Mortgage Foreclosure Fraud

That is what it is. Assuming home buyers were in most cases not making mortgage payments does not excuse banks from using fraudulent paperwork to foreclose. In the land of real estate flips, Florida, one judicial circuit alone may have as many as 20% of its cases awaiting summary judgment based on legally deficient documents according to the chief judge of the 12th Circuit. Yet Florida is third behind Nevada and Arizona for most foreclosures. Morgan Stanley says as many as 9 million US mortgages may face legal challenges over the validity of legal documentation. The problems are so prevalent that Bank of America and JP Morgan Chase have called a halt to their foreclosure process, and fifty state attorneys general are launching an investigation into bank foreclosure practices. These developments will have a negative effect on the already weak US real estate market since the majority of recent home sales have been of bank repossessed homes selling at a discount. About 1.2 million homes were expected to be repossessed this year.

According to the FBI, 80% of mortgage fraud is induced by lenders. Former west coast bank, Washington Mutualwhich collapsed in 2008, is a good example of the predatory lending practices used to feed the lucrative securitization business. The document fraud used to foreclose on fraudulently induced loans associated with the collapse of the real estate bubble first came to the public attention in 2007 when an Ohio state judge refused to approve 14 foreclosures by Deutsche Bank. The bank was unable to prove to the judge's satisfaction that it was the owner of the mortgage notes in question because ownership had been flipped so many times, the chain of title became confused. This situation is common amongst the big banks who rapidly bundled their mortgages and sold them as part of the securitization process (REMICs). The unexpected result in Ohio set off alarm bells nationwide for attorneys representing home buyers facing repossession. In December of 2009 an employee of GMAC involved in Florida foreclosures was deposed. He testified that he personally signed off on 10,000 foreclosures every month in a process referred to as "robo-signing", now known to be a common practice. In such mass processing there is little chance the person attesting to personal knowledge has any knowledge of the contents of each foreclosure file. In September 2010, GMAC called a nationwide halt to processing its foreclosures in 23 states where court approval is required.

So dear readers, in the pursuit of ever more profit the banks have created a real mess that seems to keep compounding itself.  It is what one well known economist has called the greatest financial fraud in world history. The end will not come until all the worthless paper and inflated housing prices are deflated. Trying to blame the on-going crisis on the little guy for buying more house than he could afford is farcical. If you are one of the unfortunate ones, just say, "show me the note" because the Obamacon is not going to help you.