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« Robert Rubin Sounds The ALARM On U.S. Debt Crisis: "We're In Terribly Dangerous Territory, Bond Market Could Implode" | Main | Mortgaging Your Children's Future »
Wednesday
Nov172010

ACTION ALERT - STOP CONGRESS & THE FED! - Foreclosure Fraud Whitewash In The Works

The criminals in Washington never sleep, so we're on their asses like Nyquil.

---

By Dr. Pitchfork

With attempts to ignore the fraud in origination, securitization, and foreclosure having failed, key players have been hard at work with Plan B:  sweep it under the rug.  The three-pronged effort to save the banks from their own misdeeds includes:

1) An attempt by Congress to overide Obama's veto of HR 3808;

2) The possibility of a wrist-slap "settlement" with the state attorneys general;

3) The revocation by the Fed of the "recission" penalty for predatory lending. 

In a countermove, Phil Angelides, head of the Financial Crisis Inquiry Commission, has called for his own Foreclosure-Gate investigation.  Lots of links below.

##

HR 3808  ‘The Interstate Recognition of Notarizations Act of 2010’

This bill, aka "The Great MERS Whitewash Bill," was introduced in 2009, ostensibly to make it easier and more efficient for courts to recognize out-of-state documents.

However, it was recently passed by Congress in the dead of night in order to retroactively legalize hundreds of billions of dollars in mortgage fraud -- from origination to securitization to foreclosure.  Robo-signers, fabricated documents, lost title -- it's all good under this bill (or so the banks hope). Fortunately, Obama had the good wisdom to veto this rotten bill.  But now it's back.

The House plans to vote on this bill again TOMORROW (Nov. 17) in order to overide Obama's veto.

  • 4closure Fraud -- Confirms that Congress WILL VOTE TOMORROW (Nov. 17)
  • John Carney -- His "sources" tell him NO MERS bailout on the way (from early this afternoon)
  • Market Ticker -- Great discussion of details in comments, plus some good sample emails for your Congressman (Call or Write, NOW!)
  • Neil Garfield -- This is the original post that broke the story on the attempt to overide Obama's veto of HR 3808

##

State Attorneys General:  "Settlement" With the Banks On the Way?

As Diana Olick and others report, a settlement between the big banks and the state AG's is in the works.  Most likely, this will amount to little more than a slap on the wrist.  It would also involve a (relatively small) slush fund, under AG control, that could be used to compensate victims of...fraud?  Yeah, don't expect the f-word to get tossed around too much here.  And don't expect anyone to be going to jail for their crimes.  I suspect that whatever settlement is reached, the banks will be more or less indemnified from any future legal action.  (That's not a bug, it's a feature.)

  • Washington Post -- Same info, but confirms that some kind of settlement on the way
  • WSJ -- Iowa AG says NO DEAL....yet (but it's coming)
  • WFTV Orlando -- Detailed article, notes that a JPM official testifying before Congress today was interrupted by shouts of "HE IS LYING!"  (probably a Daily Bail reader)

##

The Fed Will Revoke the "Recission" Penalty for Predatory Lending

Big hat tip to Zach Carter on this one.  He breaks it down nicely:

There is only one serious federal remedy for predatory lending, and the Fed is now knowingly trying to gut that remedy in order to help banks avoid losses from their own fraud. The remedy is called rescission, and it works like this:

If a bank failed to make key consumer protection disclosures about a mortgage, the borrower can demand that all of the interest and closing costs on the loan be refunded. Equally important, the bank must also stop all foreclosure proceedings and give up its right to foreclose. Once the bank gives up its right to foreclose, the full amount of the mortgage, minus interest and closing costs, becomes due. This isn't a free lunch for the borrower, especially when the value of her home has declined dramatically, but it's better than nothing, and it does impose real costs on banks.

As usual, the Bernanke Fed is doing everything it can to spare the banks from the consequences of their own actions:

Under the Fed's proposal, if you're the victim of illegal predatory lending, the bank will still get to foreclose on you unless you pony up hundreds of thousands of dollars all at once. And you'll have to pony up what the bank says you owe, which may be very different from what you actually owe. That eliminates the usefulness of rescission, making the new rule a bailout for predators.

But here's where the Fed's gutting of the recission penalty intersects with the deeper, underlying problems with Foreclosure-Gate:

The largest banks don't have enough capital to weather a bad housing market. And any process that sheds light on the documentation procedures at mortgage servicers will expose the big banks to investor lawsuits. But investors can't sue without those documents. Rescission judgments create a paper trail for illegal loans. In addition to creating immediate losses for banks, rescission documents that banks sold illegal loans, giving investors who bought mortgage-backed securities ammunition for well-founded lawsuits. Those lawsuits, in turn, could sink some of the biggest names on Wall Street, something the Fed has been trying to prevent at all costs since 2008.

 

 

 

There is only one serious federal remedy for predatory lending, and the Fed is now knowingly trying to gut that remedy in order to help banks avoid losses from their own fraud. The remedy is called rescission, and it works like this:

If a bank failed to make key consumer protection disclosures about a mortgage, the borrower can demand that all of the interest and closing costs on the loan be refunded. Equally important, the bank must also stop all foreclosure proceedings and give up its right to foreclose. Once the bank gives up its right to foreclose, the full amount of the mortgage, minus interest and closing costs, becomes due. This isn't a free lunch for the borrower, especially when the value of her home has declined dramatically, but it's better than nothing, and it does impose real costs on banks.

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Reader Comments (31)

pitchfork...great job with all this...i had seen the denninger story earlier and was going to do something on it, but you hit it out of the park...great job compiling all this detail and links...this had to be a ton of work...i changed the headline...so we might get a few busted referral links...

who is pushing the veto override thru congress...i saw the name of bobby scott...dem from virginia...is he the 1 behind this...interesting that carney's sources are now saying that no MERS bailout is coming...he must be talking about a separate bill...because if the s3808 veto is overriden then they won't need a separate bill...
Nov 17, 2010 at 12:55 AM | Registered CommenterDailyBail
i added some detail on bobby scott to the story above...
Nov 17, 2010 at 1:06 AM | Registered CommenterDailyBail
RED ALERT! HR-3808 Veto Override Attempt

http://market-ticker.org/akcs-www?post=172452
Nov 17, 2010 at 1:07 AM | Registered CommenterDailyBail
No MERS Bailout Coming from This Congress

http://www.cnbc.com/id/40218912

this is separate from hr 3808...
Nov 17, 2010 at 1:08 AM | Registered CommenterDailyBail
Nov 17, 2010 at 1:08 AM | Registered CommenterDailyBail
Action Alert – It’s Back! H.R. 3808 Interstate Recognition of Notarization Act of 2010

http://4closurefraud.org/2010/11/16/action-alert-its-back-h-r-3808-interstate-recognition-of-notarization-act-of-2010/
Nov 17, 2010 at 1:09 AM | Registered CommenterDailyBail
Letter Requesting Withdrawal of Rescission Rule

http://ourfinancialsecurity.org/2010/11/letter-to-withdraw-rescission-rule/

This is the FED's attempt to whitewash bank fraud...
Nov 17, 2010 at 1:10 AM | Registered CommenterDailyBail
Bobby Scott recently wrote a 65-page report dissenting from the House's decision to charge Charlie Rangel (D-NY) with ethics violations. He wrote:

"While representative Rangel engaged in serious and irresponsible conduct that violated House Rules and other applicable standards, none of his conduct was done intentionally to circumvent the ethical guidelines or to use his official position for personal financial gain. His violations of House rules were caused by his sloppy and careless record-keeping, but were not corrupt."

There's that dang "sloppy paperwork" again. Somebody oughta pass a law or somethin'.
Nov 17, 2010 at 1:27 AM | Registered CommenterDr. Pitchfork
fuck you bobby scott...again...thanks for putting this together pitch...congress has no idea how closely people are watching this...all hell will break loose tomorrow if the veto is overiddden...
Nov 17, 2010 at 1:50 AM | Registered CommenterDailyBail
His office said he was only making a procedural motion, which any member of the Majority on the floor at the time would have been asked to do. They do that whenever the House receives a Veto message from the President.
Nov 17, 2010 at 9:25 AM | Unregistered CommenterBillyD
Is it just me but ... where is Elizabeth Warren on this?
Nov 17, 2010 at 10:50 AM | Unregistered CommenterWil Martindale
Wow, Dr. P, lots to digest here. Before I get into all those links, let me throw out a question or two.

I'm not sure how H.R. 3808 purports to shove anything down a court's throat. The text of the bill states: "Each Federal court shall recognize any lawful notarization made by a notary public..."

The bill doesn't say each court has to accept as undisputedly true any such affidavit, only that it "shall recognize." That's ambiguous and wholly open to interpretation by the courts, no?

Second, courts only have to recognize "any LAWFUL notarization." I've read some of these deposition transcripts where robo-signers freely concede that the notary was nowhere in site when the signature went down. That voids the notarization, which is thus unlawful. In this instance, a court is free to ignore it. Am I missing something here?
Nov 17, 2010 at 1:11 PM | Unregistered CommenterCheyenne
good questions cheyenne...i don't have the answers...i'm hoping the veto override fails so we don't have to find out...
Nov 17, 2010 at 1:48 PM | Registered CommenterDailyBail
dr. p. may have a better handle on this than i do...i'm just back to the site since leaving about 9 am this morning...i need to get caught up...
Nov 17, 2010 at 1:49 PM | Registered CommenterDailyBail
Cheyenne, I know it says "lawful," but it also says "shall recognize." It's the "shall recognize" part, plus the "electronic record" part that the banks are counting on. Their hope, apparently, is that this will take care of both the robo-signing issue and the problem with conveyance in regard to MBS and the right to foreclose.

I'm not a lawyer, but I'm not sure how a homeowner, say, or a MBS investor, would challenge whether a document were "lawful." Especially (for the homeowner) in a rocket-docket situation.

Most damning, though, is the timing of this and the way it was passed the first time AND the fact that Obama had to lie about vetoing it before he ACTUALLY vetoed it.
Nov 17, 2010 at 2:37 PM | Registered CommenterDr. Pitchfork
Also, by means of the supremacy clause, would this get the banks out of paying fines in states like California? I don't know. The Ben Ber Nank isn't supposed to PURCHASE crap assets, either. But he has.
Nov 17, 2010 at 2:41 PM | Registered CommenterDr. Pitchfork
Funny you should bring up the timing, Dr. P. This bill got started out and debated in the judiciary committee in 2005, or about two years BEFORE courts started identifying MERS' various legal infirmities, for example:

http://www.msfraud.org/law/lounge/MERSreliefDenied.pdf

I found this snippet of H.R. 3808 legislative history telling:

"If ultimately needed in any one of the latter jurisdictions to support or defend the claim in court that document should not be refused admission solely on the ground it was not notarized in the State where the court sits. The bill seeks to ensure this would not happen.

Significantly, H.R. 1458 [2005 predecessor of H.R. 3808] includes electronic notarizations in its recognition regime."

http://commdocs.house.gov/committees/judiciary/hju26412.000/hju26412_0f.htm

A couple of points here. One, you're right that the bill appears to deal directly with the admissibility of evidence in court. Two, the problems with robo-signing and MERS go far beyond the fact that they occurred in other states, which is by this excerpt of legislative history the only thing H.R. 3808 purports to correct.

In any event DB's point is a good one. Let's first pull for Congress to do the right thing for once.
Nov 17, 2010 at 3:30 PM | Unregistered CommenterCheyenne
Cheyenne, as far as I know the bill has a legitimate purpose, but the bill's original sponsor was plainly dumbfounded a few weeks back when his bill was rushed through Congress.

It's also possible that this is nothing more than a hail Mary pass on the part of the banks.

Is it possible that if one state recognizes MERS as legitimate, then others would have to as well?

Put on your evil cap and get creative: there's got to be more than one way that this bill would be "helpful."
Nov 17, 2010 at 3:58 PM | Registered CommenterDr. Pitchfork
Rep. Scott's Statement on this issue is up on his website (http://bobbyscott.house.gov) and pasted below.

Scott Supports President’s Veto of H.R. 3808

WASHINGTON, DC – Congressman Robert C. “Bobby” Scott issued the following statement on his position on the President’s veto of H.R. 3808, the Interstate Recognition of Notarizations Act of 2010:

“I support the President's veto of H.R. 3808, and I will vote to sustain it.

“On Monday, November 15th, I was on the House Floor when the House received formal notice of the President’s decision to veto H.R. 3808. At the request of the Majority Leader, I made the customary procedural motion that is regularly made upon receipt of veto messages from a President to schedule the consideration of the veto to a time certain. The question of consideration of the veto has been scheduled for a vote this afternoon. I will vote to sustain the President’s veto, and I fully expect the veto to be sustained by an overwhelming vote.”

# # #
Nov 17, 2010 at 4:23 PM | Unregistered CommenterOffice of Rep. Bobby Scott
@ Bobby Scott...thank you for this update...you can understand our initial frustration...i will add your details to the story...and reflect the changes...
Nov 17, 2010 at 5:05 PM | Registered CommenterDailyBail
@ Bobby Scott...though it was likely a difficult day for your office, given the explosion of outrage from the righteous economic blogosphere, we hope it demonstrates the power of our collective voice...we are as a group of bloggers, watching Congress and the banks very closely for any missteps...we have become a force to be reckoned with...

as you likely learned today, we are best not to be trifled with...between big picture, yves, cr, mish, zh, denninger, ratigan, and ourselves, we will collectively kick your ass if you get out of line...
Nov 17, 2010 at 5:09 PM | Registered CommenterDailyBail
Bobby Scott voted NO on TARP. Good call on that one, Mr. Scott.
http://clerk.house.gov/evs/2008/roll681.xml#N
Nov 17, 2010 at 5:10 PM | Registered CommenterDr. Pitchfork
Well, the H.R. 3808 veto override failed.

What's the over/under on when the Banksters take another stab at American homeowners?
Nov 17, 2010 at 5:28 PM | Unregistered CommenterCheyenne
what were the vote totals...i haven't seen them...the carney piece in pitchfork's story says ther's no move afoot...i don't believe it...i say they come back next spring...the mers california class-action i wrote about is a big danger..liability is potentially $60-120 billion...big payday awaits...or congress fixes...
Nov 17, 2010 at 5:34 PM | Registered CommenterDailyBail
Split along party lines. This time Republicans did banksters' bidding.

I'll take the under. They'll be back during lame duck session.
Nov 17, 2010 at 5:39 PM | Unregistered CommenterCheyenne
Foreclosure Fraud Assault - A Cry For Help
by Alan Gray
http://newsblaze.com/story/20101116120222nnnn.nb/topstory.html

. ..foreclosure that entails savagery, fraud, corruption, greed, intrusion,
peril, trauma, desolation, shocking deviation from established law and
court rules and procedures, and reprisals for whistleblowing and for not
relinquishing one's home to sham foreclosure is a riveting story worth
being told.
* * *
Following years of prompt mortgage payments, upon
falling behind, the homeowner (the victim) contacted the mortgage
"servicer," Wells Fargo Mortgage to discuss options. Wells Fargo
insisted upon the victim signing "loan modification" documents and
sending in a money order to Wells Fargo in order to keep the home.
* * *
Wells Fargo turned over the modified loan debt to a foreclosure mill
debt collection lawyer who used a defunct lender's identity to
foreclose, as well as demand unfair fees. At some point after
foreclosure had been filed, the victim discovered that the modification
consisted of a contract between the homeowner and a fictitious lender.
* * *
Along various stages of foreclosing on the victim's home, lawyers,
sheriffs and judges enabled collection of the debt that was created by
Wells Fargo's fraudulent loan modification.
* * *
. . . the manner in which the victim believes the home was acquired for the foreclosure
lawyer through a straw buyer at the collection lawyer's fake auction. . .
Nov 17, 2010 at 7:43 PM | Unregistered Commenterteetee1927
thanks for the link tee tee...
Nov 18, 2010 at 1:06 AM | Registered CommenterDailyBail
@ wil...very good point..where is liz warren's voice...she must be trying to maintain a low profile while she sets up the new agency...
Nov 18, 2010 at 1:15 AM | Registered CommenterDailyBail
"Split along party lines. This time Republicans did banksters' bidding."

And now the ball crosses the net for the Democrats to get their turn at doing the bankers bidding. Meanwhile the people are content to watch the ball go back and forth believing that their "extra special" Is pure of spirit, and playing ping pong in their best interest...
Nov 18, 2010 at 2:47 AM | Unregistered CommenterS. Gompers
Meanwhile the people are content to watch the ball go back and forth believing that their "extra special" Is pure of spirit, and playing ping pong in their best interest...

Its like "Singing Along With Mitch".................................follow the dancing ball on the bottom of yr "Black-&-White" TV Set.......

Comb-by-Ya, Hillery will come a long and save us all from our self's...?
Nov 18, 2010 at 8:51 PM | Unregistered CommenterTexas Dar
This is my good friend Bruce, from "Kick Them All Out In 2010-2012.

Twice bitten? Second Crestone resident claims fraud
Another Crestone resident, Wooddora Eisenhauer, says that she, like her neighbor Bruce McDonald, has been victimized by banks’ predatory foreclosure practices.
http://www.boulderweekly.com/article-3825-twice-bitten-second-crestone-resident-claims-fraud.html

Foreclosure crisis hits home in Colorado

McDonald told Boulder Weekly that it is more profitable for banks to foreclose on properties than it is to work out a payment arrangement with the homeowner because they can claim a loss — based on the value of the original loan, which was often artificially high due to the housing bubble — and regain 80 percent of that loss from the FDIC. (See http://www.larryhotz.com/fdic-pays-bank-to-foreclose.)

In his lawsuit, McDonald requests a jury trial and seeks economic damages for the loss of his home, damages for pain and suffering, and attorney’s fees.

Fielder says the outcome of the case could have national ramifications.

“Whatever Judge Matsch says on the McDonald case is going to be big,” he says.

OneWest also claims in its motion that in this case, a federal court does not have jurisdiction over a matter that has already been decided by a state court. The motion goes on to pick apart McDonald’s claims of fraud, racketeering and other laws, but remains silent on the question of whether his loan was sold to Freddie Mac in 2004.

McDonald, who has become a local expert on the foreclosure process (his website is www.kickthemallout.com), questions the whole system in which banks can obligate themselves for more than they actually hold.

“We need to pull all of our money out of the big banks and use the local banks and credit unions,” McDonald says. “That would stop this shit dead in its tracks. We have no idea what they’ve done. They have created so many ways to generate revenue off your loan. Most banks don’t have anything invested in the properties they are foreclosing on.”

http://www.boulderweekly.com/article-3824-foreclosure-crisis-hits-home-in-colorado.html
Nov 19, 2010 at 3:16 PM | Unregistered CommenterTexas Dar

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