“We’re not aware of a single case so far of a substantive error. Out of tens of thousands of potentially affected borrowers, we’re still waiting for the first victim claiming that he was current on his mortgage when the bank seized the home. Even if such victims exist, the proper policy is to make them whole, not to let 100,000 other people keep homes for which they haven’t paid.”

-The Politics of Foreclosure, WSJ OpEd


I used to think that the partisan, money-losing screeds that are WSJ OpEds were written by intelligent idealogues. Their errors were thought to be a function of a variety of cognitive mishaps and biases. These are typically associated with sports fans, but afflicts partisans as well.

I am no longer convinced of this.

I now believe they some combination of heavy metals or other pollutants has somehow rendered the judgment centers of their brain inoperative. They function in ways indistinguishable from other human beings, except when it comes to anything involving judgment. This includes complex mathematics, a new or unusual fact pattern, or simply something that conflicts with prior experience. It is beyond them.

If they are not clueless, then the alternative conclusion is that they are liars (a third possibility is blunt head trauma; or perhaps they are high functioning Microcephalic Idiots –  but I doubt that). That conclusion is based on an October 9th editorial, from whence the above quote was derived.

As has been widely circulated and discussed in the media, Man’s home sold out from under him in foreclosure mistake. The gentleman in question DID NOT HAVE A MORTGAGE.

If that is not substantive error, then WTF is?


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

The Politics of Foreclosure
WSJ, Functional Moron Division
OCTOBER 9, 2010

Category: Markets

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

87 Responses to “Are WSJ OpEd Writers Clueless or Liars?”

  1. Mannwich says:

    GREAT post headline, BR! I used to ask myself this very question during my short one year subscription to the WSJ, which used to have great reporting, but a stupendously awful Op-Ed page. I came to the conclusion that it’s a mix of both with the tilt towards the latter. Lying is just second nature to some people. They can’t help themselves. They even believe their own lies after a while.

  2. Mannwich says:

    “High functioning retards.” LOL.


    BR: Oops — that was my note to myself — it was not supposed to be published. I better get rid of it before the PC police go wild . . .

  3. W_Nelson says:

    Point well taken, Ritholtz — but in general — this whole episode brings to mind “What’s gravy for the goose is gravy for the gander.”

    These people were more than happy to ride the autofellating robo-loan train into home ownership, but now that it’s time to actually pay up, _now_ we break out the white gloves? Sure, on the margins there’s going to be horror stories, but that shouldn’t obscure the truth that you dance with the girl you brought, regardless.

  4. jb says:

    hrm.. Ok – first, just because you’re aware of something doesn’t mean that automatically everyone is aware of it.

    Secondly, if you can only find one instance of such an error, that would be characterized as a mistake, not some sort of heavy-metal-ingestation-conspiracy.

    Lastly, the WSJ says ‘the right thing to do is to make them whole’, which is exactly what’s happening in this particular case.

    If it turns out that there’s been a lot of these incidents, the banks are being difficult and everyone knows about it except, apparently, the WSJ and me, then you might have a case for anger with the WSJ editorials. But I read that article, thought of the one specific case you mentioned, and thought ‘well, that’s just one isolated incident, it would be highly presumptuous and crazily egotistical of me to attempt to extrapolate that into a major issue with the article as a whole”

  5. cfischer says:

    I was hoping you’d including the NYT and Mankiw’s brain fart piece of Partison nonsense in there as well.


    BR: I have something in the queue

  6. Fred C Dobbs says:

    I think you fail to make a distinction between a statement that is false, and a statement made intentionally while known to be false. Only the latter is a lie. The operative words are “substantive error.” This I take to mean that foreclosures have only been brought against people owing money to someone, and this is probably a true statement. People handling the paperwork that ends in foreclosure are not as bright as the stupidest know-it-all on Wall Street or anyone living or working in Manhattan, and these poor stupid make mistakes all the time, in good times and bad. The foreclosure against the wrong property, resulted obviously from someone putting the wrong description into the papers. Wrong cars are seized by repossessors, wrong people arrested, and so on. Big deal. WSJ makes a mistake. So have you and everyone else.

  7. Mannwich says:

    @jb: But that instance was WIDELY publicized when it happens. Isn’t it a reporters JOB to know about these things, especially when it’s laid in his/her laps?

  8. Matt SF says:

    If not misinformation, or an older article submitted some time ago prior to the latest robosigning incidents and foreclosure without a mortgage story, it’s a prime example of…

    I reject your reality, and substitute my own.

  9. Winston Munn says:

    The way to remain pure to ideology is to ignore irritating, conflicting facts.

  10. Dennis the menace says:

    I am surprised at the WSJ over this, given how important property rights are to conservatives.

    You would think true conservatives would defend that — they are just corporate whores.

  11. Mannwich says:

    GREAT point, menace, but you and I both know that the “sanctity of contracts” and “property rights” memes by the corporate whores on the right (yes, that includes YOU, WSJ) only apply selectively to their own brethren in the elite, monied class.

  12. jb:
    They said they knew of no instance. BR provided one. That puts a lie to it right away. If BR wanted to spend the next 30 minutes using Teh Google, I am sure he could find more. It’s just that the one he provided was easy as pie to provide. Which makes it all the more damning.

  13. Professor Tim 1754 says:

    I disagree. While I too would likely call the mistake substantive, it is borderline procedural insofar as the home was already in bankruptcy when the father/son purchased it via short sale. Frankly, I am surprised that the purchasers are all that surprised by this outcome. What did THEY do on their end to make sure the bankruptcy action was properly dismissed? In other words, as most of your readers are aware, you previously dedicated more than a post to Short Sale advice, Short Sales are amongst the most riskiest of real estate transactions. While enough information has recently come out regarding some flimsy practices in Florida, this one case should not be held up as the reason why the foreclosure process across the country is in shambles.

  14. Dennis the menace:
    They have been, the GOP at least, for the past 50 years, at least. The GOP used to be a big tent party(in the time of Fightin’ Bob LaFollette anyway).

  15. drewburn says:

    Who else would publish Karl Rove’s BS?

  16. Mannwich says:

    And Don Luskin.

  17. Mannwich says:

    I was going to read the Mankiw NY Times’s piece yesterday but couldn’t even muster up the energy to do so. Too nice a day outside to waste my time.

  18. KidDynamite says:

    So Barry – what if they changed that sentence to, “Apart from a single instance of a man who was foreclosed on when he didn’t even have an outstanding mortgage,…”? Would that be ok? How do you feel about the substance of the rest of the OP-Ed?

    The guy who had his non-mortgaged house foreclosed out from under him is an abomination. No one in the world, regardless of political affiliation will support it. But what about the larger point of the WSJ Op-ed? It makes a whole lot of sense to me!

    To me, the sarcastic opening paragraph of the Op-ed is dead on:

    “Talk about a financial scandal. A consumer borrows money to buy a house, doesn’t make the mortgage payments, and then loses the house in foreclosure—only to learn that the wrong guy at the bank signed the foreclosure paperwork. Can you imagine? The affidavit was supposed to be signed by the nameless, faceless employee in the back office who reviewed the file, not the other nameless, faceless employee who sits in the front. ”


    BR: That whole paragraph is a lie. Its not remotely what this scandal i about.

    This is not about keeping deadbeats in their houses — this is about the rule of law and property rights.

    I made that clear in numerous prior posts before the WSJ clowns published that drivel.

  19. VennData says:

    They’re paid marketing copy writers. They will say anything to keep the “tax cuts for the rich” guys in power.

    Simple, rational, effective. …but they will all go to Hell.

  20. Mannwich says:

    @KD: But they didn’t write that, did they? Now why is that? Goes against their ideology and agenda, perhaps? I would agree though that this is a minor quibble compared with the thousands of disingenuous and downright false Op-Ed’s that have come out of that paper in recent years. I think BR makes his point quite nicely though.

  21. KidDynamite says:

    Mannwich – my point is only that the substance of the Op-ed stands on its own without that one “error.” The proper policy IS to make the victims whole, not let everyone else skate. If there are a lot of victims, then it’s a big problem. Are there lots of victims? I have no idea. Barry mentioned ONE. One victim.

  22. Mannwich says:

    And let me see – it was the banks who held the responsibility to ensure that people could pay back these loans. Now that they didn’t do it but were still bailed out anyway for their recklessness and incompetence (and fraud), we should now allow them to skirt the law to foreclose on the very people they lent that money to? Nice work if you can get it. Do a job very poorly, and often fraudulently, get bailed out, and then get to repeat that process on the back-end with those debtors.

    If I’m one of those people being foreclosed on, I sit there and see how all of these banks have been bailed out for their reckless behavior and think to myself, “I think it’s time for me to sit tight, make them prove they own the note until I bail”. I’m not one of those people but if I was one, I would seriously think about doing it, getting “my bailout” if you will. The Sheeple only merely follow the behavior of their so-called “betters” and when they perceive they are being screwed by their masters time and time again, then why should we be surprised they’re now jumping in the game and “getting theirs”? The precedent for this behavior has long been set for gaming everything. Pull up a chair and grab some popcorn.

  23. Mannwich says:

    I hear you, KD. I’m guessing there’s probablay more but I get your point. The point is the WSJ has long been a elitist shill and tool for the establishment and they will do anything to promote that agenda, even overlook obvious contrary facts in the process.

  24. There are 100s of examples — we’ve seen rampant fraud. Including the illegal breakins into people who have not yet been foreclosed upon.

  25. TakBak04 says:

    BR…Well stated….but, on your first run…you might have been zapped by your own comment moderators.


    And, thank you for your analysis. Many of us have thought it was just us who had the same complaints about WSJ Editorial Board. The new “owner” has made things worse, though.

  26. beaufou says:

    “Even if such victims exist, the proper policy is to make them whole, not to let 100,000 other people keep homes for which they haven’t paid.”

    And how about letting the banks keep the hundreds of millions of dollars they made by committing fraud, sweep it under the rug?

  27. Mannwich says:

    Good thing Eric Holder wasn’t on this one over in Hungary. This CEO not only wouldn’t have been charged with any crime, but would have likely been rewarded.


  28. freitagfan says:

    “it was the banks who held the responsibility to ensure that people could pay back these loans. ”


    And most bankers weren’t bailed out for free. Most were forced to take a bailout, paid a fee for the bailout and have since paid the bailout back. Let’s not lump them ALL in the same bucket.

    There seems to be a mentality that people are owed something because bankers were given something that the people weren’t in favor of. I wasn’t in favor of the bailout and have paid off my mortgage. What do I get for free?

  29. Mannwich says:

    @frietagfan: Not all are equal, for sure, but to say there wasn’t WIDESPREAD malfeasance and fraud, and in the very least, incompetence, by our banking industry is simply sugar coating things. And corporations use procedural law in defense of their interests. Why can’t individuals do the same? Just saying. The sheeple merely follow. They’re often late to the party (in this case, the “party” is “gaming” to get what one wants) though.

    I say this is poetic justice.

  30. Mannwich says:

    And if “corporations = “people”, then the reverse must also be true, right? Lawyer up, peeps!

  31. rktbrkr says:

    The WSJ has been Murdocked.

  32. Koil says:

    “Even if” the editors are clueless and/or liars, the proper policy would be to simply ignore that reality.

  33. Bob is still unemployed says:

    A few years ago, I used to enjoy watching the WSJ editorial board’s TV show (now called The Journal Editorial Report). The show used to be a good and intelligent discussion of the week’s news from a rational right wing view.

    No more.

    The show has deteriorated into unsubstantiated derision of anything that is not the sanctioned viewpoint of the more extreme right wing. Intelligent commentary has been removed from the program.

    A solid and balancing viewpoint has been dumbed down to the point that is has become a caricature.

  34. dead hobo says:

    I don’t read the WSJ anymore, and I agree they are a POS with respect to the last 1/2 of Section 1, but this editorial, as excerpted here, is spot on OK. Who really gives a shit who signed the document. If the loan is in default and nobody disagrees with the facts, then let the house be foreclosed on and let the house be sold.

    I really don’t think anyone really cares about signatures except a few gullible souls who have taken the bait, such as some commentators here and other hand wringers elsewhere. This issue is what is commonly called ‘A Distraction’. Nobody has cared about the little people before this, so please, ask yourself, why do they all of a sudden care now about poor people being thrown out of their homes.

    I suspect this tale of woe was concocted by the same folks who decided the world would end if Congress and the Fed didn’t write trillion dollar blank checks to Wall Street ASAP. If so, then the WSJ didn’t get the memo and should change course and trumpet the cause.

    I don’t have all the details because I’m not smart enough to know the ins and outs of loan securitization, but here’s the basics.

    Imagine yourself as a vulture who bought a securitized package of mortgages. You paid 50 cents on the dollar. This means that even if a house is foreclosed on, your basis with respect to that house is still below the ultimate sale price and you make a profit even if the home is sold at deep discount after repossession. You will make a ton of money no matter what happens. All you have to do is collect.

    Oops. That’s the problem. I suspect this is the real paperwork problem. There’s a good chance nobody knows that you are due the remittance from the distressed property sale. The cash may be going to the prior owner of the securitization. It may even be that the system is so clogged up that money ends up in the right place only by accident.

    So, foreclosures need to stop now until the real ownership issue gets resolved. Title to the vulture is unclear and the banks need to take it up the ass until they get reasonable assurance of being paid from their loan packages. It’s another wall street bailout being painted as a populist movement to keep poor people in their houses until the evil banks hire proper notary publics. It’s a well sold and excellently presented distraction … cue the violins … damn the evil banks … stop everything now … don’t notice the messed up derivative paperwork is the only real paperwork problem except for the .00001% real victims trotted out for public display.

  35. Space_Cowboy_NW says:

    “Genius may have its limitations, but stupidity is not thus handicapped” -Elbert Hubbard

  36. Lesly says:

    Ah, but the man you direct us to was never a borrower. He paid for the property up front and couldn’t be current on his payments without a mortgage.

    Idiotic, but that would be their rebuttal.

  37. dead hobo says:

    Ultimately, whoever packaged and sold the derivative would have to pay out if cash didn’t settle out correctly from foreclosure. Given the nature of the law profession, everybody whoever touched the securitization would be sued. Underwater home owners aren’t the main beneficiary of foreclosure halts. The iBanks are … the ones in the securitization sale business. The little people are the distraction. GS and others, probably the FDIC among them, are hiding in the background.

  38. NormanB says:

    BR: So what newspaper’s op-ed section is clearheaded? The NYT? The WP? As for me, I’d love the country to be run by the WSJ’s op-ed editors. Give me Mary Anastasia O’Grady anytime. But then again, you think that BR has all of the correct answers; NOT.

  39. BennyProfane says:

    The Bancroft’s are laughing and chortling into their martinis over the fact that the short fingered vulgarian spawned from criminal stock down under paid so much for their dying newspaper.

  40. dead hobo says:

    The solution to the real problem of “Who owns the securitization” ….

    Foreclosures resume. Lawyers smarten up and file suit against prior securitization owners to collect on the derivative. Cash collected from foreclosure sales goes into an escrow account at the Fed or at a major bank until such time as the court system resolved who is the rightful owner of the cash in the escrow account. iBanks lose tens or hundreds of $billions due to negligence in paperwork processing.

  41. KidDynamite says:

    mannwich – make sure you read RortyBomb’s piece that Barry links to.

    He mentions that the MBS had a clause in there that would require the sponsor to repurchase the securities if the note isn’t delivered. I’m all in favor of this – but if the structuring banks are forced to repurchase all this dogcrap they created, we need to make sure that it doesn’t just become an un-bail-out of FNM/FRE and a re-bail-out of the banks… sadly, there’s little doubt in my mind what would happen if C/BAC/JPM/GS were forced to buy back tens of billions of dollars of faulty MBS… more Federal money coming their way.

    BR – the illegal break-ins are not really the same issue. and again, I don’t think you’ll find anyone defending those. If there are thousands of people who have been foreclosed on when they didn’t have a mortgage, I’d love to know about it – it would be a huge problem.

  42. dead hobo says:

    The solution to the real problem of “Who owns the securitization” …. finale …

    Nobody in their right mind will ever again buy a mortgage backed security, except for maybe the Fed. History will show they are unreliable investments. The market value of all now in existence just dropped to pennies on the dollar. Holders of current securitizations will be lucky to be paid properly, let alone in full. The Fed may have to buy more just to prevent another credit freeze once people become aware of the real problem here.

  43. jritzema says:

    If he had no mortgage then I guess technically he was not current on his mortgage. That is the only way to justify that statement in the face of evidence and I am pretty sure that is how the writer rationalized that is was true.

  44. If the essence of the contract is that the lender loans money to a borrower secured by real estate, and I don’t believe that anyone doubts that is the essence of the contract, then if the borrower doesn’t pay, the lender should be allowed to gain possession and title to the collateral. It’s really as simple as that.

    Using the example of a mistaken foreclosure as evidence that these rapacious lenders are kicking people out of their homes for no reason is just plain disingenuous. That guy is the unfortunate victim of a mistake, which will be easily resolved. For all those that fret he is a victim of the terribly oppressive mortgage foreclosure machine, you should be aware that he bought the house with some family members in a short sale as an investment and that he wasn’t living in the house when the errant foreclosure was conducted. In other words, the guy was a vulture investor that negotiated for the purchase fully aware that the existing mortgage against the house was in default, and paid less than was owed on the house because of it. It was an unfortunate administrative error that the foreclosure proceeded anyway after the sale–probably due to the inefficiencies in communication inherent in any large bureaucracy such as is Bank of America, but this is nothing that anybody that’s in the business would find all that shocking or oppressive. All the bank has to do is cancel the deed, and it’s fixed. It was an error, not an intentional fraud, and should mostly just be ignored. Like one poster above said, everybody, even BR, makes errors.

    Notice how the Administration came out saying they hoped all this would be quickly resolved and the moratoriums lifted? They understand how utterly damaging to the market an extended mortgage foreclosure moratorium would be. And they understand that a national mortgage market that makes securitization possible can not be run by 40 or so politician attorneys general. And they understand that, unless you’d like to overturn centuries-old contract law, failing to abide legal technicalities does not operate to void an otherwise valid “meeting of the minds” such that one part is enriched at the expense of the other. The end result of this better be continuation of the idea that if you borrow money secured by your real estate, you lose your real estate if you don’t pay it back. If this idea is substantially altered by this populist demagogery, then the real estate market will indeed face Armaggedon.

  45. obsvr-1 says:

    “Even if such victims exist, the proper policy is to make them whole, not to let 100,000 other people keep homes for which they haven’t paid.”

    How about — Knowing that the fraudsters exist, the proper policy would be to claw back their bonuses, not let them keep a bonus that they didn’t earn.

    @freitagfan 12:20 pm

    … There seems to be a mentality that people are owed something because bankers were given something that the people weren’t in favor of. I wasn’t in favor of the bailout and have paid off my mortgage. What do I get for free?

    — Reply: You get a house full of politicians paid for by the the very banks that were bailed out. None of the TBTF would have survived or been severely restructured if not for the $T bailout and backstop from the gov’t (taxpayer).

  46. ericmcsquare33 says:

    People are missing the major issue in this foreclosure crisis.

    The issue is not whether or not a debtor that is extremely delinquent on their loan gets to stay in their house rent free. The issue is whether or not banks have to shoot for something more than a Gentleman’s C when it comes to court filings.

    This is not about freebies or procedural issues or even complex financial transactions that may or may not have been properly closed; this is about whether or not some people can mislead the court some of the time provided they promise to be truthful the rest of the time.

  47. cobalt917 says:

    Consumerist.com has been reporting on some of BofA’s more egregious screw ups over the last 18 months or so.

    They collected the five greatest in a post recently: http://consumerist.com/2010/10/bank-of-americas-greatest-foreclosure-fck-ups.html

    I couldn’t muster the motivation to mail the link to the WSJ editorial page, but I had that exact thought: “Really? You’re not aware of even *one* instance?”

  48. Mannwich says:

    @Curm: I know you’re in the mortgage biz and all but this doesn’t bother you at all? Posted in the above thread here by another commenter.


  49. ToNYC says:

    Why are too many shocked to find that Murdoch the Fox has eaten all the non-Corporate chickens?
    Nothing grows from their poop as if Monsanto’s Terminator gene was in full effect.

  50. dead hobo says:

    The Curmudgeon,

    Agree with what you said. I think this ‘foreclosure crisis’ popped up out of nowhere because current owners of derivatives weren’t being paid. The populist theme is the distraction. The real game is to stall until someone figures out how the iBanks and every other company that touched the derivative don’t have to pay anyone back for the crap they sold that is not being paid per terms. Perhaps the real fraud is fraud in the prospectus?

  51. Soylent Green Is People says:

    Perhaps if they checked FARK.com first and saw the link to The Consumerist’s web page the WSJ editorial could have been a bit different.


    Apologies in advance of sensitive readers who might have an issue with some of the saltier language in the post.

    My .02c

    Soylent Green Is People.

  52. darth beta says:

    Love them or hate them, take it or leave it, beleive it or not but ZH has a pretty interesting coverage.


  53. Mannwich says:

    @darth: And ZH was all over thisburgeoning mess well before it hit the mainstream. Ditto Naked Capitalism.

  54. ToNYC says:

    Fear of real Armaggedon leads directly to TARP; the Armaggedon is the Banks’s ox being gored. The choice is your ox. There is no worries of “free house”- idiocy…the real free is “of good title” and free of single demands on the mortgage payment.

  55. contrabandista13 says:

    I for one have not read the WSJ in years…. To me, it’s worse than a waste of time…..

    That there are those who still rely on that rag for reliable information, well, my brother is an excellent bankruptcy lawyer. The really bewildering aspect is that they expect you to pay for their dribble and that so many people actually do…..

    I shudda had a V8….

    Best regards,


  56. dead hobo says:

    No, the real issue is dread fear of being sued under the 1933 Securities Act for fraud for selling crap derivatives that don’t match the description in the prospectus. The populism is a distraction and a stalling technique.

  57. Julia Chestnut says:

    @JB, it’s also not an isolated incident: http://consumerist.com/2010/10/bank-of-americas-greatest-foreclosure-fck-ups.html. That’s just Bank of America, and it is just stories that were reported in the newspaper this year. The stories in question are fantastic, because the people in question had NO DEALINGS with BOA.

    There is also the case of the woman, widely reported very recently, whose house was broken into and the locks changed while she was in it by goons sent by Chase. She was behind on her mortgage, but not technically in default, had not received an NOD, was not in foreclosure.

    THERE ARE LAWS. They are not being followed. And we’re not talking “failure to honor the law in the breach,” we are talking about huge, gross, fraudulent, lying to the court, indimidating people lawlessness. So really, the fact that even the President of the US isn’t terribly concerned about it, or that no one thinks it is prudent to throw a monkey-wrench in the foreclosure mill altogether is far from the most horrific fact going here. No no, the worst is — where are the indictments? People need to go to jail and companies need to be disbanded. Until that happens, all that happens is we further erode the belief of the populace in the rule of law. And brother, when THAT goes – trust me, you lose a lot more than a little paperwork and some hassle.

  58. Chris Morran says:

    Bank Of America’s 5 Greatest Foreclosure F*ck-Ups

    Earlier today, when Bank of America said it was halting foreclosure sales in all 50 states, we decided to take a stroll down memory lane to revisit the wide array of foreclosure disasters that BofA has perpetrated on the homeowning public in just the year or so.

    1. Aug. 2010: BofA Tries To Foreclose On Couple With Current Mortgage

    Even though they have made every payment in full and on time, Bank of America sent one couple a letter asking them for the deed to their house….

    Bank of America said sending the letter was an accident, the folks were completely current on their mortgage, and they would be looking into what caused the error.

    2. Sept. 2010: BofA Forecloses On Man’s House, Even Though He Has No Mortgage

    Bank of America stole Jason’s house from him, putting it through foreclosure even though he has no mortgage, with them or anyone, and he paid for it in cash.

    3. Oct. 2009: Bank Of America Seizes Wrong House, Causes Big Stink. No, Really.

    Bank of America screwed up and seized a vacation home that didn’t belong to them. They also changed the locks and shut off the power, leaving 75 pounds of salmon and halibut rotting for a week before it was discovered.

    4. March 2010: Bank Of America Seizes Wrong House, Holds Parrot Hostage

    After mistakenly believing that the property was in default, BoA instructed Snyder Property Services to “enter, seize, padlock, ‘winterize’ and take possession” of the plaintiff’s home. This included turning off the water, cutting power lines, filling her drains with antifreeze… and confiscating her parrot.

    5. Jan. 2010: Not Having A Mortgage Doesn’t Stop Bank Of America From Foreclosing

    Charlie and Maria Cardoso managed to do something few homeowners can: They own their vacation home in Florida outright, with no mortgage. But that didn’t stop Bank of America from kicking out a tenant who was renting the house, tossing out the Cardosos’ possessions, and, yes, foreclosing on the debt-free home.

  59. beaufou says:

    I actually like this one on ZH too.


    After reading this, re-read the WSJ editorial and laugh, systemic fraud with total disregard for the law.

  60. dead hobo says:

    Barry Ritholtz Says:
    October 11th, 2010 at 2:19 pm

    … we decided to take a stroll down memory lane to revisit the wide array of foreclosure disasters that BofA has perpetrated on the homeowning public in just the year or so.

    Wow … 5 whole mistakes. Shoot them!!!!

  61. Mannwich says:

    PRECISELY, Julia! Well put.

  62. soloduff says:

    Barry: With respect to the issues mangled by the WSJ writers, they are, strictly speaking, neither “clueless” (as in not seeing the obvious) nor “liars” (as in seeing the obvious, but lying about it). Rather, they exhibit the ideological filtration phenomenon that Orwell dubbed “doublethink”; called “selective inattention” in psychology; and “the fallacy of inconsistent principle” in the logic texts. The ideological imperative of the WSJ Op-Ed crew is the blamelessness of the status quo. Ergo, when they view the crimes of the status quo, while their physiological perception is quite unimpaired–i.e., they see all the “clues”–their ideological allegiance literally compels them to ignore, deny, or minimize all that convicts the status quo of criminality; while not being conscious of perpetrating falsehood. We see the phenomenon every day when we behold the defense of the indefensible. For example, the USA is nominally against “terrorism” (as in force or violence against civilians for political ends) but regularly engages in precisely this when expedient, as in the destruction of Iraq’s civilian infrastructure (water, electricity, sewer, etc.) during the sanctions period preceding the second Gulf War; then the “shock and awe” visited upon Baghdad in March, 2003. It’s all Cowboys and Indians, USA: When “they” attack the settlers, it’s a massacre; when “we” impose a Trail of Tears (epitomizing genocide) it’s called Manifest Destiny. When “they” shoot down a civilian airliner it’s terrorism; when “we” destroyed the Iranian airliner (per the Vincennes) it was an unfortunate result of Iranian noncooperation. When “they” harbor bin Laden “they” are terrorists, too; when “we” supported the Nicaraguan Contras, the Salvadorean death squads, etc.–who murdered many more civilians than bin Laden–”we” were supporting Freedom Fighters. When “we” proliferate WMD it’s for peace and freedom; when “they” threaten to do so (Iran) it’s a threat to civilization. When the Palestinians trapped in Gaza kill an Israeli civilian with a home-made rocket, it’s terrorism; when Israel kills Palestinians in a ratio of 10 to 1, that’s collateral damage. –Now, in light of all the above, aren’t you glad that you are a financial expert instead of a U.S. teacher of anything pertaining to the humanistic disciplines?

  63. DuchessGateau says:

    BR is still thinking like an honest trader, as are most. But I have seen this kind of thing before, in war. The Serbian leaders in Bosnia issued exactly this kind of denial EVERY DAY as they looted whole towns and property. Propaganda is a TOP priority while stealing property. It can be sophisticated, or crude and threatening. The population understood; sophisticated rhetoric accompanies a planned attack. Court battles come at the end.

    If you think I’m exaggerating, you are naive. Milosevic was a banker. He worked in New York for 7 years. Probably where he learned it.

    Professional thieves create destruction and chaos, even war, and in the midst of that chaos, they seize property. They destroy records, so titles no longer exist or are in dispute, allowing the aggressor to take all. This level of chaos in mortgage titles is normally never seen except in war. Nobody can prove who owns what property in FL, and the vultures are busy stealing property. Evidently these vultures include Wall St banks, hence the WSJ op-ed.

    I expected that the vultures would be FL real estate lawyers, but the WSJ op-ed tips us that Wall St banks are involved, and worried about lawsuits. The WSJ op-ed will back up bank claims that it’s all a big misunderstanding. Nobody knew! Systems were on “automatic,” due to the large numbers. The important thing is that NO ONE is to blame or to be held liable! The banks just happened to end up with titles while homeowners were evicted. Expect to hear pathetic excuses printed in the papers from homeowners who were behind in their mortgage. This justifies unlawful seizure of others property, right?

    THEY ALREADY HAD A PLAN. How else could they be so far into the plan? To the extent of having document mills which create false paperwork, as noted by Rep. Alan Grayson. Didn’t these same banks do the same thing in Argentina? You think they forgot how much they made, and how they did it? You think they didn’t seize property? It was all a big macro-economic mistake which they just happened to make again in New York? Don’t be naive. They knew they needed to act quickly. They are prepared to go to court, but want to minimize costs.

    Why go to court if you already own politicians, judges, and newspapers, and can draft your own legislation? If needed, they will claim that their legislation the only RESPONSIBLE way to proceed! To SAVE THE SYSTEM. Again. And Again. And Again.

  64. Julia Chestnut says:

    No, dead hobo, I think that you miss the point. Connect the dots of what we do know, and that is just the spectacular, well-publicized cases where there was no argument on the part of the bank that it was harmless error – or where the people in question were behind, so they didn’t bother challenging the court documents that were all fraudulent.

    You know, it is illegal for a repo man to take your car if he can’t do it without a risk of bodily harm to you or someone else. But these people can break into occupied houses, take things, leave what they don’t want all out on the curb, change the locks — are you not paying attention? Exactly how many examples of theft and breaking and entering do you need? If this were a real, flesh-and-blood person we were talking about, you would probably be hoping that they got raped in prison by now. Why is it different when a corporation commits crimes?

  65. dps says:

    You’ll notice that the WSJ/Bank defenders keep moving the goalposts. First it’s “only one error of millions”, then five …

  66. Julia Chestnut says:

    In fact, here — try this:


    How do you feel about them lying about doing a check for whether people are active service members before taking houses through foreclosure? There is an absolute bar in the federal statutes on doing that to active-duty soldiers: you have to wait until they get back. And some judge required this foreclosure mill to hand the judge proof that they’d done that. So they used fake SS numbers, because they didn’t want to take the time, and they really didn’t care.

    Is it worse to you if someone is off serving this country, possibly dying for his/her country, and the bank is kicking their family to the curb and taking their house while they are gone? What is described is systematic fraud – not isolated incidents.

  67. darth beta says:

    @MW both excellent sources.

    These banks are just to complex. I worked for one TARP bank and had a brother work for another. There is so much bureaucracy that one department has no clue what another department is involved with. From personal experience, back in my day to day, I probably depended on 10 different internal teams or systems, most of which I never knew in person. Data comes from random systems (which never connect), IT handles this, the India office that. ect… My brother has great accounts; his TARP bank (very big player in MBS) needed a ton of MBS paper work shuffling done. So one summer they hired multitudes of college kids, only to lay them all off after 1 month (when the project was complete). No, these kids had no idea they were getting axed after only a month. There is a nice kick in the groin for some kid trying to put himself thru school.

    Management turnover is unbelievable high at these banks, there is no accountability.

    But this isn’t just a bank issue. Our leaders sold us out to all different types of big corporations.

    The answer is simple, less lawyers, less economics, less politics. More common sense….

  68. cpickett says:

    they have both.

    Clueless ….and Liars.

    Everyone Lies. It’s just not a pleasant thought.

    Does anyone know anyone who has worked in finance selling products…..these guys i hang out with and they lie and laugh. Obviously it’s not limited to finance…..some called it different things…mislead…..obfuscate…..what ever …..so yes you have lots of people who will lie for whatever rationalization helps them sleep at nite.

  69. RR111 says:

    Another aspect that has not been discussed… MERS and their Commercial RE unit.

  70. dead hobo says:

    Julia Chestnut Says:
    October 11th, 2010 at 2:33 pm

    No, dead hobo, I think that you miss the point. Connect the dots of what we do know …

    I am. I only know what I see in the papers and on the internet.If you have inside knowledge beyond this on a grand scale then please share it. I see what looks like a PR campaign that has caught on and is now taken as “what everybody knows”. Populist politicians are on the side on the voters, coincidentally right before an election. A scare like the one for TARP won’t work a second time. Subtlety is required and ‘power to the poor people’ fits the bill. I’m waiting for the 2nd act … or perhaps the goal is to raise so much confusion that no objective jury could differentiate between the horrible banks and their careless notary publics and fraud under the 1933 Securities Act. Maybe this game is only for the benefit of the SEC to dissuade them from a prosecution. I think this is the real game and you have been happily fooled.

  71. ZedLoch says:

    @DH, KD and all the other apologists: maybe you have been away for the past couple weeks?

    Oct 4th:

    Oct 5th:

    If its no big deal as yall say, then I’m sure the investigations into GMAC, JP Morgan, Fannie Mae, and BoA will reveal as much and the foreclosure hiatus will be lifted.

    But to me, the shit has already hit the fan and denial isn’t going to help…

    @BR: maybe there’s still SOME hope for WSJ?


  72. KidDynamite says:

    Zedloch – Apologist? I’m no apologist. I think Curmudgeon’s statement above (1:53pm) nails it.

    “If the essence of the contract is that the lender loans money to a borrower secured by real estate, and I don’t believe that anyone doubts that is the essence of the contract, then if the borrower doesn’t pay, the lender should be allowed to gain possession and title to the collateral. It’s really as simple as that. ”

    Should foreclosing lenders follow the law? of course. no one is disputing that.

    I think the banks should be forced to buy back crappy MBS that they produced which are fradulent/faulty (see the RortyBomb piece barry linked to earlier):


    I think Fannie and Freddie shouldn’t be on the hook, the banks should. I think the taxpayers shouldn’t be on the hook for the banks – their shareholders and bondholders should be. But in the end, once the banks own the paper again, the delinquent borrower is still getting foreclosed on – as they should be.

  73. crankitto11 says:

    This is reminiscent of the Daily Show piece on Fox News hinting darkly about the shadowy Arab financier behind the Ground Zero Mosque– who turns out to be News Corp’s second biggest shareholder after the Murdoch family! In a hilarious takedown, Team Stewart debates: Fox News– Truly Evil or Truly Stupid? http://www.indecisionforever.com/2010/08/24/jon-stewart-fox-news-is-either-evil-or-stupid/

    On a related note of are-they-evil-or-just-willfully-ignorant, after it was announced today that economist Peter Diamond had shared the Nobel Prize for Economics, at least one key Republican Senator (Shelby) said he would continue to oppose Diamond’s nomination to the Federal Reserve Board as “unqualified.” http://blogs.wsj.com/economics/2010/10/11/nobel-win-could-aid-peter-diamonds-fed-confirmation-fight/

  74. Neither am I an apologist. Foreclosures have been done in the manner they are now done for at least the mid-90′s when the securitization train pulled away from the station. It is incredibly convenient that we are now having a crisis and moratorium to protect the little people just before folks head to the polls. Although, it’s not clear which of the parties and candidates would suffer or benefit the most.

    The time for populist outrage has passed. It should have happened when we deemed ibanks and others too big to fail, putting the monkey for their survival on the backs of the poor folks (i.e., taxpayers). Now that we poor folks have rescued them, it would be cutting off our nose to spite our face to bury them (the banks) under an avalanche of worthless mortgages and promissory notes. We would destroy the mortgage funding process that made those homes possible in the first place, in the process destroying what’s left of their value.

    Foreclosing a mortgage is an unhappy business. It always has been, but we never bothered much to care when we all figured the deadbeats were getting what they deserved. Now so many are affected by the process, many through nothing but bad luck or poor risk management, that we figure that anyone–might get caught up in the maelstrom.

    But. This is not the time to effectively re-write contract law. Contracts must be honored, even in the times when they seem most unconscienceable, nay, exactly when they seem so. Else there won’t be any contracts. And the transactions upon which enforceable contracts depend will dry up, and then we’ll have a real mess on our hands.

  75. Arequipa01 says:

    It is about standing.

    There is widespread forgery going on.

    And those who are strumming on the ‘all of a sudden’ string. Wrong. Get your timelines straight.

    Landmark v. MERS was decided last Aug. There were people commenting on this blog about its importance last year.

    The solution the WSJ oped is pushing in a lowest denominator notarization standard- great solution, huh?

    Really worked out with the usury laws.

  76. Julia Chestnut says:

    Read the depo, hobo: what concerns me is the water already under the bridge. Yes, the entire media are owned by big corporations now, and do only their bidding. Yes, there is an election coming up, and people are being drummed for that reason. But it doesn’t change the violence being done to the rule of law. It just doesn’t. Again, I’m not happy about a damn thing here: I will be screaming until people are indicted. I want corporations disbanded and/or barred from doing business in federally insured areas.

    It’s been going on for a long time – does that mean that we should ignore it?

    And unfortunately, I do have some inside knowledge – of law and politics, not MERS. I’ve documented real estate deals, done due diligence on corporate mergers and acquisitions, and I know something about documentation. When I see something like this on this kind of scale, the problem is just the tip of the iceberg. There is ALWAYS more. My experience with the paperwork is that little flaws lead to big flaws. You just have to dig. But my concern, having grown up on the border to Mexico, is how it cripples an economy once the rule of law is undermined. My family has been doing business on both sides of the border for generations – we’re a well-known name. Yes, unfortunately, I do know what I’m talking about.

  77. darth beta says:

    This isn’t a question of populist or not…. It is a question of doing something the right way or the wrong way. Status Quo is a weak excuse, if it is even an excuse.

    This is exactly what is wrong w/ modern day America. Do what is easy instead of what is right. Why grow up to open a business or a be community leader, when you can be a know-nothing talentless celebrity and make the news every night. It is hard to grow your company so cut expenses; it isn’t efficient to do credit analysis on every borrower so take the statistics of the average. It is hard to find new ways to stimulate the economy so keep going back to the QE.

    Instead of stepping away from the process, finding a comprehensive solution and executing we simply look for the easiest short term solution. Hell politcs these days is why find an answer when it is easier to point out what is wrong.

    This entire process is more made-up rules on top of more made-up rules. And you all sit here debating the rules, the whole effing game is junk.

    And quit with the broad generalizations. Yes people who don’t pay their debts should have their assets seized. No one is arguing that. This is about loyal Americans following the rules and being financially wrecked!!!!

  78. machinehead says:

    Ever sued a business in small claims court? You are required to provide the name of a person within the court’s jurisdiction, upon whom an officer of the court (usually a sheriff’s deputy) can effect personal service of the notice. If you can’t follow this procedural requirement, then you get nowhere, even if your claim is valid and you are owed money.

    ‘Little people’ have to jump through the procedural hoops, dot every ‘i,’ cross every ‘t’ — no exceptions. It should be no different for the financial industry in foreclosures. If state laws require an affidavit from someone who has personal knowledge that a borrower has been served with notice of default — then that is an absolute, non-negotiable requirement to proceed, even if the borrower is a deadbeat.

    HR 3808, recently vetoed by the president in the first veto of his career, would have legalized interstate robosigning. This pig-in-a-poke elitist power grab was shot down — probably because the president was warned of potential middle-class riots, featuring bourgeois suburbanites torching cars and heaving bricks through shop windows.

    Foreclosure moratoriums echo the 1930s, and so does the populist hatred of the politically-powerful financial industry which extorted the indecent TARP I and TARP II bailouts. What people really want to see now is bloody-lipped bankers crawling on the sidewalk on their hands and knees, searching for their broken teeth. Ditto for the blind-ideologue WSJ apologists who defend them. These faux-conservative neocon scum haven’t made a penny off me, since I cancelled my subscription a decade ago.

    Don’t fund your enemies! Starve the obnoxious WSJ into a well-deserved cessation of publication. Then deport the rapacious enemy alien Rupert Murdoch.

  79. d4winds says:

    The editorial writer hedged legitimate objections to his mendacity ab initio with “We’re not aware of a single case…” Of course, he is “not aware of ” because he chooses to ignore the obvious which would have rendered him less aware.

  80. TakBak04 says:

    Commend the posters on this thread…lots of good links and comments. Nice to see!

  81. philipat says:

    Did anyone notice how neither WSJ NOR (In particular, Fox) picked up on the Bloomberg story about the Insurnace Companies cheating the families of deceased vets.

    On the one hand, they are normally the very first to get wrapped up in the flag and all outraged about anything involving abuse of vets and/or their families. Rightly os.

    However, in this case, the counterparty was the Insurance Industry.

  82. Let’s put this mortgage deal in simple terms. The link between property and myriad securities formed off mortgages is broken, and quite possibly irreparably so.

    A business wishing to remain a going concern only stops foreclosure proceedings in all 50 states when it is the judgment of the firm that, there’s risk of suffering massive liability proceeding with the affair. Therefore, the MBS market evidently is being judged by “the market” to be rife with fraud. Why else are key TBTFs locking down? They’re pulling the pin. It’s a shakedown!

    You’ll get your QE2, alright … after a panic into Treasuries sucking in hot money from overseas bolsters the dollar and props up the Fed’s backstop … which is to say QE2 will need TARP II, as well as a brutal Congress to shove it up your you-know-what … necessary, of course, if the aliens in charge are to remain batting 1000 in their effort to prevent another Great Depression. God help us.

  83. FrancoisT says:

    “If the essence of the contract is that the lender loans money to a borrower secured by real estate, and I don’t believe that anyone doubts that is the essence of the contract, then if the borrower doesn’t pay, the lender should be allowed to gain possession and title to the collateral. It’s really as simple as that. ”

    Excuse me but…is there anyone disputing this fact here? No, right? So, why bring that up exactly?

    The question is: Who really own the note? Who has legal standing to be considered the owner of the underlying asset, in this case real estate? Inquiring minds would feel better if this question was settled in every case.

    It just so happen that to be considered the legal owner, one has to follow this horrible inconvenience called the law. “It’s really as simple as that.” And the reason real estate law is inconvenient is really, but really simple to understand: errors are very costly and it is mighty preferable to avoid them as much as possible. If the financial industry honchos do not like that, they are free to leave the sector and take a flying f… on a rolling donut for all I care.

    We all know the financial industry has gotten used to write the laws to their advantage. But that doesn’t mean it is OK, nor that they should be dispensed to follow it.

    They ought to clean up their own mess, regardless of how long it takes. We, The People didn’t make them do it, the Communists didn’t force them to do it and no aliens performed mind control experiments on the deciders in the real estate industry.

    Finally, it never cease to amaze me how preoccupied some people get with the thought that a debtor could enjoy any advantage (no matter how little) from a situation, while downplaying (when not excusing) the gross and colossal incompetence, when not criminal behavior, of corporations that have no decency, no morality whatsoever.

    But perish the thought that any average Joe Debtor could gain any reprieve.

  84. [...] 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 [...]

  85. [...] 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 [...]

  86. [...] Carney of CNBC along with the Wall Street Journal editorial page are awfully eager to blame consumers for the foreclosure crisis, but doesn’t it remain [...]