The absurdity of illegal activity, criminal conduct, rampant fraud has reached a point where the nation much declare “No More.” We must begin the process of identifying criminal actors — and prosecuting them.

The latest twist on the criminality/foreclosure fraud: The hiring of untrained, incompetent burger flippers to act as lawyers or paralegals in the processing of foreclosures:

“At JPMorgan Chase & Company, they were derided as “Burger King kids” — walk-in hires who were so inexperienced they barely knew what a mortgage was.

At Citigroup and GMAC, dotting the i’s and crossing the t’s on home foreclosures was outsourced to frazzled workers who sometimes tossed the paperwork into the garbage.

And at Litton Loan Servicing, an arm of Goldman Sachs, employees processed foreclosure documents so quickly that they barely had time to see what they were signing.

“I don’t know the ins and outs of the loan,” a Litton employee said in a deposition last year. “I’m not a loan officer.”

This is a degree of recklessness previously unseen in American jurisprudence.

My advice: If you have been in any way personally harmed by the illegal actions of any bank, law firm, process server, or loan servicing agency, you MUST file criminal charges.

If your home was broken into by a firm to change the locks illegally, that is breaking and entering, and conspiracy. If the wrong bank filed a foreclosure action, if the wrong house was foreclosed upon, its time to go criminal prosecution route.

Go to the local police department, fill out the requisite forms. Then go to your District Attorney’s Office or County Prosecutor’s office, and ask to speak to someone in charge. Tell them you want to prosecute. You can also contact your state Attorney General about the same. Follow up with written letters, that you send you your local newspaper and the NYT, WSJ, USA Today.

If any local DAs balk — some will know bank execs from the political groups and golf courses — let them know you will keeping a written record of all of this, and you plan to make sure that their opponent in the next election knows all about their bank coddling ways. When they stammer, hammer them about their opponent’s interest in who is and isn’t a bank bitch.

Corporations that get free speech rights also have liability for their own criminal actions. Its way past time we start forcing those responsibilities to have some meaning.

This is not about keeping deadbeats in their homes, as a few idiots and liars have asserted. The corporate sympathizers who are too busy fellating the bank to recognize what is going should be ignored. This is about fundamental property rights and the Rule of Law in the United States — nothing less.


Bankers Ignored Signs of Trouble on Foreclosures
NYT October 13, 2010

Category: Credit, Foreclosures, Legal

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.

83 Responses to “Time for Criminal Charges To Be Filed . . .”

  1. Petey Wheatstraw says:

    I don’t think a common citizen can file criminal charges. I believe that’s up to the State’s/Distict attorney’s office and/or a Grand Jury. A citizen can file a complaint, but in many cases (if not every case), the decision to prosecute is political. What chance is there of that happening in a corporatist-controlled government? You can’t force government to uphold the law.

  2. Through the Looking Glass says:

    Thats what Im talkin ’bout. But where are all the Wall Street prosecutions? …..Oh yea they get fellated when they go bad .

  3. “This is about fundamental property rights and the Rule of Law in the United States — nothing less.”–BR, above


    no kidding. and, while we’re at it, We should understand that that sentiment is, foursquare, behind the Idea that “The Federal Reserve”, itself–Lock, Stock, Frock, and Barrel–needs to be put down..

  4. perra says:

    The lack of criminal charges is not exactly doing wonders for Brand America in the rest of the world. This is bad news for those of us who thinks the spread of democracy is a good thing.

    IMO disillusionment with the US (and the major Western European countries) is the most damaging thing to come out of this whole crisis.

  5. Lariat1 says:

    “This is not about keeping deadbeats in their homes, as a few idiots and liars have asserted. The corporate sympathizers who are too busy fellating the bank to recognize what is going should be ignored. This is about fundamental property rights and the Rule of Law in the United States — nothing less.”

    Thank you.
    Along with our Bill of Rights that I have a copy of posted in our kitchen is also a small poster of Locke’s inalienable rights. To life, liberty, PROPERTY and to rebel against an unjust law or government. This is what I have tried to hammer into my two sons over the years. The rule of law is what gives the sheeple a fighting chance. And they don’t even realize it.

  6. mbelardes says:

    Hmm … my girlfriend works at the DA’s office and once Prop 19 passes in CA (hopefully) there will be a lot of DA’s looking for something to prosecute. I’ve been explaining this to her but I didn’t think of mentioning “Yo, why don’t you guys go after these folks.” Doh! I think what you need is a police report to be filled out alleging fraud or some sort of underlying crime that is at least a misdemeanor. Then the DA has an obligation to prosecute the case. I’ll ask.

    Also BR, people should contact the local American Bar Association chapter, especially their ethics committee/personnel. Burger Flippers doing attorney work probably bordered the line of practicing law without a license and at the direction of attorneys (my bet). I’m sure most ABAs are unaware of the practice.

  7. Mannwich says:

    @Lariat1: Is there a “Bill of Rights” “app”? Maybe that would help matters?

  8. The Pale Scot says:


    (h/t) The Pale Scot

    What? It’s not real until it’s in the times? Two words. Judy Miller

    Just kidding’ BR

  9. Petey Wheatstraw says:

    mbelardes Says:

    “Then the DA has an obligation to prosecute the case.”

    I don’t think so. There is no requirement for specific performance by any government official or employee.

    “Also BR, people should contact the local American Bar Association chapter, especially their ethics committee/personnel.”

    . . . and be rudely awakened to the realities of self-regulation by the most corporatized branch of government.

  10. Jack Damn says:

    September home foreclosures top 100,000 for first time (Reuters)

    The number of homes taken over by banks topped 100,000 for the first time in September, though foreclosures are expected to slow in coming months as lenders work through questionable paperwork, real estate data company RealtyTrac said on Thursday.

    Why don’t we socialize home ownership?

  11. Petey Wheatstraw says:

    “Why don’t we socialize home ownership?”

    What’s in it for the banks?

  12. Bob is still unemployed says:


    Nothing really to add to your comments except a huge Thank-You for bringing this abdication of process to the forefront and keeping it under the glare of sunlight.

  13. rktbrkr says:

    It only takes one noble attorney general in a rugged individual state like Wyoming for example to bring crim charges against a handful of biggies from the big mortgage mills to tighten up a lot of assholes.I’m afraid they’ll target underlings like the mulletted mope from PA.

    How would you like to be a high profile defendant in a state like Florida or Nevada that has been racked by foreclosures? Go with a jury trial or not? LOL

  14. Lariat1 says:

    @Mannwich: Just for kicks i checked “apps” and came up with a .99 for Declaration of Independence, the Constitution, Articles of Confederation, Bill of Rights and the Emancipation Proclamation. With a whopping 100 – 500 downloads. It looks like American Idol and Dancing with Stars carries the day.

  15. Good idea, BR. Send a bunch of “BK kids” to jail. We’d have to turn all the empty McMansions into jails to house everyone if every time a fraud, mistaken or intentional, resulted in a criminal prosecution. Civil courts generally handle that sort of thing.

    The histeria with which you and many posters here approach this issue is a bit frightening. How about we just eliminate the criminal processes required for conviction and march all the bank employees and officers off to a guillotine?

    Nothing of this histeria and hyperbole will do anything to get at the true cause of all of this–as MEH observed above–the fraudulent promises embodied in a US Federal Reserve Note. But I get. It makes you feel better, and makes for a more interesting screed. Whatever.

  16. Lollipop says:

    So you’re all in favor of due process when it comes to bankers, but when it comes to seizing someone’s home due process is out the window?

    Looks like a double standard to me.

  17. AG Sage says:

    >Why don’t we socialize home ownership?

    It is. It’s called the Mortgage Interest Tax Deduction. Some apartment dweller making 60k helped pay for your house.

  18. mrmike23 says:

    Come on, Barry. Do you know how hard it is to find workers who will do this kind of soul-destroying, Goodwill Industries-appropriate assembly-line work? You are not going to get MBA’s or anyone else with an IQ above about 80. I guess in your line of work, where you interview and hire only bright, enthusiastic young college graduates, I’m assuming you have never had the task of trying to fill positions that have skill requirements that are slightly above those required of horse stall sweepers. What do you expect is going to happen? Mistakes, and lots of them.
    Rather than blame the banks and loan processing firms, what needs to change is the loan documentation and ownership history process to bring it into the 21st century where all the information resides on hard drives and software that checks for completeness like a Spell-Check sorts out items that don’t look right.

  19. Jack Damn says:

    What’s in it for the banks?

    Nothing. That’s the point.

    Instead of wasting time filing criminal charges (feeding another corrupt system taxpayer cash), why not take it out of the hands of the banks completely? Everyone here seems to dislike the way the banks are running the gig, so take it away from them. Socialize home & land ownership:

    1.) Remove the burden of private property from the individual. It’s an anachronistic concept that has no place in today’s economy and has resulted in a fiscal disaster.
    2.) Removes the burden of being financially responsible for something as complex as home ownership.

    Filing criminal charges did “what” to stop Goldman recently? Nothing … the SEC charges against Goldman didn’t do dick, and we all know that dragging this foreclouse mess into the courts will do … n-o-t-h-i-n-g. Nada. Zip … except transfer wealth to the lawyers & court system, and maybe enact a few laws that will slow down the machine for a few years until some hacks figure out the loopholes and we end up right back here again.

    Socialize every aspect of what the banks do today, and put them out of business. It solves two things:

    1.) You call off predatory bank practices that everyone here hates.
    2.) You don’t feed cash into the legal system which has become a farce.

    Simple as that.


  20. dsawy says:

    Those burger flippers were hired so that it wasn’t a lawyer’s signature upon a fraudulent affidavit. Why were these robo-signers hired? The lawyers were complaining of writer’s cramp? I don’t think so. MERS was willing to sell a vice-presidency position to a lawyer just as well as they’d sell it to a Walmart greeter. Why were all these documents funneled onto so few people’s desks, with so few notaries counter-signing?

    This was about making sure that the lawyers in the foreclosure mills and banks weren’t directly involved in submitting fraudulent documents to a court of law. The lawyers are trying to create a plausible defense that it wasn’t their job to review the docs, that they were not involved in notary fraud, etc.

    So if the courts ever decide to charge someone with “fraud upon the court,” it won’t be a lawyer losing their license. Some patsy will take the fall.

  21. ezrasfund says:

    BR asked which political party will throw the banks under the bus. Politics is the crux of the problem for the banks. They may have bought the politicians, but the angry mobs, from the Tea Party to the far left are at the gates. This may be a chance for Obama to cast himself as the populist anti-bank crusader. The pocket veto of the “notary bill” may represent a new direction for him and a path out of the wilderness.

    Another point that will make this messy. Foreclosure is under state law, not federal. It’s unlikely that we’ll see any “reforms” like the one that has Citibank and friends working out of South Dakota.

  22. donna says:

    Well, I dealt with an idiot in charge of handling estates at JPM for five years who was completely incompetent. I would question the competence of any of their employees.

    Just get your money out of any of the big banks and tell your friends and companies to do the same. Legal action is not sufficient — just destroy their reputations so completely that no one will bank with them ever again.

  23. rktbrkr says:

    By changing the mark-to-market rules the banks obscured the facts but couldn’t change them, now that the details are coming to light I’d say the facts are worse than we imagined a couple years back when Hank P was throwing life rings. Now that the TBTF have returned the life rings in order to collect their bonuses we can see the tsunami approaching. We have always underestimated the depths to which our TBTF bankers have sunk.

    IMO it will be politically impossible for Turbo Timmy to throw another life ring party for his buds.

  24. contrabandista13 says:


    I took the liberty of inserting in quotations, what I think you meant…

    “….. This is not about keeping deadbeats in their homes, as a few idiots and liars have asserted. The corporate sympathizers who are too busy fellating the bank, “while the bank ‘cornholes’ the public and the courts”, to recognize what is going should be ignored. This is about fundamental property rights and the Rule of Law in the United States — nothing less……”

    Best regards,


  25. ACS says:

    Jack Damn, just to keep the record straight, GS had civil, not criminal, charges filed against them.

  26. Jack Damn says:

    Ah, you’re right ACS. I mistakenly lumped it together. Thanks.

  27. rktbrkr says:

    FED collateral for loans to TBTF banks – a lot is secured by RE right? RE without clear title??? Maybe?

  28. WFTA says:

    A sincere question to anyone who might have the answer:

    Early in 2009 the administration undertook an initiative to help some borrowers restructure their mortgages and avoid foreclosure. To my knowledge it had very limited impact.

    Was it a feeble program or was it made feeble because the lien holders and servicers could not or would not wade through the mismanaged documentation?

  29. constantnormal says:

    It won’t work.

    The necessary preceding steps are to form a responsible third party, and vote them into office, displacing all (or at least a majority) of the Republicans and Democrats. That will require several election cycles, and a substantial body of informed activist voters, which does not exist.

    And even if a third party of responsible candidates somehow did magically spring into being, the existing power structure would work very hard at both blocking their appearance on the ballots, and at infiltrating and corrupting them via billions of dollars in bribes and campaign support — a tactic that has worked exceptionally well over the past decades.

    But nature will bring about a correction to this unsustainable situation — it always does. We just won’t like it very much.

  30. Kort says:

    Barry…you jumped the shark lol…your quote of the day is your own quote! Great quote btw…

    “You cannot borrow your way out of debt anymore than you can drink yourself sober.” -Barry Ritholtz

  31. tfneuhaus says:

    Easy now, Barry. A lot of this press about ‘robo-signers’ and wrong foreclosures has been drummed up by foreclosure lawyers. The reality is that the foreclosure process was speeding up after grinding to a halt because of a lack of judges and personell. The states started moving the process along and the foreclosure lawyers needed something to grab onto to slow the process down. If they don’t sue, the don’t get paid. And this was a perfect red-herring.

    The reality is that 99.9% of all the foreclosure documents have the correct information on them. They contain the $ amount owed, the amount in arrears, the property name, etc. The documents are double checked for accuracy several times during the process. Whoever signs the final copy isn’t the only one who’s looked at them.

    Banks are foreclosing on properties where the payments are in arrears according the mortgage contract the owner signed. The bank has that right according to the contract. This is also the rule of law and property ownership. Whether or not the person who finally signs the document has personal knowledge of that specific case is practically irrellevant as long as the information is correct, which is most all cases it is. Don’t let the foreclosure lawyers stop a process that is meant to clear the inventory of homes that people can no longer afford.

  32. advsys says:

    Is there a reason this can not be a class action? ie, some lawyer should be seeing a big opportunity in this situation?

  33. RadioFlyer says:

    The Curmudgeon is correct – the hysteria and hyperbole have reached a fever pitch. Kind of reminds me what this site temporarily devolved into back in the spring/early summer – when so many were screaming that the Gulf of Mexico – and perhaps the entire ocean – would turn into a vast oily wasteland. I’m still waiting for the oil to destroy all the marshes of LA, or wash up in Miami, Cape Hatteras, the Hamptons – or even Key West for that matter.

    From what I can tell, Barry still has not acknowledged and/or apologized for his hyperbolic outburst on Kudlow on Monday. Mistaken evections and foreclosures have indeed happened before, and the world apparently did not come to an end.

    Perhaps he and others are tired of the “madness” and believe that it’s necessary to overreact just to get a little response – but in my opinion, the overreaction just weakens the very valid argument that with respect to the transfer of some securitized notes, things got sloppy – and in cases where it rose to criminality, there probably ought to be prosecutions.

  34. ews says:

    So Paulson was a mere “incompetent” but a bunch of “BK kids” represent “a degree of reckless previously unseen in American jurisprudence?” Good grief.

  35. Petey Wheatstraw says:

    The Curmudgeon/tfneuhaus/RadioFlyer:

    If y’all are smokin’ something, you should stop. If you’re not, you should start.

    There is no hysteria in a call for criminal prosecutions for fraud. The “robo-signing” element f this has all of you reacting as if a mere technical boo-boo had happened.

    The fact is, the signing fraud was the first step in the creation of (now systemically ubiquitous) fraudulent securities, that have been divorced from the title to the underlying asset. THERE IS NOTHING BACKING THE SECURITIES THE BANKS CREATED AND DISTRIBUTED AROUND THE WORLD. If the banks try to undo the original “small” fraud, they open themselves up to admitting the larger fraud, plus taxes, plus penalties, plus interest, plus criminal and civil penalties and fines.

    There is no overreaction regarding this development. The banks are truly in check-mate. That some of you don’t understand the gravity of this dilemma for the banks (and, of course, the taxpayer), or that you persist in trying to trivialize the profound criminality that took place, paints you as either hard-headed, willfully obstinate, or just plain ol’ stupid.

  36. prozach says:

    It seems like this is similar to illegal search & seizure.

    Say a criminal is stealing stuff, you know he/she is doing it but you don’t have proof enough to get a warrant from the judge. Yeah, it’s a pain to go through the whole process of investigation and proper evidence gathering, even slows down the process, so much so that criminals are left on the street longer to commit more crimes, but that process protects the innocent.

    It’s the same way with the foreclosure process. It’s there to protect the innocent, at the cost of leaving deadbeats in houses they aren’t paying for. I don’t have a problem with this. Remember too that the banks made the original crappy loan, so too bad sorry sad that they are now stuck with a bad asset on their books longer than they’d like. I dont want to be kicked out of my house for because of their mistake.

  37. Mannwich says:

    @Petey: Wouldn’t that otherwise be defined as another version of a “Ponzi Scheme?”

  38. Mannwich says:

    @Petey: Or IN the industry.

  39. Just a thought: The action of the lenders by forging signatures, not notarizing documents properly or lying by signing documents that employees did not know were true are all crimes against the integrity of the judiciary. As citizens that must rely on the courts to enforce the laws, their integrity is paramount. As a result, I don’t think that whether or not I was personally foreclosed against or financially harmed is necessary. I hope that the attorney generals beat any individual one of us to the courthouse and impose severe criminal sanctions against anyone that is found to have conspired or acted directly in any of the alleged misdeeds.

  40. Crabbybill says:

    dsawy–you nailed it!

    Preserving the plausible deniability defense is a crucial component of any worthwhile ‘aggressive’ business plan. That layer of well place ignorance provides the needed isolation for the executive suite.

  41. Petey Wheatstraw says:


    ponzi is different. This is blatant fraud. Send me $50, and I’ll send you my product, only, in this case, when the box arrives, it’s empty.

    IN the industry crossed my mind, but I don’t think Curmudgeon is in the industry (OTOH, he might be — it’s a blog, he could be the head of one of these banks, for all I know).

  42. Mannwich says:

    @Petey: Point taken but Ponzi is “blatant fraud” as well. OK, maybe less “blatant”.

  43. Thor says:

    Petey – But don’t you see? Blatant fraud is OK if you’re a bank. If you’re just a lazy homeowner who knowingly defrauded those banks (who were really just being mandated by the government to give loans anyhow) then they should not only lose their house, but be socially stigmatized if they stop paying their mortgage.

  44. cfischer says:

    “The corporate sympathizers who are too busy fellating the bank to recognize what is going should be ignored”

    Barry, if I had a nickle for everytime you’ve made me laugh out loud sitting in my office, I’d have enough to buy you lunch by now.

    Couldn’t agree more with everything you’ve written.

  45. EAPoe says:

    Is there any data out there on this? I’m curious what % of foreclosures have been completely incorrect, how many people with no mortgages have been foreclosed on, etc.? I am not defending the actions of these banks, but I’d like to know, given the underinvestment in their servicing arms, how much did they get completely wrong at the end of the day?

  46. Mannwich says:

    @Petey: I believe that Curm is in the mortgage biz.

    @Curm: Care to weigh in and confirm or deny?

  47. SteveC says:

    I agree with you Barry that people need to wise up or get fed up with the fact that we’ve become either a plutocracy or corporatocracy.

  48. Amen to this call.

    (“A bank bitch” … nice.)

  49. curbyourrisk says:

    BR – a closet Austrian?????

    Who would have thunk it?

    Welcome aboard Mr. R.

    By the way…please indict the right people. Not the “burger flipping kids”, but the masters of the domain. Please indict the MANAGEMENT of said places. Yes LLoyd that means you at Goldman……

  50. darth beta says:

    BR a pretty concise sell side report that may help your readers……. (sorry for length)

    From Citigroup Global Markets

    Mortgage Foreclosures
    Keith Horowitz, CFA
    Craig Singer, CFA
    Steve Foundos

     Industry Overview

    Mortgage Foreclosures
    13 October 2010

    Understanding “Robo-Signers,” Documentation Req’s & MERS Foreclosure Problem Is Complex, but There Are Really Two Issues: Robo-Signing and Documentation Issues in Securitizations — There is a lot of investor concern about mortgage foreclosure impact on the banks given complexity of the topic and
    the size of mortgages outstanding ($10.6 trillion, of which $6.6 trillion is securitized). We believe there are two distinct issues right now. The first relates to the “robo-signing” issues that we believe led to several banks to issue temporary moratoriums on foreclosures. The second issue now being raised is whether existing securitizations have sufficient documentation. While the legal details are murky, our initial take is that the bigger risk to banks remains mortgage putbacks (see our Sept 26th note called Mortgage Repurchase Update) and that the issues raised here in this report will most likely end up delaying the foreclosure process, but will not present a systemic issue for the mortgage industry and the banks.  After Hearing The Bull and Bear Argument, We Came Away Less Concerned — Our
    colleague Josh Levin recently hosted a conference call, and published a noted called Foreclosures Gone Wild: Key Takeaways from Our Conference Call that raised some very significant issues with respect to the mortgage securitization process. After listening to the conference call, we were admittedly concerned. Subsequent to the call, we have spoken with various mortgage securitization experts and lawyers and also reconnected with Mr. Levitin. What we found was there are really 3 key areas of disagreement, and in the note we review each and give the Bull and Bear case to provide a balanced view of the issues. Overall, we came away incrementally more comfortable after hearing both sides, but due to
    legal uncertainties, we cannot definitively determine which side is right and the purpose of the analysis is to lay out a balanced view of the issues to the best of our understanding to help investors grapple with a very complex topic.  Market Reaction Implies Skepticism of Worst Case Scenario — In the secondary
    wholesale loan market and non-agency MBS market, we have not observed any noticeable negative impact from foreclosure issues in prices though neither market is highly liquid. In recent days, whole loans and ABX indices have actually been pricing slightly tighter. From what we have heard, consensus among distressed investors is robo-signing issues could add 3 months to the foreclosure process in non-judicial states and 3-6 months in judicial states.  Coming AG Investigations Could Uncover Negative Catalysts — With Congressional leaders calling for aggressive investigation of bank foreclosure rocesses, new evidence of problems could be uncovered. If systemic fraudulent activity is found,
    banks would likely see fines and penalties. I) “Robo-Signer” Issue Issue created by affidavit… When a bank conducts a foreclosure in a judicial state (see Appendix for definitions of judicial vs non-judicial states), one of the key steps in the process is for an officer of the bank (typically the loan servicer)
    to sign an affidavit prepared by a designated law firm with data backed up by the lender. By signing the affidavit, the officer is saying they have personal knowledge of the facts contained in the affidavit, and that the figures presented in the loan foreclosure proceedings are correct (typically unpaid loan balance
    outstanding, period of delinquency, etc.). Based on our understanding of the judicial process, the affidavit allows the bank to make legal attestation to the court that they have a reason to pursue the foreclosure process. …with questions about “robo-signers” not reviewing the files… The term “robosigner” has been coined to refer to bank employees who signed numerous affidavits on mortgages without 1) individually reviewing each file and/or 2) signing in the present of a notary public. Mid-level executives at several firms have said in legal depositions that they signed thousands of affidavits without personal knowledge of the accuracy of the documents. There have also been
    some allegations of fraudulent activities (ie forged documents), but we do not have reason to believe this is widespread. …but it is unclear whether this is fraud or just procedural error. Key question
    regarding “robo-signing” is whether the banks committed fraud or whether it was simply procedural error that did not cause the borrowers harm. This could be interpreted as fraud since the signers did not personally review the documents. However, an argument can be made that the “robo-signers” relied
    upon the policies and procedures of the bank foreclosure review process even though they did not personally read the documents. State governments have begun to take action, but it is too early to tell what the penalties and/or resolution of these issues would be. Attorneys general taking action… There have been several actions lately by the states. For example, Ohio Attorney General Richard Cordray has filed suit against GMAC/Ally Financial, seeking up to $25,000 per violation in civil penalties and for Ally to pay losses to homeowners. According to press reports, at least six attorneys general have called for foreclosure moratoriums and a coalition of 40 attorneys general are expected to announce an investigation of the mortgage servicing industry. …But Obama administration appears to be resisting a national moratorium on foreclosures. Recently the Obama administration has indicated that they do not
    want to see a national foreclosure moratorium, given that it could delay processof working through housing issues that is currently underway. According to the WSJ on Tuesday (10/12/10), “Some in Congress have called for a moratorium on all foreclosures until the documentation issue is resolved, though senior Administration officials Monday again declined to endorse that idea.” Treasury Secretary Geithner also recent said a foreclosure moratorium would be damaging to the housing market. Sen Dodd not in support of nationwide moratorium. In a speech on Oct 12, Sen Banking Committee member Chris Dodd said “A broad, sweeping moratorium is probably unwise…There are many institutions that are actually engaging the foreclosure process intelligently and well and doing a good job. To stop that
    across the board from happening would be very harmful for the economy,” according to Bloomberg.

    Mortgage Foreclosures 13 October 2010
    3 Citigroup Global Markets

    Five Banks (BAC, GS (Litton), JPM, GMAC, PNC) Have Issued Foreclosure Moratorium, While WFC Continues Its Foreclosure Activity In response to the robo-signing issues, we have seen several banks initiate a foreclosure moratorium in order to ensure there foreclosure procedures are being properly executed. Bank of America reviewing foreclosures in 50 states. On October 8th BAC announced it was “extending its review of foreclosure documents to all 50 states” and that it would “stop foreclosure sales” until their assessment was completed. They also asserted that the “ongoing assessment shows the basis for our past foreclosure decisions is accurate.” On Oct 1st BAC first announced it would suspend sales of homes in foreclosure in 23 states after admitting employees signed affidavits without verifying information or having a notary present, as is required proper procedure. Homes under contract to be sold are not being executed and foreclosed REO is not being listed for sale. One question is why is BAC extending its foreclosure moratorium beyond the 23 states, and we believe this may be driven more by political/public relations issues. JPM and GMAC suspended foreclosures in 23 judicial states, PNC and Litton also reviewing procedures. According to press reports, JP Morgan and Ally Bank (GMAC) suspended foreclosures in the 23 states that have a judicial foreclosure process, to address concerns surrounding “robo-signers” attesting to foreclosure documentation without properly reviewing the files. In addition, PNC and Litton Loan Servicing (Goldman Sachs) halted some foreclosures to
    review procedures. Wells Fargo has not halted foreclosures, appears more confident on its procedures. Wells Fargo said it would review pending foreclosures, but it has not taken action to suspend foreclosures, indicating more confidence in their process.

    Mortgage Foreclosures
    13 October 2010
    4 Citigroup Global Markets
    II) Documentation Issues & Questions of Securitization Validity While the robo-signer issue has been getting a lot of press and we believe is the driver of for several banks decisions to halt foreclosures, there is another issue that is being raised which has more to do with documentation issues surrounding the mortgage loans that were sold into securitizations. Our colleague Josh Levin recently hosted a conference call with Adam Levitin who is an Associate Professor of Law at Georgetown University, and published a note called Foreclosures Gone Wild: Key Takeaways from Our Conference Call that raised some very significant issues with respect to the mortgage securitization process. After listening to the conference call and without a strong knowledge of the subject, we were admittedly concerned. Subsequent to the call, we have spoken with various mortgage securitization experts and lawyers and also reconnected with Mr. Levitin. What we attempt to do below is provide a balanced view of the issues, and really in our view there are 3 key points of disagreement. Overall, we came away incrementally more comfortable after hearing both sides, but since we are not lawyers, we are not going to pretend to
    say definitively which side is right and we attempt below to lay out both sides to help people better frame the issues. In the following sections we do our best to parse a number of highly technical
    legal concepts in layman’s terms. As we are not legal experts, this report does not constitute legal advice or opinion, but represents our best understanding of complex topic. We are certain there are instances where our vocabulary will not be precise, but we have done our best to capture the essence of the topics. Note that in the Appendix we review the securitization process, which we believe provides some valuable color in understanding the issues below. Issue #1: Did sloppy due diligence paperwork and legal reviews cause defects in securitization process? The first issue is whether the appropriate documentation occurred in securitization process. In legal terms, we believe this question might be
    phrased, were the “notes” delivered with endorsement to the trust or
    appropriately delivered in “blank form” to be endorsed at later date.
    Where there is agreement – Everyone we spoke with appeared to be in
    agreement that if the notes were never properly delivered to the securitization
    trust (and physically held on behalf of the trustee by the custodian), that there
    could be problems. In this section we focus on the validity of the notes, which
    many experts we spoke with believe are the key component of the
    documentation bundle; the other piece is the mortgage documentation which
    many believe in most cases “follows the notes.” Whether mortgages always
    follow the note is a point of contention we address later in Issue #3.
    Below we try our best to summarize the bull case – why loans were likely
    properly documented and delivered vs the bear case, there are material defects
    in multiple deals.
    Mortgage Foreclosures
    13 October 2010
    5 Citigroup Global Markets
     Bull case – This is fundamental part of securitization procedure. The
    argument goes that delivery and endorsements of notes into the trusts was
    “securitization 101” and constitutes among the most fundamental and basic
    components of executing a securitization deal. To not physically deliver the
    notes would be highly unusual. Second, at deal closing, there are attorneys
    and custodians charged with signing off on completeness of the
    documentation. Custodians would receive exception reports that detailed
    any loans that were sold without note documents, which would likely trigger
    a putback of the loan if docs didn’t get remedied. The last argument is
    among the strongest disputing that notes were not transferred into the trust
    because of explicit language in the pooling and servicing agreements saying
    the selling party was assigning, transferring, and relinquishing ownership of
    the notes to the trust.
     Bear case – Part I: Procedures were sloppy, deal volume was high, and junior
    level employees/attorneys likely made mistakes. For those who believe there
    were problems, the rationale goes that the stringency of documentation
    procedures for securitizations mirrored the stringency of the underwriting
    practices, which were clearly lax. Second, the high volume of securitization
    deals in 2005-2007 created greater potential for errors. Third, the parties
    responsible for the documentation checking, e.g. the employees at the
    custodian or even the attorneys, in some cases were poorly trained, or junior
    level not capable of catching mistakes. Fourth, there may have been
    instances of outright fraud committed by mortgage originators – such as
    selling the same note to two different securitizations w/o sending paperwork
    (we think if it occurred, was rare) or inappropriate note retention policies by
    originators (e.g. notes inadvertently warehoused by originators).
     Bear case Part II: Assuming some note sales/transfers were invalid, fixing the
    problem is very difficult because of REMIC structure and tax laws, which may
    have resulted in some backdating of documents. The next leg of the bear
    case says that if notes were not properly delivered into the trust, then
    problems arise at foreclosure. The reason is in order to foreclose a servicer
    (acting on behalf of the trustee) must in most states have possession of both
    the note and the mortgage (more on this later). But if the note document was
    never delivered, the bank would need to obtain it and add it to the trust.
    – Here we have heard allegations of two types of possible problems:
    • 1) REMIC issue: the securitizations are established as passive REMIC
    structures. By getting the note and adding it to the trust more than 90-
    days after the deal has closed would constitute a violation of IRS rules,
    and trigger an event that would jeopardize the tax status of the entire
    • 2) Backdating notarizations of note receipt: according to one expert we
    spoke with one of the issues that came out of the depositions of
    executives accused of robo-signing was alleged back-dating of
    notarizations of documents, i.e. saying a note was received by a trust at
    the time of close as of a certain date by notaries whose commissions
    had not yet begun as of this date. (We would note one counterpoint
    made by “a bull expert” we spoke with said that endorsements/notaries
    on documents for notes added to trusts at deal time that were done in
    blank and later endorsed could create timing differences b/w deal
    closure and notarization dates). While it’s not clear to us whether back
    dating occurred, if it has, bears believe this could be fraudulent activity.
    Mortgage Foreclosures
    13 October 2010
    6 Citigroup Global Markets
    • If these problems are true, a host of new potentially serious issues arise
    – In this bear case scenario, we have heard theories of a host of serious
    problems that could arise – though at this time we cannot handicap the
    likelihood: 1) If process was found to invalidate past foreclosures
    because of fraud, banks found could see fines of $25K per incident
    plus payment of damages to wrongfully evicted homeowners. 2) MBS
    holders could sue custodians (often bank affiliates) for failing to fulfill
    their duties. 3) Creation of a backdoor way for non-agency MBS bond
    holders to get access to loan files – which they have so far been
    unsuccessful – and pursue large scale loan putbacks. 4) Large scale
    federal litigation is required to fix the issue which would alleviate
    significant financial pain from the banks, in return, legislators would
    demand concessions from the banks, such as principal reductions on
    underwater home loans.
     While we believe it is likely there are one-off cases of inappropriate
    documentation, we have a very hard time believe this was a systemic issue –
    We believe there are going to be plenty of examples of people citing first
    hand how they know mortgage lenders that never transferred the notes and
    they are sitting in a warehouse, but we would be very wary of extrapolating
    this to a broader universe. Given procedures in place and general practice,
    we are skeptical the notes would not have been delivered in a very large
    scale manner. Our view is that this is likely to be a manageable issue with
    the obvious caveat being that without taking first hand sampling of
    documents held by custodians on behalf of trustees, there is no way for us
    or anyone to know if most custodians are in possession of the notes
    supporting the loans in the trust – or if there are missing documents.
    Issue #2: Will legal hurdles for the MERS system to transfer
    mortgage assignments to servicers cause large scale
    blockage of foreclosures?
    Based on our understanding, foreclosure requirements in each
    state/jurisdiction vary, and in some jurisdictions there have been contests in
    instances where MERS was involved (see Appendix for definition of MERS,
    which never actually holds the note or the mortgage, but acts as a registrar or
    nominee for the actual mortgage holder). In these cases there have been
    problems with MERS assigning the mortgage to the servicer in order to properly
    execute the foreclosure.
     Bear case – Part 1: Inability for MERS to transfer notes/mortgages to
    servicers creates “purgatory” preventing servicer from beginning foreclosure
    process not executed. The gist of the issue is, as nominee, in certain
    jurisdictions, MERS may have limited legally enforceable abilities to transfer
    notes or mortgages from one party to another or bring foreclosure
    proceedings on its own on behalf of the trustee. In certain instances we have
    heard of foreclosures being “stuck” meaning MERS doesn’t have the ability
    to shift notes from one party to another because it is not the owner
    preventing any party from having the ability to foreclose. We have seen
    foreclosure defense websites note a strategy of challenges foreclosures in
    California in every case MERS has assigned the mortgage citing the fact that
    MERS does not have the right to do such because it is not the legal owner of
    the note.
    Mortgage Foreclosures
    13 October 2010
    7 Citigroup Global Markets
     Bear case – Part 2: Momentum of MERS cases is negative and judges
    growing sympathy with borrowers may cause adverse precedents. With a
    political climate sympathetic to homeowners, judges may be ruling on
    technicalities, which delay the foreclosure process keeping people in their
    homes longer. The other problem is negative precedents could build upon
    each other, making foreclosures litigation more difficult in the future.
     Bull case – MERS litigation has been ongoing for years and problems
    represent procedural issues, not systemic problems. Bulls note the longevity
    and wide use of the MERS system, which has been in place since the late
    1990s — we have heard ~60% of mortgage loans use MERS as the nominal
    mortgagee including both agency and non-agency loans. In the cases where
    foreclosures initiated by MERS were thrown out of court, bulls argue the
    judgments are without prejudice, meaning they are not fatal to the
    foreclosure process, but simply force MERS to appropriately transfer the
    mortgage to the holder of the note, which only serves as a delay.
    In response to issues we describe as “purgatory”, bulls argue that the courts
    must allow for some mechanism to unlock the documents from MERS and
    transfer to another party, however this method has not been made clear as
    of yet. Lastly, bulls view momentum of cases against MERS as a result of the
    political climate, but as unlikely to structurally challenge the entire system of
    mortgage record keeping, which would have chaotic impacts across the all of
    the mortgage market (including originations and refis, and not just foreclosures).
    Issue #3: Does the mortgage always follow the note? And
    ramifications of assigning mortgages “in blank” form
    This issue is the most technical we discuss in this note – the question
    surrounds the effective assignment of the mortgage to the owning party as
    loans are sold and changed hands along the securitization process.
    As explained in the appendix, there are two pieces to every mortgage loan – the
    note and the mortgage. In practice both notes and mortgages are sometimes
    sold in “blank” form, meaning there is no owner noted. It is debatable whether
    this has different implications for notes and mortgages. The question that
    arises is whether the blank conventions, particularly for mortgages, contribute
    to issues preventing foreclosures down the line, if documents get separated.
    Everyone agrees that you can assign the note in blank without issue, which is
    akin to “writing a check to cash” – Notes are governed under Article 3 of UCC
    (Uniform Commercial Code), which treats blank notes in a similar form to
    bearer bonds. It is perfectly legal to transfer ownership of blank notes without
    having the notes renamed from owner to owner.
     Bear case: Part I – Mortgages do NOT always “follow the note” and problems
    arise if the mortgage does not get into trust in a timely fashion – While bulls
    and bears seem to agree that in most instances mortgages that “follow the
    note” some bears argue that mortgages are not governed by UCC and
    instead fall under state real estate law – which varies jurisdiction by
    jurisdiction if a mortgage follows a note. Because mortgage practice
    assumed the rule of thumb for all instances, there will be cases where the
    mortgage and the note became separated – and therefore documents must
    be remedied for foreclosure proceedings to begin.
    Mortgage Foreclosures
    13 October 2010
    8 Citigroup Global Markets
     Bear case: Part II – As described above, this also potentially creates the
    REMIC problem – In instances where mortgages, in theory, did not “follow”
    the note, and a foreclosure needs to be processed, the trustee would require
    the mortgage to be added to the trust – because one needs both the
    mortgage and note to foreclose. However, bears argue because REMICs
    must remain static vehicles for tax purposes the mortgage cannot be added,
    and foreclosure can not be executed, producing 100% loss severity on this
    loan for the trust.
     Bull case – The note and the mortgage are inextricably linked. According to
    bulls, you cannot really divorce the note from the mortgage, even if the mortgage is assigned in blank form. While there may be administrative paperwork required to reassign a blank mortgage into the name of the note holder, this would not cause structural issues for the securitization, as the
    mortgage was legally “following” the note the whole time.

  51. RR111 says:

    @TFNEUHAUS – “The reality is that 99.9% of all the foreclosure documents have the correct information on them.”

    You have no idea what you are talking about. Even is we assume that is the case, it does not matter. Look into how the securitization process works. This is not a foreclosure issue only. The issue is much larger than incorrect wording on foreclosure documents. Chain of Title – ever heard of that? Do some reasearch.

  52. Mannwich says:

    And on cue:

    Access To Justice In U.S. At Third-World Levels, Says Survey

  53. RadioFlyer says:

    “Access To Justice In U.S. At Third-World Levels, Says Survey”

    Perhaps our criminal and civil justice systems wouldn’t be so backlogged if there were a few less frivolous lawsuits from people that don’t want to accept personal responsibility, and would rather just sue. Or murderers and rapists on their umpteenth appeal, or up for a new crime because they were released early from an already too lenient sentence.

    The massive and accelerating abdication of personal responsibility at all levels of our society is the real problem there. And it’s compounded by people like the majority of Huffington Post contributors who steadfastly believe that there are no “bad” people, just a world full of victims.

  54. obsvr-1 says:

    First the banksters bring the economy to the precipice of the abyss
    now they’re trampling on the core principles of contract law and property rights

    but the bonuses keep rolling in … and you thought the mofia had the best bonus payout for corruption

    If home builders constructed homes like the banksters & corrupt lawyers constructed MBS/CDO then the first woodpecker to come along would destroy civilization

  55. Thor says:

    Radio – Is it the citizens who have abdicated all sense of personal responsibility or the law firms in this country creating an ever more litigious culture out of pure greed?

    Who is putting up those “if you’ve ever taken Viox, you may be entitled to a settlement?

    Guess it depends on what side of the political spectrum you fall on eh?

  56. Old Timer says:

    BR – Thanks for shining a light on this problem.

    Still, if one is not paying their mortgage – they should get out of the house immediately. Using property that you do not own without paying for it is THEFT.

    If one has signed a promissory note to pay for the home and is not keeping that promise then why should they have all the rights and privileges of one who owns that hose outright?

    Bankers deserve every bit of hell they have earned.

    So…tell us…is it better to be a welfare bitch than a bank bitch?

  57. Long term says:

    @ BR

    “My advice: If you have been in any way personally harmed by the illegal actions of any bank, law firm, process server, or loan servicing agency, you MUST file criminal charges.”

    Perfect answer. Agree 100%. I would even take it a step further–if you are a lawyer advertise your services to represent such cases at this juncture. The legal cost of breaking the law must be higher than the cost of following the rules–or else the rules won’t be followed.

  58. RadioFlyer says:

    @Thor: What do you call 1,000 lawyers at the bottom of the ocean?

    I said it applied to “all levels” of society, maybe I should have more clearly stated that that meant both individuals and corporations.

    Anyway, it’s kind of a chicken-and-egg question, so you won’t get any argument from me that “ambulance chasers” aren’t a huge part of the problem (I can’t speak to the “validity” of the specific Vioxx example you mentioned since I’m not too familiar with it. But I am getting tired of mesothelioma commercials.) However, I don’t necessarily think that has to do with which side of the political spectrum you’re on. Hard right or hard left, it’s all the same. I only picked on the Huffington Post because it was linked to – I probably could have also said “the majority of Fox News contributors that believe there are no victims, just bad people”. Both are obviously wrong. Both extremes have a real hard time coming to grips with reality.

  59. obsvr-1 says:

    @Old Timer 2:08 pm

    Still, if one is not paying their mortgage – they should get out of the house immediately. Using property that you do not own without paying for it is THEFT.

    If one has signed a promissory note to pay for the home and is not keeping that promise then why should they have all the rights and privileges of one who owns that hose outright?

    Bankers deserve every bit of hell they have earned.

    So…tell us…is it better to be a welfare bitch than a bank bitch?

    —- Reply

    If they do not pay their payment, then the contract says a foreclosure process begins and should be followed by the legal standards set. No the person should not be able to live in the house for free, but the legal remedy in the no recourse loan (note) is to foreclose on the property. One could take the high road, or look on the bright side, the house is occupied and presumably being taken care of, such that vacancy, vandalism and downward decay is averted.

    >> Bankers deserve every bit of hell they have earned.
    The problem is that the losses the banks suffer go to the consumer in higher fees, the common shareholder in lost value or the taxpayer in bailouts … The banksters and cronies are not suffering the hell, they’re handing out record bonuses.

    >> So…tell us…is it better to be a welfare bitch than a bank bitch?
    The answer is obvious, a bank bitch — as they get hefty bonuses when they are unethical, fraudulent and break the law … a welfare bitch gets the boot and to wake up to find a way to feed the kids, find a job and live out another day.

  60. Mannwich says:

    Did you read the article, Radio? I’m guessing not. It’s saying there’s basically different levels of “justice” based on your class status in this country. Not that we didn’t know that already.

  61. “The massive and accelerating abdication of personal responsibility at all levels of our society is the real problem there. ”

    Specially when that abdication takes place at the highest levels and influences the lives of millions.

  62. obsvr-1 says:

    @rafael-minuesa 4:09 pm

    “The massive and accelerating abdication of personal responsibility at all levels of our society is the real problem there. ”

    Specially when that abdication takes place at the highest levels and influences the lives of millions.

    — Should read:

    Specially when that abdication takes place at the highest levels and DESTROYS the lives of millions.

  63. Aside from the legal intricasies (ie. it’s either impossible or not easy to legally compel an unwilling DA to engage in a prosecutorial action), Barry is right on. But as Barry says, you have to make the ask and should never assume the DA is unsympathetic without first making the ask. They might be just waiting for you to walk in through the door. I would imagine there are avenues for civil court action for cases of rampant fraud. These are self-initiated and do not require a DA. But you do have to show initiative and do your homework. And you don’t need a lawyer. If you are the victim you can file the complaint pro se.

  64. Still, if one is not paying their mortgage – they should get out of the house immediately. Using property that you do not own without paying for it is THEFT. If one has signed a promissory note to pay for the home and is not keeping that promise then why should they have all the rights and privileges of one who owns that hose outright?

    None of this is true. As Barry has noted in a previous, highly informative post, a foreclosure proceeding is like a closing proceeding but in reverse. The legal procedure for foreclosures is set forth in great detail in statute and rule and every bit of it must be followed correctly in order to make the foreclosure legal. It’s similar to an eviction process. If the building owner does not execute every step correctly, the eviction cannot ensue, even if the tenant is a surly deadbeat. Them’s the laws.

  65. FrancoisT says:

    Please, contrast these 2 approaches:

    US government suck the banks. Iceland takes care of its people.

    Iceland’s government will this week present a bill allowing debtors to walk away from obligations that exceed asset values and to nullify personal bankruptcies after four years, Internal Affairs Minister Ogmundur Jonasson said.

    “All Icelanders can see that our society is currently in turmoil,” Jonasson said in an interview in Reykjavik. “We’re therefore required to sit down at the table and offer solutions; I don’t anticipate that the people running financial institutions will disagree.”

    Prime Minister Johanna Sigurdardottir’s coalition is holding talks with the lenders today to thrash out housing market reforms after about 8,000 protestors gathered outside parliament last week to show their anger over rising homeowner insolvencies. The International Monetary Fund, which is leading Iceland’s $4.6 billion bailout, estimates that 63 percent of the island’s loans are non-performing.

    Jonasson, who spoke in an Oct. 11 interview, says he favors a proposal put forward by the Interest Group of the Homes, which represents households demanding debt relief. The lobby group wants lenders to forgive about 200 billion kronur ($1.8 billion) in mortgage debt.

    The opposition, which met with the government yesterday, is likely to back the proposals.

    Tell me: which country is really the more “advanced”?

    A simple “US or “Iceland” will do.

  66. Mannwich says:


  67. tfneuhaus says:

    @RR111 – I understand what Chain of Title is. However, that’s not the issue that is being discussed in Barry’s article or in all the press reports.

    The issue is the the validity of the robo-signers or burger king kids or whatever else you want to call them. To start a foreclosure proceeding, an affidavit has to be prepared by a law firm that contains the pertinent information about the loan. By signing the affidavit, the signee is saying they have “personal knowledge” of the facts in the affidavit. Well, what is personal knowledge? Do they have to read the document? Would they have to have been at the loan closing? This is a legal question that will be settled by the courts. If its found that the signees didn’t read the documents, all that will happen is that someone from the bank will read the affidavit and the loan documents, sign the affidavit and then refile. The foreclosure process will continue with a minor delay. This is what I mean when I say 99.9% of the foreclosure documents are correct. There would be no affidavit if someone was still paying on the mortgage. And the affidavit had to be drawn up by actual lawyers with actual experience and actual mortgage documents. These affidavits aren’t being created out of thin air.

    And this is exactly what the foreclosure lawyers are counting on. They need to sue to get money. The foreclosure process was moving along, and they couldn’t sue. So they had to throw a wrench into the monkey works and they found it with this ‘robo-signer’ issue.

    What you are talking about is a completely different issue. You are asking if the securitization process itself is legal and followed the correct procedure. Is it a problem if the trust trying to foreclose on a property can’t find the original title to the home? Damn straight it is. That would pretty much invalidate any claim they had to foreclosure. But this is a compeletly different issue from what Barry was talking about in his blog post.

    My real point is that the rule of law has to be followed both ways, by the lender and the borrower. If you are advocating that just because you stopped paying your mortgage, you should be let off the hook because some kid didn’t read the fine print on your loan (did you read all the fine print when you signed it?) then we are in real trouble. I will stop paying my mortgage next month and use the proceeds to invest in some low risk securities. I would basically get about 360 days (the length of the average foreclosure) to invest. And maybe, if I get lucky, the trust that owns a piece of my mortgage won’t be able to find the title. It’s like a mortgage lottery. And if I don’t get lucky, I will just pay up my mortgage on day 359 and stop the process. That’s the logical conclusion that you can draw from this discussion.

  68. FrancoisT says:

    “Perhaps our criminal and civil justice systems wouldn’t be so backlogged if there were a few less frivolous lawsuits from people that don’t want to accept personal responsibility, and would rather just sue. ”

    Perhaps our forum and blog systems wouldn’t be so backlogged if there were a few less frivolous writing from people that don’t want to accept the personal responsibility of researching the issues, and would rather just spew their prejudices on the screen.

    The number of so-called “frivolous” lawsuits, just in the health care field (my domain) has decreased by >40% in the last 10 years. Moreover, the median amount adjudicated to plaintiffs has not increased in the last two decades.

    There is no reason to believe this is a phenomenon unique to health care.

  69. Thor says:

    Francois – Iceland, hands down. I was just there in June. Nothing like what you would imagine reading the MSM.

    Everyone works (Unemployment is far below ours) the streets are spotless, roads in excellent shape (far better than ours in a country with extreme climate!), schools are top notch, they have very little crime, heating is free, they generate all their own power very cheaply and are in the process of using this almost limitless free energy to build and maintain massive server farms.

    Don’t believe a think you read about this country in the MSM, go there yourself and see. It’s absolutely not a post economic collapse wasteland.

  70. willid3 says:

    tfneuhaus Says:
    My real point is that the rule of law has to be followed both ways, by the lender and the borrower. If you are advocating that just because you stopped paying your mortgage, you should be let off the hook because some kid didn’t read the fine print on your loan (did you read all the fine print when you signed it?) then we are in real trouble.

    so far the only folks who mention any thing about home owners getting to keep the house are the ones saying there isn’t a problem. BR mentioned in the first post that that isn’t what he was advocating.
    he just wants the folks right folks doing the foreclosure, and that they have crossed the Ts and Is just like the law says they are required to do.
    but so far it appears that hasn’t been done.
    and its making it to the point than even if you have paid the note off that you title may not be clear as nobody knows who has it.

  71. Carse says:

    I understood the article to mean Micky D’s kids are now practicing law without a license.

    This is not a very good image for the legal community, and many heads should roll. If anything at all, some character and fitness hearings on the licensing of those lawyers involved.

    I think Eisenhower said it best; ” A people that values its privileges above its principles soon loses both.”

  72. xynz says:

    shorter tfneuhaus:

    (The law of the land dictates that, in order to foreclose on a property, a rigorous procedure must be followed. But there are too many people behind on their mortgages; so to expedite the foreclosure process, the lien holders can circumvent the law. I don’t care if this means delinquent borrowers are no longer protected by the law, because only 0.1% of home owners will have their property illegally seized. Where did I get that statistic from? I got it from the same place where I learned the following: as long as only a minority of people are affected, then systematic injustice is an acceptable cost for making the banksters whole. )

  73. Andy T says:


    Thanks for taking the time to write the well-thought out counterpoints in this thread. It’s appreciated.

  74. StuffedMattress says:


    I notice you use the term “foreclosure documents” and NOT the term “mortgage documents”. While the “foreclosure documents” may be right, they still are NOT the original mortgage.

    Banks can no more assert rights that a non-existent contract bestows on them than I could try to exercise a clause in a contract i could not longer prove even existed.

  75. liqal says:

    The masses of people walk around hypnotized. Hypnotized defined as believed falsehoods as true. While the country is still salvageable, the public somehow must wake up to the fact that neither party serves them, only their constituents. The present path leads to ruin for the republic. – J. Edward

  76. liqal says:

    A friend of mine called me when this law was passed…

    Widespread changes in consumer bankruptcy law took effect on October 17, 2005, with passage of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. This special section of FindLaw’s Bankruptcy and Debt Center contains information on this major reform of the U.S. bankruptcy system.

    …. and he said. Now that they got everybody into debt, they are gonne screw em.

    Wise man.

  77. [...] Barry says hang 'em high (TBP) while Krugman adds this to the case against American Exceptionalism.  [...]

  78. [...] Time for Criminal Charges To Be Filed . . . | The Big Picture Barry Ritholtz [...]

  79. ReadingFundamental says:

    I disagree with the commentor who claimed the loan servicers can’t find smart, qualified people to do this work.

    If you only want to pay $25k – $40k then you might be right. However, if you pay $80k you can pick up plenty of experienced financial services folks. There are a lot of them who are unemployed due to the virtual halt in lending by banks and non-bank financial companies. They used to make much better money, but would jump at the opportunity to review loan docs and payment histories and execute affidavits. Two years ago I had a choice between $85K a year and sitting around waiting for $50/hour contract gigs to come in now and then. I wanted to keep my house (I have a ton of equity in it) so I took the $85k.

    The servicing business has really been squeezed, profit wise, over the last 20 years and as a result they have hired more and more inexperienced and lesser educated people.

  80. MinnItMan says:

    tfneuhaus misses one important point. While the personal knowledge requirement for an affidavit regarding default is somewhat slippery – is a computer prinout sufficient? – the requirement for the “true and correct copies of the originals of documents” (the note, mortgage, demand letters etc.) have a very low but clear standard of compliance. Does the affiant have personal knowledge that the copies he is attesting to were made from the originals? Yes, or no? Generally, to answer “yes,” they will have to have personally seen the original or something that qualifies as an “original” like a certified copy. I would not read into that requirement that the affidavit maker is required to read the document, at least respecting the “true and correct copy” statement.

    The deposition transacripts that I have read focus on this, and it is clear that the signers have merely stated they are “true and correct copies” without any personal knowledge, that is, they never saw the original. Again, unlike the default statement, this one is much more provable, one way or another. The deposition transcripts I’ve read make it pretty clear that this is where the process went off the rails. The “true and correct” statement in the affidavit is the foundation for the copies attached as exhibits to the complaint that allows a court to enter judgment on the pleadings in an uncontested case. This “technicality” is very basic litigation 101, and they blew it.

    As for Old Timer, one of Social Security’s unstated goals was to get old fools out of the way. Age doesn’t always impart wisdom, and his statement is a good example.

    I’m at a loss to understand why some of the anti-lender lawyers and advocates have allowed the affidavit issue to get conflated with the securitization issue. The “light perjury” (as George Bluth might say) in the affidavits is easy to understand. And whether it’s “light” or not, it’s not going to be easily fixed, withdrawn or explained away. False statements in affidavits are always a bad thing and they tend to create a stink around cases that doesn’t go away.

    The proper transfers and assignments into securitization issue is actually several complicated issues, which IMO, are not clearly understood by anybody (at least anybody I’ve read). This theory requires a lot of so-far-unknowns to fall the anti-lender direction, and some may and some may not. I’m not dismissing this legal theory, but mostly because I have a lot of unanswered questions, and I’m far from an expert on NY and DE trust law and REMICs. I do think, however, the investors will have much clearer standing to raise these arguments than borrowers. One thing has struck me about this theory is that the lenders’ lawyers chose a very poor vehicle for holding this paper if the theory is right about the lack of flexibility of REMICs and trusts. Real estate lending is notorious for late documentation, and to not allow for that certainty, the lawyers designed a Pinto.

  81. [...] rights and due process. Oh, and not commit perjury or fraud, and if they did, they must suffer criminal prosecution like any other suspected [...]