Foreclosure Offense: Identity Theft by “lenders” and Investment Banks

According to the stats, it appears as though there are around 400 lawyers using the blog as a resource. Most of them use the material without posting any comments or results. So now I want you guys to return the favor. I had a thought that I’d like some feedback on.

The typical case of identity theft involves getting the personal information and signature (electronic or actual) and using it for your own personal gain in ways that the victim is unaware without the victim’s consent. If you get me to sign something and give you my address and social security number, you can pretty much do anything as me even though it isn’t me. You can apply for credit, issue securities as officer of a corporation, start bank accounts, make deals and profit handily until the cops come knocking on your door. Of course if you can show the cops that you had my permission to act in my name, then the crime goes away. But then the jail door slams shut anyway when it is shown that you obtained my signature under false pretenses.

So here we have a mortgage broker and a “lender” getting every scrap of personal information about borrowers and getting their signatures on papers that nobody reads or understands. They pass on these signed papers along with third party agreements that the borrower knows nothing about. Some of the agreements (assignment and assumption, pooling and service, collateralization, credit default swaps, insurance, hierarchical guarantees of tranches) actually change the way the payments are allocated to and from this particular loan account — contrary to the terms of the note signed by the borrower.

And they end up selling the borrower’s name and signature to an investor under false pretenses as to the value of the property and the income and assets of the borrower, all of which contains the signature of the borrower, but none of which is true. In fact most of the falsification was done either without the knowledge of the borrower or at the insistence of the “lender”.

And of course as we have seen the “lender” is only a “pretender lender” who was hired to play the part, and whose charter or license was rented by a non-bank, unregulated lender/investor. Seems like a classic con game to me.

OK, the question is, why isn’t this identity theft and why don’t the criminal and civil penalties apply?

2 Responses

  1. is it “consent” if it’s based upon a fraudulent misrepresentation or failure to disclose?

    in AZ

    13-2008. Taking identity of another person or entity; knowingly accepting identity of another person; classification
    A. A person commits taking the identity of another person or entity if the person knowingly takes, purchases, manufactures, records, possesses or uses any personal identifying information or entity identifying information of another person or entity, including a real or fictitious person or entity, without the consent of that other person or entity, with the intent to obtain or use the other person’s or entity’s identity for any unlawful purpose or to cause loss to a person or entity whether or not the person or entity actually suffers any economic loss as a result of the offense, or with the intent to obtain or continue employment.

  2. California White Collar Crime Criminal Sanctions and Civil Remedies

    Matthew Bender & Company, Inc., a member of the LexisNexis Group.


    Chapter 1 Complex Theft Offenses

    � 1.900 IDENTITY THEFT

    In 1997, the California Legislature added Penal Code section 530.5 to create the explicit offense of ”identity theft,” and expanded the statute in 1998 and again in 2002. Any person who willfully obtains personal identifying information of another person and attempts to obtain credit, goods, services, or medical services without consent shall be guilty of a wobbler misdemeanor/felony. The statute includes common identification indicia in its list of ”personal identifying information,” i.e., name, address, telephone number, driver’s license number, social security number, place of employment, employee ID number, mother’s maiden name, bank and credit account numbers. The statute was amended in 2002 to expand identification indicia further to include, among other things, checking account numbers, passport numbers, date of birth, credit card number, biometric data (including fingerprint, facial scan identifiers, voice print, retina or iris image, or other unique physical representation), and personal identification numbers or passwords. (Pen. Code, � 530.5(b).) The 2002 amendment also expanded liability beyond ”willfully obtaining” the personal identifying information of another person to include as a misdemeanor offense the transfer or retention of that information with ”the intent to defraud.” (Pen. Code � 530.5(d).)

    In 2001, the law was amended to eliminate the ”without consent” element (AB245 (Wyland)). Hence, as of 2002, the use of such information ”for an unlawful purpose” constituted a violation. A person could therefore consent to the taking of some personal information for a consented purpose–and its expropriation for another (unlawful) purpose would be a violation.

    Also in 2001, the Legislature enacted SB125 (Alpert) to allow voctims of identity theft to file a police report and obtain information from financial institutions and credit card companies about false identification in their name–overcoming Right to Financial Privacy Act impediments.

    It looks like that elimination of “without consent” might just make this an actionable offense in my opinion.

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