After New York Attorney General Eric Schneiderman filed his new complaint against JPMorgan Chase, Bank of America, Wells Fargo, and the Mortgage Electronic Registry System, I got an email from the AG’s spokesman. “Looking forward to your story on the MERS lawsuit in the wake of your inaccurate conjecture this week,” it said, referring to my column expressing skepticism that the recently-announced joint mortgage-backed securities task force will accomplish more than the individual task force members have.
As I said in that piece, I’m eager for my skepticism to be proved unfounded. I hope the task force tells the world exactly who is responsible for the greed-driven securitization deficiencies already alleged in private MBS suits and in Congressional reports. I hope someone comes up with a legal theory to hold wrongdoers accountable for packaging mortgages that never should have been issued into securities that were (allegedly) not what they were represented to be.
That, however, is not what the AG’s new case does. […]
“Mortgage Electronic Registration Systems, Inc. (MERS) takes its role as a mortgagee very seriously. The MERS® System is an important part of the mortgage industry and the MERS business model has been consistently validated in all 50 states. All of the activities of MERSCORP and MERS are in compliance with state and federal laws. We are confident that as people understand more about MERS and the role we play, they will see that MERS adds great value to our nation’s system of housing finance in ways that benefit not just financial institutions, the broader economy and the government, but—most of all—homeowners.
Once again we’re hearing that a foreclosure fraud deal is about to be announced between major banks, the U.S. government and most or all of the states. We’ve heard that before, only to have the deadline pushed back so that holdout Attorneys General can be brought on board with the agreement.
Deal, or no deal? We’re not sure, but it’s certainly possible we’ll hear something today, tonight or tomorrow.
How will we know if it’s a good deal for the American people? After all, this is an issue with a lot of moving parts. It includes all of the states and multiple agencies within the Federal government, and involves a multitude of allegations involving several different kinds of crime that come under different jurisdictions. Even the statutes of limitations are a moving target.
It’s incredibly important that you–voters–understand that you are being lied to right now by your Federal Government and Team Obama.
Today a still secret deal will be announced and signed by the Bailed-Out Banks (B.O.B.s), our Federal Government, and an unknown but probably tragically high number of states attorneys general. You’ll hear this deal called a “Robo-signing settlement”, though it’s impossible to see how it can end the fraudulent manufacture of evidence by creditors in foreclosure cases. You might also hear it called a “mortgage servicer settlement”, because the B.O.B.’s conduct while wearing their mortgage servicing hats is supposedly the focus of the deal. But here’s how it should be known: The United States’s Latest Lavish/Slavish Gift to the Bailed-Out Banks Settlement.
A multi-state mortgage settlement in the works for more than a year will likely be pushed back again as dissident U.S. states continue to press specific concerns and ignore a Monday deadline to decide whether they will sign it.
States had been given two weeks to assess a proposed settlement, under which top U.S. banks would pay up to $25 billion in exchange for resolving civil government lawsuits about misconduct in servicing home loans and pursuing faulty foreclosures.
But on Monday, as a close-of-business deadline loomed, many states had not yet reached a decision.
I knew there was something I was suppose to follow up with last week and earlier today I noted that this was unconfirmed, until I finally found it in my “things to do”!
Now exactly who is going to cover the costs for the document mill?
We have even received information in recent days that shows LPS, a document mill includedin the proposed settlement, specifically requested to have this criminal investigationconverted to a civil lawsuit. It seems clear that they are aware of their vulnerability to these charges, and are attempting to save their company’s stock price by avoiding responsibility.
Rumor (Now Confirmed) behind the scenes points to LPS also being part of the discussions to walk.
This is outrageous!
Business Week-
States that balked at bank liability releases in a proposed $25 billion nationwide settlement over foreclosure practices must decide by today whether its mortgage relief and reforms are worth the legal claims they’ll give up.
While some states have already announced their intention to sign the deal, others including California Attorney General Kamala Harris have yet to publicly commit in part due to terms that protect the banks from future litigation. Without Harris, the deal’s value will drop by several billion dollars, according to a person familiar with the matter.
The agreement is “beyond fixing,” said George Goehl, executive director of National People’s Action, a network of community organizations which advocates for fair lending and affordable housing.
“People are very disappointed in what this is going to be both in terms of dollars and release of claims,” Goehl said in a telephone interview. “We’re giving away the store.”
With a deadline looming on Monday for state officials to sign onto a landmark multibillion-dollar settlement to address foreclosure abuses, the Obama administration is close to winning support from crucial states that would significantly expand the breadth of the deal.
The biggest remaining holdout, California, has returned to the negotiating table after a four-month absence, a change of heart that could increase the pot for mortgage relief nationwide to $25 billion from $19 billion.
Another important potential backer, Attorney General Eric T. Schneiderman of New York, has also signaled that he sees progress on provisions that prevented him from supporting it in the past.
The potential support from California and New York comes in exchange for tightening provisions of the settlement to preserve the right to investigate past misdeeds by banks, and stepping up oversight to ensure that the financial institutions live up to the deal and distribute the money to the hardest-hit homeowners.
Just when you’ve thought you seen, heard and been hurt by this all, Abigail has another jackpot story on her site…besides what’s to stop them since they aren’t protecting the homeowners!
Abigail C. Field-
A shocking aspect of the proposed foreclosure fraud settlement among Bailed-Out Banks, the state attorneys general, and the Feds has rightly gotten a lot of attention, namely the Bailed-Out Banks’ ability to use other people’s money to pay their “penalty.” I confess, when I first heard about it, I figured it was a testament to the federal government’s craven capitulation to the Bailed Out Banks. (Let’s call them the B.O.B.s, rhymes with S.O.Bs.) But now I know it’s much worse than that, thanks to excellent reporting by David Dayen. The federal government really wants the B.O.Bs to use pension fund money to pay their “penalty.”
In his State of the Union speech, President Obama said and proposed many reasonable-sounding things. One of them was this:
We’ll also establish a Financial Crimes Unit of highly trained investigators to crack down on large-scale fraud… financial firms violate major anti-fraud laws because there’s no real penalty for being a repeat offender… So pass legislation that makes the penalties for fraud count.
And tonight, I’m asking my Attorney General to create a special unit of federal prosecutors and leading state attorney general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis.
Now, how could you be against that? In his speech, and indeed as has been true for his entire career, Mr. Obama deserves an A for rhetoric. But what grade does he deserve for action? Alas, he flunks.
Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings
Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable
Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process
NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.
The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.
“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”
The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.
Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.
MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.
[…]
The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:
MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.
WARNING: Attention homeowners: Do not read this post as legal advice. Although the information in this post is true, securitization fail, even of your loan, will not typically prevent the bank from foreclosing on you, unless you have a good lawyer. Even then, realistic end game is a sustainable modification, not a free house. More after the post.
—
The criminal securities fraud at the heart of the financial crisis has one very under-reported aspect: “securitization fail.” Once you understand the securitization fail concept, you can instantly, with tremendous clarity, see the scale of the fraud the Bailed Out Banks and Wall Street firms committed and commit every day. Get securitization fail, and the bankers’ crimes stand out like a vast herd of bison on the South Dakota prairie, a herd much bigger than this one.
The deadline for states to decide whether to join a proposed nationwide foreclosure settlement with banks was postponed to Feb. 6 from Feb. 3, according to the Iowa Attorney General’s Office.
States were given more time to evaluate the proposal, which may total $25 billion, after at least one asked for a delay, Geoff Greenwood, a spokesman for Iowa Attorney General Tom Miller, said today in a phone interview. Miller is helping to lead negotiations.
State and federal officials have been negotiating an agreement with mortgage servicers that would provide mortgage relief to homeowners and set requirements for how banks conduct foreclosures.
Some states have raised concerns about the releases, saying they shouldn’t protect banks from claims that haven’t been investigated.
It would be nice to see the AG’s grow some ***** and treat this as a crime scene and not bow down. I disagree with Kroger.
Bloomberg-
Oregon’s attorney general agreed to join a proposed multistate settlement over foreclosure and mortgage-servicing, saying it penalizes banks and offers relief to homeowners.
The settlement will provide $30 million to the state and as much as $200 million in relief to Oregon homeowners, including those facing foreclosure, Attorney General John Kroger said today in a statement.
“This agreement penalizes banks that engaged in wrongful foreclosure practices and brings badly needed relief for distressed homeowners,” he said. “I am not confident we could get a better agreement on this limited set of issues if we litigated for several more years.”
[…]
Connecticut Attorney General George Jepsen said in an e- mailed statement yesterday that he would also sign on to the agreement. The deal “would impose tough new servicing standards on banks and hold them accountable for what have become familiar abuses,” he said.
How many settlements have already taken place? This won’t stop the banks either!
REUTERS-
A proposed settlement to resolve mortgage abuses by top U.S. banks will give states broad authority to punish firms that mistreat borrowers in the future, according to documents seen by Reuters on Wednesday.
Under the settlement, which states are currently reviewing to decide whether they will join, the states and a separate “monitoring committee” will have the authority to go to court to enforce the terms and seek penalties of up to $5 million per violation.
A strong enforcement mechanism could help the states and the Obama administration sell the deal to the public, after left-leaning activist groups have questioned whether the negotiations were too lenient on the banks.
States have just a few more days to make a decision, and an announcement of a settlement could come as early as next week, people familiar with the talks said.
The Obama administration’s record of prosecuting elite financial frauds is worse than the Bush administration’s record, which is a very large statement. Syracuse University’s TRAC issued a report on November 11, 2011 entitled “Criminal Prosecutions for Financial Institution Fraud Continue to Fall.”
Neither administration has prosecuted any elite CEO for the epidemic of mortgage fraud that drove the ongoing crisis. This contrasts with over 1,000 elite felony convictions arising from the S&L debacle. The ongoing crisis caused losses more than 70 times greater than the S&L debacle and the amount of elite fraud driving this crisis is also vastly greater than during the S&L debacle. Bank CEOs leading “accounting control frauds” now do so with impunity from the criminal laws. They become wealthy through fraud and even if they are sued civilly they almost invariably walk away wealthy with the proceeds of their frauds.
The Obama Administration Prefers Politics and Propaganda to Prosecutions
Elite financial institutions officers engaged in fraud face a dramatically reduced risk of prosecution compared to 20 years ago when financial fraud was far less common. TRAC reports that the number of financial institution fraud prosecutions under Obama is less than one-half the number 20 years ago. Bush (II) was slightly better than Obama in prosecuting non-elite financial institution frauds, but both were pathetically bad.
There are a few voices emerging suggesting that the current iteration of the “50 AG settlement” is somehow wonderful, or at least OK, because it only immunizes robosigning. “Only,” as if robosigning was some relatively benign peccadillo, instead of a massive conspiracy to commit forgery and perjury that is systematically driving our population into homelessness AND continuing to drive down the value of our homes…
The Honorable Bill Schuette Attorney General of Michigan
Mr. Schuette –
I have the utmost respect for you and your office, and I wish to commend your hard work on the recent mortgage robo-signing crisis. The challenges we have faced in Michigan concerning property fraud have been unlike anything we have ever seen before, and you have been actively engaged in this fight with myself and the other Michigan Registers of Deeds.
As you know, the deadline for Michigan to sign on to the 50-state mortgage fraud settlement is February 3rd. I recognize that this is a difficult decision, and that there are many factors to consider.
I am writing to ask that you stand firm, and refuse to add Michigan to any settlement that would give criminal immunity to the defendants. Our ongoing investigations have demonstrated that the major banks in this settlement, and their hired document mills, were engaged in the practice of robo-signing. Hundreds of residents here in Ingham County, and thousands of residents across the state, were illegally foreclosed upon because of this practice.
These illegalities have stolen due process from our own citizens, and robbed them of precious time that could have been used to recover and resume their mortgages, or obtain a modification. A family who is facing a foreclosure is already vulnerable; this practice insured that they could not possibly reclaim their home.
We have even received information in recent days that shows LPS, a document mill included in the proposed settlement, specifically requested to have this criminal investigation converted to a civil lawsuit. It seems clear that they are aware of their vulnerability to these charges, and are attempting to save their company’s stock price by avoiding responsibility.
All I am asking is that we treat the banks in the same way we would treat our own citizens. If a person in Michigan were to commit fraud and forgery, and use these practices to take someone’s property, that person would go to jail. I respectfully request that we leave that same possibility open for the banks and corporations that have committed those same crimes here in our state.
Sincerely, Curtis Hertel Ingham County Register of Deeds
Religious and community groups urged Attorney General Pam Bondi on Monday to take a tougher stance on a proposed settlement with the nation’s five largest mortgage lenders over deceptive foreclosure practices.
A pair of ministers and an evicted former homeowner delivered a letter after holding a news conference outside Bondi’s office at the Capitol.
They contend the proposed $25 billion national deal that Bondi supports doesn’t go far enough. They say that’s because the negative equity on homes in Florida alone is about $120 billion.
The BIG question remains, What happens if there is origination fraud? Will there be a separate fund for victims in this instance?
HuffPO-
In a letter dated Friday, emailed to federal officials and obtained by The Huffington Post, Nevada’s attorney general, Catherine Cortez Masto, asked 38 questions referencing a variety of concerns, including fears that states would play second fiddle to the federal government in making decisions. She also questioned if the states would lose their ability to pursue certain types of lawsuits against banks and whether the states would get their fair share of the housing assistance for their borrowers.
“What would happen if all of the state attorney general representatives had one view and the federal agencies disagreed?” Masto asked in her letter.
Recent Comments