Innovative Lawsuits Test the Credibility of Securitized Loans

For further information or assistance please call 954-495-9867 or 520-405-1688.



If you ever saw the movie “The Firm” from the book by John Grisham, you know the ending. The whole system was rigged but what finally produced a result was mail fraud, which is generally off the radar screen for any lawyer combating powerful opponents. The lesson for the perpetrators of crimes, predatory loans and so forth is that they can’t cover everything. There are too many ways that they faked the deals from top to bottom. Mail fraud might be one of them. And as you will see, talking to the borrower might be another. One lawsuit against US Bank shows that anyone who really does their homework might be able to take down Goliath with just such an innocuous provision.

A word of caution here  — these strategies are predicated in part on the assumption that the entire loan process was fraudulent, where there were dozens of undisclosed entities taking undisclosed fees from a large pool of investor money used in part to fund mortgage that were not tied to any documents signed at closing. The documents that were signed had no connection to the actual lender and the entity identified as the lender was a pretender paid to act as though it was loaning money. The reason I mention this is not to hammer down on the reality of those mortgages, but to suggest that a judge who still thinks that the borrower is a deadbeat trying to get out of legitimate loan, is likely to find problems with “innovative strategies.” But it is also true that there are a variety of things that bother many judges more and more about these loans and the foreclosures.

The article in the New York Times by Peter Eavis goes into some detail, but the essence is in this quote:

Not engaging with borrowers who have missed payments may not seem like the strongest grounds for litigation against a bank. Yet that is the basis for an innovative lawsuit against U.S. Bank, a division of U.S. Bancorp, one of the largest banks in the country. The legal action could mean fresh legal problems for other big mortgage banks, as well. It is the latest threat to emerge from a barrage of cases that have forced big banks to pay tens of billions of dollars in recent months.

The lawsuit focuses on a popular type of government-guaranteed mortgage that in fact requires that banks take distinct steps — like trying to arrange a meeting — when borrowers stop paying.

The lawsuit is being brought by Advocates for Basic Legal Equality, a legal aid group. In a twist, the group is suing U.S. Bank in federal court in Ohio on behalf of the United States government, using the False Claims Act. This legislation, which dates to the Civil War, allows private citizens and groups to pursue legal action against companies and other entities for receiving payments from the government on false grounds.

The more you drill down on the existing laws, rules and regulations the more violations you will find. And when it comes to foreclosing, anyone watching this nightmare unfold must get to to wondering about why all of these deals went to foreclosure instead of workouts. The answer is that the foreclosure judgment and the foreclosure sale is part of a massive cover-up of massive fraud. And for the most part, the government has decided to (a) not prosecute real claims for real damages and real crimes and (b) not provide individual homeowners with information already obtained about their homes, their mortgages and their foreclosures that would shut the process down if known. The latter is what most irks Elizabeth Warren who now officially speaks for the average American and who seeks a level playing field in the Senate of the U.S. Congress.

People like Senator Warren, Sheila Bair, former FDIC chief, and others who have been outspoken about the out right fraud — i.e., nonexistence of the loans being used as a basis for foreclosure — keep getting stepped on, but the recent “promotion” of Warren is at least somewhat encouraging in that it shows that the leadership of the Democratic party recognizes they can no longer ignore her or the issues she speaks about. She speaks at gathering that attract voters from across the political spectrum and she is proving what I said years ago a constantly ever since — if you want to win by a landslide, run against the banks  and the people they own in our government.

8 Responses

  1. And once again, some arrogant and overpaid suit being grilled by E. Warren.

  2. This kind of stories shouldn’t happen anymore but they still do. No point in negotiating: when people have been wronged, they need to sue, ask for a lot and fight all the way to trial. They may not get it all but until more people do, nothing will change. 7 years is a long time. And nobody will fight for anyone else.

    That guy was way too reasonable right from the onset.

  3. the obama debt forgiveness act is a puny gesture compared to the hail mary passes ( so called settlements, some devoid of any meaningful investigation by independent bodies) these bank criminals have been given ( on our tax payer dime of course) not to mention the false claim to tax exemptions- if any of we little folks tried that we would have hell to pay. If our leaders were to prosecute this massive fraud the privitized jail system here in AZ and elsewhere would thrive and all the unjust enrichment obtsined by these crooks could be seized and used tiwards community projects and community small business ventures, being good for the economy – long term, long term.

  4. Whats good about ” innovative” is the asshats are not prepared

  5. Ukg and Louise- heads up high! Hope springs eternal! We may get a level of justice which we weren’t expecting-
    I saw it in a fortune cookie the other day, am trying to verify the source right now. I think it came from somebody named “Eddy”.

  6. me neither. Our government is part of this conspiracy.

  7. We shall see whether we receive any justice this year or not. I, personally, am not expecting any.

Contribute to the discussion!