2 Big 2 Foreclose--Is The Subprime End Game Approaching?

[Joanne98]

THE MIDDLE GAME QUAGMIRE

After a bad opening, there is hope for the middle game. After a bad middle game, there is hope for the endgame. But once you are in the endgame, the moment of truth has arrived. - Edmar Mednis (Grandmaster)

I have one central thought of where this fraudclosure fiasco could lead, and this is why everyone should watch very carefully how the various players move their pieces in this subprime middle game.

Up until now, the banks have been making sweeping statements that this all reflects a "technical" glitch in foreclosure processes.

Well, having a posse of State AGs band together to commence a joint investigation is no longer a minor "technical" glitch. Allegations of masses of forged signatures, falsified or fabricated notarized documents, back dating etc., if true, collectively amount to an institutional pattern of criminal behavior. Having the Justice Department announce it is opening a preliminary investigation raises the stakes even higher.
http://www.zerohedge.com/article/2-big-2-foreclose-end-game-approaching

[Ozymanithrax]

1. Anyone that knowingly signed a document or created a system...

where falsification of legal documents was routine should go to jail.

[Sanity Claws]

2. It's perjury

clearly criminal under existing law.

The ones who set up the system suborned perjury

[tularetom]

3. That's kind of a sweeping generalization

Do you mean to include home buyers who, at the request of their mortgage lender, signed a loan application which overstated their income?

Because we'd have to build a lot of new jails to hold them all. Even if we let all the pot smokers out.

[Ozymanithrax]

4. To knowingly sign a legal document under false pretenses is a felony...

When we bought our mortgage (we won't own the house for a while) we signed in the presence of a notary public, who checked our Id's several times.

What we have seen is that behind the scenes in the banks and mortgage houses handling foreclosures appear to have set up a system where nobody followed the law, not because the notary was lazy but because it was the policy to ignore the law.

Now, if there is a person who falsified documents to buy a house, yes, send that person to jail also. But I don't think you will find that many. The real issue here is what has happened out of the light of day in these foreclosures. If there is evidence that documents were signed fraudulently, then everybody involved in that chain from the highest management that sets policy down to the lowest clerk who shuffled fraudulent paper should go to jail.

[tularetom]

6. In theory I agree with you

The law is quite specific about falsifying legal documents.

But, my granddaughter used to work for a title company. According to her it was widely known in the escrow business that certain mortgage companies routinely inflated the incomes of their prospective borrowers by several thousands of dollars monthly in order to qualify them for loans that they never could afford to pay back. Why? The commission was paid to the mortgage agent immediately upon closing, so they got their money even if the homeowner defaulted. She complained to her bosses about what she had heard and they more or less pooh poohed her concerns. Although she isn't highly educated she isn't stupid and she realized that the title companies had to be part of the problem so she quit.

According to her the practice was not uncommon and the fact that this area is one of the foreclosure capitals of the US would seem to back it up. In some cases the mortgage guy even had the buyer sign a blank document and then filled in whatever income he thought they would need to qualify for the loan they were seeking.

You're talking systemic corruption and fraud here. We don't have enough jails to hold all the mortgage companies, title and escrow companies, realtors, brokers and other middlemen who got rich off these crappy loans plus throw the buyers in there too.

And that doesn't even begin to deal with the investment banks who bundled the loans into bonds and sold them, and the people who created insurance policies that enabled wealthy investors to bet that the loans would default. The system was riddled with corruption from top to bottom and while I wouldn't call it too big to fail, it doesn't seem cost effective to throw the book at the small time crooks while we let the people at the top of the pyramid go free.

[grasswire]

7. they found enough jail space for minor drug offenders, didn't they?

People whose possession of drugs harmed no one else. There was plenty of money available for locking them up.

[Ozymanithrax]

8. Being widely known and practiced doesn't make it legal.

If we don't have enough jails, well I understand that Gitmo is still running. I'd even approve keeping it open for that. A certain Sheriff Joe Arpaio is a complete asswipe, but I'll bet he has lots of pink jail gear.

As far as I'm concerned, if they knew about it, or were in a position to influence, they were conspirators and should go to jail. If we are going to pretend to be a nation of laws then the laws must mean something.

So what would be your remedy? A truth commission like they had in South Africa that grants a blanket pardon if they tell us what they did? The system needs to be heavily regulated, but there still needs to be a remedy for wholesale corruption.

[grasswire]

9. here's another possibility

Offer the crook a choice between jail or a very hefty fine or forfeiture of assets plus an ankle bracelet that restricts movement outside of work.

[tularetom]

10. Again, I'm not disagreeing with you

It would be extremely satisfying to throw in jail everybody that participated in this gigantic swindle no matter how insignificant their role actually was.

But let's be realistic, it ain't gonna happen. The current administration won't even do anything to investigate allegations against the incompetent and corrupt cast of the previous administration, who deserve to be in the Hague right now answering charges of war crimes and human rights abuses. Or lined up against the wall and shot. You think there's any chance of prosecuting thieves and swindlers for mortgage fraud?

And consider this. One of the allegations made by right wing apologists for the banksters and wall street thugs is that it was really Fannie Mae and Freddy Mac that caused this mess by granting mortgages to undeserving minority applicants who were encouraged to lie on their applications about their income, net worth and other qualifications. I don't believe it, but I also don't doubt that some abuse took place. Are you prepared to throw these minorities in jail for doing what a representative of a quasi governmental agency told them to do?

By the way who are the victims? Was it the banks? Don't think so, they have made out like burglars on this, they sold their shitty mortgages to investment banks and other high rollers who packaged them up and sold bonds secured by bad loans. Was it the bond buyers? No, most of them hedged their investment in these questionable bonds by buying credit default swaps which insured them against the bottom falling out. Was it AIG which wrote the CDS's and was on the hook when the shit hit the fan? No, but now we're getting close. Was it the taxpayers, whose money was used by the government to bail out AIG? Yup, that's who it was. And I see no evidence of outrage on the part of those taxpayers. And without that outrage, neither this administration or any administration that follows is going to lift a finger to go after anybody.

I don't think the Obama administration really wants to take any action on this matter either regulatory or criminal. So I believe the mess will just sit there and fester - billions of dollars of paper wealth, just plain gone. And it won't really be resolved until the price of real estate deflates to a level that the average American can once again afford. Which may take awhile because the average American's income is deflating almost as fast as the price of real estate.

Another poster suggested we make room in the jails for the mortgage crooks by letting all the minor drug offenders out. I advocated doing this 20 years ago before there even was a mortgage mess. But I don't believe, as a society, we have the stomach to go after middle class Americans who were caught up in this clusterfuck, knowingly or unknowingly.

[Celebration]

11. the reason so many did it

is that under Bush we didn't enforce the laws. He moved the FBI from white collar crime to terrorism, and wouldn't hire anyone new. All it takes is a few people to be put behind bars to keep this shit from happening.

The rule of law just disappeared under Bush. Not that it is much better now!

[laughingliberal]

5. K & R nt