Sen. Cantwell demands DOJ investigate foreclosure fraud before a settlement

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By Matt Browner Hamlin, http://www.americablog.com

Senator Maria Cantwell (D-WA) issued a blistering letter calling on the Department of Justice to investigate big banks for fraudulent foreclosure practices before agreeing to any settlement deal which would grant them immunity for these practices. In her letter to Attorney General Eric Holder, Cantwell writes:

I am concerned that recently reported settlement proposals will effectively absolve these financial institutions of substantial civil and criminal liability in one of the largest alleged fraud schemes during the financial crisis. Specifically, I am concerned that the proposed settlement includes a release from liability that may be far too sweeping, does not adequately compensate victims, does not require enough of banks to reform the system that led to the crisis in the first place, and is being made before all the facts are known and without the backing of a full inquiry into the size and scope of the alleged fraud.

Without a thorough investigation, it is impossible to truly estimate just how pervasive the defects in the foreclosure and securitization process are. Continued reports of wrongful foreclosures, forged documents, and an inability of servicers and banks to prove chain of title and the legal right to foreclosure, raises the very alarming possibility that these defects were endemic to the mortgage servicing industry across the country. The sheer magnitude of the potential fallout from these defects demands that we undertake a full investigation to uncover the true scope of wrongdoing before providing blanket immunity to the perpetrators.

I am also concerned that reports of a settlement in the range of $20 billion, as recently reported, may not adequately compensate the victims of the foreclosure crisis. As a result of the pump-and-dump scheme perpetrated by the nation’s largest banks that inflated – and burst – the housing bubble, an estimated 14 million Americans are underwater, owing $700 billion more on their homes than those homes are worth. A $20 billion settlement is woefully inadequate to compensate the wrongfully evicted or homeowners struggling to stay in their homes. Much more should be required of banks to provide meaningful help underwater homeowners and compensate foreclosure fraud victims.

Boom goes the dynamite.

Washington is an important state in the context of the foreclosure crisis and the ongoing settlement talks between AGs and banks. Washington’s Republican Attorney General Rob McKenna is running for governor and has long been viewed as being a potential get for people trying to stop a bad deal. McKenna’s Democratic opponent in the gubernatorial race is Congressman Jay Inslee. Inslee has made stopping a bad settlement a major campaign issue and is collecting signatures on a petition against the rumored deal. Inslee is trying to wedge McKenna – either by making him look like a tool of the banksters or forcing him to do the right thing and help his constituents who were defrauded of their homes by the banks. It looks like Cantwell is aiding Inslee in that squeeze play, but the politics are really secondary to the potential outcome. Simultaneously, we are seeing another major politician standing up to the banks and demanding a halt to the consideration of a bad settlement deal. This is a very good thing.

16 Responses

  1. Alys Cohen (Nat’l. Consumer Law Center) testimony == preview of the Foreclosure Review Forms (OCC) and she discusses things such as

    Fees are a profit center for Servicers etc.

    http://www.scribd.com/doc/76022962/Testimony-of-Alys-Cohen-Before-US-Housing-SubCommittee-Alys-from-Nati-l-Consumer-Law-Center-12-13-2011

  2. Barry Fagan v Wells Fargo Bank Request for Judicial Notice of the Recorded Lis Pendens with Evidence of Document Fraud and Expert Opinion of Forensic Document Examiner

    http://www.scribd.com/doc/75954809/Barry-Fagan-v-Wells-Fargo-Bank-Request-for-Judicial-Notice-of-the-Recorded-Lis-Pendens-with-Evidence-of-Document-Fraud-and-Expert-Opinion-of-Forensic

    Note: Scribd allows you to expand the document for greater clarity.

  3. Women are smarter — not part of the “old boy network.”

  4. @E.Toile,

    Hehe. Which other AG is a woman? They definitely seem more inclined to shake the status quo. Apparently, MN AG is also against that unilateral half-ass settlement.

  5. @ Enraged, Lori Swanson of MN also released a press statement stating she’s not interested in signing off on the fraud.

    Go girls!

  6. Why is it the women who take the strongest stand?

    Schneiderman and Biden against… Coakley, Harris, the Nevada AG, Elisabeth Warren and now Maria Cantwell.

    Makes you wonder…

  7. Why can’t more AG’s stand up for what’s right like this? Have they been so brainwashed and misinformed and terrorized that they can’t see the writing on the forged documents? They don’t look in the direction of the families who will spend the holidays in shelters because the greedy, corrupt banks stole their homes when they had nothing invested in those homes? They turn away from the hungry kids living in tents, vans and trucks for no other reason than that the banks wanted to sell homes they don’t own to profit further from the already huge ponzi scheme they’ve pulled on the world?

    Some AG’s need to get off their ass and DEMAND, just like this woman did, instead of selling us all out while they collect their fat paychecks. We need to throw these AG’s out of office!

  8. Sorry, I posted my comment to the wrong thread. Should have been the FNMA/FREDDIE discussion.

  9. Z, your post is great food for thought. Let me add an amusing story to your discussion.

    First, let me preface with this: the UCC says the person entitled to enforce must be in possession of the INSTRUMENT. And the UCC defines its use of the word instrument as “negotiable instrument.”

    Most people know that a check with wet-ink signatures is a negotiable instrument, but most also know that a “copy” of that check is not negotiable. We little people would likely go to jail for trying to cash a copy of a check, especially if made out to someone else. And we certainly couldn’t expect our bank to cash the mysterious original check on a claim that one of our business associates was guarding it, therefore, we didn’t have the original check with us.

    Now here’s my story.

    I paid a house payment to one of the big banks. It cleared my bank about a year and a half ago. A couple of months ago, I received a refund from the bank for that payment. The bank said my payment was 30 cents short and it could not accept a partial payment. I was out of town and couldn’t remember the exact payment amount.

    Since, I’m in foreclosure, I make copies of everything related to the case. I made a nice color copy of the check for my file. The copy of the check was an accurate and true copy of the original…except…the word VOID appeared all over the copy. The big bank wouldn’t want someone to get paid twice on that check, now would it? And God forbid that MULTIPLE parties would be paid on copies of that check!

    Being in possession of the INSTRUMENT–better defined as a negotiable instrument–cannot be constructive possession, as constructive possession of a note is not negotiable.

    I am not an attorney and my opinion about this is worth just about as much as your opinion about FNMA qualification as noteholder. But I LIKE your opinion and discussion about that! 🙂

    To further complicate my understanding of FNMA loans, I was floored when I found the FNMA Lender Letter (October 2010, I think) stating that servicers *are not* its agents, assigns, or representatives. Instead, FNMA said, servicers are independent contractors. So, are we supposed to be okay with an independent contractor waving a copy of note and seizing our homes under loans supposedly in FNMA trusts but held by an unidentified document custodian?

  10. ANY SETTLEMENT MUST INCLUDE FIRING ALL OF THE EMPLOYEES OF THE ROBO-FIRMS NATIONWIDE, AND THE RELATED FREDDIE/FANNIE ORIGINATOR’S AS MASTER SERVICER, CONDUITS, SERVICERS, SUBSERVICES, AND MANDATORY ALL OF THE REO SERVICERS, CLOSING TITLE & SETTLEMENT AGENTS, BROKERS, DEALERS, DISTRIBUTORS. THAT MEANS ALL OF THE REAL ESTATE LAWYERS/BROKERS WHO CLOSE IN SECRET THE ORIGINATIONS AND ALL OF THE INSURANCE TITLE AND ESCROW AGENTS, ACCOUNTANTS, INFORMATION TECHNOLOGISTS AT ALL OF THE COMPANIES STARTING AT FREDDIE MAC/FANNIE MAE, FRB, OCC, HUD, FHA, WHO ARE DIRECTLY RESPONSIBEL FOR THE PIPELINE THAT MORPHED FOR FREDDIE/FANNIE BENEFACTORS RESPOSNBILE FOR THE ‘ORIGIANTION’ AND ‘SERVICING TRANSACTIONS. ALL SHOULD BE FIRED FOR CAUSE AND NOT ALLOWED TO COLLECT. THESE PEOPLE WHO ALL ARE IN COLLUSION, COMPLICIT AND COLLABORATE SHOULD NOT BE ALLOWED TO WORK IN THE RELATED FIELDS FOR THE REST OF THEIR LIVES.

    AND, THE NON-PROFIT’S ‘CLEARINGHOUSE’ ‘MBA’ ‘NEA’ ETC. WHO ARE ‘LOBBYISTS’

    ALL OF THE JOBS SHOULD THEN BE AVAILABLE THROUGH THE ONE-STOP CENTERS OF THE UNEMPLOYMENT OFFICES NATIONWIDE!

  11. A friend and I were laughing so hard last night, tears literally running down our faces. Painfully aware now what consumers need to win are tax attorney/litigators. The harm to the economy and our families did occur from real estate transactions and breaches of accounting and general ledger. To win, get yourself a real good tax accountant broker not for bankruptcy sue the bastards.

    Don’t be jealous and covet a ‘settlement.’

    Why? You’ll be placated with a reduction in principal and yet there will remains an ‘unknown’ third party. In fact, the real estate lawyers/brokers have no problem admitting to the COURT there is an unknown third party.

    How ridiculous! Then the judges are painfully aware of the unknown third party!

    The owner will not be issued owner’s title policy! Declination letter in hand. Without Owners Policy will be subjected to third party’s taking property, unable to sell property, and pending 1099 A flip ot C. The deficiency.

    How is this yet possible before the court? A closing took place with the ever valuable HUD and sales settlement contract was signed. (3) Lender Title policies were issued! How could the owner of the property who never changed not get a good title?

    Ahaa moment. The Lender’s Title Commitment for the Originator needs to only be good for (1) Day. Like the day of the Sheriff Sale.

  12. ‘MERS’ NOW REFERRED TO AS ‘MERSCORP’ AND
    MORTGAGE ELECTRONIC REGISTRATION SYSTEMS INC (“MERS SPE INC”)

    “SHALL MAKE THE SERVICES OF “its” CROSSED OUT AND CHANGED TO “the” (SERVICEMARK) OF MERS(R) SYSTEM

    MERSCORP.’Title Exchange’

    ‘Certifying officer’ comes from documents one finds on Google power of Google Document Viewer. Example: 2008 Premier Asset Services dba Wells Fargo Bank NA ‘Certifying Officers’ Attorney in Fact gives Power of Attorney to Master Servicer’s ‘Substitute Trustee’.

    ‘TITLE EXCHANGE’ USED TO DO WHAT LICENSED ‘REAL ESTATE BROKERS’ MAY NOT DO.

    NON-MERS MEMBERS USE ‘MERS’ GET ATTACHED TO ‘FHA’ SERVICER – FOR EXAMPLE’

    PURCHASE LOANS THROUGH MERS AND REPACKAGE AS MOM ALLOWS NON-MEMBER ….

    PAGE 11, SECTION (b) “mortgage loan registered on the MERS® System is vested in a non-Member” MERS Servicer of such mortgage loan. MERS not to be liable for following MERS Member instructions on behalf of the non-Member beneficial owner.

    The note owner or the note owner’s servicer shall cause the Certifying Officer to execute the assignment of the Security Instrument from MERS SPE Inc. to the note owner’s servicer, or to such other party expressly and specifically designated by the note-owner before initiating foreclosure proceedings or filing Legal Proceedings and promptly send the assignment of the Security Instrument (in recordable form) for recording in the applicable public land records

    MERSCORP OR MERS SPE INC. ‘MERS ENTITY’

    FOLLOWING A SERVICER PROVIDER REPLACEMENT EVENT’ (SEE RULE 11-SECTION 2)
    ‘MERSCORP’

    SHALL MEAN EITHER MERS SPE INC OR THE ‘REPLACEMENT SERVICE PROVIDER – AS DETERMINED BY MERS SPE INC.

    SECTION 2: APPLICATIONS FOR MEMBERS TAKEN ON BEHALF OF ‘MERSCORP’ (USE TO BE MERS)
    BOARD OF DIRECTORS MERS CROSSED OUT ‘MERSCORP’ REPLACEMENT.

    THEY REMOVED ‘AS APPROVED BY THE BOARD OF DIRECTORS OF MERS ‘SECTION 5.

    SECTION 7, THEY REMOVED ‘THE CORPORATION’ AND REPLACED ‘MERSCORP

    ‘LAST SENTENCE PAGE 48 “OBLIGATIONS OF THE MEMBER UNDER RULE 14 SHALL SURVIVE THE TERMINATION OF THE MEMBER’S USE OF THE MERS(R) SYSTEM.
    MERS GETS COPIES OF ALL PUBLC PLEADINGS IT FILES ON ITS OWN BEHALF AND ALL PLEADINGS IT FILES ON BEHALF OF MERSCORP AND MERS SPE INC.

    MERSCORP, INC (THEY CROSS OUT THE INC) ‘MERSCORP ONLY.

    MERSCORP

    For purposes of this Rule, the term “person associated with” when applied to any person or entity shall mean (i) any partner, senior officer, director or controlling person of such person or entity or (ii) any officer or employee of such person or entity who has, or shall have, access to the MERS® System.

    EACH MEMBER AT OWN EXPENSE CAUSE MERS SPE INC. TO APPEAR IN APPROPIRATE PUBLIC RECORDS AS MORTGAGEE OF RECORD FOR EACH MORTGAGE LOAN MEMBER REGISTERS ON THE MERS(R) SYSTEMS MERS SPE INC. IS A WHOOLY OWNED SUBSIDIARY OF MERSCORP CREATED FOR THE PURPOSE OF SERVING AS THE ‘MORTGAGEE’ OF RECORD IN THE APPROPRIATE PUBLIC RECORDS.

    THE ‘MEMBER’ SHALL MONITOR PUBLIC RECORDS VERIFY COMPLIED IS THE ‘QUALITY ASSURANCE PROGRAM’

    THE MEMBER REGISTERS ON THE ‘MERS(R) SYSTEM THE DATE SUCH INSTRUMENT DELIVERED.

    THEY CROSSED OUT:

    As soon as practical, the Member shall register

    on the MERS® System the specific recordation information provided by the custodian of public

    records which evidences that Mortgage Electronic Registration Systems, Inc. is mortgagee of

    record with respect to such mortgage loan.
    PAGE 12 OF 48

    SIGNIFICANT WORD ‘CUSTODIAN’
    THE CUSTODIAN AS IN THE BAILEE LETTER? CONDUIT? ‘REMOVED’ MEANING UP TILL NOW WAS CUSTODIAN.

    MERS MEMBER REGISTERS LOAN – MEMBER PROVIDES EVIDENCE.

    (c) Mortgage Electronic Registration Systems, MERS SPE Inc. shall not act as

    mortgagee of record for the purpose of procuring borrowers for the Member or making mortgage

    loans on behalf of the Member PAGE 13

    SECTION 6, CROSSED OUT ‘MERS’ AND ADDED:

    MERSEach Member hereby appoints MERS SPE Inc. as its nominee (as a

    limited agent) with respect to each mortgage that such Member registers on the MERS® System.

    MERSCORP and MERS SPE Inc. shall

    PAGE 15 (c) … indemnification shall extend to circumstances in which a mortgage is released by Mortgage Electronic Registration Systems,MERS SPE Inc., but the mortgage loan has not been paid in full, or in which such Member wrongfully refuses to authorize Mortgage Electronic Registration

    Systems,MERS SPE Inc. to release the mortgage.
    CR67871 – Allow Agency Investors to Initiate TOB Option 2
    With this enhancement, Agency Investor Org IDs 1000106, 1000130, and 1000249 may initiate a TOB Option 2 batch for MINs on which they are the Current Investor. Error message 478 “Transferring Member Not Servicer/Subservicer/Investor” is displayed online or on the Transfer of Beneficial Rights Rejects (BF) Report if one of these three Org IDs is the Initiating Org ID and is not the current Servicer, Subservicer, or Investor on the MIN.

    CR67959 – Modify Lite Member Aging Report Criteria
    The MERS Lite Aged MIN Servicing Detail (QV) Report now identifies MERS Lite Members that are the Servicer of MINs over 90 days old regardless of whether a Subservicer is also present on the MIN.

    If you have any questions about this interim release, please contact the MERS Development Department

  13. Fannie Mae is giving the mortgage servicing industry’s handling of troubled government-backed loans a makeover. But it would rather do so in private

  14. PENDINGLAWSUIT

    cannot read the copy posted—copying too light

  15. ANYBODY NOT LIVING IN CALIFORNIA, NEVADA OR MASSACHUSETTS — TAKE HEED

    http://www.scribd.com/doc/75883473/ACTION-ALERT-TO-NON-CALIFORNIANS-NON-NEVADANS-YOUR-RIGHTS-WILL-BE-TAKEN-AWAY

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