AG’s Waiving Prosecution of Banks’ Foreclosure Fraud, Leaving America in the Dust


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EDITOR’S NOTE: It’s Monday and so we must be in the twilight zone. The Wall Street Banks have engaged in multiple schemes to corner the market on money and now they are cornering the market on land — all with other people’s money whom they never intended to pay back. Now they are going to get a waiver that lets them go free for crimes far worse than the 800 people went to jail for in the S&L crisis in the 1980’s. Does anyone care?

They are getting the waiver because the Banks have cornered the market on politicians. They have bought enough of them to turn the tide regardless of the facts and circumstances. Ultimately prosecution is a political decision. Nobody can afford to prosecute all crimes. So it becomes a decision as to which ones to go after.

In this case, the Banks swindled homeowners into fake loans that forever corrupts title to most residential property in the the nation. They faked the appraisals, putting people in the position of losers in a fight they didn’t even know was going on. The one set of people who could not afford to take losses in the hundreds of thousands of dollars are consumers. But that is exactly where the AG’s are heading, because they all have ambitions to be governor and the Banks can make that happen.

The banks lied, perjured themselves, forged millions of documents, to get a free house, thus cheating both homeowners and investors.

People have murdered their family and committed suicide. Millions have lost homes, jobs and life-style passing on a legacy of poverty to the next generation. Investors all over the world have been swindled out of cash for pensions and operations. The credibility of our financial system is hovering just above zero. Just how bad does it have to get before YOU and YOUR FRIENDS take to the streets and let the politicians know that they will be selling shoes after the next election. Yes, a real job.

The message the AG’s are sending is this: If you do it once, you go to jail. If you do it a lot, you become a powerful and rich politician. Amen to April Charney comments about helping the AG’s. Count us in.

The Banks Still Want a Waiver


HOW should banks atone for those foreclosure abuses — all the robo-signing and shoddy recordkeeping that jettisoned so many people from their homes?

It has been four months since a deal to remedy this mess was floated. Not much has happened since — at least not publicly.

Last week, banking executives and state attorneys general met in Washington to try to settle their differences. At issue was how much banks should pay, and how and to whom, to make this all go away. The initial terms, which emerged in March, were said to carry a $20 billion price tag.

But here is a crucial question: to what extent would such a settlement protect banks from future liability? Will the attorneys general strike a deal that effectively prevents them from bringing new, unrelated lawsuits against the banks?

If the releases in any settlement are broad, there will be joy in Bankville. If they are narrow, the banks will probably face more litigation, something they would rather avoid.

A looming issue relates to the potential liability stemming from the Mortgage Electronic Registry Systems, or MERS. This company, owned by the major banks, was set up in the mid-1990s by the Mortgage Bankers Association, Fannie Mae and Freddie Mac. Its goal was to expedite the home loan process.

By eliminating the need to record changes in property ownership in local land records, MERS ramped up profits for lenders. In 2007, MERS calculated that it had saved the industry $1 billion over 10 years. An estimated 60 percent of all home loans were registered to MERS.

But the MERS machine started to sputter during the foreclosure crisis. Lawyers challenged MERS’s ability to bring foreclosure proceedings because the system does not technically own the security or note underlying properties, as required. While some courts have not objected to MERS’s foreclosing in place of banks, others have.

New York courts, for instance, have been increasingly hostile to MERS. In a February 2011 opinion, Robert E. Grossman, a federal judge on in Long Island, wrote: “This court does not accept the argument that because MERS may be involved with 50 percent of all residential mortgages in the country, that is reason enough for this court to turn a blind eye to the fact that this process does not comply with the law.”

Equally troubling for MERS is the fact that its officials have filed questionable documents with courts attesting to ownership of the notes and other significant matters.

These practices have consequences, as described by R. K. Arnold, MERS’s former president, in a 2006 deposition. “We are heavily at risk as far as, you know, having to follow the rules of the court and enforcing our rules that our members must go by,” he said. “We also have jeopardy as far as if we were to fail in the foreclosure realm.”

David Pelligrinelli, president of AFX Title, a title search company, said MERS contributed to the problem of thousands of mortgages lacking a complete ownership chain.

“You can’t go back and redocument all these things, because some of the companies aren’t around anymore,” he said. “Even if they are, the charters for these companies don’t allow for backdating of assignments.”

How MERS and its bank owners will fare with the attorneys general is unclear. The early term sheet for the possible settlement said only this: “Issues relating to the use and performance of MERS are reserved for further discussion.” Those further discussions may be taking place now. It’s a good bet that the banks want a comprehensive release from liability relating to MERS.

Officials at the nation’s top four banks declined to comment on the private talks. A spokeswoman for MERS said it was not participating in the discussions and could not speculate on them.

Lawyers who have examined this issue say it would be unprecedented to grant a broad release from liability to the banks that own MERS from claims that have not been investigated.

WHILE some states are scrutinizing MERS, most have declined to investigate its operations. That might seem surprising, given the apparent conflicts of interest in its business. Employees of law firms representing banks in foreclosures, for instance, are also officers of MERS. They can assign mortgages even though they represent a party with an interest in the outcome.

A broad release would vastly diminish the possibility of an in-depth investigation. Such a release might also make it harder for borrowers to argue that MERS has no right, or standing, to foreclose on them. The United States Trustee has supported this view in a number of recent cases, but exempting banks from future lawsuits on this issue would send a message that questioning MERS’s standing is of no interest to top state officials.

And if the banks are insulated from future state lawsuits, responsibility for any abusive acts by MERS would be pushed onto law firms that did the system’s work. With few assets, these law firms are virtually judgment-proof. The unit of MERS that held title to the mortgages also has few assets and was set up in such a way that lawsuits against it would probably reap little for plaintiffs.

MERS has begun to clean up its practices and paperwork. Officials are furiously assigning mortgages out of MERS’s name and into the banks’ names. One borrower in Pierce County, Wash., combed through records from April 1, 2011, to July 18, and found 1,956 assignments of deeds of trust executed from MERS to banks that service the loans or trustees that oversee mortgage pools.

Sure, the issues surrounding MERS seem mind-numbing. Some officials might want to wash their hands of the whole thing in a settlement. But at least one legal professional is offering to educate attorneys general — at no cost. She is April Charney, a lawyer at Jacksonville Area Legal Aid in Florida and one of the first to question MERS’s standing in foreclosures.

“You need lawyers in each state to be legal consultants to the A.G.’s so they’re on equal footing with the huge industry they are up against,” she said. “It would be an honor to consult on these highly complex, layered and nuanced state-based legal issues. Call it pro bono with bells on.”

It would be telling if no one takes her up on that offer.

30 Responses

  1. Don’t close your accounts if you are in an FDIC insured bank or you pay for the default and they get the assets for pennies on the dollar

  2. Your organization has a great name – but unless all of the organizations gather together as one – there can be no strength in what you do – You need a voice – Otherwise you will win a few here and a few there – but you would win a lot more with a voice, the peoples’s voice. This same issue has been on the blog for years, yet no one forms a single organization to combine all of the others.

  3. name correction:

    It was not Louise, it is Joyce Louise, sorry about that, got in a hurry.

  4. Christine,

    I have closed my bk account and went to a local credit union some 2.5 years ago now. All cash, no credit, defaulted on all credit cards after paying on them for 2 years and not using them. When they decided to raise my interest rates to 30% that is when I said screw you. We are even.

    Funny, credit card companies, which are just brokers as they turn the debt into ABS, raised interest rates some 3 years ago on everybody. And you hear in the news the media saying they are concerned about interest rates raising if the debt ceiling is not raised. Too funny. Well, who sets the interest rates, feds and banks.

  5. FAith

    We have a lot of good people out there fighting the fight; however, they are doing by numerous organizations instead of forging ahead as a single unit – These blogs have been talking about the same issues for years and yet – the banks are winning because there has been no real effort to take them out based on the people voice.

    Individuals fighting in court with their stuff is never going to get it. You have a good organization name, and it needs to work from there. Gather the people together for the strength – otherwise, it is powerless. Yes you will win a few here and there, but I have been watching it for years and nothing has changed.

    One good piece of news this morning is the 2nd lien holder issued a release to the borrower because they went past the four year statute. It took a simple letter with two small paragraphs quoting the statute and attaching a copy of the acceleration notice – and it was over.

    So many cases out there, I hope people are watching their statutes.

  6. @ louie hammer – was that supposed to be a question? im confused

  7. To April Charney-If you want to come up to Ma. and help Martha Coakley out in any way I will offer you free accommodations in Plymouth.

  8. dan-o?

  9. […] AG’s Waiving Prosecution of Banks’ Foreclosure Fraud, Leaving America in the Dust Posted on… […]

  10. I do understand that an entire town in NY decided to close all its accounts with Chase last May (I believe) and that more and more people do likewise, individually or as groups.

    When we paid the bailouts, which incidentally enriched Paulson to the tune of 3.8 billion, (no wonder he was so adamant that we act… yesterday!) we paid our debts. Of those payment, very little has been recovered and our country has been brought to its knees. Some banks immediately filed for bankruptcy: CIT Group discharged over 10 billion of its own debts incurred through midmanagement and fraud, after having received our 2.8 billion we will never see again.

    My philosophy is simple: when my money served to enrich the wealthy and run our country down, I paid forward. My debt was extinguished with the 80 billion I paid out. And so was yours. We all actually paid our mortgage loans and all other debt contracted with large banks forward. Filing suit against large bank is only in order to get it in writing. Until the day I die, the bank will no longer receive one cent from me and I will not ever again entrust it with my savings (or whatever is left of it).

  11. Christine you are right.

    Christine, on July 25, 2011 at 12:47 pm said:

    Let’s make it official as of 8/1/2011. Everybody closes their bank account with Chase, BofA, and every major bank having received bailout money. And starting 8/2/11, everybody stops simply paying back all the loans financed by the big banks (no need to hurt the small credit unions if they financed something. The idea is to return to a community-based system).

    I have all ready stopped paying big banks since October, 2007 and they can not foreclose my property, at this time i have a Law Suit against U.S. Bank Nationals Association as trustee Et Al including their Attorney Steven J. Baum P.C. from Buffalo New York, and I would never give them any money for the rest of my life…….
    Ray Quiroz from New York
    email :

  12. I also stopped paying everything…sent cease and desist letters and dispute of debt, QWR, etc….”get outta my face, criminals!”…a credit score is just an “I love debt score”…who cares…they did it to themselves…they destroyed our economy so that we can barely make any living at all…dispute the hell out of everything and fight back however you can.

  13. Christine –

    I am with you. I closed my bank account 3 years ago after 16 years with them and bank refused my payments which I got in writing from the Bank. I have a pending lawsuit and I will not give up. There are lawyers out there that will take contingencies. It took alot of digging but I found one.

  14. It is clear the chain of title in almost all securization loans was broken. Loans went from A to C rather from A to B to C. Bankers are arguing home owers have no legal basis to agure defects in the securization agreements. Some judges are agreeing with the banksters while others are agreeing with the homeowners. Where is this matter heading? What is the best way to argure?

  15. Let’s make it official as of 8/1/2011. Everybody closes their bank account with Chase, BofA, and every major bank having received bailout money. And starting 8/2/11, everybody stops simply paying back all the loans financed by the big banks (no need to hurt the small credit unions if they financed something. The idea is to return to a community-based system).

    We have a set date. I did the above 2 years ago and have a pending suit against my mortgage servicer. The only things i pay are the small local loans. Otherwise, I fight everything in court. That’s where my mortgage payments are going: to get the legal help I need. When bank become serious about helping homeowners, they’ll do the right thing. In the meantime, boycotting is the American way. No violence, no riots, no blood. Just a peaceful united action…

    When you ain’t got nothing, you got nothing to lose…

  16. The problem is the masses are so conditioned to believe that this magnitude of fraud practiced by major institutions is inconceivable. So I pray any type of revolution will create a snowball and bandwagon effect. The most relevant question at hand is… When will we stop talking about it and do something about it? When will the planning by THE PEOPLE finally begin?!?!?!

  17. Carie: This is strictly my opinion but no one realized that when de-regulation was put in place that this planet was housing so many deceitful politicians and bansters, together with Wall Street. Actually, the deregulation could have been a good thing, but they took something and turned it into that which allowed them to so harm the American people and our economy.

    I do not believe for one minute that Bill Clinton wanted this for the American people (at least I hope not and I am not a Bill Clinton supporter). Larry Summers was a do nothing kind of guy even though I feel confident that between he and Robert Rubin that they really did understood what the potential would be for the banks once the deregulation was passed. And that is why I went into panic mode when Larry Summers was named on Obama’s team.

    Phil Gramm, the republican who took the vote to the floor most surely knew also what the potential for this kind of regulation would do for the banksters and Wall Street. Again, Texas appears to be a state that does much for the financial services business. Guess what, I don’t like it and I am glad that this has finally come to a head – it most certainly will affect the election or re=election of any of the Texas people and across this nation. Unless of course the people go back to sleep.

    As disappointed as I am in Alan Greenspan – he was over the top. To say that he didn’t think the dangerous loan programs being put out there were significant will go down in history. How could he make such a statement. I know he did not want this in his legacy, but when you don’t mind the store, and he wasn’t, then this is what you get.

  18. Alan, the reason for calling the AG’s is to put them on notice that everything possible will be done by the people to secure as much information as we can about what they they think they are doing when it comes to settleling for the people.

    We already know what they did not do and they need to be reminded. This is separate and a part and effort which the people must take on. The only missing link is and I have said this many many times – Where are the people who are fairing well that have not come to their aid of their neighbor as their homes were taken in violation of the law.

    There must be some verbal communication between the people and the AG’s – that having been said, where is the group that is going to Washington to visit and require our congressional hearing – This talk talk talk has gone on for two years and the people do nothing. There have been a few gatherings but nothing that makes the banks sit up and take notice.

    I for one believe that the congressional meeting should be required between the people and the Congress so we can rule out those do nothing politicians – Same with the AG’s. Then we sit down with the Banks. And hopefully before the AG’s settle this for us so that we cannot even take a case to court. By their actions, they will be saving the banks billions in court cost for their wrong doing.

    If you think for one minute my AG is going to get any support if he does run for Governor or any other office – you would definintely be wrong. To not return the calls is an “in your face” attitude which shows they are not going to answer to the very people who hired them. Let’s get that straight right now.

    Fairway although it operates as an entity that is not a non profit, but what it does do, is render its services without charge to the homeowner and we did that for five years. Now that is over with and we will go after the parties responsible for this demise – AG’s, the congress, the administration, the title companies and of course –
    which now that I think about it, will cut out the very people who created this mess, the banks and Wall Street, because the people are allowing these settlements without doing something to stop it.

    I voted for Abbott, Cornyn and Perry – that will not happen again and including the legislature that put the foreclosure laws in place in Texas that clearly protect the banks. Another in your face attitude. Hey, if they want to argue it with me, fine, I am ready.

    I will be the first to concede and apologize if I am not right in my criticisms. Certainly, no one wants to cause such harm if it is not deserved. There are those who “actually believe they are doing a good job or know they are not and just don’t want to admit it”, as long as they get what they want out of the deal.

  19. Make sure they don’t get voted back in. Make sure when it comes time to vote for an Atty Gen. you don’t vote for the same creep that sold you down the river. Yes, I agree, it will take civil disobedience.

  20. De-regulation created the free-for-all that we find ourselves in right now—you can thank Larry Summers and all the other cronies for that–
    We are dying in the streets because of it…they stole our homes and our jobs…and our trust…

    Like @BSTL says:

    “They should all be aware that when the people have no jobs, and no homes, then they will have no fear, and the blowback will not be pretty. We will not forgive and will not forget.”

    Have no fear and FIGHT BACK with everything you can think of—calmly and assertively.


    …uh huh.

  22. Game over folks , I have come to the sad point of view that nothing we do will change. The take over of our Government is long over . Email & call all you want to your State AG’S …the fix was in before it began . Unless there is massive civil protest & unrest ,nothing will change .

    My advice start loading up on food , plant a garden & get some protection for your family.

  23. I did send my AG an e-mail. What is irritating is that the his does not allow the sender to edit or review the e-mail and does not allow to print it.

    I guess it will have to be a real letter, RRR to assure a response (which i expect to be sone automatic acknowledgment with no further action.) Another 2 hours of my life wasted…

  24. Excuse me!!!! Our attorney Generals need legal counsel so they can be on level ground with the banksters. What a disgraceful statement, but she may be right. I do not believe however that the AG’s do need legal counsel. They know exactly what they are doing and it does not appear to be in the best interest of the people. When are the people going to get a grip.

    Besides most are missing the point and in doing so, the AG’s are addressing robo signing which is more or less to camoflauge all of the intentional negligence performed by the originator and servicers before it even got to the robo signing stage. Coming up with the original note of course is important and certainly violations of the robo signing need to be addressed, but what about the millions of people that have suffered as a result of the servicer’s negligence at the Gates of Hell and which of course was designed to ignore the Bush and Obama housing recovering programs and to assure that the property goes to foreclosure.

    Are we going to accept the AG’s settlement offers – they will all be laughing all the way to the bank. Going hand in hand. It literally makes me sick that our AG’s have so deserted us.

    Now if the AG’s want to go over what the claims are going to be, that would help. As of right now I can’t even get the AG’s office to return my calls when in fact, all I am trying to do, is make sure that the people’s rights are protected and that the banks get the proper punishment for their wrong doing. Who do the AG’s think they are – they did not represent us properly and allowed this to happen and now they are going to settle for us. The people had best wake up, why they do not, I have no idea. And for those who have managed to fair well during this fiasco, shame on you for not standing with your neighbor while he was attacked right in his own front yard.

    I can only do what I can to assure that none of these politicians get back in office. There are still some good people out there and the AG’s can run all they want. If the people do not wish to put a stop to the current AG’s re-election, then so be it. They figure the people will forget that they did not do their job and allowed it to happen and then came up with the second tier of scam by the Wall Street boys when they allowed them to settle for such a pittance while they took the properties. 48 years in the business and this is what it came down to. We did not do this in the 80’s or the 90’s so that speaks for the current politicians actions as to how this was allowed to happen.

  25. if the banks:

    1) cleared the titles to all the homes they clouded, and gave the houses to the homeowners free and clear, and…
    2) settled with the investors, and…..
    3) agreed to dismantle MERS, and….
    4) paid all the recordation fees and taxes to the states that mers helped them evade during the bubble, and ..
    5)agreed to insanely strict oversight in lending practices for the next fifty years

    then maybe they get a waiver, or probation. no guarantees. someone needs to go to jail for this. in fact, the above listed things need to be done regardless. who are they to negotiate the penalty for their crimes? or do it like they do with the mob, put an offer out that says the first bank to roll on the rest gets a pass, and the rest get prosecuted to the full extent of the law. no waivers, no leniency. you nearly collapsed the united states economy, theres no pass for who will be the first bank to roll on what happened?

  26. I hope you all send a note to your AG telling them that if they provide immunity to the banks, we will respond in a very unkind manner!!!

    These AGs need to know that it is their DUTY to uphold the laws in their state. Pretty sure that includes evidence of forgery!!! And trustee conflicts of interest (Recontrust is subsidiary of BofA and does not have a registered agent in WA, I suggest you check in other states as well.) And signing affidavits that are not sworn to.

    Etc, etc.

    You need to be there policeman, if they won’t police themselves….come on people!!!!

  27. I have a few suggestions that I would like to throw in…

    We know how much banks rule this country’s politics, we know that pretty much everyone in any position of authority has been heavily bought through actual bribes or promises of elections, the same way pharmaceutical companies buy physicians in order to push their drugs (eventually recalled by FDA when too many reports of serious or fatal side effects ermerge). Anyone who has suffered at the hands of the banks in the past years can vividly recount the ordeal of having years of his life taken away by constant worries, mounting fees oftentimes fraudulently imposed and unjustified, threats of foreclosure, scams from would-be loan modification agencies, loss of a job, loss of a home, etc. And as you stated, people have died over it and our entire country has been reduced to the shadow of itself.

    I don’t know how many people do have a bank count with any of the MERS culpits. I don’t know either how many people have tied themselves into loans with MERS culpits, (business, auto, home repair, mortgage, etc.)

    Rather than picket banks or AG offices, wouldn’t it be much simpler to unite, decide on one specific date and simply:
    1) close all bank accounts with MERS banks and flock to local credit unions;
    2) stop paying all loans. Simply stop, without looking back. What we don’t owe cannot be taken away.

    A few things would happen: 1) the collapse of this abused and broken system on life support since the Big Bailout(s) with our own money and without any of us having any say would be effected within a few short weeks. 2) Because of that collapse, the 20% holding 80% of America’s wealth would no longer hold much of anything in a very short time and their power would disappear overnight. 3) Congress and government would be absolutely obligated to stop playing deadly games and start acting. Those who don’t wouldn’t last very long. 4) We The People would actually be in charge. Why? Because there would not be enough repo centers, law firms, courts and law enforcement agencies to go after all the defaults. The system would come to a halt once and for all and we could work on restoring it. Would everyone somehow suffer? Probably. Haven’t we all already suffered long enough and is there an end to the suffering we have gone through? Obviously not, based on your article.

    Revolutions don’t have to be bloody and violent. Jesus, Gandhi and many other historic figures clearly demonstrated that. oftentimes, a quiet revolution has much more power than any gun.

    A movement can be created, one person at a time until it has so much momentum that the building crumbles. The building will anyway. The thing is: we can decide when make it happen when we are still strong or allow ourselves to be destroyed slowly and by the time the building does crumble, there will be no one left to enjoy it and rebuild from it.

  28. in 2005 I thought i was blessed with a small little condo in South Palm Beach County. it was a starter home and never thought for a minute i would be trapped in a Countrywide home loan to this day. i am current and in the second month of a trial BOA mod after being denied for 4 years. I am staying current because i work for myself, need a new car and do not want to ruin my credit. my condo is in a BNMellon pool.
    is it possible that there is a law team out there that would take a case for me….knowing that i am being robbed and in an illegal contract?
    please i cant imagine at 49 starting over again~
    Lisa 561-503-1223

  29. this

    think tankvideobook clubweekend
    AboutContactManaged AssetsSpeakingDisclosures « Fast Money: Bull Market or BS?Time Loves a Hero »Why Foreclosure Fraud Is So Dangerous to Property Rights
    By Barry Ritholtz – October 12th, 2010, 8:00AM There seems to be a misunderstanding as to why the rampant and systemic foreclosure fraud is so dangerous to American system of property rights and contract law. Some of this is being done by people who are naked corporatists (i.e., the WSJ Editorial Board) excusing horrific conduct by the banks. Others are excusing endemic property right destruction out of genuine ignorance.

    This morning, I want to explain exactly why this RE fraud is so dangerous, and explain the significance of the rights that are currently being trampled. I also want to demonstrate that the only way the nation could have the quantity and magnitude of errors we see is by willful, systemic fraud.

    Perhaps this commentary will allow for a more intelligent debate of this issue, and focus on what can be done to fix the problems, rather than the blind parroting of talking points.


    The process of purchasing a home in America culminates with an event called “the Closing.” It is an hour plus long contract signing that ensures the buyer is legitimately taking title, possession and legal ownership of a unique parcel of land and any structures upon it. The process gives any buyer specific rights to that property that cannot be abrogated under the laws of the United States.

    At the closing, buyers sign and initial numerous documents. The goal is to accomplish the following:

    1) Papers are signed that will be filed with the County Clerk (or appropriate officer) along with recording fees, for the official transfer of title from the prior owner to the new owner. The enabling purchase loan (i.e., mortgage note) is also filed with the Clerk.

    2) The buyer receives title (ownership) of the land;

    3) The mortgage lender establishes a new interest in that property contingent upon their mortgage note;

    4) All other claims, liens, tax obligations and prior mortgages, home equity lines or second notes are satisfied and extinguished before title passes to the new owner.

    5) Third party claims of any interest in that property superior to the buyer are eliminated;

    6) Title Insurance is purchased and issued so the buyer has a recourse in case of defects in ownership occurs.

    Every step of the process is designed to protect the property rights of all parties. The result is more than a mere transaction selling property from one party to another; rather, this has created a system where ownership interests are clearly defined; where title history can be reviewed going back decades and centuries. There is a certainty to the purchasers of this property against all future claims.

    Everything about this process has been created to make sure the transfer goes off perfectly. In a nation of laws, contract and property rights, there is no room for errors. Indeed, even small technical flaws can be repaired via a process called “perfecting title.”

    As we noted previously, esteemed economists such as Hernando de Soto have identified that the respect for title, proper documentation, contract law and private property rights are the underlying reason capitalism works in Western nations, but seems to flounder elsewhere.

    We cannot have free market capitalism without this process. So what does it mean if banks have been systemically, fraudulently and illegally undermining this process?


    The closing process described above took place with all parties participating voluntarily. The buyer wants the house, the seller wants the transaction, the financing bank wants to make the mortgage loan.

    What happens during a proper foreclosure? The prior closing is essentially reversed, only its done involuntarily. The process requires another RE closing, only this time, the Note holder is exercising their right to repossess the house if the borrower has failed to uphold the terms of the mortgage note. It typically states that if a borrower fails to make the requisite payments, they become delinquent. After an extended period of delinquency, they go into default. That allows the note holder to exercise their rights to foreclose on the property, and take title and possession.

    The same care and attention to detail that occurred during the initial closing must also occur in the foreclosure process. All of the steps noted in our initial closing must occur here also. But since it is an involuntary process for the (soon-to-be former) property owner, extra care must be taken to make sure that property rights are being maintained and respected. The entire process is, if anything, is even more rigorous.
    The law does not tolerate any errors in this process. What does the foreclosure process legally require? It varies by state and mortgage note, but the following is a good outline:

    1) Notice of Delinquency is sent to a borrower who has fallen behind his payment schedule;

    2) Notice of Default is sent to a delinquent borrower who has missed the requisite number of mortgage payments;

    3) Notice of Foreclosure is sent to the defaulted borrower, and the process begins;

    4) Affadavit by the bank’s representative are signed attesting to: Ownership of the note, who the borrower is, the property in question, the date of last mortgage payment, amount of delinquency, tax escrow owed, other payments (such as homeowners insurance);

    5) Notarized documents: A Notary Public affirms that the affidavit was actually signed by the signatory, and this allows it to be entered into the court as documentary evidence;

    6A) Notice of Pendency (Lis Pendens) is filed with the County Clerk putting the world on notice as to the foreclosure action;

    6B) Summons and Complaint are prepared by bank attorneys, who further verify the specific information attested to by the bank executives. The attorneys then file the Complaint, commencing the Foreclosure Action;.

    7) Service of Process is filed, either hand delivered to the home owner, or nailed to the door of the home;

    8) Referee is Appointed to review and process the case; calculate the amount owed, and report back to the Court; The Referees report is also notarized;

    9) Judgment of Foreclosure is moved for by Note holder;

    10) Court orders the property auctioned. The court specifies a notice of the auction, publicizing the property auction;

    11) Bidders must Close on the auctioned house in 30-90 days; In the event of no sale, the bank takes possession (REO);

    The fraud that has come to light are primarily occurring in steps 4, 5, 6 and 7. The verification of the specific data that is mandated legally is not taking place by bank executives. Reviewing a file can take anywhere from, 20 minutes to well over an hour. Yet some bank employees are testifying that they have signed off on as many as 150 per day (Wells Fargo) or 400 per day (Chase).

    It is impossible to perform that many foreclosure reviews and data verifications in a single day. The only way this could happen is via a systemic banking fraud that orders its employees to violate the law. Hence, how we end up with the wrong house being foreclosed upon, the wrong person being sued for a mortgage note, a bank without an interest in a mortgage note suing for foreclosure, and cases where more than one note holders are suing on the same property that is being foreclosed.

    This is more than mere accident or error, it is willful recklessness. When that recklessness is part of a company’s processes and procedures, it amounts to systemic fraud. (THIS IS CRIMINAL AND SHOULD BE PROSECUTED).

    The next step in our cavalcade of illegality is the Notary. Their signature and stamp allows these fraudulent documents to be entered into court as actual evidence (no live witness required). Hence, we have no only fraud, but contempt of court on top of it (BOTH OF WHICH REQUIRE PROSECUTION).

    Law firms preparing the legal documents are not doing their job of further verifying the information. And, it seems certain states such as Florida have foreclosure mills who were set up from the outset as fraudulent enterprises. (EVEN MORE PROSECUTION NEEDED).

    Lastly, some service processors are not bothering to do their job. This is the last step in the foreclosure proceedings that would put a person on notice of the errors (YET MORE FRAUD).

    There are multiple failsafes and checkpoints along the way to insure that this system has zero errors. Indeed, one can argue that the entire system of property rights and contract law has been established over the past two centuries to ensure that this process is error free. There are multiple checks, fail-safes, rechecks, verifications, affirmations, reviews, and attestations that make sure the process does not fail.

    It is a legal impossibility for someone without a mortgage to be foreclosed upon. It is a legal impossibility for the wrong house to be foreclosed upon, It is a legal impossibility for the wrong bank to sue for foreclosure.

    And yet, all of those things have occurred. The only way these errors could have occurred is if several people involved in the process committed criminal fraud. This is not a case of “Well, something slipped through the cracks.” In order for the process to fail, many people along the chain must commit fraud.

    That it is being done for expediency and to save a few dollars on the process is why the full criminal prosecution must occur.


    The approach of most Western nations to property is an important legacy. In the United States, it has been enshrined in the Constitution. Even the rare exercise by the State to take private property during Eminent Domain requires an extensive and proper process. The Fifth Amendment to the US Constitution guarantees that no “private property be taken for public use, without just compensation.” The Supreme Court has detailed the process required for the State to seize any citizen’s private property without the owner’s consent.

    There is simply no reason we should tolerate unlawful property seizure merely when it is done by banks. They are not the State, not the King, and not above the law.


    Man without Mortgage Loses Home in Foreclosure (September 23rd, 2010)

    Florida’s Ongoing Foreclosures Nightmare (September 29th, 2010)

    How ‘Flawed’ Is Foreclosure Paperwork? (October 4th, 2010)

    Foreclosure Fraud Reveals Structural & Legal Crisis (October 5th, 2010)

    Are WSJ OpEd Writers Clueless or Liars? (October 11th, 2010)

    Category: Credit, Foreclosures, Legal, Real Estate, Really, really bad calls, Regulation, Taxes and Policy.
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  30. If the AG’s buckle, then the people of this country should start playing by the banks own rules and quit claim their properties 10 layers deep and around the world and back to themselves in offshore trust accounts, blah, blah, blah, and make it impossible for the banks to ever find owners….
    My father was a Chief Asst. State Atty in FL (20th JD) for about 14 years in the late 60’s, 70’s to early 80’s or so and still practices in privately in the state. I grew up in a household in which I heard about him going after white collar criminals all the time. He loved them. He ate their lunch, the bigger and more powerful, the more fun for him. He took down judges and sheriff’s, loved corruption almost more than street crime, and I have to admire him for that. Question is, where have all those people in public office gone? Everyone is on the dole and looking and covering everyone else’s ass and don’t want to be the last person standing without having secured their own golden parachute….They should all be aware that when the people have no jobs, and no homes, then they will have no fear, and the blowback will not be pretty. We will not forgive and will not forget.

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