Bank Fraud FINALLY In the Limelight

I have not been the first to report on this as I have been busy reading all of the other reports on this topic.  PANDORA’S BOX HAS FINALLY BEEN OPENED.

This “robo- signer” fraud is only the tip of the iceberg that ICE Legal (no pun intended) in Royal Palm Beach, Florida (Palm Beach County) discovered during “discovery”.  His deposition caused GMAC (ALLY Bank) to halt foreclosures in 23 states.  This action was then followed by JP Morgan Chase and as of this past Friday, Bank of America.  I am sure we will see many other of our major banks follow suit as this practice of submitting fraudulent documents to the courts is wide-spread.

While this news is finally showing how banks are committing fraud in our courts by submitting fraudulent Affidavits attesting to personal knowledge of each foreclosure case and mortgage account, I believe, is only the beginning.

Back Door To Fraud

The banks and their attorneys – commonly called foreclosure mills – have been committing fraud on the court since the beginning of the once called “mortgage meltdown” and the current foreclosure crisis.  The fraud was committed when many loans were originated.

Mortgage brokers – who were accused by the big box banks of creating all of these “bad loans” – submitted deals to the banks.  It was the job of these banks/lenders to “underwrite” these loans then decide if they would approve them or not.  In many cases they approved loans knowing that there were fraudulent documents in the file or knowing that the ability to repay did not exist.  In other words, the banks approved and funded loans they knew were foreclosures in the making.  They blamed the brokers when it was their job to make the decision to approve and fund or to deny.

FYI, Fannie and Freddie very much did the same.  You see, they created a computer underwriting engine that would automatically underwrite a loan input by any loan originator including the mortgage brokers.  They (F & F) frequently tweaked the system so that it would approve more loans. They sent teams of people out into the field to teach originators how to use their automated underwriting (AU) systems, called Desktop Underwriter (DU) for Fannie Mae and Loan Prospector (LP) for Freddie Mac‘s version.  In these “field” workshops they taught us how to manipulate the system to get approvals.  They taught us to keep changing the information such as income and assets until the system gave us an approval often not requiring any verification.  Once the system gave us the desired approval we were then told to hit the submit button which would give the official approval.

Once a DU or LP approval was received, any bank would buy the loan because the DU or LP approval was a guarantee that Fannie or Freddie would buy the loan from the bank – who 68% of the time received it from the mortgage broker or originator.

THE FRAUD CONTINUED – Fraudulent Ratings

Now that the loans had been originated, approved, funded and closed, what then happened to the “paper”?  Most of it was “sold” to Wall Street.  These Mortgage Notes would be pooled together into packages worth billions of dollars, split up into tiny little pieces and these pieces then sold to the general public – both large and small investors.  This process was called securitization.  So then, where was the fraud?

I will try to simplify this answer to a very complex question.  First, these mortgage pools of securities – called Mortgage Backed Securities or MBS for short – needed no SEC approvals like most other stock issues or security instruments .  They did however, require filings with the SEC.  With no approval by SEC required, this in itself, led to fraud and abuse.

Secondly, Wall Street had created an international hunger for these MBS issues, primarily due to the high interest rates on many of these loans.  Subprime loans and the security packages they were put into, became a catalyst for this fraud, offering high return  investments.  Typically high yield investments also have high risk…but did these?  Let’s take a look at the answer to this question and expose yet another fraud.

There are three major rating agencies.  Standard and Poors, Fitch and Moody’s.  These rating agencies are the holy grail for investors worldwide.  They rate securities based on their credit worthiness or stability for successful return.  The highest rating given by these agencies is triple A (Aaa) meaning that the particular security has little chance of failure and an almost 100 percent probability of success.  In other words, “you can’t lose on a triple A rated security, bond or corporation.

So again, where was the fraud.  This answer is simple.  These rating agencies – as has been admitted to by several employees – for the most part  never look at the contents of these mortgage-backed securities.  They never looked at how good or bad the various loans contained in them were.   They just rated them triple A (Aaa) – rubber stamped them without ever looking at them to actually evaluate them.  This fraudulent rating then told the whole world that these investments (MBS’s) were high return investments with little, if any, downside risk.  Nations such as Iceland, retirement funds world wide and small everyday hard-working middle class people  invested in these fraudulently rated securities.

The demand for these fraudulently rated securities was off the charts.  Investors literally waiting in line to buy over and over again.  It was truly the birth of what someday history will record as the biggest Ponzi scheme ever.   As I have said from the very beginning, Madoff (a fall guy) was a bit player compared to this fraud.

The more the need for “paper” the lower the qualifying  guidelines for mortgages became and the more fraud and abuse we began to see – especially at the bank and lender level who encouraged the loan originators to submit any application even if it contained lies or fraudulent documentation.

(LR NOTE:  I am not saying that all originators did this nor am I condeming the mortgage broker industry.  I do in fact, to this day support them as I was one.   However, I am suggesting that the daily solicitation by the banks/lenders Account Executives for files and the ability for these lenders to totally overlook guidelines and even obvious fraud did contribute to this mess.  But I say again, in defense of the loan originator, only the Underwriters could approve and fund loans.  The underwriters did have DENY authority.

The purpose of Underwriting is to verify the accuracy of the information contained in a file.  It is the job of the Underwriter to do so.  Most good loan originators – the majority – along with their loan processors did this on their own before submitting the file to Underwriting.)

THE FRAUD CONTINUES – No Official Transfer of Loans By Endorsement or Assignment.

The speed at which loans were being made, sold to Wall Street for securitization then sold to investors world-wide was reaching supersonic proportions.  The amount of paper being created for distribution was (as is with th foreclosure process today) so large that more often than not the use of robo-signers began.  People, not necessarily officers of the corporation were enlisted to sign Endorsements as well as Assignments.

Endorsements of Notes is similar to endorsing a check over to someone else.  In other words, you sign the “note” over to someone else who then has the right to collect on it.

Assignments of Notes is the official passing of the Note to another person or party.  In other words, it is like signing the title to your car over to another.  Once you sign the title (assign the title) to another, that other now legally owns the property.  In the case of a mortgage, an Assignment transfers ownership of the Note to another individual or entity.

The first fraud here is that the so-called signers of these Endorsements and/or Assignments were many times not officers of the corporation they were signing on behalf of.  In many cases these same people (the original robo-signers)  represented themselves as being officers of many different banks and lenders always working out of the same office location.  As one judge once commented in a foreclosure case talking about the signer of the Assingment and I paraphrase:

If all of the companies you claim to work for as an officer all have their offices in the same location, the building must be as large as Madison Square Garden.  In addition, how can you work for so many different companies each day?

In the past three years these robo-signers have admitted to this fraud under oath and in depositions yet very little has ever come of these admissions of fraud and deceit.

Making matters even worse and expanding this fraud is the fact that in many cases the notes were never Assigned (sold or given to) the security created by Wall Street which they then sold to investors.  What I am saying is that many of these MBS issues DO NOT LEGALLY CONTAIN THE MORTGAGE NOTES THEY REPRESENT THEMSELVES TO HAVE.  The investors have been defrauded by purchasing shares in a Aaa (Triple A) rated investment (one with little or no risk of failure) that do not even legally or physically own the mortgage notes they are supposed to contain.  There are two cases of fraud here.

Investor were sold wrongfully rated bags of air.  While some of the notes are in these MBS pools many are not.  A thorough audit of  each of these bond issues would uncover what I would call the largest fraud ever in the history of the world.

THE GREATEST FRAUD EVER – Continues With Illegal Foreclosures Nationwide

All the previous fraud I mention collapsed this Ponzi scheme and house of cards which came to be known as the housing bubble.  When Wall Street began to realize that some or all of their fraud might be discovered (this is my theory) they shut down the market for the MBS issues.  In other words, they would no longer sell these mortgage-backed securities which left lenders and banks holding loans they could not afford to hold.  They needed to sell these loans because in most cases they were loaning money they did not have.  Yes, even your large banks like Bank of America, JP Morgan Chase, Citibank and the rest needed to sell the loans to recoup the money they did not have.

This action by Wall Street caused the failure of most mortgage brokers/lenders as well as the failure of what we now refer to as the Too Big To Fail banks.  Yes,Wall Street firms,  Bear Stearns, Lehman Bros., Merrill Lynch along with your big box banks all failed because they all got caught up in their own scam.

Then they lied to us, the public, and continued to scam us on a never before seen scale -the Bailout.  We gave them billions of dollars to enable them to continue their fraud against the people – The Foreclosure Fraud.

These same fraud committing banks who created this whole mess to begin with are now corrupting our entire legal system and destroying the integrity of our court system by committing fraud on the court.

Providing fraudulently signed Affidavits – as I said in the beginning – is only the tip of the iceberg.

They are foreclosing illegally.  In many cases there are no assignments of the notes to the party or entity claiming to be the owner of the note with the standing (legal ability and right to foreclose).  They are defrauding the courts when these plaintiff’s attorneys (foreclosure mills) tell the court that their plaintiffs own the note but never- NEVER – provide proof of ownership.   Unfortunately- our courts – inundated with these cases – don’t take the time to question this basic requirement of proving ownership.  Save a few judges in Ohio, New York and a very few in Florida, most judges just “ass_ ume” that the “bank” is “telling the truth”.  After all, they are THE BANK, which in itself is untrue.  THE BANK is usually not the plaintiff.  It is the Servicing Company (many owned by a bank and some not) but NOT A BANK or the Trustee on behalf of the security issue (the MBS) who is usually an employee of a bank.  In the case of a Servicing Company, they definitely do not own the note.  That is not their business.  They are hired to collect payments and keep track of the accounts only.

In the case of the Trustees for the MBS security, there would have to exist a valid assignment to the security and then even with that the question of Standing is at issue.

A valid Assignment would be  an Assignment made prior to the filing of the foreclosure, an Assignment signed by an official officer of the corporation which made the loan originally.  The question of Standing even with the Assignment is at issue as I believe (and I am not an attorney) it would take a whole interest in the note to have Standing.  In other words, if there were 1,000 owners of a specific security then all 1,000 owners would have to be named plaintiff’s.  I would very much welcome legal opinions on this.

Again, upon investigation and deposition we would find that many Assignments were made after the filing of the foreclosure.  Many made by or on behalf of the attorney who filed the foreclosure and often times had one of their own employees sign the already fraudulent Assignment.  In addition, we would find many documents required under TILA and RESPA to have been forged by the attorneys or by the Servicing Companies (owned by the Banks) and placed in the file.  Some court files themselves are tampered with by these “mill” attorneys – sometimes changing or replacing documents.

Yes, forgery in addition to fraud.  One foreclosure mill attorney – one of the largest in the country – actually owned a company that created and forged documents.  That law office is under investigation by the Florida Attorney General as are three other such firms.  Maybe in light of this new and open evidence of fraud, Attorney General McCullum or his successor in the November election will take action once and for all and not slide it under the rug.

Affidavits, sworn statements of personal knowledge, the last “legal” requirement of the judicial foreclosure process has been uncovered as fraud.  I hope, as I stated at the beginning, that this discovery will lead to the exposure of all the other fraud I outlined above.

Our banks have destroyed our economy and our housing market.  ‘They have accomplished the greatest transfer of wealth known to mankind.  Now they continue to rape us and our country by corrupting our courts thereby denying us our constitutional right of Due Process, our day in court – our ability to properly defend ourselves.

Our Federal government along with our State and Local governments are complicit in the fraud against the people.  By mandating “Rocket Docket” procedures, hiring retired judges (to what should be elected positions) and mandating them to “clear the dockets” is just plain unconscionable as well as illegal and unconstitutional.

Hurrah for our major media for FINALLY picking up this story.  Now, get to work and investigate the allegations I have made above and have been making for the past three years.

Stop the fraud by the banks – protect the people – stop all the foreclosures.  Protect the court system and our rig

THE LAW IS THE LAW FOR EVERYONE.  Two wrongs don’t make a right.

There is a better way.