Barney Frank, Alan Grayson, Corinne Brown Come Through With Sharply Worded Letter To FNMA


9.24.10 BARNEY FRANK LETTER-Letter-to-Fannie-on-Foreclosure-Fraud[1]


In a blunt, no nonsense letter to Fannie Mae three congressional representatives including Barney Frank who has enormous clout, a shot heard round the country was heard. It wasn’t just a letter of inquiry or even at the level of complaint. It was an accusation and a demand that FNMA comply with law and stop employing foreclosure mills who violate the law in the name of the former government sponsored entity which is now wholly owned by the U.S. Government. We can expect similar action from congress and other agencies as the fog starts to lift and public officials come to realize what the rest of us have known for three years — the whole foreclosure mess is a fraud, should never have begun and the resulting horrific consequences on people’s lives could have and should have been avoided.

44 Responses

  1. And he’s a Rep, not a Senator.

  2. Hope this Link shows the Youtube otherwise click:
    Sen Grayson speaking the TRUTH.

  3. Thanks for the info, Anonymous. My head is spinning from all this. One moment it all seems clear, the next I hear about a new wrinkle.

  4. zurenarrh,

    There is a distinction between securitization of receivables and “whole loan” ownership.

    Part of the problem is the complexity of the securitization process. If loans met Fannie/Freddie conforming guidelines – including loan limits – loan ownership was/is likely with Fannie/Freddie. But, the receivables were sold to Wall Street for securitization – pass through of current payments to security investors. Have said many times, securities must be for CURRENT payments only. Bernancke emphasized this a the height of the crisis. ONLY CURRENT PAYMENTS PASS THROUGH in securitization. And, we now know by the Federal Reserve Interim Opinion (now Rule) of the May 2009 TILA Amendment – that security investors are NOT the creditor.

    Now, what happened to repurchases and what happens to delinquent loans? Repurchases remove the loan from the original security trust (actually loan was never placed in trust – although it may still be reflected on original “Mortgage Schedule”- and there is no way to search to see if your loan was a repurchase – or to a find a current “Mortgage Schedule” (any distribution report only tracks the original Mortgage Schedule). However, many repurchases were synthetically “resecuritized” into scratch and dent transactions – which are not MBS pass-throughs due to the misrepresentation/warranties/early payment default that prevents traditional MBS securitization. It this case, you have to know the entity that purchased the “whole loan.” And, many do not know that your first payment may have been fraudulently withheld from the trustee – placing you in “early payment default” – even though you not in default. (Wells Fargo did admit in one SEC doc that early payment defaults were erroneously miscalculated). This system was manipulated by third parties entities (distressed debt buyers) who may have targeted your home (particularly if there was equity).

    Similarly, delinquent loans are only in trust for a short period – during this period the servicer will advance any delinquent payments to the trustee to the trust. Once servicer deems loan as “non-collectible” – the servicer no longer has to advance payments to trustee to trust. In most debt collection, “charge-offs” (of the receivables” occur at 180 days. This does not mean that the loan owner has to sell collection rights – they may keep them. Most often, however, your loan is placed in a portfolio with other delinquent loans with collection rights sold to a third party. It very important to try to get the Trustee ledger – to trace when loan was removed from trust that is – servicer advance payments ceased to trustee.

    The bottom line is – who currently owns the collection rights to the “whole loan” – the receivables no longer matter.

  5. Bust Fannie,
    Don’t know what “FNMA SS IO 3027” means. My pool number was CL and then a 6-digit number. Maybe go to “Pool Talk” at (or and try to search there. There are a few ways to search for things on and there is a lot of info there.

  6. All of your questions are answered here:

    every player in the Model is contractually bound to the “Guides”


  7. Extrapolating a bit from my epiphany below, it stands to reason that there is no Note Holder in a securitization scenario. And the promissory note plainly states that the Note Holder is the person to whom money is due from the borrower. Well, since there is no Note Holder, who does the borrower have to make payments to?

    Neil has probably pointed out this exact conundrum many times, but again, it’s just now starting to take hold in my mind. I know that Neil has said many times that just because party A or party B may not be entitled to payments doesn’t mean that an obligation doesn’t exist.

    But now that I think about it some more, the existence of an obligation is pretty much a moot point if there is no one to pay the obligation to as spelled out in the contract/note. In other words, the note says I am to pay the person who has taken the note by transfer AND who is entitled to receive payments under the note. But, in the context of securitization, no such person exists.

    Could such a person come back into existence if the note was repurchased? Like if Bank of America repurchases a securitized note from Fannie Mae, Bank of America may take the note by transfer from Fannie Mae. But since Fannie Mae had sold its right to receive payments, does that automatically transfer to Bank of America? How could it, since the right to receive payments did not belong to Fannie Mae? But If the right to receive payments does not automatically transfer to Bank of America in such a scenario, why would Bank of America repurchase a note unless Bank of America had to under a repurchase agreement in the PSA or the MLPA?

    And how does UCC 3 fit in with all this? OK…gotta go to bed…

  8. Had somewhat of an epiphany reading over my promissory note this evening.

    My note defines a “Note Holder” as: “anyone who takes this Note by transfer and who is entitled to receive payments under this Note.” I would imagine most, if not all promissory notes, contain that language exactly or language similar to it.

    Therefore, to be a “Note Holder,” a person has to fulfill two simple criteria: 1) take the note by transfer AND 2) be entitled to receive payments under the note. Having to fulfill both of those criteria, it seems to me, keeps a goodly percentage of ALL of the would-be foreclosers from being noteholders.

    That’s because even though all of these trustees for XYZ Trust may have taken the note by transfer and be able to produce it, that doesn’t mean that they are entitled to receive payments under the note. In fact, the trustees AREN’T entitled to receive payments under the note–the investors in the securities are.

    Therefore, as Neil has constantly said, foreclosure is impossible because BOTH criteria in the note must be fulfilled, and neither the trustees nor the investors can meet both of them because the trustees have the note but not the right to get the payments and the investors have the right to the payments but don’t have the note.

    Food for thought, if nothing else.

  9. Hi Abby


  10. Oky1

    The justification for the bailout – simply put – was a decision that was thought to better the country as a whole.

    It is an analogy to the old boat story – in which it is determined that the best individual to survive is the one who will help the most people – all the others are simply casualties.

    When the bailout was decided – it was determined that it was in this country’s best interest to bail out the big banks – due to the international repercussions – and that there MUST be individuals who will take the hit for the betterment of the US financial market/economy as a whole. THIS WAS A CALCULATED DECISION. And, victims of mortgage origination and foreclosure fraud – were to take the hit. This IS HOW it was decided.

    And, yes, perhaps a financial meltdown was prevented – but, only for the moment. The real issues were never resolved – it was a band-aid solution to a long-developing crisis – that would, in effect, effectually polarize US economic recovery. And, in addition, further multiple and harm numerous victims (casualties) of fraud.

    As the days, months, years, went by – it is now clearly apparent that the immediate answer to prevent a financial meltdown was – greatly flawed. And I, among many others here, – resent being a “casualty ” of fraud. I resent that I must suffer – in order to prevent meltdown – for the so-called (false) “betterment” of the financial world in general. Further, any mechanisms used to avert the financial meltdown were – simply – temporary in nature. Believe, that those that participated in those decisions are now currently aware that the immediate decisions were not a permanent fix for a very destructed US financial system.

    Again, we were the scapegoats. We were the ongoing victims. We were sacrificed to allow the banks to continue – at our expense – for the betterment of a system that was greatly flawed and fraudulent from the onset.

    I will not be a victim. I will fight to stand up to the fraud. I will no longer be a scapegoat. I will no longer be a casualty. I will fight – to survive- at all costs. I will not support a financial system that allows me to me a victim of fraud – for the betterment of falsely perceived country’s financial system as a whole. I will join together to fight the fraud, to fight the cover-up, and to fight the political decision to sacrifice my rights – for ta greatly destructive financial system,. I will not be a part of a fraudulent system – I will not, myself, be a victim of system that will never better the country as whole. No system of fraud will ever promote a better US financial/economic system. We must address the flaws – resolve them, and move on from there. We will not be a victim anymore. We will survive – because we, all the people, are America.

  11. In case some of you missed this story earlier this week check out the utter contempt this Gov. Welfare Queen Charles Munger has for the American people.

    Yes he’s pretty old & at 1st glance I thought it might be dementia setting in, but upon reflection I think the ole fool, Gov. Welfare Queen, actually believes what he said.

    ** “You should thank God” for bank bailouts, Munger said in a discussion at the University of Michigan on Sept. 14, according to a video posted on the Internet. “Now, if you talk about bailouts for everybody else, there comes a place where if you just start bailing out all the individuals instead of telling them to adapt, the culture dies.”

    “Hit the economy with enough misery and enough disruption, destroy the currency, and God knows what happens,” Munger said. “So I think when you have troubles like that you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.” **

    Further, I’m not in complete agreement with Mish’s take on Munger & the broader US economy, but here is what he wrote on his website:

  12. The Wallst Banks/Insurance Co’s & the Gov. have hired thousands of people to come on to massage bulletin boards like this one & others to attempt to guide our conversations & get you & other readers to surrender your “Rights” & to go along like mindless sheep to slaughter. Ignore them!

    Don’t believe them for a second! The American people, (& of the world), are having a major effect on these crooked Wallst firms & their DC puppets.

    You can witness the proof yourselves & others are having an effect everyday if you just look around a bit.

    Consider this: If DC bailed out the Wallst Banks/Insur. Firms & now everything is just fine with them then why is it countries like Portugal, Ireland, Italy, Iceland & Greece continue to need ongoing bailouts by the US Federal Reserve, (IE;US Taxpayers)???

    If everything is fine then how/why is it 3 major US Wholesale Credit Unions imploded Friday evening requiring an emergence US taxpayer bailout????

    Consider last year about this time, with the Taxpayer funded bail outs through the TARP funds, 750 billion, which Wallst was said to have leverage approx 33%, estimated at about $24 Trillion bucks, was only able to clean up 10% of AIG’s financial mess. That still left 90% out there needing cleaned up.

    Yes, hard numbers are hard to come by, but we still see the Wallst Banks/Insur firms continue to implode & we know why!!!

    Wallst/DC never wanted to modify your loans as those suicidal sociopaths wanted your homes & businesses/farms in foreclosure so they could collect off their multiple fraudulent insurance policies (securized CDOs/CDSs/MBSs etc..), written against your properties/assets.

    Don’t let yourselves be ignorant sheep lead to slaughter. If your loans/investments were securitized then figure out how you can hire a forensic investigator to track down how/where Wallst is hiding the proof your loans/investments were part of their grand scheme to defraud you. Then you’ll have the info to attack them with in court.

    There are many other peaceful actions you can take. You should not continue doing business with people/corporations you suspect of running an ongoing criminal enterprise.

    Shun them all!

    Close your accounts with them.

    For example, my wife & I believe Walmart is now an un-American corporation so over the past 3 to 4 years we’ve been able to almost completely stop doing any business with them.

    And over the past couple of quarters I can hear Walmart’s management moan/groan in the news that their sales are dropping & they are trying to fix it.

    Goodluck Walmart, my wife & I are done with your sort of corporate trash!

    Look around you, the voting system is largely rigged, (blackboxvoting DOT Org), find other peaceful means you can take to protect your own personal/business interest today!

  13. ANONYMOUS–nobody can figure out what just happened when gold broke thru 1300 per ounce last week and the stock market rose that day.

    usually if gold goes up, market goes down

    there has to be some artificial ‘propping’ of the market going on

    there have been rumors swirling that Ft. Knox does not contain all the gold that we have been told is supposed to be in it

    any comments on Ft. Knox?








    You can’t see the forest for the trees!!!

    The GSE Model has “players”. The first players are the politicians who first gave the implicit guarantee on the GSE MBSs. If there was no guarantee—–there would have been no meltdown.

    Sit down and chart the “players” and it will dawn on you that they are all in it together, each and every player being paid, with the taxpayer footing the bills.

  16. Zurenarrh,

    Thank you for your explanation. I too have been struggling to understand Fannie’s role in all this. Even though Neil explained it well here, it’s all just so effin unbelievable:

  17. According to Frank, Grayson, and Brown, Fannie Mae is “at this point, a government entity.” That’s not how Fannie’s conservator, the FHFA, sees it. I have a letter from FHFA turning down my FOIA appeal telling me that Fannie is a private company.

    In other words, according to the FHFA, Fannie is still a private company beholden only to shareholders and the profit motive, despite Fannie being saved from bankruptcy and ruin by we the taxpayers. Therein lies the reason that Fannie has now made it official policy to have servicers use MERS to “assign” notes and mortgages from MERS to servicers even though MERS doesn’t hold any notes or mortgages and therefore any assignments to servicers are null and void. But at least Fannie doesn’t have to be in the foreclosure business, because if Fannie tried to foreclose in its own name, people would get wise, and begin to ask themselves “Why is a company that has been bailed out by taxpayers to the tune of billions if not trillions of dollars and is being run by the government taking my house? I bail them out and they throw me out on the street? Screw that!”

    In my case, my servicer has admitted this. When I called them on it, they said, “OK, you’re right–we don’t hold the note; Fannie does.” However, looking at Fannie’s prospectuses, trust indentures, and agreements, it is clear that Fannie holds nothing and that Neil has been right all along. The investors/certificateholders in the Fannie Mae trusts are the noteholders, not Fannie Mae. Fannie Mae is only a trustee of its trusts.

    Not only that, Fannie Mae is merely a servicer for these noteholders, by Fannie’s own admission and as such, just like the “subservicers” that you and I deal with, Fannie doesn’t “hold” anything. Fannie Mae is no one’s creditor.

    I know none of this info is really new, but I have just recently begun to piece it all together where it has really sunk in.

  18. ANy help I can get-

    BAC is my servicer, they have told us 5 different entitites own our loan via RESPA QWR responses. The one I can not find or track down is they said:

    FNMA SS IO 3027 is the investor

    DOES ANYONE know what this all stands for, I get the FNMA part?

  19. It’s called the “GSE BUSINESS MODEL”.


    If the GSEs demand repurchase due to breach of warranties and representations of THEIR contractors………………the borrower will get relief from their antics.

  20. […] This post was mentioned on Twitter by kim thomas and Social Apocalypse, Financial Wellness. Financial Wellness said: 9.24.10 BARNEY FRANK LETTER-Letter-to-Fannie-on-Foreclosure-Fraud[1] In a blunt, no nonsense letter to Fannie Mae … […]

  21. Hopefully these usurious bastards will soon be digging ditches next to the ones in which they enslaved.

  22. NOt impressed…. Wow stop it people… stop it banks,

  23. Bill Kay,


  24. Last month I applied for a job at FNMA and FDMAC as a mortgage analyst, they turned me down. I guess, I did not fit their profile.

    may be I was not willing to forge documents, lie, and cheat. Well, too bad.

    If you want to lie, cheat and steal homes apply to any of the following outfits:


  25. All I want is for the crooked layers and their minions to give me a full break down of where is the money, where is the beef?

    show me the money BABY!

    After that we can sit down and negotiate.

    GMAC Drew `False Testimony’ Sanction Years Before Eviction Halt
    By Dakin Campbell and Lorraine Woellert – Sep 23, 2010 8:46 AM ET

    Ally Said to Tell Freddie Mac of Faulty Foreclosures

    Fannie Mae , the largest government-backed mortgage firm, said it notified lawyers of flaws in GMAC documentation after it was alerted. Photographer: Bradley C. Bower/Bloomberg

    Ally Financial Inc.’s GMAC Mortgage unit, which suspended evictions in 23 states last week after finding employees didn’t verify foreclosure documents, was sanctioned in 2006 for similar practices, court records show.

    GMAC gave “false testimony” when it justified foreclosures by submitting sworn affidavits signed by a mortgage executive who later said in a deposition she didn’t actually review the loan documents or sign in the presence of a notary, according to a 2006 court order filed in Duval County, Florida. In response to the sanctions, GMAC Mortgage directed employees to “read and fully understand” court documents before signing.

    “Do not sign unless you have that comfort level,” said a policy directive from GMAC Mortgage’s James Barden, then- associate counsel for the legal staff. “It is the integrity of our cases that is at stake and we cannot afford anything less than full accuracy.”

    GMAC Mortgage is facing new allegations in court documents that it evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, the Detroit-based auto and home lender, said this week it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

    Loan Industry

    Ally declined to say how many loans may be affected. The firm, formerly known as GMAC Inc., ranked fourth among U.S. home-loan originators in the first six months of this year with $26 billion, and fifth among loan servicers, with a $349.1 billion portfolio, according to Inside Mortgage Finance, an industry newsletter. It’s also the beneficiary of more than $17 billion in U.S. bailout funds.

    Servicers conduct billing and collections on mortgages, sometimes for other firms that actually own the loans, and handle foreclosures when borrowers default.

    Gina Proia, a spokeswoman for Ally, confirmed that a policy directive was issued in 2006, “but we recently became aware of a breakdown in the process. The process has since been addressed and the prior practice is no longer taking place.”

    Mark Paustenbach, a spokesman for the U.S. Treasury Department, which owns 56.3 percent of Ally, declined to comment. Kim Fennebresque, a director named by the Treasury to serve as an independent board member, didn’t return calls.

    In a statement earlier this week, Proia said “the entire situation is unfortunate and regrettable and GMAC Mortgage is diligently working to resolve the situation,” and that “there was never any intent on the part of GMAC Mortgage to bypass court rules or procedures.” Florida was among the 23 states where evictions have been halted.


    Lawyers defending borrowers have accused mortgage firms including GMAC and JPMorgan Chase & Co. of foreclosing on homeowners without making proper efforts to verify the accuracy of the documents. In foreclosure cases, companies typically file affidavits to start court proceedings. Affidavits are statements written and sworn in the presence of someone authorized to administer an oath, such as a notary public.

    The 2006 case stems from a GMAC Mortgage foreclosure that began in August 2004 on a home owned by Robert and Lillian Jackson. The filing included an affidavit signed by a GMAC officer laying out the amount owed on the loan.

    Florida Circuit Court Judge Bernard Nachman sanctioned GMAC in May 2006, saying that the company “submitted false testimony to the court in the form of affidavits of indebtedness.” The company was ordered to submit an explanation and confirmation that the policies were changed, and told to pay defendants’ legal costs of $8,135.55.

    Legal Directive

    GMAC’s legal department issued a statement afterward that told employees “not to sign verifications on court pleading documents unless you have independently reviewed and checked the facts.” The policy, distributed in June 2006, also stated in italics and boldface that employees should sign documents only in the presence of a notary. GMAC told the court four years ago that the policies were “being corrected.”

    In December 2009, a GMAC Mortgage employee said in a deposition that his team of 13 people signed about 10,000 affidavits and other foreclosure documents a month without verifying their accuracy. The employee’s supervisor is the same executive sanctioned in the 2006 case.

    GMAC’s internal review discovered the new discrepancies “a few months ago” and halted the practice, according to Proia’s statement earlier this week. Barden, who wrote the 2006 directive, and the two employees still work at GMAC, Proia said. Barden didn’t return a request for comment left on his work phone.

    GMAC Impact

    “They’re acting like this is a new problem,” said O. Max Gardner III, a bankruptcy attorney at Gardner & Gardner PLLC in Shelby, North Carolina, who isn’t directly involved in either GMAC case. “It’s the exact same thing,” Gardner said. “This is not just a GMAC problem. This is an industry-wide problem.”

    Deborah Rhode, a Stanford University law professor and director of the school’s Center on the Legal Profession, said GMAC Mortgage’s behavior may amount to misleading the court.

    “It’s not ‘technical’ when people attest under oath to knowledge they don’t have, and it doesn’t matter that in fact there isn’t actual error or discrepancy,” Rhode said. “Any court would take this very seriously.”

    Judges could decide to dismiss the foreclosures, sanction the attorneys and company or levy a “substantial” financial penalty that would “get their attention,” she said.

    The U.S. took control of Ally as part of a larger effort to prop up auto manufacturers. On a national level, regulators and lawmakers are trying to persuade bankers to avert foreclosures as seizures of homes by banks set records. Bank repossessions climbed 25 percent in August from a year earlier to 95,364, according to RealtyTrac Inc., the Irvine, California-based data provider.

    To contact the reporters on this story: Dakin Campbell in San Francisco at; Lorraine Woellert in Washington at

    To contact the editors responsible for this story: Alec McCabe at Lawrence Roberts at

  26. All I want is for the crooked layers and their minions to give me a full break down of where is the money, where is the beef?

    show me the money BABY!

    After that we can sit down and negotiate.

  27. Those affidavits are not factually correct if they do not include all the fees and third party payments made into the account.

    I want a full accounting of all fees paid into the account from the inception of the loan until now. And if the loans were sold forward as they generally were, the clock starts at that time.

    by doing a full accounting those loans , all seven million loans and homes that have been foreclosed become fully non compliant with TILA and will be full of RESPA violations and then we can start by using the RICO statutes as well. On top of this all the fraud and forged docs.




    Ally Issues `Robust’ Policy, Adds Staff for Foreclosure Process
    By Dakin Campbell – Sep 24, 2010 4:29 PM ET

    Ally Issues ‘Robust’ Policy, Adds Staff

    Michael Carpenter, chief executive officer of Ally Financial Inc. Photographer: Melissa Golden/Bloomberg

    Ally Financial Inc., whose GMAC Mortgage unit halted evictions in 23 states last week, said it has issued a “more robust policy” on processing foreclosures, increased staff to handle documents and instituted more training for employees.

    GMAC Mortgage notified agents and brokers on Sept. 17 that it had suspended evictions in 23 states. Ally, the Detroit-based auto and home lender run by Chief Executive Officer Michael Carpenter, said this week that it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true. GMAC was sanctioned in 2006 for similar practices, and issued a new policy at the time, court records show.

    “Preserving the integrity of the foreclosure process is of the utmost importance,” the lender said today in a statement. “While we are exercising an abundance of caution in the review process, we are confident that the processing errors did not result in any inappropriate foreclosures.”

    GMAC didn’t say how much more staff it added to process foreclosures.

    Attorneys general in Texas, Iowa and Illinois have started investigations into foreclosure practices at the company, and California Attorney General Jerry Brown today asked GMAC to prove that it’s obeying the state’s laws.

    “GMAC Mortgage apologizes for the error and any related confusion and is working to resolve the situation expeditiously,” according to the statement. The company said it expects to remedy the “vast majority” of the issues by the end of the year.

    To contact the reporter on this story: Dakin Campbell in San Francisco at

    To contact the editor responsible for this story: Alec McCabe at

  29. Save Americans by Sticking It to Them: Jonathan Weil
    By Jonathan Weil – Sep 24, 2010 4:00 PM ET

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    Bloomberg Opinion

    Jonathan Weil

    (Corrects figure in 12th paragraph from Congressional Oversight Panel for number of Ally directors appointed by Treasury Department, in column published Sept. 23.)

    The banks were saved by the American people. Now who will save the people from the banks?

    Last week, in a rare and possibly fleeting victory for the little guy, Ally Financial Inc.’s mortgage-servicing unit temporarily halted evictions tied to foreclosures in 23 states. This came after some attorneys for homeowners caught the company saying things that weren’t true in its court filings.

    There’s no sense complaining to the federal government about Ally’s conduct, though. That’s because the Treasury Department is the company’s majority shareholder, after spending $17.2 billion of bailout money on Ally under the Troubled Asset Relief Program.

    While the Treasury’s policy is to stay out of the company’s day-to-day affairs, the mess at Ally offers a fine example of why TARP is so politically unpopular.

    In Florida and many other states, the law requires lenders and mortgage-servicing companies to jump through numerous hoops before they’re allowed to foreclose on a person’s home. These include having employees provide local courts with sworn, notarized statements about customers’ loans that they personally know to be true. These pesky requirements proved too much for Ally to follow.

    10,000 Affidavits

    So acknowledged a 41-year-old middle manager at Ally’s GMAC Mortgage unit, Jeffrey Stephan, during a December 2009 deposition, in which he estimated that he signed “a round number of 10,000” affidavits and other foreclosure documents a month. Stephan, a team leader overseeing 13 people in the company’s foreclosure department, said he relied on outside law firms to verify the records’ accuracy, rather than checking the facts himself. Nor was a notary present when he signed the affidavits, which were used in the process of repossessing homes and evicting residents.

    Ally, the former General Motors unit that used to be called GMAC Inc., says such problems were merely technical defects, albeit unfortunate and regrettable ones. There will be “no interruption in new foreclosures,” the company said in a Sept. 20 press release, as if this were supposed to provide reassurance. Meanwhile, some Florida law firms representing the company have withdrawn affidavits signed by Stephan. The Florida attorney general’s office says it’s investigating.

    Back in December 2009, the head of the TARP program, Herbert Allison, told Congress the government had no intention of getting involved in the daily management of the companies it bailed out.

    Protecting Taxpayers

    “Our responsibility is to protect the taxpayers’ investment,” said Allison, the assistant Treasury secretary for financial stability. “Government involvement in the day-to-day management of a company might actually reduce the value of these investments, impede the ability of the companies to return fully to being privately owned, and frustrate attainment of our broader economic policy goals.”

    With the benefit of hindsight and a little rephrasing, the government’s policy is clearer now: We have to let these bailed- out banks keep screwing the American people, in order to keep the American people from getting screwed on their investments in these bailed-out banks.

    If this helps preserve the value of Cerberus Capital Management’s 14.9 percent stake in Ally, oh well. Hold your nose, we’re told, because it’s for the greater good. And never mind that this private-equity firm’s chairman happens to be a former Treasury secretary, John Snow. Just optics, you know.

    No Difference

    It’s not as though the government is asserting its full rights as a 56.3 percent shareholder of Ally, either. Under the terms of Ally’s bailout, the Treasury received the right to name four directors to Ally’s nine-member board. So far, Treasury has appointed three.

    It makes no difference how many loan-modification programs the government creates, or what new consumer-protection agency Elizabeth Warren gets hired to lead. As long as the Treasury is supporting a company such as Ally, Americans will be right to conclude the government is two-faced and working against their own best interests.

    The problem of mortgage companies filing false court documents stretches beyond Ally. In August, for instance, a Florida circuit court judge blocked a Jacksonville foreclosure by Washington Mutual and JPMorgan Chase & Co., which had purchased the failed lender’s assets. The judge, Jean Johnson, wrote that WaMu and its law firm “committed fraud on this court.” As Bloomberg News reported on Sept. 21, JPMorgan had presented a document that showed WaMu had bought the mortgage, when actually it was still owned by Fannie Mae.

    Bailout Culture

    While JPMorgan has repaid its TARP money, Ally hasn’t. Given the government’s investments, it would be hard to fault anyone for thinking the Treasury condones this sort of behavior.

    This is what infuriates so many Americans about the bailout culture. When banks break the rules, consumers are supposed to be able to turn to the government for help. When Ally breaks the rules, though, it’s the Treasury’s own company that’s doing it.

    Our government isn’t supposed to prey on its own people in the name of protecting our investments. It never should have gotten in this business in the first place.

    (Jonathan Weil is a Bloomberg News columnist. The opinions expressed are his own.)

    To contact the writer of this column: Jonathan Weil in New York at

    To contact the editor responsible for this column: James Greiff at

  30. Ally Said to Tell Freddie Mac of Faulty Foreclosures Weeks Ago
    By Lorraine Woellert and Dakin Campbell – Sep 24, 2010 12:01 AM ET

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    GMAC ‘False Testimony’ Sanction Years Before Eviction Halt

    Fannie Mae , the largest government-backed mortgage firm, said it notified lawyers of flaws in GMAC documentation after it was alerted. Photographer: Bradley C. Bower/Bloomberg

    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.”

    Ally faces allegations that its GMAC unit evicted homeowners without verifying that borrowers actually defaulted or whether the firm had legal standing to seize the homes. Ally, Freddie Mac and Fannie Mae are majority-owned by the U.S. government, which has been pressing lenders to reduce foreclosures as evictions hit record levels.

    Ally notified agents and brokers last week that it had suspended evictions. This week, Ally said it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

    Ally said earlier this week it recently became aware that its process for ensuring foreclosures were done properly had broken down, and that it has since been corrected. The company said that aside from signing the affidavits without knowledge or a notary, the details of the files were “factually accurate.”

    Freddie Mac had almost $118 billion worth of non-performing single-family loans at the end of June. The company completed almost 153,600 foreclosures in the first half of this year and had more than 62,000 foreclosed homes in its inventory, according to a filing with the Securities and Exchange Commission.

    Fannie Mae and Freddie Mac own or guarantee more than half of the $11 trillion U.S. home mortgage market. The companies are almost 80 percent owned by the government, which took them over in September 2008 after declining home prices pushed them to the brink of collapse. The U.S. holds a 56.3 percent stake in Ally.

    To contact the reporter on this story: Lorraine Woellert in Washington at; Dakin Campbell in San Francisco at

    To contact the editor responsible for this story: Lawrence Roberts at

  31. Texas, Iowa, Illinois Investigate GMAC Foreclosures
    By Margaret Cronin Fisk, Lorraine Woellert and Joel Rosenblatt – Sep 24, 2010 4:03 PM ET

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    Attorneys general in Texas, Iowa and Illinois, following Florida, have started investigations into mortgage practices at Ally Financial Inc.’s GMAC unit while California has ordered the company to prove its foreclosures are legal or halt them.

    California Attorney General Jerry Brown said today in a statement that he is “demanding that Ally Financial, the fourth largest home loan institution in the country, demonstrate its compliance with California law or else halt all foreclosure operations in the state.”

    Iowa, which leads an 11-state working group of attorneys general and bank examiners exploring ways to prevent foreclosures, opened an inquiry yesterday.

    “The integrity of the foreclosure process is of utmost importance and we are very concerned by the issues that have been raised regarding Ally Financial’s treatment of affidavits,” Iowa Assistant Attorney General Patrick Madigan said.

    Texas Attorney General Greg Abbott opened an investigation “early this month,” said Tom Kelley, a spokesman for the office. Illinois Attorney General Lisa Madigan asked for a meeting with the company and requested information about how homeowners in the state have been affected, according to a statement.

    The action by officials in the four states follows an announcement by Florida Attorney General William McCollum, who last month said he was investigating three Florida law firms handling foreclosures.

    Florida Subpoenas

    Florida investigators issued subpoenas in the case to the Law Offices of Marshall C. Watson PA; Shapiro & Fishman LLP; and the Law Offices of David J. Stern P.A., according to a news release posted on the attorney general’s website.

    The law firms were hired by loan servicers to begin foreclosure proceedings when consumers were behind on their mortgages, according to McCollum’s office.

    Homeowners facing eviction have accused the companies of filing foreclosure actions without verifying that borrowers actually defaulted or who owns the loans.

    GMAC Mortgage notified agents and brokers on Sept. 17 that it had suspended evictions in 23 states. This week, Ally, the Detroit-based auto and home lender, said it found a “technical” deficiency in its foreclosure process allowing employees to sign documents without a notary present or with information they didn’t personally know was true.

    GMAC said today in a statement that the problem was identified and then corrected “a few months ago.” The defects didn’t occur in all foreclosure cases in the 23 affected states, according to the statement.

    ‘Procedural Error’

    “Regrettably, a procedural error was found to have occurred in certain affidavits required in certain states,” the company said. “The error is not related to the accuracy of the underlying transaction or the ultimate decisions to have exercised the foreclosure proceedings.”

    California wasn’t on the list of states where Ally halted foreclosures. These 23 states have a system that requires a court order for foreclosure, unlike California, Brown’s office said in its statement. Ally has continued its foreclosure operations in California, the state said.

    California law prohibits lenders from recording defaults on mortgages made from Jan. 1, 2003, to Dec. 31, 2007, unless, with some exceptions, the lender and borrower determine eligibility for a loan modification, Brown said in the statement. Brown cited reports that Ally approved foreclosure documents without confirming that they complied with state law.

    Consumer Fraud Act

    Illinois’ Madigan said GMAC Mortgage may have violated the state’s consumer fraud act. Madigan requested information about Illinois homeowners affected by GMAC’s suspension and the names of law firms in the state that work with the company on processing foreclosures.

    “If I determine that Ally is rubber-stamping affidavits and filing them with our courts as evidence, I will take appropriate action,” Madigan said in the statement. “The law demands that lenders prove their case in foreclosure actions, and Illinois homeowners demand the same.”

    To contact the reporters on this story: Lorraine Woellert in Washington at; Margaret Cronin Fisk in Detroit at; Joel Rosenblatt in San Francisco at

    To contact the editors responsible for this story: Lawrence Roberts at; David E. Rovella at

  32. Let us put our foot down. This is the time. I have said it before, we have in our hands their seats in congress. If we play it right they will listen, if not we will kick them out.

    Today I called NPR at noon time and ask the Democratic candidate for our district here in norther Virginia, he is running against Mr. Frank Wolf and he had no response. He was actually taken off guard. His response was that he was going to propose legislation to push the pretender lenders to be more flexible with the short sales. What a dumb ass.

    Some of these politician cannot discern a an owl from an eagle. I put it to him so he could hit out of the park. And he just blew it there were over 100,000 people listening that radio show.
    I wrote to all the business and finance section of the Washington Post and the Washington Times with copies of several samples of the fraud with names and phone numbers of the victims and they have started calling the people for a possible expose.

    Dear Karen, I admire what you are doing and god bless you. I wrote to the Leesburg Today newspaper editor to see if he would post in the Editorial page several opinion I have written about the illegal foreclosure process here in Virginia specifically in Loudoun County. Let us see if the have the GONADS to publish them.

    we need to send copies of the letters from the congressmen to our local judges. And force them to take judicial notice. And even file them into the land record of our homes.


    The stock market has “help” since 1988.

    Take a look at this link:

    This is all starting to unravel!







  35. So now GMAC is going to do Chapter 7 or 11 and we will get nothing but $35.00 from it all, lots a class actions and the lawyers and the courts gets all the money and we lose our place to live at.

  36. yes i faxed proof of another robo signer to California Attorney general today too!

  37. More HEADLINES tonight (9-24-10)…The WALL is Crumbling!!!!!!!
    California Attorney General asks GMAC to cease foreclosures- AP Wire
    Just out this evening, now we have Fla. & California! How about FREEZING ALL FORECLOSURES …NATIONWIDE!
    Every ATTY Gen in EVERY STATE should be doing this now!!

  38. So now they will solve the problem, they will fix the fraud, and the fraud will be no more, Barney will pass a new law that fraud is Okay, and the bank will continue with the plunder.

    Millions will line up in the BK court in DE, and get squatt from the pillage.

  39. You’re damned right they’ve destroyed our lives. And these very same people who signed this letter, as members of “our” government, have made it perfectly clear from the beginning that they have no desire toaid
    homeowners caught up in the foreclosure crisis, except to pretend to be helping through ludicrous programs designed to further enrich the same
    sleazy characters who started this mess. Their hope has been and still is that this crisis will eventually pass, even at the expense of millions upon
    millions of families. We are the civilian version of cannon fodder, the term used in situations where soldiers are forced to deliberately fight against
    hopeless odds (with the foreknowledge that they will suffer extremely high casualties) in an effort to achieve a strategic goal. Only in this case, the goal is a land grab larger than the entire westward expansion of the 19th century.

    Obama, Paulson, Geithner, Bernanke and Greenspan before him, as well as thousands of others in D.C. have watched from the safety of the white house, the capitol, and their protected homes as our laws, our
    courtrooms, and our basic human rights have been trampled by the TBTF banks. James Kwak wrote about the foreclosure crisis, “….it may simply be that the administration doesn’t care that much. Perhaps the primary goal of homeowner assistance all along was to detoxify the toxic assets on large banks’ balance sheets; now that those banks are off of life support, maybe the mortgages themselves don’t matter that much.”

    Our government offers rewards for information leading to the arrest of criminals. And yet we’ve been witnessing for years thousands of serious crimes being committed against American citizens destroying our economy, our jobs, and our families, and they’ve done it with total impunity. Has anyone been arrested? Where are the handcuffs? Where’s the outrage? If I
    had my way, the headquarters of Goldman Sacs and several other bank buildings would have bars put on the windows and guards placed at the

    However, seeing as how we’ve already gifted trillions of taxpayer dollars propping up these TBTF jerks, I know without a shadow of a doubt that nothing will change. It’s obvious, our legislators have turned their backs to the people, and their open hands to the financiers. What began as risky behavior and insatiable greed by loathsome bankers appears to be steadily moving our once great country towards class war. And I for one would choose that any day over a life ruled by these bastards. Our liberties are at stake, just as much as our founding fathers faced years before.

    Revolution the Sequel. Bring it on!

  40. Why would barney do this now when it has a problem that he knew about all these years? I think the election is running high

  41. Heard rumor today that Federal Reserve is lending money for investment in stock market – to support Pres. Obama. Not sure if this is true. But, stock market keeps recently rising – for little or no reason.

    An attorney once told me that there will be no real relief aid to foreclosure victims until the stock market really reflects the depth of the problem. While the market keeps rising – all remains covered-up as to the US economy – and the real problems in America, which currently stems from mortgage crisis and continues to be hidden.

    Agree with Mario Kenny – I ain’t seen nothing yet. And, we are going to trust Barney Frank?? the spokesman for Fannie/Freddie??

    They have destroyed our lives.

  42. I believe when I see and I aint seen nothing yet.

  43. Here’s my take on this:

    The banksters are between a rock and a hard place. They can’t count on their incumbent buddies to bail them out of this one. Frank & Co. normally would be hopping thru hoops to help these guys. Now they’re just trying to save their asses.

    The Tea Party Express cannot be counted on to bail them out.

    This is going to be the classic “Prisoner’s Dilemma.” (Google it.)

    Watch for a rapid falling out amongst defendants. It will look like a Gompertz Curve (Google Images). This can’t be stopped now. Ask your judges to take judicial notice of this correspondence between Congress and FNMA. Get a copy of the letter from their offices or their websites.

    There is a God in Heaven for the troubled souls here.


    One is getting “JP MORGAN CHASE” on it.

    The other is getting “QUALITY LOAN SERVICE.”

    I’ll bet this will RAMP-UP my protests on Fridays a bit.

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