California Real Estate Fraud Report

After playing cat-and-mouse as to whether she would remain a hold-out or sign-off on a nationwide settlement between the Attorneys General and five major banks for committing widespread fraud in the signing of foreclosure documents, Attorney General Kamala D. Harris announced today that California will be part of the settlement.

The five banks are Wells Fargo, Bank of America, JP Morgan Chase & Co., Citigroup Inc. and GMAC/Ally Financial Inc.

California will receive $18 billion as its share of the agreement, which sought to penalize robosigning, in which the banks hired $10/hour temporary employees to forge as many as several thousand foreclosure documents  every day, many of which were manufactured to replace lost paperwork on home mortgages.

On the positive side, Harris’ obtained an enforceable guarantee that the named banks will have to provide at least $12 billion in principal reductions to underwater homeowners. Monies will also be allocated so that Harris can expand her Mortgage Fraud Task Force.

On the other hand, today’s settlement is a huge disappointment for homeowners whose foreclosures were illegal in one form or another. The most they will receive is $2,000 which is nothing short of ridiculous.

Also, bank C-suite executives, managers and other employees appear to be off the hook for any criminal acts they may have committed with regard to the robosigning scandal, which is why the banks were so eager to get a blanket agreement from the states.

Read about the settlement in the Los Angeles Times and AG Harris’ press release.

Almost a year after they were outed for engaging in widespread fraudulent foreclosure document signing practices, known as robo-signing, big banks are still engaging in the practice, along with the contractors.

One registrar of deeds on the East Coast said “My office is a crime scene”, referring to his office still receiving large numbers of documents with suspicious or outright fraudulent signatures.

A county registrar in Michigan has referred  Marshall Isaacs, an attorney with foreclosure law firm Orlans Associates, for a criminal investigation for robo-signing. Mr. Isaacs’ name has appeared on foreclosure documents that more than one county’s officials believe have been robo-signed.

Clearly, the settlement that the 14 biggest banks made with federal regulators this past April that promised a cessation of their fraudulent business practices (bank fraud) as well as paying restitution to homeowner on whom they had improperly foreclosed, is a joke.

Read the original article in the Silicon Valley Mercury News.

Does your Attorney General work for you, the consumer and taxpayer, or for Wells Fargo, Bank of America, JPMorgan Chase, CitiGroup and Ally Financial?

An article by Scot Paltrow in Reuters yesterday entitled “States Negotiating Immunity for Banks over Foreclosures” seems to indicate that our state attorneys general want to get the Foreclosure Gate scandal of mega-banks’ robo-signing homeowners into foreclosure off their desks. Never mind that some of the activities of the banks may rise to a criminal level.

The “negotiation” undertaken collectively by the attorneys general of all 50 states would let the five banks collectively pay “up to (my emphasis)$25 billion in penalties and commitments to follow new rules,” rules which any ethical institution would have followed in the first place. In exchange, the banks would receive immunity from civil lawsuits by the states.

At the least, this sounds like dismissing serious corruption by sweeping it under the rug for a pittance.

So, $5 billion per bank for massive and willful corporate malfeasance. That’s less than $100 million per state and chump change for the likes of Wells Fargo, Bank of America, JPMorgan Chase, CitiGroup and Ally Financial. And as usual, no crooked C-suite executives lose any time off the golf course in depositions or court proceedings. It’s business as usual.

According to the Reuters article, only New York State Attorney General Eric Schneiderman has objected to this wink to corporate corruption. And some of the senators on the Senate Banking Committee, including Republican Richard Shelby, have criticized banking regulators for failing to adequately investigate the robo-signing and other anti-consumer practices engaged in by the banks and their contractors, which Reuters alleges continue to this day. 

Read the original article in Reuters.

Read about public banking.

Congressman Alan Grayson (D-FL) has taken his gloves off in a scathing letter he wrote on October 14 to FBI Director Robert Mueller and US Attorney Robert O’Neill of the Central District of Florida, calling for prison sentences for some bankers for improper foreclosing of homes, dubbed Foreclosure Gate.

In his letter, Congressman Grayson accuses banks of “routinely evading laws meant to protect homeowners” and states bluntly that “fraud does not become legal just because a big bank does it.”

Read the letter by Congressman Alan Grayson on Market Ticker.

The FBI is investigating whether banks and other lending institutions may have committed criminal violations in their processing of tens of thousands of foreclosures, in what has been termed Foreclosure Gate. Their determination hinges on whether the rubber-stamping (robo-signing) of the foreclosures was done with criminal intent.

In the meantime, both Bank of America and GMAC (Ally Financial, Inc.) have stated their intent to resume foreclosures in judicial foreclosure states. How successful they will be is an open question, as the attorneys general for all 50 states have initiated joint investigations into the procedures the major lenders have used to foreclose on homeowners. Further, plaintiffs’ attorneys are busy filing lawsuits against the lenders and at least one judge who has thrown out foreclosures, Justice Arthur Schack of State Supreme Court in Brooklyn, has stated for the record that lenders “better file all their paperwork and makes sure it’s done correctly, because they’re asking me to take someone’s house away.”

Read the full article in Yahoo News.

In the ongoing sage of Foreclosure Gate, Bank of America became the first lender to halt foreclosure proceedings against distressed borrowers in all 50 states amid questions about whether it had properly processed foreclosure documents. JP Morgan Chase, Ally Financial, Inc. (GMAC), Wells Fargo and other lenders are under the microscope too, although Wells Fargo denies it failed to follow state foreclosure laws. Despite the self-imposed moratorium, Bank of America claims “Our ongoing assessment shows the basis for our past foreclosure decisions is accurate.”

Despite the denial, Renee Hertzler, a Bank of America employee, has acknowledged in at least one deposition that she routinely signed 7,000 to 8,000 documents per month having to do with foreclosing on residential properties.

Also today, Pittsburgh-based PNC Financial Services Group, Inc. announced it is suspending foreclosure proceedings in the 23 judicial foreclosure states for a month while it conducts an internal review to confirm it has complied with state foreclosure laws.

Read the full article in Yahoo News and MSN.

Amidst new revelations that many of the nation’s major banks may have improperly processed the foreclosure documents of tens of thousands of homes and / or violated the foreclosure laws of many states, a bill that would have legitimized electronic signatures across state lines failed when President Obama rejected it by a pocket veto.

The bill, which has been through Congress several times in the past five years, was put to rest “out of an abundance of caution, and to ensure that those unintended consequences don’t harm consumers”, according to White House press secretary Robert Gibbs.

Both sides of Congress had supported the bill. But Senator Patrick Leahy (D-Vt) noted after the President’s rejection that the recent revelations about the validity of signatures of bank officials on foreclosure documents that “Now that concerns have been raised, Congress should re- examine whether this bill might have had an unintended impact on foreclosures.”

Read the full article in BusinessWeek.

Old Republic National Title Insurance has thrown a monkey wrench into the ability of lenders to sell their foreclosures: on September 29, the company announced that it will no longer issue policies to properties that have been foreclosed by JP Morgan Chase and Ally Financial, Inc. (GMAC). Further, Old Republic will not write title on properties which have been purchased after the foreclosed properties have been listed and sold as REOs (bank-owned property).

Maryln Weiner, a title agent and real estate attorney in Boca Raton, Florida, predicted the disclosure by the two mega-lenders, as well as Bank of America, will

“set us back years.  They won’t insure it after completion after the foreclosure. I think you’re going to see actions to reopen foreclosures that already took place. This will have tremendous consequences and all title companies will do the same thing. We’ve never seen anything like this before.”

What’s even worse is that the buyers of REOs could have their ownership challenged in court by the former homeowners, who may contend the foreclosure judgment has to be set aside due to faulty documents. In that case, the new homeowners may go to the title insurer to cover their financial losses.

The financial impact on title companies, the banks and the U.S. economy is staggering: the National Association of Realtors shows that foreclosed properties make up 34% of sales across the country, up from 31% a year ago.

Read the full article in USA Today.

There’s a wildfire spreading across the country: instead of the continuing wave of foreclosures, the practices banks use to initiate the sales of homes are going under the microscope of judges and attorneys general.

Articles last week in the California Real Estate Fraud Report revealed that California Attorney General Jerry Brown has called on JP Morgan and Ally Financial, Inc. (GMAC) to suspend their foreclosure proceedings unless they could show they are in compliance with state consumer protection law.

In Connecticut last week, Attorney General Richard Blumenthal asked a state court to freeze all foreclosures for 60 days because it “should stop a foreclosure steamroller based on defective documents.”

New York, State Attorney General Andrew Cuomo is reviewing his own response “to prevent homeowners from being improperly removed from their homes.”

The Los Angeles Times reports that a Wells Fargo executive, Herman John Kennerty, admitted in a deposition he only signed dates on foreclosure documents because he “relied” on his subordinates to make sure the information was accurate.

Bank of America employee Renee Hertzler has admitted that she signed 7,000 – 8,000 foreclosure documents each month without reading them. Ms. Hertzler further admitted falsely posing as a representative for the Bank of New York Mellon, which served as the trustee for a homeowner’s loan.

Bank of America is haulting foreclosures in 23 states (Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin) which use the judicial foreclosure process, a process that is lengthy and requires the foreclosing party to verify all documents. In contrast, non-judical foreclosure states such as California afford lenders the ability to foreclose on a property in less than 4 months via a trustee’s sale.

Read about this outrage against due process for homeowners by the banks in the Washington Post, Web of Debt author Ellen Brown in OpEd News.