If Democrats get their way, we'll soon have a nationwide freeze on home foreclosures -- imposing vast new losses on mortgage lenders and taxpayers, sidelining panicked homebuyers and pushing off a housing-market recovery for years. You can thank bullying politicians, from President Obama on down to most state attorneys general.
I have yet to see news of a single borrower coming forward to say the bank foreclosed on his home when he wasn't in default on his mortgage.
Then you pretty much haven't been looking, jackass. This guy got foreclosed on even though he'd paid for his entire house in cash. This woman, meanwhile, watched in horror as thugs hired by her bank broke into her house to change the locks even though her house hadn't even been foreclosed on. There plenty more stories like those two. You just have to, you know, learn how to use the magic of Google News to find them.
Yet millions of pending foreclosures will now be halted. This is a massive overreaction to technical faults in affidavits.
And what "technical faults" did the banks make, you ask? Well let's start out with some of these:
In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in "foreclosure expert" jobs with no formal training, a Florida lawyer says.
In depositions released Tuesday, many of those workers testified that they barely knew what a mortgage was. Some couldn't define the word "affidavit." Others didn't know what a complaint was, or even what was meant by personal property. Most troubling, several said they knew they were lying when they signed the foreclosure affidavits and that they agreed with the defense lawyers' accusations about document fraud.
And then add on some of these:
Lawyers at two Maryland firms handling foreclosures filed court documents without actually signing the papers themselves, a development that is calling into question the validity of at least some of the home foreclosure cases in the state.
The two attorneys, one based in Hunt Valley and the other in Bethesda, have filed more than 20,000 foreclosure cases in Maryland courts since 2008.
The lawyers have acknowledged that in documents filed in court for some of their foreclosure cases their names were signed by others at their behest. The documents, known as affidavits, are the written equivalent of court testimony. Maryland law requires that affidavits be signed by the person whose name they bear, according to the state attorney general's office.
So let's see: the banks went out and hired people to sign documents as quickly as they could without even reading through them -- and even if they did read through them, they didn't know what the hell they were reading. Oh, and lawyers handling foreclosures had other people sign affidavits on their behalf. Since an affidavit is considered sworn written testimony in a court of law, this is what's known as perjury. The last time I checked, that sort of thing is against the law.
OK, back to Meister:
Sure, banks cut corners in dealing with a never-before-seen flood of millions of foreclosures. That's not right -- but it's also not right that 18.9 million homes are vacant and millions of homeowners aren't paying their mortgages.
The lending industry should fight back -- but it's too fearful of being demonized by opportunistic pols.
Good God, I can't take this anymore.
The banks did not just "cut corners." They broke the law. They and their patsies signed countless affidavits without reading them. This is widespread systematic fraud. These SOBs broke the law. They should be placed in handcuffs and sent to prison for the rest of their miserable, worthless lives. Go read Barry Ritholz for a good explanation of why it's simply impossible to chalk this sort of fraud up to just a few technical "oopsies." For those too lazy to read it, it breaks down like this:
- Private property rights are sacrosanct in any capitalist economy. This is why laws have been written to ensure that when private property is taken away from someone, it is a process filled with all kinds of checks and balances.
- This is why banks have to send out notices of delinquency, default and foreclosure to people whose houses they're going to take. It's also why banks must sign sworn affidavits attesting to the fact that they do own the property. Furthermore, a notary public must affirm that the person who claims to have signed the affidavit really did sign the affidavit.
- If a bank hires someone to sign an affidavit who hasn't read it -- or, even better, if they're hiring someone to forge an attorney's signature on an affidavit -- then that is fraud. And if the notary public signs off on this without confirming who has been signing documents, then that public official is aiding and abetting fraud.
As Ritholz notes:
The verification of the specific data that is mandated legally is not taking place by bank executives. Reviewing a file can take anywhere from, 20 minutes to well over an hour. Yet some bank employees are testifying that they have signed off on as many as 150 per day (Wells Fargo) or 400 per day (Chase).
It is impossible to perform that many foreclosure reviews and data verifications in a single day. The only way this could happen is via a systemic banking fraud that orders its employees to violate the law.
And there you have it. Our financial institutions are engaging in massive fraud and flagrantly breaking the law. But Wall Street lackeys like Mr. Meister (sounds like a band name!) say that this is perfectly OK, because, well shoot, laws were just meant for the little people, not our precious corporate masters.
If you want to see the destructive real-world impact of the "rich-people-are-special" ideology at work, I don't think you can find a better example.