Will there be investigations for fraud in documentation, or fraud in mortgage bundling, or fraud in the creation of mortgage derivatives, or fraud in the rating procedures that gave no risk ratings to junk, or fraud in foreclosure procedures? Will Goldman Sachs be shown to lack due diligence in its business operations? One thing seems certain: there will be a lot more disclosures about GS's business model in the near future!
ForeclosureGate and Obama's Pocket Veto
by Ellen Brown - The Huffington Post
The swift passage and the President's subsequent veto of this bill come on the heels of an announcement that Wall Street banks are voluntarily suspending foreclosure proceedings in 23 states.
By most reports, it would appear that the voluntary suspension of foreclosures is underway to review simple, careless procedural errors. Errors which the conscientious banks are hastening to correct. Even Gretchen Morgenson in the New York Times characterizes the problem as "flawed paperwork."
But those errors go far deeper than mere sloppiness. They are concealing a massive fraud.
They cannot be corrected with legitimate paperwork, and that was the reason the servicers had to hire "foreclosure mills" to fabricate the documents.
These errors involve perjury and forgery -- fabricating documents that never existed and swearing to the accuracy of facts not known.
Karl Denninger at MarketTicker is calling it "Foreclosuregate."
Diana Ollick of CNBC calls it "the RoboSigning Scandal." On Monday, Ollick reported rumors that the government is planning a 90-day foreclosure moratorium to deal with the problem.
Three large mortgage issuers - JPMorgan Chase, Bank of America and GMAC -- have voluntarily suspended thousands of foreclosures, and a number of calls have been made for investigations.
Ohio Attorney General Richard Cordray announced on Wednesday that he is filing suit against Ally Financial and GMAC for civil penalties up to $25,000 per violation for fraud in hundreds of foreclosure suits.
These problems cannot be swept under the rug as mere technicalities. They go to the heart of the securitization process itself. The snowball has just started to roll.
You Can't Recover What Doesn't Exist
Yves Smith of Naked Capitalism has uncovered a price list from a company called DocX that specializes in "document recovery solutions." DocX is the technology platform used by Lender Processing Services to manage a national network of foreclosure mills. The price list includes such things as "Create Missing Intervening Assignment," $35; "Cure Defective Assignment," $12.95; "Recreate Entire Collateral File," $95. Notes Smith:[C]reating... means fabricating documents out of whole cloth, and look at the extent of the offerings. The collateral file is ALL the documents the trustee (or the custodian as an agent of the trustee) needs to have pursuant to its obligations under the pooling and servicing agreement on behalf of the mortgage backed security holder. This means most importantly the original of the note (the borrower IOU), copies of the mortgage (the lien on the property), the securitization agreement, and title insurance.
Read the entire article here