable — if our political system keeps sharks like the subprime gang from wrecking the system and agencies such as FNMA from being corrupted.

Fannie Mae, which over-reached and went broke as a private company with a government guarantee, is now a ward of the federal government. It should be restored to its original form under Roosevelt, as a public corporation with high principles and high standards.

In the aftermath of the subprime collapse, many hard working lower income people, including a great many African Americans, have seen their dreams wiped out. The home ownership rate in black communities, which were targeted for subprime loans, is in free fall. Brandeis University’s Institute on Assets and Social Policy reports a devastating increase in the black-white wealth gap.

The same New York Times recently published a fine piece by reporter Michael Powell on what is happening to the black middle class in Memphis, “Blacks in Memphis Lose Decades of Economic Gains.”

The same story could be told about hundreds of predominantly African American neighborhoods.

The villain of the piece is the mortgage meltdown coupled with rising unemployment rates that are the collateral damage of the same financial collapse. The villain is not moderate income homeowners.

These people paid their mortgages on time, and there was nothing wrong with their dream. What was wrong was the failure of their government to keep the private financial industry from stealing the dream.

Robert Kuttner’s new book is A Presidency in Peril. He is co-editor of The American Prospect and a senior fellow at Demos.

Source: Huffington Post


© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosure, foreclosure fraud, foreclosuresComments (0)

GORED BY WALL STREET: Senate Blocks Vote To Rein In Big Banks — Because It Probably Would Have Passed

GORED BY WALL STREET: Senate Blocks Vote To Rein In Big Banks — Because It Probably Would Have Passed


Simon JohnsonSimon Johnson

: May 21, 2010 09:21 AM

Focus on This: Merkley-Levin Did Not Get a Vote

After nine months of hard fighting, yesterday financial reform came down to this: an amendment, proposed by Senators Jeff Merkley and Carl Levin that would have forced big banks to get rid of their speculative proprietary trading activities (i.e., a relatively strong version of the Volcker Rule.)

The amendment had picked up a great deal of support in recent weeks, partly because of unflagging support from Paul Volcker and partly because of the broader debate around the Brown-Kaufman amendment (which would have forced the biggest 6 banks to become smaller). Brown-Kaufman failed, 33-61, but it demonstrated that a growing number of senators were willing to confront the power of our biggest and worst banks.

Yet, at the end of the day, the Merkley-Levin amendment did not even get a vote. Why?

continue reading…. Huffington Post

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in foreclosures, wall streetComments (0)

Tapped Out: When Water Bills Force Foreclosure

Tapped Out: When Water Bills Force Foreclosure


Some may recall the post I did about DISTURBING BEHAVIOR in FLORIDA: The $67K Water Lien! Revoked Homestead!

I guess this isn’t that rare. Take a look what a $3,000 unpaid water bill can do if you DO NOT HAVE ANY MORTGAGE.

One raw day in early February, Vicki Valentine stood by helplessly as real estate investors snatched her West Baltimore home over what began with an unpaid city water bill of $362. Valentine lost the property after the city sold her debt to investors through a contentious and byzantine legal process called a tax sale. This little-known type of foreclosure can enrich investors as growing numbers of property owners struggle to pay their bills.

[youtube=http://www.youtube.com/watch?v=59cOz05Ovdk]

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Chase Sued AGAIN Over Mortgage Modifications Gone Wrong: HUFFINGTON POST

Chase Sued AGAIN Over Mortgage Modifications Gone Wrong: HUFFINGTON POST


Arthur DelaneyArthur Delaney arthur@huffingtonpost.com | HuffPost Reporting

First Posted: 05- 4-10 03:15 PM   |   Updated: 05- 4-10 04:58 PM

Three frustrated homeowners in New York City are suing JPMorgan Chase over the bank’s failure to permanently modify their mortgages under the Obama administration’s plan to help homeowners avoid foreclosure.Earns Jpmorgan Chase

The complaint, filed in federal court in New York, says the plaintiffs, who are represented by attorneys with the nonprofit Urban Justice Center, relied on promises by Chase that they could have their loans modified if they made reduced payments per the Home Affordable Modification Program (HAMP). Despite making payments on time, they’ve received foreclosure threats but no modifications.

One of the plaintiffs, Alex Lam, a 35-year-old restaurant manager, alleges Chase told him to actually stop making payments in order to be eligible for help. In early 2009, Lam contacted Washington Mutual (since absorbed by Chase) about a modification after his adjustable-rate mortgage blew up in his face. He was told he didn’t qualify for help because he was current on his payments.

“Mr. Lam was specifically told that if he stopped making payments for several months, he could be considered for a modification,” the says the complaint.

The next big surprise came in December, when, after making trial payments of $1,568 for the previous six months, Lam was told he owed the bank $12,000. When he protested, Chase relented and told Lam to apply once again for a mod, this time under HAMP. He made his payments until March, when Chase told him he’d failed HAMP’s opaque “Net Present Value” test, meaning the bank determined the investors who owned the loan would make more money via foreclosure than modification. Lam alleges Chase used bogus inputs for the NPV test and that Chase refuses to show its work.

Lam called the situation “very upsetting” in an interview with HuffPost. “I trusted them because they’re a big bank. I did whatever they asked me to.”

HuffPost asked Lam what he wanted from suing Chase.

“Just to get a modification, that’s all I’m asking for,” he said. “Since day one, that’s all I’m asking for.”

HAMP lawsuits have been flying. Last week a 91-year-old veteran of three wars named Peter Ruplenas sued Bank of America over mortgage mod malfeasance in West Virginia.

In April, Faiz and Khadija Jahani of California sued Chase for reasons similar to Lam’s — the bank told them to stop making payments to qualify for help, then foreclosed. A similar case is brewing in Seattle.

Homeowners are supposed to be eligible for HAMP mods if they’re having trouble making monthly payments, owe less than $729,750, took out the loan before January 2009, and if their payment on their first mortgage is more than 31 percent of their income. In theory, if homeowners make reduced payments (typically $500 cheaper) for three months, they are put in “permanent” modifications that last for five years.

But the banks voluntarily participating in HAMP have given permanent mods to just 230,000 homeowners in the program’s first year, a far cry from the three to four million officials said HAMP would help. Meanwhile, frustrated homeowners’ stories of lost paperwork, dishonesty, and incompetence by banks are piling up.

A Chase spokesman declined to comment on the lawsuit.

Posted in chase, mortgage modificationComments (2)

Too Big To Jail? Executives Unscathed As Regulators Let Banks Report Criminal Fraud: HUFFINGTON POST

Too Big To Jail? Executives Unscathed As Regulators Let Banks Report Criminal Fraud: HUFFINGTON POST


Huffington Post Investigative Fund |  David Heath First Posted: 05- 3-10 09:24 PM   |   Updated: 05- 3-10 09:44 PM

Republished from the Huffington Post Investigative Fund.

The financial crisis has spawned hundreds of criminal prosecutions for alleged fraud. Yet so far, defendants have been mostly minor players such as real-estate agents, mortgage brokers, borrowers and a few low-level bank employees. No senior executives at large financial institutions face criminal charges.

Too Big To JailThats in stark contrast to prosecutions during the savings and loan scandal two decades ago, when the government’s strategy targeted and snagged some of banking’s most powerful players. The approach back then succeeded in sending scores of S&L executives to prison, as well as junk-bond king Michael Milken and business tycoon Charles Keating Jr.

One explanation for the difference may be that key bank regulators — who did the detective work during the S&L crisis and sent more than 1,000 criminal referrals to prosecutors — have this time left reporting fraud up to the banks themselves.

Spokesmen for two chief regulators, the Comptroller of the Currency and the Office of Thrift Supervision, say that they have not sent prosecutors a single case for criminal prosecution.

An OTS spokesman said the agency, much like the banks themselves, does not see much evidence of criminal fraud inside the financial institutions. The spokesman, Bill Ruberry, citing the agency’s enforcement director, said, “There may be some isolated cases, but certainly there’s no widespread patterns.”

That surprises William K. Black, a former OTS official who helped coordinate criminal investigations during the S&L crisis.

“Dear God,” Black said when told bank regulators haven’t made any criminal referrals. “Not a single one?”

Black sees many signs the the government is less aggressive than during the S&L era — and could result in more bad behavior.

“This crisis was not bad luck,” he said. “It was done to us. When you bring those convictions, you hope that at least for a while to deter.”

Banks have reported massive amounts of fraud to the Treasury Department but have not held themselves — or their top executives — responsible, instead pinning blame on borrowers, independent mortgage brokers, and others.

That may account for the dearth of prosections against big fry. For instance, in California, among states where the mortgage meltdown hit hardest, the Huffington Post Investigative Fund identified 170 mortgage fraud prosecutions in federal courts. Only two are against employees of a regulated lender.

An Investigative Fund analysis shows that two-thirds of the 170 prosecutions are against mortgage brokers, real-estate professionals or borrowers — the same groups blamed by the banks when they report suspicious activities to regulators.

Besides the absence of criminal referrals, other plausible factors for the lack of major prosecutions may include a skittishness among prosecutors about filing cases they could have trouble winning, and a severe decline in investigative resources. The FBI dramatically shifted resources away from white-collar crime after the 2001 terrorist attacks.

To be sure, there are also notable differences between the S&L and current financial crisis, in the behavior of lenders during both periods, and between civil allegations of fraud and proving that someone committed a crime — all of which could account for the lack of big prosecutions.

But interviews with several law enforcement authorities suggest another explanation: A lack of active assistance to prosecutors by bank regulators who played key roles during the S&L crackdown. Those regulators sent detailed reports to prosecutors of known and suspicious criminal activity.

“Only the regulators can make a lot of these cases,” Black said. “The FBI can make a few, but the regulators are the ones that understand the industry.”

[youtube=http://www.youtube.com/watch?v=PR-8uVu4lPI]

Under intense political pressure in the late 1980s, the Justice Department and thrift regulators developed a strategy to thoroughly investigate failed S&Ls for evidence of fraud and to focus their resources on the highest ranking executives.

In the early years, between 1987 and 1989, there were more than 300 prosecutions. Some bank executives were already behind bars. In 1989, Woody Lemons, chairman of Vernon Savings and Loan in Texas, was sentenced to 30 years.

In June 1990, then-OTS director Timothy Ryan told Congress that his agency had established criminal-referral units in each of 12 district offices. In addition, more than 30 OTS employees were assigned as full-time agents of grand juries or assistant US attorneys to help prosecutions. And the agency prioritized prosecutions to a Top 100 list, targeting senior S&L executives and directors.

While data on criminal referrals during the S&L crisis is spotty, the Government Accountability Office reported that in the first ten months of 1992 alone — a random snapshot — financial regulators sent the Justice Department more than 1,000 cases for criminal prosecution.

One study showed that 35 percent of criminal referrals in Texas — ground zero for the S&L problems — were against officers and directors.

This time, prosecutors are relying more heavily on banks to report suspicious activity to the Treasury Department. Banks are required to report known or suspected criminal violations, including fraud, on Suspicious Activity Reports designed for the purpose. In effect, the reports, which can be many pages in length, provide substantive leads for criminal investigations.

Black scoffs at the strategy of leaving it to banks to ferret out all the fraud. “Institutions will not make criminal referrals against the people who control the institutions,” said Black.

A white-collar criminologist and law professor at the University of Missouri-Kansas City, he argues that there’s ample evidence of fraud. Insiders working for lenders openly referred to loans they made without proof of income as “liar loans.” Many banks actively sought inflated appraisals in their rush to make as many loans as possible. As previously reported by the Investigative Fund, such lending practices contributed to the demise of Washington Mutual.

Not everyone agrees that such a case can be successful. Benjamin Wagner, a U.S. Attorney who is actively prosecuting mortgage fraud cases in Sacramento, Calif., points out that banks lose money when a loan turns out to be fraudulent. An investor in loans who documents fraud can force a bank to buy the loan back. But convincing a jury that executives intended to make fraudulent loans, and thus should be held criminally responsible, may be too difficult of a hurdle for prosecutors.

“It doesn’t make any sense to me that they would be deliberately defrauding themselves,” Wagner said.

So far, only sporadic news reports suggest that the Justice Department has ongoing criminal investigations against major banks such as Washington Mutual and Countrywide, as well as investment bank Goldman Sachs.

Fewer Cops on the Beat

The Justice Department, in response to written questions from the Investigative Fund, acknowledged the absence of criminal referrals from financial regulators. Months into the financial crisis, a new Financial Fraud Enforcement Task Force, formed by President Obama last fall, was trying to work out communication problems between Justice and the regulatory agencies, according to the head of the task force, Robb Adkins. Adkins has said that criminal referrals from regulators have been “too often the exception to the rule.”

At a Congressional hearing in December, Assistant Attorney General Lanny Breuer was asked why there have been no criminal cases brought yet against CEOs. “Don’t for a moment think [these cases] aren’t being investigated,” Breuer replied. “They are complicated cases. It took a long time in hatching them and developing them. But they will be brought.”

The system that tracks Suspicious Activity Reports, or SARs, detected a dramatic increase in mortgage fraud starting in 2003, when reports of mortgage fraud nearly doubled within a year from 5,400 to 9,500. By 2007, the number had exploded to 53,000. During those same years, many mortgage lenders dramatically lowered their lending standards. Banks often required no proof of income. Borrowers could even get loans without be able to repay them.

Yet in their reports, banks overwhelmingly have blamed others for fraud. Whenever a borrower’s income was wrong on a loan application, the banks fingered borrowers 87 percent of the time and independent mortgage brokers 64 percent of the time, according to a 2006 Treasury analysis of the SARs. But the bank’s own employees were almost never blamed — only about four times in every 1,000 reports.

That might explain why so few prosecutions have targeted bank insiders.

Another reason for fewer prosecutions against bank employees is that the Federal Bureau of Investigation has far fewer agents working on the current crisis. Deputy Director John Pistole testified before Congress last year that the bureau had 1,000 people working on the S&L crisis at its height. That compares to about 240 agents working on mortgage fraud cases last year.

The FBI dramatically shifted its resources away from white-collar crime and to terrorism after the Sept. 11 attacks.

“We just didn’t have the cops on the beat” during the recent crisis, said Sen. Ted Kaufman, the Delaware Democrat who conducted a hearing on the lack of criminal prosecutions. “I was around during the savings and loan crisis [as a Congressional aide] and we had a lot more folks working it when it went down.”

Even with additional funding from Congress, which Kaufman helped push through, the FBI is budgeted to have 377 people working mortgage fraud cases this year, about a third as many as during the S&L investigations.

Charges Harder to Prove?

Charges in the recent banking crisis may be harder to prove, said Robert H. Tillman, who teaches at St. John’s University and who analyzed data about S&L prosecutions. Savings and loan executives who were convicted often personally approved large commercial loans for projects doomed to fail. Some would use federally insured deposits to pay themselves excessive salaries or to lend money to their own real estate projects. A few even took kickbacks.

This time, lending executives may have encouraged the making of bad loans, but they generally did not personally approve the loans, Tillman said. They didn’t send emails telling the troops to make fraudulent loans but paid big commissions to loan offers who made risky loans. Then the executives were able to reap huge bonuses for making the company look so profitable.

So far, the biggest cases have been civil lawsuits brought by the Securities and Exchange Commission, including most recently a highly publicized securities fraud case against Goldman Sachs and one of its vice presidents, Fabrice P. Tourre. News reports suggest that a referral from the SEC’s enforcement division to the Justice Department has led to a criminal inquiry.

Typically, federal authorities deal with massive financial scandals by picking a few cases they are confident they can win, said Henry Pontell, an expert on fraud at the University of California — Irvine.

This time, the administration may have been more focused on saving failing banks — and an entire financial system — than in prosecuting bank executives, Pontell said. Giving billions in bailout dollars to executives who encouraged fraudulent practices not only could complicate a case, it could prove embarrasing, he added.

Posted in foreclosure fraud, Mortgage Foreclosure FraudComments (1)

Take a STAND! REMOVE YOUR MONEY 9/11/2010

Take a STAND! REMOVE YOUR MONEY 9/11/2010


ENOUGH is ENOUGH!

The more they destroy our lives, the more we lose our identity!

Posted in concealment, conspiracy, corruption, securitizationComments (3)

Homeowner Road Trip: Rally in Tallahassee WAY TO GO!!! Huffington Post

Homeowner Road Trip: Rally in Tallahassee WAY TO GO!!! Huffington Post


 

Richard Zombeck Richard Zombeck
HuffPost’s Eyes & Ears Mortgage Specialist
Posted: April 17, 2010 12:30 PM

Homeowner Road Trip: Rally in Tallahassee

In a time when you can stroll over to the computer and rattle off an e-mail to your elected official because you think your taxes are too high or leave an anonymous comment on a blog or article voicing your disapproval with a particular reporter, it would seem that the days of face-to-face action and rallies are unfortunately a thing of the past.Not for a group of activists in Florida heading to the Capitol in Tallahassee on Wednesday, April 21.

Michael Redman (4closureFraud), and Lisa Epstein (Foreclosure Hamlet), in an effort to convince Florida legislators to listen to their constituents, are organizing a transport to the capital. An old fashion road trip of attorneys, advocates, and homeowners. Transportation is being organized and buses will be available from key areas throughout Florida and along major roadways. Redman and Epstein had initially dipped into their own pockets to charter buses for the event.

As of April 16th, according to Redman’s blog, in a Friday post,

“Team Ice in West Palm has sponsored their bus and now one of Pinellas County’s toughest foreclosure fighters has generously agreed to sponsor a bus to make sure any attorney and homeowner who wants to go to Tallahassee and make his or her voice heard has the opportunity to get up there and meet face to face.”
“One of the most inspiring things about all of this is seeing how the defense attorneys are all throwing their time, talent and treasure into this fight.  We all share our ideas, insight and experience because doing so serves the interests of not just our clients but those folks out there who cannot afford an attorney and it especially serves the Constitution we took an oath to protect and the judiciary we respect,”

The most important piece of legislation the group was trying to stop was a push by bankers to change the way Florida handles foreclosures. Florida currently, and always has had Judicial foreclosures. The bank’s proposed legislation would have allowed banks to foreclose on Florida homes without going to court. According to Matt Weidner, a Florida attorney, the bill for now appears to have been stopped in the House, but the Senate will meet next week and according to an old Florida saying, “No one’s safe while the legislature is in session.”

A non-judicial foreclosure would mean that, “you the homeowner won’t automatically get your day in court if your lender tries to take your house away. The way it works right now is the lender is required by law to file a civil lawsuit against you in order to foreclose. You then have to answer it. If you don’t answer it or don’t show up to court, the judge issues a summary judgment against you. In a non-judicial foreclosure everything is done administratively and your right to due process is compromised and you have to beg for your day in court,” as explained by Steve Dibert of MFI-Miami.

Although the bill appears to have died, and the bankers appear to have conceded, this motivated band of advocates doesn’t want to leave anything to chance.

An e-mail from Weidner reads:

As Mark Twain said, ‘News of My death was greatly exaggerated.’ Although the legislation appears to have died, the passion and concern that its introduction incited has only increased with word of its demise.  Tapping into broad based anxiety and concern felt by homeowners all across Florida, the group has turned its focus from defeating this legislation to demanding legislation that will increase protections for Florida homeowners. Talk about turning the tables.  They are meeting with Senator Mark Aronberg and Rep. Darren Soto who introduced a “Homeowner’s Bill of Rights“. They’re asking that this legislation be resurrected… at the very least they want to make sure their legislators are fully aware of their concerns and the problems they’re facing.

According to Weidner’s press release,

“The response from legislators to this movement has been awe-inspiring. Our leaders in Washington may have trouble hearing the voices of their people, but the leaders who represent us in Tallahassee hear the voice of the people loud and clear! Already leaders from both houses have graciously agreed to meet with their voters, we’re confident many more will agree to meet with us when we arrive.”

Michael Moore spoke of the apathy and lack of action he witnessed despite his tireless work drawing attention to key issues affecting millions of Americans.

“Two years ago, I tried to get the health-care debate going, and it did eventually, and now where are we? We may not even have it. What am I supposed to do at a certain point?, ” Moore said in an 2009 Toronto press conference.

I wrote about that similar frustration with apathy in “Where are the Screaming Liberals?,” back in September 2009.

It’s refreshing and inspiring to think that may be changing.

Denise Richardson (givemebackmycredit.com) posted the following from Lisa Epstein on her blog:

This is not just for homeowners!We are ALL reduced by the actions behind the mortgage frauds and scams. Tenants! Anyone who relies on any public service funded by our now shrunken tax revenues! Anyone owning any property at all, fully paid off or not. Any business owner! Unemployed family members! Credit card/bank account fees victims! Those with drained 401Ks and college savings accounts!

We will be heard as was the Florida Bankers Association on their own “Capitol Day” on March 10, 2010. Florida Bankers, guess what? You wanted a “Taste of Florida”? You are gonna get one! We are having our own “Capitol Day”! But our collective voices will be a harmony; louder, clearer, unwavering, and with a foundation firmly planted in the historical roots of our country as a nation for WE, THE PEOPLE!

Bankers and other stealth foreclosing entities, listen up! We are NOT boobs, chumps, doormats, dupes, easy marks, fools, goats, gulls, patsies, pigeons, pushovers, saps, scapegoats, schmucks, sitting ducks, stooges, suckers, victims, or weaklings, And we most certainly are not “deadbeats”!

To find out more about the rally and let them know you’ll be along for the ride, see Redman’s site at 4closurefraud.org or Weidner’s blog for more information.

Posted in foreclosure fraud, foreclosure millsComments (0)

Arianna Huffington: Move Your Money!!

Arianna Huffington: Move Your Money!!


TAKE A STAND….MOVE YOUR MONEY!!

The Huffington Post

 

Posted in concealment, conspiracy, corruptionComments (0)

Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com

Federal Reserve Must Disclose Bank Bailout Records (Update5): We love Bloomberg.com


SHOCK & AWE …I’m betting! Thanks to Bloomberg for the lawsuit to DISCLOSE! Notice how both Bloomberg & Huffington are always the ones who go after the banksters…Because they probably don’t use the banksters to fund them!

By David Glovin and Bob Van Voris

March 19 (Bloomberg) — The Federal Reserve Board must disclose documents identifying financial firms that might have collapsed without the largest U.S. government bailout ever, a federal appeals court said.

The U.S. Court of Appeals in Manhattan ruled today that the Fed must release records of the unprecedented $2 trillion U.S. loan program launched primarily after the 2008 collapse of Lehman Brothers Holdings Inc. The ruling upholds a decision of a lower-court judge, who in August ordered that the information be released.

The Fed had argued that disclosure of the documents threatens to stigmatize borrowers and cause them “severe and irreparable competitive injury,” discouraging banks in distress from seeking help. A three-judge panel of the appeals court rejected that argument in a unanimous decision.

The U.S. Freedom of Information Act, or FOIA, “sets forth no basis for the exemption the Board asks us to read into it,” U.S. Circuit Chief Judge Dennis Jacobs wrote in the opinion. “If the Board believes such an exemption would better serve the national interest, it should ask Congress to amend the statute.”

The opinion may not be the final word in the bid for the documents, which was launched by Bloomberg LP, the parent of Bloomberg News, with a November 2008 lawsuit. The Fed may seek a rehearing or appeal to the full appeals court and eventually petition the U.S. Supreme Court.

Right to Know

If today’s ruling is upheld or not appealed by the Fed, it will have to disclose the requested records. That may lead to “catastrophic” results, including demands for the instant disclosure of banks seeking help from the Fed, resulting in a “death sentence” for such financial institutions, said Chris Kotowski, a bank analyst at Oppenheimer & Co. in New York.

“Whenever the Fed extends funds to a bank, it should be disclosed in private to the Congressional oversight committees, but to release it to the public I think would be a horrific mistake,” Kotowski said in an interview. “It would stigmatize the banks, it would lead to all kinds of second-guessing of the Fed, and I don’t see what public purpose is served by it.”

Senator Bernie Sanders, an Independent from Vermont, said the decision was a “major victory” for U.S. taxpayers.

“This money does not belong to the Federal Reserve,” Sanders said in a statement. “It belongs to the American people, and the American people have a right to know where more than $2 trillion of their money has gone.”

Fed Review

The Fed is reviewing the decision and considering its options for reconsideration or appeal, Fed spokesman David Skidmore said.

“We’re obviously pleased with the court’s decision, which is an important affirmation of the public’s right to know what its government is up to,” said Thomas Golden, a partner at New York-based Willkie Farr & Gallagher LLP and Bloomberg’s outside counsel.

The court was asked to decide whether loan records are covered by FOIA. Historically, the type of government documents sought in the case has been protected from public disclosure because they might reveal competitive trade secrets.

The Fed had argued that it could withhold the information under an exemption that allows federal agencies to refuse disclosure of “trade secrets and commercial or financial information obtained from a person and privileged or confidential.”

Payment Processors

The Clearing House Association, which processes payments among banks, joined the case and sided with the Fed. The group includes ABN Amro Bank NV, a unit of Royal Bank of Scotland Plc, Bank of America Corp., The Bank of New York Mellon Corp., Citigroup Inc., Deutsche Bank AG, HSBC Holdings Plc, JPMorgan Chase & Co., US Bancorp and Wells Fargo & Co.

Paul Saltzman, general counsel for the Clearing House, said the decision did not address the “fundamental issue” of whether disclosure would “competitively harm” borrower banks.

“The Second Circuit declined to follow the decisions of other circuit courts recognizing that disclosure of certain confidential information can impair the effectiveness of government programs, such as lending programs,” Saltzman said in a statement.

The Clearing House is considering whether to ask for a rehearing by the full Second Circuit and, ultimately, review by the U.S. Supreme Court, he said.

Deep Crisis

Oscar Suris, a spokesman for Wells Fargo, JPMorgan spokeswoman Jennifer Zuccarelli, Bank of New York Mellon spokesman Kevin Heine, HSBC spokeswoman Juanita Gutierrez and RBS spokeswoman Linda Harper all declined to comment. Deutsche Bank spokesman Ronald Weichert couldn’t immediately comment. Bank of America declined to comment, Scott Silvestri said. Citigroup spokeswoman Shannon Bell declined to comment. U.S. Bancorp spokesman Steve Dale didn’t return phone and e-mail messages seeking comment.

Bloomberg, majority-owned by New York Mayor Michael Bloomberg, sued after the Fed refused to name the firms it lent to or disclose loan amounts or assets used as collateral under its lending programs. Most of the loans were made in response to the deepest financial crisis since the Great Depression.

Lawyers for Bloomberg argued in court that the public has the right to know basic information about the “unprecedented and highly controversial use” of public money.

“Bloomberg has been trying for almost two years to break down a brick wall of secrecy in order to vindicate the public’s right to learn basic information,” Golden wrote in court filings.

Potential Harm

Banks and the Fed warned that bailed-out lenders may be hurt if the documents are made public, causing a run or a sell- off by investors. Disclosure may hamstring the Fed’s ability to deal with another crisis, they also argued.

Much of the debate at the appeals court argument on Jan. 11 centered on the potential harm to banks if it was revealed that they borrowed from the Fed’s so-called discount window. Matthew Collette, a lawyer for the government, said banks don’t do that unless they have liquidity problems.

FOIA requires federal agencies to make government documents available to the press and public. An exception to the statute protects trade secrets and privileged or confidential financial data. In her Aug. 24 ruling, U.S. District Judge Loretta Preska in New York said the exception didn’t apply because there’s no proof banks would suffer.

Tripartite Test

In its opinion today, the appeals court said that the exception applies only if the agency can satisfy a three-part test. The information must be a trade secret or commercial or financial in character; must be obtained from a person; and must be privileged or confidential, according to the opinion.

The court said that the information sought by Bloomberg was not “obtained from” the borrowing banks. It rejected an alternative argument the individual Federal Reserve Banks are “persons,” for purposes of the law because they would not suffer the kind of harm required under the “privileged and confidential” requirement of the exemption.

In a related case, U.S. District Judge Alvin Hellerstein in New York previously sided with the Fed and refused to order the agency to release Fed documents that Fox News Network sought. The appeals court today returned that case to Hellerstein and told him to order the Fed to conduct further searches for documents and determine whether the documents should be disclosed.

“We are pleased that this information is finally, and rightfully, going to be made available to the American public,” said Kevin Magee, Executive Vice President of Fox Business Network, in a statement.

Balance Sheet Debt

The Fed’s balance sheet debt doubled after lending standards were relaxed following Lehman’s failure on Sept. 15, 2008. That year, the Fed began extending credit directly to companies that weren’t banks for the first time since the 1930s. Total central bank lending exceeded $2 trillion for the first time on Nov. 6, 2008, reaching $2.14 trillion on Sept. 23, 2009.

More than a dozen other groups or companies filed friend- of-the-court briefs. Those arguing for disclosure of the records included the American Society of News Editors and individual news organizations.

“It’s gratifying that the court recognizes the considerable interest in knowing what is being done with our tax dollars,” said Lucy Dalglish, executive director of the Reporters Committee for Freedom of the Press in Arlington, Virginia.

“We’ve learned some powerful lessons in the last 18 months that citizens need to pay more attention to what’s going on in the financial world. This decision will make it easier to do that.”

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; Bob Van Voris in New York at vanvoris@bloomberg.net.

Last Updated: March 19, 2010 16:15 EDT

also see  huffington post articles on this

Posted in bloomberg, citi, concealment, conspiracy, corruption, Dick Fuld, FED FRAUD, federal reserve board, G. Edward Griffin, geithner, hank paulson, jpmorgan chase, lehman brothers, naked short selling, RON PAUL, scamComments (0)


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