Telling judges across dozens of states that documents are accurate and have been reviewed when you don’t know and haven’t done it, is just a pack of lies. Running thousands of foreclosures through the court system without enough staff to actually do the work isn’t just cost cutting it’s stealing from homeowners who do not owe the sums reported or are trying to prove fraud in the process. The banks essentially said, “Our documents show you are just wrong, suck it up.” All this when they had little or no assurance that the documents were correct.

In an article written by Arthur Delaney, he writes –

The paperwork scandal that has prompted several banks to halt evictions and review their foreclosure procedures is reminiscent of the predatory lending scheme that inflated the housing bubble.

“It’s the same process, falsifying documents to make them look acceptable to someone,” said Tom Domonoske, a lawyer and consumer advocate in Virginia. “They’re falsifying foreclosure documents so judges will look at them and say, ‘Here’s an affidavit. It’s signed.'”

Now, get a load of this – (further down in the article)

The bogus loans and bad foreclosure paperwork are both the result of Wall Street’s massive appetite for mortgages during the housing bubble, experts say, as banks repackaged mortgages as asset-backed securities and sold them to investors. As mortgages repeatedly changed hands, servicers in many instances lost track of who owned them. In states where foreclosures need a court’s approval, servicers now find themselves unable to prove they have a legal right to foreclose.

That’s right, they’ve been foreclosing on homes they weren’t sure they owned. (By the way, the sentence explaining that when they need a court’s approval, they don’t get to foreclose if they can’t prove ownership is nonsense. It is only when you contest ownership, usually with a lawyer, can you stop the process. There is no doubt in my mind that thousands of homes were foreclosed on, with no small profit to the bank, that the bank had no ownership rights to.)

What are we going to do? Banks have had a good reputation in the past with foreclosures. It was unpleasant for the bank and for the customer. They did their process and the home shifted possession. Because of this good reputation the law accepted the bank’s statement as to ownership and money amounts without demanding proof.

It would have cost a lot of money for banks to have to prove the facts in dozens of what were largely routine cases. So, the legal system streamlined the process. The bank’s paperwork was accepted as accurate as long as an attorney signed that he had personally reviewed the documents.

What have we learned? First, we can learn that the processes under which we gave financial institutions the benefit of the doubt have to be modified so that these institutions have to prove their case. Yes, it will make mortgages more expensive to forclose. Yes, it will make the process more complex and longer. But what choice do we have when the banks have deliberately and calculating lied for years in tens of thousands of cases? At what point do you stop giving them the benefit of the doubt?

Now.

They have proven that they cannot be trusted. Anyone who says otherwise is ignoring the hard, cold, unpleasant, unyielding facts.

James Pilant