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Saturday, December 3, 2011

Going after the banks with the full force of the law - finally

Martha Coakley may well be remembered as the Democratic Senatorial candidate who managed to lose Ted Kennedy's seat with a campaign so bad that "lame" doesn't even begin to describe it.  The positive side to that is she returned to her position as Attorney General for Massachusetts and she's fired a full salvo at five banks at the center of the mortgage mess. suing them for fraud that goes to the heart of the mess.

Foremost is the massive amounts of fraudulent title deeds called 'robosigning'.  The banks failed to transfer title deeds as legally required.  With the actual title deeds lost in the murk of multiple transfers mortgage servicing companies started forging deeds at record pace.  No-one knows how many such titles were forged but the numbers could run into the millions.  People were paid $10 an hour to sign the forged deeds as long as they could sing 300 titles an hour.

The banks have been trying to negotiate an overall settlement with all 50 AG's for a relative pittance of $50 billion which would get them off the hook for everything.  Fortunately a few AG's including Coakey and Eric Sneiderman in New York aren't playing ball and as long as a state like New York doesn't go along with the deal, it's dead in the water.

A couple of weeks ago Nevada indicted a couple of mid level employees of a locally based robosigning companiy, hoping to squeeze them as the AG moves up the food chain.  The ultimate goal would be to prove that the banks were complicit in this, something that is an unknown at the present time but the odds that they were must be incredibly short.  If that happens, things coulld get interesting.

Hullabaloo has an excellent analysis of the case and its implications.

 1. Engaging in unfair and deceptive foreclosure practices by conducting foreclosures when the defendants lacked the right to do so and misrepresenting to homeowners their roles as mortgagees or as the holders of the mortgages;

2. Engaging in false documentation practices to facilitate their foreclosure practices;

3. Deceiving homeowners in the course of servicing mortgage loans by misrepresenting to borrowers regarding its loan modification programs, acting deceptively in implementing loan modifications and deceiving borrowers regarding foreclosure proceedings; and

4. Failing to comply with Massachusetts’ registration statute.

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