Covering Up

It’s a sign of just how serious the mortgage foreclosure frauds are if the powers that be are indeed jumping to cover their butts with this law. Yves at Naked Capitalism has the details:

With the stakes so high for the various parties to securitizations, the first line of defense of the incumbents is to try to minimize the problem. But the fact that more extreme measures are being readied suggests they are coming to understand that this cesspool might be plenty deep.

One sighting (hat tip 4ClosureFraud) is the effort by the Ohio Secretary of State to enlist support against a proposed measure to allow for electronic notarizations. The Secretary hints strongly that this measure being put forward is directly related to the revelation of affidavit improprieties, which further suggests that the banks might regard this as a remedy for this particular, um, lapse:

H.R. 3808 is known as the “Interstate Recognition of Notarizations Act.” It passed the House under a suspension of the rules in April 2010. It requires federal and state courts to recognize any notarization that is lawful in the state where the notary is licensed. Now, in one day, it passed in the Senate.

When I learned of it last Thursday, it sounded innocuous to me, but then I started looking at the timing of the bill. GMAC, owned by Ally, had just suspended its foreclosure actions in 23 states, including Ohio. I had already referred Chase Home Finance, LLC, on August 23, 2010, to the U.S. Department of Justice, asking it to review and investigate Chase’s document notarization practices in home foreclosures (18,000 documents per month were being notarized by 8 people, along with other irregularities). I license notaries in the State of Ohio. Even though I don’t have the power under state law to investigate or prosecute, I couldn’t stand idly by without acting. That’s why I’m asking you to email or call the President at 202-456-1111 to ask him not to sign the bill.

Last Wednesday, the day before I announced the DOJ referral, JPMorgan Chase announced it was having third party counsel review its document procedures for foreclosures. Just two days before, the U.S. Senate had rushed through H.R. 3808. Something didn’t seem right. Since then others agree with me.

Yves here. This development reveals how this battle is likely to play out. Now that judges in some states are starting to take these dubious, potentially fraudulent measures seriously, the next line of attack is to get the more bought-and-paid-for Federal government to intercede on behalf of the banks. As the e-mail by the Ohio Secretary shows, this is a state versus Federal rights issue. And the problem is that these solutions will be depicted as “efficient,” just as securitizations and other “innovations” were.

And while efficiency in theory is a good thing, it must always be kept secondary to the overall integrity of the system, otherwise, you run the risk of breakdown. Using dubious arguments to overturn well settled law to get the banking industry out of a monster mess it created is a Faustian bargain. It makes it abundantly clear what is really at stake here, which is the rule of law. Banks that were quick to defend unjustifiable pay deals by invoking “sanctity of contract” have no inhibition about ignoring their own contracts to pad their bottom line, and ultimately, the wallets of top executives.

Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I’m not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.The result is that we institutionalize kleptocracy while keeping largely gutted forms of due process as theater. The powers that be hope that the broad public will remain unaware of what is really at work.

However, the battle is not yet lost. Elizabeth Warren has said she will stand up for consumers and is a vocal advocate of contracts as a mechanism for protecting the interests of American families. This issue could serve as an opportunity for her to demonstrate that her appointment as de facto head of the new financial services consumer protection agency is not mere Obama Administration window dressing (or more accurately, that her appointment was a PR ploy, but Warren is able nevertheless to turn it to her advantage).

In addition, an increasing number of Congressmen, as least at this juncture, are lining up in this fight in favor of borrowers and against well funded business interests who provide hefty campaign donations is a hopeful sign. It may be that there is enough left of what passes for propriety in this country that even the Congress can’t be rolled so easily on this one.

10 thoughts on “Covering Up

  1. too late, already rolled and on the president’s desk. And look, now with local flavor, who says Bob Casey doesn’t stand for working people?

    A bill that homeowners advocates warn will make it more difficult to challenge improper foreclosure attempts by big mortgage processors is awaiting President Barack Obama’s signature after it quietly zoomed through the Senate last week.

    The bill, passed without public debate in a way that even surprised its main sponsor, Republican Representative Robert Aderholt, requires courts to accept as valid document notarizations made out of state, making it harder to challenge the authenticity of foreclosure and other legal documents.
    Questions about improper notarizations have figured prominently in challenges to the validity of these court documents, and led to widespread halts of foreclosure proceedings.

    The legislation could protect bank and mortgage processors from liability for false or improperly prepared documents.
    The bill’s approval involved invocation of a special procedure.

    Democratic Senator Robert Casey, shepherding last-minute legislation on behalf of the Senate leadership, had the bill taken away from the Senate Judiciary committee, which hadn’t acted on it.

    The full Senate then immediately passed the bill without debate, by unanimous consent. The House had passed the bill in April.

    Hooray for Boob Casey, friend of the working class the banks.

  2. I called the White House anyway; when I get home, it’s time to write to Casey. What the hell was he thinking? Oh, I forgot, most of our legislators are friends of the banks.

  3. It’s amazing how wonderfully efficient our Democratic congress can be on behalf of corporations. Any other legislation, oh too difficult, not enough votes, must debate endlessly, must sit in committees, etc etc etc

    Tell me again why it’s important to vote for Dems over Repubs? The difference is what again?

  4. what was he thinking? well probably how banks have a lot of money to give him. or maybe he wasn’t thinking at all: it’s no secret that Bob Casey’s a thickwit whose family name has lot more heft than his intellect.

  5. All the improprieties the banks are accused of seem highly technical in nature. On the other hand, what the so-called homeowners are doing is pretty clear-cut. One, they aren’t homeowners. You don’t own what you haven’t paid for. And what they are trying to do really amounts to theft.

    That’s my money they borrowed to get that house, and when they refuse to pay it back, they deserve to lose the house.

    I don’t understand why you don’t see it that way. There’s nothing heroic about lying, promise-breaking thieves, whatever your opinion of banks.

  6. Brian:

    The banks that are foreclosing can’t prove they actually hold the note.

    If BofA loans the money does GMAC have the right to foreclose?

  7. Explain to me again how the Republicans are worse?

    President Obama just vetoed the bill. Explained.

  8. Brian, if you or I knowingly lied to the court about a matter before it, I think we would find ourselves in a world of hurt and legal trouble.

    But I’m one of the little people — not a bankster with bought and paid for pols in Congress to help me out.

    Of course, politics may also enter into things: Banksters who gambled away our money, our 401K investments, our retirement savings got no criminal investigations even, afaik. But Martha Stewart? Jail, babeeee! Obstruction of justice, so the law must prevail.

    Now, those banksters also played fast and loose with those mortgage loan notes, playing slice and dice and fool the credit default buyers. But, hey, what’s a little criminality among the crimogenic types?

    Besides, the taxpayers will pick up the tab in the end. In fact, BOHICA!

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